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