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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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): May 23, 2007
-----------------
Network Appliance, Inc.
(Exact name of Registrant as specified in its charter)
Delaware 0-27130 77-0307520
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification Number)
495 East Java Drive
Sunnyvale, CA 94089
(Address of principal executive offices) (Zip Code)
(408) 822-6000
(Registrant's telephone number, including area code)
================================================================================
- --------------------------------------------------------------------------------
Item 2.02.
On May 23, 2007, Network Appliance, Inc. issued a press release announcing
its earnings for the fourth quarter and fiscal year 2007. The press release is
attached as an exhibit to this Form 8-K, and the information set forth therein
is hereby incorporated by reference into this Item 2.02.
Item 9.01(c).
Network Appliance, Inc.'s May 23, 2007 press release is hereby furnished
as Exhibit 99.1 to this Form 8-K in connection with the disclosures under Item
2.02 of this Form 8-K.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
May 23, 2007 By: /s/ Steven Gomo
--------------------------------------
Steven J. Gomo
Chief Financial Officer
- --------------------------------------------------------------------------------
Index to Exhibits
Exhibit Description
- ------- -----------
99.1 Press release of Network Appliance, Inc. issued on May 23, 2007.
Exhibit 99.1
Network Appliance Announces Results for Fourth Quarter and Fiscal Year 2007
Q4 Revenues $801.2 Million, up 34% Year over Year;
Fiscal Year 2007 Revenues $2.8 Billion, up 36% Year over Year
SUNNYVALE, Calif.--(BUSINESS WIRE)--May 23, 2007--Network Appliance, Inc.
(NASDAQ:NTAP), the leader in advanced networked storage solutions, today
reported results for the fourth quarter and fiscal year 2007. Revenues for the
fourth fiscal quarter were $801.2 million, an increase of 34% compared to
revenues of $598.0 million for the same period a year ago and an increase of 10%
compared to $729.3 million in the prior quarter.
For the fourth fiscal quarter, GAAP net income increased 51% to $89.6
million, or $0.23 per share(1) compared to GAAP net income of $59.2 million, or
$0.15 per share for the same period in the prior year. Non-GAAP(2) net income
for the fourth fiscal quarter increased 28% to $114.2 million, or $0.30 per
share, compared to non-GAAP net income of $89.3 million, or $0.23 per share for
the same period a year ago.
Revenues for fiscal year 2007 totaled $2.8 billion, an increase of 36%
compared to revenues of $2.07 billion for fiscal year 2006.
For fiscal year 2007, GAAP net income increased 12% to $297.7 million, or
$0.77 per share, compared to GAAP net income of $266.5 million, or $0.69 per
share for fiscal year 2006. Non-GAAP net income for fiscal year 2007 increased
37% to $430.7 million, or $1.11 per share, compared to non-GAAP net income of
$315.3 million, or $0.81 per share for fiscal year 2006.
"Network Appliance had a great finish to a great year. With 36% annual
growth, NetApp clearly provides to customers the best value in the industry,"
said Dan Warmenhoven, chief executive officer. "And while we weren't immune from
the March macroeconomic spending slowdown, our competitive differentiation and
business fundamentals have never been stronger."
Outlook
-- Network Appliance expects sequential revenue for the first quarter of
fiscal year 2008 to decline by 6% to 7%, which translates to about 20%
to 21% growth year over year.
-- Including the implementation of SFAS123R and with current information
and assumptions, the company estimates that the first quarter of
fiscal year 2008 GAAP earnings per share will be approximately $0.14
to $0.15 per share. Network Appliance expects first quarter non-GAAP
earnings per share to be approximately $0.24 to $0.25 per share.
Quarterly Highlights
During the fourth quarter of fiscal year 2007, NetApp broadened its Fibre
Channel (FC) storage area network (SAN) portfolio and enhanced data management
and data protection solutions with new products as well as broader and deeper
partnerships. The company also continued to gain momentum in the SAN market
while maintaining market leadership in both network-attached storage (NAS) and
iSCSI.
Continuing its extension into the data center, NetApp announced two new
midrange platforms aimed at making enterprise data center management easier for
customers. The NetApp(R) FAS3040 and NetApp V3040 series created additional
market opportunities for NetApp as it broadened its enterprise lineup and added
functionality for FC SAN environments.
The NetApp FC SAN portfolio was further strengthened with the worldwide
availability of new switches, including two new blades for the Brocade(R) 48000
Director, and the QLogic(R) SANbox(R) 9000 Core and SANbox 5600 Stackable Series
of switches.
NetApp expanded its enterprise-class software line with NetApp
ReplicatorX(TM) and NetApp SnapManager(R) software for use with SAP(R)
solutions. NetApp ReplicatorX (formerly Topio TDPS) provides continuous data
replication and recovery across a range of locations and storage systems,
including EMC, HDS, HP, IBM, and NetApp. NetApp SnapManager software for use
with SAP enhances application availability and provides increased storage
management flexibility in SAP environments.
From a market perspective, according to IDC's Worldwide Quarterly Disk
Storage Systems Tracker Q4 2006(3), NetApp continued to grow faster than the
market in FC SAN in both revenue and capacity, year over year. The company grew
FC SAN revenue at more than seven times the rate of both the market leader and
the overall FC SAN market, and grew FC SAN capacity at more than four times the
rate of the overall market.
In addition to FC SAN, NetApp continued to demonstrate leadership in the
NAS and iSCSI storage markets, maintaining the number-one market share position
in capacity shipped for NAS (38.9%) and in iSCSI for both capacity and revenue.
NetApp also continued to show significant gains in storage software,
growing six times faster than the overall storage software market from 2005 to
2006, according to IDC's Worldwide Quarterly Storage Software Tracker Q4
2006(4).
NetApp leadership in innovation remained strong with the news that it has
been positioned by Gartner, Inc., in the "Visionaries" quadrant in the Gartner
Magic Quadrant for Storage Resource Management (SRM) and SAN Management
Software, 2007(5).
On the partner front, NetApp unveiled several new solution enhancements and
partner offerings with Brocade, Cisco, Fujitsu, Onaro, RSA, SAP, Symantec, and
VMware to address a variety of data concerns, including data management, data
protection, and data replication.
In corporate news, NetApp topped the "Most Admired Company" list in the
computer peripherals industry in FORTUNE Magazine's 2007 "America's Most Admired
Companies" rankings.
NetApp StoreVault(TM) S500 also received accolades in the fourth quarter as
it was voted "Best Product of the Year" in Small Business Computing's 2007
Product Excellence Awards.
Webcast and Conference Call Information
-- The NetApp quarterly results conference call will be broadcast live
via the Internet at http://investors.netapp.com on Wednesday, May 23,
2007, at 2:00 p.m. Pacific time. This press release and any other
information related to the call will also be posted on the Website at
that location.
-- The conference call will also be available live in a listen-only
format at (800) 901-5231 in the United States and (617) 786-2961
outside the United States. The pass code for both numbers is 67805785.
-- A replay will be available for 72 hours following the completion of
the live call by dialing (888) 286-8010 in the United States and (617)
801-6888 outside the United States, using replay code 37079987. The
Webcast replay will be posted on our Website for at least one year.
About Network Appliance
Network Appliance is a world leader in unified storage solutions for
today's data-intensive enterprise. Since its inception in 1992, Network
Appliance has delivered technology, product, and partner firsts that simplify
data management. Information about Network Appliance(TM) solutions and services
is available at www.netapp.com.
This press release contains forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. These statements
include all of the statements under the Outlook section relating to our
forecasted operating results and metrics for the first quarter of fiscal 2008;
statements regarding the anticipated benefits of our products, technologies, and
services relative to the offerings of our competitors; and statements regarding
anticipated benefits from partner offerings. These forward-looking statements
involve risks and uncertainties, and actual results could vary. Important
factors that could cause actual results to differ materially from those in the
forward-looking statements include our ability to build non-deferred backlog to
levels consistent with our past results and to increase our revenue over the
next several quarters; general economic and industry conditions, including
expenditure trends for storage-related products; risks associated with the
anticipated growth in network storage and content delivery markets; our ability
to deliver new product architectures and enterprise service offerings;
competition risks, including our ability to design products and services that
compete effectively from a price and performance perspective; risks with new
product introductions; our reliance on a limited number of suppliers; our
ability to accurately forecast demand for our products and successfully manage
our relationships with our contract manufacturers; our ability to expand our
direct sales operations and reseller distribution channels; our ability to
develop, maintain, and strengthen our relationships and product offerings with
strategic partners; risks associated with international operations; our ability
to successfully acquire and integrate complementary businesses and technologies;
foreign currency exchange rate fluctuations; and other important factors as
described in Network Appliance, Inc. reports and documents filed from time to
time with the Securities and Exchange Commission, including the factors
described under the sections captioned "Risk Factors" in our most recently
submitted 10-K and 10-Q. We disclaim any obligation to update information
contained in these forward-looking statements whether as a result of new
information, future events, or otherwise.
(1) Earnings per share represents the diluted number of shares for all
periods presented.
(2) Non-GAAP results of operations exclude amortization of intangible
assets, stock-based compensation expenses, other acquisition-related costs,
in-process research and development, restructuring charges/recoveries, gain/loss
on sale of assets and investments, certain other nonrecurring events, and the
related effects on income taxes.
(3) IDC's Worldwide Quarterly Disk Storage Systems Tracker, Q4 2006.
(4) IDC's Worldwide Quarterly Storage Software Tracker, March 2007.
(5) Gartner Inc., "Magic Quadrant for Storage Resource Management (SRM) and
SAN Management Software, 2007."
NetApp and SnapManager are registered trademarks and Network Appliance,
ReplicatorX, and StoreVault are trademarks of Network Appliance, Inc. in the
U.S. and other countries. All other brands or products are trademarks or
registered trademarks of their respective holders and should be treated as such.
Network Appliance Usage of Non-GAAP Financials
The Company refers to the non-GAAP financial measures cited above in making
operating decisions because they provide meaningful supplemental information
regarding the Company's operational performance. These non-GAAP financial
measures exclude amortization of intangible assets, in-process research and
development, stock compensation, other acquisition-related cost, restructuring
charges/recoveries, gain/loss on sales of assets and investments, certain other
nonrecurring events, and the related effects on income taxes as well as certain
discrete GAAP provisions for income tax matters recognized ratably for non-GAAP
purposes. We have excluded these items in order to enhance investors'
understanding of our ongoing operations. The use of these non-GAAP financial
measures has material limitations because they should not be used to evaluate
our company without reference to their corresponding GAAP financial measures. As
such, we compensate for these material limitations by using these non-GAAP
financial measures in conjunction with GAAP financial measures.
These non-GAAP financial measures facilitate management's internal
comparisons to the Company's historical operating results and comparisons to
competitors' operating results. We include these non-GAAP financial measures in
our earnings announcement because we believe they are useful to investors in
allowing for greater transparency with respect to supplemental information used
by management in its financial and operational decision making, such as employee
compensation planning. In addition, we have historically reported similar
non-GAAP financial measures to our investors and believe that the inclusion of
comparative numbers provides consistency in our financial reporting at this
time.
NETWORK APPLIANCE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
April 30, April 30,
2007 2006
----------- -----------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 489,079 $ 461,256
Short-term investments 819,702 861,636
Accounts receivable, net 591,324 415,295
Inventories 54,880 64,452
Prepaid expenses and other assets 56,765 43,536
Short-term restricted cash and investments 118,312 138,539
Deferred income taxes 110,741 48,496
----------- -----------
Total current assets 2,240,803 2,033,210
PROPERTY AND EQUIPMENT, net 603,523 513,193
GOODWILL 601,056 487,535
INTANGIBLE ASSETS, net 83,009 75,051
LONG-TERM RESTRICTED CASH AND INVESTMENTS 3,639 108,371
OTHER ASSETS 126,448 43,605
----------- -----------
$3,658,478 $3,260,965
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 85,110 $ 166,211
Accounts payable 144,112 101,278
Income taxes payable 53,371 51,577
Accrued compensation and related benefits 177,327 129,636
Other accrued liabilities 97,017 69,073
Deferred revenue 630,610 399,388
----------- -----------
Total current liabilities 1,187,547 917,163
----------- -----------
LONG-TERM DEBT - 133,789
LONG-TERM DEFERRED REVENUE 472,423 282,149
LONG-TERM OBLIGATIONS 9,487 4,411
----------- -----------
1,669,457 1,337,512
----------- -----------
STOCKHOLDERS' EQUITY 1,989,021 1,923,453
----------- -----------
$3,658,478 $3,260,965
=========== ===========
NETWORK APPLIANCE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)
Quarter Ended Year Ended
--------------------- -----------------------
April 30, April 30, April 30, April 30,
2007 2006 2007 2006
---------- ---------- ----------- -----------
REVENUES:
Product $ 588,121 $ 455,299 $2,085,898 $1,577,435
Software subscriptions 99,206 67,632 341,258 239,139
Service 113,866 75,029 377,126 249,882
---------- ---------- ----------- -----------
Total revenues 801,193 597,960 2,804,282 2,066,456
---------- ---------- ----------- -----------
COST OF REVENUES:
Cost of product 230,491 184,444 815,928 616,576
Cost of software
subscriptions 2,752 2,138 10,210 8,370
Cost of service 81,936 54,519 273,644 185,049
---------- ---------- ----------- -----------
Total cost of
revenues 315,179 241,101 1,099,782 809,995
---------- ---------- ----------- -----------
GROSS MARGIN 486,014 356,859 1,704,500 1,256,461
---------- ---------- ----------- -----------
OPERATING EXPENSES:
Sales and marketing 259,599 168,763 895,813 599,140
Research and
development 108,802 75,939 385,357 251,330
General and
administrative 42,164 24,807 147,501 92,817
In process research
and development - - - 5,000
Restructuring charges
(recoveries) - 378 (74) (117)
Gain on sale of assets - - (25,339) -
---------- ---------- ----------- -----------
Total operating
expenses 410,565 269,887 1,403,258 948,170
---------- ---------- ----------- -----------
INCOME FROM OPERATIONS 75,449 86,972 301,242 308,291
OTHER INCOME (EXPENSES),
net:
Interest income 17,617 12,929 68,837 41,519
Interest expense (1,831) (1,249) (13,208) (1,283)
Other income
(expense), net 1,204 1,158 4,395 1,644
Net gain (loss) on
investments (422) - (1,538) 101
---------- ---------- ----------- -----------
Total other income,
net 16,568 12,838 58,486 41,981
---------- ---------- ----------- -----------
INCOME BEFORE INCOME
TAXES 92,017 99,810 359,728 350,272
PROVISION FOR INCOME
TAXES 2,397 40,589 61,993 83,820
---------- ---------- ----------- -----------
NET INCOME $ 89,620 $ 59,221 $ 297,735 $ 266,452
========== ========== =========== ===========
NET INCOME PER SHARE:
BASIC $ 0.24 $ 0.16 $ 0.80 $ 0.72
========== ========== =========== ===========
DILUTED $ 0.23 $ 0.15 $ 0.77 $ 0.69
========== ========== =========== ===========
SHARES USED IN PER SHARE
CALCULATION:
BASIC 369,002 374,035 371,204 371,061
========== ========== =========== ===========
DILUTED 385,151 392,549 388,454 388,381
========== ========== =========== ===========
NETWORK APPLIANCE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(In thousands)
(Unaudited)
Quarter Ended Year Ended
--------------------- -------------------------
April 30, April 30, April 30, April 30,
2007 2006 2007 2006
---------- ---------- ------------ ------------
Cash Flows from
Operating Activities:
Net income $ 89,620 $ 59,221 $ 297,735 $ 266,452
Adjustments to
reconcile net income
to net cash provided
by operating
activities:
Depreciation 25,075 17,504 87,391 63,679
In process research
and development - - - 5,000
Amortization of
intangible assets 6,490 4,807 21,460 16,136
Amortization of
patents 496 495 1,982 1,982
Stock-based
compensation 38,354 3,851 163,033 13,293
Net (gain) loss on
investments 422 - 1,538 (101)
Gain on sale of
assets - - (25,339) -
Net loss on
disposal of
equipment 87 63 773 1,381
Allowance for
doubtful accounts 742 (875) 928 46
Deferred income
taxes (19,523) 1,531 (19,523) 1,545
Deferred rent 54 368 1,033 669
Excess tax benefit
from stock-based
compensation (19,696) - (63,159) -
Changes in assets
and liabilities:
Accounts
receivable (152,234) (46,663) (175,231) (116,816)
Inventories 6,413 (7,850) 9,908 (46,247)
Prepaid expenses
and other assets (5,385) (6,374) (6,366) (12,964)
Accounts payable 32,143 1,333 36,589 17,405
Income taxes
payable 18,557 33,063 50,126 72,669
Accrued
compensation and
related benefits 26,742 15,361 43,612 28,353
Other accrued
liabilities 4,511 7,601 16,638 8,571
Deferred revenue 157,879 88,492 421,328 233,229
---------- ---------- ------------ ------------
Net cash provided
by operating
activities 210,747 171,928 864,456 554,282
---------- ---------- ------------ ------------
Cash Flows from
Investing Activities:
Purchases of
investments (692,159) (578,857) (2,630,350) (1,029,412)
Redemptions of
investments 682,600 429,108 2,690,326 900,863
Redemptions of
restricted
investments 64,645 - 127,881 -
Increase (decrease)
in restricted cash (43) 319 290 (1,678)
Proceeds from sale of
assets - - 23,914 -
Purchases of property
and equipment (53,417) (36,407) (165,828) (132,883)
Proceeds from sales
of investments 1,039 - 2,813 130
Purchases of equity
securities (250) (2,175) (1,583) (9,275)
Purchase of business,
net of cash acquired - - (131,241) (53,747)
---------- ---------- ------------ ------------
Net cash provided
by (used in)
investing
activities 2,415 (188,012) (83,778) (326,002)
---------- ---------- ------------ ------------
Cash Flows from
Financing Activities:
Proceeds from sale
of common stock
related to employee
stock transactions 38,028 91,020 215,453 232,745
Excess tax benefit
from stock-based
compensation 19,696 - 63,159 -
Proceeds from debt - 300,000 - 300,000
Repayment of debt (66,021) - (214,890) -
Tax withholding
payments reimbursed
by restricted stock (580) (268) (5,272) (1,062)
Repurchases of common
stock (200,000) (98,761) (805,708) (488,908)
---------- ---------- ------------ ------------
Net cash (used in)
provided by
financing
activities (208,877) 291,991 (747,258) 42,775
---------- ---------- ------------ ------------
Effect of Exchange
Rate Changes on Cash (5,422) (2,776) (5,597) (3,341)
Net (Decrease) Increase
in Cash and Cash
Equivalents (1,137) 273,131 27,823 267,714
Cash and Cash
Equivalents:
Beginning of period 490,216 188,125 461,256 193,542
---------- ---------- ------------ ------------
End of period $ 489,079 $ 461,256 $ 489,079 $ 461,256
========== ========== ============ ============
NETWORK APPLIANCE, INC.
SUPPLEMENTAL INFORMATION
(In thousands)
(Unaudited)
QUARTER ENDED APRIL 30, 2007
---------------------------------------------
Amortization of Stock-based Acquisition-
Intangible Compensation Related
Assets Expenses Retention Cost
Cost of product
revenues $ 5,278 $ 1,059 -
Cost of service
revenues - 2,431 -
Sales and marketing
expense 974 16,955 1,162
Research and
development expense - 12,157 -
General and
administrative expense 238 5,752 -
Restructuring charges
(recoveries) - - -
Gain on sale of assets - - -
Net (gain) loss on
investments - - -
--------------- -------------- ---------------
Effect on pre-tax
income $ 6,490 $ 38,354 $ 1,162
Restructuring Gain on Net (Gain)
charges Sale of Loss on
(recoveries) Assets Investments Total
Cost of product revenues - - - $ 6,337
Cost of service revenues - - - 2,431
Sales and marketing
expense - - - 19,091
Research and development
expense - - - 12,157
General and
administrative expense - - - 5,990
Restructuring charges
(recoveries) - - - -
Gain on sale of assets - - - -
Net (gain) loss on
investments - - 422 422
------------- --------- ------------ --------
Effect on pre-tax income - - $ 422 $46,428
YEAR ENDED APRIL 30, 2007
---------------------------------------------
Acquisition-
Amortization of Stock-based Related
Intangible Compensation Retention
Assets Expenses Cost
Cost of product revenues $ 17,580 $ 3,720 -
Cost of service revenues - 10,088 -
Sales and marketing
expense 2,930 71,701 1,743
Research and development
expense - 51,323 -
General and
administrative expense 950 26,201 -
Restructuring charges
(recoveries) - - -
Gain on sale of assets - - -
Net (gain) loss on
investments - - -
--------------- -------------- --------------
Effect on pre-tax income $ 21,460 $ 163,033 $ 1,743
Restructuring Gain on Net (Gain)
charges Sale of Loss on
(recoveries) Assets Investments Total
Cost of product
revenues - - - $ 21,300
Cost of service
revenues - - - 10,088
Sales and marketing
expense - - - 76,374
Research and
development expense - - - 51,323
General and
administrative expense - - - 27,151
Restructuring charges
(recoveries) (74) - - (74)
Gain on sale of assets - (25,339) - (25,339)
Net (gain) loss on
investments - - 1,538 1,538
------------- --------- ------------ ---------
Effect on pre-tax
income ($74) ($25,339) $ 1,538 $162,361
NETWORK APPLIANCE, INC.
SUPPLEMENTAL INFORMATION
(In thousands)
(Unaudited)
QUARTER ENDED APRIL 30, 2006
---------------------------------------------
Amortization of Stock-based In process
Intangible Compensation research and
Assets Expenses development
Cost of product revenues $ 3,866 - -
Cost of service revenues - - -
Sales and marketing
expense 703 1,135 -
Research and development
expense - 2,413 -
General and
administrative expense 238 303 -
In process research and
development - - -
Restructuring charges
(recoveries) - - -
Net (gain) loss on
investments - - -
--------------- -------------- --------------
Effect on pre-tax income $ 4,807 $ 3,851 -
Restructuring Gain on Net (Gain) Total
charges Sale of Loss on
(recoveries) Assets Investments
Cost of product revenues - - - $3,866
Cost of service revenues - - - -
Sales and marketing
expense - - - 1,838
Research and development
expense - - - 2,413
General and
administrative expense - - - 541
In process research and
development - - - -
Restructuring charges
(recoveries) 378 - - 378
Net (gain) loss on
investments - - - -
------------- ---------- ------------ -------
Effect on pre-tax income $ 378 - - $9,036
YEAR ENDED APRIL 30, 2006
---------------------------------------------
Amortization Stock-based In process
of Intangible Compensation research and
Assets Expenses development
Cost of product revenues $ 11,785 - -
Cost of service revenues - - -
Sales and marketing
expense 2,121 3,986 -
Research and development
expense - 8,342 -
General and
administrative expense 2,230 965 -
In process research and
development - - 5,000
Restructuring charges
(recoveries) - - -
Net (gain) loss on
investments - - -
-------------- -------------- --------------
Effect on pre-tax income $ 16,136 $ 13,293 $ 5,000
Restructuring Gain on Net (Gain) Total
charges Sale of Loss on
(recoveries) Assets Investments
Cost of product revenues - - - $11,785
Cost of service revenues - - - -
Sales and marketing
expense - - - 6,107
Research and development
expense - - - 8,342
General and
administrative expense - - - 3,195
In process research and
development - - - 5,000
Restructuring charges
(recoveries) (117) - - (117)
Net (gain) loss on
investments - - (101) (101)
------------- --------- ------------ --------
Effect on pre-tax income ($117) - ($101) $34,211
NETWORK APPLIANCE, INC.
RECONCILIATION OF NON-GAAP AND GAAP
IN THE CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)
Quarter Ended Year Ended
-------------------- -------------------
April 30, April 30, April 30, April 30,
2007 2006 2007 2006
--------- ---------- --------- ---------
SUMMARY RECONCILIATION OF NET
INCOME
- -----------------------------
NET INCOME $ 89,620 $ 59,221 $297,735 $266,452
Adjustments:
Amortization of
intangible assets 6,490 4,807 21,460 16,136
Stock-based compensation
expenses 38,354 3,851 163,033 13,293
Acquisition-related
retention cost 1,162 - 1,743 -
In process research and
development - - - 5,000
Restructuring charges
(recoveries) - 378 (74) (117)
Gain on sale of assets - - (25,339) -
Net (gain) loss on
investments 422 - 1,538 (101)
Discrete GAAP tax
provision items ratably
for non-GAAP purposes (3,024) (1,358) (2,767) (5,157)
Tax effect on sale of
assets (2,012) - 2,993 -
Discrete GAAP tax
provision items 1,924 - (571) -
Non-recurring American
Jobs Creation Act income
tax expense - 22,482 - 22,482
Income tax effect (18,719) (128) (29,028) (2,712)
--------- ---------- --------- ---------
NON-GAAP NET INCOME $114,217 $ 89,253 $430,723 $315,276
========= ========== ========= =========
EARNINGS PER SHARE $ 0.233 $ 0.151 $ 0.766 $ 0.686
Adjustments:
Amortization of
intangible assets 0.017 0.012 0.055 0.042
Stock-based compensation
expenses 0.100 0.010 0.420 0.034
Acquisition-related
retention cost 0.003 - 0.004 -
In process research and
development - - - 0.013
Restructuring charges
(recoveries) - 0.001 - -
Gain on sale of assets - - (0.065) -
Net (gain) loss on
investments 0.001 - 0.004 -
Discrete GAAP tax
provision items ratably
for non-GAAP purposes (0.008) (0.003) (0.007) (0.013)
Tax effect on sale of
assets (0.005) - 0.008 -
Discrete GAAP tax
provision items 0.005 - (0.001) -
Non-recurring American
Jobs Creation Act income
tax expense - 0.057 - 0.058
Income tax effect (0.049) - (0.075) (0.007)
--------- ---------- --------- ---------
NON-GAAP EARNINGS PER SHARE $ 0.297 $ 0.228 $ 1.109 $ 0.813
========= ========== ========= =========
NETWORK APPLIANCE, INC.
RECONCILIATION OF NON GAAP GUIDANCE TO GAAP
EXPRESSED AS EARNINGS PER SHARE
FIRST QUARTER 2008
(Unaudited)
First Quarter
2008
------------------
Non-GAAP Guidance $0.24 - $0.25
Adjustments of Specific Items to Earnings Per Share
for the First Quarter 2008:
Amortization of intangible assets (0.01)
Stock based compensation expense (0.10)
Income tax effect 0.01
------------------
Total Adjustments (0.10)
GAAP Guidance - Earnings Per Share $0.14 - $0.15
CONTACT: Network Appliance, Inc.
Jodi Baumann, 408-822-3974 (Press)
jodi@netapp.com
Tara Dhillon, 408-822-6909 (Investor)
tara@netapp.com
Billie Fagenstrom, 408-822-6428 (Investor)
billief@netapp.com