SOURCE: NetApp, Inc.

NetApp, Inc.

November 13, 2013 16:01 ET

NetApp Reports Second Quarter Fiscal Year 2014 Results

Non-GAAP Earnings per Share of $0.66, Up 29% Year Over Year

SUNNYVALE, CA--(Marketwired - Nov 13, 2013) - NetApp (NASDAQ: NTAP)

  • Revenue of $1.550 billion
  • Branded revenue up 5% year over year
  • Cash from operations of $363 million; free cash flow 21% of revenue
  • Over 1,900 Clustered Data ONTAP® nodes shipped, up almost 300% year over year

NetApp (NASDAQ: NTAP) today reported financial results for the second quarter of fiscal year 2014, ended October 25, 2013.

Second Quarter Financial Results
Total revenues for the second quarter of fiscal year 2014 were $1.550 billion, an increase of 1% from the comparable period of the prior year. GAAP net income for the second quarter of fiscal year 2014 was $167 million, or $0.48 per share,1 compared to GAAP net income of $110 million, or $0.30 per share, for the comparable period of the prior year. Non-GAAP net income for the second quarter of fiscal year 2014 was $232 million, or $0.66 per share,2 compared to non-GAAP net income of $189 million, or $0.51 per share, for the comparable period of the prior year.

Cash, Cash Equivalents and Investments
NetApp ended the second quarter of 2014 with $5.273 billion of total cash, cash equivalents and investments and during the quarter generated approximately $363 million in cash from operations. The company returned $202 million to shareholders during the quarter through share repurchases and a cash dividend. The next dividend in the amount of $0.15 per share will be paid on January 22, 2014 to shareholders of record as of the close of business on January 9, 2014.

"NetApp is at the forefront of a changing IT landscape, creating opportunity from perceived threats," said Tom Georgens, president and CEO. "Though we face an ongoing uncertain macro environment, our solid branded revenue growth and share gains are evidence of the value customers place on our innovative, best-of-breed solutions."

Q3 Fiscal Year 2014 Outlook
The Company is providing the following financial guidance for the third quarter of fiscal year 2014:

  • Total revenue is expected to be in the range of $1.575 billion to $1.675 billion
  • GAAP earnings per share is expected to be in the range of $0.50 to $0.55 per share
  • Non-GAAP earnings per share is expected to be in the range of $0.68 to $0.73 per share

Business Highlights
In its second quarter of fiscal year 2014, NetApp delivered technology innovation focused on helping customers capitalize on cloud and software-defined data center trends, and once again was recognized as one of the world's best workplaces. Highlights include:

  • NetApp Outlines Strategy to Enable Hybrid Cloud Architectures. NetApp's strategy is to use the world's number-one branded storage operating system, Data ONTAP, as a universal data platform to provide seamless cloud management across any blend of private and public cloud resources.
  • NetApp and Verizon Team on Software-Defined Storage Solutions for New Verizon Cloud. The two companies will collaborate to rearchitect traditional cloud-based storage models to deliver NetApp Data ONTAP as a virtual storage appliance for Verizon Cloud clients. The software will deliver on the promise of software-defined storage, providing additional deployment and management flexibility for clients implementing Verizon Cloud Compute and Verizon Cloud Storage.
  • NetApp and VMware Help Customers Move to Software-Defined Data Centers. New integrations with VMware vCloud Suite and NetApp clustered Data ONTAP enable nondisruptive migration of data for hundreds of virtual machines at a time, and streamlines provisioning, analysis, data protection, and disaster recovery for virtualized environments, simplifying and accelerating the deployment of software-defined storage in software-defined data center environments.
  • NetApp Deepens Integration with Oracle's Cloud-Enabling Software. The integration can deliver enhanced features for Oracle Database 12c and Oracle Enterprise Manager 12c, allowing customers to centrally manage and maintain control of their data across private, public, and hybrid clouds.
  • NetApp Helps Orange Business Services Deliver Cloud Solutions. Orange Business Services developed its Flexible Computing solution with NetApp Data ONTAP at its core. As a result, Orange Business Services is able to provide enterprise customers with high-level data availability, helping to establish itself as a leading global IT infrastructure provider with more than 600 Flexible Computing customers worldwide.
  • NetApp Earns #3 Ranking as Best Place to Work in the World. NetApp placed in the top five on the "World's Best Multinational Workplaces" list for the third consecutive year due to its employee-driven culture. NetApp believes that its culture is a sustainable differentiator and is committed to being a model company that empowers great outcomes for its partners, customers, and investors.

Editor's Note

  • Financial information previously found in the Supplemental Commentary document is now included in the accompanying Supplemental Data tables of the quarterly financial press release.
  • In addition, historical supplemental data tables, providing historical multi-period financial information, are available on our investor relations website at investors.netapp.com.

Webcast and Conference Call Information
NetApp will host a conference call to discuss these results today at 2:30 p.m. Pacific Time. To access the live webcast of this event, visit the NetApp Investor Relations website at investors.netapp.com. In addition, this press release and any other information related to the call will be posted on the Investor Relations website. An audio replay will also be available after 4:30 p.m. Pacific Time today on the website.

About NetApp
NetApp creates innovative storage and data management solutions that deliver outstanding cost efficiency and accelerate business breakthroughs. Our commitment to living our core values and consistently being recognized as a great place to work around the world are fundamental to our long-term growth and success, as well as the success of our pathway partners and customers. 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 Q3 Fiscal Year 2014 Outlook section relating to the financial guidance for the third quarter of fiscal year 2014, the benefits to us and our customers of our products and services, the expected benefits of partnerships and alliances, and our strategies for cloud storage. All of these forward-looking statements involve risk and uncertainty. Actual results may differ materially from these statements for a variety of reasons, including, without limitation, general economic and market conditions, changes in U.S. government spending, revenue seasonality, our stock price and matters specific to our business, such as customer demand for and acceptance of our products and services. These and other equally important factors are described in reports and documents we file from time to time with the Securities and Exchange Commission (SEC), including the factors described under the sections titled "Risk Factors" in our most recently submitted Annual and Quarterly Reports on Forms 10-K and 10-Q, respectively. 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 or registered trademarks of NetApp, Inc. All other marks 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, acquisition-related income and expenses, restructuring and other charges, asset impairments, non-cash interest expense associated with our 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. A detailed reconciliation of our non-GAAP to GAAP results can be found at http://investors.netapp.com.

NetApp Usage of Non-GAAP Financials
The Company refers to the non-GAAP financial measures 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, acquisition-related income and expenses, restructuring and other charges, asset impairments, non-cash interest expense associated with our 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 25, 2013   April 26, 2013
           
ASSETS          
           
Current assets:          
  Cash, cash equivalents and investments $ 5,272.7   $ 6,952.6
  Accounts receivable, net   590.4     800.9
  Inventories   115.9     139.5
  Other current assets   441.0     525.2
    Total current assets   6,420.0     8,418.2
           
Property and equipment, net   1,142.9     1,170.9
Goodwill and purchased intangible assets, net   1,139.0     1,168.7
Other non-current assets   495.5     484.6
      Total assets $ 9,197.4   $ 11,242.4
           
           
LIABILITIES AND STOCKHOLDERS' EQUITY          
           
Current liabilities:          
  Accounts payable $ 223.8   $ 259.7
  Accrued compensation and other current liabilities   659.1     749.8
  Current portion of long-term debt   -     1,257.8
  Short-term deferred revenue   1,525.8     1,563.3
    Total current liabilities   2,408.7     3,830.6
           
Long-term debt   995.0     994.6
Other long-term liabilities   267.2     253.5
Long-term deferred revenue   1,406.1     1,446.2
      Total liabilities   5,077.0     6,524.9
           
Stockholders' equity   4,120.4     4,717.5
        Total liabilities and stockholders' equity $ 9,197.4   $ 11,242.4
   
   
   
NETAPP, INC.  
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  
(In millions, except per share amounts)  
(Unaudited)  
   
  Three Months Ended     Six Months Ended  
  October 25, 2013     October 26, 2012     October 25, 2013     October 26, 2012  
                               
Revenues:                              
  Product $ 955.3     $ 995.8     $ 1,886.1     $ 1,893.8  
  Software entitlements and maintenance   231.8       219.4       460.3       437.9  
  Service   362.8       326.0       719.7       654.1  
    Net revenues   1,549.9       1,541.2       3,066.1       2,985.8  
                               
Cost of revenues:                              
  Cost of product   423.3       477.3       873.2       929.5  
  Cost of software entitlements and maintenance   7.5       7.0       15.0       13.6  
  Cost of service   153.9       143.0       303.1       278.7  
    Total cost of revenues   584.7       627.3       1,191.3       1,221.8  
      Gross profit   965.2       913.9       1,874.8       1,764.0  
                               
Operating expenses:                              
  Sales and marketing   479.5       488.2       947.3       971.1  
  Research and development   228.2       223.8       456.3       445.2  
  General and administrative   69.5       66.6       137.9       132.2  
  Restructuring and other charges   1.1       -       49.5       -  
    Total operating expenses   778.3       778.6       1,591.0       1,548.5  
                               
Income from operations   186.9       135.3       283.8       215.5  
                               
Other income/(expense), net:                              
Interest income   8.5       11.0       18.5       21.8  
Interest expense   (6.5 )     (19.8 )     (23.0 )     (39.7 )
Other income, net   3.3       1.2       5.2       4.3  
Total other income/(expense), net   5.3       (7.6 )     0.7       (13.6 )
                               
Income before income taxes   192.2       127.7       284.5       201.9  
                               
Provision for income taxes   25.4       18.1       36.1       28.5  
                               
Net income $ 166.8     $ 109.6     $ 248.4     $ 173.4  
                               
Net income per share:                              
  Basic $ 0.49     $ 0.30     $ 0.72     $ 0.48  
                               
  Diluted $ 0.48     $ 0.30     $ 0.70     $ 0.47  
                               
Shares used in net income per share calculations:                              
  Basic   340.7       362.0       345.8       364.1  
                               
  Diluted   349.1       368.2       354.5       369.7  
                               
Cash dividends declared per share $ 0.15     $ -     $ 0.30     $ -  
   
   
   
NETAPP, INC.  
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW  
(In millions)  
(Unaudited)  
                       
                       
  Three Months Ended     Six Months Ended  
  October 25, 2013     October 26, 2012     October 25, 2013     October 26, 2012  
                               
Cash flows from operating activities:                              
  Net income $ 166.8     $ 109.6     $ 248.4     $ 173.4  
  Adjustments to reconcile net income to net cash provided by operating activities:                              
    Depreciation and amortization   82.5       86.7       168.4       169.1  
    Stock-based compensation   67.6       65.0       133.9       144.2  
    Accretion of discount and issuance costs on debt   0.6       14.4       8.8       28.7  
    Excess tax benefit from stock-based compensation   (9.4 )     (38.7 )     (9.5 )     (43.6 )
    Other, net   10.5       21.1       (24.9 )     (11.7 )
  Changes in assets and liabilities                              
    Accounts receivable   (55.9 )     (31.3 )     209.3       212.9  
    Inventories   0.7       (9.5 )     23.6       (51.7 )
    Accounts payable   (2.9 )     (28.0 )     (40.8 )     13.9  
    Accrued compensation and other current liabilities   73.0       130.8       (102.4 )     (15.9 )
    Deferred revenue   (13.3 )     4.4       (67.6 )     (42.6 )
    Changes in other operating assets and liabilities, net   42.3       11.9       101.1       (11.1 )
      Net cash provided by operating activities   362.5       336.4       648.3       565.6  
Cash flows from investing activities:                              
  Redemptions of investments, net   282.1       159.5       672.1       93.4  
  Purchases of property and equipment   (42.2 )     (67.1 )     (107.5 )     (129.0 )
  Other investing activities, net   2.2       1.5       3.4       2.8  
      Net cash provided by (used in) investing activities   242.1       93.9       568.0       (32.8 )
Cash flows from financing activities:                              
  Issuance of common stock under employee stock plans   52.4       10.1       123.9       45.1  
  Repurchase of common stock   (150.5 )     (198.3 )     (1,000.0 )     (348.3 )
  Excess tax benefit from stock-based compensation   9.4       38.7       9.5       43.6  
  Repayment of debt   -       -       (1,264.9 )     -  
  Dividends paid   (51.3 )     -       (102.7 )     -  
  Other financing activities, net   (15.2 )     1.7       (5.7 )     (0.3 )
      Net cash used in financing activities   (155.2 )     (147.8 )     (2,239.9 )     (259.9 )
                               
Effect of exchange rate changes on cash and cash equivalents   14.3       4.9       7.0       (5.9 )
                               
Net increase (decrease) in cash and cash equivalents   463.7       287.4       (1,016.6 )     267.0  
Cash and cash equivalents:                              
  Beginning of period   1,796.8       1,529.4       3,277.1       1,549.8  
  End of period $ 2,260.5     $ 1,816.8     $ 2,260.5     $ 1,816.8  
   
   
   
NETAPP, INC.  
SUPPLEMENTAL DATA  
(In millions except percentages, DSO and Inventory Turns)  
(Unaudited)  
                 
                 
  Q2 FY'14     Q1 FY'14     Q2 FY'13  
  Revenues                      
Product Revenue $ 955.3     $ 930.8     $ 995.8  
Software Entitlements & Maintenance Revenue (SEM)   231.8       228.5       219.4  
Service Revenue:   362.8       356.9       326.0  
  Hardware Maintenance Support Contracts Revenue   276.4       273.6       239.9  
  Professional & Other Services Revenue   86.4       83.2       86.1  
    Net Revenue $ 1,549.9     $ 1,516.2     $ 1,541.2  
                       
  Branded and OEM Revenues                      
  Q2 FY'14     Q1 FY'14     Q2 FY'13  
Branded Revenue $ 1,398.8     $ 1,349.7     $ 1,331.6  
OEM Revenue   151.1       166.5       209.6  
    Net Revenue $ 1,549.9     $ 1,516.2     $ 1,541.2  
                       
  Branded revenue includes revenue from all products and services sold directly by us or our partners under the NetApp brand, including NetApp branded E-Series products and solutions.        
  OEM revenue comprises revenue from the sale of our products by other companies under their brands and includes revenue from IBM, Fujitsu, and other E-Series OEM relationships.        
                       
  Geographic Mix                      
  % of Q2 FY'14 Revenue     % of Q1 FY'14 Revenue     % of Q2 FY'13 Revenue  
Americas*   58 %     57 %     58 %
  Americas Commercial   42 %     44 %     41 %
  U.S. Public Sector   16 %     12 %     17 %
EMEA   29 %     30 %     28 %
Asia Pacific   13 %     14 %     13 %
                       
  * Americas Commercial and USPS revenue for Q2FY'13 is recast as a result of reporting certain healthcare revenue in Americas Commercial revenue that was previously included in U.S. Public Sector revenue. A reconciliation of this change is posted to our website at investors.netapp.com.        
                       
  Pathways Mix  
  % of Q2 FY'14 Revenue     % of Q1 FY'14 Revenue     % of Q2 FY'13 Revenue  
Direct   17 %     20 %     18 %
Indirect   83 %     80 %     82 %
                       
  Indirect revenues include those sold through value-added resellers, system integrators, OEM's and distributors.        
  Direct revenues are those sold through our direct sales force. The Direct / Indirect revenue mix reflects order fulfillment, not who owns the customer relationship.        
                       
  Non-GAAP Gross Margins                      
  Q2 FY'14     Q1 FY'14     Q2 FY'13  
Non-GAAP Gross Margin   63.6 %     61.3 %     60.6 %
  Product   57.3 %     53.3 %     53.6 %
  Software Entitlements & Maintenance (SEM)   96.8 %     96.7 %     96.8 %
  Service   58.9 %     59.5 %     57.5 %
                       
                       
  Non-GAAP Income from Operations, Income before Income Taxes & Effective Tax Rate                      
  Q2 FY'14     Q1 FY'14     Q2 FY'13  
Non-GAAP Income from Operations $ 270.5     $ 226.5     $ 221.8  
  % of Net Revenue   17.5 %     14.9 %     14.4 %
Non-GAAP Income before Income Taxes $ 275.8     $ 230.1     $ 228.6  
Non-GAAP Effective Tax Rate   16.1 %     16.6 %     17.3 %
                       
                       
                       
  Non-GAAP Net Income                      
  Q2 FY'14     Q1 FY'14     Q2 FY'13  
Non-GAAP Net Income $ 231.5     $ 191.9     $ 189.0  
Weighted Average Common Shares Outstanding, Diluted   349.1       359.9       368.2  
Non-GAAP Net Income per Share, Diluted $ 0.66     $ 0.53     $ 0.51  
                       
  Included in the diluted weighted average common shares outstanding are none, 2.6 million and 1.0 million shares in Q2 FY'14, Q1 FY'14 and Q2 FY'13 respectively,related to the impact of our convertible notes.        
                       
                       
  Select Balance Sheet Items                      
  Q2 FY'14     Q1 FY'14     Q2 FY'13  
Deferred Revenue $ 2,931.9     $ 2,941.3     $ 2,770.2  
DSO (days)   35       32       36  
Inventory Turns   20       20       11  
                       
  Days sales outstanding are defined as accounts receivable net divided by net revenue, multiplied by the number of days in the quarter.        
  Inventory turns are defined as annualized non-GAAP cost of revenues divided by net inventories.        
                       
                       
  Select Cash Flow Statement Items                      
  Q2 FY'14     Q1 FY'14     Q2 FY'13  
Net Cash Provided by Operating Activities $ 362.5     $ 285.8     $ 336.4  
Purchases of Property and Equipment $ 42.2     $ 65.3     $ 67.1  
Free Cash Flow $ 320.3     $ 220.5     $ 269.3  
Free Cash Flow as % of Total Revenue   20.7 %     14.5 %     17.5 %
                       
  Free cash flow is a non-GAAP measure and is defined as net cash provided by operating activities less purchases of property and equipment.        
                   
  Some items may not add or recalculate due to rounding        
   
   
   
NETAPP, INC.  
RECONCILIATION OF NON-GAAP TO GAAP  
FINANCIAL STATEMENT INFORMATION  
(In millions, except net income per share amounts)  
(Unaudited)  
                   
    Three Months Ended  
    October 25, 2013     July 26, 2013     October 26, 2012  
                         
NET INCOME   $ 166.8     $ 81.6     $ 109.6  
Adjustments:                        
  Amortization of intangible assets     14.9       14.9       21.5  
  Stock-based compensation     67.6       66.3       65.0  
  Restructuring and other charges     1.1       48.4       -  
  Non-cash interest expense     -       8.2       14.4  
  Income tax effect of Non-GAAP adjustments     (18.9 )     (27.5 )     (21.5 )
NON-GAAP NET INCOME   $ 231.5     $ 191.9     $ 189.0  
                         
COST OF REVENUES   $ 584.7     $ 606.6     $ 627.3  
Adjustments:                        
  Amortization of intangible assets     (14.3 )     (14.3 )     (13.9 )
  Stock-based compensation     (5.6 )     (5.3 )     (6.1 )
NON-GAAP COST OF REVENUES   $ 564.8     $ 587.0     $ 607.3  
                         
COST OF PRODUCT REVENUES   $ 423.3     $ 449.9     $ 477.3  
Adjustments:                        
  Amortization of intangible assets     (13.8 )     (13.7 )     (13.9 )
  Stock-based compensation     (1.4 )     (1.3 )     (1.5 )
NON-GAAP COST OF PRODUCT REVENUES   $ 408.1     $ 434.9     $ 461.9  
                         
COST OF SERVICE REVENUES   $ 153.9     $ 149.2     $ 143.0  
Adjustments:                        
  Amortization of intangible assets     (0.5 )     (0.6 )     -  
  Stock-based compensation     (4.2 )     (4.0 )     (4.6 )
NON-GAAP COST OF SERVICE REVENUES   $ 149.2     $ 144.6     $ 138.4  
                         
GROSS PROFIT   $ 965.2     $ 909.6     $ 913.9  
Adjustments:                        
  Amortization of intangible assets     14.3       14.3       13.9  
  Stock-based compensation     5.6       5.3       6.1  
NON-GAAP GROSS PROFIT   $ 985.1     $ 929.2     $ 933.9  
                         
SALES AND MARKETING EXPENSES   $ 479.5     $ 467.8     $ 488.2  
Adjustments:                        
  Amortization of intangible assets     (0.6 )     (0.6 )     (7.6 )
  Stock-based compensation     (31.1 )     (30.5 )     (30.9 )
NON-GAAP SALES AND MARKETING EXPENSES   $ 447.8     $ 436.7     $ 449.7  
                         
RESEARCH AND DEVELOPMENT EXPENSES   $ 228.2     $ 228.1     $ 223.8  
Adjustment:                        
  Stock-based compensation     (21.6 )     (21.4 )     (19.3 )
NON-GAAP RESEARCH AND DEVELOPMENT EXPENSES   $ 206.6     $ 206.7     $ 204.5  
                         
GENERAL AND ADMINISTRATIVE EXPENSES   $ 69.5     $ 68.4     $ 66.6  
Adjustment:                        
  Stock-based compensation     (9.3 )     (9.1 )     (8.7 )
NON-GAAP GENERAL AND ADMINISTRATIVE EXPENSES   $ 60.2     $ 59.3     $ 57.9  
                         
RESTRUCTURING AND OTHER CHARGES   $ 1.1     $ 48.4     $ -  
Adjustment:                        
  Restructuring and other charges     (1.1 )     (48.4 )     -  
NON-GAAP RESTRUCTURING AND OTHER CHARGES   $ -     $ -     $ -  
                         
OPERATING EXPENSES   $ 778.3     $ 812.7     $ 778.6  
Adjustments:                        
  Amortization of intangible assets     (0.6 )     (0.6 )     (7.6 )
  Stock-based compensation     (62.0 )     (61.0 )     (58.9 )
  Restructuring and other charges     (1.1 )     (48.4 )     -  
NON-GAAP OPERATING EXPENSES   $ 714.6     $ 702.7     $ 712.1  
                         
INCOME FROM OPERATIONS   $ 186.9     $ 96.9     $ 135.3  
Adjustments:                        
  Amortization of intangible assets     14.9       14.9       21.5  
  Stock-based compensation     67.6       66.3       65.0  
  Restructuring and other charges     1.1       48.4       -  
NON-GAAP INCOME FROM OPERATIONS   $ 270.5     $ 226.5     $ 221.8  
                         
TOTAL OTHER INCOME (EXPENSE), NET   $ 5.3     $ (4.6 )   $ (7.6 )
Adjustment:                        
  Non-cash interest expense     -       8.2       14.4  
NON-GAAP TOTAL OTHER INCOME, NET   $ 5.3     $ 3.6     $ 6.8  
                         
INCOME BEFORE INCOME TAXES   $ 192.2     $ 92.3     $ 127.7  
Adjustments:                        
  Amortization of intangible assets     14.9       14.9       21.5  
  Stock-based compensation     67.6       66.3       65.0  
  Restructuring and other charges     1.1       48.4       -  
  Non-cash interest expense     -       8.2       14.4  
NON-GAAP INCOME BEFORE INCOME TAXES   $ 275.8     $ 230.1     $ 228.6  
                         
PROVISION FOR INCOME TAXES   $ 25.4     $ 10.7     $ 18.1  
Adjustment:                        
  Income tax effect of Non-GAAP adjustments     18.9       27.5       21.5  
NON-GAAP PROVISION FOR INCOME TAXES   $ 44.3     $ 38.2     $ 39.6  
                         
NET INCOME PER SHARE   $ 0.478     $ 0.227     $ 0.298  
Adjustments:                        
  Amortization of intangible assets     0.043       0.041       0.058  
  Stock-based compensation     0.194       0.184       0.176  
  Restructuring and other charges     0.002       0.134       -  
  Non-cash interest expense     -       0.023       0.039  
  Income tax effect of Non-GAAP adjustments     (0.054 )     (0.076 )     (0.058 )
NON-GAAP NET INCOME PER SHARE   $ 0.663     $ 0.533     $ 0.513  
   
   
   
NETAPP, INC.
RECONCILIATION OF NON-GAAP GUIDANCE TO GAAP
EXPRESSED AS EARNINGS PER SHARE
THIRD QUARTER 2014
(Unaudited)
   
   
   
  Third Quarter
  2014
   
Non-GAAP Guidance - Net Income Per Share $0.68 - $0.73
   
   
Adjustments of Specific Items to  
  Net Income Per Share for the Third  
  Quarter 2014:  
   
  Amortization of intangible assets (0.04)
  Stock-based compensation expense (0.20)
  Income tax effect 0.06
Total Adjustments (0.18)
   
GAAP Guidance - Net Income Per Share $0.50 - $0.55
   
   
   

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