Network Appliance Announces Results for Fourth Quarter Fiscal Year End 2003

Network Appliance Announces Results for Fourth Quarter Fiscal Year End 2003
Sixth Consecutive Quarter of Growth

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Sunnyvale, Calif. - May 13, 2003 -- Network Appliance, Inc.

(NASDAQ: NTAP) today announced results for the fourth quarter and fiscal year 2003. Revenues for the fourth fiscal quarter were $241.6 million, an increase of 18% compared to revenues of $204.9 million for the same period a year ago, and a 6% increase compared to $228.5 million in the prior quarter.

For the fourth quarter, GAAP net income increased 219% to $24.8 million, or $0.07 per share, compared to GAAP net income of $7.8 million, or $0.02 per share for the same period in the prior year. Pro forma net income for the fourth quarter increased 75% to $25.5 million, or $0.07 per share, compared to pro forma net income of $14.6 million, or $0.04 per share for the same period a year ago.

Revenues for fiscal year 2003 were $892.1 million, an increase of 12% compared to revenues of $798.4 million for fiscal year 2002.

For fiscal year 2003, GAAP net income was $76.5 million, or $0.22 per share, compared to GAAP net income of $3.0 million, or $0.01 per share for fiscal year 2002. Pro forma net income for fiscal year 2003 increased 97% to $83.8 million, or $0.24 per share, compared to pro forma net income of $42.5 million, or $0.12 per share for fiscal year 2002.

"We are pleased with our performance for the quarter, particularly with our cash generation and the continued strength of the balance sheet. Our 12% increase in revenue over the last fiscal year is a direct reflection of our strong sales and operational performance," said Dan Warmenhoven, CEO of Network Appliance. "NetApp remains an industry market leader with our innovative products being recognized by eWeek and Network Magazine for best products of the year."

Quarterly Highlights
Throughout the fourth quarter and fiscal year 2003, Network Appliance accelerated its momentum by developing new storage solutions, expanding its customer base, strengthening its partnerships, and gaining market acceptance for its new and expanded unified storage, NearStore™, and NetCache® families.

Product milestones for the fourth quarter included the launch of Network Appliance's first native iSCSI storage solution in the form of iSCSI protocol support and host attach kits for NetApp® unified storage systems. The company also has extended its heterogeneous data protection and storage consolidation portfolio with the debut of the NearStore R150 system, SnapVault™ software, MetroCluster software, and a certified NearStore and VERITAS Volume Replicator offering. In addition, Network Appliance announced SnapLock™, an open access data retention solution targeted at regulated data industries such as financial services, healthcare, pharmaceuticals, and government.

On other product-related milestones, Network Appliance won two awards in the fourth quarter including Best Enterprise IT Product of the Year for its FAS900 by eWeek, and Best Product of the Year for its NetApp NearStore R100 by Network Magazine.

During the fourth quarter, customers from a variety of industries worldwide selected Network Appliance to store, manage and consolidate their business- and mission-critical data in the fourth quarter. Unified and SAN storage wins include B. Braun Medical France, Brocade Communications Systems, Inc., L'Oréal, and SAS. Other enterprise customer wins include Emerson, Honda, Krispy Kreme Doughnuts, Statoil, and the U.S. Army. NearStore customer wins included Affymetrix, Johnson Controls and The Home Depot.

Also during the fourth quarter, Network Appliance continued to expand its unified storage strategy and solution initiatives through partnerships with key industry leaders. NetApp and HDS announced the availability of their co-developed, co-branded HDS NetApp Enterprise NAS Gateway. NetApp and Intel announced their partnership to co-develop and market standards-compliant iSCSI solutions.

Network Appliance also announced today that the Board of Directors has approved a $150 million stock repurchase program to purchase shares of its outstanding common stock.

Network Appliance's fiscal year 2004 will be a 53-week year with the extra week falling into the first quarter. The company's targeted quarterly results dates for the fiscal year are August 19, 2003, November 18, 2003, February 17, 2004, and May 18, 2004.

Pro forma results exclude amortization of goodwill and intangible assets, stock compensation, restructuring charges, net loss on investments, gain on sale of intangible assets, and the related effects on income taxes.

Earnings per share represents the diluted number of shares for all periods presented.

The conference call will be broadcast live via the Internet from the investors section of Network Appliance's Web site at on Tuesday, May 13, 2003 at 2:00 p.m. Pacific Time. The conference call will also be available live in a listen-only format at (800) 218-0530 in the United States, and (212) 329-1452 outside the United States. A replay will be available for 72 hours following completion of the live call by dialing (800) 405-2236 in the United States, and (303) 590-3000 outside the United States, replay code 534799.

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 continue to drive the evolution of storage. Information about Network Appliance™ solutions and services is available at NetApp and NetCache are registered trademarks. Network Appliance, NearStore, SnapVault, 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. 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.

"Safe Harbor" Statement under U.S. Private Securities Litigation Reform Act of 1995

The statement regarding the stock repurchase program 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.

Network Appliance
Marla Dierkes

Network Appliance
Marla Dierkes

Network Appliance
Billie Fagenstrom