Network Appliance Announces Results for Fourth Fiscal Quarter and Fiscal Year 2002 Printable Page
Sunnyvale, CA - May 14, 2002 -- Network Appliance, Inc. (NASDAQ: NTAP) today announced results for the fourth quarter and fiscal year 2002. Revenues for the fourth fiscal quarter were $204.9 million, compared to revenues of $225.8 million for the same period a year ago, and $198.3 million in the prior quarter.
Pro forma net income for the fourth quarter was $14.6 million, compared with $7.9 million for the same period a year ago. Pro forma earnings per share for the fourth quarter was $0.04 per share compared with $0.02 per share for the same period a year ago, and $0.04 per share in the prior quarter. For the fourth quarter, on an as-reported basis, net income for the quarter was $7.8 million, or $0.02 per share, compared with net income of $0.5 million, or breakeven per share for the same period in the prior year.
During the fourth quarter, NetApp discontinued its synthetic leases by purchasing the land and buildings at its Sunnyvale headquarters site for $249.8 million, converting restricted investments to property and equipment on the balance sheet.
Also during the fourth quarter, NetApp incurred a restructuring charge of $4.2 million primarily related to the closure of an engineering facility and consolidation of resources to the Sunnyvale headquarters.
Revenues for the fiscal year 2002 totaled $798.4 million, compared to revenue of $1.0 billion for fiscal year 2001.
Pro forma net income for fiscal year 2002 totaled $42.5 million, or $0.12 per share, compared to pro forma net income of $116.4 million, or $0.32 per share for the fiscal year 2001. For fiscal year 2002, on an as-reported basis, the net income for the fiscal year was $3.0 million, or $0.01 per share, compared with net income of $74.9 million, or $0.21 per share for the same period in the prior year.
"This quarter Network Appliance increased its penetration of six targeted enterprise vertical markets, and successfully built backlog levels. We also shipped NearStore™, the industry's first disk-based online backup solution for enterprise storage management," said Dan Warmenhoven, CEO of Network Appliance. "The challenging economic conditions have changed customer's IT spending patterns and caused them to look for approaches that deliver immediate return on investment. That shift benefits Network Appliance because our solutions help customers substantially drive down costs, simplify data management and increase the efficiency of network storage infrastructures."
Quarterly Highlights
Throughout the fourth quarter and this fiscal year, Network Appliance made significant progress towards achieving business, partner and product goals. The company launched more new products in the last year than at any time in the company's decade-long history. The broad customer base of Network Appliance now includes over 35,000 active systems installed in over 90 countries.
Success in the enterprise market continued in the fourth quarter, as customers chose Network Appliance for data consolidation projects, data center operations, business continuance initiatives and distributed enterprise application deployments. The energy, U.S. federal government, financial services, life sciences, major manufacturing, and telecommunications vertical markets contributed 60% of revenues in the fourth quarter.
Network Appliance customer wins included Bear Stearns, Boeing Satellite Systems, Petrobas, Raytheon, Shandong Telecom, Verizon and an award with Lockheed Martin for storage management at the National Imagery and Mapping Agency (NIMA).
The company successfully focused on enhancing business and applications relationships with Oracle, Sybase, IBM, SAP and Microsoft during the quarter. We announced a business relationship with EYT, formerly known as Ernst and Young Technologies, to offer storage-on-demand solutions. The company established a global services and support partnership with IBM Lotus, for Lotus Notes customers deploying NetApp® filers, and also became one of the first storage companies to be included in the mySAP advanced infrastructure program.
Product milestones in the fourth quarter included the NearStore family product launch, a new category of storage appliances from NetApp for online backup and archiving data. In addition, ADIC, Computer Associates, Connected, Enigma Data Systems, IXOS Software, Legato, Quantum, Spectra Logic, Storage-Tek and Veritas Software all joined with Network Appliance to announce integrated NearStore solutions for customers. The first DAFS products were shipped to customers, delivering significant performance and enhanced functions for Sybase, IBM DB2 and Oracle database environments. At the same time, record setting TPC-C benchmarks were announced with Fujitsu Siemens, Sybase and Emulex, which further validated NetApp's value proposition for DAFS customers with enterprise database architectures.
Warmenhoven continued, "We are encouraged with the customer acceptance of our technology and the direction we are headed with our product roadmap. In the coming year, Network Appliance expects to continue building upon our strong market-leading position, deliver innovative network storage solutions and focus on being a full line storage provider to Fortune 500 customers."
Pro forma results exclude the impact of in-process research and development, amortization of intangible assets, stock compensation expense, restructuring charges, write-down on equity investments and the related income tax effect.
Earnings per share represent the diluted number of shares for all periods presented.
The conference call will be broadcast live via the Internet from Network Appliance's Web site at investors.netapp.com. The conference call will also be available live in a listen-only format at (800) 240-8621 in the United States, and (303) 262-0069 outside the United States. A replay will be available by dialing (800) 405-2236, replay code 465180.
About Network Appliance
Network Appliance is a world leader in open network storage solutions for today's data-intensive enterprise. Since its inception in 1992, Network Appliance has pioneered technology, product, and partner firsts that continue to drive the evolution of storage.
"Safe Harbor" Statement under U.S. Private Securities Litigation Reform Act of 1995
The statement regarding market trends toward the network storage model is a forward-looking statement 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 these statements, readers should specifically consider various factors that could cause actual events or results to differ materially from those indicated, including without limitation; continuing decline in the general economic conditions, customer demand for products and services, customer acceptance of product architectures, increased competition, 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.
Press Contact:
Adam Trunkey
Network Appliance, Inc.
(408) 822-6314
atrunkey@netapp.com
Investor Contact:
Rod Mathews
Network Appliance, Inc.
(408) 822-6108
rmathews@netapp.com
Network Appliance, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
Apr 30, 2002 Apr 30, 2001
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 210,756 $ 271,931
Short-term investments 243,371 92,094
Accounts receivable, net 146,511 186,956
Inventories 23,849 22,504
Prepaid expenses and other assets 22,112 25,745
Deferred income taxes 32,529 36,287
Total current assets 679,128 635,517
RESTRICTED CASH 0 193,747
PROPERTY AND EQUIPMENT, net 345,195 103,238
INTANGIBLE ASSETS, net 58,615 79,510
OTHER ASSETS 25,868 24,240
$1,108,806 $1,036,252
LIABILITIES, AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 40,243 $ 53,493
Income taxes payable 17,073 21,844
Accrued compensation and related benefits 36,912 50,523
Other accrued liabilities 45,193 34,597
Deferred revenue 76,139 58,316
Total current liabilities 215,560 218,773
LONG TERM DEFERRED REVENUE 31,036 12,882
LONG TERM OBLIGATIONS 3,734 149
250,330 231,804
SHAREHOLDERS' EQUITY $ 858,476 $ 804,448
$ 1,108,806 $ 1,036,252
NETWORK APPLIANCE, INC.
PRO FORMA (1) CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
Quarter Ended Year Ended
Apr 30, 2002 Apr 30, 2001 Apr 30, 2002 Apr 30, 2001
NET SALES $ 204,879 $ 225,841 $ 798,369 $ 1,006,186
COST OF SALES 73,773 99,173 317,846 401,707
GROSS MARGIN 131,106 126,668 480,523 604,479
OPERATING EXPENSES
Sales and marketing 75,065 76,439 284,355 289,003
Research and development 30,837 34,131 116,725 120,938
General and administrative 8,781 10,288 40,182 40,238
Total operating expenses 114,683 120,858 441,262 450,179
INCOME FROM OPERATIONS 16,423 5,810 39,261 154,300
OTHER INCOME, net 2,800 6,277 16,603 23,352
INCOME BEFORE INCOME TAXES 19,223 12,087 55,864 177,652
PROVISION FOR INCOME TAXES 4,613 4,170 13,407 61,290
NET INCOME $ 14,610 $ 7,917 $ 42,457 $ 116,362
NET INCOME PER SHARE (1)
BASIC $ 0.04 $ 0.02 $ 0.13 $ 0.36
DILUTED $ 0.04 $ 0.02 $ 0.12 $ 0.32
SHARES USED IN PER SHARE CALCULATION
BASIC 334,401 327,229 331,645 320,435
DILUTED 353,841 353,884 350,498 359,824
(1) Pro forma results of operations exclude amortization of intangible assets, in-process research and development, stock compensation, restructuring charges, impairment loss on investments and the related effects on income taxes.
NETWORK APPLIANCE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Quarter Ended Year Ended
April 30, 2002 April 30, 2001 April 30, 2002 April 30, 2001
NET SALES $ 204,879 $ 225,841 $ 798,369 $ 1,006,186
COST OF SALES 73,773 99,173 317,846 401,707
GROSS MARGIN 131,106 126,668 480,523 604,479
OPERATING EXPENSES
Sales and marketing 75,065 76,439 284,355 289,003
Research and development 30,837 34,131 116,725 120,938
General and administrative 8,781 10,288 40,182 40,238
Amortization of intangible assets 5,217 5,226 20,895 11,732
In-process research and development – – – – – – 26,688
Stock compensation 1,447 4,211 7,202 6,223
Restructuring charges 4,246 – – 12,226 – –
Total operating expenses 125,593 130,295 481,585 494,822
INCOME (LOSS) FROM OPERATIONS 5,513 (3,627) (1,062) 109,657
OTHER INCOME (EXPENSE), net
Interest income and other, net 2,800 6,277 16,603 23,352
Impairment loss on
investments 0 0 (13,008) 0
Total other income, net 2,800 6,277 3,595 23,352
INCOME BEFORE INCOME TAXES 8,313 2,650 2,533 133,009
PROVISION (BENEFIT) FOR INCOME TAXES 540 2,171 (500) 58,123
NET INCOME $ 7,773 $ 479 $ 3,033 $ 74,886
NET INCOME PER SHARE
BASIC $ 0.02 $ 0.00 $ 0.01 $ 0.23
DILUTED $ 0.02 $ 0.00 $ 0.01 $ 0.21
SHARES USED IN PER SHARE CALCULATION
BASIC 334,401 327,229 331,645 320,435
DILUTED 353,841 353,884 350,498 359,824
SUPPLEMENTAL INFORMATION:
NET INCOME 7,773 479 3,033 74,886
Adjustments:
Amortization of intangible assets 5,217 5,226 20,895 11,732
In-process research and development – – – – – – 26,688
Stock compensation 1,447 4,211 7,202 6,223
Restructuring charges 4,246 – – 12,226 – –
Impairment loss on investments – – – – 13,008 – –
Income tax effect (4,073) (1,999) (13,907) (3,167)
PRO FORMA NET INCOME 14,610 7,917 42,457 116,362
DILUTED PRO FORMA NET INCOME PER SHARE 0.04 0.02 0.12 0.32
SHARES USED IN DILUTED PRO FORMA NET INCOME PER SHARE CALCULATION 353,841 353,884 350,498 359,824 |
