Network Appliance Announces Results for Second Quarter Fiscal Year 2004
Sunnyvale, Calif. - November 18, 2003
-- Network Appliance, Inc. Network Appliance, Inc. (NASDAQ: NTAP)
today announced results for the second quarter of fiscal year 2004.
Revenues for the second fiscal quarter were $275.6 million, an
increase of 28% compared to revenues of $215.2 million for the same
period a year ago and a 6% increase compared to $260.5 million in
the prior quarter.
For the second quarter, GAAP net income increased 206% to $48.4
million, or $0.13 per share1 compared to GAAP net income of $15.8
million, or $0.05 per share for the same period in the prior year.
GAAP net income for the second quarter of fiscal year 2004 includes
a non-recurring tax benefit of $16.8 million, or approximately
$0.045 per share, associated with a favorable foreign tax ruling,
which transpired during the current quarter. Pro forma2 net income
for the second quarter increased 92% to $33.6 million, or $0.09 per
share, compared to pro forma net income of $17.5 million, or $0.05
per share for the same period a year ago.
Revenues for the first six months of the current fiscal year
totaled $536.1 million, compared to revenues of $422.0 million for
the first six months of the prior fiscal year.
For the first six months of the current fiscal year, GAAP net
income was $75.5 million, or $0.21 per share, compared with income
of $32.0 million, or $0.09 per share for the same period in the
prior year. Pro forma net income for the first six months of the
current fiscal year totaled $62.4 million, or $0.17 per share,
compared to pro forma net income of $35.5 million, or $0.10 per
share for the first six months of the prior fiscal year.
"I am very pleased with our results and our continued growth, which
exceeded 25% year-over-year for the second consecutive quarter,"
said Dan Warmenhoven, Chief Executive Officer at Network Appliance.
"Our entry-level FAS systems achieved significant market momentum,
and we continue to lead in enterprise iSCSI storage systems. We
have expanded SnapLock for general enterprise as well as regulatory
compliance needs. Most importantly, our growth reflects our strong
customer commitment, growing services expertise, and sales emphasis
on enterprise accounts."
In the second quarter of fiscal year 2004, Network Appliance
continued to reinforce its position as a storage leader by
expanding its iSCSI, unified storage, and NearStore™
solutions, extending its partnerships with other technology
leaders, and winning customers across all target industries.
The company reaffirmed its commitment to iSCSI technology by
becoming the first to support Windows®, Novell®,
NetWare®, and Linux® native iSCSI initiators on
Intel® technology-based platforms, enabling customers to share
and network more of their data currently in direct-attached
configurations using their existing network infrastructures. In
addition, Network Appliance announced its program to qualify iSCSI
adapter vendors as NetApp® supported solutions in conjunction
with NetApp iSCSI storage systems, allowing vendors to develop
affordable, certified and interoperable storage consolidation
During the second quarter, customers worldwide also chose Network
Appliance to store, manage, protect, and consolidate a wide range
of data. Unified storage, iSCSI, SAN, and NAS wins included 1-800
CONTACTS, Antwerp Municipal Port Authority, Bacardi, Bronson
Healthcare, DHL International, Egmont IT, National Instruments,
National Oceanic and Atmospheric Administration, TF1, U.S.
Department of State, and Xerox Corporation. NearStore customer wins
included Constellation Energy Group, Discovery Communications,
Inc., L'Equipe, Magellan Health, and The College Board.
The company also expanded its data protection and regulatory
compliance initiatives by extending the SnapLock™ solutions
for regulated data and data permanence storage. Network Appliance
introduced SnapLock Compliance, which meets the storage safeguards
required by SEC Rule 17a-3 and 17a-4. Network Appliance also
released SnapLock Enterprise, which provides customers with the
assurance that important, data and business records remain
accurate, safe, accessible, and unmodified. In addition, Network
Appliance teamed up with Decru DataFort™ and MDY Advanced
Technologies to achieve U.S. Department of Defense 5015.2-STD
certification for electronic records management applications,
enabling defense users to meet stringent data protection and
shredding regulations regarding national security.
During the quarter, Network Appliance reinforced its commitment to
partners by launching the NetApp Partner Program to support the
companies who continue to play an integral role in developing and
expanding Network Appliance's enterprise solutions and services.
The program enables partners to more tightly integrate and
synergize their products and services for optimal performance in
NetApp environments by providing the tools, training, collateral,
education programs, and online partner and support portals to
assist them in addressing the end user needs.
The company also extended its strategic partnership with Fujitsu
Siemens Computers to deliver integrated server and storage
solutions for Oracle database technology to European customers. In
addition, Network Appliance signed an agreement with VERITAS
Software Corporation expanding their strategic partnership to
cooperatively develop and deliver integrated solutions for
customers through joint sales and marketing, and cooperative
1. Earnings per share represents the diluted number of shares for
all periods presented.
2. Pro forma results exclude amortization of intangible assets,
stock compensation, restructuring charges, net gain or loss on
investments, gain on sale of intangible assets, and the related
effects on income taxes, as well as the benefit of a non-recurring
foreign tax ruling.
On November 4, 2003, Network Appliance signed a merger agreement
with Spinnaker Networks, Inc., a privately held company based in
Pittsburgh, Pennsylvania, for approximately $300 million in an
all-stock transaction. The software technology acquisition
reaffirms the Network Appliance business model and accelerates the
company's vision for a storage grid future, enabling customers to
leverage more value from their storage and data infrastructures.
The transaction is expected to close in January 2004.
Conference Call Information
The NetApp quarterly results conference call will be broadcast live
via the Internet from the investors section of Network Appliance's
Web site at
http://investors.netapp.com on Tuesday, November 18,
2003 at 2:00 p.m. Pacific time. The conference call will also be
available live in a listen-only format at (800) 257-2101 in the
United States and (303) 262-0075 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 556284.
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 www.netapp.com.
NetApp is a registered trademark and
Network Appliance, NearStore, SnapLock, and The evolution of
storage 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
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
This press release contains forward-looking
statements within the meeting of the Private Securities Litigation
Reform Act of 1995. These statements include comments regarding our
continued position as a storage leader, our ability to meet
regulatory standards in certain of the markets we serve, market
acceptance of unified storage and other Network Appliance solutions
and expected benefits of the proposed acquisition with Spinnaker
Networks. 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 products which meet market acceptance, our ability to design
products which compete effectively from a price and performance
perspective, our ability to successfully complete and integrate our
proposed acquisition of Spinnaker Networks 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