Press Release
Network Appliance Announces Revenues Up 91% and
Pro Forma Net Income Up 95% in Third Fiscal
Quarter
SUNNYVALE, Calif.--(BUSINESS WIRE)--Feb. 8, 2001--Network Appliance, Inc. (Nasdaq:NTAP - news), today
reported revenues of $288.4 million for the third fiscal quarter ended January 26, 2001, an increase of 91% compared to
revenues of $151.3 million for the same period a year ago.
Pro forma net income for the quarter increased 95% to $38.9 million, or $0.11 per share, compared to pro forma net income of
$20.0 million, or $0.06 per share for the same period a year ago. Pro forma net income was up 6% from the $36.6 million
reported in the second quarter of fiscal year 2001. Actual net income for the quarter was $34.1 million, or $0.09 per share,
compared with $19.8 million, or $0.06 per share for the same period a year ago.
Revenues for the first nine months of the current fiscal year totaled $780.3 million, an increase of 106% compared to revenue of
$379.3 million for the first nine months of the prior fiscal year. For the first nine months of the current fiscal year, pro forma net
income increased 117% to $108.4 million, or $0.30 per share, compared to pro forma net income of $49.9 million, or $0.15
per share for the first nine months of the prior fiscal year. Pro forma net income per share for the first nine months of the current
fiscal year increased approximately 105% from the first nine months of the prior fiscal year. Actual net income for the nine
months of the current fiscal year was $74.4 million, or $0.21 per share, compared with $49.3 million, or $0.14 for the same
period a year ago.
``During the quarter, Network Appliance continued to execute on its business strategy to fundamentally change the way
companies architect their enterprise storage and content delivery systems,'' said Dan Warmenhoven, CEO of Network
Appliance. ``Storage is a strategic IT investment and remains a priority for today's leading corporations. We are clearly
encouraged by the enterprise penetration of our new high-end systems.''
Quarterly Highlights
The company completed the acquisition of WebManage in November, enhancing NetApp's overall center-to-edge solutions
and product offerings.
During the quarter, Network Appliance was again ranked number one in the fast growing network attached storage (NAS)
market by International Data Corporation. Network Appliance has been ranked by IDC as the market share leader in NAS
since 1998.
Strategic enterprise account wins this quarter included: Airbus Industrie, BT Ignite, Deutsche Telekom, Oracle, Texas
Instruments and Vignette. The Powered By Network Appliance initiative grew during the quarter and today 143 companies
have joined the program to utilize NetApp® solutions for their e-business.
Product and Technology Highlights
Network Appliance(TM) filers and NetCache(TM) products both set industry milestones during the quarter. The F800 scalable
storage network posted 120,206 SPECsfs97v3 ops per second with an overall response time of 1.87 milliseconds, as
measured by the Standard Performance Evaluation Corporation (SPEC) SFS97 benchmark.
The NetCache C6100 demonstrated its capability to deliver 27,000 streams of video from a single appliance without a loss in
frame rate or packet loss, based on streaming media performance tests conducted by eTesting Labs.
During the quarter, NetApp added support for IBM's DB2 Universal Database®, enhancing the scope of leading commercial
systems and database application environments supported by Network Appliance.
NetApp also completed evaluation tests that establish NetApp filers as a storage platform for IBM OS/390 deployments,
adding mainframe connectivity to Network Appliance systems. In addition, NetApp launched ApplianceWatch(TM) for Tivoli
Enterprise, a new systems management software tool for NetApp filers and NetCache appliances.
And, Network Appliance became the first company to have NAS systems included on the Microsoft® hardware compatibility
list (HCL), opening up new opportunities in the Windows NT external storage market.
Pro forma results exclude the impact of amortization of intangible assets, acquired in-process research and development
expenses and stock compensation expense.
Diluted earnings per share and the number of shares used in the per share calculation of all periods presented reflect the
two-for-one stock splits that were effective December 20, 1999 and March 22, 2000.
About Network Appliance
Network Appliance, Inc., a leader in network storage and content delivery, has been providing data access solutions since
1992, and is a member of both the S&P 500 and NASDAQ 100 index. Major corporations and service providers, including
Lycos, Yahoo!, Citicorp Securities, Siemens, Lockheed, Cisco, Motorola, and Texas Instruments have deployed NetApp
solutions.
The company pioneered the concept of the ``network appliance,'' an extension of the industry trend toward dedicated,
specialized products that perform a single function. NetApp storage and content delivery platforms (filers and NetCache
appliances) are coupled with powerful content distribution and reporting software. This end-to-end solution offers seamless data
management from the back-end data center to the edge of the network quickly, simply, and reliably. The Network Appliance
product portfolio utilizes the company's innovative data access software, known as the Data ONTAP(TM) operating system, as
well as standards-compliant hardware. It also offers multiprotocol support and transparent integration for UNIX® and
Windows® environments.
Note to Editors: NetApp is a registered trademark in the U.S. and Network Appliance, Data ONTAP, NetCache and
ApplianceWatch 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.
``Safe Harbor'' Statement under U.S. Private Securities Litigation Reform Act of 1995
This press release may contain forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform
Act of 1995. Forward-looking statements include any statement regarding future events or the future financial performance of
Network Appliance Inc. that involves risks or uncertainties. In evaluating such statements, readers should specifically consider
various factors that could cause actual events or results to differ materially from those indicated, including without limitation;
general economic trends, seasonality of product sales, dependence on new product offerings, customer demand for products
and services, rapid changes in technology, ability to attract and retain qualified technical and sales personnel, increased
competition, reliance upon limited supply base, inherent risk in the international operations and other important factors as
described in Network Appliance, Inc. reports and documents filed from time to time with the Securities and Exchange
Commission, including its mostly recently submitted 10-K and 10-Q.
-0-
NETWORK APPLIANCE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
January 26, April 30,
2001 2000
---------- ----------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 214,384 $ 279,014
Short-term investments 122,377 74,477
Accounts receivable, net 222,555 108,902
Inventories 37,117 20,434
Prepaid expenses and other 22,842 27,958
Deferred income taxes 30,798 22,215
---------- ----------
Total current assets 650,073 533,000
RESTRICTED CASH 192,052 --
PROPERTY AND EQUIPMENT, net 96,351 47,949
INTANGIBLE ASSETS, net 84,736 389
OTHER ASSETS 15,656 10,895
---------- ----------
$1,038,868 $ 592,233
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 80,725 $ 34,061
Accrued compensation and
related benefits 58,189 34,902
Other accrued liabilities 41,620 21,288
Deferred revenue 62,944 23,182
---------- ----------
Total current liabilities 243,478 113,433
---------- ----------
NON-CURRENT LIABILITIES 6,123 54
---------- ----------
SHAREHOLDERS' EQUITY 789,267 478,746
---------- ----------
$1,038,868 $ 592,233
========== ==========
NETWORK APPLIANCE, INC.
PRO FORMA (1) CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands except per share data)
(Unaudited)
Quarter Ended Nine Months Ended
------------- -----------------
January 26, January 28, January 26, January 28,
2001 2000 2001 2000
-------- -------- -------- --------
NET SALES $288,409 $151,290 $780,345 $379,281
COST OF SALES 113,763 61,415 302,534 155,471
-------- -------- -------- --------
GROSS MARGIN 174,646 89,875 477,811 223,810
-------- -------- -------- --------
OPERATING EXPENSES:
Sales and marketing 76,510 40,042 212,564 99,192
Research and development 34,966 16,361 86,807 40,956
General and
administrative 10,922 5,352 29,951 13,436
-------- -------- -------- --------
Total operating
expenses 122,398 61,755 329,322 153,584
-------- -------- -------- --------
INCOME FROM OPERATIONS 52,248 28,120 148,489 70,226
OTHER INCOME, net 7,184 2,909 17,075 7,153
-------- -------- -------- --------
INCOME BEFORE INCOME
TAXES 59,432 31,029 165,564 77,379
PROVISION FOR INCOME
TAXES 20,504 11,015 57,120 27,470
-------- -------- -------- --------
NET INCOME $ 38,928 $ 20,014 $108,444 $ 49,909
======== ======== ======== ========
NET INCOME PER SHARE (1):
BASIC $ 0.12 $ 0.07 $ 0.34 $ 0.17
======== ======== ======== ========
DILUTED $ 0.11 $ 0.06 $ 0.30 $ 0.15
======== ======== ======== ========
SHARES USED IN PER SHARE
CALCULATION (2):
BASIC 322,727 300,922 318,161 296,588
======== ======== ======== ========
DILUTED 361,599 350,336 361,804 340,632
======== ======== ======== ========
(1) Net Income excludes in-process research and development,
amortization of intangible assets and stock compensation expense.
(2) Share and per share amounts have been adjusted to reflect the
two-for-one stock splits which were effective December 20, 1999
and March 22, 2000.
NETWORK APPLIANCE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands except per share data)
(Unaudited)
Quarter Ended Nine Months Ended
------------- -----------------
January 26, January 28, January 26, January 28,
2001 2000 2001 2000
-------- -------- -------- --------
NET SALES $288,409 $151,290 $780,345 $379,281
COST OF SALES 113,763 61,415 302,534 155,471
-------- -------- -------- --------
GROSS MARGIN 174,646 89,875 477,811 223,810
-------- -------- -------- --------
OPERATING EXPENSES:
Sales and marketing 76,510 40,042 212,564 99,192
Research and development 34,966 16,361 86,807 40,956
General and
administrative 10,922 5,352 29,951 13,436
Amortization of
intangible assets 4,567 50 6,506 150
In-process research and
development -- -- 26,688 --
Stock Compensation 1,140 283 2,012 773
-------- -------- -------- --------
Total operating
expenses 128,105 62,088 364,528 154,507
-------- -------- -------- --------
INCOME FROM OPERATIONS 46,541 27,787 113,283 69,303
OTHER INCOME, net 7,184 2,909 17,075 7,153
-------- -------- -------- --------
INCOME BEFORE INCOME
TAXES 53,725 30,696 130,358 76,456
PROVISION FOR INCOME
TAXES 19,654 10,897 55,952 27,142
-------- -------- -------- --------
NET INCOME $ 34,071 $ 19,799 $ 74,406 $ 49,314
======== ======== ======== ========
NET INCOME PER SHARE (1):
BASIC $ 0.11 $ 0.07 $ 0.23 $ 0.17
======== ======== ======== ========
DILUTED $ 0.09 $ 0.06 $ 0.21 $ 0.14
======== ======== ======== ========
SHARES USED IN PER SHARE
CALCULATION (1):
BASIC 322,727 300,922 318,161 296,588
======== ======== ======== ========
DILUTED 361,599 350,336 361,804 340,632
======== ======== ======== ========
(1) Share and per share amounts have been adjusted to reflect the
two-for-one stock splits which were effective December 20, 1999
and March 22, 2000.
Contact:
Network Appliance, Inc.
Adam Trunkey, 408/822-6314
atrunkey@netapp.com
Billie Fagenstrom, 408/822-6428 (Investor Contact)
billief@netapp.com |
