SOURCE: NetApp, Inc.

NetApp, Inc.

November 17, 2010 15:31 ET

NetApp Announces Results for Second Quarter Fiscal Year 2011

Company Reports Record Q2 FY'11 Revenues of $1.207 Billion, Up 33% Year Over Year

SUNNYVALE, CA--(Marketwire - November 17, 2010) - NetApp (NASDAQ: NTAP) today reported results for the second quarter of fiscal year 2011, which ended October 29, 2010. Revenues for the second fiscal quarter of 2011 totaled $1.207 billion compared to revenues of $910 million for the same period a year ago, an increase of 33% year over year.

For the second quarter of fiscal year 2011, GAAP net income was $165 million or $0.42 per share(1) compared to GAAP net income of $96 million, or $0.27 per share for the same period a year ago. Non-GAAP net income for the second quarter of fiscal year 2011 was $203 million, or $0.52 per share(2), compared to non-GAAP net income of $130 million, or $0.37 per share for the same period a year ago.

Revenues for the first six months of fiscal year 2011 totaled $2.345 billion compared to revenues of $1.748 billion for the first six months of the prior fiscal year, an increase of 34% year over year.

GAAP net income for the first six months of fiscal year 2011 totaled $306 million, or $0.80 per share, compared to GAAP net income of $147 million, or $0.43 per share for the first six months of the prior fiscal year. Non-GAAP net income for the first six months of fiscal year 2011 totaled $385 million, or $1.01 per share, compared to non-GAAP net income of $206 million, or $0.60 per share for the first six months of the prior fiscal year.

"NetApp produced 49% year over year growth in product revenue and our highest non-GAAP operating margin in over a decade, while simultaneously investing aggressively in our future," said Tom Georgens, president and CEO of NetApp. "Last week, the NetApp team delivered the most comprehensive product launch in our history. By offering customers a more flexible and efficient alternative to traditional storage, NetApp further strengthened our leadership position as the platform of choice for the next generation of IT infrastructure."

Outlook

  • NetApp estimates revenue for the third quarter of fiscal year 2011 to be in the range of $1.240 billion to $1.290 billion, which equates to approximately 3% to 7% sequential revenue growth and approximately 23% to 28% year over year revenue growth.
  • NetApp estimates that third quarter fiscal year 2011 GAAP earnings per share will be approximately $0.39 to $0.41 per share. NetApp estimates that the third quarter fiscal year 2011 non-GAAP earnings per share will be approximately $0.48 to $0.50 per share.
  • NetApp estimates share count for the third quarter of fiscal year 2011 will increase to approximately 408 million shares, including an estimated 16.9 million shares from the Company's outstanding convertible notes(3) and 9.9 million shares from outstanding warrants. Share count does not include the Company's outstanding note hedges that are expected to offset 80% of the dilution from the convertible notes at maturity or conversion, which would equate to an offset of approximately 13.5 million shares if the conversion or maturity occurred in the third quarter.

Business Highlights
In the second quarter of fiscal year 2011, NetApp introduced new solutions and expanded support and integration with key partners such as VMware to help customers accelerate their move to a more integrated, efficient, and flexible shared IT infrastructure. In addition, NetApp achieved several milestones and was honored as a best place to work and one of the most trusted and strategic IT vendors in the industry. Key business highlights included the following:

NetApp and Partners Deliver Flexible and Efficient IT

  • NetApp and VMware® improve IT efficiency. NetApp made several announcements with VMware to enable customers to achieve greater efficiency in their virtual environments. NetApp integrated its unified storage technologies with VMware® View™ to help customers enhance storage efficiency and virtual desktop scalability, as well as improve performance levels. NetApp also announced support for VMware vCloud™ Director software to improve IT flexibility and efficiency and help enterprise customers and service providers to easily and cost-effectively evolve to a cloud service model. In addition, NetApp and VMware unveiled a new solution for midsize enterprises to consolidate and virtualize their Windows® environments to deliver enterprise-class IT as a service.

  • Fujitsu and NetApp help customers gain greater IT value and efficiency. Fujitsu and NetApp extended their strong, long-standing global partnership to offer a shared portfolio of products to meet the integrated storage needs of their customers. Fujitsu will expand its resale of NetApp® unified storage systems to more markets worldwide. In addition, NetApp will resell the Fujitsu ETERNUS CS800 S2 Data Protection Appliance in 22 countries across EMEA.

  • NetApp strengthens integration with Symantec to boost customers' IT efficiency. NetApp integrated its unified storage systems with the Symantec™ Thin Reclamation API to help SAN customers automatically reclaim storage space and improve overall storage efficiency. Customers can improve planning and reduce their overall IT footprint and management costs.

  • NetApp helps EMC and HP customers achieve greater efficiency. NetApp introduced its Zero Investment Promise (ZIP) for Database Promotion to assist EMC and HP customers in achieving greater storage efficiencies in their database environments. The promotion enables EMC and HP customers to reduce storage requirements, improve utilization, and decrease operating costs by engaging in a 90-day, risk-free, zero-investment trial of NetApp V-Series for their database storage infrastructures.

Milestones and Awards

  • NetApp customers deploy thousands of systems with Data ONTAP® 8. To help transition to a shared IT infrastructure, customers accelerated their adoption of NetApp Data ONTAP 8 by deploying thousands of systems to build flexible, scalable, and efficient shared storage environments that are designed to address today's business challenges and the future requirements of their businesses.

  • NetApp ranked #1 hardware vendor and #2 overall IT vendor. NetApp was ranked as the #1 hardware vendor and #2 (tied with Cisco) overall IT vendor in the 2010 CIO Insight Vendor Value Ratings survey.

  • NetApp positioned in Leaders quadrant. Gartner, Inc. positioned NetApp in the Leaders quadrant for Storage Resource Management and SAN Management Software(4). Gartner asserted that vendors in the Leaders quadrant "have the highest combined measures of Ability to Execute and Completeness of Vision."

  • NetApp ranked #1 best place to work. NetApp was ranked #1 on the Triangle Business Journal's annual "Best Places to Work" in Research Triangle Park (RTP) list for 2010. NetApp received this honor for the Giant Businesses category, which includes companies of 1,000 employees or more; it marks the sixth time that NetApp has made this distinguished list and the second time it has been ranked #1.

Webcast and Conference Call Information
The NetApp second quarter fiscal year 2011 results conference call will be broadcast live on the Internet at http://investors.netapp.com on Wednesday, November 17, 2010, 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. An audio replay Webcast will also be available after 4:00 p.m. Pacific Time on our Web site.

NetApp uses a hybrid format for disclosing key financial information associated with our quarterly results. Concurrent with the press release, NetApp will post and distribute a separate document with financial commentary and statistics. These prepared remarks will be available prior to the conference call in order to provide the investment community with additional time to analyze our results. This commentary will not be read during the earnings call.

About NetApp
NetApp creates innovative storage and data management solutions that deliver outstanding cost efficiency and accelerate business breakthroughs. Discover our 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, share count, and metrics for the third quarter of fiscal year 2011, expectations regarding current and new partnerships and strategic alliances, and the benefits that we expect our customers to realize from using our products and from our strategic alliances and partnerships. 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, but are not limited to, customer demand for our products and services including our recently announced new product introductions; our ability to increase revenue and manage our operating costs; increased competition risks associated with the anticipated growth in networked storage market; general economic and market conditions; our ability to deliver new product architectures and enterprise service offerings; our ability to design products and services that compete effectively from a price and performance perspective; our reliance on a limited number of suppliers; our ability to accurately forecast demand for our products; 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, and Data ONTAP are trademarks in the United States and other countries. All other trademarks are the property of their respective owners.

(1) GAAP earnings per share is calculated using the diluted number of shares for all periods presented.
(2) Non-GAAP net income excludes the amortization of intangible assets, stock-based compensation expenses, acquisition related income and expenses, restructuring and other charges, asset impairments, non-cash interest expense associated with our convertible debt, net losses or gains on investments, and our GAAP tax provision, but includes a non-GAAP tax provision based upon our projected annual non-GAAP effective tax rate for the first three quarters of the fiscal year and an actual non-GAAP tax provision for the fourth quarter of the fiscal year. Non-GAAP earnings per share is calculated using the diluted number of shares for all periods presented.
(3) 80% hedged on maturity or conversion of the convertible notes.
(4) Gartner, Inc. Magic Quadrant for Storage Resource Management and SAN Management Software, Valdis Filks, Robert E. Passmore, September 21, 2010.

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 ongoing operational performance. Non-GAAP net income excludes the amortization of intangible assets, stock-based compensation expenses, acquisition related income and expenses, restructuring and other charges, asset impairments, non-cash interest expense associated with our convertible debt, net losses or gains on investments, and our GAAP tax provision, but includes a non-GAAP tax provision based upon our projected annual non-GAAP effective tax rate for the first three quarters of the fiscal year and an actual non-GAAP tax provision for the fourth quarter of the fiscal year. 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 are used to: (1) measure company performance against historical results, (2) facilitate comparisons to our competitors' operating results, and (3) allow greater transparency with respect to information used by management in financial and operational decision making. In addition, these non-GAAP financial measures are used to measure company performance for the purposes of determining employee incentive plan compensation. 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 millions)
                               (Unaudited)


                                                    October 29,  April 30,
                                                       2010        2010
                                                    ----------- -----------
                      ASSETS
Current assets:
    Cash, cash equivalents and investments          $   4,381.5 $   3,724.0
    Accounts receivable, net                              446.6       471.5
    Inventories                                            84.7       112.9
    Other current assets                                  218.3       228.7
                                                    ----------- -----------
        Total current assets                            5,131.1     4,537.1

Property and equipment, net                               845.3       804.4
Goodwill and other intangible assets, net                 775.8       706.1
Long-term investments and restricted cash                  69.8        72.8
Other non-current assets                                  415.8       374.0
                                                    ----------- -----------
                                                    $   7,237.8 $   6,494.4
                                                    =========== ===========

       LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
    Accounts payable                                $     175.9 $     184.6
    Accrued compensation and other current
     liabilities                                          523.0       591.3
    Short-term deferred revenue                         1,135.6     1,135.1
                                                    ----------- -----------
        Total current liabilities                       1,834.5     1,911.0
                                                    ----------- -----------

Long-term debt and other obligations                    1,329.5     1,273.4
Long-term deferred revenue                                866.4       779.5
                                                    ----------- -----------
                                                        4,030.4     3,963.9
                                                    ----------- -----------

Stockholders' equity                                    3,207.4     2,530.5
                                                    ----------- -----------
                                                    $   7,237.8 $   6,494.4
                                                    =========== ===========





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



                           Three Months Ended         Six Months Ended
                        ------------------------  ------------------------
                        October 29,  October 30,  October 29,  October 30,
                           2010         2009         2010         2009
                        -----------  -----------  -----------  -----------

Revenues:
  Product               $     780.0  $     525.1  $   1,500.8  $   1,003.4
  Software entitlements
   and maintenance            177.9        169.8        352.6        335.1
  Service                     249.5        215.1        491.8        409.5
                        -----------  -----------  -----------  -----------
    Net revenues            1,207.4        910.0      2,345.2      1,748.0
                        -----------  -----------  -----------  -----------

Cost of revenues:
  Cost of product             296.1        199.1        603.8        411.7
  Cost of software
   entitlements and
   maintenance                  3.5          3.1          6.9          6.2
  Cost of service             106.7        101.1        209.0        200.9
                        -----------  -----------  -----------  -----------
    Total cost of
     revenues                 406.3        303.3        819.7        618.8
                        -----------  -----------  -----------  -----------
Gross profit                  801.1        606.7      1,525.5      1,129.2
                        -----------  -----------  -----------  -----------

Operating expenses:
  Sales and marketing         382.8        300.8        737.0        602.3
  Research and
   development                156.6        132.4        306.1        262.7
  General and
   administrative              64.2         56.9        120.4        116.4
  Restructuring and
   other charges                0.1          1.2          0.1          2.7
  Acquisition related
   (income) expense, net          -            -          0.3        (41.1)
                        -----------  -----------  -----------  -----------
    Total operating
     expenses                 603.7        491.3      1,163.9        943.0
                        -----------  -----------  -----------  -----------

Income from operations        197.4        115.4        361.6        186.2

Other income
 (expenses), net
  Interest income               9.5          7.0         19.3         15.6
  Interest expense            (18.6)       (17.9)       (37.2)       (37.1)
  Other income
   (expenses), net             (1.4)         1.5          0.8          0.4
                        -----------  -----------  -----------  -----------
    Total other
     expenses, net            (10.5)        (9.4)       (17.1)       (21.1)
                        -----------  -----------  -----------  -----------

Income before income
 taxes                        186.9        106.0        344.5        165.1

Provision for income
 taxes                         22.3         10.3         38.1         17.8
                        -----------  -----------  -----------  -----------

Net income              $     164.6  $      95.7  $     306.4  $     147.3
                        ===========  ===========  ===========  ===========

Net income per share:
  Basic                 $      0.46  $      0.28  $      0.86  $      0.44
                        ===========  ===========  ===========  ===========
  Diluted               $      0.42  $      0.27  $      0.80  $      0.43
                        ===========  ===========  ===========  ===========

Shares used in net
 income per share
 calculations:
  Basic                       359.1        336.7        355.8        335.6
                        ===========  ===========  ===========  ===========
  Diluted                     391.7        349.8        383.0        344.3
                        ===========  ===========  ===========  ===========





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


                              Three Months Ended       Six Months Ended
                            ----------------------  ----------------------
                            October 29, October 30, October 29, October 30,
                               2010        2009        2010        2009
                            ----------  ----------  ----------  ----------

Cash Flows from Operating
 Activities:
 Net income                 $    164.6  $     95.7  $    306.4  $    147.3
 Adjustments to reconcile
  net income to net cash
  provided by operating
  activities:
  Depreciation and
   amortization                   41.6        42.2        82.3        85.2
  Stock-based compensation        37.7        33.2        82.0        85.4
  Accretion of discount and
   issue costs on notes           13.0        12.2        25.9        25.3
  Unrealized losses on
   derivative activities          (4.1)          -         6.7           -
  Tax benefit from
   stock-based compensation       52.9        (4.6)       40.9        14.4
  Excess tax benefit from
   stock-based compensation      (32.7)       (1.4)      (32.7)       (1.4)
  Other, net                     (28.9)       (2.1)      (17.8)       (4.1)
 Changes in assets and
  liabilities:
   Accounts receivable           (72.7)       14.5        27.3       131.7
   Inventories                     5.7         0.7        28.2         0.3
   Accounts payable               15.8        (2.4)      (18.6)      (16.9)
   Accrued compensation and
    other current
    liabilities                  125.5        90.8       (96.1)     (140.1)
   Deferred revenue               48.4        (4.4)       81.6       (14.2)
   Changes in other
    operating assets and
    liabilities, net              (2.1)       (7.1)       25.9        (7.4)
                            ----------  ----------  ----------  ----------
        Net cash provided
         by operating
         activities              364.7       267.3       542.0       305.5
                            ----------  ----------  ----------  ----------
Cash Flows from Investing
 Activities:
 Purchases and redemptions
  of investments, net           (300.9)     (336.0)     (594.8)     (102.4)
 Purchases of property and
  equipment                      (43.3)      (22.8)      (83.5)      (47.5)
 Acquisition of business,
  net of cash acquired               -           -       (74.9)          -
 Other investing
  activities, net                 (0.1)        4.1           -         3.6
                            ----------  ----------  ----------  ----------
        Net cash used in
         investing
         activities             (344.3)     (354.7)     (753.2)     (146.3)
                            ----------  ----------  ----------  ----------
Cash Flows from Financing
 Activities:
 Issuance of common stock         96.2        26.8       236.1        60.1
 Excess tax benefit from
  stock-based compensation        32.7         1.4        32.7         1.4
 Payment of financing
  arrangements                    (2.0)          -        (2.0)          -
                            ----------  ----------  ----------  ----------
        Net cash provided
         by financing
         activities              126.9        28.2       266.8        61.5
                            ----------  ----------  ----------  ----------
Effect of Exchange Rate
 Changes on Cash and Cash
 Equivalents                      11.8         3.6        10.5        13.9

Net Increase (Decrease) in
 Cash and Cash Equivalents       159.1       (55.6)       66.1       234.6
Cash and Cash Equivalents:
 Beginning of period           1,612.0     1,784.4     1,705.0     1,494.2
                            ----------  ----------  ----------  ----------
 End of period              $  1,771.1  $  1,728.8  $  1,771.1  $  1,728.8
                            ==========  ==========  ==========  ==========





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


                              Three Months Ended       Six Months Ended
                            ----------------------  ----------------------
                           October 29,  October 30, October 29, October 30,
                               2010        2009        2010        2009
                            ----------  ----------  ----------  ----------

SUMMARY RECONCILIATION OF
 NET INCOME
NET INCOME                  $    164.6  $     95.7  $    306.4  $    147.3

Adjustments:
 Amortization of intangible
  assets                           4.4         5.1         9.9        10.7
 Stock-based compensation
  expenses                        37.7        33.2        82.0        85.4
 Restructuring and other
  charges                          0.1         1.2         0.1         2.7
 Acquisition related
  (income) expense, net              -           -         0.3       (41.1)
 Non-cash interest expense        13.0        12.2        25.9        25.3
 Gain on investments                 -        (2.8)       (2.5)       (2.8)
 Income tax effect of
  non-GAAP adjustments           (17.1)      (14.5)      (36.8)      (21.4)

                            ----------  ----------  ----------  ----------
NON-GAAP NET INCOME         $    202.7  $    130.1  $    385.3  $    206.1
                            ==========  ==========  ==========  ==========


NET INCOME PER SHARE        $    0.420  $    0.274  $    0.800  $    0.428

Adjustments:
 Amortization of intangible
  assets                         0.011       0.015       0.026       0.031
 Stock-based compensation
  expenses                       0.096       0.095       0.214       0.248
 Restructuring and other
  charges                            -       0.003           -       0.008
 Acquisition related
  (income) expense, net              -           -       0.001      (0.119)
 Non-cash interest expense       0.033       0.035       0.068       0.073
 Gain on investments                 -      (0.008)     (0.007)     (0.008)
 Income tax effect of
  non-GAAP adjustments          (0.043)     (0.042)     (0.096)     (0.062)

NON-GAAP NET INCOME PER     ----------  ----------  ----------  ----------
 SHARE                      $    0.517  $    0.372  $    1.006  $    0.599
                            ==========  ==========  ==========  ==========





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


                                Three Months Ended October 29, 2010
                        ---------------------------------------------------

                                                                Acquisition
                        Amortization                              related
                            of       Stock-based  Restructuring  (income)
                        Intangible   Compensation   and Other    expense,
                          Assets       Expenses     Charges         net
                        ------------ ------------ ------------- -----------

Cost of product
 revenues               $        3.3 $        0.8 $           - $         -
Cost of service
 revenues                          -          3.1             -           -
Sales and marketing
 expense                         1.1         17.3             -           -
Research and
 development expense               -          9.2             -           -
General and
 administrative expense            -          7.3             -           -
Restructuring and other
 charges                           -            -           0.1           -
Interest expense                   -            -             -           -
                        ------------ ------------ ------------- -----------
Effect on income before
 income taxes           $        4.4 $       37.7 $         0.1 $         -



                        Three Months Ended October 29, 2010
                        -----------------------------------

                         Non-Cash
                         Interest     Gain on
                         Expense    Investments    Total
                        ----------- ----------- -----------

Cost of product
 revenues               $         - $         - $       4.1
Cost of service
 revenues                         -           -         3.1
Sales and marketing
 expense                          -           -        18.4
Research and
 development expense              -           -         9.2
General and
 administrative expense           -           -         7.3
Restructuring and other
 charges                          -           -         0.1
Interest expense               13.0           -        13.0
                        ----------- ----------- -----------
Effect on income before
 income taxes           $      13.0 $         - $      55.2




                                Six Months Ended October 29, 2010
                        ---------------------------------------------------

                                                                Acquisition
                        Amortization                              related
                            of       Stock-based  Restructuring  (income)
                        Intangible   Compensation   and Other    expense,
                          Assets       Expenses     Charges         net
                        ------------ ------------ ------------- -----------
Cost of product
 revenues               $        7.7 $        1.7 $           - $         -
Cost of service
 revenues                          -          7.0             -           -
Sales and marketing
 expense                         2.2         37.9             -           -
Research and
 development expense               -         20.3             -           -
General and
 administrative expense            -         15.1             -           -
Restructuring and other
 charges                           -            -           0.1           -
Acquisition related
 (income) expense, net             -            -             -         0.3
Interest expense                   -            -             -           -
Other income
 (expenses), net                   -            -             -           -
                        ------------ ------------ ------------- -----------
Effect on income before
 income taxes           $        9.9 $       82.0 $         0.1 $       0.3



                         Six Months Ended October 29, 2010
                        -----------------------------------

                         Non-Cash
                         Interest    Gain on
                          Expense  Investments     Total
                        ----------- ----------  ----------
Cost of product
 revenues               $         - $        -  $      9.4
Cost of service
 revenues                         -          -         7.0
Sales and marketing
 expense                          -          -        40.1
Research and
 development expense              -          -        20.3
General and
 administrative expense           -          -        15.1
Restructuring and other
 charges                          -          -         0.1
Acquisition related
 (income) expense, net            -          -         0.3
Interest expense               25.9          -        25.9
Other income
 (expenses), net                  -       (2.5)       (2.5)
                        ----------- ----------  ----------
Effect on income before
 income taxes           $      25.9 $     (2.5) $    115.7




                                Three Months Ended October 30, 2009
                        ---------------------------------------------------

                                                                Acquisition
                        Amortization                              related
                            of       Stock-based  Restructuring  (income)
                        Intangible   Compensation   and Other    expense,
                          Assets       Expenses     Charges         net
                        ------------ ------------ ------------- -----------
Cost of product
 revenues               $        4.3 $        0.5 $           - $         -
Cost of service
 revenues                          -          2.9             -           -
Sales and marketing
 expense                         0.8         15.7             -           -
Research and
 development expense               -          7.9             -           -
General and
 administrative expense            -          6.2             -           -
Restructuring and other
 charges                           -            -           1.2           -
Interest expense                   -            -             -           -
Other income
 (expenses), net                   -            -             -           -
                        ------------ ------------ ------------- -----------
Effect on income before
 income taxes           $        5.1 $       33.2 $         1.2 $         -



                        Three Months Ended October 30, 2009
                        -----------------------------------

                         Non-Cash
                         Interest    Gain on
                          Expense  Investments     Total
                        ----------- ----------  ----------
Cost of product
 revenues               $         - $        -  $      4.8
Cost of service
 revenues                         -          -         2.9
Sales and marketing
 expense                          -          -        16.5
Research and
 development expense              -          -         7.9
General and
 administrative expense           -          -         6.2
Restructuring and other
 charges                          -          -         1.2
Interest expense               12.2          -        12.2
Other income
 (expenses), net                  -       (2.8)       (2.8)
                        ----------- ----------  ----------
Effect on income before
 income taxes           $      12.2 $     (2.8) $     48.9



                                Six Months Ended October 30, 2009
                        ---------------------------------------------------

                                                                Acquisition
                        Amortization                              related
                            of       Stock-based  Restructuring  (income)
                        Intangible   Compensation   and Other    expense,
                          Assets       Expenses     Charges         net
                        ------------ ------------ ------------- ----------
Cost of product
 revenues               $        9.0 $        1.7 $           - $        -
Cost of service
 revenues                          -          7.4             -          -
Sales and marketing
 expense                         1.7         39.7             -          -
Research and
 development expense               -         20.6             -          -
General and
 administrative expense            -         16.0             -          -
Restructuring and other
 charges                           -            -           2.7          -
Acquisition related
 (income) expense, net             -            -             -      (41.1)
Interest expense                   -            -             -          -
Other income
 (expenses), net                   -            -             -          -
                        ------------ ------------ ------------- ----------
Effect on income before
 income taxes           $       10.7 $       85.4 $         2.7 $    (41.1)



                         Six Months Ended October 30, 2009
                        -----------------------------------

                         Non-Cash
                         Interest    Gain on
                          Expense  Investments    Total
                        ----------- ----------  ----------
Cost of product
 revenues               $         - $        -  $     10.7
Cost of service
 revenues                         -          -         7.4
Sales and marketing
 expense                          -          -        41.4
Research and
 development expense              -          -        20.6
General and
 administrative expense           -          -        16.0
Restructuring and other
 charges                          -          -         2.7
Acquisition related
 (income) expense, net            -          -       (41.1)
Interest expense               25.3          -        25.3
Other income
 (expenses), net                  -       (2.8)       (2.8)
                        ----------- ----------  ----------
Effect on income before
 income taxes           $      25.3 $     (2.8) $     80.2






                               NETAPP, INC.
                RECONCILIATION OF NON GAAP GUIDANCE TO GAAP
                      EXPRESSED AS EARNINGS PER SHARE
                            THIRD QUARTER 2011
                                (Unaudited)




                                                            Third Quarter
                                                                 2011
                                                           ---------------

Non-GAAP Guidance                                           $0.48 - $0.50


Adjustments of Specific Items to
     Net Income Per Share for the Third
     Quarter 2011:

     Stock based compensation expense                           (0.09)
     Amortization of intangible assets                          (0.01)
     Non cash interest expense                                  (0.03)
     Income tax effect                                           0.04
                                                           ---------------
Total Adjustments                                               (0.09)

GAAP Guidance -Net Income Per Share                         $0.39 - $0.41

Contact Information