-----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, KwSka3gkIfHp/HBIcJsYZuTKKuenJagjX8Xz2w/afmOkeatJE/H54QqtC51XPZkq 2rgXrS0FiXkt16+nxhRG4w== 0001157523-05-007569.txt : 20050817 0001157523-05-007569.hdr.sgml : 20050817 20050817161021 ACCESSION NUMBER: 0001157523-05-007569 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20050817 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050817 DATE AS OF CHANGE: 20050817 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: 051033562 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 a4954965.txt NETWORK APPLIANCE 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): August 17, 2005 ------------------- 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) NA - ------------------------------------------------------------------------------- (Former name or former address, if changed since last report.) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): [_] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [_] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [_] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [_] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 2.02. On August 17, 2005, Network Appliance, Inc. issued a press release announcing its earnings for the first quarter of its fiscal year 2006. The press release is attached as an exhibit to this Form 8-K, and the information set forth therein is hereby incorporated by reference into this Item 2.02. Item 9.01(c). Network Appliance, Inc.'s August 17, 2005 press release is hereby furnished as Exhibit 99.1 to this Form 8-K in connection with the disclosures under Item 2.02 of 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. August 17, 2005 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 August 17, 2005. EX-99.1 2 a4954965ex991.txt EXHIBIT 99.1 Exhibit 99.1 Network Appliance Announces Results for First Quarter Fiscal Year 2006 SUNNYVALE, Calif.--(BUSINESS WIRE)--Aug. 17, 2005--Network Appliance, Inc. (NASDAQ:NTAP), the leader in advanced networked storage solutions, today reported results for the first quarter of fiscal year 2006. Revenues for the first fiscal quarter were $448.4 million, an increase of 25% compared to revenues of $358.4 million for the same period a year ago and a decrease of 1% compared to $451.8 million in the prior quarter. For the first fiscal quarter, GAAP net income was $60.1 million, or $0.16 per share(1) compared to GAAP net income of $46.9 million, or $0.13 per share for the same period in the prior year. Non-GAAP(2) net income for the first fiscal quarter was $62.1 million, or $0.16 per share, compared to non-GAAP net income of $49.9 million, or $0.13 per share for the same period a year ago. "With 25% revenue growth, we continue to grow significantly faster than the storage market and gain share. We are pleased with the success of our new FAS3000 midrange product line, despite the product transition issues that resulted in revenues a little short of our expectations," said Dan Warmenhoven, CEO of Network Appliance. "We are also encouraged by our growing relationships with partners, particularly IBM's recent introduction of their first product resulting from our OEM agreement." Outlook -- Network Appliance estimates that year-over-year growth in revenue for the second quarter of fiscal year 2006 will be in the range of 25% to 28%. This projection reflects a quarter-over-quarter sequential growth rate of approximately 5% to 7%. -- The company expects second quarter GAAP earnings per share to finish between $0.17 and $0.18 per share. Network Appliance expects second quarter non-GAAP earnings per share to be in the range of $0.18 to $0.19 per share. -- For the full fiscal year, Network Appliance estimates that revenues will finish in the range of 25% to 28% higher than fiscal year 2005. -- The company expects GAAP earnings per share for fiscal year 2006 to be between $0.74 and $0.77 per share. Network Appliance estimates full-year non-GAAP earnings per share to be in the range of $0.76 to $0.79 per share. Quarterly Highlights During the first quarter of fiscal year 2006, Network Appliance extended its leadership in data protection through a definitive agreement to acquire Decru, expanded its footprint in midrange storage and in global service offerings, and advanced its relationship with IBM in the virtualization and NAS markets. In this quarter, NetApp entered into a definitive agreement to acquire Decru, a privately held company based in Redwood City, California, for approximately $272 million in cash and stock. Decru, a market leader in storage security, offers data protection solutions to address a range of needs for enterprises and governments, including regulatory compliance, privacy, secure consolidation, and outsourcing. Decru DataFort(TM) appliances protect the core of the storage network by seamlessly inserting a layer of strong encryption, authentication, access controls, and compartmentalization. Since January 2004, NetApp and Decru have worked together to deliver solutions to customers in sectors including investment banking, healthcare, semiconductors, software, and the federal government. This acquisition is expected to close during the second quarter of fiscal year 2006, subject to receipt of required regulatory approvals and other customary closing conditions. Also during the quarter, NetApp and IBM announced their intention to extend their strong relationship to encompass the growing technologies of virtualization and blade solutions. The focus is on combining IBM's storage virtualization technologies and the full line of NetApp V-Series and FAS storage systems into integrated solutions, signaling the beginning of efforts to collaborate to exploit the synergies between the companies' respective virtualization technologies. NetApp also announced that it plans to join IBM as one of nine founding members in the new Blade.org industry community. The community was conceived to enhance the relationships between the founding members and to serve as a catalyst for the industry to create new blade technology. NetApp is already providing back-end storage systems for IBM eServer(R) BladeCenter(TM). On the product front, NetApp unveiled two new midrange storage systems -- the NetApp FAS3020 and FAS3050 plus a new serial ATA (SATA) option for primary storage applications. Concurrently, NetApp debuted two new V-Series virtualization engines -- the NetApp V3020 and V3050. These new solutions, combined with Data ONTAP(TM) 7G software, address three significant customer pain points -- high storage acquisition costs, low storage resource utilization, and increasing storage management costs -- with elegant, powerful, and scalable solutions that help today's enterprise tailor its storage needs to its business and data demands. The new systems also significantly increase NetApp midrange performance. Additionally, NetApp debuted two new midrange NetCache systems -- the NetApp C2300 and C3300 -- to strengthen the company's Internet access and security solution for enterprise data centers. The C2300 and C3300 provide more midrange deployment options than the previous NetCache portfolio. The new systems double NetCache price performance compared to older NetCache systems. NetApp maintained its leadership in the Secure Content and Application Delivery market for the fourth consecutive time according to IDC's (3)Secure Content and Application Delivery 2005-2009 Forecast and Analysis, IDC# 33455. According to IDC, in 2004, NetApp captured 32.1% of the revenue market share and maintained a leadership position with its NetCache customer offerings, which include solutions for Internet access and security, streaming media, and business application acceleration. Overall, the secure content and application delivery market grew by 15% from 2003 to 2004. In service and support, NetApp announced a new generation of its service and support offering, ConsultingEdge, with six packaged consulting and integration services, designed to simplify complex storage and data management needs and speed time to production of NetApp solutions within customers' data infrastructures and the first support solution designed exclusively for government agencies, SupportEdge Secure for Government. NetApp SupportEdge Secure for Government is a highly customized service package that provides confidential and secure assistance in the support and management of NetApp storage solutions to both classified and nonclassified government agencies. With this offering, NetApp has designed a pioneering set of tools that allows filtering of restricted or classified information from government files prior to making them available for troubleshooting purposes. On the partner front, NetApp unveiled several new solution enhancements and partner offerings with Arkivio, Decru, FileNet, Interwoven, Microsoft, SAP, and Symantec to address a variety of data concerns including bringing scalability to ILM, compliance, IP SAN support, content management, enhancing data protection and consumer data security, increased data recovery, SQL server support, enhanced storage management and other business-critical initiatives facing enterprise customers. In corporate news, NetApp was named by IDG's Computerworld as one of the "100 Best Places to Work in IT." NetApp ranked in fifth place on an impressive list of U.S. companies spanning several industries, based on employee feedback. NetApp also appointed Jeffry R. Allen to its board of directors. Allen transitioned to the board from his former role as the executive vice president of Business Operations at Network Appliance. Allen's appointment brought the number on the Network Appliance board to 10. Conference Call and Webcast Information -- The NetApp quarterly results conference call will be broadcast live via the Internet at http://investors.netapp.com/ on Wednesday, August 17, 2005, 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) 299-7098 in the United States and (617) 801-9715 outside the United States. The passcode for both numbers is 27942294. -- A replay will be available for seven days following completion of the live call by dialing (888) 286-8010 in the United States and (617) 801-6888 outside the United States, with replay code 73629016. The webcast replay will be posted on our website for at least one year. 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 simplify data management. Information about Network Appliance solutions and services is available 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, statements regarding the anticipated closing of and benefits to be derived from NetApp's pending acquisition of Decru, and statements regarding anticipated benefits from NetApp's relationship with IBM and other industry partners. 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 enterprise service offerings, and our ability to design products and services that compete effectively from a price and performance perspective; foreign currency exchange rate fluctuations, 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. (1) Earnings per share represent the diluted number of shares for all periods presented. (2) Non-GAAP results for all periods presented and the projections in the Outlook section exclude amortization of intangible assets, stock compensation, restructuring charges (recoveries), net gain on investments and the related effects on income taxes. (3) IDC's Secure Content and Application Delivery 2005-2009 Forecast and Analysis, IDC# 33455. NetApp and NetCache are trademarks and Network Appliance and Data ONTAP 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 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 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 such as employee compensation planning. 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. NETWORK APPLIANCE, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) July 29, April 30, 2005 2005 ----------- ----------- ASSETS CURRENT ASSETS: Cash and cash equivalents $ 231,585 $ 193,542 Short-term investments 983,153 976,423 Accounts receivable, net 239,015 296,885 Inventories 40,343 38,983 Prepaid expenses and other 32,663 32,472 Deferred income taxes 35,558 37,584 ---------- ---------- Total current assets 1,562,317 1,575,889 PROPERTY AND EQUIPMENT, net 443,760 418,749 GOODWILL 297,661 291,816 INTANGIBLE ASSETS, net 23,982 21,448 OTHER ASSETS 68,943 64,745 ---------- ---------- $2,396,663 $2,372,647 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 80,579 $ 83,572 Income taxes payable 14,251 20,823 Accrued compensation and related benefits 66,839 100,534 Other accrued liabilities 55,414 53,262 Deferred revenue 278,705 261,998 ---------- ---------- Total current liabilities 495,788 520,189 LONG-TERM DEFERRED REVENUE 206,705 187,180 LONG-TERM OBLIGATIONS 3,340 4,474 ---------- ---------- 705,833 711,843 ---------- ---------- STOCKHOLDERS' EQUITY 1,690,830 1,660,804 ---------- ---------- $2,396,663 $2,372,647 ========== ========== NETWORK APPLIANCE, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share amounts) (Unaudited) Quarter Ended -------------------- July 29, July 30, 2005 2004 --------- --------- REVENUES: Product revenue $394,630 $324,627 Service revenue 53,773 33,794 -------- -------- Total revenues 448,403 358,421 -------- -------- COST OF REVENUES: Cost of product revenue 133,755 114,215 Cost of service revenue 41,162 29,248 -------- -------- Total cost of revenues 174,917 143,463 -------- -------- GROSS MARGIN 273,486 214,958 -------- -------- OPERATING EXPENSES: Sales and marketing 137,299 103,311 Research and development 50,802 38,703 General and administrative 21,041 16,882 Stock compensation 2,028 2,104 Restructuring charges (recoveries) (1,256) - -------- -------- Total operating expenses 209,914 161,000 -------- -------- INCOME FROM OPERATIONS 63,572 53,958 OTHER INCOME (EXPENSES), net: Interest income 9,048 4,082 Other expenses, net (272) (912) Net gain on investments 33 - -------- -------- Total other income, net 8,809 3,170 -------- -------- INCOME BEFORE INCOME TAXES 72,381 57,128 PROVISION FOR INCOME TAXES 12,261 10,266 -------- -------- NET INCOME $ 60,120 $ 46,862 ======== ======== NET INCOME PER SHARE: BASIC $ 0.16 $ 0.13 ======== ======== DILUTED $ 0.16 $ 0.13 ======== ======== SHARES USED IN PER SHARE CALCULATION: BASIC 367,438 356,743 ======== ======== DILUTED 386,383 372,974 ======== ======== NETWORK APPLIANCE, INC. NON-GAAP (1) CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share amounts) (Unaudited) Quarter Ended -------------------- July 29, July 30, 2005 2004 --------- --------- REVENUES: Product revenue $394,630 $324,627 Service revenue 53,773 33,794 -------- -------- Total revenues 448,403 358,421 -------- -------- COST OF REVENUES: Cost of product revenue 132,647 113,357 Cost of service revenue 41,162 29,248 -------- -------- Total cost of revenues 173,809 142,605 -------- -------- GROSS MARGIN 274,594 215,816 -------- -------- OPERATING EXPENSES: Sales and marketing 137,092 103,104 Research and development 50,802 38,703 General and administrative 19,685 15,614 -------- -------- Total operating expenses 207,579 157,421 -------- -------- INCOME FROM OPERATIONS 67,015 58,395 OTHER INCOME (EXPENSES), net 8,776 3,170 -------- -------- INCOME BEFORE INCOME TAXES 75,791 61,565 PROVISION FOR INCOME TAXES 13,642 11,697 --------- --------- NET INCOME $ 62,149 $ 49,868 ======== ======== NET INCOME PER SHARE: BASIC $ 0.17 $ 0.14 ======== ======== DILUTED $ 0.16 $ 0.13 ======== ======== SHARES USED IN PER SHARE CALCULATION: BASIC 367,438 356,743 ======== ======== DILUTED 386,383 372,974 ======== ======== (1) Non-GAAP results of operations exclude amortization of intangible assets, stock compensation, restructuring charges (recoveries), net gain on investments and the related effects on income taxes. 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 -------------------- July 29, July 30, 2005 2004 --------- --------- SUMMARY RECONCILIATION OF NET INCOME - ------------------------------------ NET INCOME $ 60,120 $ 46,862 Adjustments: Amortization of intangible assets 2,671 2,333 Stock compensation 2,028 2,104 Restructuring (recoveries) (1,256) - Net (gain) on investments (33) - Income tax effect (1,381) (1,431) --------- --------- NON-GAAP NET INCOME $ 62,149 $ 49,868 ======== ======== DILUTED NON-GAAP NET INCOME PER SHARE $ 0.16 $ 0.13 ======== ======== SHARES USED IN DILUTED NON-GAAP NET INCOME PER SHARE CALCULATION: 386,383 372,974 ======== ======== DETAILED RECONCILIATION OF SPECIFIC ITEMS: - ------------------------------------------ COST OF REVENUES $174,917 $143,463 Adjustment: Amortization of intangible assets (1,108) (858) --------- --------- NON-GAAP COST OF REVENUES $173,809 $142,605 ======== ======== GROSS MARGIN $273,486 $214,958 Adjustment: Amortization of intangible assets 1,108 858 --------- --------- NON-GAAP GROSS MARGIN $274,594 $215,816 ======== ======== SALES AND MARKETING EXPENSES $137,299 $103,311 Adjustments: Amortization of intangible assets (207) (207) --------- --------- NON-GAAP SALES AND MARKETING EXPENSES $137,092 $103,104 ======== ======== GENERAL AND ADMINISTRATIVE EXPENSES $ 21,041 $ 16,882 Adjustments: Amortization of intangible assets (1,356) (1,268) --------- --------- NON-GAAP GENERAL AND ADMINISTRATIVE EXPENSES $ 19,685 $ 15,614 ======== ======== OPERATING EXPENSES $209,914 $161,000 Adjustments: Stock compensation (2,028) (2,104) Amortization of intangible assets (1,563) (1,475) Restructuring recoveries 1,256 - --------- --------- NON-GAAP OPERATING EXPENSES $207,579 $157,421 ======== ======== INCOME FROM OPERATIONS $ 63,572 $ 53,958 Adjustments: Amortization of intangible assets 2,671 2,333 Stock compensation 2,028 2,104 Restructuring (recoveries) (1,256) - --------- --------- NON-GAAP INCOME FROM OPERATIONS $ 67,015 $ 58,395 ======== ======== TOTAL OTHER INCOME (EXPENSES), NET $ 8,809 $ 3,170 Adjustments: Net (gain) on investments (33) - --------- --------- NON-GAAP TOTAL OTHER INCOME (EXPENSES), NET $ 8,776 $ 3,170 ======== ======== INCOME BEFORE INCOME TAXES $ 72,381 $ 57,128 Adjustments: Amortization of intangible assets 2,671 2,333 Stock compensation 2,028 2,104 Restructuring (recoveries) (1,256) - Net (gain) on investments (33) - --------- --------- NON-GAAP INCOME BEFORE INCOME TAXES $ 75,791 $ 61,565 ======== ======== PROVISION FOR INCOME TAXES $ 12,261 $ 10,266 Adjustments: Income tax effect 1,381 1,431 --------- --------- NON-GAAP PROVISION FOR INCOME TAXES $ 13,642 $ 11,697 ======== ======== NETWORK APPLIANCE, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW (In thousands) (Unaudited) Three Months Ended ---------------------- July 29, July 30, 2005 2004 ---------- ---------- Cash Flows from Operating Activities: Net income $ 60,120 $ 46,862 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 14,756 13,242 Amortization of intangible assets 2,671 2,333 Amortization of patents 495 450 Stock compensation 2,028 2,104 Net (gain) on investments (33) (29) Net loss on disposal of equipment 404 7 Allowance for doubtful accounts (379) (154) Deferred rent 48 90 Changes in assets and liabilities: Accounts receivable 57,892 (5,757) Inventories (4,998) (3,331) Prepaid expenses and other assets (3,997) (1,429) Accounts payable (2,691) (1,075) Income taxes payable 9,648 4,851 Accrued compensation and related benefits (32,418) (14,535) Other accrued liabilities (1,302) 2,697 Deferred revenue 36,716 30,342 --------- --------- Net cash provided by operating activities 138,960 76,668 --------- --------- Cash Flows from Investing Activities: Purchases of investments (222,787) (148,646) Redemptions of investments 213,977 139,045 Increase in restricted cash (1,504) - Purchases of property and equipment (33,538) (32,265) Proceeds from sales of investments 62 298 Purchases of equity securities (275) - Purchase of business, net of cash acquired (11,831) - --------- --------- Net cash used in investing activities (55,896) (41,568) --------- --------- Cash Flows from Financing Activities: Proceeds from sale of common stock related to employee stock transactions 50,763 23,202 Tax withholding payments reimbursed by restricted stock (419) - Repurchases of common stock (95,543) (47,742) --------- --------- Net cash used in financing activities (45,199) (24,540) --------- --------- Effect of Exchange Rate Changes on Cash and Cash Equivalents 178 334 Net Increase in Cash and Cash Equivalents 38,043 10,894 Cash and Cash Equivalents: Beginning of period 193,542 92,328 --------- --------- End of period $ 231,585 $ 103,222 ========= ========= Noncash Investing and Financing Activities: Conversion of evaluation inventory to fixed assets $ 3,638 $ 2,729 Deferred stock compensation, net of reversals $ 2,634 $ (546) Income tax benefit from employee stock transactions $ 16,289 $ 5,692 Acquisition of property and equipment on account $ 3,561 $ - Options assumed for acquired business $ 2,314 $ - Supplemental cash flow information: Income taxes paid $ 2,014 $ 6,826 NETWORK APPLIANCE, INC. RECONCILIATION OF NON-GAAP GUIDANCE TO GAAP EXPRESSED AS EARNINGS PER SHARE SECOND QUARTER AND FISCAL YEAR 2006 (Unaudited) Projected Second Projected Annual Quarter Revenue FY06 Revenue Growth Range Growth Range --------------------------------------- 5% 7% 25% 28% -------- -------- -------- -------- ADJUSTMENTS OF SPECIFIC ITEMS TO EARNINGS PER SHARE FOR THE SECOND QUARTER AND FISCAL YEAR 2006 ($): COST OF REVENUES Adjustment: Amortization of intangible assets (0.0029) (0.0029) (0.0115) (0.0115) OPERATING EXPENSES Adjustments: Stock compensation (0.0055) (0.0055) (0.0227) (0.0227) Amortization of intangible assets (0.0009) (0.0009) (0.0056) (0.0056) Restructuring charges 0.0033 0.0033 TOTAL OTHER INCOME (EXPENSES), NET Adjustments: Net (gain)/loss on investments 0.0001 0.0001 PROVISION FOR INCOME TAXES Adjustments: Income tax effect 0.0039 0.0040 0.0160 0.0163 -------- ---------- -------- -------- NET DECREASE IN EARNINGS PER SHARE (0.0054) (0.0053) (0.0204) (0.0201) ======== ========== ======== ======== CONTACT: Network Appliance, Inc. Jodi Baumann, 408-822-3974 (Press) jodi@netapp.com Tara Calhoun, 408-822-6909 (Investors) tara@netapp.com Billie Fagenstrom, 408-822-6428 (Investors) billief@netapp.com -----END PRIVACY-ENHANCED MESSAGE-----