Attached files
| file | filename |
|---|---|
| 8-K - NETAPP, INC. 8-K - NetApp, Inc. | netapp8k.htm |
| EX-99.1 - EXHIBIT 99.1 - NetApp, Inc. | exh99_1.htm |
Exhibit
99.2
|
NetApp
Q3 FY10 Earnings Results
Supplemental
Commentary
February
17, 2010
|
Beginning
with today’s earnings results announcement, NetApp will be publishing written
commentary, which has historically been provided during our live conference
call, concurrently with our earnings press release. This information will be
posted to our investor website and filed in an 8-K with the SEC. The intention
of this change in our reporting format is to provide the investment community
with additional time to review and analyze more information prior to
commencement of the live call. Please note that these prepared remarks will not
be read during the call. The live call will focus on strategic commentary from
the CEO and CFO, followed by Q&A.
Safe
Harbor Statement
These
prepared remarks contain forward-looking statements and projections that involve
risk and uncertainty, including statements regarding
our financial performance for the fourth quarter of fiscal
2010. Actual results may differ materially from our statements
or projections. Factors that could cause actual results to differ from our
projections include, but are not limited to, customer demand for our products
and services; our ability to increase revenue and manage our operating costs;
increased competition risks associated with the anticipated growth in the
networked storage market; our ability to deliver new product architectures and
enterprise service offerings; our ability to design products and services that
compete effectively from a price and performance perspective; our reliance on a
limited number of suppliers; and our ability to accurately forecast demand for
our products. Other equally important factors are detailed in our accompanying
press release as well as our 10-K and 10-Q reports on file with the SEC and also
available on our website, all of which are incorporated by reference into
today’s commentary.
All
numbers stated herein are GAAP unless stated otherwise. To see the reconciling
items between non-GAAP and GAAP, refer to the table at the end of this document,
as well as in our press release and on our website.
Q3 Fiscal
2010 Overview
NetApp
achieved several records in the third quarter, including record revenue, record
number of systems shipped, record performance from nearly every geography,
record income from operations and record net income per share. Our storage
efficiency solutions are driving significant demand as customers begin to
refresh and re-architect their data centers. Our record performance was achieved
despite supply constraints which extended lead times throughout the
quarter.
Revenue
|
Q3
FY10 Revenue
|
%
of Q3 FY10 Revenue
|
Year/Year
Growth
|
|
|
Product
Revenue
|
$619M
|
61%
|
17%
|
|
S/W
Entitlements & Maintenance
|
$171M
|
17%
|
9%
|
|
Services
|
$222M
|
22%
|
17%
|
|
Total
Revenue1
|
$1,012M
|
100%
|
16%
|
Revenue
for the third quarter was $1.01 billion, up 11% sequentially and up 16% over
non-GAAP revenue of $874 million in Q3 of last year. Foreign currency effects
improved sequential results by 0.5 percentage points, and increased our year
over year growth rate by about two percentage points.
Product
revenue grew 18% sequentially and was up 17% year over year to $619 million.
Products increased in the mix to 61% of total revenue. As we discussed on last
quarter’s call, we will no longer break out the mix of add-on software due to
the increase in our bundled product offerings which mask the distinction between
software and systems. It is no longer a useful indicator, given that the metric
had been trending at the lowest levels in several years, yet product margins
have been at or near all-time highs. The best proxy for the impact of software
on our business going forward is our product gross margins.
Revenue
from software entitlements and maintenance (E&M), which is a deferred
revenue element, was $171 million, or 17% of total revenue. Software E&M was
up 1% sequentially and up 9% year over year. The growth in software E&M
revenue will tend to track product revenue growth, albeit on a lagged
basis.
Service
revenue was $222 million and 22% of total revenue, up 3% sequentially and up 17%
over Q3 of last year. Service revenues are comprised mainly of hardware
maintenance support contracts and professional services.
|
·
|
Revenue
from hardware maintenance support contracts is also a deferred revenue
element, and comprised approximately 64% of our services revenue this
quarter. In Q3 it increased 4% sequentially and 23% year over
year.
|
|
·
|
The
professional services component of service revenue increased 3%
sequentially and was up 6% year over
year.
|
Gross
Margin
|
Q3
FY10
|
Q2
FY10
|
Q3
FY09
|
|
|
Non-GAAP
Gross Margin
|
64.2%
|
67.5%
|
60.7%
|
|
Product
|
59.8%
|
63.0%
|
53.5%
|
|
S/W
Entitlements & Maintenance
|
98.3%
|
98.2%
|
98.5%
|
|
Services
|
50.4%
|
54.4%
|
49.6%
|
On a
non-GAAP basis, consolidated gross margin was a 64.2% of revenue this quarter,
in line with the forecast we provided at the end of the second quarter. This was
about three percentage points lower than Q2—which we stated was unsustainably
high. The decline to a more sustainable level this quarter was due to the return
to more typical product margins and a modestly lower contribution from deferred
elements coming off of the balance sheet. These deferred revenue elements carry
a very high margin.
As
expected, non-GAAP product gross margin was also down just over three percentage
points sequentially to 59.8%. We did not expect last quarter’s unusually
favorable configuration mix to continue into Q3, and we passed
along cost savings to customers during the quarter in order to
stimulate share gains.
Non-GAAP
service margin pulled back to 50.4% due to higher than expected commissions for
professional services.
Non-GAAP
Software E&M gross margins were up just slightly to 98.3%.
Operating
Expenses
|
Q3
FY10
|
Q2
FY10
|
Q3
FY09
|
|
|
Non-GAAP
Operating Expenses
|
$479M
|
$459M
|
$424M
|
Non-GAAP
operating expenses increased 4% sequentially and were up 13% year-over-year,
totaling $479 million or 47% of revenue. These expense levels were approximately
6% above the midpoint of our forecast for the third quarter, primarily due to
higher than planned accruals for commissions and incentive compensation related
to outperformance on both the revenue and operating income lines. We also began
selectively hiring in sales and engineering. Headcount at the end of
the quarter was 8,174 – a net increase of 69 people.
On a GAAP
basis, Q3 operating expenses include $32 million of stock compensation expense
compared to $30 million in Q2, as well as amortization of intangible assets
associated with prior acquisitions and the current period impact of prior
restructuring actions.
Income
from Operations & Other Income
|
Q3
FY10
|
Q2
FY10
|
Q3
FY09
|
|
|
Non-GAAP
Income from Operations
|
$171M
|
$155M
|
$107M
|
|
Non-GAAP
Other Income (Expense)
|
$0.33M
|
$0M
|
$4M
|
|
Non-GAAP
Income Before Income Taxes
|
$171M
|
$155M
|
$111M
|
|
Non-GAAP
Provision for Income Taxes
|
16.0%
|
16.0%
|
16.0%
|
|
Non-GAAP
Net Income
|
$144M
|
$130M
|
$93M
|
|
Non-GAAP
Net Income per Share
|
$0.40
|
$0.37
|
$0.28
|
Non-GAAP
income from operations was up 10% sequentially and 60% year over year to $171
million, or 16.9% of revenue.
Non-GAAP
other income and expense was $0.33 million due to continued low interest rate
levels. GAAP other income / (expense) also includes $12.5 million of
non-cash interest expense associated with our convertible debt.
Non-GAAP
income before income taxes was $171 million, or 16.9% of revenue. Our non-GAAP
provision for income tax was $27 million and our effective tax rate remains at
16%. With the increase in stock price weighing heavily on the treasury method of
accounting for shares outstanding again this quarter, NetApp’s diluted share
count increased sequentially by 10.6 million shares to 360 million shares
outstanding.
Non-GAAP
net income totaled $144 million, or $0.40 cents per share, a new record for
NetApp.
Select
Balance Sheet Items
|
Q3
FY10
|
Q2
FY10
|
Q3
FY09
|
|
|
Cash
& Short Term Investments
|
$3.2B
|
$3.0B
|
$2.5B
|
|
Deferred
Revenue
|
$1.8B
|
$1.7B
|
$1.6B
|
|
DSO
(days)2
|
41
|
32
|
36
|
|
Inventory
Turns3
|
20.2
|
19.6
|
16.8
|
Q3 cash
and short term investments totaled $3.2 billion. At the end of Q3, our cash and
short term investments domiciled in the U.S. were 53% of this
balance.
The total
deferred revenue balance of $1.8 billion reflects a sequential increase of
approximately $73 million this quarter and a 10% increase in the balance year
over year.
With
respect to DSO, accounts receivable days sales outstanding were 41 days this
quarter, compared to an unusually low 32 days last quarter and 36 days in Q3
last year. Our current DSO of 41 days represents a more sustainable
level.
Inventory
turns were approximately 20 turns, up slightly from Q2, and up from 17 turns in
Q3 of last year.
Select
Cash Flow Statement Items
|
Q3
FY10
|
Q2
FY10
|
Q3
FY09
|
|
|
Net
Cash Provided by Operating Activities
|
$195M
|
$267M
|
$236M
|
|
Purchases
of Property and Equipment
|
$50M
|
$23M
|
$51M
|
|
Free
Cash Flow4
|
$145M
|
$245M
|
$185M
|
|
Free
Cash Flow as % of Revenue5
|
14%
|
27%
|
21%
|
Net cash
provided by operating activities was $195 million, down 27% sequentially,
primarily due to the increase in accounts receivable this quarter. Capital
expenditures were about $50 million, up from $23 million last quarter, due to
the purchase of land in India.
Free cash
flow totaled $145 million, down 22% from Q3 last year. Expressed as a percent of
revenue, Q3 free cash flow was 14% of revenue, below our targeted range of 17% -
22% as a result of a large increase in accounts receivable from the record low
DSO level in Q2. Accounts receivables should remain relatively stable
going forward, so free cash flow as a percent of revenue should return to our
targeted range in Q4.
Q4 FY10
Outlook
|
Q4
FY10 Outlook
|
|
|
Revenue
|
$1.07B
– $1.10B
|
|
Share
Count
|
Approximately
366M
|
|
Non-GAAP
Net Income per Share
|
$0.42
- $0.44
|
|
GAAP
Net Income per Share
|
$0.31
- $0.33
|
This
forecast is based on current business expectations and current market
conditions, and reflects our non-GAAP presentation.
Other
Business Metrics
4 Free
cash flow is defined as cash provided by operating activities less purchases of
property and equipment
Geographic
Mix
|
|
%
of Q3 FY10 Revenue
|
Q3
FY10 Revenue
|
Year/Year
Growth6
|
|
Americas
|
57%
|
$576M
|
26%
|
|
U.S.
Public Sector
|
14%
|
||
|
EMEA
|
33%
|
$337M
|
7%
|
|
AsiaPacific
|
10%
|
$99M
|
-3%
|
The
Americas contributed 57% of total revenue, Americas revenue was up 16%
sequentially and up 26% year over year. Included in the Americas, the US Public
Sector Team delivered 14% of total revenue, despite fiscal Q3 usually being a
seasonally slower period for government purchases.
EMEA was
up 5% sequentially and up 7% year over year to 33% of total revenue. AsiaPacific
contributed 10% of revenue this quarter, up 9% sequentially and down 3% year
over year.
Channel
Mix
Direct
revenue was 30% of total revenue, up 4% sequentially and up 15% year over year.
Indirect channel contribution was 70%, up 15% sequentially and up 16% over Q3
last year. Within the indirect channel, Arrow grew to a record 16% of total
revenue and Avnet contributed a record 12% of revenue. Revenue from the IBM OEM
partnership was a record high, accounting for nearly 6% of total revenue and up
9% over Q3 last year.
Large
Customer Mix
The top
100 accounts were somewhat more balanced in the mix this quarter, accounting for
about 42% of total revenue. Within that number was a seasonal decline in
government business and an increase in contribution from commercial
accounts.
Protocol
Trends
|
Q3
FY09
|
Q4
FY09
|
Q1
FY10
|
Q2
FY10
|
Q3
FY10
|
|
|
NAS
|
50%
|
47%
|
51%
|
48%
|
42%
|
|
SAN
|
14%
|
14%
|
15%
|
19%
|
15%
|
|
Unified
|
36%
|
39%
|
35%
|
34%
|
42%
|
Of
configured system product revenue, this was our first quarter in which unified
systems—systems sold with both a SAN and a NAS protocol—exceeded that of
NAS-only systems. 15% of our configured system product revenue included a SAN
protocol this quarter, just over 42% was unified, and about 42% was NAS only. We
shipped a record number of NFS and CIFS licenses in Q3, and we are now shipping
FCoE targets in production quantities.
According
to our system-reported data, in virtualized server environments we are now
consistently seeing about 42% of NetApp machines are running NAS and 58% are
running SAN. We are also now beginning to see HyperV environments in the
customer base.
Platform
Trends
Total
systems shipped grew dramatically this quarter, up 54% sequentially and up 34%
year over year. While unit sales of all platform levels grew both sequentially
and year over year, the step-function growth came from new mid-sized enterprise
(MSE) business driving huge demand for our low end systems through the channel.
Sales of high-end units were also up again this quarter, growing 29%
sequentially and 16% year over year, and mid-range units shipped also grew by
double digits both sequentially and year over year. Low end units were up 83%
sequentially and up 48% year over year.
Our
V-Series platform, which is our controller and data management software without
any disks, delivered yet another record revenue quarter, and accounted for
almost 20% of the net new Storage5000 accounts added during the period. This
product is designed to provide NetApp data management and storage efficiency in
front of large footprints of legacy SAN products offered by our competitors. It
allows customers to experience NetApp functionality without a big initial
investment, and it can pay for itself almost immediately with the space
reclaimed when our space efficiency technologies are enabled. In fact, we
guarantee a 35% capacity savings when deployed in front of other vendors’
arrays. Units of V-Series shipped were up 68% year over year, and the fastest
growing segments of this business are selling into EMC and HP midrange
environments.
Capacity
Trends
|
(in
Petabytes)
|
Q3FY09
|
Q4
FY09
|
Q1
FY10
|
Q2
FY10
|
Q3
FY10
|
|
Fibre
Channel
|
70
|
72
|
69
|
79
|
88
|
|
ATA
|
149
|
165
|
175
|
173
|
209
|
|
SAS
|
9
|
8
|
7
|
8
|
29
|
|
Total
|
229
|
245
|
250
|
260
|
326
|
Total
petabytes shipped grew 25% sequentially and 42% year over year to 326 petabytes.
The mix of drive capacity also changed, with Fibre Channel dropping to 27% of
total capacity shipped, ATA declining modestly to 64% of capacity shipped, and
SAS tripling to 9% of capacity shipped this quarter.
Additional
Information
For more
detailed information about our solutions, corporate strategy and our
go-to-market initiatives, you can find video replays of our October 8th
analyst day presentations on our IR website at
investors.netapp.com.
NetApp
Usage of Non-GAAP Financials
The
Company refers to the non-GAAP financial measures cited above in making
operating decisions because they provide meaningful supplemental information
regarding the Company's operational performance. Non-GAAP results of operations
exclude the GSA settlement, amortization of intangible assets, stock-based
compensation expenses, merger termination proceeds (net of related
expenses), restructuring and other charges, asset impairment, noncash interest
expense associated with our convertible debt, net loss or gain on investments,
and our GAAP tax provision, including discrete items, but includes a non-GAAP
tax provision based upon our projected annual non-GAAP effective tax rate. We
have excluded these items in order to enhance investors’ understanding of our
ongoing operations. The use of these non-GAAP financial measures has
material limitations because they should not be used to evaluate our
company without reference to their corresponding GAAP financial measures. As
such, we compensate for these material limitations by using these non-GAAP
financial measures in conjunction with GAAP financial
measures.
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.
Non-GAAP
to GAAP Reconciliation
|
NETAPP,
INC.
|
||||||||||||
|
RECONCILIATION
OF NON-GAAP AND GAAP
|
||||||||||||
|
IN
THE CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
||||||||||||
|
(In
thousands, except net income per share amounts)
|
||||||||||||
|
(Unaudited)
|
||||||||||||
|
Three
Months Ended
|
||||||||||||
|
January
29, 2010
|
January
23, 2009
|
October
30, 2009
|
||||||||||
|
SUMMARY RECONCILIATION OF NET
INCOME
|
||||||||||||
|
NET
INCOME (LOSS)
|
$ | 107,880 | $ | (81,623 | ) | $ | 95,677 | |||||
|
Adjustments:
|
||||||||||||
|
GSA settlement
|
- | 128,000 | - | |||||||||
|
Amortization
of intangible assets
|
4,901 | 7,214 | 5,122 | |||||||||
|
Stock-based
compensation expenses
|
36,658 | 34,430 | 33,245 | |||||||||
|
Asset
impairment
|
- | 9,431 | - | |||||||||
|
Restructuring
and other charges
|
68 | 18,955 | 1,179 | |||||||||
|
Merger
termination proceeds, net
|
- | - | - | |||||||||
|
Non-cash
interest expense
|
12,464 | 10,436 | 12,211 | |||||||||
|
(Gain)
loss on investments, net
|
(733 | ) | 1,691 | (2,805 | ) | |||||||
|
Discrete
GAAP tax provision items
|
572 | (3,880 | ) | (645 | ) | |||||||
|
Income
tax effect
|
(17,955 | ) | (31,197 | ) | (13,848 | ) | ||||||
|
NON-GAAP
NET INCOME
|
$ | 143,855 | $ | 93,457 | $ | 130,136 | ||||||
|
DETAILED RECONCILIATION OF SPECIFIC
ITEMS:
|
||||||||||||
|
TOTAL
REVENUES
|
$ | 1,011,650 | $ | 746,343 | $ | 910,027 | ||||||
|
Adjustment:
|
||||||||||||
|
GSA
settlement
|
- | 128,000 | - | |||||||||
|
NON-GAAP
TOTAL REVENUES
|
$ | 1,011,650 | $ | 874,343 | $ | 910,027 | ||||||
|
COST
OF REVENUES
|
$ | 370,110 | $ | 353,127 | $ | 303,346 | ||||||
|
Adjustment:
|
||||||||||||
|
Amortization
of intangible assets
|
(4,053 | ) | (6,161 | ) | (4,273 | ) | ||||||
|
Stock-based
compensation expenses
|
(4,334 | ) | (3,664 | ) | (3,452 | ) | ||||||
|
NON-GAAP
COST OF REVENUES
|
$ | 361,723 | $ | 343,302 | $ | 295,621 | ||||||
|
COST
OF PRODUCT REVENUES
|
$ | 253,907 | $ | 252,327 | $ | 199,134 | ||||||
|
Adjustment:
|
||||||||||||
|
Amortization
of intangible assets
|
(4,053 | ) | (6,161 | ) | (4,273 | ) | ||||||
|
Stock-based
compensation expenses
|
(1,017 | ) | (775 | ) | (510 | ) | ||||||
|
NON-GAAP
COST OF PRODUCT REVENUES
|
$ | 248,837 | $ | 245,391 | $ | 194,351 | ||||||
|
COST
OF SERVICE REVENUES
|
$ | 113,259 | $ | 98,480 | $ | 101,106 | ||||||
|
Adjustment:
|
||||||||||||
|
Stock-based
compensation expenses
|
(3,317 | ) | (2,889 | ) | (2,942 | ) | ||||||
|
NON-GAAP
COST OF SERVICE REVENUES
|
$ | 109,942 | $ | 95,591 | $ | 98,164 | ||||||
|
GROSS
MARGIN
|
$ | 641,540 | $ | 393,216 | $ | 606,681 | ||||||
|
Adjustment:
|
||||||||||||
|
GSA
settlement
|
- | 128,000 | 0 | |||||||||
|
Amortization
of intangible assets
|
4,053 | 6,161 | 4,273 | |||||||||
|
Stock-based
compensation expenses
|
4,334 | 3,664 | 3,452 | |||||||||
|
NON-GAAP
GROSS MARGIN
|
$ | 649,927 | $ | 531,041 | $ | 614,406 | ||||||
|
SALES
AND MARKETING EXPENSES
|
$ | 324,768 | $ | 291,634 | $ | 300,835 | ||||||
|
Adjustments:
|
||||||||||||
|
Amortization
of intangible assets
|
(848 | ) | (1,053 | ) | (849 | ) | ||||||
|
Stock-based
compensation expenses
|
(17,175 | ) | (15,787 | ) | (15,690 | ) | ||||||
|
Asset
impairment
|
- | (9,431 | ) | - | ||||||||
|
NON-GAAP
SALES AND MARKETING EXPENSES
|
$ | 306,745 | $ | 265,363 | $ | 284,296 | ||||||
|
RESEARCH
AND DEVELOPMENT EXPENSES
|
$ | 129,329 | $ | 122,662 | $ | 132,354 | ||||||
|
Adjustments:
|
||||||||||||
|
Stock-based
compensation expenses
|
(8,906 | ) | (8,982 | ) | (7,909 | ) | ||||||
|
NON-GAAP
RESEARCH AND DEVELOPMENT EXPENSES
|
$ | 120,423 | $ | 113,680 | $ | 124,445 | ||||||
|
GENERAL
AND ADMINISTRATIVE EXPENSES
|
$ | 58,079 | $ | 51,048 | $ | 56,939 | ||||||
|
Adjustments:
|
||||||||||||
|
Stock-based
compensation expenses
|
(6,243 | ) | (5,997 | ) | (6,194 | ) | ||||||
|
NON-GAAP
GENERAL AND ADMINISTRATIVE EXPENSES
|
$ | 51,836 | $ | 45,051 | $ | 50,745 | ||||||
|
OPERATING
EXPENSES
|
$ | 512,244 | $ | 484,299 | $ | 491,307 | ||||||
|
Adjustments:
|
||||||||||||
|
Amortization
of intangible assets
|
(848 | ) | (1,053 | ) | (849 | ) | ||||||
|
Stock-based
compensation expenses
|
(32,324 | ) | (30,766 | ) | (29,793 | ) | ||||||
|
Asset
impairment
|
- | (9,431 | ) | |||||||||
|
Restructuring
and other charges
|
(68 | ) | (18,955 | ) | (1,179 | ) | ||||||
|
Merger
termination proceeds, net
|
- | - | - | |||||||||
|
NON-GAAP
OPERATING EXPENSES
|
$ | 479,004 | $ | 424,094 | $ | 459,486 | ||||||
|
INCOME
(LOSS) FROM OPERATIONS
|
$ | 129,296 | $ | (91,083 | ) | $ | 115,374 | |||||
|
Adjustments:
|
||||||||||||
|
GSA
settlement
|
- | 128,000 | - | |||||||||
|
Amortization
of intangible assets
|
4,901 | 7,214 | 5,122 | |||||||||
|
Stock-based
compensation expenses
|
36,658 | 34,430 | 33,245 | |||||||||
|
Asset
impairment
|
- | 9,431 | - | |||||||||
|
Restructuring
and other charges
|
68 | 18,955 | 1,179 | |||||||||
|
Merger
termination proceeds, net
|
- | - | - | |||||||||
|
NON-GAAP
INCOME FROM OPERATIONS
|
$ | 170,923 | $ | 106,947 | $ | 154,920 | ||||||
|
TOTAL
OTHER INCOME (EXPENSES), NET
|
$ | (11,398 | ) | $ | (7,815 | ) | $ | (9,402 | ) | |||
|
Adjustments:
|
||||||||||||
|
Non-cash
interest expense
|
12,464 | 10,436 | 12,211 | |||||||||
|
(Gain)
loss on investments, net
|
(733 | ) | 1,691 | (2,805 | ) | |||||||
|
NON-GAAP
TOTAL OTHER INCOME (EXPENSES), NET
|
$ | 333 | $ | 4,312 | $ | 4 | ||||||
|
INCOME
(LOSS) BEFORE INCOME TAXES
|
$ | 117,898 | $ | (98,898 | ) | $ | 105,972 | |||||
|
Adjustments:
|
||||||||||||
|
GSA
settlement
|
- | 128,000 | - | |||||||||
|
Amortization
of intangible assets
|
4,901 | 7,214 | 5,122 | |||||||||
|
Stock-based
compensation expenses
|
36,658 | 34,430 | 33,245 | |||||||||
|
Asset
impairment
|
- | 9,431 | - | |||||||||
|
Restructuring
and other charges
|
68 | 18,955 | 1,179 | |||||||||
|
Merger
termination proceeds, net
|
- | - | - | |||||||||
|
Non-cash
interest expense
|
12,464 | 10,436 | 12,211 | |||||||||
|
(Gain)
loss on investments, net
|
(733 | ) | 1,691 | (2,805 | ) | |||||||
|
NON-GAAP
INCOME BEFORE INCOME TAXES
|
$ | 171,256 | $ | 111,259 | $ | 154,924 | ||||||
|
PROVISION
(BENEFIT) FOR INCOME TAXES
|
$ | 10,018 | $ | (17,275 | ) | $ | 10,295 | |||||
|
Adjustments:
|
||||||||||||
|
Discrete
GAAP tax provision items
|
(572 | ) | 3,880 | 645 | ||||||||
|
Income
tax effect
|
17,955 | 31,197 | 13,848 | |||||||||
|
NON-GAAP
PROVISION FOR INCOME TAXES
|
$ | 27,401 | $ | 17,802 | $ | 24,788 | ||||||
|
NET
INCOME (LOSS) PER SHARE
|
$ | 0.299 | $ | (0.248 | ) | $ | 0.274 | |||||
|
Adjustments:
|
||||||||||||
|
GSA settlement
|
- | 0.387 | - | |||||||||
|
Amortization
of intangible assets
|
0.013 | 0.022 | 0.014 | |||||||||
|
Stock-based
compensation expenses
|
0.102 | 0.104 | 0.095 | |||||||||
|
Asset
impairment
|
- | 0.029 | - | |||||||||
|
Restructuring
and other charges
|
- | 0.057 | 0.003 | |||||||||
|
Merger
termination proceeds, net
|
- | - | - | |||||||||
|
Non-cash
interest expense
|
0.035 | 0.032 | 0.035 | |||||||||
|
(Gain)
loss on investments, net
|
(0.002 | ) | 0.005 | (0.008 | ) | |||||||
|
Discrete
GAAP tax provision items
|
0.002 | (0.012 | ) | (0.002 | ) | |||||||
|
Income
tax effect
|
(0.050 | ) | (0.094 | ) | (0.039 | ) | ||||||
|
NON-GAAP
NET INCOME PER SHARE
|
$ | 0.399 | $ | 0.282 | $ | 0.372 | ||||||
Reg G
Schedule
|
NETAPP,
INC.
|
||||
|
RECONCILIATION
OF NON GAAP GUIDANCE TO GAAP
|
||||
|
EXPRESSED
AS EARNINGS PER SHARE
|
||||
|
FOURTH
QUARTER 2010
|
||||
|
(Unaudited)
|
||||
|
Fourth
Quarter
|
||||
|
2010
|
||||
|
Non-GAAP
Guidance
|
$ | 0.42 - $0.44 | ||
|
Adjustments
of Specific Items to
|
||||
|
Earnings Per Share for the Fourth
|
||||
|
Quarter
2010:
|
||||
|
Stock
based compensation expense
|
(0.10 | ) | ||
|
Amortization
of intangible assets
|
(0.01 | ) | ||
|
Non
cash interest expense
|
(0.04 | ) | ||
|
Income
tax effect
|
0.04 | |||
|
Total
Adjustments
|
(0.11 | ) | ||
|
GAAP
Guidance - Earnings Per Share
|
$ | 0.31 - $0.33 | ||