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

NETAPP, INC.

(Exact name of Registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation)		0-27130 (Commission File Number)		77-0307520 (I.R.S. Employer 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)

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):

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

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

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

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

 

 

Item 9.01 Financial Statements and Exhibits

(d) Exhibits.

     The following exhibits are being filed or furnished herewith:

Exhibit		Description
99.1		Press release of NetApp, Inc. issued on May 20, 2009 (furnished herewith).
99.2		Condensed Consolidated Statements of Income, Condensed Consolidated Balance Sheet, and Condensed Consolidated Statements of Cash Flow (filed herewith).

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.

Index to Exhibits

Exhibit		Description
99.1		Press release of NetApp, Inc. issued on May 20, 2009 (furnished herewith).
99.2		Condensed Consolidated Statements of Income, Condensed Consolidated Balance Sheet, and Condensed Consolidated Statements of Cash Flow (filed herewith).

Exhibit 99.1

Press Contact:		Investor Contacts:
NetApp		NetApp		NetApp
Jodi Baumann		Tara Dhillon		Billie Fagenstrom
Ph: (408) 822-3974		Ph: (408) 822-6909		Ph: (408) 822-6428
jodi@netapp.com		tara@netapp.com		billief@netapp.com

NETAPP ANNOUNCES RESULTS FOR FOURTH
QUARTER AND FISCAL YEAR 2009

SUNNYVALE, Calif. – May 20, 2009 — NetApp (NASDAQ: NTAP) today reported results for the fourth fiscal quarter and fiscal year 2009. Revenues for the fourth fiscal quarter of 2009 totaled $880 million compared to revenues of $938 million for the same period a year ago.

     For the fourth fiscal quarter, GAAP net income was $75 million, or $0.23 per share¹ compared to GAAP net income of $90 million, or $0.26 per share for the same period in the prior year. Non-GAAP² net income for the fourth fiscal quarter was $103 million, or $0.31 per share, compared to non-GAAP net income of $131 million, or $0.38 per share for the same period a year ago.

     For fiscal year 2009, GAAP revenues totaled $3.4 billion, an increase of 3% compared to GAAP revenues of $3.3 billion for fiscal year 2008. Non-GAAP revenues for fiscal year 2009, excluding the impact of the $129 million GSA settlement, were $3.5 billion. For fiscal year 2009, GAAP net income was $87 million, or $0.26 per share, compared to GAAP net income of $310 million, or $0.86 per share for fiscal year 2008. Non-GAAP net income for fiscal year 2009 was $364 million, or $1.09 per share, compared to non-GAAP net income of $455 million, or $1.26 per share for fiscal year 2008.

     “The NetApp team performed admirably to close a challenging fiscal year 2009,” said Dan Warmenhoven, chairman and CEO. “With revenues up and expenses well contained, NetApp has delivered three consecutive quarters of increasing operating margins. Storage efficiency and storage for virtual server environments continue to be the primary demand drivers during this difficult economic period. Customers are increasingly turning to NetApp for help solving their storage and data management challenges in the face of shrinking budgets.”

Outlook

Given the reduced visibility caused by the recent changes in the macroeconomic environment, NetApp will not be providing revenue guidance for the first quarter of fiscal year 2010.

§		NetApp estimates non-GAAP gross margins for the first quarter of fiscal year 2010 to be around 61%.
§		NetApp estimates non-GAAP operating expenses for the first quarter of fiscal year 2010 to increase by about $10 million to $15 million from the $426 million reported in the fourth quarter of fiscal year 2009.
§		NetApp estimates non-GAAP operating expense levels for the second and third quarters of fiscal year 2010 to average approximately $405 to $410 million.

Quarterly Highlights

     In the fourth quarter of fiscal year 2009, NetApp introduced several new solutions to help customers transform their data center architectures through greater storage efficiency, greater power and space savings, and innovative data management techniques. The company also received industry recognition for its market leadership, product performance, and channel success.

     This quarter, NetApp and Cisco announced that they are teaming up to provide customers with unified, dynamic data center solutions that are based on the Cisco Unified Computing System and NetApp^® unified storage architecture.

     NetApp announced new storage and data management advances for VMware^® View™ to help customers deploy and operate virtual desktop environments faster and more efficiently, including NetApp’s new Rapid Cloning Utility 2.0, which simplifies the way administrators clone VMware virtual machines and datastores. NetApp also announced the integration and certification of its storage platforms with VMware vSphere™ 4, which provides a path to virtualized data centers and cloud computing.

     During the quarter, NetApp extended its virtualization guarantee to include EMC, IBM, HP, and HDS storage systems by offering a guarantee³ that customers will decrease their non-NetApp primary storage capacity for virtual server environments by 35% using NetApp V-Series

and deduplication technology. NetApp deduplication has been delivered to more than 5,000 customers worldwide, comprising more than 30,000 systems containing 385PB of storage capacity.

     NetApp unveiled V-Series support for Texas Memory Systems’ RamSan-500 solid-state disk (SSD) array. NetApp V-Series and Texas Memory Systems combine the full benefits of the NetApp Data ONTAP^® operating system with SSD storage to improve application performance and offer advanced features such as thin provisioning, Snapshot™ copies, and deduplication to improve storage efficiency and management.

     Also this quarter, NetApp introduced new functionalities for NetApp MetroCluster that offer customers continuous data availability in virtualized environments, the ability to perform nondisruptive software and hardware upgrades, and integration with NetApp deduplication technology for enhanced storage efficiency.

     During the quarter, NetApp received the following third party recognitions:

	§		“Magic Quadrant for Midrange and High-End NAS Solutions4” – Gartner, Inc. positioned NetApp in the Leaders quadrant for Midrange and High-End NAS Solutions.
	§		Network World’s 2009 Best of the Tests Awards – Citing consistently higher performance, a mix of NAS and SAN features, high availability, and NetApp Snapshot™ capabilities, Network World’s Lab Alliance members named the FAS2050 the best of the 12 systems they tested during year-long trials.
	§		2009 Everything Channel Five-Star Partner Program Guide Certification – NetApp was recognized as one of North America’s top information technology (IT) vendors for its VIP Partner Program and US Public Sector VIP Partner Program.
	§		2009 CRN Channel Champion – NetApp was named a 2009 CRN Channel Champion in the category of Network Storage.
	§		2009 Channel Chiefs by the Everything Channel’s CRN – NetApp executives Julie Parrish, vice president of Worldwide Channel Sales, and Todd Palmer, vice president of Americas Channel Sales, were named 2009 Channel Chiefs by the Everything Channel’s CRN.

§

Best Workplaces in France – NetApp ranked number 14 on a list of the Best Workplaces in France published by Réussir/L’EXPRESS, based on a survey by the Great Place to Work® Institute France.

Webcast and Conference Call Information

     The NetApp quarterly results conference call will be broadcast live on the Internet at http://investors.netapp.com on Wednesday, May 20, 2009, at 2:00 p.m. Pacific Time. This press release and any other information related to the call will also be posted on the Web site at that location. The conference call will also be available live in a listen-only format at (800) 638-4930 in the United States and (617) 614-3944 outside the United States. The pass code for both numbers is 57400475. 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 92143343. The Webcast replay will be posted on our Web site for at least one year.

About NetApp

NetApp creates innovative storage and data management solutions that accelerate business breakthroughs and deliver outstanding cost efficiency. Discover NetApp’s passion for helping companies around the world go further, faster at www.netapp.com.

“Safe Harbor” Statement Under U.S. Private Securities Litigation Reform Act of 1995

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 year 2010 and the benefits that we expect our customers to realize from using our products. 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 the material and adverse global economic and market conditions that currently exist and that are expected to persist throughout calendar 2009; our ability to build

nondeferred backlog to levels consistent with our past results and to increase our revenue over the next several quarters; 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, including our ability to consummate our acquisition of Data Domain and integrate its operations into ours; foreign currency exchange rate fluctuations; and other important factors as described in NetApp reports and documents filed from time to time with the Securities and Exchange Commission (SEC), 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.

NetApp, the NetApp logo Go further, faster, Data ONTAP, and Snapshot are trademarks or

registered trademarks of NetApp, Inc. in the United States and/or other countries. All other brands or products are trademarks or registered trademarks of their respective holders and should be treated as such.

NetApp 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. Non-GAAP revenues exclude the GSA settlement. Non-GAAP results of operations exclude the GSA settlement, amortization of intangible assets, stock-based compensation expenses, asset impairment, acquisition related costs, prior acquisition related costs, restructuring and other charges, net gain or loss on investments, and the related effects on income taxes, as well as certain discrete GAAP tax provision items and the tax effect on sale of investments. 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.

NetApp Use of Corporate Web Site

In accordance with SEC guidance published on August 22, 2008 (Release No. 34-58288), NetApp will begin to disseminate material information about the company through its corporate Web site within the next several fiscal quarters. NetApp intends to designate a separate portion of its corporate Web site for purposes of these disclosures and will include a prominent link on its Web site to allow visitors to locate this material information, which will be routinely updated. The Web site will supplement, rather than replace, NetApp’s current existing channels of information distribution.

Additional Information and Where to Find It

NetApp plans to file with the SEC a Registration Statement on Form S-4 in connection with the transaction and Data Domain plans to file with the SEC and mail to its stockholders a Proxy Statement/Prospectus in connection with the transaction. The Registration Statement and the Proxy Statement/Prospectus will contain important information about NetApp, Data Domain, the

transaction and related matters. Investors and security holders are urged to read the Registration Statement and the Proxy Statement/Prospectus carefully when they are available. Investors and security holders will be able to obtain free copies of the Registration Statement and the Proxy Statement/Prospectus and other documents filed with the SEC by NetApp and Data Domain through the web site maintained by the SEC at www.sec.gov and by contacting NetApp Investor Relations at (408) 822-7098 or Data Domain Investor Relations at (408) 980-4909. In addition, investors and security holders will be able to obtain free copies of the documents filed with the SEC on NetApp’s website at www.NetApp.com and on Data Domain’s website at www.datadomain.com.

Participants in the Acquisition of Data Domain

NetApp, Data Domain and their respective directors, executive officers and certain other members of management and employees may be deemed to be participants in the solicitation of proxies in respect of the proposed transaction. Information regarding these persons who may, under the rules of the SEC, be considered participants in the solicitation of Data Domain stockholders in connection with the proposed transaction will be set forth in the Proxy Statement/Prospectus described above when it is filed with the SEC. Additional information regarding NetApp’s executive officers and directors is included in NetApp’s definitive proxy statement, which was filed with the SEC on July 14, 2008, and additional information regarding Data Domain’s executive officers and directors is included in Data Domain’s Annual Report on Form 10-K/A for fiscal year ended December 31, 2008, which was filed with the SEC on April 30, 2009. You can obtain free copies of these documents from NetApp or Data Domain using the contact information above.

NETAPP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)

		April 24, 2009				April 25, 2008
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	1,494,153			$	936,479
Short-term investments			1,110,053				227,911
Accounts receivable, net			426,384				582,110
Inventories			61,104				70,222
Prepaid expenses and other assets			119,887				123,514
Short-term deferred income taxes			207,050				127,197
Total current assets			3,418,631				2,067,433
PROPERTY AND EQUIPMENT, net			807,923				693,792
GOODWILL			680,986				680,054
INTANGIBLE ASSETS, net			45,744				90,075
LONG-TERM INVESTMENTS AND RESTRICTED CASH			127,317				331,105
LONG-TERM DEFERRED INCOME TAXES AND OTHER ASSETS			372,065				208,529
		$	5,452,666			$	4,070,988
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable		$	137,826			$	178,233
Accrued compensation and related benefits			204,168				202,929
Other accrued liabilities			170,159				154,331
Accrual for GSA settlement			128,715				—
Income taxes payable			4,735				6,245
Deferred revenue			1,013,569				872,364
Total current liabilities			1,659,172				1,414,102
LONG-TERM DEBT AND OTHER OBLIGATIONS			1,429,499				318,658
LONG-TERM DEFERRED REVENUE			701,649				637,889
			3,790,320				2,370,649
STOCKHOLDERS’ EQUITY			1,662,346				1,700,339
		$	5,452,666			$	4,070,988

NETAPP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except net income per share amounts)
(Unaudited)

		Quarter Ended								Year Ended
		April 24, 2009				April 25, 2008				April 24, 2009				April 25, 2008
REVENUES:
Product		$	506,168			$	629,610			$	2,152,657			$	2,242,474
Software entitlements and maintenance			164,672				136,268				618,352				486,896
Service			209,518				171,854				764,099				573,797
GSA settlement			(715	)			—				(128,715	)			—
Net revenues			879,643				937,732				3,406,393				3,303,167
COST OF REVENUES:
Cost of product			245,205				269,804				1,007,642				942,924
Cost of software entitlements and maintenance			2,415				2,014				9,179				8,572
Cost of service			98,129				93,042				399,657				338,295
Total cost of revenues			345,749				364,860				1,416,478				1,289,791
GROSS MARGIN			533,894				572,872				1,989,915				2,013,376
OPERATING EXPENSES:
Sales and marketing			287,355				296,457				1,186,141				1,075,588
Research and development			124,985				124,968				498,495				452,205
General and administrative			52,175				47,793				203,698				171,536
Restructuring and other charges			35,451				447				54,406				447
Total operating expenses			499,966				469,665				1,942,740				1,699,776
INCOME FROM OPERATIONS			33,928				103,207				47,175				313,600
OTHER INCOME (EXPENSES), net:
Interest income			11,716				14,316				57,610				64,610
Interest expense			(7,510	)			(1,860	)			(26,865	)			(7,990	)
Gain (loss) on investments, net			(2,646	)			—				(29,571	)			12,614
Other income (expenses), net			197				(578	)			(3,520	)			(135	)
Total other income (expenses), net			1,757				11,878				(2,346	)			69,099
INCOME BEFORE INCOME TAXES			35,685				115,085				44,829				382,699
PROVISION (BENEFIT) FOR INCOME TAXES			(39,398	)			25,264				(41,716	)			72,961
NET INCOME		$	75,083			$	89,821			$	86,545			$	309,738
NET INCOME PER SHARE:
BASIC		$	0.23			$	0.26			$	0.26			$	0.88
DILUTED		$	0.23			$	0.26			$	0.26			$	0.86
SHARES USED IN PER SHARE CALCULATION:
BASIC			330,918				342,308				330,279				351,676
DILUTED			333,088				348,492				334,575				361,090

NETAPP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(In thousands)
(Unaudited)

		Quarter Ended								Year Ended
		April 24, 2009				April 25, 2008				April 24, 2009				April 25, 2008
Cash Flows from Operating Activities:
Net income		$	75,083			$	89,821			$	86,545			$	309,738
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			40,704				39,832				170,538				144,184
Stock-based compensation			42,157				34,886				140,754				147,964
Impairment of investments			2,646				—				20,273				(12,614	)
Asset impairment and write-offs			3,308				1,013				31,573				1,841
Allowance for doubtful accounts			(757	)			463				1,146				818
Deferred income taxes			(52,696	)			26,673				(124,176	)			(53,031	)
Deferred rent			1,752				3,280				4,789				3,912
Income tax benefit from stock-based compensation			19,256				(37,161	)			59,660				48,195
Excess tax benefit from stock-based compensation			(17,579	)			1,716				(52,507	)			(45,391	)
Changes in assets and liabilities:
Accounts receivable			(81,421	)			(114,249	)			148,845				(27,741	)
Inventories			21,085				(10,198	)			9,126				(15,382	)
Prepaid expenses and other assets			928				(27,025	)			3,596				(7,549	)
Accounts payable			15,187				53,896				(26,969	)			20,031
Accrued compensation and related benefits			18,968				23,776				12,874				18,754
Other accrued liabilities			11,423				(855	)			30,139				3,974
Accrual for GSA settlement			715				—				128,715				—
Income taxes payable			(1,767	)			(6,286	)			(1,440	)			(47,300	)
Other liabilities			(505	)			49,722				10,643				117,469
Deferred revenue			81,303				163,998				219,301				401,014
Net cash provided by operating activities			179,790				293,302				873,425				1,008,886
Cash Flows from Investing Activities:
Net redemptions (purchases) of investments			(291,866	)			167,731				(116,783	)			376,449
Reclassification from cash and cash equivalents to short-term investments			—				—				(597,974	)			—
Change in restricted cash			780				607				336				(793	)
Net proceeds (purchases) of nonmarketable and marketable securities			(50	)			—				757				14,919
Purchases of property and equipment			(134,756	)			(63,433	)			(289,657	)			(188,280	)
Purchase of business net of cash acquired			—				(99,601	)			—				(99,390	)
Net cash provided by (used in) investing activities			(425,892	)			5,304				(1,003,321	)			102,905
Cash Flows from Financing Activities:
Proceeds from sale of common stock related to employee stock transactions			17,596				14,510				91,014				114,697
Tax withholding payments reimbursed by restricted stock			(930	)			(169	)			(5,115	)			(6,020	)
Excess tax benefit from stock-based compensation			17,579				(1,716	)			52,507				45,391
Proceeds from revolving credit facility			—				56,000				—				318,754
Proceeds from issuance of convertible notes			—				—				1,265,000				—
Payment of financing costs			—				—				(26,581	)			—
Sale of common stock warrants			—				—				163,059				—
Purchase of note hedge			—				—				(254,898	)			—
Repayment of debt			—				(28,790	)			—				(85,110	)
Repayment of revolving credit facility			—				(133,400	)			(172,600	)			(146,400	)
Repurchases of common stock			—				(59,453	)			(399,981	)			(903,704	)
Net cash provided by (used in) financing activities			34,245				(153,018	)			712,405				(662,392	)
Effect of Exchange Rate Changes on Cash and Cash Equivalents			(2,190	)			14,532				(24,835	)			(1,999	)
Net Increase (Decrease) in Cash and Cash Equivalents			(214,047	)			160,120				557,674				447,400
Cash and Cash Equivalents:
Beginning of period			1,708,200				776,359				936,479				489,079
End of period		$	1,494,153			$	936,479			$	1,494,153			$	936,479

NETAPP, INC.
SUPPLEMENTAL INFORMATION
(In thousands)
(Unaudited)

		QUARTER ENDED APRIL 24, 2009
																		Acquisition-				Prior
						Amortization				Stock-based								Related				Acquisition-				Restructuring				Loss (Gain) on
		GSA				of Intangible				Compensation				Asset				Retention				related				and Other				Investments,
		Settlement				Assets				Expenses				Impairment				Cost				Costs				Charges				Net				Total
Total revenues		$	715				—				—				—				—				—				—				—			$	715
Cost of product revenues			—				4,858				980				—				—				—				—				—				5,838
Cost of service revenues			—				—				3,940				—				—				—				—				—				3,940
Sales and marketing expense			—				848				20,107				—				—				—				—				—				20,955
Research and development expense			—				—				11,251				—				—				—				—				—				11,251
General and administrative expense			—				—				5,879				—				—				—				—				—				5,879
Restructuring and other charges			—				—				—				—				—				—				35,451				—				35,451
Loss (gain) on investments, net			—				—				—				—				—				—				—				2,646				2,646
Effect on pre-tax income		$	715			$	5,706			$	42,157				—				—				—			$	35,451			$	2,646			$	86,675
		YEAR ENDED APRIL 24, 2009
																		Acquisition-				Prior
						Amortization				Stock-based								Related				Acquisition-				Restructuring				Loss (Gain) on
		GSA				of Intangible				Compensation				Asset				Retention				related				and Other				Investments,
		Settlement				Assets				Expenses				Impairment				Cost				Costs				Charges				Net				Total
Total revenues		$	128,715				—				—				—				—				—				—				—			$	128,715
Cost of product revenues			—				24,515				3,327				—				—				—				—				—			$	27,842
Cost of service revenues			—				—				12,289				—				—				—				—				—				12,289
Sales and marketing expense			—				4,420				65,085				9,431				—				—				—				—				78,936
Research and development expense			—				—				37,902				—				—				—				—				—				37,902
General and administrative expense			—				—				22,151				—				—				—				—				—				22,151
Restructuring and other charges			—				—				—				—				—				—				54,406				—				54,406
Loss (gain) on investments, net			—				—				—				—				—				—				—				29,571				29,571
Effect on pre-tax income		$	128,715			$	28,935			$	140,754			$	9,431				—				—			$	54,406			$	29,571			$	391,812
		QUARTER ENDED APRIL 25, 2008
																		Acquisition-				Prior
						Amortization				Stock-based								Related				Acquisition-				Restructuring				Loss (Gain) on
		GSA				of Intangible				Compensation				Asset				Retention				related				and Other				Investments,
		Settlement				Assets				Expenses				Impairment				Cost				Costs				Charges				Net				Total
Cost of product revenues			—			$	6,748			$	870				—				—				—				—				—			$	7,618
Cost of service revenues			—				—				2,653				—				—				—				—				—				2,653
Sales and marketing expense			—				1,259				15,971				—				—				—				—				—				17,230
Research and development expense			—				—				10,309				—				—				—				—				—				10,309
General and administrative expense			—				—				5,083				—				—				—				—				—				5,083
Restructuring and other charges			—				—				—				—				—				—				447				—				447
Loss (gain) on investments, net			—				—				—				—				—				—				—				—				—
Effect on pre-tax income			—			$	8,007			$	34,886				—				—				—			$	447				—			$	43,340
		YEAR ENDED APRIL 25, 2008
																		Acquisition-				Prior
						Amortization				Stock-based								Related				Acquisition-				Restructuring				Loss (Gain) on
		GSA				of Intangible				Compensation				Asset				Retention				related				and Other				Investments,
		Settlement				Assets				Expenses				Impairment				Cost				Costs				Charges				Net				Total
Cost of product revenues			—			$	22,582			$	3,384				—				—				—				—				—			$	25,966
Cost of service revenues			—				—				10,442				—				—				—				—				—				10,442
Sales and marketing expense			—				4,170				65,399				—				3,086				—				—				—				72,655
Research and development expense			—				—				46,632				—				—				—				—				—				46,632
General and administrative expense			—				200				22,107				—				—				2,800				—				—				25,107
Restructuring and other charges			—				—				—				—				—				—				447				—				447
Loss (gain) on investments, net			—				—				—				—				—				—				—				(12,614	)			(12,614	)
Effect on pre-tax income			—			$	26,952			$	147,964				—			$	3,086			$	2,800			$	447				($12,614	)		$	168,635

NETAPP, INC.
RECONCILIATION OF NON-GAAP AND GAAP
IN THE CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except net income per share amounts)
(Unaudited)

		Quarter Ended								Year Ended
		April 24, 2009				April 25, 2008				April 24, 2009				April 25, 2008
SUMMARY RECONCILIATION OF NET INCOME
NET INCOME		$	75,083			$	89,821			$	86,545			$	309,738
Adjustments:
GSA settlement			715				—				128,715				—
Amortization of intangible assets			5,706				8,007				28,935				26,952
Stock-based compensation expenses			42,157				34,886				140,754				147,964
Asset impairment			—				—				9,431				—
Acquisition-related retention cost			—				—				—				3,086
Prior acquisition-related costs			—				—				—				2,800
Restructuring and other charges			35,451				447				54,406				447
(Gain) loss on investments, net			2,646				—				29,571				(12,614	)
Tax effect on sale of investments			—				—				—				5,477
Discrete GAAP tax provision items			6,521				17,669				6,949				17,044
Income tax effect			(65,497	)			(20,129	)			(121,016	)			(46,044	)
NON-GAAP NET INCOME		$	102,782			$	130,701			$	364,290			$	454,850
NET INCOME PER SHARE		$	0.225			$	0.258			$	0.259			$	0.858
Adjustments:
GSA settlement			0.002				—				0.385				—
Amortization of intangible assets			0.017				0.023				0.086				0.075
Stock-based compensation expenses			0.127				0.100				0.421				0.410
Asset impairment			—				—				0.028				—
Acquisition-related retention cost			—				—				—				0.009
Prior acquisition-related costs			—				—				—				0.008
Restructuring and other charges			0.106				0.001				0.163				0.001
(Gain) loss on investments, net			0.008				—				0.088				(0.035	)
Tax effect on sale of investments			—				—				—				0.015
Discrete GAAP tax provision items			0.020				0.051				0.021				0.047
Income tax effect			(0.197	)			(0.058	)			(0.362	)			(0.128	)
NON-GAAP NET INCOME PER SHARE		$	0.308			$	0.375			$	1.089			$	1.260

NETAPP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)

		April 24, 2009				April 25, 2008
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	1,494,153			$	936,479
Short-term investments			1,110,053				227,911
Accounts receivable, net			426,384				582,110
Inventories			61,104				70,222
Prepaid expenses and other assets			119,887				123,514
Short-term deferred income taxes			207,050				127,197
Total current assets			3,418,631				2,067,433
PROPERTY AND EQUIPMENT, net			807,923				693,792
GOODWILL			680,986				680,054
INTANGIBLE ASSETS, net			45,744				90,075
LONG-TERM INVESTMENTS AND RESTRICTED CASH			127,317				331,105
LONG-TERM DEFERRED INCOME TAXES AND OTHER ASSETS			372,065				208,529
		$	5,452,666			$	4,070,988
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable		$	137,826			$	178,233
Accrued compensation and related benefits			204,168				202,929
Other accrued liabilities			170,159				154,331
Accrual for GSA settlement			128,715				—
Income taxes payable			4,735				6,245
Deferred revenue			1,013,569				872,364
Total current liabilities			1,659,172				1,414,102
LONG-TERM DEBT AND OTHER OBLIGATIONS			1,429,499				318,658
LONG-TERM DEFERRED REVENUE			701,649				637,889
			3,790,320				2,370,649
STOCKHOLDERS’ EQUITY			1,662,346				1,700,339
		$	5,452,666			$	4,070,988

NETAPP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except net income per share amounts)
(Unaudited)

		Quarter Ended								Year Ended
		April 24, 2009				April 25, 2008				April 24, 2009				April 25, 2008
REVENUES:
Product		$	506,168			$	629,610			$	2,152,657			$	2,242,474
Software entitlements and maintenance			164,672				136,268				618,352				486,896
Service			209,518				171,854				764,099				573,797
GSA settlement			(715	)			—				(128,715	)			—
Net revenues			879,643				937,732				3,406,393				3,303,167
COST OF REVENUES:
Cost of product			245,205				269,804				1,007,642				942,924
Cost of software entitlements and maintenance			2,415				2,014				9,179				8,572
Cost of service			98,129				93,042				399,657				338,295
Total cost of revenues			345,749				364,860				1,416,478				1,289,791
GROSS MARGIN			533,894				572,872				1,989,915				2,013,376
OPERATING EXPENSES:
Sales and marketing			287,355				296,457				1,186,141				1,075,588
Research and development			124,985				124,968				498,495				452,205
General and administrative			52,175				47,793				203,698				171,536
Restructuring and other charges			35,451				447				54,406				447
Total operating expenses			499,966				469,665				1,942,740				1,699,776
INCOME FROM OPERATIONS			33,928				103,207				47,175				313,600
OTHER INCOME (EXPENSES), net:
Interest income			11,716				14,316				57,610				64,610
Interest expense			(7,510	)			(1,860	)			(26,865	)			(7,990	)
Gain (loss) on investments, net			(2,646	)			—				(29,571	)			12,614
Other income (expenses), net			197				(578	)			(3,520	)			(135	)
Total other income (expenses), net			1,757				11,878				(2,346	)			69,099
INCOME BEFORE INCOME TAXES			35,685				115,085				44,829				382,699
PROVISION (BENEFIT) FOR INCOME TAXES			(39,398	)			25,264				(41,716	)			72,961
NET INCOME		$	75,083			$	89,821			$	86,545			$	309,738
NET INCOME PER SHARE:
BASIC		$	0.23			$	0.26			$	0.26			$	0.88
DILUTED		$	0.23			$	0.26			$	0.26			$	0.86
SHARES USED IN PER SHARE CALCULATION:
BASIC			330,918				342,308				330,279				351,676
DILUTED			333,088				348,492				334,575				361,090

NETAPP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(In thousands)
(Unaudited)

		Quarter Ended								Year Ended
		April 24, 2009				April 25, 2008				April 24, 2009				April 25, 2008
Cash Flows from Operating Activities:
Net income		$	75,083			$	89,821			$	86,545			$	309,738
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			40,704				39,832				170,538				144,184
Stock-based compensation			42,157				34,886				140,754				147,964
Impairment of investments			2,646				—				20,273				(12,614	)
Asset impairment and write-offs			3,308				1,013				31,573				1,841
Allowance for doubtful accounts			(757	)			463				1,146				818
Deferred income taxes			(52,696	)			26,673				(124,176	)			(53,031	)
Deferred rent			1,752				3,280				4,789				3,912
Income tax benefit from stock-based compensation			19,256				(37,161	)			59,660				48,195
Excess tax benefit from stock-based compensation			(17,579	)			1,716				(52,507	)			(45,391	)
Changes in assets and liabilities:
Accounts receivable			(81,421	)			(114,249	)			148,845				(27,741	)
Inventories			21,085				(10,198	)			9,126				(15,382	)
Prepaid expenses and other assets			928				(27,025	)			3,596				(7,549	)
Accounts payable			15,187				53,896				(26,969	)			20,031
Accrued compensation and related benefits			18,968				23,776				12,874				18,754
Other accrued liabilities			11,423				(855	)			30,139				3,974
Accrual for GSA settlement			715				—				128,715				—
Income taxes payable			(1,767	)			(6,286	)			(1,440	)			(47,300	)
Other liabilities			(505	)			49,722				10,643				117,469
Deferred revenue			81,303				163,998				219,301				401,014
Net cash provided by operating activities			179,790				293,302				873,425				1,008,886
Cash Flows from Investing Activities:
Net redemptions (purchases) of investments			(291,866	)			167,731				(116,783	)			376,449
Reclassification from cash and cash equivalents to short-term investments			—				—				(597,974	)			—
Change in restricted cash			780				607				336				(793	)
Net proceeds (purchases) of nonmarketable and marketable securities			(50	)			—				757				14,919
Purchases of property and equipment			(134,756	)			(63,433	)			(289,657	)			(188,280	)
Purchase of business net of cash acquired			—				(99,601	)			—				(99,390	)
Net cash provided by (used in) investing activities			(425,892	)			5,304				(1,003,321	)			102,905
Cash Flows from Financing Activities:
Proceeds from sale of common stock related to employee stock transactions			17,596				14,510				91,014				114,697
Tax withholding payments reimbursed by restricted stock			(930	)			(169	)			(5,115	)			(6,020	)
Excess tax benefit from stock-based compensation			17,579				(1,716	)			52,507				45,391
Proceeds from revolving credit facility			—				56,000				—				318,754
Proceeds from issuance of convertible notes			—				—				1,265,000				—
Payment of financing costs			—				—				(26,581	)			—
Sale of common stock warrants			—				—				163,059				—
Purchase of note hedge			—				—				(254,898	)			—
Repayment of debt			—				(28,790	)			—				(85,110	)
Repayment of revolving credit facility			—				(133,400	)			(172,600	)			(146,400	)
Repurchases of common stock			—				(59,453	)			(399,981	)			(903,704	)
Net cash provided by (used in) financing activities			34,245				(153,018	)			712,405				(662,392	)
Effect of Exchange Rate Changes on Cash and Cash Equivalents			(2,190	)			14,532				(24,835	)			(1,999	)
Net Increase (Decrease) in Cash and Cash Equivalents			(214,047	)			160,120				557,674				447,400
Cash and Cash Equivalents:
Beginning of period			1,708,200				776,359				936,479				489,079
End of period		$	1,494,153			$	936,479			$	1,494,153			$	936,479