National Instruments Reports Quarterly Revenue of $172 Million

Non-GAAP (Generally Accepted Accounting Principles) diluted EPS in Q1 2007 was 28 cents with non-GAAP net income of $22.5 million, up 39 percent from Q1 2006. For Q1 2007, non-GAAP operating margin was 15.5 percent, up from 13 percent in Q1 2006. This 250 basis point increase in Q1 non-GAAP operating margin has positioned the company well to achieve its goal of 18 percent non-GAAP operating margin for the full year. 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 press release.

NI virtual instrument and graphical system design products, which constitute the vast majority of the company’s product portfolio, had 13.4 percent year-over-year revenue growth in Q1. This represents the third consecutive quarter of strong revenue growth from these products despite three sequential quarterly declines in the Global Purchasing Managers Index. NI believes this continued strong organic growth validates the company’s strategy of increased investment in R&D to drive new product success.

Revenue from NI instrument control products declined by 6 percent year-over-year in Q1, compared to a 5 percent decline year-over-year in Q4 2006. The company believes this decline in revenue from instrument control products reflects the recent slowdown in the traditional test and semiconductor test markets. Instrument control represented less than 11 percent of NI revenue in Q1 2007, down from 13 percent in Q1 last year.

“I am very pleased with the strong revenue growth we saw in Q1 in the areas of LabVIEW FPGA, CompactRIO, USB data acquisition, modular instruments, RF and PXI,” said Dr. James Truchard, NI president and CEO. “We believe our strategy of increased investment in R&D over the last six years has allowed us to significantly outperform our competitors during this weaker period for the industry.”

Geographically, revenue in U.S. dollar terms for Q1 2007 compared to Q1 2006 was up 4 percent in the Americas, up 14 percent in Europe and up 21 percent in Asia, equaling overall growth of 11 percent. In local currency terms, revenue was up 6 percent in Europe and up 20 percent in Asia.

The company announced today that the board of directors declared a dividend of 7 cents per share on its common stock payable on June 4, 2007, to shareholders of record on May 14, 2007. As of March 31, 2007, the company had $245 million in net cash and short-term investments. During the quarter the company used $29 million to repurchase 1,057,000 shares of its common stock at an average price of $27.67 per share.

Q1 2007 Highlights

· Revenue of $172 million, up 11 percent year-over-year
· GAAP net income of $19 million, up 51 percent year-over-year
· Non-GAAP net income of $22.5 million, up 39 percent year-over-year
· Record revenue from PXI system sales
· Record revenue from distributed I/O products
· Strong growth of software, USB data acquisition, modular instruments and RF products
· Cash and short-term investments of $245 million
· LabVIEW recognized by EDN magazine as Innovation of the Year in the software category
· Test & Measurement World magazine awards LabVIEW the Test-of-Time Award in recognition of the continuous high quality and efficiency of the graphical development environment


“Entering 2007, we focused on achieving double digit revenue growth in the face of a weaker industrial economy, while also continuing to drive operating leverage as we move toward our goal of 18 percent non-GAAP operating margin for 2007,” said Alex Davern, NI CFO. “We are very pleased to have been able to deliver on these goals in Q1, growing our non-GAAP net income by 39 percent in what was a tough quarter for our industry.”

Guidance for Q2 2007

NI currently expects revenue for Q2 2007 to be in the range of $174 million to $183 million, compared to revenue of $160 million in Q2 last year. Additionally, for Q2 2007, the company expects GAAP diluted EPS to be in the range of 23 cents to 28 cents per share compared to 21 cents in Q2 last year. The company also expects non-GAAP fully diluted EPS to be in the range of 28 cents to 33 cents per share compared to 25 cents in Q2 last year.

For the full year management expects to record our fifth consecutive year of record revenue and our third consecutive year of record net income. Management also currently expects GAAP and non-GAAP effective tax rates for the full year to be 22 percent.

In Q2 2007, the company expects the combined impact of stock-based compensation and the amortization of acquisition-related intangibles to be 5 cents per share.

Interested parties can listen to a conference call today, April 26, 2007, beginning at 4:00 p.m. CDT, at www.ni.com/call. Replay information is available by calling (719) 457-0820, confirmation code #1013048 from April 26, 2007, at 7:00 p.m. CDT, through May 3, 2007, at 12:00 a.m. CDT.

This release contains “forward-looking statements,” including statements related to the company’s goal of 18 percent operating margin and the company being positioned to achieve such goal; strategy of increased investment in R&D; significantly outperforming competitors; and the guidance for Q2 2007 and the full year of 2007 including revenue, GAAP and non-GAAP diluted EPS, effective tax rates, and the estimated diluted EPS impact of stock-based compensation and acquisition-related intangibles. These statements are subject to a number of risks and uncertainties, including the risk of adverse changes in the global economy, 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 you to documents filed with the SEC for other risks associated with the company’s future performance.