Exhibit 99.1
Network Appliance Announces Results
for Fourth Quarter and Fiscal Year 2005; Reports 37% Annual Revenue
Growth and 74% Increase in Q4 GAAP Net Income
SUNNYVALE, Calif.--(BUSINESS WIRE)--May 24, 2005--Network
Appliance, Inc. (Nasdaq:NTAP), the leader in advanced networked
storage solutions, today reported results for the fourth quarter and
fiscal year 2005. Revenues for the fourth fiscal quarter were $451.8
million, an increase of 34% compared to revenues of $337.0 million for
the same period a year ago and a 9.5% increase compared to $412.7
million in the prior quarter.
For the fourth fiscal quarter, GAAP net income increased 74% to
$63.4 million, or $0.16 per share(1) compared to GAAP net income of
$36.4 million, or $0.10 per share for the same period in the prior
year. Pro forma(2) net income for the fourth fiscal quarter increased
53% to $66.6 million, or $0.17 per share, compared to pro forma net
income of $43.5 million, or $0.12 per share for the same period a year
ago.
Revenues for fiscal year 2005 totaled $1.6 billion, an increase of
37% compared to revenues of $1.17 billion for fiscal year 2004.
For fiscal year 2005, GAAP net income increased 48% to $225.8
million, or $0.59 per share, compared to GAAP net income of $152.1
million, or $0.42 per share for fiscal year 2004. Pro forma net income
for fiscal year 2005 increased 63% to $237.7 million, or $0.62 per
share, compared to pro forma net income of $146.0 million, or $0.40
per share for fiscal year 2004.
"Fiscal 2005 was an outstanding year for Network Appliance. We
achieved strong gains in revenue, captured additional market share,
expanded gross margins, and broadened our offering of the most
innovative products targeted at the areas of fastest growth in
storage," said Dan Warmenhoven, CEO of Network Appliance. "Our
continued investments in our business, combined with expanded
partnerships with strategic vendors such as IBM, Microsoft, SAP, and
VERITAS, lay the foundation for providing even greater value to our
customers."
Outlook
-- Network Appliance estimates that revenue for the first quarter
of fiscal year 2006 will grow sequentially by 3% to 6%. This
projection reflects year-over-year growth rates of 30% to 33%.
-- The company expects first quarter pro forma earnings per share
to finish at $0.17 to $0.18 per share. First quarter GAAP
earnings per share are projected to finish at $0.16 to $0.17
per share.
-- For the full fiscal year, Network Appliance estimates that
revenues will finish 32% to 35% higher than fiscal year 2005.
-- Network Appliance estimates full-year pro forma earnings per
share to finish at $0.76 to $0.80 per share. GAAP earnings per
share are projected for fiscal year 2006 at $0.73 to $0.77 per
share.
Quarterly Highlights
During the fourth quarter of fiscal year 2005, Network Appliance
reinforced its leadership position through a strategic original
equipment manufacturing (OEM) relationship with IBM, increased growth
in storage software and SAN, and continued leadership in the iSCSI and
network-attached storage (NAS) markets.
This quarter, NetApp and IBM entered into an OEM agreement that
will enable IBM to sell IBM-branded solutions based on Network
Appliance(TM) unified and open network attached storage NAS and
iSCSI/IP SAN solutions, including NearStore(R) and NetApp V-Series
systems, as well as associated software offerings. For more
information, please see our April 6, 2005 press release posted on the
NetApp Web site.
Also this quarter, NetApp acquired Alacritus, a privately held
company based in Pleasanton, California. The acquisition will extend
the company's ability to provide a robust data protection solution to
NetApp customers and help accelerate customer transitions to
disk-based backup. Alacritus is best known for its Virtual Tape
Library (VTL) software product, which makes disks emulate tape to
provide high performance for large-scale backup environments without
disrupting established tape backup workflow and processes.
On the product front, NetApp announced the latest addition to its
data management and virtualization portfolio, the NetApp V-Series
family which unifies SAN, IP SAN, and NAS under a common architecture.
V-Series systems enable customers to extend the complete suite of
groundbreaking dynamic virtualization capabilities delivered in NetApp
Data ONTAP(TM) 7G software to third-party storage products from HDS,
HP, IBM, and Sun. The unique virtualization capabilities of V-Series
systems translate directly into customer cost savings and a more
intelligent, fluid approach to storage asset utilization that
accommodates shifting business demands. V-Series systems facilitate a
single, powerful, flexible management paradigm that replaces the
cumbersome management procedures of conventional arrays.
VERITAS Software Corporation and NetApp announced the availability
of new integrated disk-based data protection and data management
solutions for multi-vendor environments. The two companies integrated
the latest version of VERITAS NetBackup(TM) software with NetApp
NearStore storage systems and SnapVault software to help customers
significantly reduce their backup and restore times with disk-based
protection, while still retaining data on tape for long-term archival
and disaster recovery -- all through a common management console.
NetBackup 6.0 integration with NetApp storage provides cost savings
when using NearStore single-instance storage capabilities to eliminate
redundant heterogeneous backup data. Customers can now store hundreds
of backups online with minimal storage.
NetApp and VERITAS have also collaborated to integrate VERITAS
Enterprise Vault(TM) 6.0 software with NetApp NearStore and
SnapLock(TM) products. These integrated products offer powerful
solutions to help mutual customers cope with growing compliance and
regulatory requirements by delivering solutions that allow them to
transparently archive data and quickly retrieve specific information
as needed.
NetApp demonstrated the strongest growth in storage software
according to Gartner's report "Market Share: Storage Management
Software, Worldwide, 2004."(3) The total market for new license
revenue in 2003 to 2004 grew at a rate of 12.3%, with Network
Appliance beating the market with a growth rate of 73.5% for the same
period. NetApp showed the strongest market share growth among the top
10 vendors of storage software and has moved into the top five vendors
for marketshare in 2004. For the second year in a row, this was the
fastest growth rate among the top 10 vendors in the space and for the
first year places NetApp in the top five with a total overall market
share of 5.2%.
NetApp maintained its leadership position in both the NAS and
iSCSI storage markets for calendar year 2004 (CY2004). According to
IDC's Worldwide Quarterly Disk Storage Systems Tracker Q4 2004,(4)
NetApp demonstrated continued leadership in its core NAS market, with
a 36.9% revenue share and maintained its strong lead in the iSCSI
storage market, with a 43% revenue share for CY2004. In addition,
NetApp remained the leader in the IP storage market (NAS and iSCSI),
posting a 37.3% market share in CY2004. Also according to IDC, the
company grew revenue in the open systems networked storage market,
with 29.7% year-over-year (fourth quarter 2003 to fourth quarter 2004)
growth, versus overall market growth of 11.6%. NetApp grew revenue in
the open SAN market at 98.9%, versus the market growth of 9.2%,
year-over-year (fourth quarter 2003 to fourth quarter 2004).
On the partner front, NetApp announced support of Microsoft(R)
Windows(R) iSCSI Initiator 2.0. Support of the initiator demonstrates
the rapid integration of NetApp storage solutions with the latest
Microsoft Windows storage technologies. NetApp is among the first to
support Microsoft's latest version of its iSCSI initiator, which
underscores a continued vision by both companies to embrace the iSCSI
protocol for the benefit of enterprise customers. NetApp also unveiled
several new solution enhancements and partner offerings with Asigra,
Filenet, Maranti, Microsoft, Mobius, and Sun Microsystems to address a
variety of data concerns, including simplifying SQL Server
integration, content management, compliance, data backup and recovery,
data management, security, and other business-critical initiatives
facing enterprise customers.
Conference Call Information
-- The NetApp fourth quarter and fiscal year end results
conference call will be broadcast live via the Internet at
http://investors.netapp.com/ on Tuesday, May 24, 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 (866) 800-8652 in
the United States and (617) 614-2705 outside the United
States. The passcode for both numbers is 90731703.
-- A replay will be available for 72 hours 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 79132069.
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.
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; 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) Pro forma results for all periods presented and the
projections in the Outlook section exclude amortization of
intangible assets, in process research and development, stock
compensation, restructuring charges (recoveries), net gain on
investments and the related effects on income taxes, as well
as an income tax benefit from a nonrecurring foreign tax
ruling.
(3) Gartner Dataquest, "Market Share: Storage Management Software,
Worldwide, 2004," Carolyn DiCenzo, April 19, 2005.
(4) IDC, Worldwide Quarterly Disk Storage Systems Tracker Q4 2004,
March 2004
NetApp, NearStore and SnapVault are registered trademarks and
Network Appliance, Data ONTAP, and SnapLock are trademarks of Network
Appliance, Inc. in the U.S. and other countries. All other brands or
products are trademarks or registered trademarks of their respective
holders and should be treated as such.
Network Appliance Usage of Pro Forma Financials
The Company refers to the non-GAAP financial measures cited above
in making operating decisions because they provide meaningful
supplemental information regarding the Company's operational
performance. In addition, these non-GAAP financial measures facilitate
management's internal comparisons to the Company's historical
operating results and comparisons to competitors' operating results.
We include these non-GAAP financial measures in our earnings
announcement because we believe they are useful to investors in
allowing for greater transparency with respect to supplemental
information used by management in its financial and operational
decision making 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)
April 30, 2005 April 30, 2004
----------------- ---------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $193,542 $92,328
Short-term investments 976,423 715,637
Accounts receivable, net 296,885 193,942
Inventories 38,983 34,109
Prepaid expenses and other 32,472 29,057
Deferred income taxes 37,584 24,163
----------------- ---------------
Total current assets 1,575,889 1,089,236
PROPERTY AND EQUIPMENT, net 418,749 370,717
GOODWILL 291,816 291,816
INTANGIBLE ASSETS, net 21,448 31,718
OTHER ASSETS 64,745 93,779
----------------- ---------------
$2,372,647 $1,877,266
================= ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $83,572 $52,719
Income taxes payable 20,823 16,033
Accrued compensation
and related benefits 100,534 65,186
Other accrued liabilities 53,262 43,683
Deferred revenue 261,998 166,602
----------------- ---------------
Total current liabilities 520,189 344,223
LONG-TERM DEFERRED REVENUE 187,180 112,337
LONG-TERM OBLIGATIONS 4,474 4,858
----------------- ---------------
711,843 461,418
----------------- ---------------
STOCKHOLDERS' EQUITY 1,660,804 1,415,848
----------------- ---------------
$2,372,647 $1,877,266
================= ===============
NETWORK APPLIANCE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)
Quarter Ended Year Ended
------------------- -----------------------
April 30, April 30, April 30, April 30,
2005 2004 2005 2004
--------- --------- ----------- -----------
REVENUES:
Product revenue $401,003 $303,931 $1,430,337 $1,058,204
Service revenue 50,826 33,033 167,794 112,106
--------- --------- ----------- -----------
Total revenues 451,829 336,964 1,598,131 1,170,310
--------- --------- ----------- -----------
COST OF REVENUES:
Cost of product revenue 134,820 104,910 487,880 371,480
Cost of service revenue 40,213 28,842 135,203 94,309
--------- --------- ----------- -----------
Total cost of
revenues 175,033 133,752 623,083 465,789
--------- --------- ----------- -----------
GROSS MARGIN 276,796 203,212 975,048 704,521
--------- --------- ----------- -----------
OPERATING EXPENSES:
Sales and marketing 134,946 101,974 466,032 349,490
Research and
development 48,093 35,855 171,049 131,856
General and
administrative 22,014 15,813 76,903 54,550
In process research and
development -- 4,940 -- 4,940
Stock compensation 1,716 1,882 8,148 3,895
Restructuring charges
(recoveries) (1) 217 (271) 1,327
--------- --------- ----------- -----------
Total operating
expenses 206,768 160,681 721,861 546,058
--------- --------- ----------- -----------
INCOME FROM OPERATIONS 70,028 42,531 253,187 158,463
OTHER INCOME (EXPENSES),
net:
Interest income 8,034 3,967 24,249 13,704
Other income
(expenses), net 72 (372) (1,249) (2,460)
Net gain on
investments -- 385 41 747
--------- --------- ----------- -----------
Total other
income, net 8,106 3,980 23,041 11,991
--------- --------- ----------- -----------
INCOME BEFORE INCOME
TAXES 78,134 46,511 276,228 170,454
PROVISION FOR INCOME
TAXES 14,698 10,062 50,474 18,367
--------- --------- ----------- -----------
NET INCOME $ 63,436 $ 36,449 $ 225,754 $ 152,087
========= ========= =========== ===========
NET INCOME PER SHARE:
BASIC $ 0.17 $ 0.10 $ 0.63 $ 0.44
========= ========= =========== ===========
DILUTED $ 0.16 $ 0.10 $ 0.59 $ 0.42
========= ========= =========== ===========
SHARES USED IN PER SHARE
CALCULATION:
BASIC 366,941 356,142 361,009 346,965
========= ========= =========== ===========
DILUTED 387,733 375,140 380,412 366,195
========= ========= =========== ===========
NETWORK APPLIANCE, INC.
PRO FORMA (1) CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)
Quarter Ended Year Ended
--------------------- -----------------------
April 30, April 30, April 30, April 30,
2005 2004 2005 2004
----------- --------- ----------- -----------
REVENUES:
Product revenue $401,003 $303,931 $1,430,337 $1,058,204
Service revenue 50,826 33,033 167,794 112,106
----------- --------- ----------- -----------
Total
revenues 451,829 336,964 1,598,131 1,170,310
----------- --------- ----------- -----------
COST OF REVENUES:
Cost of product revenue 133,962 104,195 484,448 367,811
Cost of service revenue 40,213 28,842 135,203 94,309
----------- --------- ----------- -----------
Total cost
of revenues 174,175 133,037 619,651 462,120
----------- --------- ----------- -----------
GROSS MARGIN 277,654 203,927 978,480 708,190
----------- --------- ----------- -----------
OPERATING EXPENSES:
Sales and marketing 134,739 101,802 465,205 349,318
Research and
development 48,093 35,855 171,049 131,856
General and
administrative 20,746 14,756 71,830 53,493
----------- --------- ----------- -----------
Total operating
expenses 203,578 152,413 708,084 534,667
----------- --------- ----------- -----------
INCOME FROM OPERATIONS 74,076 51,514 270,396 173,523
OTHER INCOME (EXPENSES),
net 8,106 3,595 23,000 11,244
----------- --------- ----------- -----------
INCOME BEFORE INCOME
TAXES 82,182 55,109 293,396 184,767
PROVISION FOR INCOME
TAXES 15,614 11,573 55,745 38,801
----------- --------- ----------- -----------
NET INCOME $66,568 $43,536 $237,651 $145,966
=========== ========= =========== ===========
NET INCOME PER SHARE:
BASIC $0.18 $0.12 $0.66 $0.42
=========== ========= =========== ===========
DILUTED $0.17 $0.12 $0.62 $0.40
=========== ========= =========== ===========
SHARES USED IN PER
SHARE CALCULATION:
BASIC 366,941 356,142 361,009 346,965
=========== ========= =========== ===========
DILUTED 387,733 375,140 380,412 366,195
=========== ========= =========== ===========
(1) Pro forma results of operations exclude amortization of intangible
assets, in process research and development, stock compensation,
restructuring charges (recoveries), net gain on investments and
the related effects on income taxes, as well as an income tax
benefit from a non-recurring foreign tax ruling.
NETWORK APPLIANCE, INC.
RECONCILIATION OF NON-GAAP AND GAAP
IN THE CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)
Quarter Ended Year Ended
---------------------- --------------------
April 30, April 30, April 30, April 30,
2005 2004 2005 2004
----------- ---------- ---------- ---------
SUMMARY RECONCILIATION OF
NET INCOME
- -------------------------
NET INCOME $63,436 $36,449 $225,754 $152,087
Adjustments:
Amortization of
intangible assets 2,333 1,944 9,332 4,898
Stock compensation 1,716 1,882 8,148 3,895
In process research and
development -- 4,940 -- 4,940
Restructuring charges
(recoveries) (1) 217 (271) 1,327
Net gain on investments -- (385) (41) (747)
Income tax effect (916) (1,511) (5,271) (3,603)
Income tax benefit from
foreign tax ruling -- -- -- (16,831)
----------- ---------- ---------- ---------
PRO FORMA NET INCOME $66,568 $43,536 $237,651 $145,966
=========== ========== ========== =========
DILUTED PRO FORMA NET
INCOME PER SHARE $0.17 $0.12 $0.62 $0.40
=========== ========== ========== =========
SHARES USED IN DILUTED
PRO FORMA NET INCOME
PER SHARE CALCULATION: 387,733 375,140 380,412 366,195
=========== ========== ========== =========
DETAILED RECONCILIATION
OF SPECIFIC ITEMS:
- --------------------------
COST OF REVENUES $175,033 $133,752 $623,083 $465,789
Adjustment:
Amortization of
intangible assets (858) (715) (3,432) (3,669)
----------- ---------- ---------- ---------
PRO FORMA COST OF REVENUES $174,175 $133,037 $619,651 $462,120
=========== ========== ========== =========
GROSS MARGIN $276,796 $203,212 $975,048 $704,521
Adjustment:
Amortization of
intangible assets 858 715 3,432 3,669
----------- ---------- ---------- ---------
PRO FORMA GROSS MARGIN $277,654 $203,927 $978,480 $708,190
=========== ========== ========== =========
SALES AND MARKETING
EXPENSES $134,946 $101,974 $466,032 $349,490
Adjustments:
Amortization of
intangible assets (207) (172) (827) (172)
----------- ---------- ---------- ---------
PRO FORMA SALES AND
MARKETING EXPENSES $134,739 $101,802 $465,205 $349,318
=========== ========== ========== =========
GENERAL AND ADMINISTRATIVE
EXPENSES $22,014 $15,813 $76,903 $54,550
Adjustments:
Amortization of
intangible assets (1,268) (1,057) (5,073) (1,057)
----------- ---------- ---------- ---------
PRO FORMA GENERAL AND
ADMINISTRATIVE EXPENSES $20,746 $14,756 $71,830 $53,493
=========== ========== ========== =========
OPERATING EXPENSES $206,768 $160,681 $721,861 $546,058
Adjustments:
Stock compensation (1,716) (1,882) (8,148) (3,895)
In process research and
development -- (4,940) -- (4,940)
Amortization of
intangible assets (1,475) (1,229) (5,900) (1,229)
Restructuring charges
(recoveries) 1 (217) 271 (1,327)
----------- ---------- ---------- ---------
PRO FORMA OPERATING
EXPENSES $203,578 $152,413 $708,084 $534,667
=========== ========== ========== =========
INCOME FROM OPERATIONS $70,028 $42,531 $253,187 $158,463
Adjustments:
In process research and
development -- 4,940 -- 4,940
Amortization of
intangible assets 2,333 1,944 9,332 4,898
Stock compensation 1,716 1,882 8,148 3,895
Restructuring charges (1) 217 (271) 1,327
----------- ---------- ---------- ---------
PRO FORMA INCOME FROM
OPERATIONS $74,076 $51,514 $270,396 $173,523
=========== ========== ========== =========
OTHER INCOME (EXPENSES),
NET $8,106 $3,980 $23,041 $11,991
Adjustments:
Net gain on investments -- (385) (41) (747)
----------- ---------- ---------- ---------
PRO FORMA OTHER INCOME
(EXPENSES), NET $8,106 $3,595 $23,000 $11,244
=========== ========== ========== =========
INCOME BEFORE INCOME TAXES $78,134 $46,511 $276,228 $170,454
Adjustments:
Amortization of
intangible assets 2,333 1,944 9,332 4,898
In process research and
development -- 4,940 -- 4,940
Stock compensation 1,716 1,882 8,148 3,895
Restructuring charges
(recoveries) (1) 217 (271) 1,327
Net gain on investments -- (385) (41) (747)
----------- ---------- ---------- ---------
PRO FORMA INCOME BEFORE
INCOME TAXES $82,182 $55,109 $293,396 $184,767
=========== ========== ========== =========
PROVISION FOR INCOME TAXES $14,698 $10,062 $50,474 $18,367
Adjustments:
Income tax effect 916 1,511 5,271 3,603
Income tax benefit from
foreign tax ruling -- -- -- 16,831
----------- ---------- ---------- ---------
PRO FORMA PROVISION FOR
INCOME TAXES $15,614 $11,573 $55,745 $38,801
=========== ========== ========== =========
NETWORK APPLIANCE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(In thousands)
(Unaudited)
Year Ended
-----------------------------------
April 30, April 30, April 30,
2005 2004 2003
--------- ----------- -----------
Cash Flows from Operating
Activities:
Net income $225,754 $152,087 $76,472
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation 54,459 53,052 51,933
Acquired in-process research
and development -- 4,940 --
Amortization of intangible
assets 9,332 4,898 5,478
Amortization of patents 1,833 1,503 --
Stock compensation 8,148 3,895 3,642
Net gain on investments (70) (941) 1,229
Gain on sale of intangible
assets -- -- (604)
Loss on disposal of
equipment 1,990 291 1,009
Allowance for doubtful
accounts (reversal) 1,110 (259) (1,696)
Deferred income taxes 6,321 (21,446) (18,292)
Deferred rent 294 301 (62)
Changes in assets and
liabilities:
Accounts receivable (103,352) (40,078) (2,702)
Inventories (14,996) (9,975) (16,253)
Prepaid expenses and
other assets 7,708 (14,483) (3,829)
Accounts payable 30,460 11,714 (1,241)
Income taxes payable 32,541 35,000 30,263
Accrued compensation
and related benefits 33,828 22,722 (1,035)
Other accrued
liabilities 7,369 1,608 (1,112)
Deferred revenue 169,433 104,271 67,137
--------- ----------- -----------
Net cash provided by
operating
activities 472,162 309,100 190,337
--------- ----------- -----------
Cash Flows from Investing
Activities:
Purchases of short and
long-term investments (872,237) (1,050,915) (747,623)
Redemptions of short and
long-term investments 605,426 859,259 547,626
Purchases of property and
equipment (93,568) (48,675) (60,165)
Proceeds from disposal of
property and equipment -- 123 --
Proceeds from sales of
investments 347 1,113 797
Purchase of patents (895) (9,015) --
Purchases of equity securities (425) (925) (650)
Purchase of business, net
of cash acquired -- (6,841) --
--------- ----------- -----------
Net cash used in
investing
activities (361,352) (255,876) (260,015)
--------- ----------- -----------
Cash Flows from Financing
Activities:
Proceeds from sale of common
stock related to employee
stock transactions 181,920 81,548 29,248
Restricted stock traded
for taxes (1,121) -- --
Repurchases of common stock (192,902) (136,172) --
--------- ----------- -----------
Net cash provided by
(used in) financing
activities (12,103) (54,624) 29,248
--------- ----------- -----------
Effect of Exchange Rate
Changes on Cash 2,507 1,862 3,809
Net Increase (Decrease) in
Cash and Cash Equivalents 101,214 462 (36,621)
Cash and Cash Equivalents:
Beginning of period 92,328 91,866 128,487
--------- ----------- -----------
End of period $193,542 $92,328 $91,866
========= =========== ===========
Noncash Investing and
Financing Activities:
Deferred stock compensation,
net of reversals $154 $25,382 $(441)
Conversion of evaluation
inventory to fixed assets 10,122 7,892 9,340
Income tax benefit from
employee stock transactions 27,829 49,535 18,458
Common stock issued and options
assumed for acquired business -- 302,612 --
Release of milestone shares -- -- 921
Release of escrow shares -- -- 1,210
Supplemental cash flow information:
Income taxes paid 13,284 14,566 7,952
Income taxes refund 12,399 13,812 89
NETWORK APPLIANCE, INC.
RECONCILIATION OF NON GAAP GUIDANCE TO GAAP
EXPRESSED AS EARNINGS PER SHARE
FIRST QUARTER AND FISCAL YEAR 2006
(Unaudited)
Projected First Projected Annual
Quarter Revenue FY06 Revenue
Growth Range Growth Range
------------------- -----------------
3% 6% 32% 35%
-------- --------- -------- --------
ADJUSTMENTS OF SPECIFIC ITEMS
TO EARNINGS PER SHARE FOR THE
FIRST QUARTER AND FISCAL
YEAR 2006 ($):
COST OF REVENUES
Adjustment:
Amortization of intangible
assets (0.0030) (0.0030) (0.0118) (0.0118)
OPERATING EXPENSES
Adjustments:
Stock compensation (0.0055) (0.0055) (0.0231) (0.0231)
Amortization of intangible
assets (0.0038) (0.0038) (0.0046) (0.0046)
Restructuring charges -- -- -- --
TOTAL OTHER INCOME (EXPENSES),
NET
Adjustments:
Net (gain)/loss on
investments -- -- -- --
PROVISION FOR INCOME TAXES
Adjustments:
Income tax effect 0.0043 0.0044 0.0167 0.0175
Income tax benefit from
foreign tax ruling -- -- -- --
-------- --------- -------- --------
NET DECREASE IN EARNINGS
PER SHARE (0.0080) (0.0079) (0.0228) (0.0220)
======== ========= ======== ========
CONTACT: Network Appliance, Inc.
Jodi Baumann, 408-822-3974 (Press)
jodi@netapp.com
Tara Calhoun, 408-822-6909 (Investor)
tara@netapp.com
Billie Fagenstrom, 408-822-6428
billief@netapp.com