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National Instruments
Condensed Consolidated Balance Sheets
(in thousands)
			September 30,					December 31,
			2016					2015
Assets
Current assets:
Cash and cash equivalents			$	300,652				$	251,129
Short-term investments				52,277					81,789
Accounts receivable, net				206,171					216,244
Inventories, net				196,391					185,197
Prepaid expenses and other current assets				55,281					65,381
Total current assets				810,772					799,740
Property and equipment, net				261,859					257,853
Goodwill				261,372					257,718
Intangible assets, net				110,161					108,196
Other long-term assets				28,729					30,349
Total assets			$	1,472,893				$	1,453,856
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable			$	53,192				$	50,970
Accrued compensation				31,615					27,956
Deferred revenue - current				113,645					112,283
Accrued expenses and other liabilities				23,940					11,756
Other taxes payable				33,461					37,250
Total current liabilities				255,853					240,215
Long-term debt				25,000					37,000
Deferred income taxes				37,787					44,673
Liability for uncertain tax positions				10,037					11,974
Deferred revenue - long-term				28,148					27,708
Other long-term liabilities				8,657					10,565
Total liabilities				365,482					372,135
Stockholders' equity:
Preferred stock				-					-
Common stock				1,289					1,275
Additional paid-in capital				758,411					717,705
Retained earnings				372,893					400,831
Accumulated other comprehensive loss				(25,182	)				(38,090	)
Total stockholders' equity				1,107,411					1,081,721
Total liabilities and stockholders' equity			$	1,472,893				$	1,453,856

National Instruments
Condensed Consolidated Statements of Income
(in thousands, except per share data, unaudited)
			Three Months Ended										Nine Months Ended
			September 30,										September 30,
			2016					2015					2016					2015
Net sales:
Product			$	278,521				$	271,683				$	816,486				$	807,064
Software maintenance				27,843					28,129					83,161					84,053
Total net sales				306,364					299,812					899,647					891,117
Cost of sales:
Product				74,734					75,144					225,261					225,646
Software maintenance				1,998					2,022					5,126					4,531
Total cost of sales				76,732					77,166					230,387					230,177
Gross profit				229,632					222,646					669,260					660,940
Operating expenses:
Sales and marketing				116,662					114,507					346,230					335,916
Research and development				59,066					52,533					178,244					168,462
General and administrative				24,537					23,255					74,308					69,391
Total operating expenses				200,265					190,295					598,782					573,769
Operating income				29,367					32,351					70,478					87,171
Other income (expense):
Interest income				276					396					787					1,089
Net foreign exchange (loss) gain				(760	)				286					(1,471	)				(1,965	)
Other (expense) income, net				301					133					(2,052	)				787
Income before income taxes				29,184					33,166					67,742					87,082
Provision for income taxes				4,695					9,988					14,155					23,958
Net income			$	24,489				$	23,178				$	53,587				$	63,124
Basic earnings per share			$	0.19				$	0.18				$	0.42				$	0.49
Diluted earnings per share			$	0.19				$	0.18				$	0.42				$	0.49
Weighted average shares outstanding -
basic				128,815					127,935					128,233					128,219
diluted				129,047					128,229					128,738					128,856
Dividends declared per share			$	0.20				$	0.19				$	0.60				$	0.57

National Instruments
Condensed Consolidated Statements of Cash Flows
(in thousands, unaudited)
			Nine Months Ended September 30,
			2016					2015
Cash flow from operating activities:
Net income			$	53,587				$	63,124
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization				55,164					55,157
Stock-based compensation				19,635					19,151
Tax expense/(benefit) expense from deferred income taxes				(7,321	)				(7,404	)
Tax benefit from stock option plans				(439	)				(944	)
Net change in operating assets and liabilities				32,454					(8,603	)
Net cash provided by operating activities				153,080					120,481
Cash flow from investing activities:
Capital expenditures				(34,408	)				(28,102	)
Capitalization of internally developed software				(24,048	)				(22,639	)
Additions to other intangibles				(1,969	)				(2,240	)
Acquisitions, net of cash received				(549	)				(28,629	)
Purchases of short-term investments				(9,054	)				(29,649	)
Sales and maturities of short-term investments				38,566					44,752
Net cash used by investing activities				(31,462	)				(66,507	)
Cash flow from financing activities:
Proceeds from revolving line of credit				15,000					42,000
Principal payments on revolving line of credit				(27,000	)				(17,000	)
Proceeds from issuance of common stock				22,157					21,252
Repurchase of common stock				(5,635	)				(72,559	)
Dividends paid				(77,056	)				(73,406	)
Tax benefit from stock option plans				439					944
Net cash used by financing activities				(72,095	)				(98,769	)
Net change in cash and cash equivalents				49,523					(44,795	)
Cash and cash equivalents at beginning of period				251,129					274,030
Cash and cash equivalents at end of period			$	300,652				$	229,235

The following tables provide details with respect to the amount of GAAP charges related to stock-based compensation, amortization of acquisition 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)
			Three Months Ended											Nine Months Ended
			September 30,											June 30,
			2016					2015						2016					2015
Stock-based compensation
Cost of sales			$	556				$	499					$	1,643				$	1,427
Sales and marketing				2,635					2,854						8,422					8,303
Research and development				2,027					2,132						6,745					6,764
General and administrative				921					921						2,764					2,656
Provision for income taxes				(2,092	)				(1,933	)					(6,202	)				(5,420	)
Total			$	4,047				$	4,473					$	13,372				$	13,730
Amortization of acquisition intangibles
Cost of sales			$	1,599				$	2,643					$	7,621				$	7,858
Sales and marketing				502					423						2,141					1,299
Research and development				276					322						815					983
Other income, net				-					145						-					448
Provision for income taxes				854					(1,152	)					1,312					(3,469	)
Total			$	3,231				$	2,381					$	11,889				$	7,119
Acquisition transaction costs, restructuring charges, and other
Cost of sales			$	74				$	169					$	253				$	974
Sales and marketing				42					-						141					-
Research and development				236					-						648					-
General and administrative				97					238						317					442
Foreign exchange gain (loss) 1				-					-						94					-
Other income (loss), net 2				-					-						2,475					-
Provision for income taxes				(156	)				(59	)					(1,358	)				(390	)
Total			$	293				$	348					$	2,570				$	1,026
(1) Foreign exchange losses on acquisitions were $94 and $0 for the nine month periods ended September 30, 2016 and 2015, respectively
(2) Taxes levied on the transfer of acquired intellectual property were $2,475 and $0 for the nine month periods ended September 30, 2016 and 2015, respectively

National Instruments
Reconciliation of GAAP to Non-GAAP Measures
(in thousands, unaudited)
			Three Months Ended											Nine Months Ended
			September 30,											September 30,
			2016					2015						2016					2015
Reconciliation of Gross Profit to Non-GAAP Gross Profit
Gross profit, as reported			$	229,632				$	222,646					$	669,260				$	660,940
Stock-based compensation				556					499						1,643					1,427
Amortization of acquisition intangibles				1,599					2,643						7,621					7,858
Acquisition transaction costs and restructuring charges				74					169						253					974
Non-GAAP gross profit			$	231,861				$	225,957					$	678,777				$	671,199
Non-GAAP gross margin				75.7	%				75.4	%					75.4	%				75.3	%
Reconciliation of Operating Expenses to Non-GAAP Operating Expenses
Operating expenses, as reported			$	200,265				$	190,295					$	598,782				$	573,769
Stock-based compensation				(5,583	)				(5,907	)					(17,931	)				(17,723	)
Amortization of acquisition intangibles				(778	)				(745	)					(2,956	)				(2,282	)
Acquisition transaction costs and restructuring charges				(375	)				(238	)					(1,106	)				(442	)
Non-GAAP operating expenses			$	193,529				$	183,405					$	576,789				$	553,322
Reconciliation of Operating Income to Non-GAAP Operating Income
Operating income, as reported			$	29,367				$	32,351					$	70,478				$	87,171
Stock-based compensation				6,139					6,406						19,574					19,150
Amortization of acquisition intangibles				2,377					3,388						10,577					10,140
Acquisition transaction costs and restructuring charges				449					407						1,359					1,416
Non-GAAP operating income			$	38,332				$	42,552					$	101,988				$	117,877
Non-GAAP operating margin				12.5	%				14.2	%					11.3	%				13.2	%
Reconciliation of Income before income taxes to Non-GAAP Income before income taxes
Income before income taxes, as reported			$	29,184				$	33,166					$	67,742				$	87,082
Stock-based compensation				6,139					6,406						19,574					19,150
Amortization of acquisition intangibles				2,377					3,533						10,577					10,588
Acquisition transaction costs and restructuring charges				449					407						1,359					1,416
Foreign exchange loss on acquisitions				-					-						94					-
Taxes levied on transfer of acquired intellectual property				-					-						2,474					-
Non-GAAP income before income taxes			$	38,149				$	43,512					$	101,820				$	118,236
Reconciliation of Provision for income taxes to Non-GAAP Provision for income taxes
Provision for income taxes, as reported			$	4,695				$	9,988					$	14,155				$	23,958
Stock-based compensation				2,092					1,933						6,202					5,420
Amortization of acquisition intangibles				(854	)				1,152						(1,312	)				3,469
Acquisition transaction costs, restructuring charges, and other				156					59						1,358					390
Non-GAAP provision for income taxes			$	6,089				$	13,132					$	20,403				$	33,237

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,
			2016				2015					2016				2015
Net income, as reported			$	24,489			$	23,178				$	53,587			$	63,124
Adjustments to reconcile net income to non-GAAP net income:
Stock-based compensation, net of tax effect				4,047				4,473					13,372				13,730
Amortization of acquisition intangibles, net of tax effect				3,231				2,381					11,889				7,119
Acquisition transaction costs, restructuring, and other, net of tax effect				293				348					2,570				1,026
Non-GAAP net income			$	32,060			$	30,380				$	81,418			$	84,999
Basic EPS, as reported			$	0.19			$	0.18				$	0.42			$	0.49
Adjustment to reconcile basic EPS to non-GAAP basic EPS:
Impact of stock-based compensation, net of tax effect				0.03				0.04					0.10				0.11
Impact of amortization of acquisition intangibles, net of tax effect				0.03				0.02					0.09				0.06
Impact of acquisition transaction costs, restructuring, and other, net of tax effect				-				-					0.02				-
Non-GAAP basic EPS			$	0.25			$	0.24				$	0.63			$	0.66
Diluted EPS, as reported			$	0.19			$	0.18				$	0.42			$	0.49
Adjustment to reconcile diluted EPS to non-GAAP diluted EPS
Impact of stock-based compensation, net of tax effect				0.03				0.04					0.10				0.11
Impact of amortization of acquisition intangibles, net of tax effect				0.03				0.02					0.09				0.06
Impact of acquisition transaction costs, restructuring, and other, net of tax effect				-				-					0.02				-
Non-GAAP diluted EPS			$	0.25			$	0.24				$	0.63			$	0.66
Weighted average shares outstanding -
Basic				128,815				127,935					128,233				128,219
Diluted				129,047				128,229					128,738				128,856

National Instruments
Reconciliation of Net Income to EBITDA
(in thousands, unaudited)
			Three Months Ended											Nine Months Ended
			September 30,											September 30,
			2016					2015						2016					2015
Net income, as reported			$	24,489				$	23,178					$	53,587				$	63,124
Adjustments to reconcile net income to EBITDA:
Interest income				(53	)				(396	)					(194	)				(1,089	)
Tax expense				4,695					9,988						14,155					23,958
Depreciation and amortization				16,947					18,655						55,164					55,157
EBITDA			$	46,078				$	51,425					$	122,712				$	141,150
Weighted average shares outstanding - Diluted				129,047					128,229						128,738					128,856
Reconciliation of GAAP to Non-GAAP EPS Guidance
(unaudited)
			Three months ended
			December 31, 2016
			Low					High
GAAP Fully Diluted EPS, guidance			$	0.24				$	0.36
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				0.04					0.04
Non-GAAP diluted EPS, guidance			$	0.32				$	0.44

National Instruments
Reconciliation of GAAP Revenue Growth to Core Revenue Growth
(unaudited)
			Three Months Ended,
			September 30,
			2016
YoY GAAP revenue growth, as reported			$	2	%
Effect of excluding our current largest customer				-1	%
YoY GAAP revenue growth, excluding our largest customer				1	%
Effect of excluding the impact of foreign currency exchange				3	%
YoY Core revenue growth			$	4	%
National Instruments
Reconciliation of GAAP Revenue Growth Guidance to Core Revenue Growth Guidance
(unaudited)
			Three Months Ended
			December 31,
			2016
Estimated YoY GAAP revenue growth, as reported			$	1	%
Estimated effect of excluding our current largest customer				2	%
Estimated YoY GAAP revenue growth, excluding our largest customer				3	%
Estimated effect of excluding the impact of foreign currency exchange				2	%
Estimated YoY Core revenue growth			$	5	%

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