8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

____________________

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported)

July 27, 2010

____________________

National Instruments Corporation

(Exact name of registrant as specified in its charter)

Delaware	000-25426	74-1871327
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

11500 North MoPac Expressway

Austin, Texas 78759

(Address of principal executive offices, including zip code)

(512) 338-9119

(Registrant’s telephone number, including area code)

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

[  ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[  ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[  ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[  ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02.  Results of Operations and Financial Conditions

Attached hereto as Exhibit 99.1 and incorporated by reference herein is the text of the registrant's press release, dated July 27, 2010, regarding financial results for the registrant's second fiscal quarter ended June 30, 2010.

The information in this Current Report on Form 8-K is being furnished and shall not be deemed "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section.

Item 9.01.  Financial Statements and Exhibits

(d)  Exhibits.

ExhibitNo.	Description
99.1	Press Release dated July 27, 2010

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	NATIONAL INSTRUMENTS CORPORATION
By:	/s/ DAVID G. HUGLEY
	David  G. Hugley Vice President & General Counsel; Secretary

Date:  July 27, 2010

EX-99.1

Contact:	Veronica Garza
	Investor Relations
	(512) 683-6873

National Instruments Reports Record Q2 Revenue and Operating Income

Strong Gross Margins Drive Operating Leverage and Strategic Investments

Q2 2010 Highlights

·   Record second quarter revenue of $212 million, up 39 percent year-over-year

·   Record second quarter operating income

·   GAAP gross margin of 77.0 percent and non-GAAP gross margin of 77.6 percent

·   Fully diluted GAAP EPS of $0.31 and non-GAAP fully diluted EPS of $0.36, both including a net foreign exchange loss of $0.02 per share

·   Record cash and short-term investments of $316 million as of June 30, 2010

·   Deferred revenue increased by $3.5 million in Q2 to $64.5 million

AUSTIN, Texas – July 27, 2010 – National Instruments (Nasdaq: NATI) reported quarterly revenue for Q2 2010 of $212 million, representing a 39 percent year-over-year increase and an 11 percent sequential increase. For the first half of 2010, the company reported a 30 percent increase in revenue and a 15 percent increase in non-GAAP operating expenses, compared to the first half of 2009. GAAP operating expenses grew by 14 percent in the first half of 2010, compared to the first half of 2009. Growing non-GAAP expenses at half the rate of revenue delivers on the goal expressed by the company at the 2009 NIWeek Investor Conference.

Net income for Q2 2010 was $24.6 million, with GAAP fully diluted earnings per share (EPS) of $0.31. Non-GAAP net income was $28.3 million, with non-GAAP fully diluted EPS of $0.36. Operating income set a record for a second quarter, and operating margins improved significantlyover last year. Included in both GAAP and non-GAAP earnings for Q2 is a net loss on foreign exchange of $2.2 million, or $0.02 per share, as a result of the dramatic weakening of European currencies in May and June. The company had not anticipated this loss when giving guidance in April. The company’s non-GAAP results exclude the impact of both stock-based compensation and the amortization of acquisition-related intangibles. Reconciliations of the company’s GAAP and non-GAAP results are included as part of this news release.

In Q2, GAAP gross margin increased 3.6 percentage points year-over-year to 77.0 percent. Non-GAAP gross margin increased by 3.4 percentage points year-over-year to 77.6 percent.

“While the economy remains uncertain, our outstanding performance in the first half of the year and our strong Q3 guidance give us confidence that we will be able to deliver record annual revenue and record annual profitability in 2010,” said Dr. James Truchard, co-founder, president, and CEO.“We plan to maintain a disciplined approach to expense management as we increase our investments to drive long-term profitable growth through strategic R&D and sales initiatives.”

National Instruments Reports Record Q2 Revenue of $212 Million

July 27, 2010

Page 2

NI virtual instrumentation and graphical system design product sales were up 38 percent year-over-year. NI instrument control product sales were up 54 percent year-over-year but remain 17 percent below Q2 2008 levels. Product revenue was $195 million, up 39 percent from Q2 2009, and software maintenance revenue was $17 million, up 37 percent year-over-year. Geographically, revenue in U.S. dollar terms for Q2 2010 compared to Q2 2009 was up 32 percent in the Americas, up 28 percent in Europe and up 66 percent in Asia. In local currency terms, revenue was up 19 percent in Europe and up 52 percent in Asia.

As of June 30, NI had a record $316 million in net cash and short-term investments, up $21 million from March 31, 2010. During Q2 2010, the company paid $10 million in dividends. National Instruments announced that its board of directors declared a dividend of $0.13 per share on its common stock payable on Aug. 30, 2010, to shareholders of record on Aug. 9, 2010.

Outlook

The trends of the global Purchasing Managers Index (PMI) continued to be strong in Q2, averaging 56.7 for the quarter, but it appears likely that the global PMI reached its peak for this cycle in Q2. The profit and investment plans the company laid out at the 2009 NIWeek Investor Conference anticipated this strong recovery by the global PMI followed by the necessary moderation toward its historical mean. The company’s discipline in growing non-GAAP expenses at half the rate of revenue has resulted in a dramatic rebound in profitability with non-GAAP operating margins increasing from 4 percent in the first half of 2009 to 15 percent in the first half of 2010

“At our 2009 NIWeek Investor Conference we set the goal of increasing expenses at 50 percent of revenue growth, until we returned record revenue,” said Alex Davern, CFO. “Given that we are back to record revenue and profitability, we will be presenting a more balanced investment plan at our investor conference next week.  Going forward we will be increasing our strategic investments and plan to increase expenses at a rate closer to that of revenue growth, while continuing to drive towards our long-term operating profit goal.”

NI expects strong Q3 year-over-year revenue growth, with revenue expected to be between $206 million and $220 million. The company expects fully diluted EPS between $0.27 and $0.37, with non-GAAP fully diluted EPS expected to be between $0.32 and $0.42.

National Instruments Reports Record Q2 Revenue of $212 Million

July 27, 2010

Page 3

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 news release, the company has presented its gross profit, operating expenses, operating income, net income, provision for taxes and EPS for the three and six month periods ending June 30, 2010 and 2009, on a GAAP and non-GAAP basis. When presenting non-GAAP information, the company includes a reconciliation of the non-GAAP results to the GAAP results.

Management believes that including the non-GAAP results assists investors in assessing the company’s operational performance and its performance relative to its competitors. The company 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. Management uses these non-GAAP measures to manage and assess the profitability and performance of its business and does not consider stock-based compensation expense or amortization of acquired intangibles that are non-cash charges in managing its operations. Specifically, management 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 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. Management also considers such non-GAAP results to be an important supplemental measure of its performance.

This news release also discloses NI earnings before interest, taxes, depreciation and amortization (EBITDA) and EBITDA diluted EPS for the three and six month periods ended June 30, 2010 and 2009. Management also believes that including the EBITDA results assists investors in assessing the company’s operational performance relative to its competitors. A reconciliation of EBITDA and EBITDA diluted EPS to GAAP net income and GAAP diluted EPS is included with this news release.

Conference Call Information

Interested parties can listen to the Q2 2010 conference call today, July 27, beginning at 4:00 p.m. CDT, at www.ni.com/call. Replay information is available by calling (888) 203-1112, confirmation code # 9955054, from July 27 at 7:00 p.m. CDT through Aug. 3 at midnight CDT.

National Instruments Reports Record Q2 Revenue of $212 Million

July 27, 2010

Page 4

Forward-Looking Statements

This release contains “forward-looking statements,” including statements related to delivering record annual revenue and record annual profitability in 2010, plan to maintain a disciplined approach to expense management,  driving long-term profitable growth through strategic R&D and sales initiatives focused at new large opportunity areas, likely that the global PMI peaked for this cycle, maintaining tight budget discipline, expenses increasing at a rate closer to revenue growth, continuing to improve the company’s profitability and outlook for Q3 revenue and Q3 GAAP and non-GAAP EPS. These statements are subject to a number of risks and uncertainties, including the risk of further adverse changes or fluctuations in the global economy, disruption of European logistics, component shortages, delays in the release of new products, fluctuations in customer demand for NI products, the company’s ability to continue to control its operating expenses, manufacturing inefficiencies and foreign exchange fluctuations. Actual results may differ materially from the expected results. The company directs readers to its Form 10-K for the fiscal year ended Dec. 31, 2009, its Form 10-Q for the quarter ended March 31, 2010, and the other documents it files with the SEC for other risks associated with the company’s future performance.

About National Instruments

National Instruments (www.ni.com) is transforming the way engineers and scientists design, prototype and deploy systems for measurement, automation and embedded applications. NI empowers customers with off-the-shelf software such as NI LabVIEW and modular cost-effective hardware, and sells to a broad base of more than 30,000 different companies worldwide, with no one customer representing more than 3 percent of revenue and no one industry representing more than 15 percent of revenue. Headquartered in Austin, Texas, NI has more than 5,000 employees and direct operations in more than 40 countries. For the past 11 years, FORTUNE magazine has named NI one of the 100 best companies to work for in America. Readers can obtain investment information from the company’s investor relations department by calling (512) 683-5090, e-mailing nati@ni.com or visiting www.ni.com/nati. (NATI-F)

LabVIEW, National Instruments, NI, ni.com and NIWeek are trademarks of National Instruments. Other product and company names listed are trademarks or trade names of their respective companies.

###

National Instruments Reports Record Q2 Revenue of $212 Million

July 27, 2010

Page 5

National Instruments
Consolidated Balance Sheets
(in thousands)
		June 30,		December 31,
		2010		2009
		(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	185,418	$	201,465
Short-term investments		130,857		87,196
Accounts receivable, net		111,008		103,957
Inventories, net		95,983		86,515
Prepaid expenses and other current assets		41,928		36,523
Deferred income taxes, net		12,811		16,522
Total current assets		578,005		532,178
Property and equipment, net		150,905		153,265
Goodwill, net		68,569		64,779
Intangible assets, net		53,132		43,390
Other long-term assets		17,559		19,417
Total assets	$	868,170	$	813,029
Liabilities and stockholders' equity
Current liabilities:
Accounts payable	$	28,786	$	23,502
Accrued compensation		29,145		14,934
Deferred revenue		64,447		57,242
Accrued expenses and other liabilities		14,566		8,560
Other taxes payable		12,910		14,181
Total current liabilities		149,854		118,419
Deferred income taxes		24,700		25,012
Liability for uncertain tax position		12,389		11,062
Other long-term liabilities		5,251		4,116
Total liabilities	$	192,194	$	158,609
Stockholders' equity:
Preferred stock		-		-
Common stock		782		774
Additional paid-in capital		379,468		336,446
Retained earnings		299,871		303,655
Accumulated other comprehensive income (loss)		(4,145)		13,545
Total stockholders' equity	$	675,976	$	654,420
Total liabilities and stockholders' equity	$	868,170	$	813,029

National Instruments Reports Record Q2 Revenue of $212 Million

July 27, 2010

Page 6

National Instruments
Consolidated Statements of Income
(in thousands, except per share data)
		Three Months Ended				Six Months Ended
		June 30,				June 30,
		(Unaudited)				(Unaudited)
		2010		2009		2010		2009
Net sales:
Products	$	194,830	$	139,792	$	370,225	$	283,242
Software maintenance		16,887		12,371		32,583		26,720
Total net sales		211,717		152,163		402,808		309,962
Cost of sales:
Cost of products	$	47,176	$	39,202	$	89,438	$	78,758
Cost of software maintenance		1,463		1,284		2,443		2,611
Total cost of sales		48,639		40,486		91,881		81,369
Gross profit	$	163,078	$	111,677	$	310,927	$	228,593
Operating expenses:
Sales and marketing	$	79,231	$	65,137	$	153,672	$	133,963
Research and development		36,395		29,447		74,941		64,236
General and administrative		16,969		14,752		32,309		30,532
Total operating expenses	$	132,595	$	109,336	$	260,922	$	228,731
Operating income (loss)	$	30,483	$	2,341	$	50,005	$	(138)
Other income (expense):
Interest income	$	371	$	407	$	671	$	996
Net foreign exchange gain (loss)		(2,203)		1,063		(2,901)		361
Other income, net		462		334		810		497
Income before income taxes	$	29,113	$	4,145	$	48,585	$	1,716
Provision for (benefit from) income taxes		4,511		(285)		5,630		(3,072)
Net income	$	24,602	$	4,430	$	42,955	$	4,788
Basic earnings per share	$	0.32	$	0.06	$	0.55	$	0.06
Diluted earnings per share	$	0.31	$	0.06	$	0.55	$	0.06
Weighted average shares outstanding -
basic		77,932		77,556		77,657		77,417
diluted		78,992		77,824		78,752		77,596
Dividends declared per share	$	0.13	$	0.12	$	0.26	$	0.24

National Instruments Reports Record Q2 Revenue of $212 Million

July 27, 2010

Page 7

National Instruments
Consolidated Statements of Cash Flows
(in thousands)
		Six Months Ended
		June 30,
		(Unaudited)
		2010		2009
Cash flow from operating activities:
Net income	$	42,955	$	4,788
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization		18,988		19,023
Stock-based compensation		9,459		10,036
Tax expense (benefit) from deferred income taxes		3,774		(2,610)
Tax expense stock option plans		579		1,379
Changes in operating assets and liabilities:
Accounts receivable		(6,803)		30,155
Inventories		(9,163)		12,089
Prepaid expenses and other assets		(18,740)		(624)
Accounts payable		4,953		(6,498)
Deferred revenue		7,205		2,178
Taxes and other liabilities		18,513		(11,922)
Net cash provided by operating activities	$	71,720	$	57,994
Cash flow from investing activities:
Capital expenditures		(10,015)		(7,706)
Capitalization of internally developed software		(11,021)		(9,390)
Additions to other intangibles		(1,690)		(2,420)
Acquisition, net of cash received		(2,191)		-
Purchases of short-term and long-term investments		(85,199)		(23,989)
Sales and maturities of short-term and long-term investments		41,538		1,218
Net cash (used by) investing activities	$	(68,578)	$	(42,287)
Cash flow from financing activities:
Proceeds from issuance of common stock		32,550		11,520
Repurchase of common stock		(30,935)		(14,908)
Dividends paid		(20,225)		(18,617)
Tax (benefit) from stock option plans		(579)		(1,379)
Net cash (used by) financing activities	$	(19,189)	$	(23,384)
Net change in cash and cash equivalents		(16,047)		(7,677)
Cash and cash equivalents at beginning of period		201,465		229,400
Cash and cash equivalents at end of period	$	185,418	$	221,723

National Instruments Reports Record Q2 Revenue of $212 Million

July 27, 2010

Page 8

Detail of GAAP charges related to stock-based compensation and
amortization of acquisition intangibles
(Unaudited)
		Three Months Ended				Six Months Ended
		June 30,				June 30,
		2010		2009		2010		2009
Stock-based compensation
Cost of sales	$	320	$	330	$	682	$	640
Sales and marketing		1,996		2,231		4,100		4,416
Research and development		1,593		1,683		3,358		3,420
General and administrative		634		761		1,319		1,560
Provision for income taxes		(1,582)		(1,865)		(3,127)		(4,879)
Total	$	2,961	$	3,140	$	6,332	$	5,157
Amortization of acquisition intangibles
Cost of sales	$	922	$	853	$	1,644	$	1,740
Sales and marketing		100		126		222		252
Research and development		-		-		-		-
General and administrative		-		-		-		-
Provision for income taxes		(327)		(277)		(580)		(557)
Total	$	695	$	702	$	1,286	$	1,435

National Instruments Reports Record Q2 Revenue of $212 Million

July 27, 2010

Page 9

National Instruments
Reconciliation of GAAP to Non-GAAP Measures
(in thousands, except per share data)
(unaudited)
Reconciliation of Gross Profit to Non-GAAP Gross Profit
		Three Months Ended				Six Months Ended
		June 30,				June 30,
		2010		2009		2010		2009
Gross profit, as reported	$	163,078	$	111,677	$	310,927	$	228,593
Stock-based compensation		320		330		682		640
Amortization of acquisition intangibles		922		853		1,644		1,740
Non-GAAP gross profit	$	164,320	$	112,860	$	313,253	$	230,973
Reconciliation of Operating Expenses to Non-GAAP Operating Expenses
		Three Months Ended				Six Months Ended
		June 30,				June 30,
		2010		2009		2010		2009
Operating expenses, as reported	$	132,595	$	109,336	$	260,922	$	228,731
Stock-based compensation		(4,223)		(4,675)		(8,777)		(9,396)
Amortization of acquisition intangibles		(100)		(126)		(222)		(252)
Non-GAAP operating expenses	$	128,272	$	104,535	$	251,923	$	219,083
Reconciliation of Operating Income (Loss) to Non-GAAP Operating Income
		Three Months Ended				Six Months Ended
		June 30,				June 30,
		2010		2009		2010		2009
Operating income (loss), as reported	$	30,483	$	2,341	$	50,005	$	(138)
Stock-based compensation		4,543		5,005		9,459		10,036
Amortization of acquisition intangibles		1,022		979		1,866		1,992
Non-GAAP operating income	$	36,048	$	8,325	$	61,330	$	11,890
Reconciliation of Income before income taxes to Non-GAAP Income before income taxes
		Three Months Ended				Six Months Ended
		June 30,				June 30,
		2010		2009		2010		2009
Income before income taxes, as reported	$	29,113	$	4,145	$	48,585	$	1,716
Stock-based compensation		4,543		5,005		9,459		10,036
Amortization of acquisition intangibles		1,022		979		1,866		1,992
Non-GAAP income before income taxes	$	34,678	$	10,129	$	59,910	$	13,744
Reconciliation of Provision for (Benefit From) Income Taxes to Non-GAAP Provision For (Benefit From) Income Taxes
		Three Months Ended				Six Months Ended
		June 30,				June 30,
		2010		2009		2010		2009
Provision for(benefit from) income taxes, as reported	$	4,511	$	(285)	$	5,630	$	(3,072)
Stock-based compensation		1,582		1,865		3,127		4,879
Amortization of acquisition intangibles		327		277		580		557
Non-GAAP provision for income taxes	$	6,420	$	1,857	$	9,337	$	2,364

National Instruments Reports Record Q2 Revenue of $212 Million

July 27, 2010

Page 10

Reconciliation of GAAP Net Income, Basic EPS and Diluted EPS to Non-GAAP Net Income, Basic EPS and
Diluted EPS
(unaudited)
		Three Months Ended				Six Months Ended
		June 30,				June 30,
		2010		2009		2010		2009
Net income, as reported	$	24,602	$	4,430	$	42,955	$	4,788
Adjustments to reconcile net income to non-GAAP net income:
Stock-based compensation, net of tax effect		2,961		3,140		6,332		5,157
Amortization of acquisition intangibles, net of tax effect		695		702		1,286		1,435
Non-GAAP net income	$	28,258	$	8,272	$	50,573	$	11,380
Basic EPS, as reported	$	0.32	$	0.06	$	0.55	$	0.06
Adjustment to reconcile basic EPS to non-GAAP
basic EPS:
Impact of stock-based compensation, net of tax effect	$	0.03	$	0.04	$	0.08	$	0.07
Impact of amortization of acquisition intangibles, net of tax effect	$	0.01	$	0.01	$	0.02	$	0.02
Non-GAAP basic EPS	$	0.36	$	0.11	$	0.65	$	0.15
Diluted EPS, as reported	$	0.31	$	0.06	$	0.55	$	0.06
Adjustment to reconcile diluted EPS to non-GAAP
diluted EPS:
Impact of stock-based compensation, net of tax effect	$	0.04	$	0.04	$	0.08	$	0.07
Impact of amortization of acquisition intangibles, net of tax effect	$	0.01	$	0.01	$	0.01	$	0.02
Non-GAAP diluted EPS	$	0.36	$	0.11	$	0.64	$	0.15
Weighted average shares outstanding -
Basic		77,932		77,556		77,657		77,417
Diluted		78,992		77,824		78,752		77,596
Reconciliation of Net Income and Diluted EPS to EBITDA and EBITDA Diluted EPS
(unaudited)
		Three Months Ended				Six Months Ended
		June 30,				June 30,
		2010		2009		2010		2009
Net income, as reported	$	24,602	$	4,430	$	42,955	$	4,788
Adjustments to reconcile net income to EBITDA:
Interest income		(371)		(407)		(671)		(996)
Taxes		4,511		(285)		5,630		(3,072)
Depreciation and amortization		9,546		10,638		18,988		19,023
EBITDA	$	38,288	$	14,376	$	66,902	$	19,743
Diluted EPS, as reported	$	0.31	$	0.06	$	0.55	$	0.06
Adjustment to reconcile diluted EPS to EBITDA
Interest income	$	(0.01)	$	(0.01)	$	(0.01)	$	(0.01)
Taxes	$	0.06	$	(0.01)	$	0.07	$	(0.04)
Depreciation and amortization	$	0.12	$	0.14	$	0.24	$	0.24
EBITDA diluted EPS	$	0.48	$	0.18	$	0.85	$	0.25
Weighted average shares outstanding - Diluted		78,992		77,824		78,752		77,596

National Instruments Reports Record Q2 Revenue of $212 Million

July 27, 2010

Page 11

National Instruments
Reconciliation of GAAP to Non-GAAP EPS Guidance
(unaudited)
		Three months ended
		September 30, 2010
		Low		High
GAAP Fully Diluted EPS guidance	$	0.27	$	0.37
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, net of tax effect	$	0.01	$	0.01
Non-GAAP diluted EPS guidance	$	0.32	$	0.42