Continued Year-Over-Year Core Revenue Growth

Q4 2015 Highlights

• Record revenue of $334 million, up 0.5 percent year over year in U.S. dollar terms with core revenue up 4.3 percent year over year
• Record bookings for software
• GAAP operating margin of 15 percent
• Non-GAAP operating margin of 18.5 percent
• Fully diluted GAAP EPS of $0.25 and fully diluted non-GAAP EPS of $0.34
• EBITDA of $63 million or $0.49 per share
• Cash and short-term investments of $333 million as of Dec. 31, 2015

AUSTIN, Texas--(BUSINESS WIRE)-- NI (Nasdaq: NATI) today announced Q4 revenue of $334 million, up 0.5 percent year over year in U.S. dollar terms with core revenue up 4.3 percent year over year. The company's definition of core revenue is GAAP revenue excluding the impact of NI's largest customer and the impact of foreign currency exchange. A reconciliation of GAAP revenue to core revenue is included with this news release.

In Q4 2015, NI received $10 million in orders from its largest customer compared with $8 million in orders from this customer in Q4 2014. Excluding NI's largest customer, the company's total order growth was flat for the quarter with orders under $20,000 down 5 percent year over year; orders between $20,000 and $100,000 up 1 percent year over year; and orders above $100,000 up 9 percent year over year.

"Despite the revenue headwinds, the strength of our business model has allowed us to deliver strong gross and operating margins for the year. Our platform-based approach, built around highly differentiated software, has created a large ecosystem of customers, partners and technologies that are key drivers to the long-term growth and profitability of the company," said Dr. James Truchard, NI president, CEO and co-founder. "The recent convergence of technology has led to an explosion in the amount of data required to characterize systems. Our differentiated software-defined platform puts us at the forefront as we empower engineers to solve their unique challenges through our flexible tools designed specifically to measure, process and connect to these sources of Big Analog Data."

GAAP net income for Q4 was $32 million, with fully diluted earnings per share (EPS) of $0.25, and non-GAAP net income was $43 million, with non-GAAP fully diluted EPS of $0.34. EBITDA, or Earnings Before Interest, Taxes, Depreciation and Amortization, was $63 million, or $0.49 per share in the fourth quarter.

In Q4, GAAP gross margin was 74 percent and non-GAAP gross margin was 75 percent. Total GAAP operating expenses were $198 million, up 2 percent year over year. Total non-GAAP operating expenses were $190 million, up 2 percent year over year.

GAAP operating margin was 15 percent in Q4, with GAAP operating income of $50 million, down 9 percent year over year. Non-GAAP operating margin was 18.5 percent in Q4, with non-GAAP operating income of $62 million, down 6 percent year over year.

"While our results for 2015 were below our expectations coming into the year, I am proud of our execution. Given the revenue headwinds that developed due to currency, a weak PMI and other issues, I am proud that we were able to essentially maintain our revenue and operating profitability in 2015," said Alex Davern, NI COO and CFO. "We remain committed to our goal of driving operating leverage to achieve our long-term operating margin targets."

Geographic revenue in U.S. dollar terms for Q4 2015 compared with Q4 2014 was down 4 percent in the Americas, up 3 percent in EMEIA and up 3 percent in APAC. In constant currency terms, revenue was down 1 percent in the Americas, up 8 percent in EMEIA and up 9 percent in APAC. Historical revenue from these three regions can be found on NI's investor website at www.ni.com/nati.

As of Dec. 31, 2015, NI had $333 million in cash and short-term investments. For the year, the company paid $98 million in dividends, used $75 million to repurchase 2.6 million shares of NI's common stock at an average price of $29.04 per share and used $126 million in net cash for acquisitions. The NI Board of Directors approved a quarterly dividend of $0.20 per share payable on March 7, 2016, to stockholders of record on Feb. 16, 2016.

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

FY 2015 Highlights

• Revenue of $1.23 billion, down 1.5 percent year over year
• Core revenue up 6 percent year-over-year
• Fully diluted GAAP EPS of $0.74
• Non-GAAP fully diluted EPS of $1.00
• EBITDA of $204 million, or $1.59 per share
• Dividends paid of $98 million, or $0.76 per share

Full-year 2015 revenue was $1.23 billion, down 1.5 percent year-over-year. GAAP net income for 2015 was $95 million, with fully diluted GAAP EPS of $0.74, and non-GAAP net income was $128 million, with fully diluted EPS of $1.00.

Guidance for Q1 2016

NI currently expects Q1 revenue to be in the range of $290 million to $320 million. Based on current exchange rates the company expects that the impact of the strengthening of the U.S. dollar will reduce the company's year over year dollar revenue growth rate by approximately 400 basis points in Q1 and approximately 200 basis points for Q2 through Q4. At the midpoint, NI's guidance reflects a 5 percent increase in U.S. dollars and approximately 9 percent year over year core revenue growth. The company currently expects that GAAP fully diluted EPS will be in the range of $0.09 to $0.21 for Q1, with non-GAAP fully diluted EPS expected to be in the range of $0.17 to $0.29. In Q1, NI currently expects its non-GAAP effective tax rate to be approximately 21 percent.

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, 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 twelve-month periods ending December 31, 2015 and 2014, on a GAAP and non-GAAP basis. NI is also providing guidance on its non-GAAP fully diluted EPS and non-GAAP effective tax rate.

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-related transaction costs, restructuring charges, foreign exchange loss on acquisitions and impairment of minority cost basis investments 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 discloses the company's EBITDA and EBITDA diluted EPS for the three- and twelve-month periods ending December 31, 2015 and 2014. The company 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. This news release also discloses the company's core revenue for the three- and twelve-month periods ending December 31, 2015 and 2014. The company believes that including its core revenue assists investors in assessing the company's operational performance. A reconciliation of core revenue to GAAP revenue is included with this news release.

Conference Call Information and Availability of Presentation Materials

Interested parties can listen to the Q4 2015 earnings conference call with NI management today, Jan. 28, at 4:00 p.m. CT at ni.com/call. Replay information is available by calling (855) 212-2361, confirmation code 10953888 shortly after the call through Jan. 31, at 11:00 p.m. CT, or by visiting the company's website at ni.com/call. Presentation materials referred to on the conference call can also be found at ni.com/nati.

Forward-Looking Statements

This release contains "forward-looking statements," including statements regarding continued year over year core revenue growth; that our platform-based approach has created a large ecosystem of customers, partners, and technologies that are key drivers to long-term growth and profitability; that our platform puts us at the forefront as we empower engineers to solve their unique challenges; that we remain committed to our goal of driving operating leverage to achieve our long-term operating margin targets; that NI expects the impact of the strengthening of the U.S. dollar to reduce its year-over-year dollar revenue growth rate by approximately 400 basis points in Q1; expected revenue from NI's largest customer in Q1; and NI's guidance for Q1 revenue and GAAP and non-GAAP fully diluted EPS and non-GAAP tax rate. These statements are subject to a number of risks and uncertainties, including the risk of adverse changes or fluctuations in the global economy, foreign exchange fluctuations, component shortages, delays in the release of new products, fluctuations in demand for NI products including orders from NI's largest customer, the company's ability to effectively manage its operating expenses, manufacturing inefficiencies and the level of capacity utilization, the impact of any recent or future acquisitions by NI, expense overruns and adverse effect of price changes and effective tax rates. Actual results may differ materially from the expected results.

The company directs readers to its Form 10-K for the year ended Dec. 31, 2014; its Form 10-Q for the quarter ended September 30, 2015; and the other documents it files with the SEC for other risks associated with the company's future performance.

About NI

Since 1976, NI (www.ni.com) has made it possible for engineers and scientists to solve the world's greatest engineering challenges with powerful, flexible technology solutions that accelerate productivity and drive rapid innovation. Customers from a wide variety of industries - from healthcare to automotive and from consumer electronics to particle physics - use NI's integrated hardware and software platform to improve the world we live in. (NATI-F)

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

National Instruments
Condensed Consolidated Balance Sheets
(in thousands, unaudited)
			December 31,					December 31,
			2015					2014
Assets
Current assets:
Cash and cash equivalents			$	251,129				$	274,030
Short-term investments				81,789					197,163
Accounts receivable, net				216,244					202,329
Inventories, net				185,197					173,052
Prepaid expenses and other current assets				65,381					70,075
Deferred income taxes, net				-					31,171
Total current assets				799,740					947,820
Property and equipment, net				257,853					264,086
Goodwill				257,718					144,325
Intangible assets, net				108,196					78,282
Other long-term assets				30,349					20,978
Total assets			$	1,453,856				$	1,455,491
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable			$	50,970				$	58,603
Accrued compensation				27,956					33,774
Deferred revenue - current				112,283					105,964
Accrued expenses and other liabilities				11,755					14,714
Other taxes payable				37,250					34,602
Total current liabilities				240,214					247,657
Long-term debt				37,000					-
Deferred income taxes				44,673					47,406
Liability for uncertain tax positions				11,974					10,127
Deferred revenue - long-term				27,708					26,452
Other long-term liabilities				10,565					6,353
Total liabilities				372,134					337,995
Stockholders' equity:
Preferred stock				-					-
Common stock				1,275					1,278
Additional paid-in capital				717,706					662,889
Retained earnings				400,831					464,993
Accumulated other comprehensive income (loss)				(38,090	)				(11,664	)
Total stockholders' equity				1,081,722					1,117,496
Total liabilities and stockholders' equity			$	1,453,856				$	1,455,491

National Instruments
Condensed Consolidated Statements of Income
(in thousands, except per share data, unaudited)
			Three Months Ended										Year Ended
			December 31,										December 31,
				2015					2014					2015					2014
Net sales:
Product			$	306,350				$	305,176				$	1,113,590				$	1,143,000
Software maintenance				27,989					27,600					111,866					100,862
Total net sales				334,339					332,776					1,225,456					1,243,862
Cost of sales:
Product				85,575					83,094					311,226					312,623
Software maintenance				1,200					1,066					5,730					5,509
Total cost of sales				86,775					84,160					316,956					318,132
Gross profit				247,564					248,616					908,500					925,730
				74.0	%				74.7	%				74.1	%				74.4	%
Operating expenses:
Sales and marketing				116,348					113,819					452,263					461,845
Research and development				56,670					57,351					225,131					227,433
General and administrative				24,544					22,411					93,935					91,265
Total operating expenses				197,562					193,581					771,329					780,543
Operating income				50,002					55,035					137,171					145,187
Other income (expense):
Interest income				314					340					1,403					1,133
Net foreign exchange loss				(5,110	)				(1,245	)				(7,075	)				(2,250	)
Other (expense) income, net				(1,014	)				(352	)				(221	)				(69	)
Income before income taxes				44,192					53,778					131,278					144,001
Provision for income taxes				12,058					10,393					36,016					17,668
Net income			$	32,134				$	43,385				$	95,262				$	126,333
Basic earnings per share			$	0.25				$	0.34				$	0.74				$	0.99
Diluted earnings per share			$	0.25				$	0.34				$	0.74				$	0.99
Weighted average shares outstanding -
basic				127,341					127,755					127,997					127,030
diluted				127,798					128,233					128,668					127,799
Dividends declared per share			$	0.19				$	0.15				$	0.76				$	0.60

National Instruments
Condensed Consolidated Statements of Cash Flows
(in thousands, unaudited)
			Year Ended December 31,
			2015				2014
Cash flow from operating activities:
Net income			$	95,262			$	126,333
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization				74,090				70,206
Stock-based compensation				24,572				25,759
Tax expense/(benefit) expense from deferred income taxes				9,361				5,886
Tax benefit from stock option plans				(967	)			(1,242	)
Net change in operating assets and liabilities				(39,586	)			(31,836	)
Net cash provided by operating activities				162,732				195,106
Cash flow from investing activities:
Capital expenditures				(33,984	)			(44,944	)
Capitalization of internally developed software				(31,356	)			(25,781	)
Additions to other intangibles				(2,811	)			(2,834	)
Acquisitions, net of cash received				(125,710	)			-
Purchases of short-term investments				(29,649	)			(123,849	)
Sales and maturities of short-term investments				145,023				89,835
Net cash used by investing activities				(78,487	)			(107,573	)
Cash flow from financing activities:
Proceeds from revolving line of credit				54,000				-
Principal payments on revolving line of credit				(17,000	)			-
Proceeds from issuance of common stock				27,785				31,277
Repurchase of common stock				(75,255	)			-
Dividends paid				(97,643	)			(76,285	)
Tax benefit from stock option plans				967				1,242
Net cash used by financing activities				(107,146	)			(43,766	)
Net change in cash and cash equivalents				(22,901	)			43,767
Cash and cash equivalents at beginning of period				274,030				230,263
Cash and cash equivalents at end of period			$	251,129			$	274,030

Detail of GAAP charges related to stock-based compensation, amortization of acquisition intangibles, acquisition related transaction costs, restructuring charges, foreign exchange loss on acquisitions and impairment of minority cost basis investments (unaudited)

			Three Months Ended										Year Ended
			December 31,										December 31,
				2015					2014					2015					2014
Stock-based compensation
Cost of sales			$	509				$	447				$	1,936				$	1,711
Sales and marketing				2,701					2,597					11,003					10,931
Research and development				2,240					2,428					9,004					9,649
General and administrative				888					810					3,544					3,467
Provision for income taxes				(1,870	)				(1,497	)				(7,289	)				(7,414	)
Total			$	4,468				$	4,785				$	18,198				$	18,344
Amortization of acquisition intangibles
Cost of sales			$	3,080				$	2,660				$	10,938				$	10,651
Sales and marketing				740					433					2,039					1,784
Research and development				316					369					1,299					1,567
Other income, net				93					165					542					672
Provision for income taxes				(1,398	)				(1,199	)				(4,867	)				(4,846	)
Total			$	2,831				$	2,428				$	9,951				$	9,828
Acquisition transaction costs, restructuring charges, and other
Cost of sales			$	296				$	742				$	1,269				$	1,289
Sales and marketing				123					37					123					189
Research and development				198					178					198					442
General and administrative				593					96					1,035					241
Foreign exchange loss on acquisition				3,111					-					3,111					-
Impairment of minority cost basis investment				1,000					-					1,000					-
Provision for income taxes				(1,453	)				(286	)				(1,843	)				(674	)
			$	3,868				$	767				$	4,893				$	1,487

Reconciliation of Gross Profit to Non-GAAP Gross Profit
			Three Months Ended										Year Ended
			December 31,										December 31,
				2015					2014					2015					2014
Gross profit, as reported			$	247,564				$	248,616				$	908,500				$	925,730
Stock-based compensation				509					447					1,936					1,711
Amortization of acquisition intangibles				3,080					2,660					10,938					10,651
Acquisition transaction costs, restructuring charges and other				296					742					1,269					1,289
Non-GAAP gross profit			$	251,449				$	252,465				$	922,643				$	939,381
Non-GAAP gross margin				75.2	%				75.9	%				75.3	%				75.5	%
Reconciliation of Operating Expenses to Non-GAAP Operating Expenses
			Three Months Ended										Year Ended
			December 31,										December 31,
				2015					2014					2015					2014
Operating expenses, as reported			$	197,562				$	193,581				$	771,329				$	780,543
Stock-based compensation				(5,829	)				(5,835	)				(23,551	)				(24,047	)
Amortization of acquisition intangibles				(1,056	)				(802	)				(3,338	)				(3,351	)
Acquisition transaction costs, restructuring charges and other				(914	)				(311	)				(1,356	)				(872	)
Non-GAAP operating expenses			$	189,763				$	186,633				$	743,084				$	752,273
Reconciliation of Operating Income to Non-GAAP Operating Income
			Three Months Ended										Year Ended
			December 31,										December 31,
				2015					2014					2015					2014
Operating income, as reported			$	50,002				$	55,035				$	137,171				$	145,187
Stock-based compensation				6,338					6,282					25,487					25,758
Amortization of acquisition intangibles				4,136					3,462					14,276					14,002
Acquisition transaction costs, restructuring charges and other				1,210					1,053					2,625					2,161
Non-GAAP operating income			$	61,686				$	65,832				$	179,559				$	187,108
Non-GAAP operating margin				18.5	%				19.8	%				14.7	%				15.0	%
Reconciliation of Income before income taxes to Non-GAAP Income before income taxes
			Three Months Ended										Year Ended
			December 31,										December 31,
				2015					2014					2015					2014
Income before income taxes, as reported			$	44,192				$	53,778				$	131,278				$	144,001
Stock-based compensation				6,338					6,282					25,487					25,758
Amortization of acquisition intangibles				4,229					3,627					14,818					14,674
Acquisition transaction costs, restructuring charges and other				5,321					1,053					6,736					2,161
Non-GAAP income before income taxes			$	60,080				$	64,740				$	178,319				$	186,594
Reconciliation of Provision for income taxes to Non-GAAP Provision for income taxes
			Three Months Ended										Year Ended
			December 31,										December 31,
				2015					2014					2015					2014
Provision for income taxes, as reported			$	12,058				$	10,393				$	36,016				$	17,668
Stock-based compensation				1,870					1,497					7,289					7,414
Amortization of acquisition intangibles				1,398					1,199					4,867					4,846
Acquisition transaction costs, restructuring charges and other				1,453					286					1,843					674
Non-GAAP provision for income taxes			$	16,779				$	13,375				$	50,015				$	30,602

Reconciliation of GAAP Net Income, Basic EPS and Diluted EPS to Non-GAAP Net Income, Non-GAAP Basic EPS and Non-GAAP Diluted EPS (unaudited)
			Three Months Ended								Year Ended
			December 31,								December 31,
			2015				2014				2015				2014
Net income, as reported			$	32,134			$	43,385			$	95,262			$	126,333
Adjustments to reconcile net income to non-GAAP net income:
Stock-based compensation, net of tax effect				4,468				4,785				18,198				18,344
Amortization of acquisition intangibles, net of tax effect				2,831				2,428				9,951				9,828
Acquisition transaction costs, restructuring charges and other, net of tax effect				3,868				767				4,893				1,487
Non-GAAP net income			$	43,301			$	51,365			$	128,304			$	155,992
Basic EPS, as reported			$	0.25			$	0.34			$	0.74			$	0.99
Adjustment to reconcile basic EPS to non-GAAP basis EPS:
Impact of stock-based compensation, net of tax effect				0.04				0.04				0.14				0.14
Impact of amortization of acquisition intangibles, net of tax effect				0.02				0.02				0.08				0.08
Impact of acquisition transaction costs, restructuring charges and other, net of tax effect				0.03				-				0.04				0.02
Non-GAAP basic EPS			$	0.34			$	0.40			$	1.00			$	1.23
Diluted EPS, as reported			$	0.25			$	0.34			$	0.74			$	0.99
Adjustment to reconcile diluted EPS to non-GAAP diluted EPS:
Impact of stock-based compensation, net of tax effect				0.04				0.04				0.14				0.14
Impact of amortization of acquisition intangibles, net of tax effect				0.02				0.02				0.08				0.08
Impact of acquisition transaction costs, restructuring charges and other, net of tax effect				0.03				-				0.04				0.01
Non-GAAP diluted EPS			$	0.34			$	0.40			$	1.00			$	1.22
Weighted average shares outstanding -
Basic				127,341				127,755				127,997				127,030
Diluted				127,798				128,233				128,668				127,799

National Instruments
Reconciliation of Net Income and Diluted EPS to EBITDA and EBITDA Diluted EPS
(unaudited)
			Three Months Ended										Year Ended
			December 31,										December 31,
				2015					2014					2015					2014
Net income, as reported			$	32,134				$	43,385				$	95,262				$	126,333
Adjustments to reconcile net income to EBITDA:
Interest income, net of interest expense				(167	)				(306	)				(1,099	)				(991	)
Tax expense				12,058					10,393					36,016					17,668
Depreciation and amortization				18,933					19,195					74,090					70,206
EBITDA			$	62,958				$	72,667				$	204,269				$	213,216
Diluted EPS, as reported			$	0.25				$	0.34				$	0.74				$	0.99
Adjustment to reconcile diluted EPS to EBITDA
Interest income, net of interest expense				-					-					(0.01	)				(0.01	)
Taxes				0.09					0.08					0.28					0.14
Depreciation and amortization				0.15					0.15					0.58					0.55
EBITDA diluted EPS			$	0.49				$	0.57				$	1.59				$	1.67
Weighted average shares outstanding - Diluted				127,798					128,233					128,668					127,799

Reconciliation of GAAP to Non-GAAP EPS Guidance
(unaudited)
			Three Months Ended
			March 31, 2016
			Low				High
GAAP Fully Diluted EPS, guidance			$	0.09			$	0.21
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				0.03				0.03
Impact of acquisition restructuring costs, net of tax effect				0.01				0.01
Non-GAAP diluted EPS, guidance			$	0.17			$	0.29

National Instruments
Reconciliation of GAAP Revenue to Core Revenue
(unaudited)
			Three Months Ended
			December 31,
				2015
YoY GAAP revenue growth, as reported			$	0.5	%
Effect of excluding our current largest customer				-0.7	%
YoY GAAP revenue growth, excluding our largest customer				-0.2	%
Effect of excluding the impact of foreign currency exchange				4.5	%
YoY Core revenue growth			$	4.3	%
National Instruments
Reconciliation of GAAP Revenue to Core Revenue
(unaudited)
			Year Ended
			December 31,
				2015
YoY GAAP revenue growth, as reported			$	-1.5	%
Effect of excluding our current largest customer				1.8	%
YoY GAAP revenue growth, excluding our largest customer				.3	%
Effect of excluding the impact of foreign currency exchange				5.8	%
YoY Core revenue growth			$	6.1	%
National Instruments
Reconciliation of GAAP Revenue to Core Revenue Guidance
(unaudited)
			Three Months Ended
			March 31,
				2016
Estimated YoY GAAP revenue growth, as reported			$	5.3	%
Estimated effect of excluding our current largest customer				-0.3	%
Estimated YoY GAAP revenue growth, excluding our largest customer				5.0	%
Estimated effect of excluding the impact of foreign currency exchange				4.0	%
Estimated YoY Core revenue growth			$	9.0	%

View source version on businesswire.com: http://www.businesswire.com/news/home/20160128006455/en/

National Instruments
Marissa Vidaurri, 512-683-5215
Investor Relations
marissa.vidaurri@ni.com

Source: National Instruments

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