National Instruments Corporation (NASDAQ:NATI) Files An 8-K Results of Operations and Financial Condition

National Instruments Corporation (NASDAQ:NATI) Files An 8-K Results of Operations and Financial Condition

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Item 2.02

Results of Operations and Financial Condition.
On January 26, 2017, National Instruments Corporation (“NI”)
furnished financial information to Item 2.02 of Form 8-K (the
“Form 8-K”) regarding financial results for NI’s fourth fiscal
quarter ended December 31, 2016. Based on NI’s additional
analysis of its calculation for provision for income taxes for
the three and twelve-month periods ended December 31, 2016, NI is
furnishing in the tables below revisions to certain of the
financial information included in its Form 8-K.
The additional analysis referred to above did not impact NI’s
financial guidance included in the Form 8-K and NI is confirming,
as of the date hereof, its financial guidance previously
furnished in the Form 8-K dated January 26, 2017.
The information herein shall not be deemed “filed” for purposes
of Section 18 of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), or otherwise subject to the liabilities
of that section, nor shall it be deemed incorporated by reference
in any filing under the Securities Act of 1933, as amended, or
the Exchange Act.
NI’s audited financial results for the year ended December 31,
2016 will be contained in its Annual Report on Form 10-K which is
expected to be filed with the Securities and Exchange Commission
on or about the date hereof.
A reconciliation of the financial information previously
furnished in the Form 8-K on January 26, 2017 to the revised
financial information is detailed in the tables below;
National Instruments
Condensed Consolidated Balance Sheets
(in thousands)
December 31, 2016 (Unaudited)
As furnished on January 26, 2017
Impact of revision
As furnished on February 16, 2017
Assets
Current assets:
Cash and cash equivalents
285,283
285,283
Short-term investments
73,117
73,117
Accounts receivable, net
228,686
228,686
Inventories, net
193,608
193,608
Prepaid expenses and other current assets
54,056
(103
)
53,953
Total current assets
834,750
(103
)
834,647
Property and equipment, net
260,456
260,456
Goodwill
253,197
253,197
Intangible assets, net
108,663
108,663
Other long-term assets
39,601
39,601
Total assets
1,496,667
(103
)
1,496,564
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable
48,800
48,800
Accrued compensation
27,743
27,743
Deferred revenue – current
115,577
115,577
Accrued expenses and other liabilities
32,289
32,997
Other taxes payable
34,958
34,958
Total current liabilities
259,367
260,075
Long-term debt
25,000
25,000
Deferred income taxes
41,733
3,653
45,386
Liability for uncertain tax positions
11,719
11,719
Deferred revenue – long-term
29,752
29,752
Other long-term liabilities
10,413
10,413
Total liabilities
377,984
4,361
382,345
Stockholders’ equity:
Preferred stock
Common stock
1,292
1,292
Additional paid-in capital
771,346
771,346
Retained earnings
380,883
(4,681
)
376,202
Accumulated other comprehensive loss
(34,838
)
(34,621
)
Total stockholders’ equity
1,118,683
(4,464
)
1,114,219
Total liabilities and stockholders’ equity
1,496,667
(103
)
1,496,564
National Instruments
Condensed Consolidated Statements of Income
(in thousands, except per share data, unaudited)
Three Months Ended Dec. 31, 2016
Year Ended Dec. 31, 2016
As furnished on January 26, 2017
Impact of revision
As furnished on February 16, 2017
As furnished on January 26, 2017
Impact of revision
As furnished on February 16, 2017
Net sales:
Product
300,218
300,218
1,116,703
1,116,703
Software maintenance
28,314
28,314
111,476
111,476
Total net sales
328,532
328,532
1,228,179
1,228,179
Cost of sales:
Product
81,468
81,468
306,730
306,730
Software maintenance
1,264
1,264
6,391
6,391
Total cost of sales
82,732
82,732
313,121
313,121
Gross profit
245,800
245,800
915,058
915,058
Operating expenses:
Sales and marketing
115,006
115,006
461,236
461,236
Research and development
57,461
57,461
235,706
235,706
General and administrative
24,082
24,082
98,390
98,390
Total operating expenses
196,549
196,549
795,332
795,332
Operating income
49,251
49,251
119,726
119,726
Other income (expense):
Interest income
1,122
1,122
Net foreign exchange loss
(3,162
)
(3,162
)
(4,632
)
(4,632
)
Other income (expense), net
(1,581
)
(1,581
)
Income before income taxes
46,895
46,895
114,635
114,635
Provision for income taxes
13,065
4,681
17,746
27,220
4,681
31,901
Net income
33,830
(4,681
)
29,149
87,415
(4,681
)
82,734
Basic earnings per share
0.26
(0.03
)
0.23
0.68
(0.04
)
0.64
Diluted earnings per share
0.26
(0.03
)
0.23
0.68
(0.04
)
0.64
Weighted average shares outstanding –
Basic
129,108
129,108
128,453
128,453
Diluted
129,503
129,503
129,008
129,008
National Instruments
Condensed Consolidated Statements of Cash Flows
(in thousands, unaudited)
Year Ended Dec. 31, 2016
As furnished on January 26, 2017
Impact of revision
As furnished on February 16, 2017
Cash flow from operating activities:
Net income
87,415
(4,681
)
82,734
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization
73,390
73,390
Stock-based compensation
25,832
25,832
Tax expense/(benefit) expense from deferred income taxes
(22,751
)
17,321
(5,430
)
Tax benefit from stock option plans
(442
)
(442
)
Acquisition-related fair value adjustments
1,585
1,585
Net change in operating assets and liabilities
30,811
(12,640
)
18,171
Net cash provided by operating activities
195,840
195,840
Cash flow from investing activities:
Capital expenditures
(44,425
)
(44,425
)
Capitalization of internally developed software
(31,859
)
(31,859
)
Additions to other intangibles
(2,342
)
(2,342
)
Acquisitions, net of cash received
(549
)
(549
)
Purchases of short-term investments
(39,097
)
(39,097
)
Sales and maturities of short-term investments
47,769
47,769
Net cash used by investing activities
(70,503
)
(70,503
)
Cash flow from financing activities:
Proceeds from revolving line of credit
15,000
15,000
Principal payments on revolving line of credit
(27,000
)
(27,000
)
Proceeds from issuance of common stock
28,907
28,907
Repurchase of common stock
(5,635
)
(5,635
)
Dividends paid
(102,897
)
(102,897
)
Tax benefit from stock option plans
Net cash used by financing activities
(91,183
)
(91,183
)
Net change in cash and cash equivalents
34,154
34,154
Cash and cash equivalents at beginning of year
251,129
251,129
Cash and cash equivalents at end of year
285,283
285,283
National Instruments
Reconciliation of GAAP to Non-GAAP Measures
(in thousands, unaudited)
Reconciliation of Provision for income taxes to Non-GAAP
Provision for income taxes
Three Months Ended Dec. 31, 2016
Year Ended Dec. 31, 2016
As furnished on January 26, 2017
Impact of revision
As furnished on February 16, 2017
As furnished on January 26, 2017
Impact of revision
As furnished on February 16, 2017
Provision for income taxes, as reported
13,065
4,681
17,746
27,220
4,681
31,901
Stock-based compensation
1,125
1,125
7,322
7,322
Amortization of acquisition intangibles
(855
)
(855
)
(2,162
)
(2,162
)
Acquisition transaction costs, restructuring charges, and
other
1,452
1,452
Acquisition-related fair value adjustments
Non-GAAP provision for income taxes
13,996
4,681
18,677
34,399
4,681
39,080
Reconciliation of GAAP Net Income, Basic EPS and Diluted
EPS to Non-GAAP Net Income, Non-GAAP Basic EPS and Non-GAAP
Diluted EPS
(in thousands, except per share data, unaudited)
Three Months Ended Dec. 31, 2016
Year Ended Dec. 31, 2016
As furnished on January 26, 2017
Impact of revision
As furnished on February 16, 2017
As furnished on January 26, 2017
Impact of revision
As furnished on February 16, 2017
Net income, as reported
33,830
(4,681
)
29,149
87,415
(4,681
)
82,734
Adjustments to reconcile net income to non-GAAP net income:
Stock-based compensation, net of tax effect
5,069
5,069
18,444
18,444
Amortization of acquisition intangibles, net of tax effect
3,350
3,350
15,234
15,234
Acquisition transaction costs, restructuring, and other,
net of tax effect
2,812
2,812
Acquisition-related fair value adjustments, net of tax
effect
1,018
1,018
1,018
1,018
Non-GAAP net income
43,509
(4,681
)
38,828
124,923
(4,681
)
120,242
Basic EPS, as reported
0.26
(0.03
)
0.23
0.68
(0.04
)
0.64
Adjustment to reconcile basic EPS to non-GAAP
basic EPS:
Impact of stock-based compensation, net of tax effect
0.04
(0.01
)
0.03
0.14
0.14
Impact of amortization of acquisition intangibles, net of
tax effect
0.03
0.03
0.12
0.12
Impact of acquisition transaction costs, restructuring, and
other, net of tax effect
0.02
0.02
Impact of acquisition-related fair value adjustments, net
of tax effect
0.01
0.01
0.01
0.01
Non-GAAP basic EPS
0.34
(0.04
)
0.30
0.97
(0.04
)
0.93
Diluted EPS, as reported
0.26
(0.03
)
0.23
0.68
(0.04
)
0.64
Adjustment to reconcile diluted EPS to non-GAAP diluted EPS
Impact of stock-based compensation, net of tax effect
0.04
(0.01
)
0.03
0.14
0.14
Impact of amortization of acquisition intangibles, net of
tax effect
0.03
0.03
0.12
0.12
Impact of acquisition transaction costs, restructuring, and
other, net of tax effect
0.02
0.02
Impact of acquisition-related fair value adjustments, net
of tax effect
0.01
0.01
0.01
0.01
Non-GAAP diluted EPS
0.34
(0.04
)
0.30
0.97
(0.04
)
0.93
Weighted average shares outstanding –
Basic
129,108
129,108
128,453
128,453
Diluted
129,503
129,503
129,008
129,008
National Instruments
Reconciliation of Net Income to EBITDA
(in thousands, unaudited)
Three Months Ended Dec. 31, 2016
Year Ended Dec. 31, 2016
As furnished on January 26, 2017
Impact of revision
As furnished on February 16, 2017
As furnished on January 26, 2017
Impact of revision
As furnished on February 16, 2017
Net income, as reported
33,830
(4,681
)
29,149
87,415
(4,681
)
82,734
Adjustments to reconcile net income to EBITDA:
Interest income, net
(155
)
(155
)
(349
)
(349
)
Tax expense
13,065
4,681
17,746
27,220
4,681
31,901
Depreciation and amortization
18,226
18,226
73,390
73,390
EBITDA
64,966
64,966
187,676
187,676
Weighted average shares outstanding – Diluted
129,503
129,503
129,008
129,008
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
Current Report on Form 8-K, NI has presented its provision for
income taxes, net income and basic and fully diluted EPS for the
three- and twelve-month periods ending Dec. 31, 2016 on a GAAP
and non-GAAP basis.
When presenting non-GAAP information, NI includes a
reconciliation of the non-GAAP results to the GAAP results. NI
believes that including the non-GAAP results assists investors in
assessing the company’s operational performance and its
performance relative to its competitors. NI 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. NI 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, taxes levied on the transfer of acquired
intellectual property, foreign exchange loss on acquisitions,
acquisition-related fair value adjustments, and restructuring
charges in managing its operations. Specifically, NI 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. NI also considers such
non-GAAP results to be an important supplemental measure of its
performance.
This Current Report on Form 8-K discloses NI’s EBITDA for the
three- and twelve- month periods ending Dec. 31, 2016. NI
believes that including the EBITDA results assists investors in
assessing the company’s operational performance relative to its
competitors. A reconciliation of EBITDA to GAAP net income is
included with this Current Report on Form 8-K.
Forward-Looking Statements
The foregoing statement whereby NI is confirming, as of the date
hereof, its financial guidance previously furnished in the Form
8-K dated January 26, 2017 is a “forward-looking statement”
that is subject to a number of risks and uncertainties, including
the risk of adverse changes or fluctuations in the global
economy, foreign exchange fluctuations, fluctuations in demand
for NI’s products including orders from its largest customer,
component shortages, delays in the release of new products, NI’s
ability to effectively manage its operating expenses,
manufacturing inefficiencies and the level of capacity
utilization, the impact of any recent or future acquisitions,
expense overruns, adverse effects of price changes or effective
tax rates. Actual results may differ materially from the expected
results. NI directs readers to its Form 10-K for the year ended
Dec. 31, 2015, its Form 10-Q for the quarter ended Sept. 30,
2016; and the other documents it files with the SEC for other
risks associated with the company’s future performance.


About National Instruments Corporation (NASDAQ:NATI)

National Instruments Corporation (NI) designs, manufactures and sells systems to engineers and scientists. The Company offers graphical system design approach to engineering, which provides an integrated software and hardware platform for measurement and control systems. Its products include reusable hardware and software modules. The Company offers a range of measurement, automation and control products. It offers products, technology and services, which include system design software, programming tools, application software, modular hardware products and related driver software, production test systems, NI education platform, software products for teaching and hardware products for teaching. It also offers NI Services, including hardware services and maintenance, software maintenance services, and training and certification. Its products are used across various industries in a range of applications, including research and development, simulation and modeling and product design.

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