FORMForm 10-K

Commission File Number 0-27130

NETWORK APPLIANCE, INC.Network Appliance, Inc.

495 East Java Drive,

Registrant’s telephone number, including area code: (408) 822-6000

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act:

     Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes xþ          No o

     Indicate by a check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.     o

     Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).     Yes þ          No o

The aggregate market value of voting stock held by nonaffiliates of the Registrant, as of May 24,October 25, 2002, was $4,564,195,010$2,322,696,600 (based on the closing price for shares of the Registrant’s common stock as reported by the Nasdaq National Market for the last tradingbusiness day prior to that date). Shares of common stock held by each executive officer, director, and holder of 5% or more of the outstanding common stock have been excluded in that such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes.

     On May 24, 2002, 335,355,98923, 2003, 341,080,594 shares of the Registrant’s common stock, $0.001 par value, were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

     The information called for by Part III of this Form 10-K is hereby incorporated by reference from the definitive Proxy Statement for our annual meeting of stockholders to be held on August 29, 2002,September 2, 2003, which will be filed with the Securities and Exchange Commission not later than 120 days after April 26, 2002.

FORWARD-LOOKING STATEMENTS

All statements included or incorporated by reference in thisForward-Looking Statements:

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PART I

Overview

     Network Appliance, Inc., is a worldwide leader in enterprise network storage and data management solutions. NetApp® network storage solutions and service offerings provide data-intensive enterprises with consolidated storage, improved data center operations, economical business continuance, and efficient remote data access across the distributed enterprise.access. Network Appliance’s success to date has been in delivering highly cost-effective network storage solutions that reduce the complexity associated with conventional storage solutions. We believe ourOur products have set the standard for simplicity and ease of operation, with what we believe to be one of the lowest total costs of ownership (TCO) and highest returns on investment (ROI) in the industry. Network Appliance^TM solutions are the data management and storage foundation for leading enterprises, government agencies, and universities worldwide.

     Network Appliance was founded in 1992 with the goal of simplifying data access by creating the world’s first network storage appliance. The first system was shipped in 1993. Today Network Appliance is a multinational corporation with over 2,2002,300 employees and an installed base of products in over 90 countries.

     Network Appliance focuses on simplifying“simplifying the complex.” This philosophy drives the entire company,Company, from product design and system operation through support processes. Our drive for simplicity has deliveredThis results in significant customer advantages:advantages, including:

	•	Lower total cost of ownership, in part because system administrators can more efficiently manage much greater amounts of information, and also because recovery times are significantly reduced in the event of a disaster or data corruption.
	•	Business agility, by improving our customers’ ability to react quickly to changes via rapid deployment or reconfiguration of storage assets.

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	•	Improved information availability, because simplicity drivesdue to increased reliability.
	•	Improved application performance, enabling customers to advance their time-to-market goals.goals and create new revenue-generating opportunities.
	•	Business continuance via online rapid restore and disaster recovery deployments.

Customer Base

     Our diversified customer base spans a number of large vertical markets. Our storage infrastructure is deployed in the largest enterprises within each of the vertical markets on which we have focused our efforts. Examples include:

	•	Energy.Customers in the energy market have traditionally deployed our products to support their exploration activities, where the simplicity of the appliance architecture and the ability to support massive amounts of data are critical. Our solutions help enable energy companies to meet their workflow optimization objectives, improve quality, reduce cycle times, and lower costs.
	•	Federal government.The U.S. federal government is one of the largest IT consumers in the world, and Network Appliance Federal Systems, Inc., provides solutions for many data-intensive activities, including intelligence gathering, analysis, and civilian and military operations.
	•	Financial services.New data-processing methodologies, shorter time frames for settlement transactions, and new demands for better knowledge management are requiring financial services firms to improve their data storage infrastructures. Network Appliance solutions for enterprise storage enable these financial institutions to effectively manage large amounts of data in a high-speed distributed infrastructure, enabling customers to leverage their existing technology investments and derive maximum value from their time-sensitive information.

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	•	High technology.Global high-technology enterprises, including semiconductor, systems, and software companies, are keenly focused on reducing infrastructure cost and improving time-to-market. Network Appliance solutions enable high-technology firms to achieve these goals by reducing total cost of ownership and providing highly reliable systems and rapid access to corporate information assets.
	•	Internet.Internet-focused businesses place considerable and often unpredictable demands on transaction-intensive, database-driven environments such as electronic mail (e-mail), World Wide Web (WWW), and electronic commerce (e-commerce). In a marketplace where retaining customer loyalty is paramount, Internet-focused businesses must have high performance and readily available data to ensure their customers do not seek alternative providers. Scalable distributed architectures based on Network Appliance’s products improve data availability, scalability, and performance, while reducing the total cost of ownership.
	•	Life sciences.Pharmaceutical, bioresearch, genomic research, and care providers are focused on developing vital new drugs, improving quality of patient care, and increasing their returns on investment. Network Appliance solutions enable fast access, integration, and sharing of massive amounts of exponentially growing scientific and medical imaging data, reduced time-to-market, and improvements in operational efficiency.
	•	Major manufacturing.Global manufacturing companies face intense competitive pressure to develop attractive new products, improve time-to-market, and optimize profitability. Network Appliance solutions enable these companies to simplify the management overhead associated with storing and protecting large amounts of ERP, engineering, and manufacturing product data, while ensuring that information can be easily and efficiently distributed to manufacturing and distribution sites around the world.
	•	Telecommunications.Service providers in the telecommunications industry are faced with deregulation, globalization, increased competition, and often a substantial debt burden. As a result, they must control infrastructure costs while maintaining or improving services to existing customers and at the same time identifying and developing compelling new revenue streams in order to grow their business. Network Appliance’s products and solutions allow these providers to quickly and cost-effectively build the network storage infrastructure and content delivery networks required by the global telecommunications industry.

Customer Challenges

     Network Appliance enterprise network storage solutions directly address the major information technology challenges that enterprises face — consolidating rapidly growing quantities of storage, reducing costs associated with data center operations, ensuring business continuance, and managing data throughout the globally distributed enterprise.

	•	Storage consolidation.Managing the explosive growth of data is one of the greatest challenges enterprises face today. Network Appliance gives enterprises the scalable solutions they need to consolidate storage from hundreds or thousands of servers and manage storage efficiently in a mixed server environment.
	•	Data center operations.More than just applications and hardware, the data center is the nerve center of an organization, controlling the flow of information throughout the enterprise. Many of the costs that drive up the total cost of information technology (IT) ownership are associated with data center operations, and include tasks such as data backup and recovery, hardware and software maintenance, performance management, and resource allocation. Our simplesimplified appliance architecture automates or eliminates many of these administrative tasks, and delivers simple, centrally managed, and flexible data storage that leverages and increases the performance of existing IT infrastructure.infrastructures.
	•	Business continuance.Many enterprises are increasingly focused on disaster preparedness and recovery and must avoid costly downtime in the event of a major disaster.disaster or localized disruption. Minutes of downtime are costly, and hours of downtime can be catastrophic. Working in tandem with

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		the existing network infrastructure (both Fibre Channel and Ethernet), our storage appliances and data management software enable customers to implement disaster recovery and data mirroring plans quickly and effectively, while minimizing incremental telecommunications and administration costs.
	•	Distributed enterprise.As enterprises grow, it becomes increasingly difficult to provide timely information to remote locations and branch offices, jeopardizing their productivity. NetApp products accelerate information access and application performance while reducing bandwidth costs, and also reduce the cost and complexity associated with managing the data in these distributed offices. Our solutions enable enterprises to quickly replicate and relay information to and from one or many locations, fully protecting data in remote offices and locations.

A Solution-Based Approach

     To solve these customer challenges, Network Appliance offers a growing number of integrated solutions that address the specific data management hurdles faced by our enterprise customers. These turnkey solutions, which include hardware, software, service, and financing components, enable our customers to simplify their storage management, leverage their existing infrastructure, and increase their return on investment. The solutions that have received the greatest level of interest to date include:

	•	Storage consolidation:File sharing and messaging applications are critical to successful enterprise operations. Network Appliance offers highly available, scalable, and cost-effective storage consolidation solutions that incorporate the NetApp unified storage platform and the feature-rich functionality of data and resource management software to deliver storage with simplified backup and reduced recovery time as well as the capability to add storage without downtime. By freeing up valuable infrastructure and staff resources, Network Appliance storage consolidation solutions improve enterprise productivity, performance, and profitability.
	•	Data protection: The Network Appliance data protection solution simplifies the complex backup and recovery process while accelerating time-to-recovery. This is accomplished through reduced operational costs, enabling immediate access to information, and the elimination of backup windows.
	•	Internet access and security:The Internet access and security solution merges proxy caching and storage technologies to improve the secure access and management of information to eliminate obstacles created by geography, complexity, and resource limitations. In accomplishing this NetApp reduces costs, increases collaboration, and increases productivity.

     No matter the solution, NetApp strives to simplify whenever possible, utilizing open standards and driving industry collaboration, partnering with other industry leaders, and providing world-class global service and support.

	•	Simplicity.NetApp’sThe NetApp appliance architecture allows enterprises to reduce management overhead, decrease deployment times, and eliminate downtime typically associated with general-purpose architectures. Network Appliance plans to continue to expand on the appliance architecture in future product designs and service offerings.
	•	Open standards and industry collaboration.Network Appliance participates in and leads many industry initiatives and organizations, such as the Storage Networking Industry Association (SNIA), that have defined standards that are widely deployed today. Standards that Network Appliance has helped advance include the Network File System (NFS) protocol for file access in UNIX® and Linux® environments,environments; the Common Internet File System (CIFS) protocol for file access in Windows® environments,environments; the Network Data Management Protocol (NDMP) for simplifying backup of networked storage; the Internet Content Adaptation Protocol (ICAP) for content adaptation in Web environments, the Network Data Management Protocol (NDMP) for simplifying backup of networked storage, andenvironments; the Direct Access File System (DAFS) protocol for high-performance, high-throughput access to data. We plan to continue to participate in driving emerging standards, including

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		NFS version 4, 10 Gigabit Ethernet,data; and the Internet Small Computer System Interface (iSCSI) protocol for building block-based storage area networks using widely deployed Ethernet infrastructures. We plan to continue to participate in driving emerging standards, including NFS version 4 and 10 Gigabit Ethernet.

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	•	Business application integration and partnerships.Network Appliance’s goal is to deliver complete network storage solutions to customers. Our partners are vital to our success in this area, and we have strengthened oursignificant partner relationships with database and business application companies including EDS/ PLM Solutions, Dassault Catia, Documentum, EDS/PLM Solutions, several units within IBM including DB2 and Lotus, Interwoven, Landmark Graphics, Microsoft, Openwave, Oracle, Rational, SAP, SAS, Sybase, Vignette, and others. These application partnerships enhance our ability to reduce implementation time, increase application availability, and provide the highest level of solution support to customers. Technology and infrastructure solution partners enable seamless integration into customers’ existing environments, resulting in lower costs and more rapid deployment. Our infrastructure partner list includes ADIC, Atempo, Bakbone, Brocade, Cisco, Commvault, Computer Associates, Egenera, F5 Networks, Fujitsu Prime Software Technology, Hitachi Data Systems, IBM Tivoli, Ingrian Networks, KVS, Legato, QuantumyATL,McData, NuView, Precise Software Solutions, Quantum/ATL, Reliaty, RLX Technologies, Spectra Logic, StorageTek, Symantec, Syncsort, and Veritas.
	•	Global service and support.Network Appliance’s increasing number of enterprise customers requires a global, integrated service and support model. These requirements have been met by expanding efforts in professional services and support offerings, as well as by continuing to develop strategic partnerships. Our partnerships with service providers such as Accenture, Computer Sciences Corporation, and IBM Global Services and PwC allow us to better serve customers by broadening service offerings, as well as leveraging existing service and support relationships that customers may already have in place.

Target VerticalsClasses of Data

     WeNetApp products and solutions are focusedbased on expanding our presencethe premise that not all data is created equal. Enterprise customers face a significant challenge in highly targeted vertical markets. Examples include:designing networked storage infrastructures that balance the availability requirements of their applications and associated data with the cost of the storage solution. Storing all data on an expensive, monolithic, mainframe-class array is no longer acceptable to customers who must carefully evaluate the value of their information. As a result, data is being classified by availability and performance requirements in relation to cost.

	•	Energy.Business-critical data.Customers in Business-critical applications, including trading-floor applications and ERP systems, require the energy markethighest levels of availability and reliability, have traditionally deployed our products to support their exploration activities, wheremore dedicated management resources, and exhibit the simplicityleast amount of cost sensitivity. If this data is unavailable, the appliance architecturebusiness is typically not generating revenue and the ability to support massive amounts of data are critical. Our solutions help enable energy companies to meet their workflow optimization objectives, improve quality, reduce cycle times, and lower costs.may incur other financial penalties.
	•	Federal government.Business operations data.During fiscal year 2002, we launched a new subsidiary, Network Appliance Federal Systems, Inc. The U.S. federal government This category includes data used by externally visible business operations applications, including e-mail, customer support applications, and external Web sites. If this data is one ofunavailable, it may be apparent to customers and prospects, impacting revenue and reflecting poorly on the largest IT consumers in the world,organization. As such, this data has higher reliability and Network Appliance Federal Systems, Inc., provides solutions for many data-intensive activities, including intelligence gathering, analysis,availability requirements, and civiliantypically requires more significant storage infrastructure and military operations.data management software investments.
	•	Financial services.Business internal data.New data processing methodologies, shorter time frames for settlement transactions, and new demands for better knowledge management are requiring financial services firms to improve their data storage infrastructures. Network Appliance solutions for enterprise storage enable these financial institutions to effectively manage large amounts This class of data inis accessed by internal employees, and while the availability of the data is not important to customers outside the business, it can have a high-speed distributed infrastructure, enabling customers to leverage their existing technology investmentsbig impact on the users of the data inside the business. Examples of business internal data could include corporate intranets, HR systems, and derive maximum value from their time-sensitive information.data warehouses used for analytical purposes.
	•	High technology.Departmental and remote office data.Global high-technology enterprises, including semiconductor, systems, Departmental and software companies, are keenly focused on reducing infrastructure costremote-office deployments also require a low-cost solution, but typically need higher levels of availability with low management overhead. Data in this class is typically not used outside the department or remote office, and improving time-to-market. Network Appliance solutions enable high-technology firmsif the data becomes unavailable, the impact to achieve these goals by reducing total cost of ownership and providing highly reliable and rapid access to corporate information assets.the overall business is minimal.
	•	Internet.Reference data.Internet-focused businesses place considerable Types of reference data include e-mail archives; bank, brokerage, and often unpredictable demands on transaction-intensive, database-driven environments such as electronic mail (e-mail), World Wide Web (WWW),billing statements; medical images and electronic commerce (e-commerce). In a marketplace where retaining customer loyalty is paramount, Internet-focused businesses cannot experience poor performancerecords; MCAD drawings; integrated chip designs; and seismic and satellite data. Customers require fast data access at costs comparable to much slower high-end tape or poor data availability, which can cause their customers to seek alternative providers. Scalable distributed architectures based on NetApp appliances improve data availability, scalability, and performance, while reducing the total cost of ownership.optical libraries, with minimal ongoing management cost.

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	•	Life sciences.Archive data.Pharmaceutical, bioresearch, genomic research,Enterprises require a very low-cost storage solution for archive data and care providersbackups, which have historically been stored on magnetic tape. Many customers are focusednow storing archive data on developing vital new drugs, improving quality of patient care,more flexible disk-based systems, such as the NetApp NearStoreTM, which reduces backup windows and increasing their returns on investment. Network Appliance solutions enable fast access, integration and sharing of massive amounts of exponentially growing scientific and medical imaging data, reducing time-to-market, and improving operational efficiency.
	•	Major manufacturing.Global manufacturing companies face intense competitive pressure to develop attractive new products, improve time-to-market, and optimize profitability. Network Appliance solutions enable these companies to simplify the management overhead associated with storing and protecting huge amounts of ERP, engineering, and manufacturing product data, while ensuring that information can be easily and efficiently distributed to manufacturing and distribution sites around the world.
	•	Telecommunications.Service providersenables rapid recovery in the telecommunications industry are faced with deregulation, globalization, increased competition, and oftenevent of a substantial debt burden. As a result, they must control infrastructure costs to serve existing customers and grow by identifying and developing compelling new revenue streams. NetApp products and solutions allow them to quickly and cost-effectively build the network storage infrastructure and content delivery networks required by the global telecommunications industry.disaster.

     Network Appliance solutions meet the needs of archive, reference, departmental/remote office, business internal, business operations, and business critical data with a common product architecture and data management methodology, enabling customers to easily deploy and manage all their networked storage infrastructure in the same way.

System Products

     NetApp products consist of filerfabric-attached storage (FAS) appliances, also known as filers, NearStore^TM appliances, systems, NetCache® content delivery appliances, data management and content delivery software, and professional and support services. Our configured appliances range in price from $4,000 to more than $1,000,000.

     All NetApp systems come packaged in rack-mountable enclosures that can be installed in a customer’s existing server racks or factory-installed and configured in cabinets. Our appliances are based primarily on commodity hardware, including Intel® Pentium® processors, an advanced implementation of the industry-standard PCI bus architecture, standard Ethernet adapters, and either Fibre Channel-Arbitrated Loop (FC-AL), Advanced Technology Attachment (ATA), or Small Computer System Interface (SCSI) disk interconnects.

     NetApp filers are a scalable, suite of highly available, field-proven, unified networked storage systems for consolidating data storage and simplifying data management. The filer appliances are easy to install, configure, and manage. They are specifically designed for highly scalable, network-centric IT system architectures.architectures, and support both network-attached storage (“NAS”) and storage-attached networks (“SAN”) on a single, unified platform. Our filers are designed for and deliver lower total cost of ownership than alternative competitive systems. Heterogeneous data sharing providesallows our systems to deliver simultaneous file systemdata access to Linux, UNIX, Linux, Windows, and Web-based servers and clients.clients, dramatically lowering the total cost of ownership and management complexity versus homogeneous storage systems. Filers are available in either single-node configurations or fully redundant, active/active cluster configurations that provide high data availability for business-critical environments.

     Current filer products include:

	•	NetApp F880 filer.FAS 960c/FAS960 enterprise servers.Introduced during fiscal year 20022003 and built for the most demanding customers, the F880FAS960c is our highest-performance filer. The superior throughputFAS960c continues NetApp’s tradition of providing industry-leading performance in a simple, reliable, flexible, and response times allow NetApp F880 filersmanageable system. The FAS960c is designed to supportaccommodate thousands of independent users withand large, high-bandwidth applications. With the capability of managing up to 9 terabytes (TB)48TB of raw data. The increased processing power ofdata in one system and 8TB in one file system, the NetApp F880 provides maximized scalability and performance for high-end enterprise applications. An integrated CompactFlashTM boot device simplifies management in remote or multifiler environments.
	•	NetApp F840 filer.The balance of capacity and performance with flexible I/ O configuration enables the NetApp F840 to power a broad range of large-scale applications. The F840 is currently deployed in large service provider networks and data-intensive enterprise environments including database, ERP, and design applications.

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	•	NetApp F810 and F820 filers.Introduced during fiscal year 2002, these are entry-level, enterprise-class performance filers. NetApp F810 and F820 filers suit small- to medium-sized enterprise applications. These products enable the consolidation of heterogeneous data for enterprises and service providers.
	•	NetApp F880c, F840c, F820c, and F810c filers.For maximized data availability in mission-critical environments, NetApp F880c, F840c, F820c, and F810c clustered filersFAS960c can meet the networked storage challenges for large enterprises and applications that require high availability. NetAppdemands of virtually any enterprise. NetApp’s clustered filers scale to support up to 18TB of raw data. Thefiler architecture integrates multiple processors in an active/active Clustered Failoverclustered failover configuration to provide high availability and scalable performance to multiple networks.
	•	NetApp FAS940c/FAS940 enterprise server.The FAS940c can be deployed on demand in any enterprise. The flexibility and performance capabilities of the FAS940c bring FAS900 series features to a broad range of enterprise applications, including Customer Relationship Management (“CRM”), Enterprise Resource Planning (“ERP”), Decision Support Solutions (“DSS”), massive home directory consolidation, and Web serving.
	•	NetApp F880c/F880 and F825c/F825 enterprise servers.The balance of capacity and performance with flexible I/O configuration enables the NetApp F880c and F825c to power a broad range of large-scale applications. Currently deployed in the largest service provider networks and data-intensive

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		environments, including those running database/ERP and other enterprise-level applications, the F880 and F825 are proven high-performance workhorses.
	•	NetApp F810c/F810.The NetApp F810c server is designed for small to medium-size enterprise applications. By using the same Data ONTAPTM operating system as higher-capacity, higher-performance servers, the F810c is fully compatible with them and serves as a cost-efficient starting point in building a network infrastructure on NetApp systems.
	•	NetApp FAS250 filer.The NetApp FAS250 is an entry-level enterprise filer supporting capacities up to 1TB in a compact form factor. The FAS250 is completely software compatible with all other NetApp products and uses the same storage shelves and Fibre Channel disks currently available for the F800 and FAS900 series filers. The FAS250 provides customers with an attractive entry-level price and a simple upgrade path to higher-capacity, higher-performance filers.
	•	NetApp F87 filer.Introduced during fiscal year 2002, theThe NetApp F87 filer is targeted at workgroup and remote branch office environments. The F87 filers leverage high-volume components to bring industry-leading NetApp features and functionality to entry-level applications, supporting access for up to 576 gigabytes (GB) of raw storage for user and application data. We have announced End Of Availability (EOA) of the F87 filer. During fiscal 2003 we continued to ship the F87 filer, but expect that this product will be phased out as new products are introduced in fiscal year 2004.

The Network Appliance gFiler^TM gateway is an innovative storage consolidation solution that provides file-level access to data stored in Fibre Channel storage arrays. The file data is accessed via client systems and application servers on an IP network. The NetApp gFiler uses the Data ONTAP microkernel, and functions as a NAS file server when connected to a Fibre Channel SAN from other enterprise storage vendors. Proven multiprotocol file services and advanced NetApp data management capabilities are available for consolidating, protecting, and recovering mission-critical data for applications and users.

     Current gateway filer products include:

	•	NetApp GF960/c gateway.Provides industry-leading performance to thousands of independent users and high-bandwidth applications. Scales to 48TB of managed capacity when configured for simultaneous active/active file access with secure failover across two independent systems.
	•	NetApp GF940/c gateway.Provides flexibility and industry-leading performance across a broad range of enterprise applications. Scales to 18TB of managed capacity when configured for simultaneous active/active file access with secure failover across two independent systems.
	•	NetApp GF825/c gateway. Provides flexibility and industry-leading price/performance across a broad range of enterprise applications. Scales to 6TB of managed capacity when configured for simultaneous active/active file access with secure failover across two independent systems.

The gFiler gateway series for Hitachi Freedom Storage is available exclusively through Hitachi Data Systems.

     NetApp NearStore products introduced during fiscal year 2002, are designed for improving data backup and recovery architectures, storing reference and regulated data, and archiving infrequently accessed files. NearStore appliancessystems back up and restore data with speed, consistency, and scalability unmatched in tape-based backup/restore solutions. The product complements and significantly improves existing tape backup processes by inserting economical and simple-to-use disk-based storage between application storage and tape libraries, resulting in a highly efficient two-stage backup configuration. Unlike alternative technologies, recovery time is measured in seconds and minutes, not hours and days. Almost any type of primary storage can be backed up to NearStore appliances,systems, including UNIX, Linux, or Windows servers with direct-attached or SAN-attached storage from all other storage vendors, desktop and notebook computers, and NetApp filers. NearStore can also be used as a mirror

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     NearStore appliancessystems are also ideal for consolidating nearline data resources, including reference and archive data into a single storage platform. This platform can be located and managed centrally, reducing costs associated with data center operations.

     Existing applications,With the advent of SEC regulation 17a-4 and HIPAA as well as several governmental defense requirements, NearStore, in conjunction with NetApp SnapLock^TM software, is part of an open access data-retention solution targeted at regulated data industries, such as document management, have traditionally relied on Hierarchical Storage Management (HSM) solutions for infrequently accessed data. Providers of these applications are now integrating nearline storage into their blueprint solution portfolio to enable faster access to datafinancial services, healthcare, pharmaceuticals, and lower their operational costs to customers. Emerging changes in traditional applications, such as data warehousing, are now occurring for the purpose of separating active and inactive database data between primary and secondary storage. The ability for an organization to have an identical management framework for both their primary and secondary storage is a unique NetApp advantage.government.

     TheCurrent NearStore R100 is available in configurations ranging from capacities of 12TB to 96TB, and can be configured and managed to create virtually unlimited capacity.products include:

	•	The NearStore R150 is available in system modules of 12TB and 24TB. Multiple modules are easily configured and managed to provide hundreds of terabytes of storage with DataFabricTM Manager and Virtual File ManagerTM software.
	•	The NearStore R100 was the first family of NearStore products and was introduced in fiscal year 2002. The NearStore R100 is available in system modules of 7TB and 12TB.

     The NetCache product line is a scalable suite of appliances, designed to solve complex Web content delivery problems faced by enterprises and service providers. NetCache appliances currently power some of the world’s largest enterprises and telecommunications networks. These appliances are deployed across the entire network, from the primary data center to remote points of presence (POPs) and local offices worldwide. They reduce network latency to enhance the overall Web experience for intranet users, e-commerce customers, and external suppliers and partners. NetCache appliances reliably deliver high-quality audio and video streams, enabling a host of next-generation network services and applications such as online training, executive broadcasts, and large-scale corporate and consumer video-on-demand services. NetCache appli-

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     Current NetCache products include:

	•	NetCache C6100.The high-end NetCache C6100 delivers high levels of performance and reliability for the data center and other high-bandwidth locations. Large content libraries — up to 2TB of storage — can be reliably stored and optimally accessed. Enterprises and service providers use the NetCache C6100 to improve end-user response times, manage quality of service, reduce bandwidth costs, and provide security and content filteringcontent-filtering controls.
	•	NetCache C3100.C2100.The midrange NetCache C3100C2100 optimizes price/performance by supporting a wide range of capacity and reliability features. Reliability and availability of mission-critical data are ensured with features such as RAID data protection, redundant hardware, and hot-swap drives. These capabilities make the NetCache C3100C2100 an attractive solution for environments experiencing rapid growth.
	•	NetCache C1100.C1200.Globally distributed enterprises, small/medium-sized businesses, and service provider remote points of presence select the entry-level NetCache C1100C1200 for its attractive price point and space-sensitive design. The affordable, fast access to data and content filteringcontent-filtering capabilities increase productivity and improve overall user satisfaction. The appliance architecture is especially attractive in these environments where there is often limited local technical expertise.

Software Products

     Network Appliance sells filer-based software as well as server-based software that simplifies storage administration as well as increases data availability. All NetApp appliances are configured with the Data

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     Network Appliance develops software support for a number of industry-standard protocols. The base filer and NearStore systems include one protocol, and additional protocols may be added at any time for an additional license fee. Protocols available on filer and NearStore systems include:

	•	SnapshotCommon Internet File System (CIFS).TM. Snapshots enable online backups, providing rapid access to previous versions of data without requiring complete separate copies. Snapshots eliminate the need to recover data from a tape archive CIFS is an industry-standard network file-sharing protocol used in the event of a disaster or user error.Microsoft® Windows environments.
	•	SnapRestore® software.Direct Access File System (DAFS).SnapRestore allows rapid restoration of a file system to an earlier point in time, typically in only a few seconds. SnapRestore is based on the Data ONTAP Snapshot technology and enables customers to greatly minimize recovery time in the event of data corruption or loss.
	•	SnapVaultTM software.SnapVault provides extended and centralized disk-based backup for filers by periodically backing up a Snapshot to another filer or NearStore appliance on the network. Storing multiple Snapshots on the SnapVault server enables enterprises to keep weeks, months, or years of backups online, improving recovery times in the event of a disaster or data corruption. SnapVault was introduced during fiscal year 2002.
	•	SnapMirror® software.SnapMirror remote mirroring software enables automated file system replication between sites. SnapMirror leverages the Data ONTAP Snapshot technology and enables customers to quickly recover from site disasters, easily replicate critical data, and cost-effectively deploy centralized backup architectures.
	•	SnapManager®software.SnapManager software for Microsoft® Exchange 5.5 and Microsoft Exchange 2000 allows customers to perform online backup and rapid recovery of Microsoft Exchange data. SnapManager for Microsoft Exchange 2000, introduced during fiscal year 2002, is the first block-services storage product shipped by Network Appliance.
	•	SnapDriveTMsoftware.SnapDrive, introduced during fiscal year 2002, enables a block-based storage connection for Microsoft® SQL Server and Oracle® database software on Windows 2000 platforms.

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		Customers take full advantage of the simple data management capabilities of the filer appliance in block-based storage environments.
	•	Clustered Failover software.Clustered Failover software for filers ensures high data availability for business-critical environments by eliminating any single point of failure through a fully redundant, active/ active network storage cluster configuration.
	•	MultiStoreTM software.Many enterprises have thousands of Windows and UNIX file servers distributed throughout their networks. These servers not only represent an enormous hardware investment, they also create huge, ongoing administration costs. NetApp MultiStore reduces this major expense and complexity by enabling a single physical filer to appear as multiple virtual filers. Introduced during fiscal year 2002, NetApp MultiStore software enables customers to quickly and seamlessly consolidate a large number of servers onto a single filer.
	•	FilerView®software.FilerView, a Web-based administration tool, allows IT administrators to fully manage filers from remote locations on the network using a Web browser.
	•	DataFabricTMManager software.DataFabric Manager offers the ability to manage multiple NetApp filer appliances, NearStore appliances, and NetCache appliances from a single administrative console, reducing administrative complexity and total cost of ownership. DataFabric Manager 1.0, 1.1, and 2.0 were introduced during fiscal year 2002.
	•	ApplianceWatchTM software.ApplianceWatch software allows IT professionals to centrally manage and administer NetApp appliances using standard management frameworks, including products from HP OpenView and Tivoli.
	•	ContentDirectorTMsoftware.ContentDirector software provides secure distribution of Web content from centrally deployed storage appliances across global networks to multiple remotely deployed storage appliances. In addition, it fully automates distribution and synchronization of Internet content, including streaming media, applications, and graphics. ContentDirector 2.0 was introduced during fiscal year 2002.
	•	NDMP software.Support for the industry-standard Network Data Management Protocol (NDMP) enables customers to maximize their infrastructure investments and reduce the time required to do tape backups. Data ONTAP provides support for Fibre Channel, Ethernet, and SCSI-attached tape libraries, with support for industry-standard networking and backup software and hardware from leading vendors including ADIC, Brocade, BakBone Software, Cisco, CommVault Systems, Computer Associates, Legato, Quadratec, Quantum/ATL, SpectraLogic, StorageTek, Syncsort, and Veritas. These solutions allow customers to easily share tape libraries among multiple filers in a large enterprise deployment.
	•	DAFS protocol.The Direct Access File System (DAFS) protocol was defined by an industry group of more than 85 companies to solvesolves the I/O and data-sharing problems that exist in high-performance data center applications, including collaborative environments and databases. DAFS takes advantage of standard memory-to-memory interconnects, including virtual interface (VI) and InfiniBand, to dramatically improve the performance, reliability, and scalability of these applications. We believeThe DAFS protocol is an important foundation technology that will enable a new generation of high-performance, highly scalable data center applications. Support for DAFS was shipped during fiscal year 2002.not available on NearStore systems.
	•	Fibre Channel Protocol (FCP). FCP is the standard serial SCSI command protocol used in Fibre Channel SAN networks. FCP is a heterogeneous protocol supported by all standard Linux, UNIX, and Windows operating systems.
	•	iSCSI protocol. iSCSI, a new protocol defined by the Internet Engineering Task Force, offers the consolidation, scalability, and management advantages of a storage area network (SAN) without the unfamiliarity, complexity, and expense of Fibre Channel. iSCSI is an Ethernet-based protocol.
	•	Network File System (NFS). NFS is an industry-standard client/server protocol for sharing files and directories over a network in Linux and UNIX environments.

The base NetCache system includes support for caching standard Web protocols, as well as support for proxy caching. NetCache protocols available for an additional license fee include:

	•	Distributed Network File Services (DNFS).Provides rapid access to shared UNIX files for enhanced collaboration in distributed environments. DNFS appliances deployed in remote offices automatically replicate, store, and serve the files or file portions that are requested by remote users without the need for any replication software or scripts.
	•	Microsoft Windows MediaTM streaming.Fully supports Windows Media features such as live stream splitting, delivery of video-on-demand, and support for digital rights management, authentication, authorization, and logging.
	•	QuickTimeTM streaming.Supports Apple® QuickTime streaming servers and the Apple QuickTime player to optimize the delivery of QuickTime content.
	•	RealNetworks® streaming.Supports RealAudioTM, RealVideoTM, and replicates SureStream functionality between RealSystemTM servers and RealPlayer®.

     Network Appliance also offers a comprehensive set of software products that provide specialized functionality to solve a variety of business problems. These add-on software features and products include:

	•	ApplianceWatchTM. ApplianceWatch software allows IT professionals to centrally manage and administer NetApp appliances using standard management frameworks, including products from HP OpenView and Tivoli.

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	•	Clustered Failover software.Clustered Failover software for filers ensures high data availability for business-critical environments by eliminating any single point of failure through a fully redundant, active/active network storage cluster configuration.
	•	ContentDirectorTM. ContentDirector software provides secure distribution of Web content from centrally deployed storage appliances across global networks to multiple remotely deployed storage appliances. In addition, it fully automates distribution and synchronization of Internet content, including streaming media, applications, and graphics.
	•	DAFS Database Accelerator (DDA), also introduced during fiscal year 2002,.The DDA is a high-performance storage solution for Sun®SunTM SolarisTM-based- based servers running Oracle8iTM and Oracle9iTM, IBM DB2, and Sybase® database software. It is the industry’s first DAFS implementation and is an efficient, transparent storage solution for database management systems, delivering the performance of direct-attached disks with the ease of management of filer-based storage.
	•	DataFabricTMManager software.DataFabric Manager offers the ability to manage multiple NetApp filer appliances, NearStore systems, and NetCache appliances from a single administrative console, reducing administrative complexity and total cost of ownership. DataFabric Manager 2.1 and 2.2 were introduced during fiscal year 2003.
	•	FilerView®.FilerView a Web-based administration tool, allows IT administrators to fully manage filers from remote locations on the network using a Web browser.
	•	MetroCluster.MetroCluster, introduced during fiscal 2003, is a highly available business continuance solution ideal for campus and metropolitan area networks. MetroCluster enables customers to quickly and easily resume mission-critical operation at a remote site with no data loss and minimal downtime.
	•	MultiStoreTM. Many enterprises have thousands of Windows and UNIX file servers distributed throughout their networks. These servers not only represent an enormous hardware investment, they also create huge, ongoing administration costs. NetApp MultiStore reduces this major expense and complexity by enabling a single physical filer to appear as multiple virtual filers. NetApp MultiStore software enables customers to quickly and seamlessly consolidate a large number of servers onto a single filer.
	•	SnapDriveTM.SnapDrive is a management software package that enables customers to take full advantage of the simple data management capabilities of the filer appliance in block-based storage environments. SnapDrive 2.0 was introduced during fiscal year 2003.
	•	SnapLockTM.SnapLock, introduced during fiscal year 2003, is designed to meet the requirements of “data permanence” required by various government regulations — most notably SEC Reg 17a-4 for financial services broker-dealers. SnapLock provides WORM (write once, read many) attributes such as nonerasability and nonrewritability that prevent data, once it is stored on NearStore, from ever being altered or deleted.
	•	SnapManager®.SnapManager software for Microsoft Exchange 5.5 and Microsoft Exchange 2000 allows customers to perform online backup and rapid recovery of Microsoft Exchange data. SnapManager software has been enhanced in fiscal year 2003 to also provide the same benefits of online backup and rapid recovery to SQL Server and Lotus Domino environments as well.
	•	SnapMirror®.SnapMirror remote mirroring software enables automated asynchronous file system replication between sites. SnapMirror leverages the Data ONTAP Snapshot technology and enables customers to quickly recover from site disasters, easily replicate critical data, and cost-effectively deploy centralized backup architectures.
	•	SnapRestore®.SnapRestore allows rapid restoration of a file system to an earlier point in time, typically in only a few seconds. SnapRestore is based on the Data ONTAP Snapshot technology and enables customers to greatly minimize recovery time in the event of data corruption or loss.

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	•	SnapVaultTM. SnapVault provides extended and centralized disk-based backup for filers, and for heterogeneous servers with their associated storage, by periodically backing up data to, and maintaining snapshots on, another filer or NearStore system on the network. Storing multiple Snapshot copies on the SnapVault server enables enterprises to keep weeks, months, or years of backups online, improving recovery times in the event of a disaster or data corruption.
	•	SyncMirrorTM.SyncMirror, introduced during fiscal 2003, is a synchronous data replication tool for mission- critical applications in a local data center environment. The replicated data is completely up-to-date and provides a higher level of data availability by protecting data against various physical storage component failures.
	•	Virtual File ManagerTM (VFM). VFMTM, introduced during fiscal year 2003, is a file virtualization solution for managing distributed storage in Windows and multiprotocol environments. VFM provides a global namespace that dramatically simplifies the administration of large file server environments.

     Customers may purchase an annual software subscription upgrade that provides online access to all software and firmware upgrades and updates.

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Customer Service and Support

     The Network Appliance customeroffers comprehensive, global, enterprise-wide support solutions. Some enterprise customers require a comprehensive, enterprise-wide support solution, while others operate with complete self-sufficiency. Our flexible service programs help our customers maximize data availability and support organization providesmaintain a rangelow total cost of technical support services, professional consulting services, and training. We believe that providing high levels of customer service and technical support are critical to customer satisfaction and to our success.ownership.

     Network Appliance’s commitment to customer service and satisfaction is reflected in our Global Support Center (GSC) operations available from four locations: Sunnyvale, California; Raleigh, North Carolina; Hoofddorp, Netherlands; and Singapore. Our “follow the sun” strategy provides around-the-clock support regardless of where theour customer is located. All four Global Support Centers have received the Support Center Practices (SCP) certification, which is an internationally recognized standard created by the Service & Support Professionals Association (SSPA) and a consortium of IT companies to create a recognized quality certification for support centers.

     Our proactive service options provide comprehensive enterprise-wide support and ensure optimal system configuration and performance:

	•	Global Advisor and Global Advisor Plus.Network Appliance will review GSC cases and remotely monitor systems for trends or issues beyond the base AutoSupport level. With Global Advisor Plus, we provide customers with direct access to back-line engineers.
	•	System Availability Management (SAM) and System Availability Management Plus (SAM+).Network Appliance performs regular site inspections and system availability reviews. With System Availability Management Plus, customers also receive on-site, 7x24 emergency response from our Professional Services engineers.

     Network Appliance Professional Services solutions offer proactive protection. From regularly scheduled audits to performance optimization and technology refresh recommendations, we work to ensure that customers maximize information availability and minimize downtime. Our Professional Services products include services that address:

	•	Assessment of existing resources, practices, and performance;
	•	Storage solution design;
	•	Network architecture evaluation and recommendations;
	•	Data migration;
	•	Database consulting;

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	•	System moves;
	•	Installation and configuration;
	•	System availability management audits;
	•	Disaster recovery assessment, solution design, and deployment; and
	•	Data protection solutions.

     Warranty coverage for hardware is product-specific, for a term of either one year or three years, depending upon the product. Software warranty is for 90 days. The 90-day period warrants that media will be free of defects and will perform substantially as described in the end-user documentation. Warranty coverage includesincludes: access to the NetAppNOW^TM (NetApp on the Web (NOW)^TMWeb) Web site and knowledge system, AutoSupport,AutoSupport; next-business-day exchange of system components,components; 7x24 emergency phone support,support; and 7x24 Web case support for nonemergency situations.

     A customer can also purchase an extended warranty after the initial warranty coverage expires. Purchasing the extended warranty entitles the customer to access the services included in the base warranty for an additional period of time, and is typically renewed on an annual basis.

     Customers can also select from a comprehensive menu of service options to design a service program that complements their existing in-house capabilities. Customers can supplement their warranty or extended warranty packages by choosing from service options including the following service options:following:

	•	Two- or four-hour hardware delivery.Software Subscription and Support (SSP). For customers who do not purchase spares kits or cannot wait untilProvides 24x7 software phone support and entitles the next day for a replacement part,customer to all major and minor releases of Network Appliance offers two-hour or four-hour hardware delivery.software and firmware upgrades. Customers who have a current software subscription are able to download new software releases from the NOW Web site.
	•	Two-On-site service.Network Appliance provides next-business-day, 2-, or four-hour hardware replacement. For4-hour on-site service for select configurations of NetApp equipment. Provides 24x7 phone support and next-business-day, 2-hour, or 4-hour response time to system problems. After case diagnosis, a Network Appliance qualified technician will be dispatched to the customer that has a mission-critical environment or has minimalfacility to perform on-site IT capabilities, system components can be replaced within a two- or four-hour time frame. This is a 7x24 replacement service, which includes deliverydiagnostics and troubleshooting of spare system components and a trained technical service specialist on-site within two or four hours of being dispatched.

     Some enterprise customers prefer greater levels of engagement. Proactive service options provide a closer level of engagement and ensure optimal system configuration and performance.

	•	Global Advisor and Global Advisor Plus.the Network Appliance will review GSC casesequipment and remotely monitor systems for trends or issues beyondperform the base AutoSupport level. With Global Advisor Plus, we provide customers with direct access to back-line engineers.necessary hardware/software changes.
	•	System Availability ManagementHardware delivery and System Availability Management Plus.replacement.Provides 24x7 phone support and 2- or 4-hour delivery of parts after a case has been submitted to Network Appliance performs regular site inspections and system availability reviews. With System Availability Management Plus, customersdiagnosed. A customer support representative or automated AutoSupport process will dispatch the parts delivery once the case has been diagnosed as hardware replacement. Customers may also receive on-site, 7x24 emergencypurchase packages that include a response from our Professional Services engineers.
	•	NetApp Availability AssuranceTM. This service provides customers withby a service agreement for a guaranteed data availability level. The Availability Assurance solution establishes a combination of products and services to help customers accomplish their specific business goals and objectives.Network Appliance qualified technician.

     Education: Network Appliance Professional Services solutions offer proactive protection. From regularly scheduled audits to performance optimization and technology refresh recommendations, we work to ensure that

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	•	Assessment of existing resources, practices, and performance
	•	Storage solution design
	•	Network architecture evaluation and recommendations
	•	Data migration
	•	Database consulting
	•	System moves
	•	Installation and configuration
	•	System availability management audits
	•	Disaster recovery assessment, solution design, and deployment
	•	Data protection solutions

     Network Appliance also offers instructor-led, Web-based, computer-based, self-paced, or Web-based technical training,distance-learning classes, as well as custom on-site education programs and technical certification programs. Certified, experienced Network Appliance trainers teach the instructor-led programs around the world. All courses include practical lessons and feature extensive hands-on experience in installing, configuring, and troubleshooting NetApp systems.

Segment and Geographic Information

     See Note 8 to the Consolidated Financials Statements accompanying this Annual Report on Form 10-K.

Seasonality

     Although operating results have not been materially and adversely affected by seasonality in the past, because of the significant seasonal effects experienced within the industry, particularly in Europe, our future operating results could be materially adversely affected by seasonality. See “Risk Factors — Factors beyond our control could cause our quarterly results to fluctuate” and “Risks inherent in our international operations

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Sales and Marketing

     Network Appliance markets and distributes products globally in over 90 countries. In North America, we employcountries employing a multichannel distribution strategy, which focuses on product sales to end users through a direct sales force, as well as selected value-added resellers.resellers, system integrators, and original equipment manufacturers (OEM). In North America, we employ all forms of distribution previously mentioned, with a focus on direct sales to our strategic and named accounts. In Europe, we employ a mix of resellers and direct sales channels to sell to end users. In Asia, our products are primarily sold through resellers, which are supported by channel sales representatives and technical support personnel. No single customer accounted for 10% or more of net sales in fiscal 2003, 2002, 2001, or 2000.

     During fiscal year 2002, we launched Network Appliance Canada Ltd., and Network Appliance Federal Systems, Inc., to increase our sales presence.2001.

Backlog

     Network Appliance manufactures products based on a combination of specific order requirements and forecasts of our customer demands.customers’ demand. Orders are generally placed by customers on an as-needed basis. Products are typically shipped within one to four weeks following receipt of an order. In certain circumstances, customers may cancel or reschedule orders without penalty. For these reasons, “orders” may not constitute a firm backlog and may not be a meaningful indicator of revenues.

Manufacturing

     Manufacturing operations, primarily locatedwith insourced and outsourced locations in Sunnyvale, California, and Glasgow, Scotland, include materials procurement, commodity management, component engineering, test engineering, manufacturing engineering, product assembly, product assurance, quality control, and final test. We rely on many suppliers for materials, as well as several key subcontractors for the production of certain subassemblies and finished systems. Our strategy has been to develop close relationships with our suppliers, exchanging critical information and implementing joint quality-training programs. During fiscal year 2002, we expanded theWe also use of subcontractorscontract manufacturers for the production of major subassemblies primarily to reduce our lead times for shipments to Europe and to improve our manufacturing redundancy. See “Risk Factors — We rely on a limited number of suppliers” and “Risk Factors — The loss of our sole contract manufacturer.manufacturers.” This manufacturing strategy minimizes capital

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Research and Development

     During fiscal year 2002,2003, Network Appliance launched more products than in any other year in the history of the company.unified storage platforms designed to support both SAN and NAS simultaneously. We introduced a number of new systems, including the F87F825 midrange filer, the FAS940 and F810 low-end systems,FAS960 high-end filers, the F880NetCache C1200 and F880c high-end systems,C2100, and the NearStore R100,R150, which definedcontinues to define a new category of storage solution. We enhanced almost every software productcompleted the development of the new FAS250 entry-level enterprise filer, and began delivery to customers in our portfolio andthe first quarter of fiscal year 2004. We also launched new software products that significantly improve data management capabilities, provide new solutions in the areas of data protection and backup and recovery, and enable new business continuance functionality. We introduced new products to better integrate our filers into Microsoft Exchange, Microsoft SQL Server, and Oracle database environments.

     See “Risk Factors — If we are unable to develop and introduce new products and respond to technological change, or if our new products do not achieve market acceptance, our operating results could be materially adversely affected.”

Competition

     The storage and content delivery markets are intensely competitive and are characterized by rapidly changing technology.

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     In the storage market, our filerFAS appliances and data management software compete primarily against storage products and data management software from EMC Corporation, Hitachi Data Systems, Hewlett-Packard Company (including the integrated Compaq Computer Corporation), IBM Corporation, and Sun Microsystems, Inc. We have also historically encountered less-frequent competition from companies including Auspex Systems, Inc., Dell, LSI Logic Corp., MTI Corp., Procom Technology, and Procom Technology.Silicon Graphics, Inc.

     In the content delivery market, our NetCache appliances and content delivery software compete against caching appliance and content delivery software vendors including Akamai Technologies, Inc., BlueCoat Systems (formerly CacheFlow, Inc.), and Cisco Systems, Inc., and Inktomi Corp.

     Additionally a number of new, privately held companies are currently attempting to enter the storage and content delivery markets, some of which may become significant competitors in the future.

     We believe that the principal competitive factors affecting the storage and content delivery markets include product benefits such as response time, reliability, data availability, scalability, ease of use, price, multiprotocol capabilities, and customer service and support.

     See “Risk Factors — An increase in competition could materially adversely affect our operating results” and “If we are unable to develop and introduce new products and respond to technological change, or if our new products do not achieve market acceptance.”

Proprietary Rights

     We currently rely on a combination of copyright and trademark laws, trade secrets, confidentiality procedures, contractual provisions, and patents to protect our proprietary rights. We seek to protect our software, documentation, and other written materials under trade secret, copyright, and patent laws, which afford only limited protection. We have registered our Network Appliance name and logo, FAServer®, FilerView, NetApp, NetCache, SecureShare® SnapManager, SnapMirror, SnapRestore, and WAFL®WAFL as trademarks in the United States.States (“U.S.”). Other United StatesU.S. trademarks and some of the other United StatesU.S. registered trademarks are registered internationally as well. We will continue to evaluate the registration of additional trademarks as appropriate. We generally enter into confidentiality agreements with our employees, resellers, and customers. We currently have multiple United StatesU.S. and international patent applications pending and multiple United StatesU.S. patents issued. See — “Risk Factors — If we are unable to protect our intellectual property, we may be subject to increased competition that could materially adversely affect our operating results.”

Employees

     As of April 26, 2002,25, 2003, we had 2,2802,345 employees. Of the total, 1,2241,199 were in sales and marketing, 514526 in research and development, 246283 in finance and administration, and 296337 in manufacturing and customer service

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Additional Information

Our Internet address ishttp://www.netapp.com/. We make available through our Internet Web site our annual reports on Form 10-K, quarterly reports on form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) of the Securities Exchange Act of 1934 as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission.

     The SEC maintains an Internet site (http://www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The public also may read and copy these filings at the SEC’s Public Reference Room at 450 Fifth Street, N.W., Washington, D.C., 20549. Information about this Public Reference Room is available by calling 1-800-SEC-0330.

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Executive Officers

     Our executive officers and their ages as of May 25, 2002,23, 2003, are as follows:

     Daniel J. Warmenhovenjoined the Company in October 1994 as President and Chief Executive Officer, and has been a member of the Board of Directors since October 1994. In May 2000, he resigned the role of President, and currently serves as Chief Executive Officer and is a Director of Network Appliance, Inc. Prior to joining the Company, Mr. Warmenhoven served in various capacities, including President, Chief Executive Officer, and Chairman of the Board of Directors of Network Equipment Technologies, Inc., a telecommunications company, from November 1989 to January 1994. He presently serves on the Board of Directors of Redback Networks, Inc., a communications products company. Mr. Warmenhoven holds a B.S. degree in electrical engineering from Princeton University.

     Thomas F. Mendozawas appointed President in May 2000. Previously he served as our Senior Vice President, Worldwide Sales and Marketing, from February 1999 and Senior Vice President, Worldwide Sales from 1998. Prior to that he served as Vice President, North American Sales. Prior to April 1994, Mr. Mendoza served in various capacities including Vice President, Sales, at Work Group Technology,Technology; Vice President of North American Sales at Auspex Systems, Inc.,; and Vice President of Western Operations at Stratus Computer Corp. Mr. Mendoza holds a B.A. degree from the University of Notre Dame.

     Steven J. Gomojoined Network Appliance as Senior Vice President of Finance and Chief Financial Officer in August 2002. Prior to joining the Company, he served as Chief Financial Officer of Silicon Graphics, Inc., from February 1998 to August 2000, and most recently, Chief Financial Officer for Gemplus International S.A., headquartered in Luxembourg from November 2000 to April 2002. Prior to February 1998, he worked at Hewlett-Packard Company for 24 years in various positions including financial management, corporate finance, general management, and manufacturing. Mr. Gomo holds a master’s degree in Business Administration from Santa Clara University and a B.S. degree in Business Administration degree from Oregon State University.

Jeffry R. Allenwas appointed Executive Vice President, Business Operations, in August 2002. Previously he served as our Executive Vice President, Finance and Operations, infrom May 2000.2000 to August 2002. Mr. Allen served as our Chief Financial Officer, Senior Vice President, Finance and Operations, and Secretary from December 1996 to May 2001.2000. From October 1994 to December 1996, Mr. Allen served in various capacities, including Senior Vice President of Operations and Vice President and Controller of Bay Networks, Inc. Prior to October 1994, Mr. Allen held various positions at SynOptics, Inc., the latest of which was Vice President and Controller. Before joining SynOptics, Inc., he held various positions at Hewlett-Packard Company, the latest of which was Controller of the Information Networks Group. Mr. Allen holds a B.S. degree from San Diego State University.

     David Hitz,co-founder of Network Appliance, was appointed Executive Vice President, Engineering, in May 2000 and has served as our Senior Vice President, Engineering, since February 2000. Mr. Hitz has served as our Vice President since April 1992. Prior to 1992, Mr. Hitz worked as a senior engineer at Auspex Systems, Inc., and held various engineering positions at MIPS Computer. Mr. Hitz holds a B.S. degree in computer science and electrical engineering from Princeton University.

     James K. Lau,co-founder of Network Appliance, was appointed Executive Vice President and Chief Strategy Officer in May 2000. Mr. Lau has served as our Vice President, Chief Technical Officer, and Vice President of Engineering since April 1992. Prior to that, he served as Director of Software Development at

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Risk Factors

     The following risk factors and other information included in this Annual Report on Form 10-K should be carefully considered. The risks and uncertainties described below are not the only ones we face. Additional

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