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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 13, 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 9.
The information contained in Item 9 of this Current Report is being
furnished pursuant to "Item 12. Results of Operations and Financial Condition"
in accordance with SEC Release No. 33-8216 (March 27, 2003).
On May 13, 2003, Network Appliance, Inc. issued a press release announcing
its earnings for the fourth quarter and fiscal year ended April 30, 2003. 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.
May 13, 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 May 13, 2003.
Exhibit 99.1
Network Appliance Announces Results for Fourth Quarter and Fiscal Year End 2003;
Sixth Consecutive Quarter of Growth
SUNNYVALE, Calif.--(BUSINESS WIRE)--May 13, 2003--Network
Appliance, Inc. (Nasdaq:NTAP) today announced results for the fourth
quarter and fiscal year 2003. Revenues for the fourth fiscal quarter
were $241.6 million, an increase of 18% compared to revenues of $204.9
million for the same period a year ago, and a 6% increase compared to
$228.5 million in the prior quarter.
For the fourth quarter, GAAP net income increased 219% to $24.8
million, or $0.07 per share, compared to GAAP net income of $7.8
million, or $0.02 per share for the same period in the prior year. Pro
forma net income for the fourth quarter increased 75% to $25.5
million, or $0.07 per share, compared to pro forma net income of $14.6
million, or $0.04 per share for the same period a year ago.
Revenues for fiscal year 2003 were $892.1 million, an increase of
12% compared to revenues of $798.4 million for fiscal year 2002.
For fiscal year 2003, GAAP net income was $76.5 million, or $0.22
per share, compared to GAAP net income of $3.0 million, or $0.01 per
share for fiscal year 2002. Pro forma net income for fiscal year 2003
increased 97% to $83.8 million, or $0.24 per share, compared to pro
forma net income of $42.5 million, or $0.12 per share for fiscal year
2002.
"We are pleased with our performance for the quarter, particularly
with our cash generation and the continued strength of the balance
sheet. Our 12% increase in revenue over the last fiscal year is a
direct reflection of our strong sales and operational performance,"
said Dan Warmenhoven, CEO of Network Appliance. "NetApp remains an
industry market leader with our innovative products being recognized
by eWeek and Network Magazine for best products of the year."
Quarterly Highlights
Throughout the fourth quarter and fiscal year 2003, Network
Appliance accelerated its momentum by developing new storage
solutions, expanding its customer base, strengthening its
partnerships, and gaining market acceptance for its new and expanded
unified storage, NearStore(TM), and NetCache(R) families.
Product milestones for the fourth quarter included the launch of
Network Appliance's first native iSCSI storage solution in the form of
iSCSI protocol support and host attach kits for NetApp(R) unified
storage systems. The company also has extended its heterogeneous data
protection and storage consolidation portfolio with the debut of the
NearStore R150 system, SnapVault(TM) software, MetroCluster software,
and a certified NearStore and VERITAS Volume Replicator offering. In
addition, Network Appliance announced SnapLock(TM), an open access
data retention solution targeted at regulated data industries such as
financial services, healthcare, pharmaceuticals, and government.
On other product-related milestones, Network Appliance won two
awards in the fourth quarter including Best Enterprise IT Product of
the Year for its FAS900 by eWeek, and Best Product of the Year for its
NetApp NearStore R100 by Network Magazine.
During the fourth quarter, customers from a variety of industries
worldwide selected Network Appliance to store, manage and consolidate
their business- and mission-critical data in the fourth quarter.
Unified and SAN storage wins include B. Braun Medical France, Brocade
Communications Systems, Inc., L'Oreal, Nationwide Insurance, and SAS.
Other enterprise customer wins include Emerson, Honda, Krispy Kreme
Doughnuts, Inovant, Statoil, and the U.S. Army. NearStore customer
wins included Affymetrix, Johnson Controls and The Home Depot.
Also during the fourth quarter, Network Appliance continued to
expand its unified storage strategy and solution initiatives through
partnerships with key industry leaders. NetApp and HDS announced the
availability of their co-developed, co-branded HDS NetApp Enterprise
NAS Gateway. NetApp and Intel announced their partnership to
co-develop and market standards-compliant iSCSI solutions.
Network Appliance also announced today that the Board of Directors
has approved a $150 million stock repurchase program to purchase
shares of its outstanding common stock.
Network Appliance's fiscal year 2004 will be a 53-week year with
the extra week falling into the first quarter. The company's targeted
quarterly results dates for the fiscal year are August 19, 2003,
November 18, 2003, February 17, 2004 and May 18, 2004.
Pro forma results exclude amortization of goodwill and intangible
assets, stock compensation, restructuring charges, net loss on
investments, gain on sale of intangible assets, and the related
effects on income taxes.
Earnings per share represents the diluted number of shares for all
periods presented.
The 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, May 13, 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 534799.
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. Information
about Network Appliance(TM) solutions and services is available at
www.netapp.com.
NetApp and NetCache are registered trademarks. Network Appliance,
NearStore, SnapVault, and SnapLock 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 the stock repurchase program 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: continuing 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)
April 30, 2003 April 30, 2002
---------------- ----------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 284,161 $ 210,756
Short-term investments 334,677 243,371
Accounts receivable, net 151,637 146,511
Inventories 31,559 23,849
Prepaid expenses and other 24,014 22,112
Deferred income taxes 27,444 32,529
---------------- ----------------
Total current assets 853,492 679,128
PROPERTY AND EQUIPMENT, net 362,862 345,195
GOODWILL 48,212 49,422
INTANGIBLE ASSETS, net 2,954 8,828
OTHER ASSETS 51,653 26,233
---------------- ----------------
$1,319,173 $1,108,806
================ ================
LIABILITIES AND STOCKHOLDERS'
EQUITY
CURRENT LIABILITIES:
Accounts payable $ 39,600 $ 40,243
Income taxes payable 30,256 17,073
Accrued compensation and
related benefits 40,647 39,434
Other accrued liabilities 43,841 42,671
Deferred revenue 110,672 76,139
---------------- ----------------
Total current liabilities 265,016 215,560
LONG-TERM DEFERRED REVENUE 63,698 31,036
LONG-TERM OBLIGATIONS 3,102 3,734
---------------- ----------------
331,816 250,330
---------------- ----------------
STOCKHOLDERS' EQUITY 987,357 858,476
---------------- ----------------
$1,319,173 $1,108,806
================ ================
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,
2003 2002 2003 2002
----------- --------- --------- ----------
REVENUES
Product revenue $217,138 $185,263 $802,281 $729,916
Service revenue 24,467 19,616 89,787 68,453
----------- --------- --------- ----------
Total revenues 241,605 204,879 892,068 798,369
----------- --------- --------- ----------
COST OF REVENUES
Cost of product
revenue 74,427 58,725 274,211 261,857
Cost of service
revenue 18,781 15,048 65,953 55,989
----------- --------- --------- ----------
Total cost of
revenues 93,208 73,773 340,164 317,846
----------- --------- --------- ----------
GROSS MARGIN 148,397 131,106 551,904 480,523
----------- --------- --------- ----------
OPERATING EXPENSES:
Sales and marketing 79,158 75,065 304,236 284,355
Research and
development 28,333 30,837 112,863 116,725
General and
administrative 10,419 8,781 36,822 40,182
Amortization of
goodwill and
intangible assets 1,364 5,217 5,478 20,895
Stock compensation 536 1,447 3,642 7,202
Restructuring charges -- 4,246 1,257 12,226
----------- --------- --------- ----------
Total operating
expenses 119,810 125,593 464,298 481,585
----------- --------- --------- ----------
INCOME (LOSS) FROM
OPERATIONS 28,587 5,513 87,606 (1,062)
OTHER INCOME
(EXPENSE), net:
Interest income 3,116 3,839 12,215 18,507
Other expense, net (462) (1,039) (1,381) (1,904)
Net loss on
investments (503) -- (1,229) (13,008)
Gain on sale of
intangible asset -- -- 604 --
----------- --------- --------- ----------
Total other income,
net 2,151 2,800 10,209 3,595
----------- --------- --------- ----------
INCOME BEFORE INCOME
TAXES 30,738 8,313 97,815 2,533
PROVISION (BENEFIT)
FOR INCOME TAXES 5,915 540 21,343 (500)
----------- --------- --------- ----------
NET INCOME $ 24,823 $ 7,773 $ 76,472 $ 3,033
=========== ========= ========= ==========
NET INCOME PER SHARE:
BASIC $ 0.07 $ 0.02 $ 0.23 $ 0.01
=========== ========= ========= ==========
DILUTED $ 0.07 $ 0.02 $ 0.22 $ 0.01
=========== ========= ========= ==========
SHARES USED IN PER
SHARE CALCULATION:
BASIC 339,854 334,401 337,647 331,645
=========== ========= ========= ==========
DILUTED 352,144 353,841 350,122 350,498
=========== ========= ========= ==========
SUPPLEMENTAL
INFORMATION:
NET INCOME $ 24,823 $ 7,773 $ 76,472 $ 3,033
Adjustments:
Amortization of
goodwill -- 3,786 -- 15,169
Amortization of
intangible assets 1,364 1,431 5,478 5,726
Stock compensation 536 1,447 3,642 7,202
Restructuring charges 0 4,246 1,257 12,226
Net loss on
investments 503 -- 1,229 13,008
Gain on sale of
intangible asset -- -- (604) --
Income tax effect (1,707) (4,073) (3,685) (13,907)
----------- --------- --------- ----------
PROFORMA NET INCOME $ 25,519 $ 14,610 $ 83,789 $ 42,457
=========== ========= ========= ==========
DILUTED PRO FORMA NET
INCOME PER SHARE $ 0.07 $ 0.04 $ 0.24 $ 0.12
=========== ========= ========= ==========
SHARES USED IN DILUTED
PRO FORMA NET INCOME
PER SHARE
CALCULATION: 352,144 353,841 350,122 350,498
=========== ========= ========= ==========
NETWORK APPLIANCE, INC.
PRO FORMA (1) CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)
Quarter Ended Year Ended
--------------------- ----------------------
April 30, April 30, April 30, April 30,
2003 2002 2003 2002
--------- --------- --------- ---------
REVENUES
Product revenue $217,138 $185,263 $802,281 $729,916
Service revenue 24,467 19,616 89,787 68,453
--------- --------- --------- ---------
Total revenues 241,605 204,879 892,068 798,369
--------- --------- --------- ---------
COST OF REVENUES
Cost of product
revenue 74,427 58,725 274,211 261,857
Cost of service
revenue 18,781 15,048 65,953 55,989
--------- --------- --------- ---------
Total cost of
revenues 93,208 73,773 340,164 317,846
--------- --------- --------- ---------
GROSS MARGIN 148,397 131,106 551,904 480,523
--------- --------- --------- ---------
OPERATING EXPENSES:
Sales and marketing 79,158 75,065 304,236 284,355
Research and
development 28,333 30,837 112,863 116,725
General and
administrative 10,419 8,781 36,822 40,182
--------- --------- --------- ---------
Total operating
expenses 117,910 114,683 453,921 441,262
--------- --------- --------- ---------
INCOME FROM OPERATIONS 30,487 16,423 97,983 39,261
OTHER INCOME, net 2,654 2,800 10,834 16,603
--------- --------- --------- ---------
INCOME BEFORE INCOME
TAXES 33,141 19,223 108,817 55,864
PROVISION FOR INCOME
TAXES 7,622 4,613 25,028 13,407
--------- --------- --------- ---------
NET INCOME $ 25,519 $14,610 $ 83,789 $ 42,457
========= ========= ========= =========
NET INCOME PER SHARE:
BASIC $ 0.08 $0.04 $ 0.25 $ 0.13
========= ========= ========= =========
DILUTED $ 0.07 $0.04 $ 0.24 $ 0.12
========= ========= ========= =========
SHARES USED IN PER
SHARE CALCULATION:
BASIC 339,854 334,401 337,647 331,645
========= ========= ========= =========
DILUTED 352,144 353,841 350,122 350,498
========= ========= ========= =========
(1) Pro forma results of operations exclude amortization of
goodwill and intangible assets, stock compensation, restructuring
charges, net 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