National Instruments Corp. (NATI) filed Quarterly Report for the period ended 2009-09-30.
National Instruments Corporation is a leading supplier of computer-based instrumentation hardware and software products that engineers and scientists use in a wide range of industries. These industries are spread across two large markets: test and measurement and industrial automation. The Company provides flexible application software andmodular multifunction hardware that users combine with industry-standarddesktop computers and workstations to create `virtual instruments`. National Instruments Corp. has a market cap of $2.09 billion; its shares were traded at around $26.87 with a P/E ratio of 42.7 and P/S ratio of 2.5. The dividend yield of National Instruments Corp. stocks is 1.8%. National Instruments Corp. had an annual average earning growth of 4.3% over the past 10 years.
Highlight of Business Operations:
Sales in the Americas were $75 million and $97 million for the three month periods ended September 30, 2009 and 2008, respectively, a decrease of 23% and $212 million and $270 million for the nine month periods ended September 30, 2009 and 2008, respectively, a decrease of 21%. Sales outside of the Americas, as a percentage of consolidated sales were 54% and 55% in the three month periods ended September 30, 2009 and 2008, respectively, and 55% and 56% in the nine month periods ended September 30, 2009 and 2008, respectively. Sales in Europe were $47 million and $67 million for the three month periods ended September 30, 2009 and 2008, respectively, a decrease of 30% and $143 million and $198 million for the nine month periods ended September 30, 2009 and 2008, respectively, a decrease of 28%. Sales in Asia were $43 million and $51 million for the three month periods ended September 30, 2009 and 2008, respectively, a decrease of 16% and $120 million and $151 million for the nine month periods ended September 30, 2009 and 2008, respectively, a decrease of 21%. We expect sales outside of the Americas to continue to represent a significant portion of our revenue. We intend to continue to expand our international operations by increasing our presence in existing markets, adding a presence in some new geographical markets and continuing the use of distributors to sell our products in some countries.
Almost all sales made by our direct sales offices in the Americas, outside of the U.S., in Europe and in Asia Pacific are denominated in local currencies, and accordingly, the U.S. dollar equivalent of these sales is affected by changes in foreign currency exchange rates. For the three months ended September 30, 2009, net of hedging results, the change in exchange rates had the effect of decreasing our consolidated sales by $9.9 million or 5%, decreasing Americas sales by $1.6 million or 2%, decreasing European sales by $6.7 million or 10%, and decreasing sales in Asia Pacific by $1.6 million or 3% compared to the three months ended September 30, 2008. For the nine months ended September 30, 2009, net of hedging results, the change in exchange rates had the effect of decreasing our consolidated sales by $31.2 million or 5%, decreasing Americas sales by $6.1 million or 2%, decreasing European sales by $16.5 million or 8%, and decreasing sales in Asia Pacific by $8.6 million or 6% compared to the nine months ended September 30, 2008.
Sales and Marketing. Sales and marketing expenses were $65 million and $78 million for the three month periods ended September 30, 2009 and 2008, respectively, a decrease of 17% and $199 million and $231 million for the nine month periods ended September 30, 2009 and 2008, respectively, a decrease of 14%. As a percentage of net sales, sales and marketing expenses were 39% and 37% for the three month periods ended September 30, 2009 and 2008, respectively, and 42% and 37% for the nine month periods ended September 30, 2009 and 2008, respectively. The increases in sales and marketing expenses as a percentage of revenue was due to the 23% decrease in revenue during both the three and nine month periods ended September 30, 2009, respectively, compared to the same periods in 2008. The decrease in sales and marketing expenses during the three months ended September 30, 2009 compared to same period in 2008 was due to a decrease in travel and tradeshows of $5 million, a decrease in variable compensation of $2 million and a decrease caused by the net impact of changes in foreign currency exchange rates of $2 million. Temporary cost cutting measures which included a company-wide wage reduction as well as a reduction in the number of accrued vacation hours that employees are allowed to carry beyond December 31, 2009, resulted in additional cost savings of $2 million compared to three months ended September 30, 2008. The decrease in sales and marketing expenses during the nine months ended September 30, 2009 compared to same period in 2008 was due to a decrease in travel and tradeshows of $12 million, a decrease in variable compensation of $5 million and a decrease caused by the net impact of changes in foreign currency exchange rates of $11 million. Temporary cost cutting measures which included a company-wide wage reduction as well as a reduction in the number of accrued vacation hours that employees are allowed to carry beyond December 31, 2009, resulted in additional cost savings of $4 million compared to nine months ended September 30, 2008. We plan to continue to make investments in our field sales force during the remainder of 2009. However, due to the continued downturn in the industrial economy in 2009 and due to the fact that we cannot anticipate when this downturn might ease, our field sales expansion during the remainder of 2009 will likely be less than it was in 2008. We expect sales and marketing expenses in future periods to continue to fluctuate as a percentage of sales based on recruiting, marketing and advertising campaign costs associated with major new product releases and entry into new market areas, investment in web sales and marketing efforts, increasing product demonstration costs and the timing of domestic and international conferences and trade shows.
Research and Development. Research and development expenses were $35 million and $37 million for the three month periods ended September 30, 2009, and 2008, respectively, a decrease of 5% and $99 million and $106 million for the nine month periods ended September 30, 2009 and 2008, respectively, a decrease of 7%. As a percentage of net sales, research and development expenses were 21% and 17% for the three month periods ended September 30, 2009 and 2008, respectively, and 21% and 17% for the nine month periods ended September 30, 2009 and 2008, respectively. The increases in research and development expenses as a percentage of net sales were due to the 23% decreases in revenue during both the three and nine month periods ended September 30, 2009 compared to the same periods in 2008. The decrease in research and development expenses during the three months ended September 30, 2009 compared to same period in 2008 was due to a decrease in variable compensation of $1 million and a decrease caused by the net impact of changes in foreign currency exchange rates of $235,000. Temporary cost cutting measures which included a company-wide wage reduction as well as a reduction in the number of accrued vacation hours that employees are allowed to carry beyond December 31, 2009, resulted in additional cost savings of $2 million compared to three months ended September 30, 2008. These decreases were offset by personnel costs related to a net headcount increase of 66. The decrease in research and development expenses during the nine months ended September 30, 2009 compared to same period in 2008 was due to a decrease in variable compensation of $3 million and a decrease caused by the net impact of changes in foreign currency exchange rates of $861,000. Temporary cost cutting measures which included a company-wide wage reduction as well as a reduction in the number of accrued vacation hours that employees are allowed to carry beyond December 31, 2009, resulted in additional cost savings of $4 million compared to nine months ended September 30, 2008. We plan to continue to make additional investments in our research and development group during the remainder of 2009. However, due to the continued weakness in the industrial economy and due to the fact that we cannot anticipate when this weakness might ease, our research and development expansion during 2009 will likely be less than it was in 2008.
We capitalize software development costs in accordance with the Software Topic of the FASB ASC 985. We amortize such costs over the related product s estimated economic life, generally three years, beginning when a product becomes available for general release. Software amortization expense included in cost of goods sold totaled $3 million and $3 million during the three month periods ended September 30, 2009 and 2008, respectively, and $7 million and $8 million during the nine month periods ended September 30, 2009 and 2008, respectively. Internally developed software costs capitalized during the three month periods ended September 30, 2009 and 2008, were $1 million and $1 million, respectively, and $11 million and $9 million during the nine month periods ended September 30, 2009 and 2008, respectively. Capitalization of internally developed software costs varies depending on the timing of when each project reaches technological feasibility and the length and scope of the development cycle of each individual project. (See Note 7 - Intangibles of Notes to Consolidated Financial Statements for a description of intangibles).
General and Administrative. General and administrative expenses were $12 million and $17 million for the three month periods ended September 30, 2009, and 2008, respectively, a decrease of 29% and $43 million and $51 million for the nine month periods ended September 30, 2009 and 2008, respectively, a decrease of 16%. As a percentage of net sales, general and administrative expenses were 8% and 8% for the three month periods ended September 30, 2009 and 2008, respectively, and 9% and 8% for the nine month periods ended September 30, 2009 and 2008, respectively. For the nine months ended September 30, 2009, the increase in general and administrative expense as a percentage of revenue was due to the 23% decrease in revenue compared to the same periods in 2008. The decrease in general and administrative expenses during the three months ended September 30, 2009 compared to same period in 2008 was due to a decrease in variable compensation of $406,000, a reduction of our patent litigation accrual which resulted in a non-cash increase to our operating income of $2 million, and a decrease caused by the ne
Rate This Article: |
  |