SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

(Mark One)

 X    Quarterly report pursuant to Section 13 or 15(d) of the Securities
      Exchange Act of 1934

For the fiscal quarter ended:  March 31, 1997 or

      Transition report pursuant to Section 13 or 15(d) of the Securities
      Exchange Act of 1934

For the transition period from ________________ to ________________

Commission file number:     0-25426

                        NATIONAL INSTRUMENTS CORPORATION
             (Exact name of registrant as specified in its charter)

               Delaware                                  74-1871327
- ----------------------------------------     -----------------------------------
    (State or other jurisdiction of                   (I.R.S. Employer
    incorporation or organization)                 Identification Number)
       6504 Bridge Point Parkway
             Austin, Texas                                 78730
- ----------------------------------------     -----------------------------------
    (address of principal executive                      (zip code)
               offices)

        Registrant's telephone number, including area code:  (512) 338-9119
                            --------------------------

     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. Yes X No

     Indicate the number of shares  outstanding of each of the issuer's  classes
of
common stock, as of the latest practicable date.

                  Class                        Outstanding at April 28, 1997
     Common Stock - $0.01 par value                     21,699,644


                                     Page 1


                        NATIONAL INSTRUMENTS CORPORATION

                                      INDEX

                                                                        Page No.

              PART I.  FINANCIAL INFORMATION

Item 1        Financial Statements:

                 Consolidated Balance Sheets
                 March 31, 1997 (unaudited) and December 31, 1996.........3

                 Consolidated Statements of Income (unaudited)
                 three months ended March 31, 1997 and 1996...............4

                 Consolidated Statements of Cash Flows (unaudited)
                 three months ended March 31, 1997 and 1996...............5

                 Consolidated Statement of Stockholders' Equity
                 March 31, 1997 (unaudited) and December 31, 1996 ........6
                 Notes to Consolidated Financial Statements...............7

Item 2        Management's Discussion and Analysis of Financial
              Condition and Results of Operations.........................8


              PART II.  OTHER INFORMATION

Item 6        Exhibits and Reports on Form 8-K...........................15



                                     Page 2



- -------------------------------------------------------------------------------
                         PART I - FINANCIAL INFORMATION
- -------------------------------------------------------------------------------

ITEM 1.     FINANCIAL STATEMENTS

                        NATIONAL INSTRUMENTS CORPORATION
                           CONSOLIDATED BALANCE SHEETS
                        (in thousands, except share data)

                                                        March 31,   December 31,
                                                          1997          1996
                                                        ----------   ----------

Assets                                                  (unaudited)
Current assets:
   Cash and cash equivalents .........................   $  30,167    $  30,211
   Short-term investments ............................      50,442       48,956
   Accounts receivable, net ..........................      34,698       33,442
   Inventories .......................................      11,630       11,778
   Prepaid expenses and other current assets .........       7,748        7,198
                                                         ---------    ---------
      Total current assets ...........................     134,685      131,585
Property and equipment, net ..........................      32,282       32,184
Intangibles and other assets .........................       5,733        5,456

                                                         =========    =========
      Total assets ...................................   $ 172,700    $ 169,225

                                                         =========    =========

Liabilities and Stockholders' Equity
Current liabilities:
   Current portion of long-term debt .................   $     851    $   1,517
   Accounts payable ..................................      12,617       11,430
   Accrued expenses and other liabilities ............       9,613        9,360
   Taxes payable .....................................       9,114        9,984
                                                         ---------    ---------
      Total current liabilities ......................      32,195       32,291
Long-term debt, net of current portion ...............       5,848        9,175
Deferred income taxes ................................         808          806
                                                         ---------    ---------
      Total liabilities ..............................      38,851       42,272
                                                         ---------    ---------
Commitments and contingencies Stockholders' equity:
   Common Stock: par value $.01; 60,000,000 shares
   authorized; 21,653,620 and 21,642,241 shares issued
   and outstanding, respectively .....................         216          216
Additional paid-in capital ...........................      44,552       44,396
Retained earnings ....................................      90,158       82,590
Other ................................................      (1,077)        (249)
                                                         ---------    ---------
      Total stockholders' equity .....................     133,849      126,953
                                                         =========    =========
      Total liabilities and stockholders' equity .....   $ 172,700    $ 169,225

                                                         =========    =========

    The accompanying notes are an integral part of these financial statements.


                                     Page 3


                        NATIONAL INSTRUMENTS CORPORATION
                        CONSOLIDATED STATEMENTS OF INCOME
                      (in thousands, except per share data)
                                   (unaudited)


                                                         Three Months Ended
                                                              March 31,
                                                      --------------------------
                                                         1997           1996
                                                      ------------  ------------

Net sales..........................................    $   54,571     $  46,408
Cost of sales......................................        12,293        11,266
                                                      ------------  ------------
   Gross profit....................................        42,278        35,142
                                                      ------------  ------------
Operating expenses:
   Sales and marketing.............................        19,962        17,565
   Research and development........................         6,477         4,975
   General and administrative......................         4,270         4,174
                                                      ------------  ------------
      Total operating expenses.....................        30,709        26,714
                                                      ------------  ------------
      Operating income.............................        11,569         8,428
Other (expense) income:
   Interest income, net............................           698           257
   Foreign exchange (loss), net....................          (964)         (378)
                                                      ------------  ------------
      Income before income taxes...................        11,303         8,307
Provision for income taxes.........................         3,735         2,824
                                                      ============  ============
      Net income...................................      $  7,568      $  5,483
                                                      ============  ============

Earnings per share.................................      $   0.34      $   0.25
                                                      ============  ============

Weighted average shares outstanding................        22,300        21,666
                                                      ============  ============

    The accompanying notes are an integral part of these financial statements.

                                     Page 4


                        NATIONAL INSTRUMENTS CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)
                                   (unaudited)


                                                           Three Months Ended
                                                                March 31,
                                                        ------------------------
                                                              1997        1996
                                                          ----------   ---------
Cash flow from operating activities:
   Net income ...........................................   $  7,568   $  5,483
   Adjustments to reconcile net income to cash
   provided by operating activities
      Charges to income not requiring cash outlays:
        Depreciation and amortization ...................      2,147      2,018
      Changes in operating assets and liabilities:
        Increase in accounts receivable .................     (1,582)    (4,764)
        (Increase)/decrease in inventory ................         (1)     1,706
        Decrease in prepaid expense and other assets ....         83        766
        Increase in accounts payable ....................      2,744        288
        (Decrease)/increase in accrued expenses and
        other ...........................................     (1,633)     2,086
                 liabilities
                                                            --------   --------
      Net cash provided by operating activities .........      9,326      7,583
                                                            --------   --------

Cash flow from investing activities:
   Purchases of short-term investments ..................    (12,508)    (9,163)
   Sales of short-term investments ......................     10,893      7,375
   Capital expenditures .................................     (2,837)    (1,043)
   Additions to capitalized software ....................       (788)      (655)

                                                            --------   --------
      Net cash used in investing activities .............     (5,240)    (3,486)
                                                            --------   --------

Cash flow from financing activities:
   (Repayments of)/borrowings from long-term debt .......     (3,990)       284
   Net proceeds from issuance of common stock ...........        156          6
                                                            --------   --------
      Net cash (used in)/provided by financing activities     (3,834)       290
                                                            --------   --------

Effect of translation rate changes on cash ..............       (296)       (61)
                                                            --------   --------

Net (decrease)/increase in cash and cash equivalents ....        (44)     4,326
Cash and cash equivalents at beginning of period ........     30,211     12,016
                                                            --------   --------

Cash and cash equivalents at end of period ..............   $ 30,167   $ 16,342
                                                            ========   ========

    The accompanying notes are an integral part of these financial statements.

                                     Page 5



                        NATIONAL INSTRUMENTS CORPORATION
                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                        (In thousands, except share data)



                      Common            Additional
                      Stock     Common   Paid-In   Retained
                     (Shares)    Stock   Capital   Earnings    Other    Total
                     --------    -----   -------   --------    -----    -----
Balance at
December 31, 1996    21,642,241   $216   $44,396   $82,590   $  (249) $ 126,953
Net income .......         --      --       --       7,568      --        7,568
Issuance under
 stock option plan       11,379    --        156      --        --          156
Unrealized loss
 on short term ...         --      --       --        --        (129)      (129)
 investments
Foreign currency .         --      --       --        --        (699)      (699)
 translation
 adjustment
                     ==========   ====   =======   =======   =======  =========
Balance at
  March 31, 1997     21,653,620   $216   $44,552   $90,158   $(1,077) $ 133,849
                     ==========   ====   =======   =======   =======  =========



    The accompanying notes are an integral part of these financial statements.

                                     Page 6



                        NATIONAL INSTRUMENTS CORPORATION
                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 1 - Basis of Presentation
- ------------------------------

     The  accompanying   unaudited  financial   statements  should  be  read  in
conjunction with the consolidated financial statements and notes thereto for the
year ended  December 31, 1996,  included in the Company's  annual report on Form
10-K,  filed with the  Securities  and  Exchange  Commission.  In the opinion of
management,  the  accompanying  consolidated  financial  statements  reflect all
adjustments  (consisting only of normal recurring items) considered necessary to
present fairly the financial  position of National  Instruments  Corporation and
its  consolidated  subsidiaries at March 31, 1997 and December 31, 1996, and the
results of operations and cash flows for the three-month periods ended March 31,
1997 and 1996. Operating results for the three-month period ended March 31, 1997
are not necessarily  indicative of the results that may be expected for the year
ending December 31, 1997.

NOTE 2 - Earnings Per Share
- ---------------------------

     Earnings  per share are  computed  by dividing  net income by the  weighted
average  number of common shares and common share  equivalents  outstanding  (if
dilutive) during each period.  Common share  equivalents  include stock options.
The number of common share equivalents  outstanding relating to stock options is
computed  using the treasury  stock  method.  

     In February 1997, the Financial Accounting Standards Board issued Statement
of  Financial  Accounting  Standards  No.  128,  "Earnings  per  Share." The new
standard,  which is effective for financial statements issued for periods ending
after  December 15, 1997,  establishes  standards for  computing and  presenting
earnings  per  share  (EPS)  and  upon  adoption  requires  restatement  of  all
prior-period EPS data presented. The company will implement this standard in the
fourth  quarter of 1997. The  implementation  of the standard will result in the
presentation of a basic EPS calculation in the consolidated financial statements
as well as a  diluted  EPS  calculation.  If the  Company  had  adopted  the new
standard  for the first  quarter  of 1997,  basic EPS would  have been $0.35 per
share and diluted EPS would have  approximated the EPS of $0.34 presented in the
accompanying consolidated statement of income.


NOTE 3 - Inventories
- --------------------

Inventories consist of the following (in thousands):

                                       March 31,        December 31,
                                          1996             1997
                                    ----------------   ---------------

Raw materials                             $   5,135         $   5,324
Work-in-process                                 907               864
Finished goods                                5,588             5,590
                                    ================   ===============
                                          $  11,630         $  11,778

                                    ================   ===============


                                     Page 7



ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

     This  Quarterly  Report on Form 10-Q  contains  forward-looking  statements
within the meaning of Section 27A of the  Securities Act of 1933 and Section 21E
of the Securities  Exchange Act of 1934.  Actual results could differ materially
from those projected in the  forward-looking  statements as a result of a number
of important  factors.  For a discussion of important  factors that could affect
the  Company's  results,  please  refer to the Issues and  Outlook  section  and
financial statement line item discussions below.  Readers are also encouraged to
refer to the Company's Annual Report on Form 10-K for further  discussion of the
Company's business and the risks and opportunities attendant thereto.

Results of Operations
- ---------------------

     The following table sets forth, for the periods  indicated,  the percentage
of  net  sales   represented  by  certain  items   reflected  in  the  Company's
consolidated statements of income:

                                                          Three Months Ended
                                                               March 31,
                                                       -------------------------
                                                         1997            1996
                                                       ----------     ----------
Net sales:
   North America ...............................            56.4%         56.5%
   Europe ......................................            27.5          28.2
   Asia Pacific ................................            16.1          15.3
                                                           -----         -----
   Consolidated net sales ......................           100.0         100.0
Cost of sales ..................................            22.5          24.3
                                                           -----         -----
   Gross profit ................................            77.5          75.7
Operating expenses:
   Sales and marketing .........................            36.6          37.8
   Research and development ....................            11.9          10.8
   General and administrative ..................             7.8           9.0
                                                           -----         -----
   Total operating expenses ....................            56.3          57.6
                                                           -----         -----
      Operating income .........................            21.2          18.1
Other income (expense):
   Interest income, net ........................             1.3           0.6
   Foreign exchange (loss), net ................            (1.8)         (0.8)
                                                           -----         -----
      Income before income taxes ...............            20.7          17.9
Provision for income taxes .....................             6.8           6.1
                                                           =====         =====
   Net income ..................................            13.9%         11.8%
                                                           =====         =====

     Net Sales.  Consolidated  net sales for the first quarter of 1997 increased
$8.2 million or 18% over the  comparable  prior year  quarter.  This increase in
sales  is  primarily  attributable  to  the  introduction  of new  and  upgraded
products,  increased  market  acceptance  of  the  Company's  products,  and  an
expanding  customer  base.  North  American  sales in the first  quarter of 1997
increased 17% over the first  quarter of 1996,  compared with an increase of 21%
in the first quarter of 1996 from the first quarter of 1995.

                                     Page 8


     International  sales as a percentage of consolidated net sales in the first
quarter  of 1997  remained  consistent  with  the  first  quarter  of 1996  when
international  sales  represented  44% of  consolidated  sales.  European  sales
increased 15% in the first quarter of 1997 compared to the first quarter of 1996
in contrast to a decrease in European sales of 1.5% in the first quarter of 1996
over the first  quarter of 1995.  Asia Pacific  sales  increased  25% during the
first quarter of 1997 over the first quarter of 1996,  compared with an increase
of 45% in the first quarter of 1996  compared to the first quarter of 1995.  The
decrease is due to the foreign  currency on effect on sales as discussed  below.
The sales  increase  in the Asia  Pacific  region is  attributable  to  customer
acceptance of localized  products and support,  particularly  in Japan,  and the
Company's  sales offices in Hong Kong,  Singapore,  South Korea and Taiwan which
opened  in late  1994  and  early  1995 and are  continuing  to  achieve  market
acceptance.  The Company  expects  sales outside of North America to continue to
represent a significant, and possibly increasing, portion of its revenue.

     International sales are subject to inherent risks,  including  fluctuations
in local economies,  difficulties in staffing and managing  foreign  operations,
greater  difficulty  in  accounts  receivable  collection,  costs  and  risks of
localizing  products for foreign  countries,  unexpected  changes in  regulatory
requirements, tariffs and other trade barriers, difficulties in the repatriation
of earnings and burdens of complying with a wide variety of foreign laws.  Sales
made by the  Company's  direct  sales  offices  in Europe and Asia  Pacific  are
denominated in local  currencies,  and accordingly,  the US dollar equivalent of
these sales is  affected  by changes in the value of the US dollar.  Between the
first quarter of 1996 and the first  quarter of 1997 the weighted  average value
of the US dollar  increased by 8.8%,  causing an  equivalent  decrease in the US
dollar value of the Company's foreign currency sales and expenses. This weighted
average is  calculated  as the  percentage  change in the value of the  currency
relative to the dollar,  multiplied  by the  proportion of  international  sales
recorded in the particular currency. If the weighted average value of the dollar
in the first  quarter of 1997 had been the same as that in the first  quarter of
1996,  the  Company's  sales for the first quarter of 1997 would have been $56.6
million.  This  effect  is 3.6% of  consolidated  net  sales  in the  aggregate.
European  sales for the first  quarter of 1997  would  have been $16.1  million,
representing an increase of $1.1 million and would have reflected an increase in
first quarter 1997 sales over first quarter 1996 sales by 23% instead of by 15%.
Asia Pacific  sales for the first  quarter of 1997 would have been $9.8 million,
representing  an increase of $984,000  and would have  reflected  an increase in
first quarter 1997 sales over first quarter 1996 sales by 38% instead of by 25%.
Since most of the Company's  international  operating expenses are also incurred
in local  currencies the change in exchange rates has a corresponding  effect on
international  operating  expenses.  If the  current  trend in the  value of the
dollar  continues  throughout  1997,  it will  continue  to have the  effect  of
lowering the US dollar equivalent of international sales and operating expenses.

     Gross   Profit.   The  increase  in  gross  profit  was  primarily  due  to
manufacturing labor and overhead efficiencies. Further, reductions were realized
in material and software  duplication costs. As a percentage of net sales, gross
profit represented 77.5% and 75.7% for the three months ended March 31, 1997 and
1996, respectively.

     The  marketplace  for the  Company's  products  dictates  that  many of the
Company's  products be shipped  very quickly  after an order is  received.  As a
result, the Company is required to maintain significant inventories.  Therefore,
inventory  obsolescence  is a risk for the Company  due to frequent  engineering
changes,  shifting customer demand,  the emergence of new industry standards and
rapid  technological  advances including the introduction by the Company, or its
competitors,  of products embodying new technology.  While the Company maintains
valuation  allowances for excess and obsolete inventory and management continues
to monitor the adequacy of such valuation allowances,  there can be no assurance
that such valuation allowances will be sufficient.


                                     Page 9


     Sales and  Marketing.  Sales and marketing  expenses  increased by 14% from
$17.6 million for the three months ended March 31, 1996 to $20.0 million for the
three  months  ended March 31, 1997.  As a  percentage  of net sales,  sales and
marketing  expenses  were 36.6% and 37.8% for the three  months  ended March 31,
1997 and 1996,  respectively.  The increase in these expenses in absolute dollar
amounts is primarily  attributable to increases in sales and marketing personnel
and  increased  sales and  marketing  activities.  Overall  sales and  marketing
personnel  increased from  approximately  482 at March 31, 1996, to 566 at March
31, 1997. The Company expects sales and marketing  expenses in future periods to
increase in absolute dollars, and to fluctuate as a percentage of sales based on
initial  marketing and  advertising  campaign  costs  associated  with major new
product  releases,  the opening of new sales  offices and the timing of domestic
and international conferences and trade shows.

     Research  and   Development.   The  Company  believes  that  a  significant
investment  in research  and  development  is  required  to remain  competitive.
Research  and  development  expenses  were $6.5 million and $5.0 million for the
three months ended March 31, 1997 and 1996, respectively. As a percentage of net
sales,  research and development  expenses  represented  11.9% and 10.8% for the
three  months  ended  March 31,  1997 and 1996,  respectively.  The  increase in
research  and  development  costs is  mainly  attributable  to the  increase  in
personnel  costs.  R&D personnel  increased from 271 at March 31, 1996 to 332 at
March 31, 1997. The Company capitalizes software development costs in accordance
with the Statement of Financial  Accounting  Standards No. 86 and amortizes such
costs over the related product's estimated economic useful life, generally three
years  beginning  when  a  product  becomes   available  for  general   release.
Capitalization  of software  development  costs during the first quarter of 1997
related primarily to the development of NI-DAQ 5.0. Amortization expense totaled
$376,000  and  $285,000  during the three  months ended March 31, 1997 and 1996,
respectively.  Software  development costs capitalized during such quarters were
$318,000  and  $655,000,  respectively.  The  decrease  is  attributable  to the
capitalization  of  software  development  costs in the  first  quarter  of 1996
related  primarily to costs  capitalized in conjunction  with the development of
LabVIEW 4.0.

     General and Administrative.  General and administrative  expenses were $4.3
million  and $4.2  million for the three  months  ended March 31, 1997 and 1996,
respectively.  As a percentage of net sales, general and administrative  expense
was  7.8%  and 9.0%  for the  three  months  ended  March  31,  1997  and  1996,
respectively.  The decrease in general and administrative  expenses as a percent
of sales is the  result  of  operational  efficiencies  achieved  as a result of
increased systems  integration  during the past two years. The Company's general
and  administrative  expense  increased  in absolute  dollars due to  additional
personnel and equipment  depreciation expenses. The Company expects that general
and  administrative  expense in future periods will increase in absolute amounts
and will fluctuate as a percentage of net sales.

     Interest Income,  Net.  Interest income,  net was $698,000 and $257,000 for
the three  months  ended  March 31,  1997 and 1996,  respectively.  Historically
interest  expense has generally  represented  less than one percent of net sales
and has  fluctuated as a result of bank  borrowings  and interest terms thereon.
Interest expense was $133,000 and $230,000, for the three months ended March 31,
1997 and 1996, respectively.  This decrease was because of repayments of debt in
January 1997.

     Foreign Exchange  Gain/Loss.  The Company  experienced net foreign exchange
losses of $964,000  and  $378,000  for the three months ended March 31, 1997 and
1996,  respectively.  These results are attributable to movements between the US
dollar  and the local  currencies  in  countries  in which the  Company's  sales
subsidiaries  are  located.  The Company  recognizes  the local  currency as the
functional  currency of its international  subsidiaries.  The net losses in 1997
are a result of the  strengthening  of the US dollar  against local  currencies,
primarily the Japanese Yen.

                                     Page 10




     The Company enters into foreign currency forward exchange contracts against
a majority of its intercompany foreign currency-denominated receivables in order
to reduce its  exposure  to  significant  foreign  currency  fluctuations.  This
hedging  strategy  only  partially  addresses  the  Company's  risks in  foreign
currency  transactions  as the  Company  does not  currently  hedge  anticipated
transactions.  There can be no assurance  that this strategy will be successful.
If the  strengthening  of the US dollar  continues  throughout 1997, the Company
will  continue  experiencing  significant  foreign  exchange  losses  due to the
foreign exchange risks that are not addressed by the Company's hedging strategy.
The Company  typically limits the duration of its foreign exchange  contracts to
90 days and does not invest in contracts for speculative purposes.

     Provision  for Income Taxes.  The  provision  for income taxes  reflects an
effective  tax rate of 33% and 34% for the three months ended March 31, 1997 and
1996, respectively. The decrease in the effective rate resulted from a change in
the mix of income among taxing  jurisdictions and utilization of tax credits for
taxes paid in higher tax rate jurisdictions.  As of March 31, 1997, eight of the
Company's  subsidiaries  had  available,  for income tax  purposes,  foreign net
operating loss  carryforwards  of  approximately  $1 million,  of which $635,000
expire between 1999 and 2007. The remaining  $399,000 of loss  carryforwards may
be carried  forward  indefinitely to offset future taxable income in the related
tax jurisdictions.

Liquidity and Capital Resources
- -------------------------------

     The Company is currently financing its operations and capital  expenditures
through cash flow from operations.  Historically,  the Company also financed its
capital  expenditures,  such as the new  manufacturing  facility  constructed in
1995,  through  borrowings from financial  institutions.  At March 31, 1997, the
Company  had  working  capital of  approximately  $102  million  compared to $99
million at December 31, 1996. The increase in working capital is attributable to
an increase  in short term  investments  of $1.5  million and an increase of net
accounts receivable of $1.3 million from December 31, 1996 to March 31, 1997.

     Accounts  receivable  increased to $35 million at March 31, 1997,  from $33
million at December 31, 1996,  as a result of higher  sales  levels.  Receivable
days outstanding was 57 at both March 31, 1997 and December 31, 1996.  Inventory
levels remained steady with  consolidated  inventory  balances of $12 million at
both March 31, 1997 and December  31,  1996,  which  evidences  improvements  in
inventory  management at the manufacturing  facility in Austin, Texas as well as
the centralized  European  warehouse in Amsterdam.  In the event that days sales
outstanding  significantly  lengthen,  the  Company's  cash  could be  adversely
affected.  Inventory turns of 4.2 represent an improvement  over turns of 3.7 at
December 31, 1996.

     Cash used in the first  three  months of 1997 for the  purchase of property
and  equipment  totaled  $2.8  million  and for the  capitalization  of software
development costs totaled $318,000.  The Company is currently  planning to break
ground  for an  office  building  to be  located  next to the new  manufacturing
facility  which was  completed in Austin,  Texas in June,  1995. It is currently
anticipated that a significant  portion of the  construction  costs will be paid
out of the Company's  existing  working  capital with the remaining  costs being
funded through credit from the Company's  current  financial  institutions.  The
Company  estimates  the total cost for the new  building,  including  furniture,
fixtures  and  equipment,  will  range  from $30  million  to $35  million  with
approximately  $18 million expected to be incurred during 1997 and the remainder
in early 1998. In May of 1997, the Company plans to enter into firm  commitments
of approximately $25 million for the new building.  The actual level of spending
may vary depending on a variety of factors, including unforeseen difficulties in
construction.

                                     Page 11




     The Company currently expects to fund expenditures for capital requirements
as well as  liquidity  needs  created  by  changes  in  working  capital  from a
combination  of available cash and short-term  investment  balances,  internally
generated  funds,  and  financing   arrangements   with  its  current  financial
institutions.  The Company has a $31.7 million credit agreement with NationsBank
of Texas,  N.A. which consists of (i) an $8.0 million  revolving line of credit,
(ii) a $7.5 million  equipment  line of credit,  (iii) a $3.9 million  equipment
loan,  (iv) a $3.8  million  Millennium  office  building  loan  and (v) an $8.5
million  manufacturing  facility  loan. As of March 31, 1997, the Company had no
outstanding  balances under any of the lines of credit and had repaid all of the
loans except the $8.5 million  loan,  which had a balance of $6.6  million.  The
revolving  line of  credit  expires  on June  30,  1997.  The  Company's  credit
agreements  contain certain  financial  covenants and restrictions as to various
matters,  including  the  bank's  prior  approval  of  significant  mergers  and
acquisitions.  Borrowings  under  the  line  of  credit  are  collateralized  by
substantially all of the Company's assets.

     The Company believes that its cash flow from operations,  if any, existing
cash  balances  and  short-term  investments  and  available  credit  under  the
Company's  existing  credit  facilities,  will be  sufficient  to meet  its cash
requirements for at least the next twelve months.

Issues and Outlook
- ------------------

     Fluctuations  in  Quarterly  Results.  The  Company's  quarterly  operating
results  have  fluctuated  in the past and may  fluctuate  significantly  in the
future due to a number of  factors,  including:  changes in the mix of  products
sold; the availability and pricing of components from third parties  (especially
sole sources);  the timing of orders;  level of pricing of international  sales;
fluctuations in foreign  currency  exchange rates; the difficulty in maintaining
margins,  including the higher margins  traditionally  achieved in international
sales;  and  changes in pricing  policies by the  Company,  its  competitors  or
suppliers.  As has  occurred  in the past and as may be expected to occur in the
future,  new software  products of the Company or new operating systems of third
parties on which the Company's  products are based, often contain bugs or errors
that can result in reduced  sales and/or cause the  Company's  support  costs to
increase,  having a material adverse impact on the Company's  operating results.
Furthermore,  the Company serves a number of industries such as  semiconductors,
telecommunications,  aerospace,  defense and  automotive  which are  cyclical in
nature.  Downturns in these  industries  could have a material adverse effect on
the Company's operating results.

     In  recent  years,  the  Company's  revenues  have  been  characterized  by
seasonality,  with revenues  typically being  relatively  constant in the first,
second and third quarters, and growing in the fourth quarter. If this historical
pattern continues,  revenues for the second and third quarters of 1997 would not
significantly  exceed  revenues  for the  first  quarter  of 1997.  The  Company
believes the  seasonality of its revenue results from the  international  mix of
its revenue and the  variability of the budgeting and  purchasing  cycles of its
customers  throughout each  international  region. In addition,  total operating
expenses  have in the past tended to be higher in the second and third  quarters
of  each  year,  due to  increased  sales  and  marketing  activities.  If  this
historical  pattern  continues,  net income for the second and third quarters of
1997 will be less than that in the first quarter of 1997. The Company's  results
of  operations  may be adversely  affected by lower sales levels in Europe which
typically occur during the summer months.

     Management  Information  Systems.  The Company does not  currently  have an
integrated world-wide management information system. While the Company is in the
process  of  implementing  a new  world-wide  system,  the  deficiencies  in its
existing information  resources have at times inhibited  management's ability to

                                     Page 12


manage  certain  aspects of the  Company's  operations in a timely  manner.  The
Company has implemented all of the US components of the new system.  The Company
plans to  complete  transition  of the sales  and  receivable  functions  of the
European  operations by the fourth  quarter of 1997. The Company is in the early
stages of  implementation  for its  Japanese  operation  which  will be  ongoing
throughout  1997.  All of the Company's  Asia Pacific  operations  are currently
using  independent  management  information  systems.  Until the new  world-wide
system can be implemented in this region, the growth of the Company's operations
may be  inhibited  by the  deficiencies  of its current  system.  The Company is
working to eventually  achieve a world-wide  management  information system that
will  allow  for the  consolidation  of common  functions,  reduced  costs,  and
improvements in the ability to deliver product  world-wide.  No assurance can be
given that the  Company's  efforts  will be  successful.  The failure to receive
adequate,  accurate and timely financial  information could inhibit management's
ability to make effective and timely decisions.

     New  Product  Introductions  and  Market  Acceptance.  The  market  for the
Company's  products is characterized  by rapid  technological  change,  evolving
industry  standards,   changes  in  customer  needs  and  frequent  new  product
introductions, and is therefore highly dependent upon timely product innovation.
The  Company's  success is  dependent  in part on its  ability  to  successfully
develop and  introduce  new and  enhanced  products on a timely basis to replace
declining  revenues  from  older  products,  and on  increasing  penetration  in
international  markets.  In the past,  the Company has  experienced  significant
delays between the announcement and the commercial availability of new products.
Any  sigificant  delay in releasing new products  could have a material  adverse
effect on the ultimate success of a product and other related products and could
impede  continued  sales of  predecessor  proudcts,  any of which  could  have a
material  adverse  effect on the Company's  operating  results.  There can be no
assurance  that the Company will be able to  introduce  new products on a timely
basis,  that  new  products  will  achieve  market  acceptance  or that any such
acceptance will be sustained for any significant period.  Moreover, there can be
no  assurance  that the  Company's  efforts  to  increase  international  market
penetration will be successful.

     Operation  in  Intensely  Competitive  Markets.  The  markets  in which the
Company  operates  are  characterized  by  intense   competition  from  numerous
competitors, and the Company expects to face further competition from new market
entrants in the future.  A key  competitor is  Hewlett-Packard  Company  ("HP"),
which has been the leading supplier of traditional instrumentation solutions for
decades.  Although HP offers its own line of proprietary instrument controllers,
HP also offers hardware and software  add-on  products for  third-party  desktop
computers and workstations that provide solutions that directly compete with the
Company's virtual instrumentation  products. HP is aggressively  advertising and
marketing products that are competitive with the Company's products.  Because of
HP dominance in the instrumentation business,  changes in its marketing strategy
or  product  offerings  could  have a  material  adverse  effect on the  Company
operating results.

     The  Company  believes  its  ability to compete  successfully  depends on a
number of factors  both within and outside its control,  including:  new product
introductions by competitors;  product pricing; quality and performance; success
in  developing  new  products;  adequate  manufacturing  capacity  and supply of
components and materials; efficiency of manufacturing operations;  effectiveness
of sales and marketing  resources and strategies;  strategic  relationships with
other suppliers;  timing of new product introductions by the Company; protection
of the  Company's  products by  effective  use of  intellectual  property  laws;
general market and economic  conditions;  and government  actions throughout the
world.  There can be no  assurance  that the  Company  will be able to  complete
successfully in the future.

     Dependence  on Key  Suppliers.  The Company's  manufacturing  processes use
large volumes of high-quality  components and subassemblies  supplied by outside
sources.  Several of these  components  are  available  through  sole or limited
sources.    Sole-source    components   purchased   by   the   Company   include
application-specific  integrated  circuits  ("ASICs") and other components.  The
Company has in the past  experienced  delays and quality  problems in connection
with sole-source  components,  and there can be no assurance that these problems
will not recur in the future.

                                    Page 13




     Proprietary  Rights and  Intellectual  Property  Litigation.  The Company's
success depends in part on its ability to obtain and maintain  patents and other
proprietary rights, relative to the technologies used in its principal products.
Despite the Company's efforts to protect it's proprietary  rights,  unauthorized
parties  may have in the past  infringed  or violated  certain of the  Company's
intellectual  property rights.  As is typical in the industry,  the Company from
time  to  time  may  be  notified  that  it  is  infringing  certain  patent  or
intellectual  property rights of others.  While no actions are currently pending
by or against the Company, there can be no assurance that litigation will not be
initiated  in  the  future  which  may  cause  significant  litigation  expense,
liability and a diversion of  management's  attention  which may have a material
adverse affect on results of operations.

                                    Page 14




- -------------------------------------------------------------------------------
                           PART II - OTHER INFORMATION
- -------------------------------------------------------------------------------



ITEM 6.     EXHIBITS AND REPORTS ON FORM 8-K

      (a)   Exhibits.

            11.1  Computation of Earnings Per Share
            27    Financial Data Schedule

      (b)   Reports on Form 8-K.

            No  reports  on Form 8-K were  filed by the  Company  during  the
            quarter ended March 31, 1997.




                                     Page 15



                                    SIGNATURE


     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.


                                        NATIONAL INSTRUMENTS CORPORATION
                                        Registrant



                                        BY:   /s/ JOEL B. ROLLINS
                                              Joel B. Rollins
                                              Vice  President,  Finance,  Chief
                                              Financial  Officer and  Treasurer
                                              (principal      financial     and
                                              accounting officer)






Dated:  May 9, 1997

                                     Page 16




                                  EXHIBIT 11.1

              STATEMENT REGARDING COMPUTATION OF NET INCOME PER SHARE




                                                           Three Months Ended
                                                                March 31,
                                                         ----------------------
                                                           1997         1996
                                                         --------     --------
Net Income ...........................................    $ 7,568      $ 5,483
                                                          =======      =======

Weighted Average Shares Outstanding ..................     22,300       21,666
                                                          =======      =======
Earnings Per Share ...................................    $  0.34      $  0.25
                                                          =======      =======
Calculation of Weighted Average Shares:
   Weighted Average Common Stock Outstanding .........     21,650       21,472
   Weighted Average Common Stock Options,
     utilizing the treasury stock method .............        631          194
                                                          -------      -------
                                                           22,281       21,666
                                                          =======      =======

                                     Page 17



 
                                              
5 (Replace this text with legend, if applicable) 0000935494 National Instruments Corp. 1,000 3-MOS DEC-31-1996 JAN-01-1997 MAR-31-1997 30167 50442 34698 0 11630 134685 32282 0 172700 32195 0 0 0 216 133633 172700 54571 54571 12293 12293 30709 0 0 11303 3735 7568 0 0 0 7568 0.34 0.34