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): August 19, 2003
___________
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 12.
The information is furnished pursuant to "Item 12. Results of Operations
and Financial Condition" in accordance with SEC Release No. 33-8216 (March 27,
2003).
On August 19, 2003, Network Appliance, Inc. issued a press release
announcing its earnings for the first quarter fiscal year 2004. The press
release, attached hereto as Exhibit 99.1, is being furnished on 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.
August 19, 2003 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 August 19, 2003.
Exhibit 99.1
Network Appliance Announces Results for
First Quarter Fiscal Year 2004;
Strong Growth and Improved Operating Leverage
SUNNYVALE, Calif.--(BUSINESS WIRE)--Aug. 19, 2003--Network
Appliance, Inc. (Nasdaq:NTAP), today announced results for the first
quarter of fiscal year 2004. Revenues for the first fiscal quarter
were $260.5 million, an increase of 26% compared to revenues of $206.8
million for the same period a year ago and an 8% increase compared to
$241.6 million in the prior quarter.
For the first quarter, GAAP net income increased 67% to $27.1
million, or $0.08 per share (1), compared to GAAP net income of $16.2
million, or $0.05 per share for the same period in the prior year. Pro
forma (2) net income for the first quarter increased 59% to $28.7
million, or $0.08 per share, compared to pro forma net income of $18.0
million, or $0.05 per share for the same period a year ago.
"This quarter's results were highlighted by strong revenue growth
and continued improvement in the operating profit margin," said Dan
Warmenhoven, CEO of Network Appliance. "We continue to focus on our
partnerships, innovative technology, and service and support solutions
to help our customers meet their ever-increasing storage and storage
management requirements."
Quarterly Highlights
In the first quarter of fiscal year 2004, Network Appliance
continued to enhance its enterprise solutions, broaden its customer
portfolio, expand its partnerships with other industry leaders, and
gain market acceptance for its unified storage, iSCSI, NearStore(TM)
and NetCache(R) solutions.
The company reinforced its commitment to interoperable management
solutions by releasing the Manage ONTAP(TM) API Suite and Software
Developers' Kit, which provides developers open access to Network
Appliance(TM) application programming interfaces, enabling partners to
more tightly integrate and synergize their management applications for
optimal performance in NetApp(R) environments.
During the first quarter, customers from a variety of industries
worldwide selected Network Appliance to store, manage and consolidate
their business- and mission-critical data. Network Appliance
enterprise storage and service wins include Ball State University;
Continental Airlines; Siemens Business Services; Skidmore, Owings &
Merrill LLP; Ticketmaster; and Visa Debit Processing Services.
NearStore customer wins included EDS; Ford Motor Europe; and Jefferson
Pilot Financial.
Network Appliance also expanded its channel strategy by signing
distribution agreements with the North American Computer Products
group of Arrow Electronics and Avnet Hall-Mark. The agreements enable
new Network Appliance distributors to provide value-added resellers
the tools, training, marketing, sales, and technical services to build
and expand their storage businesses and open up greater market
penetration opportunities for Network Appliance.
Network Appliance extended its strategic alliances with Oracle
Corporation and Fujitsu Siemens Computers to offer low-cost, scalable,
integrated server and storage platform solutions optimized for
Oracle9i Database with Oracle9i Real Application Clusters (RAC) for
Linux(R). Network Appliance, Oracle, and Fujitsu Siemens Computers
also opened Europe's first Enterprise Technology Center dedicated to
assisting users with implementing enterprise solutions.
More than 500 customers have downloaded NetApp iSCSI protocols to
test in their enterprise environments, and Network Appliance continues
to take a leadership position in iSCSI. In addition, IBM announced
support of Network Appliance's iSCSI solutions in IBM DB2 Universal
Database environments, helping customers leverage the benefits of a
simple and more affordable storage area network infrastructure.
In other partner-related news, Network Appliance extended its
partnership with McDATA Corporation to deliver optimized networked
storage solutions for companies of all sizes. NetApp also expanded its
leadership efforts in Linux technology by partnering with Red Hat and
SuSE Linux to develop enterprise storage solutions on Linux
technology.
FOOTNOTE
(1) Earnings per share represents the diluted number of shares for
all periods presented.
(2) Pro forma results exclude amortization of intangible assets,
stock compensation, restructuring charges, net gain or loss on
investments, gain on sale of intangible assets, and the related
effects on income taxes.
Conference Call Information
The NetApp quarterly results conference call will be broadcast
live via the Internet from the investors section of Network
Appliance's Web site at http://investors.netapp.com on Tuesday, August
19, 2003 at 2:00 p.m. Pacific time. The conference call will also be
available live in a listen-only format at 800-218-0530 in the United
States and 212-329-1452 outside the United States. A replay will be
available for 72 hours following completion of the live call by
dialing 800-405-2236 in the United States, and 303-590-3000
outside the United States, replay code 547054.
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 continue to drive "The evolution of storage(TM)"
Information about Network Appliance solutions and services is
available at www.netapp.com.
NetApp and NetCache are registered trademarks and Network
Appliance, NearStore, Manage ONTAP and The evolution of storage 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 Pro Forma 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. In addition, 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. 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.
"Safe Harbor" Statement under U.S. Private Securities Litigation
Reform Act of 1995
The statement regarding market acceptance of unified storage and
other NetApp solutions is a forward-looking statement within the
meaning of the U.S. Private Securities Litigation Reform Act of 1995.
Forward-looking statements include any statement regarding future
events or the future financial performance of Network Appliance Inc.
that involves risks or uncertainties. In evaluating these statements,
readers should specifically consider various factors that could cause
actual events or results to differ materially from those indicated,
including without limitation: decline in the general economic
conditions, customer demand for products and services, customer
acceptance of product architectures, increased competition, inherent
risk in the international operations, 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
its mostly recently submitted 10-K and 10-Q.
Note to editors: tables to follow
Note to Shareholder.com: NTAP - FIN
NETWORK APPLIANCE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
August 1, 2003 April 30, 2003
---------------- ----------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $320,679 $284,161
Short-term investments 329,426 334,677
Accounts receivable, net 142,290 151,637
Inventories 36,694 31,559
Prepaid expenses and other 24,225 24,014
Deferred income taxes 27,906 27,444
---------------- ----------------
Total current assets 881,220 853,492
PROPERTY AND EQUIPMENT, net 363,677 362,862
GOODWILL 48,212 48,212
INTANGIBLE ASSETS, net 10,455 2,954
OTHER ASSETS 53,787 51,653
---------------- ----------------
$1,357,351 $1,319,173
================ ================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $41,802 $39,600
Income taxes payable 22,984 30,256
Accrued compensation and
related benefits 35,376 40,647
Other accrued liabilities 50,220 43,841
Deferred revenue 110,247 110,672
---------------- ----------------
Total current liabilities 260,629 265,016
LONG-TERM DEFERRED REVENUE 79,035 63,698
LONG-TERM OBLIGATIONS 3,254 3,102
---------------- ----------------
342,918 331,816
---------------- ----------------
STOCKHOLDERS' EQUITY 1,014,433 987,357
---------------- ----------------
$1,357,351 $1,319,173
================ ================
NETWORK APPLIANCE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)
Quarter Ended
-------------
August 1, 2003 July 26, 2002
---------------- ---------------
REVENUES:
Product revenue $235,786 $186,740
Service revenue 24,723 20,088
---------------- ---------------
Total revenues 260,509 206,828
---------------- ---------------
COST OF REVENUES:
Cost of product revenue 85,039 63,655
Cost of service revenue 19,347 15,458
---------------- ---------------
Total cost of revenues 104,386 79,113
---------------- ---------------
GROSS MARGIN 156,123 127,715
---------------- ---------------
OPERATING EXPENSES:
Sales and marketing 79,356 71,902
Research and development 31,541 27,868
General and administrative 12,265 7,438
Stock compensation 654 983
---------------- ---------------
Total operating expenses 123,816 108,191
---------------- ---------------
INCOME FROM OPERATIONS 32,307 19,524
OTHER INCOME (EXPENSE), net:
Interest income 3,045 3,151
Other expense, net (47) (1,000)
Net gain/(loss) on investments 145 (726)
Gain on sale of intangible asset -- 604
---------------- ---------------
Total other income, net 3,143 2,029
---------------- ---------------
INCOME BEFORE INCOME TAXES 35,450 21,553
PROVISION FOR INCOME TAXES 8,377 5,388
---------------- ---------------
NET INCOME $27,073 $16,165
================ ===============
NET INCOME PER SHARE:
BASIC $0.08 $0.05
================ ===============
DILUTED $0.08 $0.05
================ ===============
SHARES USED IN PER SHARE
CALCULATION:
BASIC 341,687 335,783
================ ===============
DILUTED 358,497 350,122
================ ===============
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
-------------
August 1, 2003 July 26, 2002
---------------- ---------------
SUPPLEMENTAL INFORMATION:
NET INCOME $27,073 $16,165
Adjustments:
Amortization of intangible assets 1,364 1,386
Stock compensation 654 983
Net (gain)/loss on investments (145) 726
Gain on sale of intangible asset -- (604)
Income tax effect (207) (623)
---------------- ---------------
PROFORMA NET INCOME $28,739 $18,033
================ ===============
DILUTED PRO FORMA NET INCOME
PER SHARE $0.08 $0.05
================ ===============
SHARES USED IN DILUTED PRO FORMA
NET INCOME PER SHARE CALCULATION 358,497 350,122
================ ===============
NETWORK APPLIANCE, INC.
PRO FORMA (1) CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)
Quarter Ended
-------------
August 1, 2003 July 26, 2002
--------------- --------------
REVENUES:
Product revenue $235,786 $186,740
Service revenue 24,723 20,088
--------------- --------------
Total revenues 260,509 206,828
--------------- --------------
COST OF REVENUES:
Cost of product revenue 83,675 62,269
Cost of service revenue 19,347 15,458
--------------- --------------
Total cost of revenues 103,022 77,727
--------------- --------------
GROSS MARGIN 157,487 129,101
--------------- --------------
OPERATING EXPENSES:
Sales and marketing 79,356 71,902
Research and development 31,541 27,868
General and administrative 12,265 7,438
--------------- --------------
Total operating expenses 123,162 107,208
--------------- --------------
INCOME FROM OPERATIONS 34,325 21,893
OTHER INCOME, net 2,998 2,151
--------------- --------------
INCOME BEFORE INCOME TAXES 37,323 24,044
PROVISION FOR INCOME TAXES 8,584 6,011
--------------- --------------
NET INCOME $28,739 $18,033
=============== ==============
NET INCOME PER SHARE:
BASIC $0.08 $0.05
=============== ==============
DILUTED $0.08 $0.05
=============== ==============
SHARES USED IN PER SHARE
CALCULATION:
BASIC 341,687 335,783
=============== ==============
DILUTED 358,497 350,122
=============== ==============
(1) Pro forma results of operations exclude amortization of
intangible assets, stock compensation, net gain/loss on
investments, gain on sale of intangible asset and the related
effects on income taxes.
CONTACT: Network Appliance
Marla Dierkes, 408-822-3580 (PRESS)
marla@netapp.com
Rod Mathews, 408-822-6108 (INVESTOR)
rmathews@netapp.com
Billie Fagenstrom, 408-822-6428 (INVESTOR)
billief@netapp.com