Outlook
- NetApp estimates revenue for the third quarter of fiscal year 2010 to
be in a range of $935 million to $955 million.
- NetApp estimates the third quarter of fiscal year 2010 share count to
increase by about 5 million shares.
- NetApp estimates that the third quarter of fiscal year 2010 GAAP earnings per share will be approximately $0.24 to $0.25 per share. NetApp estimates third quarter fiscal year 2010 non-GAAP earnings per share to be approximately $0.36 to $0.37 per share.
- Best Channel Product 2009: The NetApp FAS2000 series was named
a "Best Channel Product 2009" in the NAS Storage category by Business
Solutions magazine. The FAS2000 was cited for its reliability, durability,
and ease of upgrade.
- 2009 InformationWeek 500: NetApp ranked 26th on the 2009
InformationWeek 500, which honors the nation's most innovative users of
information technology. NetApp ranked number three in the information
technology industry.
- Oracle Innovation Award: Recognizing NetApp's innovative use of
Oracle® Business Intelligence software, Oracle named NetApp a winner of
the 2009 Innovation Awards in the Business Intelligence/Enterprise
Performance Management category.
- Morgan Stanley Leadership Award for Global Commerce: Dan
Warmenhoven and Tom Mendoza received the Morgan Stanley Leadership Award
for Global Commerce, which recognizes individuals whose personal leadership
has made a critical contribution to the effective use of information
technology throughout the world.
- Washingtonian Magazine's 50 Great Places to Work: NetApp was selected as a winner in the "Think Big" category, for large companies, on the basis of such measures as recognition and respect given employees, great work-life balance, challenging and interesting opportunities, commitment to community, and generous pay and benefits.
- The NetApp quarterly results conference call will be broadcast live on
the Internet at http://investors.netapp.com on Wednesday, November 18,
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) 510-9836 in the United States and (617) 614-3670 outside the
United States. The pass code for both numbers is 11612732.
- 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 30335717. The Webcast replay will be posted on our Web site for at least one year.
NETAPP, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) October 30, 2009 April 24, 2009 ----------------- ----------------- ASSETS CURRENT ASSETS: Cash and cash equivalents $ 1,728,841 $ 1,494,153 Short-term investments 1,226,697 1,110,053 Accounts receivable, net 318,033 446,537 Inventories 61,141 61,104 Prepaid expenses and other assets 115,525 119,887 Short-term deferred income taxes 140,352 207,050 ----------------- ----------------- Total current assets 3,590,589 3,438,784 PROPERTY AND EQUIPMENT, net 780,378 807,923 GOODWILL 680,986 680,986 INTANGIBLE ASSETS, net 34,970 45,744 LONG-TERM INVESTMENTS AND RESTRICTED CASH 116,406 127,317 LONG-TERM DEFERRED INCOME TAXES AND OTHER ASSETS 361,178 283,625 ----------------- ----------------- $ 5,564,507 $ 5,384,379 ================= ================= LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 118,807 $ 137,826 Accrued compensation and related benefits 220,778 204,168 Other accrued liabilities 179,087 190,315 Accrual for GSA settlement - 128,715 Income taxes payable 3,020 4,732 Deferred revenue 1,017,067 1,013,569 ----------------- ----------------- Total current liabilities 1,538,759 1,679,325 ----------------- ----------------- LONG-TERM DEBT AND OTHER OBLIGATIONS 1,217,418 1,219,216 LONG-TERM DEFERRED REVENUE 704,836 701,649 ----------------- ----------------- 3,461,013 3,600,190 ----------------- ----------------- STOCKHOLDERS' EQUITY 2,103,494 1,784,189 ----------------- ----------------- $ 5,564,507 $ 5,384,379 ================= ================= NETAPP, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except net income per share amounts) (Unaudited) Three Months Ended Six Months Ended ------------------------ ------------------------ October 30, October 24, October 30, October 24, 2009 2008 2009 2008 ----------- ----------- ----------- ----------- REVENUES: Product $ 525,148 $ 570,436 $ 1,003,394 $ 1,118,291 Software entitlements and maintenance 169,815 152,722 335,105 297,134 Service 215,064 188,473 409,489 364,982 ----------- ----------- ----------- ----------- Net revenues 910,027 911,631 1,747,988 1,780,407 ----------- ----------- ----------- ----------- COST OF REVENUES: Cost of product 199,134 260,332 411,669 510,110 Cost of software entitlements and maintenance 3,106 2,259 6,218 4,445 Cost of service 101,106 102,884 200,927 203,048 ----------- ----------- ----------- ----------- Total cost of revenues 303,346 365,475 618,814 717,603 ----------- ----------- ----------- ----------- GROSS MARGIN 606,681 546,156 1,129,174 1,062,804 ----------- ----------- ----------- ----------- OPERATING EXPENSES: Sales and marketing 300,835 304,045 602,268 607,152 Research and development 132,354 125,496 262,671 250,848 General and administrative 56,939 51,011 116,490 100,474 Restructuring and other charges 1,179 - 2,675 - Merger termination proceeds, net - - (41,120) - ----------- ----------- ----------- ----------- Total operating expenses 491,307 480,552 942,984 958,474 ----------- ----------- ----------- ----------- INCOME FROM OPERATIONS 115,374 65,604 186,190 104,330 OTHER INCOME (EXPENSES), net: Interest income 6,979 17,619 15,596 33,094 Interest expense (17,916) (17,807) (37,117) (27,319) Loss (gain) on investments, net 2,805 (22,613) 2,713 (25,234) Other expenses, net (1,270) (479) (2,218) (2,468) ----------- ----------- ----------- ----------- Total other expenses, net (9,402) (23,280) (21,026) (21,927) ----------- ----------- ----------- ----------- INCOME BEFORE INCOME TAXES 105,972 42,324 165,164 82,403 PROVISION (BENEFIT) FOR INCOME TAXES 10,295 (729) 17,823 4,627 ----------- ----------- ----------- ----------- NET INCOME $ 95,677 $ 43,053 $ 147,341 $ 77,776 =========== =========== =========== =========== NET INCOME PER SHARE: BASIC $ 0.28 $ 0.13 $ 0.44 $ 0.24 =========== =========== =========== =========== DILUTED $ 0.27 $ 0.13 $ 0.43 $ 0.23 =========== =========== =========== =========== SHARES USED IN PER SHARE CALCULATION: BASIC 336,667 327,319 335,602 330,587 =========== =========== =========== =========== DILUTED 349,751 333,385 344,313 337,253 =========== =========== =========== =========== NETAPP, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW (In thousands) (Unaudited) Three Months Ended Six Months Ended ------------------------ ------------------------ October 30, October 24, October 30, October 24, 2009 2008 2009 2008 ----------- ----------- ----------- ----------- Cash Flows from Operating Activities: Net income $ 95,677 $ 43,053 $ 147,341 $ 77,776 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 42,148 43,918 85,189 85,467 Stock-based compensation 33,245 27,763 85,429 64,167 Loss (gain) on investments (2,835) 13,315 (2,537) 15,936 Asset impairment and write-offs 846 581 1,140 760 Allowance for doubtful accounts 144 1,740 9 1,704 Accretion of discount and issue costs on notes 12,211 11,509 25,291 17,076 Deferred income taxes 163 (36,041) (1,919) (47,300) Deferred rent (434) 2,184 (829) 3,011 Income tax benefit from stock-based compensation (4,638) 25,690 14,410 45,549 Excess tax benefit from stock-based compensation (1,350) (24,169) (1,350) (34,311) Changes in assets and liabilities: Accounts receivable 14,462 60,915 131,717 211,207 Inventories 774 (14,756) 334 (8,014) Prepaid expenses and other assets (13,347) (29,504) (1,071) (20,002) Accounts payable (2,357) 13,740 (16,858) (16,333) Accrued compensation and related benefits 82,579 23,683 9,561 (30,756) Other accrued liabilities 7,174 6,312 (19,456) 4,909 Accrual for GSA settlement - - (128,715) - Income taxes payable 970 1,857 (1,608) (536) Long term other liabilities 6,234 401 (6,334) (818) Deferred revenue (4,371) 35,249 (14,215) 88,143 ----------- ----------- ----------- ----------- Net cash provided by operating activities 267,295 207,440 305,529 457,635 ----------- ----------- ----------- ----------- Cash Flows from Investing Activities: Purchases of investments (722,334) (219,024) (883,231) (483,962) Redemptions of investments 386,288 155,711 780,808 263,643 Reclassification from cash and cash equivalents to short-term investments - (597,974) - (597,974) Change in restricted cash 967 457 (827) 682 Proceeds from nonmarketable securities 3,115 932 4,480 807 Purchases of property and equipment (22,776) (27,354) (47,490) (103,967) ----------- ----------- ----------- ----------- Net cash used in investing activities (354,740) (687,252) (146,260) (920,771) ----------- ----------- ----------- ----------- Cash Flows from Financing Activities: Proceeds from sale of common stock related to employee stock transactions 27,385 10,038 65,888 45,565 Tax withholding payments reimbursed by employee stock transactions (490) (37) (5,717) (2,591) Excess tax benefit from stock-based compensation 1,350 24,169 1,350 34,311 Proceeds from issuance of convertible notes - - - 1,265,000 Payment of financing costs - (1,136) - (26,581) Sale of common stock warrants - - - 163,059 Purchase of note hedge - - - (254,898) Repayment of revolving credit facility - (65,416) - (107,251) Repurchases of common stock - - - (399,981) ----------- ----------- ----------- ----------- Net cash provided by (used in) financing activities 28,245 (32,382) 61,521 716,633 ----------- ----------- ----------- ----------- Effect of Exchange Rate Changes on Cash and Cash Equivalents 3,653 (19,172) 13,898 (18,947) Net Increase (Decrease) in Cash and Cash Equivalents (55,547) (531,366) 234,688 234,550 Cash and Cash Equivalents: Beginning of period 1,784,388 1,702,395 1,494,153 936,479 ----------- ----------- ----------- ----------- End of period $ 1,728,841 $ 1,171,029 $ 1,728,841 $ 1,171,029 =========== =========== =========== =========== NETAPP, INC. SUPPLEMENTAL INFORMATION (In thousands) (Unaudited) Three Months Ended October 30, 2009 ------------------------------------------------------------------ Loss Stock- Restru- (Gain) Amortiza- based cturing Mergers on tion of Compen- and Termination Non-Cash Invest- Intangible sation Other Proceeds, Interest ments, Assets Expenses Charges Net Expense Net Total ---------- ------- ------- ----------- -------- ------- -------- Cost of product reve- nues $ 4,273 $ 510 - - - - $ 4,783 Cost of service revenues - 2,942 - - - - 2,942 Sales and marketing expense 849 15,690 - - - - 16,539 Research and development expense - 7,909 - - - - 7,909 General and administrative expense - 6,194 - - - - 6,194 Restructuring and other charges - - 1,179 - - - 1,179 Interest expense - - - - 12,211 - 12,211 Gain on investments, net - - - - - (2,805) (2,805) ---------- ------- ------- ----------- -------- ------- -------- Effect on income before income taxes $ 5,122 $33,245 $ 1,179 - $ 12,211 $(2,805) $ 48,952 Six Months Ended October 30, 2009 ------------------------------------------------------------------ Loss Stock- Restru- (Gain) Amortiza- based cturing Mergers on tion of Compen- and Termination Non-Cash Invest- Intangible sation Other Proceeds, Interest ments, Assets Expenses Charges Net Expense Net Total ---------- ------- ------- ----------- -------- ------- -------- Cost of product reve- nues $ 8,988 $ 1,730 - - - - $ 10,718 Cost of service revenues - 7,461 - - - - 7,461 Sales and marketing expense 1,697 39,655 - - - - 41,352 Research and development expense - 20,625 - - - - 20,625 General and administrative expense - 15,958 - - - - 15,958 Restructuring and other charges - - 2,675 - - - 2,675 Mergers termination proceeds, net - - - (41,120) - - (41,120) Interest expense - - - - 25,291 - 25,291 Gain on investments, net - - - - - (2,805) (2,805) ---------- ------- ------- ----------- -------- ------- -------- Effect on pre- tax income $ 10,685 $85,429 $ 2,675 $ (41,120) $ 25,291 $(2,805) $ 80,155 Three Months Ended October 24, 2008 ------------------------------------------------------------------ Loss Stock- Restru- (Gain) Amortiza- based cturing Mergers on tion of Compen- and Termination Non-Cash Invest- Intangible sation Other Proceeds, Interest ments, Assets Expenses Charges Net Expense Net Total ---------- ------- ------- ----------- -------- ------- -------- Cost of product reve- nues $ 6,748 $ 624 - - - - $ 7,372 Cost of service revenues - 2,419 - - - - 2,419 Sales and marketing expense 1,259 12,849 - - - - 14,108 Research and development expense - 7,482 - - - - 7,482 General and administrative expense - 4,389 - - - - 4,389 Interest expense - - - - 10,265 - 10,265 Loss on investments, net - - - - - 22,613 22,613 ---------- ------- ------- ----------- -------- ------- -------- Effect on income before income taxes $ 8,007 $27,763 - - $ 10,265 $22,613 $ 68,648 Six Months Ended October 24, 2008 ------------------------------------------------------------------ Loss Stock- Restru- (Gain) Amortiza- based cturing Mergers on tion of Compen- and Termination Non-Cash Invest- Intangible sation Other Proceeds, Interest ments, Assets Expenses Charges Net Expense Net Total ---------- ------- ------- ----------- -------- ------- -------- Cost of product reve- nues $ 13,496 $ 1,572 - - - - $ 15,068 Cost of service revenues - 5,460 - - - - 5,460 Sales and marketing expense 2,518 29,191 - - - - 31,709 Research and development expense - 17,669 - - - - 17,669 General and administrative expense - 10,275 - - - - 10,275 Interest expense - - - - 15,202 - 15,202 Loss on investments, net - - - - - 25,234 25,234 ---------- ------- ------- ----------- -------- ------- -------- Effect on pre-tax income $ 16,014 $64,167 - - $ 15,202 $25,234 $120,617 NETAPP, INC. RECONCILIATION OF NON-GAAP AND GAAP IN THE CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except net income per share amounts) (Unaudited) Three Months Ended Six Months Ended ------------------------ ------------------------ October 30, October 24, October 30, October 24, 2009 2008 2009 2008 ----------- ----------- ----------- ----------- SUMMARY RECONCILIATION OF NET INCOME NET INCOME $ 95,677 $ 43,053 $ 147,341 $ 77,776 Adjustments: Amortization of intangible assets 5,122 8,007 10,685 16,014 Stock-based compensation expenses 33,245 27,763 85,429 64,167 Restructuring and other charges 1,179 - 2,675 - Merger termination proceeds, net - - (41,120) - Non-cash interest expense 12,211 10,265 25,291 15,202 Loss (gain) on investments, net (2,805) 22,613 (2,805) 25,234 Discrete GAAP tax provision items (645) 3,816 (7,837) 4,308 Income tax effect (13,848) (23,410) (13,591) (34,655) ----------- ----------- ----------- ----------- NON-GAAP NET INCOME $ 130,136 $ 92,107 $ 206,068 $ 168,046 =========== =========== =========== =========== NET INCOME PER SHARE $ 0.274 $ 0.129 $ 0.428 $ 0.231 Adjustments: Amortization of intangible assets 0.015 0.024 0.031 0.047 Stock-based compensation expenses 0.095 0.083 0.248 0.190 Restructuring and other charges 0.003 - 0.008 - Merger termination proceeds, net - - (0.119) - Non-cash interest expense 0.035 0.031 0.073 0.045 Loss (gain) on investments, net (0.008) 0.068 (0.008) 0.075 Discrete GAAP tax provision items (0.002) 0.011 (0.023) 0.013 Income tax effect (0.040) (0.070) (0.039) (0.103) ----------- ----------- ----------- ----------- NON-GAAP NET INCOME PER SHARE $ 0.372 $ 0.276 $ 0.599 $ 0.498 =========== =========== =========== =========== NETAPP, INC. RECONCILIATION OF NON GAAP GUIDANCE TO GAAP EXPRESSED AS EARNINGS PER SHARE THIRD QUARTER 2010 (Unaudited) Third Quarter 2010 --------------- Non-GAAP Guidance $ 0.36 - $ 0.37 Adjustments of Specific Items to Earnings Per Share for the Third Quarter 2010: Non cash interest expense (0.03) Amortization of intangible assets (0.01) Stock based compensation expense (0.10) Income tax effect 0.02 --------------- Total Adjustments (0.12) GAAP Guidance - Earnings Per Share $ 0.24 - $ 0.25
Contact Information: Press Contact: NetApp Jodi Baumann Ph: (408) 822-3974 Jodi.Baumann@netapp.com Investor Contacts: NetApp Tara Dhillon Ph: (408) 822-6909 tara@netapp.com NetApp Billie Fagenstrom Ph: (408) 822-6428 billief@netapp.com