1. WELCOME National Instruments Building Business Acumen Acumen Learning, LLC www.acumenlearning.com 877-224-5444

2. B USINESS A CUMEN - D EFINED The ability to make effective business decisions in a timely manner with an understanding of the impact of the decision to the business. Quickness of perception Keen insight Mental acuteness

3. K EY S UCCESS M EASURES How much do you know about National Instruments’ Key Success Measures? Let’s find out!

4. P OP Q UIZ Instructions: Information is based on the annual reported numbers FY2010 or thru 3Q of 2011. Every question requires an answer, and yes guessing is ok. Write answers on page 35. 1 – How much Cash was on hand? 2 – How much Cash was generated by Operating Activities? 3 – What was the Gross Margin (%)? 4 – What was the Operating Margin (%)? 5 – What was the Net Profit Margin (%)? 6 – What was the Diluted Earnings Per Share ($)? 7 – What were the Net Sales ($)? 8 – What was the Inventory Turnover? 9 – What was the % change in Net Sales year over year (%)? 10 – What was the % change in Operating Earnings year over year (%)? 11 – What was the % change in EPS year over year (%)? 12 – What was the R&D spend as % of Sales (%)?

5. 5-B USINESS D RIVERS The 5-Business Drivers all companies must do well at in order to succeed.. 1.Define the driver. 2.Know how to measure driver. 3.Why is it important? 4.Know the numbers (& Competitor’s) 5.Impact by creating an Action Plan. People Employees Customers People Employees Customers Growth Top Line Bottom Line Growth Top Line Bottom Line Assets Strength Utilization Assets Strength Utilization Profit Revenues Expenses Profit Revenues Expenses Cash On Hand Generation Cash On Hand Generation

6. C ASH D RIVER People Employees Customers People Employees Customers Growth Top Line Bottom Line Growth Top Line Bottom Line Assets Strength Utilization Assets Strength Utilization Profit Revenues Expenses Profit Revenues Expenses Cash On Hand Generation Cash On Hand Generation 1.Define the driver. 2.Know how to measure driver. 3.Why is it important? 4.Know the numbers (& Competitor’s) 5.Impact by creating an Action Plan.

7. C ASH I MPORTANCE Cash is King! “Cash is the company’s oxygen supply.” ~ Ram Charan It gives you the ability to stay in business. “Cash is more important than your mother.” ~ Al Shugart Former CEO of Seagate.

8. C ASH Definition – What is required to grow and maintain the business. Cash – is the bills and coins in the register, petty cash, and cash in the bank. Also includes cash equivalents, like CD’s and other highly liquid investments, that easily convert into cash within 90 days. M EASURES Cash Flow – The cash generation from core business activities calculated from the difference between the cash that flows into and out of the business in a given period of time (month, quarter, annual)

9. P ERFORMANCE “As of September 30, 2011, NI had $336 million in cash and short-term investments. The National Instruments Board of Directors approved a quarterly dividend of $0.10 per share on the company's common stock payable on November 28 to stockholders of record on November 7.” (Q3FY11 Press Release) Primary uses: Dividends, Acquisitions, R&D Investment, Product Launches, and Capital Expenditures.

10. B ENCHMARK 25%49%40%11%25% “To maximize cash: Get the costs right, Get the quality right, and Launch products on time.” Ram Charan

11. A CTION P LAN Write down one action item You are committed to take to positively impact National Instruments focusing on Cash and/or Cash Flow. Increase Sales Reduce Costs Improve new plan designs Better manage Account Receivables Reduce/conserve operating costs Delay purchases Improve Project Planning Improve Data Input Better Manage Account Payables Possibilities

12. P ROFIT D RIVER People Employees Customers People Employees Customers Growth Top Line Bottom Line Growth Top Line Bottom Line Assets Strength Utilization Assets Strength Utilization Profit Revenues Expenses Profit Revenues Expenses Cash On Hand Generation Cash On Hand Generation “No margin, no mission.” “Every business must earn a return that is greater than the cost of using other people’s money.” Ram Charan

13. Sales (Revenues)$100100% - Costs of Goods Sold$ 23 = Gross Margin$ 77 77% - Op Expenses $ 62.3 = Op Profit Margin$ 14.7 15% - Interest and Taxes$ 2.2 =Net Profit Margin$ 12.512.5% P ROFIT C ALCULATIONS

14. H IGH M ARGIN High Margin = Unique product and/or higher demand than supply. 2010 S&P 500 Average Net Profit Margin = 11% 28% 32% 27%

15. L OW M ARGIN High Margin = Unique product and/or higher demand than supply. 2010 S&P 500 Average Net Profit Margin = 11% 8.0% 3.6% 1.7%

16. P ROFITS IN A CTION General Mills: Hot’n Spicy Chex Mix: “We had 14 different pretzel shapes. By getting rid of some of them, we save $1 million a year.” Yoplait: Ditched multicolored lids saving $2 million a year

17. P ERFORMANCE “Our ability to significantly increase our gross margin sequentially and year-over-year is attributed to the success we had in driving down component costs, improving manufacturing efficiency, and to the high value that customers see in our products” Q4FY10 Analyst Call

18. Premium pricing on new products, Expense discipline (“Operating Leverage”), Leveraging Software core, Manufacturing Efficiencies (plant in Hungary), Online Sales, Target of Expense Growth at 70% of Revenue Growth Analysts feel that 18% Operating Margin (non-GAAP) can be achieved with 10%+ Sales Growth K EY P ROFIT D RIVERS FOR N ATIONAL I NSTRUMENTS

20. B ENCHMARK “Given that we are closing out our 2011 investment plan, we expect to see a very modest increase in operating expenses in Q4. Looking out to 2012, our objective will be to grow revenues faster than expenses and we believe we will be able to achieve this goal if we are able to deliver year-over-year revenue growth in the high single digit range or better.” Alex Davern, Q3 FY11 Analyst Call

21. A SSET D RIVER Anything you own or control…which has value. People Employees Customers People Employees Customers Growth Top Line Bottom Line Growth Top Line Bottom Line Assets Strength Utilization Assets Strength Utilization Profit Revenues Expenses Profit Revenues Expenses Cash On Hand Generation Cash On Hand Generation

22. B ALANCING Asset Strength Asset Utilization

23. A SSETS IN A CTION United Parcel Services (UPS) – Avoiding left-hand turns -92,000 trucks worldwide -Saved over 28,541,472 miles -Saved 3 million gallons of fuel -Reduced insurance premiums -Reduced maintenance frequency and costs

24. P ERFORMANCE "Over the last few years we have invested significantly in building out our capabilities to serve our larger customers, which enabled the significant progress we saw in Q3. This ability to grow our larger orders will be key to achieving our goal of $2 billion in revenue by 2016." Dr. T, Q3FY11 Analyst Call

25. B ENCHMARK

26. G ROWTH D RIVER Why is GROWTH so important to business? People Employees Customers People Employees Customers Growth Top Line Bottom Line Growth Top Line Bottom Line Assets Strength Utilization Assets Strength Utilization Profit Revenues Expenses Profit Revenues Expenses Cash On Hand Generation Cash On Hand Generation

27. G ROWTH Definition – The ability to increase year over year, quarter over quarter, and/or month over month. Revenue Growth – Top-line Revenues increase. M EASURES Earnings Per Share (EPS) Growth – Per share value increase. Net Income Growth – Bottom-line / Profit increase. “In today’s business world, no growth means lagging behind in a world that grows every day…” “Investors expect it, employees are energized by it, customers are generally attracted to it and executives are measured by it.”

28. R APID D ECLINE Best and Brightest leave first. Productivity decreases. Morale goes down. Costs are cut, limiting growth and impacting quality, resulting in decreasing profits. * Studies have shown that it takes 4-5 years for a company to recover from a significant down-turn in profits, assuming they recover.

29. R APID G ROWTH Attracts/Retains the best and the brightest employees. Productivity increases = more profits = more cash = more growth! Morale is high. Employees have greater potential for career and personal growth. * Growth gets more time and attention than any of the 5 Drivers in a public company.

30. P ERFORMANCE "We have exercised good discipline this year in matching expense growth to revenue growth, with non-GAAP revenue up 22% and non-GAAP operating expenses up by 23%, year to date…while we are cautious about the direction of the industrial economy over the coming quarters, we are confident our investments will significantly advance our long-term position in the industries we serve.“ Alex Davern, Q3FY11 Analyst Call

32. G ROWTH 15

33. B ENCHMARK In FY10, large system orders contributed to yearly growth : Average order ~ $4,470, Orders over $20K ~ up 41% (higher than 2009 levels)

34. P EOPLE D RIVER Members, Customers, and employees are the key to driving profitable & sustainable growth. People Customers Employees People Customers Employees Growth Top Line Bottom Line Growth Top Line Bottom Line Assets Strength Utilization Assets Strength Utilization Profit Revenues Expenses Profit Revenues Expenses Cash On Hand Generation Cash On Hand Generation

35. P EOPLE Definition – The External Customer, Supplier, Partner, Shareholder, Bond holder, or Internal Customer that has the ability to impact the success of the business. Total Revenue – Top-line Operating Revenues. M EASURES Employee Turnover – The rate which employees leave the company and require replacement. Member Satisfaction –NPS, marketshare, etc.

36. C USTOMERS What is more important than meeting customer expectations? Exceeding? Anticipating Customer Needs & Expectations! “If I would have asked my customer what they wanted, they would have said a faster horse!” ~Henry Ford “Culture eats strategy for breakfast!” ~Peter Drucker

38. 5-B USINESS D RIVERS How will we remember the 5 Drivers? Can you ignore any of these over time and still be successful?

39. 1) What are the key messages? 2) What are the top 2 Elements getting focus from Dr. T and team? 3) What are the key strategies the Executive Team is focusing on? 4) Did we have a good year or bad year and how can you tell? 2010 A NNUAL R EPORT A CTIVITY P G. 48

40. S TATEMENTS 1.What is the basic equation for each statement? 2.What is the purpose of the statement? 3.What are the key numbers and how are they trending? 4.How can you impact each statement? The Annually Reported Financial Statements Balance Sheet Statement of Income (P&L) Statement of Cash Flows

41. Profitability (P&L) Equation Sales -Expenses = Profit Pg. 24-25 Bottom-Line Net Income / Shares 29% 538% 18% 33% 19% 16% 175% 527% 77.1% Gross Margin 14.7% Operating Margin Revenues Expenses Income(Profit) Top-Line

42. +$100K -23K + 77K Gross Margin 77% + 40K + 34K -37K Tax rate = 15% - $6K Increase Sales by $100K

43. -100K + 100K + 85K Decrease Cost of Sales by $100K Tax rate = 15% -$15K

44. Becomes Cash < 1 year Most Liquid Least Liquid Due First Due Last Due in < 1 year Financial Strength Page 26-27 Equation Assets = Liabilities + Equity Assets Liabilities Equity=+ 22% 36% 22% 18% 36% 14%

45. Balance Sheet Statement of Income (P&L) Statement of Cash Flow 5-B USINESS D RIVERS

46. 219 145 77.1 14.7 12.5 1.38 873 1.7 29 176 527 18.1

47. T OTAL THE F INANCIALS SCORING: Right answer = 1 point Somewhat close = ½ point (within: $50M, $2, 2%) Missed it by a ways = 0 point

48. F INDING F INANCIALS Web Sites: www.nasdaq.com www.reuters.com www.yahoo.com www.finance.google.com www.hoovers.com www.smartmoney.com

49. F INAL T HOUGHT “People will work… hard for a paycheck, harder for a person, and hardest for a reason.”

50. Thank You National Instruments Building Business Acumen Acumen Learning, LLC www.acumenlearning.com 877-224-5444