national instruments
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National Instruments
2
Safe Harbor Warning
During the course of this presentation, we may make projections or other forward-looking statements regarding future events or the future financial performance of the company. We wish to caution you that such statements are just predictions and that actual events or results may differ materially. We refer you to the documents the company files regularly with the Securities and Exchange Commission, specifically the company's most recent Form 10-K and 10Q. These documents contain and identify important factors that could cause the actual results to differ materially from those contained in our projections or forward-looking statements.
3
Profile
• Leaders in Computer-Based Measurement and Automation
• Long-term Track Record of Growth and Profitability
• $740M Revenue in 2007
• $205 M Revenue in Q4 2007
• More than 4,600 employees; operations in 40+ countries
• Fortune’s 100 Best Companies to Work For Ninth Consecutive Year
$0
$100
$200
$300
$400
$500
$600
$700
$800
'77 '79 '81 '83 '85 '87 '89 '91 '93 '95 '97 '99 '01 '03 '05 '07
Net R
evenu
e in M
illion
s
Record Revenue of $740 Million in 2007
4
What We Do
Low-Cost Modular
Measurement and
Control Hardware
Productive Software
Development Tools
Highly Integrated
Systems Platforms
Used By Engineers and Scientists for Test, Design and Control
5
Empowering Users Through Software
LEGO Mindstorms NXT
“the smartest, coolest toy
of the year”
CERN Large Hadron Collider
“the most powerful instrument
on earth”
6
Leveraging Commercial Technology
7
NI’s Increased Value to CustomersControl Traditional
InstrumentsComplete
System SolutionsSimple PC-Based
Measurements
PC Data Acquisition
Typical Order Size
Compact FieldPoint System Platform
LabVIEW Real-Time
PXI System Platform
GPIB Instrument Control
LabVIEWSoftware
1980s 1990s 2000s
< $2 K
$1 K - $15 K
$10 K-$100 K+
CompactRIO IndustrialSystem Platform
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Financial Update: Growth in Strategic Product RevenuesSuccess with Virtual Instrumentation and Graphical System Design
$-
$20,000,000
$40,000,000
$60,000,000
$80,000,000
$100,000,000
$120,000,000
$140,000,000
$160,000,000
$180,000,000
$200,000,000
Qu
art
erl
y R
even
ue
Instrument Control
Virtual Instrumentation and Graphical System Design
10 Year CAGR = 1.2%
10 Year CAGR = 15.5%
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MP3 player
PC/WWW/E-mail
Cellular Phone
Digital Camera
Gaming
High resolution display
iPhone
PDA
Today’s Designs: Converging Complexity
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Today’s Challenges: The Traditional Approach
Oscilloscope
Logic Analyzer
Spectrum Analyzer
DMM
Communications Analyzer
LCR Meter
Function
Generator
Power Supply
Pattern Generator
Programmable Switch
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• Lower cost
• Higher performance
• Smaller size
• Flexible
• Easily upgraded
• User-defined
• Lower cost
• Higher performance
• Smaller size
• Flexible
• Lower cost
• Higher performance
• Smaller size
NI’s Value Proposition
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Our Expanding Opportunity
Design & Test
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Test and Measurement – a $12 Billion Market
• Manufacturing
focused, Semiconductor
and board test
• Low volume, high dollar
systems sales (cyclic)
NI is an OEM supplier
Semiconductor ATE
$3.9B
• Products used in
electronic design and test
•Measurement needs
increasingly met by
commercial technologies
Growing market share
in automated test
General Purpose Test
$3.8B
• Communications
equipment design and
test
•Trend to software-based
systems and increasing
complexity
Large NI growth
potential
Communications Test
$4.2B
Source: Frost and Sullivan, 2006
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Trend Toward Software-Based Systems
Frost and Sullivan 2006 World Synthetic Instrumentation Test Equipment Report
“Software is the core of a [Synthetic Instrumentation] test system…, it is the
task of the software to define and control the hardware…”
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Our Expanding Opportunity
Embedded Design &
Control
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The Traditional Embedded & Industrial
Control Landscape
Embedded SBC
• Embedded
computers
• PC architectures
• Many form factors
Custom Design
• Totally flexible
• Exact fit
• Control of COGs
PLC
• Highly reliable
• Standard control
• Ladder logic
• Industrial networks
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Development Platform for the Next 30 Years
Graphical System DesignDesign Prototype Deploy
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Graphical System Design Examples
Machine ControlPackaging/Processing High-speed motion
control, batch control, discrete control
Heavy Machinery Control Real-time signal processing and
control of power electronics, hydraulic systems
Semiconductor/Biomed Custom motion and vision
inspection, material handling
Machine Monitoring
• Machine Condition Monitoring– Bearing order analysis, lubrication
monitoring, cooling, combustion, …
• Mobile/portable DSA, NVH– Noise, vibration, harshness, dynamic
signal analysis, acoustics
• Distributed Acquisition– Central controller with distributed I/O
nodes over Ethernet/wireless
In-Vehicle Data Acquisition• In-Vehicle Data Acquisition
– Automobiles, motorcycles, recreational vehicles, research aircraft, trains
• Engine and ECU test cells– HIL testing of engines and engine
controllers, sensor simulation using FPGA
• Rapid Control Prototyping– Automotive/aerospace control
prototyping
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Diversity of Applications
ElectronicsSemiconductors Computers
No Industry > 10% of Revenue
Advanced
ResearchPetrochemical
Food
ProcessingTextiles
AutomotiveTelecom
ATE Military/Aerospace
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Virtual Instrumentation EverywhereMore than 25,000 companies
>90% of Fortune 500 manufacturing companies
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Direct Sales Advantage
Catalog Sales
Technical Phone
Sales
Direct Field
Sales
Business
Development
Val
ue o
f Sal
e
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NI’s Strategy to Drive Revenue Growth
• New market opportunities Driven by R&D
• Expanding market share Global industrial economy
Increased penetration in emerging markets
• Acquisitions to play a limited role
23
Strong Track Record of Growth and ProfitabilityN
et Reven
ue in
Millio
ns
2007 Revenue $740 Million
$0
$100
$200
$300
$400
$500
$600
$700
$800
'77 '79 '81 '83 '85 '87 '89 '91 '93 '95 '97 '99 '01 '03 '05 '07
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Sequential Sales By Quarter ($MMs)
$0
$20
$40
$60
$80
$100
$120
$140
$160
$180
$200
$220
Q1 02
Q2 02
Q3 02
Q4 02
Q1 03
Q2 03
Q3 03
Q4 03
Q1 04
Q2 04
Q3 04
Q4 04
Q1 05
Q2 05
Q3 05
Q4 05
Q1 06
Q2 06
Q3 06
Q4 06
Q1 07
Q2 07
Q3 07
Q4 07
JP Morgan’s Global PMI vs. NI Growth
40%
42%
44%
46%
48%
50%
52%
54%
56%
58%
60%
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
Q1
-1
99
7
Q3
-1
99
7
Q1
-1
99
8
Q3
-1
99
8
Q1
-1
99
9
Q3
-1
99
9
Q1
-2
00
0
Q3
-2
00
0
Q1
-2
00
1
Q3
-2
00
1
Q1
-2
00
2
Q3
-2
00
2
Q1
-2
00
3
Q3
-2
00
3
Q1
-2
00
4
Q3
-2
00
4
Q1
-2
00
5
Q3
-20
05
Q1
-20
06
Q3
-20
06
Q1
-20
07
Q3
20
07
Glo
ba
l P
MI
YO
Y
Gro
wth
GPIB/VXI Growth All Other Products Growth Global PMI
26
R&D Headcount
0
200
400
600
800
1000
1200
1400
1999 2000 2001 2002 2003 2004 2005 2006 2007
27
Non-GAAP Gross Margin
76% 76% 76% 75% 77% 76% 77% 76% 74% 73% 74% 74% 74% 75% 76%
0%
20%
40%
60%
80%
100%
'93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07
28
Non-GAAP Operating Income and R&D as % of Revenue
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
Target Op Inc Non-GAAP Op Inc R&D as % of Rev
29
Non-GAAP Net Income
$0
$20
$40
$60
$80
$100
$120
$140
2003 2004 2005 2006 2007
* For a reconciliation of GAAP to Non-GAAP Net Income, please visit www.ni.com/nati
30
Financial Plan for 2008-2010
• Our goal is 18% non-GAAP operating margin
• Do not plan to exceed 18% in 2008-2010 on an annual basis
• Any incremental leverage in 2008-2010 will be allocated to
sales resources to leverage R&D investment with the goal of
accelerating growth relative to the industry
31
Why focus incremental leverage in sales?
• Large orders driving growth
• Technical sales resources drive large orders
System Engineers drive growth with proof of concepts
BDM’s drive growth with application knowledge
DSM’s drive growth, by evangelizing NI Software and
identifying opportunities
National Instruments
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