View:
Download DOC
Download PDF
Download XLS

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 13, 2008
______________
NetApp, Inc.
(Exact name of Registrant as specified in its charter)

Delaware

0-27130

77-0307520

(State or other jurisdiction of

incorporation or organization)

(Commission

File Number)

(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:

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

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

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

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

Item 2.02.     Results of Operations and Financial Condition

On August 13, 2008, NetApp, Inc. issued a press release announcing its earnings for the first quarter fiscal year 2009.  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     Financial Statements and Exhibits

(d) Exhibits.

NetApp, Inc.’s August 13, 2008 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.

 

 

August 13, 2008

By:

/s/ Steven Gomo

 

Steven J. Gomo

Chief Financial Officer

Index to Exhibits

Exhibit

 

Description

99.1

Press release of NetApp, Inc. issued on August 13, 2008.

Exhibit 99.1

NetApp Announces Results for First Quarter of Fiscal Year 2009

Q1 Revenues $869 Million, Up 26% Year over Year

SUNNYVALE, Calif.--(BUSINESS WIRE)--NetApp (NASDAQ:NTAP) today reported results for the first quarter of fiscal year 2009. Revenues for the first fiscal quarter of 2009 were $869 million, an increase of 26% compared to revenues of $689 million for the same period a year ago.

For the first fiscal quarter of 2009, GAAP net income was $38 million, or $0.11 per share1 compared to GAAP net income of $34 million, or $0.09 per share for the same period in the prior year. Non-GAAP2 net income for the first fiscal quarter of 2009 was $76 million, or $0.22 per share, compared to non-GAAP net income of $76 million, or $0.20 per share for the same period a year ago.

“Our new fiscal year got off to a good start, and our efforts to increase awareness and sales capacity in order to secure new customers are delivering results,” said Dan Warmenhoven, chairman and CEO. “Despite economic uncertainty, customers have continued to expand and evolve their storage infrastructure and are looking to NetApp to help them reduce costs and enable new capabilities.”

Outlook

Quarterly Highlights

In the first quarter of fiscal year 2009, NetApp launched new solutions that continue to help customers transform their data center architectures through higher efficiencies and asset utilization, greater power and space savings, innovative data management techniques, and the ability to reduce redundant data on primary storage with deduplication technology. Recognized by many industry awards, NetApp® solutions continue to be a leader in the storage market in quality and innovation. Industry analyst reports during the quarter confirmed that NetApp continues to grow much faster than the overall storage market.

During the first quarter, NetApp announced the new FAS3100 and V3100 storage system series, Storage Acceleration Appliance, and Performance Acceleration Module which enable customers to achieve such benefits as accelerated time to market, improved engineering productivity, and maximized return on their storage infrastructure.

NetApp also announced that the NetApp V-Series now allows customers who have EMC, Hitachi Data Systems, Hewlett Packard, or other storage systems to deploy NetApp deduplication technology to reduce redundant copies of data on these systems. NetApp deduplication has quickly become one of the fastest growing technologies in the company’s history.

Also during the quarter, NetApp expanded its portfolio of storage and data management solutions for virtualized IT environments that include Microsoft® Windows® Server 2008, Microsoft SQL Server™ 2008, Exchange Server 2007, and Microsoft Hyper-V. NetApp also added the availability of the SANscreen® product suite, which was acquired in the acquisition of Onaro, to its global sales and channel partner programs.

NetApp continues to focus on expanding its worldwide channel strategy, programs, and best practices by rolling out the fiscal year 2009 VIP Program worldwide. This partner program demonstrates NetApp’s commitment to building upon its strong relationships with partners by enhancing key initiatives such as services and technology specialization programs.

NetApp products and solutions continue to be rated highly by third parties. During the quarter, NetApp received the following awards: Diogenes Labs–Storage Magazine Quality Awards III (Storage), 2008 “Products of the Year” (eWeek Channel Insider), 2008 ServerWatch Product Excellence Awards (ServerWatch), 2008 Tomorrow’s Technology Today Award (Info Security Products Guide), and 2008 Service and Support Professionals Association (SSPA) STAR Award.

NetApp continued to gain momentum in the storage software market. According to IDC's Worldwide Quarterly Storage Software Tracker Q1 2008,3 NetApp grew more than twice as fast as the storage software market year over year. Also according to IDC, NetApp maintained the number-two market share position in the storage replication software market and continued to close the gap on the market leader. NetApp gained share in the storage replication market and grew fastest among the top five vendors year over year.

NetApp gained share in the networked storage market (which includes FC SAN, NAS, and iSCSI) in first quarter of calendar year 2008 in both revenue and capacity shipped, as reported in IDC's Worldwide Quarterly Disk Storage Systems Tracker Q1 2008.4 According to IDC, NetApp share gains moved the company from the fourth position in the networked storage market to tying for the number-two slot, growing to a 12.0% share in the first quarter of calendar year 2008, up from a 10.1% share in fourth quarter of calendar year 2007.

Webcast and Conference Call Information

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 second quarter of fiscal year 2009, and statements regarding the performance of our product and service offerings, relative to our competitors’ product and service 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 nondeferred 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 NetApp 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 is calculated using the diluted number of shares for all periods presented.

2 Non-GAAP results of operations exclude amortization of intangible assets, stock-based compensation expenses, acquisition-related retention costs, net gain or loss on investments, prior acquisition-related costs, and the related effects on income taxes as well as certain discrete GAAP provisions for income tax matters recognized ratably for non-GAAP purposes.

3 IDC Worldwide Quarterly Storage Software Tracker first quarter of calendar year 2008.

4 IDC Worldwide Quarterly Disk Storage Systems Tracker first quarter of calendar year 2008.

NetApp, the NetApp logo, Go further, faster, and SANscreen 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. These non-GAAP results of operations exclude amortization of intangible assets, stock-based compensation expenses, acquisition-related retention costs, net gain or loss on investments, prior acquisition-related costs, 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.

NETAPP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
   
July 25, 2008 April 25, 2008
 
ASSETS
 
CURRENT ASSETS:
Cash and cash equivalents $ 1,702,395 $ 936,479
Short-term investments 419,256 227,911
Accounts receivable, net 432,510 582,110
Inventories 63,477 70,222
Prepaid expenses and other assets 118,148 120,561
Short-term restricted cash and investments 2,857 2,953
Short-term deferred income taxes   126,250   127,197
Total current assets 2,864,893 2,067,433
 
PROPERTY AND EQUIPMENT, net 720,661 693,792
GOODWILL 680,054 680,054
INTANGIBLE ASSETS, net 81,722 90,075
LONG-TERM INVESTMENTS AND RESTRICTED CASH 285,007 331,105
LONG-TERM DEFERRED INCOME TAXES AND OTHER ASSETS   350,224   208,529
$ 4,982,561 $ 4,070,988
 
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
CURRENT LIABILITIES:
Accounts payable $ 146,158 $ 178,233
Income taxes payable 3,815 6,245
Accrued compensation and related benefits 148,823 202,929
Other accrued liabilities 141,479 154,331
Deferred revenue   914,033   872,364
Total current liabilities   1,354,308   1,414,102
 
LONG-TERM DEBT AND OTHER OBLIGATIONS 1,541,459 318,658
LONG-TERM DEFERRED REVENUE   650,797   637,889
  3,546,564   2,370,649
 
STOCKHOLDERS' EQUITY   1,435,997   1,700,339
$ 4,982,561 $ 4,070,988
NETAPP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except net income per share amounts)
(Unaudited)
     
 
Quarter Ended
July 25, 2008 July 27, 2007
 
REVENUES:
Product $ 547,855 $ 463,333
Software entitlements and maintenance 144,412 107,927
Service   176,509     117,975  
Total revenues   868,776     689,235  
 
COST OF REVENUES:
Cost of product 249,778 186,751
Cost of software entitlements and maintenance 2,186 2,084
Cost of service   100,164     83,203  
Total cost of revenues   352,128     272,038  
GROSS MARGIN   516,648     417,197  
 
OPERATING EXPENSES:
Sales and marketing 303,108 244,643
Research and development 125,352 106,556
General and administrative   49,463     41,450  
Total operating expenses   477,923     392,649  
 
INCOME FROM OPERATIONS 38,725 24,548
 
OTHER INCOME (EXPENSES), net:
Interest income 15,476 17,035
Interest expense (4,575 ) (1,081 )
Net loss on investments (2,621 ) -
Other income (expense), net   (1,989 )   832  
Total other income, net   6,291     16,786  
 
INCOME BEFORE INCOME TAXES 45,016 41,334
 
PROVISION FOR INCOME TAXES   7,344     6,997  
 
NET INCOME $ 37,672   $ 34,337  
 
NET INCOME PER SHARE:
BASIC $ 0.11   $ 0.09  
 
DILUTED $ 0.11   $ 0.09  
 
SHARES USED IN PER SHARE CALCULATION:
BASIC   333,855     364,457  
 
DILUTED   341,120     377,631  
NETAPP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(In thousands)
(Unaudited)
           
Quarter Ended
July 25, 2008 July 27, 2007
Cash Flows from Operating Activities:
Net income $ 37,672 $ 34,337
Adjustments to reconcile net income to net cash provided by operating activities:
 
Depreciation 33,197 26,734
Amortization of intangible assets and patents 8,352 6,893
Stock-based compensation 36,405 40,411
Net loss on investments 2,621 -
Net loss on disposal of equipment 179 117
Allowance for doubtful accounts (36 ) 84
Deferred income taxes (9,128 ) (22,692 )
Deferred rent 827 399
Income tax benefit from stock-based compensation 19,717 10,789
Excess tax benefit from stock-based compensation (10,142 ) (8,339 )
Changes in assets and liabilities:
Accounts receivable 150,291 144,997
Inventories 6,742 (3,145 )
Prepaid expenses and other assets 10,132 15,683
Accounts payable (30,073 ) (14,082 )
Income taxes payable (2,393 ) (47,707 )
Accrued compensation and related benefits (54,439 ) (69,889 )
Other accrued liabilities (1,403 ) (20,128 )
Other liabilities (1,220 ) 59,889
Deferred revenue   52,894     46,548  
Net cash provided by operating activities   250,195     200,899  
Cash Flows from Investing Activities:
Purchases of investments (264,938 ) (328,893 )
Redemptions of investments 107,932 461,952
Change in restricted cash 225 (1,767 )
Purchases of property and equipment (76,613 ) (33,586 )
Purchases of nonmarketable securities   (125 )   (4,035 )
Net cash (used in) provided by investing activities   (233,519 )   93,671  
Cash Flows from Financing Activities:
Proceeds from sale of common stock related to
employee stock transactions 35,528 49,991
Tax withholding payments reimbursed by restricted stock (2,554 ) (2,742 )
Excess tax benefit from stock-based compensation 10,142 8,339
Proceeds from issuance of convertible notes 1,265,000 -
Payment of financing costs (25,445 ) -
Sale of common stock warrants 163,059 -
Purchase of bond hedge (254,898 ) -
Repayment of debt - (15,960 )
Repayment of revolving credit facility (41,835 ) -
Repurchases of common stock   (399,982 )   (200,000 )
Net cash provided by (used in) financing activities   749,015     (160,372 )
 
Effect of Exchange Rate Changes on Cash and Cash Equivalents 225 713
 
Net Increase in Cash and Cash Equivalents 765,916 134,911
Cash and Cash Equivalents:
Beginning of period   936,479     489,079  
End of period $ 1,702,395   $ 623,990  
NETAPP, INC.
SUPPLEMENTAL INFORMATION

(In thousands)

(Unaudited)
           
QUARTER ENDED JULY 25, 2008
 
Amortization of Intangible Assets Stock-based Compensation Expenses Acquisition-Related Retention Cost Prior Acquisition-related Costs Net Loss on Investments Total
 
Cost of product revenues $ 6,748 $ 948 - - - $ 7,696
Cost of service revenues - 3,041 - - - 3,041
Sales and marketing expense 1,259 16,342 - - - 17,601
Research and development expense - 10,188 - - - 10,188
General and administrative expense - 5,886 - - - 5,886
Net gain on investments - - - - 2,621 2,621
           
Effect on pre-tax income $ 8,007 $ 36,405 - - $ 2,621 $ 47,033
 
 
 
QUARTER ENDED JULY 27, 2007
 
Amortization of Intangible Assets Stock-based Compensation Expenses Acquisition-Related Retention Cost Prior Acquisition-related Costs Net Loss on Investments Total
 
Cost of product revenues $ 5,278 $ 945 - - - $ 6,223
Cost of service revenues - 2,671 - - - 2,671
Sales and marketing expense 970 17,491 1,162 - - 19,623
Research and development expense - 13,175 - - - 13,175
General and administrative expense 150 6,129 - 2,800 - 9,079
           
Effect on pre-tax income $ 6,398 $ 40,411 $ 1,162 $ 2,800 - $ 50,771
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
July 25, 2008 July 27, 2007
 
SUMMARY RECONCILIATION OF NET INCOME
NET INCOME $ 37,672 $ 34,337
 
Adjustments:
Amortization of intangible assets 8,007 6,398
Stock-based compensation expenses 36,405 40,411
Acquisition-related retention cost - 1,162
Prior acquisition-related costs - 2,800
Net loss on investments 2,621 -
Discrete GAAP tax provision items 492 443
Income tax effect (9,257 ) (9,564 )
   
NON-GAAP NET INCOME $ 75,940   $ 75,987  
 
 
 
NET INCOME PER SHARE $ 0.110 $ 0.091
 
Adjustments:
Amortization of intangible assets 0.023 0.017
Stock-based compensation expenses 0.107 0.107
Acquisition-related retention cost - 0.003
Prior acquisition-related costs - 0.007
Net loss on investments 0.008 -
Discrete GAAP tax provision items 0.001 0.001
Income tax effect (0.027 ) (0.025 )
   
NON-GAAP NET INCOME PER SHARE $ 0.222   $ 0.201  
NETWORK APPLIANCE, INC.
RECONCILIATION OF NON GAAP GUIDANCE TO GAAP
EXPRESSED AS EARNINGS PER SHARE
SECOND QUARTER 2009
(Unaudited)
 
 
 
Second Quarter
  2009  
 
Non-GAAP Guidance $ 0.27 - $0.30
 
 
Adjustments of Specific Items to
Earnings Per Share for the First
Quarter and Full Year 2009:
 
Amortization of intangible assets (0.02 )
Stock based compensation expense (0.11 - 0.13 )
Income tax effect   0.02  
Total Adjustments (0.11 - 0.13 )
 
GAAP Guidance - Earnings Per Share $ 0.16 - $0.19

CONTACT:
NetApp
Jodi Baumann, 408-822-3974 (Press)
Jodi.Baumann@netapp.com
Tara Dhillon, 408-822-6909 (Investors)
tara@netapp.com
Billie Fagenstrom, 408-822-6428 (Investors)
billief@netapp.com