-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GWiHpvtXJ0YvROhK1nf1fSitzDwsB/eO/TSbQdw7aw4vaFdLlsNSyxX9zIWorpcI v0pjESTKNj8aKAF8+PYrSA== 0001157523-04-004990.txt : 20040518 0001157523-04-004990.hdr.sgml : 20040518 20040518160605 ACCESSION NUMBER: 0001157523-04-004990 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20040518 ITEM INFORMATION: FILED AS OF DATE: 20040518 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NETWORK APPLIANCE INC CENTRAL INDEX KEY: 0001002047 STANDARD INDUSTRIAL CLASSIFICATION: COMPUTER STORAGE DEVICES [3572] IRS NUMBER: 770307520 STATE OF INCORPORATION: CA FISCAL YEAR END: 0430 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-27130 FILM NUMBER: 04816305 BUSINESS ADDRESS: STREET 1: 495 EAST JAVA DR CITY: SUNNYVALE STATE: CA ZIP: 94089 BUSINESS PHONE: 4088226000 MAIL ADDRESS: STREET 1: 495 EAST JAVA DR CITY: SUNNYVALE STATE: CA ZIP: 94089 8-K 1 a4643736.txt NETWORK APPLIANCE INC. UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 --------------------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (date of earliest event reported): May 18, 2004 --------------------- NETWORK APPLIANCE, INC. (Exact name of Registrant as specified in its charter) Delaware 0-27130 77-0307520 (State or other jurisdiction of (Commission (I.R.S. Employer incorporation or organization) File Number) Identification Number) 495 East Java Drive Sunnyvale, CA 94089 (Address of principal executive offices) (Zip Code) (408) 822-6000 (Registrant's telephone number, including area code) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ITEM 12. The information is furnished pursuant to "Item 12. Results of Operations and Financial Condition" in accordance with SEC Release No. 33-8216 (March 27, 2003). On May 18, 2004, Network Appliance, Inc. issued a press release announcing its earnings for the third quarter fiscal year 2004. The press release, attached hereto as Exhibit 99.1, is being furnished on this Form 8-K. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. May 18, 2004 By: /s/ Steven Gomo ------------------------------- Steven J. Gomo Chief Financial Officer - -------------------------------------------------------------------------------- INDEX TO EXHIBITS Exhibit Description - ------- ----------- 99.1 Press release of Network Appliance, Inc. issued on May 18, 2004. - -------------------------------------------------------------------------------- EX-99.1 2 a4643736ex991.txt NEWS RELEASE Exhibit 99.1 Network Appliance Announces Results for Fourth Quarter and Fiscal Year 2004 SUNNYVALE, Calif.--(BUSINESS WIRE)--May 18, 2004-- Q4 Revenues $337.0 Million, up 39.5% Year over Year; Fiscal Year 2004 Revenues $1.17 Billion, up 31% Year over Year Network Appliance, Inc. (Nasdaq:NTAP) today announced results for the fourth quarter and fiscal year 2004. Revenues for the fourth fiscal quarter were $337.0 million, an increase of 39.5% compared to revenues of $241.6 million for the same period a year ago and a 13% increase compared to $297.3 million in the prior quarter. For the fourth fiscal quarter, GAAP net income increased 47% to $36.4 million, or $0.10 per share(1) compared to GAAP net income of $24.8 million, or $0.07 per share for the same period in the prior year. Pro forma(2) net income for the fourth fiscal quarter increased 71% to $43.5 million, or $0.12 per share, compared to pro forma net income of $25.5 million, or $0.07 per share for the same period a year ago. Revenues for fiscal year 2004 were $1.17 billion, an increase of 31% compared to revenues of $892.1 million for fiscal year 2003. For fiscal year 2004, GAAP net income was $152.1 million, or $0.42 per share, compared to GAAP net income of $76.5 million, or $0.22 per share for fiscal year 2003. Pro forma net income for fiscal year 2004 increased 74% to $146.0 million, or $0.40 per share, compared to pro forma net income of $83.8 million, or $0.24 per share for fiscal year 2003. "NetApp posted exceptional performance during the quarter with revenues growing 39.5% year over year. Our accelerating growth during the year was driven by the adoption of our new systems platforms, secondary storage for compliance applications, and our extended interconnect offerings for SAN and iSCSI," said Dan Warmenhoven, CEO of Network Appliance. "Investments we made over the past several years are paying off in our growth today and we plan to continue investing in our business to take full advantage of current and emerging market opportunities that will fuel our growth in the future." Quarterly Highlights Throughout the fourth quarter of fiscal year 2004, Network Appliance reinforced its position as a storage leader with milestone deployments, expanded partnerships, and continued market acceptance for its unified storage, NearStore(R), and NetCache(R) families. Network Appliance completed its acquisition of Spinnaker Networks, Inc. which will accelerate the delivery of the NetApp(R) "Storage Grid" architecture, enabling customers to leverage even more value from their storage and data infrastructures. Also during the quarter, the company announced several key industry milestones, including reaching the 100th iSCSI installation and the deployment of over a petabyte (1000 TB) of compliance storage in enterprise customer environments. During the fourth quarter of fiscal year 2004, Network Appliance announced strategic partnerships with Agfa, AppIQ, BearingPoint, CreekPath, FileNet, Fujitsu, SmarTeam, Sun Microsystems and VERITAS to address a variety of data management, information lifecycle management (ILM), backup and recovery, and compliance/retention issues central to enterprise customers today. The company also announced support for the SNIA SMI-S standard to simplify SAN management and joined the Enterprise Grid Alliance (EGA) to drive industry adoption of Grid computing. Also during the fourth quarter, global customers from a variety of industries worldwide selected Network Appliance to store, manage, and consolidate their business- and mission-critical data. Customer wins included AT&T, Baring Asset Management, Continental Teves AG, Cross Country Healthcare, Inc., Honda Motor Company, Lockheed-Martin, NASA Flight Dynamics, PDI/DreamWorks SKG, Renault-Nissan, State of Kentucky, The United States Federal Aviation Administration (FAA), University of Phoenix Online and Volkswagen Coordination Center. Network Appliance(TM) product- and service-related highlights during the fourth quarter included three key awards, including the selection of Network Appliance customer Mustang Engineering for Storage Network World's (SNW's) "Best Practices in Storage" award for Data Lifecycle Management (DLM). Network Appliance also won Australian Technology & Business Magazine's coveted Editor's Choice award for the NetApp FAS250 unified storage system. Additionally, the company won the Service & Support Professionals Association (SSPA) prestigious WebStar Service Award for the fourth consecutive year. Footnotes: 1. Earnings per share represents the diluted number of shares for all periods presented. 2. Pro forma results for all periods presented exclude amortization of intangible assets, in process research and development, stock compensation, restructuring charges, net gain or loss on investments, gain on sale of intangible assets, and the related effects on income taxes, as well as an income tax benefit from a nonrecurring foreign tax ruling. Conference Call Information -- The NetApp quarterly results conference call will be broadcast live via the Internet at http://investors.netapp.com/ on Tuesday, May 18, 2004 at 2:00 p.m. Pacific time. This press release and any other information related to the call will also be posted to the Web site at that location. The conference call will also be available live in a listen-only format at (800) 240-8621 in the United States and (303) 262-2190 outside the United States. -- A replay will be available for 72 hours following completion of the live call by dialing (800) 405-2236 in the United States and (303) 590-3000 outside the United States, replay code 577898. About Network Appliance Network Appliance is a world leader in unified storage solutions for today's data-intensive enterprise. Since its inception in 1992, Network Appliance has delivered technology, product, and partner firsts that continue to drive "The evolution of storage.(TM)" Information about Network Appliance solutions and services is available at www.netapp.com. NetApp, NearStore and NetCache are registered trademarks and Network Appliance and The evolution of storage are trademarks of Network Appliance, Inc. in the U.S. and other countries. All other brands or products are trademarks or registered trademarks of their respective holders and should be treated as such. Network Appliance Usage of Pro Forma Financials The Company refers to the non-GAAP financial measures cited above in making operating decisions because they provide meaningful supplemental information regarding the Company's operational performance. In addition, these non-GAAP financial measures facilitate management's internal comparisons to the Company's historical operating results and comparisons to competitors' operating results. We include these non-GAAP financial measures in our earnings announcement because we believe they are useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision-making. In addition, we have historically reported similar non-GAAP financial measures to our investors and believe that the inclusion of comparative numbers provides consistency in our financial reporting at this time. "Safe Harbor" Statement under U.S. Private Securities Litigation Reform Act of 1995 This press release contains forward-looking statements within the meeting of the Private Securities Litigation Reform Act of 1995. These statements include comments regarding: investing in our business to take full advantage of market opportunities and the acquisition of Spinnaker Networks which will accelerate the delivery of the NetApp "Storage Grid" architecture. These forward-looking statements involve risks and uncertainties, and actual results could vary. Factors that could impact our ability to achieve our goals include: general economic and industry conditions, including expenditure trends for storage related products; our ability to deliver new product architectures and products which meet market acceptance; our ability to design products which compete effectively from a price and performance perspective, our ability to successfully complete and integrate our proposed acquisition of Spinnaker Networks; and other important factors as described in Network Appliance, Inc.'s reports and documents filed from time to time with the Securities and Exchange Commission, including our most recently submitted 10-K and 10-Q. NETWORK APPLIANCE, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) April 30, April 30, 2004 2003 ---------- ----------- ASSETS CURRENT ASSETS: Cash and cash equivalents $241,149 $284,161 Short-term investments 566,816 334,677 Accounts receivable, net 193,942 151,637 Inventories 34,109 31,559 Prepaid expenses and other 29,057 24,014 Deferred income taxes 24,163 27,444 ---------- ----------- Total current assets 1,089,236 853,492 PROPERTY AND EQUIPMENT, net 370,717 362,862 GOODWILL 291,816 48,212 INTANGIBLE ASSETS, net 31,718 2,954 OTHER ASSETS 93,779 51,653 ---------- ----------- 1,877,266 $1,319,173 ========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $52,719 $39,600 Income taxes payable 16,033 30,256 Accrued compensation and related benefits 65,186 40,647 Other accrued liabilities 43,683 43,841 Deferred revenue 166,602 110,672 ---------- ----------- Total current liabilities 344,223 265,016 LONG-TERM DEFERRED REVENUE 112,337 63,698 LONG-TERM OBLIGATIONS 4,858 3,102 ---------- ----------- 461,418 331,816 ---------- ----------- STOCKHOLDERS' EQUITY 1,415,848 987,357 ---------- ----------- 1,877,266 $1,319,173 ========== =========== NETWORK APPLIANCE, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share amounts) (Unaudited) Quarter Ended Year Ended ------------------- --------------------- April 30, April 30, April 30, April 30, 2004 2003 2004 2003 --------- --------- ----------- --------- REVENUES: Product revenue $303,931 $217,138 $1,058,204 $802,281 Service revenue 33,033 24,467 112,106 89,787 --------- --------- ----------- --------- Total revenues 336,964 241,605 1,170,310 892,068 --------- --------- ----------- --------- COST OF REVENUES: Cost of product revenue 104,910 75,791 371,480 279,689 Cost of service revenue 28,842 18,781 94,309 65,953 --------- --------- ----------- --------- Total cost of revenues 133,752 94,572 465,789 345,642 --------- --------- ----------- --------- GROSS MARGIN 203,212 147,033 704,521 546,426 --------- --------- ----------- --------- OPERATING EXPENSES: Sales and marketing 101,974 79,158 349,490 304,236 Research and development 35,855 28,333 131,856 112,863 General and administrative 15,813 10,419 54,550 36,822 In process research and development 4,940 - 4,940 - Stock compensation 1,882 536 3,895 3,642 Restructuring charges 217 - 1,327 1,257 --------- --------- ----------- --------- Total operating expenses 160,681 118,446 546,058 458,820 --------- --------- ----------- --------- INCOME FROM OPERATIONS 42,531 28,587 158,463 87,606 OTHER INCOME (EXPENSES), net: Interest income 3,967 3,116 13,704 12,215 Other expenses, net (372) (462) (2,460) (1,381) Net gain/(loss) on investments 385 (503) 747 (1,229) Gain on sale of intangible asset - - - 604 --------- --------- ----------- --------- Total other income, net 3,980 2,151 11,991 10,209 --------- --------- ----------- --------- INCOME BEFORE INCOME TAXES 46,511 30,738 170,454 97,815 PROVISION FOR INCOME TAXES 10,062 5,915 18,367 21,343 --------- --------- ----------- --------- NET INCOME $36,449 $24,823 $152,087 $76,472 ========= ========= =========== ========= NET INCOME PER SHARE: BASIC $0.10 $0.07 $0.44 $0.23 ========= ========= =========== ========= DILUTED $0.10 $0.07 $0.42 $0.22 ========= ========= =========== ========= SHARES USED IN PER SHARE CALCULATION: BASIC 356,142 339,854 346,965 337,647 ========= ========= =========== ========= DILUTED 375,140 352,144 366,195 350,122 ========= ========= =========== ========= NETWORK APPLIANCE, INC. PRO FORMA (1) CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share amounts) (Unaudited) Quarter Ended Year Ended ------------------- --------------------- April 30, April 30, April 30, April 30, 2004 2003 2004 2003 --------- --------- ----------- --------- REVENUES: Product revenue $303,931 $217,138 $1,058,204 $802,281 Service revenue 33,033 24,467 112,106 89,787 --------- --------- ----------- --------- Total revenues 336,964 241,605 1,170,310 892,068 --------- --------- ----------- --------- COST OF REVENUES: Cost of product revenue 104,195 74,427 367,811 274,211 Cost of service revenue 28,842 18,781 94,309 65,953 --------- --------- ----------- --------- Total cost of revenues 133,037 93,208 462,120 340,164 --------- --------- ----------- --------- GROSS MARGIN 203,927 148,397 708,190 551,904 --------- --------- ----------- --------- OPERATING EXPENSES: Sales and marketing 101,802 79,158 349,318 304,236 Research and development 35,855 28,333 131,856 112,863 General and administrative 14,756 10,419 53,493 36,822 --------- --------- ----------- --------- Total operating expenses 152,413 117,910 534,667 453,921 --------- --------- ----------- --------- INCOME FROM OPERATIONS 51,514 30,487 173,523 97,983 OTHER INCOME (EXPENSES), net 3,595 2,654 11,244 10,834 --------- --------- ----------- --------- INCOME BEFORE INCOME TAXES 55,109 33,141 184,767 108,817 PROVISION FOR INCOME TAXES 11,573 7,622 38,801 25,028 --------- --------- ----------- --------- NET INCOME $43,536 $25,519 $145,966 $83,789 ========= ========= =========== ========= NET INCOME PER SHARE: BASIC $0.12 $0.08 $0.42 $0.25 ========= ========= =========== ========= DILUTED $0.12 $0.07 $0.40 $0.24 ========= ========= =========== ========= SHARES USED IN PER SHARE CALCULATION: BASIC 356,142 339,854 346,965 337,647 ========= ========= =========== ========= DILUTED 375,140 352,144 366,195 350,122 ========= ========= =========== ========= (1) Pro forma results of operations exclude amortization of intangible assets, in process research and development, stock compensation, restructuring charges, net gain/loss on investments, gain on sale of intangible asset and the related effects on income taxes, as well as an income tax benefit from a non-recurring foreign tax ruling. NETWORK APPLIANCE, INC. RECONCILIATION OF NON-GAAP AND GAAP IN THE CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share amounts) (Unaudited) Quarter Ended Year Ended ------------------- ------------------- April 30, April 30, April 30, April 30, 2004 2003 2004 2003 --------- --------- --------- --------- SUMMARY RECONCILIATION OF NET INCOME - ------------------------------------ NET INCOME $36,449 $24,823 $152,087 $76,472 Adjustments: Amortization of intangible assets 1,944 1,364 4,898 5,478 Stock compensation 1,882 536 3,895 3,642 In process research and development 4,940 - 4,940 - Restructuring charges 217 - 1,327 1,257 Net (gain)/loss on investments (385) 503 (747) 1,229 Gain on sale of intangible asset - - - (604) Income tax effect (1,511) (1,707) (3,603) (3,685) Income tax benefit from foreign tax ruling - - (16,831) - --------- --------- --------- --------- PRO FORMA NET INCOME $43,536 $25,519 $145,966 $83,789 ========= ========= ========= ========= DILUTED PRO FORMA NET INCOME PER SHARE $0.12 $0.07 $0.40 $0.24 ========= ========= ========= ========= SHARES USED IN DILUTED PRO FORMA NET INCOME PER SHARE CALCULATION: 375,140 352,144 366,195 350,122 ========= ========= ========= ========= DETAILED RECONCILIATION OF SPECIFIC ITEMS: - ------------------------------------------ COST OF REVENUES $133,752 $94,572 $465,789 $345,642 Adjustment: Amortization of intangible assets (715) (1,364) (3,669) (5,478) --------- --------- --------- --------- PRO FORMA COST OF REVENUES $133,037 $93,208 $462,120 $340,164 ========= ========= ========= ========= GROSS MARGIN $203,212 $147,033 $704,521 $546,426 Adjustment: Amortization of intangible assets 715 1,364 3,669 5,478 --------- --------- --------- --------- PRO FORMA GROSS MARGIN $203,927 $148,397 $708,190 $551,904 ========= ========= ========= ========= SALES AND MARKETING EXPENSES $101,974 $79,158 $349,490 $304,236 Adjustments: Amortization of intangible assets (172) - (172) - --------- --------- --------- --------- PRO FORMA SALES AND MARKETING EXPENSES $101,802 $79,158 $349,318 $304,236 ========= ========= ========= ========= GENERAL AND ADMINISTRATIVE EXPENSES $15,813 $10,419 $54,550 $36,822 Adjustments: Amortization of intangible assets (1,057) - (1,057) - --------- --------- --------- --------- PRO FORMA GENERAL AND ADMINISTRATIVE EXPENSES $14,756 $10,419 $53,493 $36,822 ========= ========= ========= ========= OPERATING EXPENSES $160,681 $118,446 $546,058 $458,820 Adjustments: Stock compensation (1,882) (536) (3,895) (3,642) Restructuring charges (217) - (1,327) (1,257) Amortization of intangible assets (1,229) - (1,229) - In process research and development (4,940) - (4,940) - --------- --------- --------- --------- PRO FORMA OPERATING EXPENSES $152,413 $117,910 $534,667 $453,921 ========= ========= ========= ========= INCOME FROM OPERATIONS $42,531 $28,587 $158,463 $87,606 Adjustments: Amortization of intangible assets 1,944 1,364 4,898 5,478 Stock compensation 1,882 536 3,895 3,642 Restructuring charges 217 - 1,327 1,257 In process research and development 4,940 - 4,940 - --------- --------- --------- --------- PRO FORMA INCOME FROM OPERATIONS $51,514 $30,487 $173,523 $97,983 ========= ========= ========= ========= TOTAL OTHER INCOME, NET $3,980 $2,151 $11,991 $10,209 Adjustments: Net (gain)/loss on investments (385) 503 (747) 1,229 Gain on sale of intangible asset - - - (604) --------- --------- --------- --------- PRO FORMA TOTAL OTHER INCOME, NET $3,595 $2,654 $11,244 $10,834 ========= ========= ========= ========= INCOME BEFORE INCOME TAXES $46,511 $30,738 $170,454 $97,815 Adjustments: Amortization of intangible assets 1,944 1,364 4,898 5,478 In process research and development 4,940 - 4,940 - Stock compensation 1,882 536 3,895 3,642 Restructuring charges 217 - 1,327 1,257 Net (gain)/loss on investments (385) 503 (747) 1,229 Gain on sale of intangible asset - - - (604) --------- --------- --------- --------- PRO FORMA INCOME BEFORE INCOME TAXES $55,109 $33,141 $184,767 $108,817 ========= ========= ========= ========= PROVISION FOR INCOME TAXES $10,062 $5,915 $18,367 $21,343 Adjustments: Income tax effect 1,511 1,707 3,603 3,685 Income tax benefit from foreign tax ruling - - 16,831 - --------- --------- --------- --------- PRO FORMA PROVISION FOR INCOME TAXES $11,573 $7,622 $38,801 $25,028 ========= ========= ========= ========= CONTACT: Voce Communications for Network Appliance, Inc. Dave Black, 408-822-3287 (Press) dblack@vocepr.com or Network Appliance, Inc. Tara Calhoun, 408-822-6909 (Investor) tara@netapp.com Billie Fagenstrom, 408-822-6428 (Investor) billief@netapp.com -----END PRIVACY-ENHANCED MESSAGE-----