National Instruments Reports Record Revenue for a Third Quarter of $321 Million

The following tables provide details with respect to the amount of GAAP charges related to stock-based compensation, amortization of acquisition-related intangibles, acquisition-related transaction costs, restructuring charges, foreign exchange loss on acquisitions and taxes levied on the transfer of acquired intellectual property that were recorded in the line items indicated below (unaudited) (in thousands)

             
Three Months Ended Nine Months Ended
September 30, September 30,
   
2017 2016 2017 2016
Stock-based compensation
Cost of sales $ 689 $ 556 $ 1,914 $ 1,643
Sales and marketing 3,014 2,635 8,523 8,422
Research and development 2,328 2,027 6,552 6,745
General and administrative 1,514 921 4,358 2,764
Provision for income taxes   (2,369 )   (2,092 )   (7,388 )   (6,202 )
Total $ 5,176     4,047     13,959     13,372  
 
Amortization of acquisition intangibles
Cost of sales $ 1,502 $ 1,599 $ 4,648 $ 7,621
Sales and marketing 515 502 1,479 2,141
Research and development 283 276 813 815
Other income, net
Provision for income taxes   (546

)

  854     (1,656

)

  1,312  
Total $ 1,754     3,231     5,284     11,889  
 
Acquisition transaction costs, restructuring charges, and other
Cost of sales $ 79 $ 74 $ 988 $ 253
Sales and marketing 1,618 42 8,018 141
Research and development 235 236 1,816 648
General and administrative 207 97 803 317
Foreign exchange gain (loss) 1 94
Other income (loss), net 2 2,475
Provision for income taxes   (720 )   (156 )   (3,655 )   (1,358 )
Total $ 1,419   $ 293   $ 7,970   $ 2,570  
 
(1) Foreign exchange losses on acquisitions were $0 and $94 for the nine month periods ended September 30, 2017 and 2016, respectively
(2) Taxes levied on the transfer of acquired intellectual property were $0 and $2,475 for the nine month periods ended September 30, 2017 and 2016, respectively
 
 
National Instruments
Reconciliation of GAAP to Non-GAAP Measures
(in thousands, unaudited)
                 
Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
 
Reconciliation of Gross Profit to Non-GAAP Gross Profit
Gross profit, as reported $ 237,170 229,632 696,902 669,260
Stock-based compensation 689 556 1,914 1,643
Amortization of acquisition intangibles 1,502 1,599 4,648 7,621
Acquisition transaction costs and restructuring charges   79   74   988   253  
Non-GAAP gross profit $ 239,440   231,861   704,452   678,777  
Non-GAAP gross margin 75 % 76 % 75 % 75 %
 
Reconciliation of Operating Expenses to Non-GAAP Operating Expenses
Operating expenses, as reported $ 199,655 200,265 608,436 598,782
Stock-based compensation (6,856 ) (5,583 ) (19,433 ) (17,931 )
Amortization of acquisition intangibles (798 ) (778 ) (2,292 ) (2,956 )
Acquisition transaction costs and restructuring charges   (2,060 ) (375 ) (10,637 ) (1,106 )
Non-GAAP operating expenses $ 189,941   193,529   576,074   576,789  
 
Reconciliation of Operating Income to Non-GAAP Operating Income
Operating income, as reported $ 37,515 29,367 88,466 70,478
Stock-based compensation 7,545 6,139 21,347 19,574
Amortization of acquisition intangibles 2,300 2,377 6,940 10,577
Acquisition transaction costs and restructuring charges   2,139   449   11,625   1,359  
Non-GAAP operating income $ 49,499     38,332   128,378   101,988  
Non-GAAP operating margin 15 % 13 % 14 % 11 %
 
Reconciliation of Income before income taxes to Non-GAAP Income before income taxes
Income before income taxes, as reported $ 38,115 29,184 90,642 67,742
Stock-based compensation 7,545 6,139 21,347 19,574
Amortization of acquisition intangibles 2,300 2,377 6,940 10,577
Acquisition transaction costs and restructuring charges 2,139 449 11,625 1,359
Foreign exchange loss on acquisitions 94
Taxes levied on transfer of acquired intellectual property         2,475  
Non-GAAP income before income taxes $ 50,099   38,149   130,554   101,821  
 
Reconciliation of Provision for income taxes to Non-GAAP Provision for income taxes
Provision for income taxes, as reported $ 4,726 4,695 13,949 14,155
Stock-based compensation 2,369 2,092 7,388 6,202
Amortization of acquisition intangibles 546 (854 ) 1,656 (1,312 )
Acquisition transaction costs, restructuring charges, and other   720   156   3,655   1,358  
Non-GAAP provision for income taxes $ 8,361   6,089   26,648   20,403  
 
 
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 Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
 
Net income, as reported $ 33,389 $ 24,489 $ 76,693 $ 53,587
Adjustments to reconcile net income to non-GAAP net income:
Stock-based compensation, net of tax effect 5,176 4,047 13,959 13,372
Amortization of acquisition intangibles, net of tax effect 1,754 3,231 5,284 11,889
Acquisition transaction costs, restructuring, and other, net of tax effect   1,419

 

293   7,970   2,570
Non-GAAP net income $ 41,738 $ 32,060 $ 103,906 $ 81,418
 
Basic EPS, as reported $ 0.26 $ 0.19 $ 0.59 $ 0.42
Adjustment to reconcile basic EPS to non-GAAP
basic EPS:
Impact of stock-based compensation, net of tax effect 0.04 0.03 0.11 0.10
Impact of amortization of acquisition intangibles, net of tax effect 0.01 0.03 0.04 0.09
Impact of acquisition transaction costs, restructuring, and other, net of tax effect   0.01     0.05   0.02
Non-GAAP basic EPS $ 0.32 $ 0.25 $ 0.79 $ 0.63
 
 
Diluted EPS, as reported $ 0.25 $ 0.19 $ 0.59 $ 0.42
Adjustment to reconcile diluted EPS to non-GAAP diluted EPS
Impact of stock-based compensation, net of tax effect 0.04 0.03 0.11 0.10
Impact of amortization of acquisition intangibles, net of tax effect 0.02 0.03 0.04 0.09
Impact of acquisition transaction costs, restructuring, and other, net of tax effect   0.01     0.05   0.02
Non-GAAP diluted EPS $ 0.32 $ 0.25 $ 0.79 $ 0.63
 
Weighted average shares outstanding -
Basic   130,660   128,815   130,103   128,233
Diluted   131,617   129,047   131,050   128,738
 
 
National Instruments
Reconciliation of Net Income to EBITDA
(in thousands, unaudited)
                 
Three Months Ended Nine Months Ended
September 30, September 30,
2017     2016 2017     2016
Net income, as reported $ 33,389 $ 24,489 $ 76,693 $ 53,587
Adjustments to reconcile net income to EBITDA:
Interest income (464 ) (53 ) (863 ) (194 )
Tax expense 4,726 4,695 13,949 14,155
Depreciation and amortization   18,879     16,947     54,794     55,164  
EBITDA $ 56,530   $ 46,078   $ 144,573   $ 122,712  
Weighted average shares outstanding - Diluted 131,617 129,047 131,050 128,738
 
 
Reconciliation of GAAP to Non-GAAP EPS Guidance
(unaudited)
Three Months Ended
December 31, 2017
 
Low High
GAAP Fully Diluted EPS, guidance $ 0.27 $ 0.41
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 and acquisition accounting adjustments, net of tax effect 0.02 0.02
Impact of acquisition transaction costs, restructuring, and other, net of tax effect   0.01     0.01  
Non-GAAP diluted EPS, guidance $ 0.34   $ 0.48  
 
 
National Instruments
Reconciliation of GAAP Revenue Growth to Core Revenue Growth
(unaudited)
     
Three Months Ended
September 30,
2017
YoY GAAP revenue growth, as reported 4.8 %
Effect of excluding our current largest customer 0.1 %
YoY GAAP revenue growth, excluding our largest customer 4.9 %
Effect of excluding the impact of foreign currency exchange 0.1 %
YoY Core revenue growth 5.0 %

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