NetApp (NASDAQ:NTAP) today reported financial results for the
fourth quarter and fiscal year 2017, ended April 28, 2017.
Fourth Quarter Financial ResultsNet revenues
for the fourth quarter of fiscal year 2017 were $1.48 billion. GAAP
net income for the fourth quarter of fiscal year 2017 was $190
million, or $0.68 per share,1 compared to GAAP net loss of $8
million, or $0.03 loss per share,2 for the comparable period of the
prior year. Non-GAAP net income for the fourth quarter of fiscal
year 2017 was $239 million, or $0.86 per share,3 compared to
non-GAAP net income of $157 million, or $0.55 per share, for the
comparable period of the prior year.
Fiscal Year 2017 Financial ResultsNet revenues
for fiscal year 2017 were $5.52 billion. GAAP net income for fiscal
year 2017 was $509 million, or $1.81 per share,1 compared to GAAP
net income of $229 million, or $0.77 per share, for the comparable
period of the prior year. Non-GAAP net income for fiscal year 2017
was $768 million, or $2.73 per share,3 compared to non-GAAP net
income of $633 million, or $2.13 per share, for the comparable
period of the prior year.
Cash, Cash Equivalents and Investments NetApp
ended the fourth quarter of fiscal year 2017 with $4.9 billion in
total cash, cash equivalents and investments. During the fourth
quarter of fiscal year 2017, the Company generated $365 million in
cash from operations and returned $180 million to shareholders
through share repurchases and a cash dividend.
The Company will increase the first quarter fiscal year 2018
dividend by 5% to $0.20 per share. The quarterly dividend will be
paid on July 26, 2017, to shareholders of record as of the close of
business on July 7, 2017.
“Our continued focus and disciplined execution yielded yet
another quarter of solid results. We have regained momentum,
returning the company to revenue growth and delivering against all
of our fiscal year 2017 commitments,” said George Kurian, chief
executive officer. “By innovating to redefine traditional markets
and to bring enterprise-grade technology to emerging areas of the
market, we are gaining market share, expanding our addressable
market, and creating new opportunities for NetApp.”
Q1
Fiscal Year 2018 Outlook |
The Company provided the following financial guidance
for the first quarter of fiscal year 2018: |
|
• Net revenues are expected to be in the range of $1.24
billion to $1.39 billion |
|
|
GAAP |
Non-GAAP |
•
Earnings per share is expected to be in the range of: |
$0.30 - $0.38 |
$0.49 - $0.57 |
|
|
|
Full Fiscal Year 2018 Outlook |
The Company
provided the following financial guidance for the full fiscal year
2018: |
|
|
|
|
GAAP |
Non-GAAP |
• Consolidated gross margin is expected to be in the range
of: |
61% -
62% |
62% -
63% |
• Operating margin is expected to be in the range of: |
14% -
16% |
18% -
20% |
• Effective tax rate is expected to be in the range of: |
23% -
24% |
19% -
20% |
Business Highlights
- NetApp Expands Impact in Flash, Cloud, and
Next-Generation Data Center- New NetApp All-Flash
Innovations Improve Data Center Economics. New All Flash
FAS A700s array delivers breakthrough performance in a compact form
factor to modernize IT for demanding enterprise applications,
analytic workloads and cloud integration.- NetApp Names
Anthony Lye to Lead Cloud Business Unit. Cloud champion
joins NetApp to accelerate hyperscaler and hybrid cloud progress.
Lye, who reports to NetApp CEO George Kurian, drives the strategy
and execution necessary to create a profitable cloud business for
NetApp and establish the Company as the undisputed leader in
managing data in a cloud-integrated world.- One-Year
Anniversary: NetApp SolidFire Redefines Data Center
Infrastructure. NetApp celebrated the one-year anniversary
of its acquisition of SolidFire, fueling the advance of the
next-generation data center that is transforming IT for enterprises
and service providers.
- Customers Team with NetApp to Drive Transformation and
Improve Performance with Their Choice of Hybrid Cloud
Deployment- NetApp Supports Vital Energi in
Transforming Data into Energy Savings Throughout the UK.
Sustainable energy company, Vital Energi, deployed a NetApp
all-flash array to speed performance and NetApp AltaVault
cloud-integrated storage to help the company meet mandatory back up
requirements.- DARZ Drives DevOps Success with
NetApp. German IT services leader fuels customers’ digital
transformation by enabling agile software development through its
Docker & Container as a Service offering.- neteffect
Offers Hybrid Cloud Disaster Recovery Solutions with
NetApp. NetApp converged infrastructure gives neteffect
technologies the flexibility to blend on-premises and cloud
services for customers.- NetApp Helps Kaufman Hall
Transform Businesses with Data-Driven Insight. Kaufman
Hall takes critical first step toward a hybrid cloud future by
consolidating on FlexPod to speed innovation as well as maximize
performance and growth.- Contegix Accelerates Private Cloud
Deployment and Cuts Service Costs in Half with NetApp
SolidFire. The leading cloud host provider prepares for
coming data deluge with high-performing, scalable
NetApp SolidFire all-flash storage to meet customers’ demands
for scalability and guaranteed performance to accelerate their
private cloud deployments.
Webcast and Conference Call InformationNetApp
will host a conference call to discuss these results today at 2:30
p.m. Pacific Time. To access the live webcast of this event, visit
the NetApp Investor Relations website at investors.netapp.com. In
addition, this press release, historical supplemental data tables,
and other information related to the call will be posted on the
Investor Relations website. An audio replay will also be available
on the website after 4:30 p.m. Pacific Time today.
About NetAppLeading organizations worldwide
count on NetApp for software, systems and services to manage and
store data. We help customers capitalize on the value of their data
in the hybrid cloud through our Data Fabric strategy, data
management expertise, portfolio and ecosystem. To learn more,
visit www.netapp.com.
“Safe Harbor” Statement Under U.S. Private Securities
Litigation Reform Act of 1995This press release contains
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements include,
but are not limited to, all of the statements made under the Q1
Fiscal Year 2018 Outlook section and the Full Fiscal Year 2018
Outlook section and statements made about our ability to redefine
traditional markets, address emerging markets and gain market
share. All of these forward-looking statements involve risk and
uncertainty. Actual results may differ materially from these
statements for a variety of reasons, including, without limitation,
general global political, macroeconomic and market conditions,
changes in U.S. government spending, revenue seasonality and
matters specific to our business, such as our ability to
understand, and effectively respond to changes affecting our market
environment, product, technologies and customer requirements,
including the impact of the cloud, customer demand for and
acceptance of our products and services, our ability to reduce our
cost structure, streamline the business and improve efficiency, our
ability to effectively integrate the SolidFire acquisition, and our
ability to manage our gross profit margins. These and other equally
important factors are described in reports and documents we file
from time to time with the Securities and Exchange Commission,
including the factors described under the section titled “Risk
Factors” in our most recently submitted Annual Report on Form 10-K.
We disclaim any obligation to update information contained in this
press release whether as a result of new information, future
events, or otherwise.
NetApp and the NetApp logo and the marks listed at
http://www.netapp.com/TM are trademarks of NetApp, Inc. Other
company and product names may be trademarks of their respective
owners.
1GAAP net income per share is calculated using the diluted
number of shares.2GAAP net loss per share is calculated using the
basic number of shares and excludes common stock equivalents
because the impact would be anti-dilutive.3Non-GAAP net income
excludes, when applicable, (a) amortization of intangible
assets, (b) stock-based compensation expenses, (c)
acquisition-related expenses, (d) restructuring charges, (e) asset
impairments, (f) gains/losses on the sale of properties, and (g)
our GAAP tax provision, but includes a non-GAAP tax provision based
upon our projected annual non-GAAP effective tax rate for the first
three quarters of the fiscal year and an actual non-GAAP tax
provision for the fourth quarter of the fiscal year. NetApp makes
additional adjustments to the non-GAAP tax provision for certain
tax matters as described below. Non-GAAP earnings per share is
calculated using the diluted number of shares for all periods
presented. A detailed reconciliation of our non-GAAP to GAAP
results can be found at http://investors.netapp.com. NetApp’s
management uses these non-GAAP measures in making operating
decisions because it believes the measurements provide meaningful
supplemental information regarding NetApp’s ongoing operational
performance.
NetApp Usage of Non-GAAP Financial Information
To supplement NetApp’s condensed consolidated financial
statement information presented in accordance with generally
accepted accounting principles in the United States (GAAP), NetApp
provides investors with certain non-GAAP measures, including, but
not limited to, historical non-GAAP operating results, non-GAAP net
income, non-GAAP effective tax rate and free cash flow, and
historical and projected non-GAAP earnings per diluted share.
NetApp believes that the presentation of non-GAAP net income,
non-GAAP effective tax rates, and non-GAAP earnings per share data
when shown in conjunction with the corresponding GAAP measures,
provides useful information to investors and management regarding
financial and business trends relating to its financial condition
and results of operations. NetApp believes that the presentation of
free cash flow, which it defines as the net cash provided by
operating activities less cash used to acquire property and
equipment, to be a liquidity measure that provides useful
information to management and investors because it reflects cash
that can be used to, among other things, invest in its business,
make strategic acquisitions, repurchase common stock, and pay
dividends on its common stock. As free cash flow is not a measure
of liquidity calculated in accordance with GAAP, free cash flow
should be considered in addition to, but not as a substitute for,
the analysis provided in the statement of cash flows.
NetApp’s management uses these non-GAAP measures in making
operating decisions because it believes the measurements provide
meaningful supplemental information regarding NetApp’s ongoing
operational performance. These non-GAAP financial measures are used
to: (1) measure company performance against historical results, (2)
facilitate comparisons to our competitors’ operating results and
(3) allow greater transparency with respect to information used by
management in financial and operational decision making. In
addition, in fiscal years 2016 and 2017 these non-GAAP financial
measures are used to measure company performance for the purposes
of determining employee incentive plan compensation.
NetApp excludes the following items from its non-GAAP measures
when applicable:
A. Amortization of intangible assets. NetApp records
amortization of intangible assets that were acquired in connection
with its business combinations. The amortization of intangible
assets varies depending on the level of acquisition activity.
Management finds it useful to exclude these charges to assess the
appropriate level of various operating expenses to assist in
budgeting, planning and forecasting future periods and in measuring
operational performance.
B. Stock-based compensation expenses. NetApp excludes
stock-based compensation expenses from its non-GAAP measures
primarily because they are non-cash expenses. While management
views stock-based compensation as a key element of our employee
retention and long-term incentives, we do not view it as an
expense to be used in evaluating operational performance in any
given period.
C. Acquisition-related expenses. NetApp excludes
acquisition-related expenses, including (a) due diligence, legal
and other one-time integration charges and (b) write down of assets
acquired that NetApp does not intend to use in its ongoing
business, from its non-GAAP measures, primarily because they are
not related to our ongoing business or cost base and, therefore,
cannot be relied upon for future planning and forecasting.
D. Restructuring charges. These charges consist of restructuring
charges that are incurred based on the particular facts and
circumstances of restructuring decisions, including employment and
contractual settlement terms, and other related charges, and can
vary in size and frequency. We therefore exclude them in our
assessment of operational performance.
E. Asset impairments. These are non-cash charges to write down
assets when there is an indication that the asset has become
impaired. Management finds it useful to exclude these non-cash
charges due to the unpredictability of these events in its
assessment of operational performance.
F. Gains/losses on the sale of properties. These are
gains/losses from the sale of our properties. Management believes
that these transactions do not reflect the results of our
underlying, on-going business and, therefore, cannot be relied upon
for future planning or forecasting.
G. Income tax adjustments. NetApp’s non-GAAP tax provision is
based upon a projected annual non-GAAP effective tax rate for the
first three quarters of the fiscal year and an actual non-GAAP tax
provision for the fourth quarter of the fiscal year. The non-GAAP
tax provision also excludes, when applicable, (a) tax charges or
benefits in the current period that relate to one or more prior
fiscal periods that are a result of events such as changes in tax
legislation, authoritative guidance, income tax audit settlements
and/or court decisions, (b) tax charges or benefits that are
attributable to unusual or non-recurring book and/or tax accounting
method changes, (c) tax charges that are a result of a non-routine
foreign cash repatriation, (d) tax charges or benefits that are a
result of infrequent restructuring of the Company’s tax structure,
(e) tax charges or benefits that are a result of a change in
valuation allowance, and (f) tax charges resulting from the
integration of intellectual properties from acquisitions.
Management believes that the use of non-GAAP tax provisions
provides a more meaningful measure of the Company’s operational
performance.
These non-GAAP measures are not in accordance with, or an
alternative for, measures prepared in accordance with GAAP, and may
be different from non-GAAP measures used by other companies. In
addition, these non-GAAP measures are not based on any
comprehensive set of accounting rules or principles. NetApp
believes that non-GAAP measures have limitations in that they do
not reflect all of the amounts associated with the Company’s
results of operations as determined in accordance with GAAP and
that these measures should only be used to evaluate the Company’s
results of operations in conjunction with the corresponding GAAP
measures. NetApp management compensates for these limitations by
analyzing current and projected results on a GAAP basis as well as
a non-GAAP basis. The presentation of non-GAAP financial
information is not meant to be considered in isolation or as a
substitute for the directly comparable financial measures prepared
in accordance with generally accepted accounting principles in the
United States. The non-GAAP financial measures are meant to
supplement, and be viewed in conjunction with, GAAP financial
measures.
NETAPP, INC. CONDENSED
CONSOLIDATED BALANCE SHEETS (In
millions)(Unaudited) |
|
|
|
April 28,2017 |
|
|
April 29,2016 |
|
|
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash,
cash equivalents and investments |
|
$ |
4,921 |
|
|
$ |
5,303 |
|
Accounts
receivable |
|
|
731 |
|
|
|
813 |
|
Inventories |
|
|
163 |
|
|
|
98 |
|
Other
current assets |
|
|
383 |
|
|
|
234 |
|
Total
current assets |
|
|
6,198 |
|
|
|
6,448 |
|
|
|
|
|
|
|
|
|
|
Property and equipment,
net |
|
|
799 |
|
|
|
937 |
|
Goodwill and purchased
intangible assets, net |
|
|
1,815 |
|
|
|
1,856 |
|
Other non-current
assets |
|
|
681 |
|
|
|
796 |
|
Total
assets |
|
$ |
9,493 |
|
|
$ |
10,037 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
|
|
Accounts
payable |
|
$ |
347 |
|
|
$ |
254 |
|
Accrued
expenses |
|
|
782 |
|
|
|
765 |
|
Commercial paper notes |
|
|
500 |
|
|
|
— |
|
Short-term loan |
|
|
— |
|
|
|
849 |
|
Current
portion of long-term debt |
|
|
749 |
|
|
|
— |
|
Short-term deferred revenue and financed unearned services
revenue |
|
|
1,661 |
|
|
|
1,794 |
|
Total
current liabilities |
|
|
4,039 |
|
|
|
3,662 |
|
Long-term debt |
|
|
744 |
|
|
|
1,490 |
|
Other long-term
liabilities |
|
|
249 |
|
|
|
413 |
|
Long-term deferred
revenue and financed unearned services revenue |
|
|
1,681 |
|
|
|
1,591 |
|
Total
liabilities |
|
|
6,713 |
|
|
|
7,156 |
|
|
|
|
|
|
|
|
|
|
Stockholders'
equity |
|
|
2,780 |
|
|
|
2,881 |
|
Total
liabilities and stockholders' equity |
|
$ |
9,493 |
|
|
$ |
10,037 |
|
NETAPP, INC. CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (In
millions, except per share amounts)
(Unaudited) |
|
|
|
Three Months Ended |
|
|
Year Ended |
|
|
|
April 28,2017 |
|
|
April 29,2016 |
|
|
April 28,2017 |
|
|
April 29,2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product |
|
$ |
852 |
|
|
$ |
757 |
|
|
$ |
3,006 |
|
|
$ |
2,986 |
|
Software
maintenance |
|
|
242 |
|
|
|
234 |
|
|
|
965 |
|
|
|
949 |
|
Hardware
maintenance and other services |
|
|
387 |
|
|
|
389 |
|
|
|
1,548 |
|
|
|
1,611 |
|
Net
revenues |
|
|
1,481 |
|
|
|
1,380 |
|
|
|
5,519 |
|
|
|
5,546 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
product |
|
|
444 |
|
|
|
424 |
|
|
|
1,614 |
|
|
|
1,558 |
|
Cost of
software maintenance |
|
|
6 |
|
|
|
9 |
|
|
|
28 |
|
|
|
37 |
|
Cost of
hardware maintenance and other services |
|
|
118 |
|
|
|
129 |
|
|
|
487 |
|
|
|
578 |
|
Total
cost of revenues |
|
|
568 |
|
|
|
562 |
|
|
|
2,129 |
|
|
|
2,173 |
|
Gross profit |
|
|
913 |
|
|
|
818 |
|
|
|
3,390 |
|
|
|
3,373 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and
marketing |
|
|
405 |
|
|
|
434 |
|
|
|
1,633 |
|
|
|
1,792 |
|
Research
and development |
|
|
191 |
|
|
|
201 |
|
|
|
779 |
|
|
|
861 |
|
General
and administrative |
|
|
70 |
|
|
|
84 |
|
|
|
271 |
|
|
|
307 |
|
Restructuring charges |
|
|
— |
|
|
|
80 |
|
|
|
52 |
|
|
|
108 |
|
Acquisition-related expense |
|
|
— |
|
|
|
6 |
|
|
|
— |
|
|
|
8 |
|
Gain on
sale of properties |
|
|
— |
|
|
|
(51 |
) |
|
|
(10 |
) |
|
|
(51 |
) |
Total
operating expenses |
|
|
666 |
|
|
|
754 |
|
|
|
2,725 |
|
|
|
3,025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
operations |
|
|
247 |
|
|
|
64 |
|
|
|
665 |
|
|
|
348 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense),
net |
|
|
1 |
|
|
|
(4 |
) |
|
|
— |
|
|
|
(3 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income
taxes |
|
|
248 |
|
|
|
60 |
|
|
|
665 |
|
|
|
345 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income
taxes |
|
|
58 |
|
|
|
68 |
|
|
|
156 |
|
|
|
116 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
190 |
|
|
$ |
(8 |
) |
|
$ |
509 |
|
|
$ |
229 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per
share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.70 |
|
|
$ |
(0.03 |
) |
|
$ |
1.85 |
|
|
$ |
0.78 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted |
|
$ |
0.68 |
|
|
$ |
(0.03 |
) |
|
$ |
1.81 |
|
|
$ |
0.77 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in net
income (loss) per share calculations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
270 |
|
|
|
284 |
|
|
|
275 |
|
|
|
294 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted |
|
|
278 |
|
|
|
284 |
|
|
|
281 |
|
|
|
297 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends declared
per share |
|
$ |
0.190 |
|
|
$ |
0.180 |
|
|
$ |
0.760 |
|
|
$ |
0.720 |
|
NETAPP, INC. CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (In
millions) (Unaudited) |
|
|
|
Three Months Ended |
|
|
Year Ended |
|
|
|
April 28,2017 |
|
|
April 29,2016 |
|
|
April 28,2017 |
|
|
April 29,2016 |
|
Cash flows from
operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss) |
|
$ |
190 |
|
|
$ |
(8 |
) |
|
$ |
509 |
|
|
$ |
229 |
|
Adjustments to reconcile net income (loss) to net cash
provided by operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
53 |
|
|
|
77 |
|
|
|
226 |
|
|
|
279 |
|
Stock-based compensation |
|
|
46 |
|
|
|
61 |
|
|
|
195 |
|
|
|
260 |
|
Gain on
sale of properties |
|
|
— |
|
|
|
(51 |
) |
|
|
(10 |
) |
|
|
(51 |
) |
Other
items, net |
|
|
19 |
|
|
|
31 |
|
|
|
84 |
|
|
|
(43 |
) |
Changes
in assets and liabilities, net of acquisitions of
businesses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
receivable |
|
|
(127 |
) |
|
|
(206 |
) |
|
|
81 |
|
|
|
(16 |
) |
Inventories |
|
|
(38 |
) |
|
|
5 |
|
|
|
(65 |
) |
|
|
49 |
|
Accounts
payable |
|
|
81 |
|
|
|
60 |
|
|
|
94 |
|
|
|
(53 |
) |
Accrued
expenses |
|
|
35 |
|
|
|
108 |
|
|
|
(86 |
) |
|
|
30 |
|
Deferred
revenue and financed unearned services revenue |
|
|
111 |
|
|
|
238 |
|
|
|
(37 |
) |
|
|
186 |
|
Changes
in other operating assets and liabilities, net |
|
|
(5 |
) |
|
|
30 |
|
|
|
(5 |
) |
|
|
104 |
|
Net cash
provided by operating activities |
|
|
365 |
|
|
|
345 |
|
|
|
986 |
|
|
|
974 |
|
Cash flows from
investing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Redemptions (purchases) of investments, net |
|
|
(45 |
) |
|
|
103 |
|
|
|
(43 |
) |
|
|
982 |
|
Purchases
of property and equipment |
|
|
(38 |
) |
|
|
(35 |
) |
|
|
(175 |
) |
|
|
(160 |
) |
Proceeds
from sale of properties |
|
|
— |
|
|
|
102 |
|
|
|
— |
|
|
|
102 |
|
Acquisitions of businesses, net of cash acquired |
|
|
(8 |
) |
|
|
(842 |
) |
|
|
(8 |
) |
|
|
(842 |
) |
Other
investing activities, net |
|
|
4 |
|
|
|
4 |
|
|
|
6 |
|
|
|
3 |
|
Net cash
provided by (used in) investing activities |
|
|
(87 |
) |
|
|
(668 |
) |
|
|
(220 |
) |
|
|
85 |
|
Cash flows from
financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of common stock under employee stock award plans |
|
|
22 |
|
|
|
— |
|
|
|
92 |
|
|
|
70 |
|
Repurchase of common stock |
|
|
(129 |
) |
|
|
(262 |
) |
|
|
(705 |
) |
|
|
(960 |
) |
Changes
in commercial paper notes, net |
|
|
107 |
|
|
|
— |
|
|
|
499 |
|
|
|
— |
|
Proceeds
from sale-leaseback financing transactions |
|
|
— |
|
|
|
148 |
|
|
|
— |
|
|
|
148 |
|
Proceeds
from short-term loan |
|
|
— |
|
|
|
870 |
|
|
|
— |
|
|
|
870 |
|
Repayment
of short-term loan |
|
|
— |
|
|
|
(20 |
) |
|
|
(850 |
) |
|
|
(20 |
) |
Dividends
paid |
|
|
(51 |
) |
|
|
(51 |
) |
|
|
(208 |
) |
|
|
(210 |
) |
Other
financing activities, net |
|
|
— |
|
|
|
(4 |
) |
|
|
(7 |
) |
|
|
(7 |
) |
Net cash
provided by (used in) financing activities |
|
|
(51 |
) |
|
|
681 |
|
|
|
(1,179 |
) |
|
|
(109 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of
exchange rate changes on cash and cash equivalents |
|
|
4 |
|
|
|
15 |
|
|
|
(11 |
) |
|
|
(4 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase
(decrease) in cash and cash equivalents |
|
|
231 |
|
|
|
373 |
|
|
|
(424 |
) |
|
|
946 |
|
Cash and cash
equivalents: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning
of period |
|
|
2,213 |
|
|
|
2,495 |
|
|
|
2,868 |
|
|
|
1,922 |
|
End of
period |
|
$ |
2,444 |
|
|
$ |
2,868 |
|
|
$ |
2,444 |
|
|
$ |
2,868 |
|
NETAPP, INC. |
|
SUPPLEMENTAL DATA |
|
(In millions except net income per share,
percentages, DSO, DIO, DPO, CCC and Inventory Turns) |
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q4 FY'17 |
|
|
Q3 FY'17 |
|
|
Q4 FY'16 |
|
|
FY 2017 |
|
|
FY 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product (1) |
|
$ |
852 |
|
|
$ |
784 |
|
|
$ |
757 |
|
|
$ |
3,006 |
|
|
$ |
2,986 |
|
Strategic |
|
$ |
596 |
|
|
$ |
512 |
|
|
$ |
481 |
|
|
$ |
1,971 |
|
|
$ |
1,682 |
|
Mature |
|
$ |
256 |
|
|
$ |
272 |
|
|
$ |
276 |
|
|
$ |
1,035 |
|
|
$ |
1,304 |
|
Software
Maintenance |
|
$ |
242 |
|
|
$ |
240 |
|
|
$ |
234 |
|
|
$ |
965 |
|
|
$ |
949 |
|
Hardware Maintenance
and Other Services: |
|
$ |
387 |
|
|
$ |
380 |
|
|
$ |
389 |
|
|
$ |
1,548 |
|
|
$ |
1,611 |
|
Hardware
Maintenance Support Contracts |
|
$ |
313 |
|
|
$ |
313 |
|
|
$ |
318 |
|
|
$ |
1,265 |
|
|
$ |
1,316 |
|
Professional and Other Services |
|
$ |
74 |
|
|
$ |
67 |
|
|
$ |
71 |
|
|
$ |
283 |
|
|
$ |
295 |
|
Net Revenues |
|
$ |
1,481 |
|
|
$ |
1,404 |
|
|
$ |
1,380 |
|
|
$ |
5,519 |
|
|
$ |
5,546 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Geographic Mix |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% of
Q4FY'17Revenue |
|
|
% of Q3FY'17Revenue |
|
|
% of Q4FY'16Revenue |
|
|
% ofFY
2017Revenue |
|
|
% ofFY 2016Revenue |
|
Americas |
|
|
54 |
% |
|
|
55 |
% |
|
|
54 |
% |
|
|
56 |
% |
|
|
55 |
% |
Americas
Commercial |
|
|
42 |
% |
|
|
44 |
% |
|
|
43 |
% |
|
|
43 |
% |
|
|
43 |
% |
U.S.
Public Sector |
|
|
12 |
% |
|
|
10 |
% |
|
|
12 |
% |
|
|
13 |
% |
|
|
12 |
% |
EMEA |
|
|
32 |
% |
|
|
33 |
% |
|
|
33 |
% |
|
|
31 |
% |
|
|
32 |
% |
Asia Pacific |
|
|
14 |
% |
|
|
13 |
% |
|
|
13 |
% |
|
|
13 |
% |
|
|
13 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pathways Mix |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% of
Q4FY'17Revenue |
|
|
% of Q3FY'17Revenue |
|
|
% of Q4FY'16Revenue |
|
|
% ofFY
2017Revenue |
|
|
% ofFY 2016Revenue |
|
Direct |
|
|
22 |
% |
|
|
21 |
% |
|
|
26 |
% |
|
|
22 |
% |
|
|
23 |
% |
Indirect |
|
|
78 |
% |
|
|
79 |
% |
|
|
74 |
% |
|
|
78 |
% |
|
|
77 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Gross Margins |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q4 FY'17 |
|
|
Q3 FY'17 |
|
|
Q4 FY'16 |
|
|
FY 2017 |
|
|
FY 2016 |
|
Non-GAAP Gross
Margin |
|
|
62.5 |
% |
|
|
61.5 |
% |
|
|
61.1 |
% |
|
|
62.3 |
% |
|
|
62.5 |
% |
Product |
|
|
48.9 |
% |
|
|
45.7 |
% |
|
|
46.8 |
% |
|
|
47.4 |
% |
|
|
50.2 |
% |
Software
Maintenance |
|
|
97.5 |
% |
|
|
97.1 |
% |
|
|
96.2 |
% |
|
|
97.1 |
% |
|
|
96.1 |
% |
Hardware
Maintenance and Other Services |
|
|
70.3 |
% |
|
|
71.6 |
% |
|
|
67.9 |
% |
|
|
69.4 |
% |
|
|
65.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Income from Operations, Income before Income Taxes
& Effective Tax Rate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q4 FY'17 |
|
|
Q3 FY'17 |
|
|
Q4 FY'16 |
|
|
FY 2017 |
|
|
FY 2016 |
|
Non-GAAP Income from
Operations |
|
$ |
306 |
|
|
$ |
284 |
|
|
$ |
185 |
|
|
$ |
950 |
|
|
$ |
751 |
|
% of Net
Revenues |
|
|
20.7 |
% |
|
|
20.2 |
% |
|
|
13.4 |
% |
|
|
17.2 |
% |
|
|
13.5 |
% |
Non-GAAP Income before
Income Taxes |
|
$ |
307 |
|
|
$ |
284 |
|
|
$ |
181 |
|
|
$ |
950 |
|
|
$ |
748 |
|
Non-GAAP Effective Tax
Rate |
|
|
22.1 |
% |
|
|
18.6 |
% |
|
|
13.1 |
% |
|
|
19.2 |
% |
|
|
15.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Net Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q4 FY'17 |
|
|
Q3 FY'17 |
|
|
Q4 FY'16 |
|
|
FY 2017 |
|
|
FY 2016 |
|
Non-GAAP Net
Income |
|
$ |
239 |
|
|
$ |
231 |
|
|
$ |
157 |
|
|
$ |
768 |
|
|
$ |
633 |
|
Non-GAAP Weighted
Average Common Shares Outstanding, Diluted |
|
|
278 |
|
|
|
281 |
|
|
|
287 |
|
|
|
281 |
|
|
|
297 |
|
Non-GAAP Income per
Share, Diluted |
|
$ |
0.86 |
|
|
$ |
0.82 |
|
|
$ |
0.55 |
|
|
$ |
2.73 |
|
|
$ |
2.13 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Select Balance Sheet Items |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q4 FY'17 |
|
|
Q3 FY'17 |
|
|
Q4 FY'16 |
|
|
|
|
|
|
|
|
|
Deferred Revenue and
Financed Unearned Services Revenue |
|
$ |
3,342 |
|
|
$ |
3,234 |
|
|
$ |
3,385 |
|
|
|
|
|
|
|
|
|
DSO (days) |
|
|
45 |
|
|
|
39 |
|
|
|
54 |
|
|
|
|
|
|
|
|
|
DIO (days) |
|
|
26 |
|
|
|
21 |
|
|
|
16 |
|
|
|
|
|
|
|
|
|
DPO (days) |
|
|
56 |
|
|
|
42 |
|
|
|
41 |
|
|
|
|
|
|
|
|
|
CCC (days) |
|
|
15 |
|
|
|
17 |
|
|
|
28 |
|
|
|
|
|
|
|
|
|
Inventory Turns |
|
|
14 |
|
|
|
18 |
|
|
|
23 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Days sales outstanding (DSO) is defined as accounts receivable
divided by net revenues, multiplied by the number of days in the
quarter. |
|
Days inventory outstanding (DIO) is defined as net inventories
divided by cost of revenues, multiplied by the number of days in
the quarter. |
|
Days payables outstanding (DPO) is defined as accounts payable
divided by cost of revenues, multiplied by the number of days in
the quarter. |
|
Cash conversion cycle (CCC) is defined as DSO plus DIO minus
DPO. |
|
Inventory turns is defined as annualized cost of revenues
divided by net inventories. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Select Cash Flow Statement Items |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q4 FY'17 |
|
|
Q3 FY'17 |
|
|
Q4 FY'16 |
|
|
FY 2017 |
|
|
FY 2016 |
|
Net Cash Provided by
Operating Activities |
|
$ |
365 |
|
|
$ |
235 |
|
|
$ |
345 |
|
|
$ |
986 |
|
|
$ |
974 |
|
Purchases of Property
and Equipment |
|
$ |
38 |
|
|
$ |
45 |
|
|
$ |
35 |
|
|
$ |
175 |
|
|
$ |
160 |
|
Free Cash Flow |
|
$ |
327 |
|
|
$ |
190 |
|
|
$ |
310 |
|
|
$ |
811 |
|
|
$ |
814 |
|
Free Cash Flow as a %
of Net Revenues |
|
|
22.1 |
% |
|
|
13.5 |
% |
|
|
22.5 |
% |
|
|
14.7 |
% |
|
|
14.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free cash flow is a non-GAAP measure and is defined as net
cash provided by operating activities less purchases of property
and equipment. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Some items may not add or recalculate due to rounding. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Sales of certain products which should have been reported
as strategic products were improperly reported as mature product
revenues. All FY 2016 periods presented have been recast to reflect
the appropriate classification. |
|
NETAPP, INC. |
|
RECONCILIATION OF NON-GAAP TO
GAAP |
|
INCOME STATEMENT INFORMATION |
|
(In millions, except net income (loss) per
share amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q4'FY17 |
|
|
Q3'FY17 |
|
|
Q4'FY16 |
|
|
FY2017 |
|
|
FY2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME
(LOSS) |
|
$ |
190 |
|
|
$ |
146 |
|
|
$ |
(8 |
) |
|
$ |
509 |
|
|
$ |
229 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets |
|
|
13 |
|
|
|
13 |
|
|
|
25 |
|
|
|
48 |
|
|
|
67 |
|
Stock-based compensation |
|
|
46 |
|
|
|
46 |
|
|
|
61 |
|
|
|
195 |
|
|
|
260 |
|
Asset
impairment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
11 |
|
Restructuring charges |
|
|
— |
|
|
|
52 |
|
|
|
80 |
|
|
|
52 |
|
|
|
108 |
|
Acquisition-related expense |
|
|
— |
|
|
|
— |
|
|
|
6 |
|
|
|
— |
|
|
|
8 |
|
Gain on
sale of properties |
|
|
— |
|
|
|
(10 |
) |
|
|
(51 |
) |
|
|
(10 |
) |
|
|
(51 |
) |
Income
tax effect of non-GAAP adjustments |
|
|
(10 |
) |
|
|
(16 |
) |
|
|
(20 |
) |
|
|
(26 |
) |
|
|
(86 |
) |
Income
tax expenses from integration of intellectual properties from
acquisition |
|
|
— |
|
|
|
— |
|
|
|
64 |
|
|
|
— |
|
|
|
64 |
|
Settlement of income tax audit |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
23 |
|
NON-GAAP NET
INCOME |
|
$ |
239 |
|
|
$ |
231 |
|
|
$ |
157 |
|
|
$ |
768 |
|
|
$ |
633 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COST OF
REVENUES |
|
$ |
568 |
|
|
$ |
553 |
|
|
$ |
562 |
|
|
$ |
2,129 |
|
|
$ |
2,173 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets |
|
|
(8 |
) |
|
|
(8 |
) |
|
|
(20 |
) |
|
|
(29 |
) |
|
|
(61 |
) |
Stock-based compensation |
|
|
(4 |
) |
|
|
(4 |
) |
|
|
(5 |
) |
|
|
(17 |
) |
|
|
(24 |
) |
Asset
impairment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(11 |
) |
NON-GAAP COST
OF REVENUES |
|
$ |
556 |
|
|
$ |
541 |
|
|
$ |
537 |
|
|
$ |
2,083 |
|
|
$ |
2,077 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COST OF PRODUCT
REVENUES |
|
$ |
444 |
|
|
$ |
435 |
|
|
$ |
424 |
|
|
$ |
1,614 |
|
|
$ |
1,558 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets |
|
|
(8 |
) |
|
|
(8 |
) |
|
|
(20 |
) |
|
|
(29 |
) |
|
|
(61 |
) |
Stock-based compensation |
|
|
(1 |
) |
|
|
(1 |
) |
|
|
(1 |
) |
|
|
(4 |
) |
|
|
(5 |
) |
Asset
impairment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(5 |
) |
NON-GAAP COST
OF PRODUCT REVENUES |
|
$ |
435 |
|
|
$ |
426 |
|
|
$ |
403 |
|
|
$ |
1,581 |
|
|
$ |
1,487 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COST OF
HARDWARE MAINTENANCE AND OTHER SERVICES REVENUES |
|
$ |
118 |
|
|
$ |
111 |
|
|
$ |
129 |
|
|
$ |
487 |
|
|
$ |
578 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation |
|
|
(3 |
) |
|
|
(3 |
) |
|
|
(4 |
) |
|
|
(13 |
) |
|
|
(19 |
) |
Asset
impairment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(6 |
) |
NON-GAAP COST
OF HARDWARE MAINTENANCE AND OTHER SERVICES REVENUES |
|
$ |
115 |
|
|
$ |
108 |
|
|
$ |
125 |
|
|
$ |
474 |
|
|
$ |
553 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GROSS
PROFIT |
|
$ |
913 |
|
|
$ |
851 |
|
|
$ |
818 |
|
|
$ |
3,390 |
|
|
$ |
3,373 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets |
|
|
8 |
|
|
|
8 |
|
|
|
20 |
|
|
|
29 |
|
|
|
61 |
|
Stock-based compensation |
|
|
4 |
|
|
|
4 |
|
|
|
5 |
|
|
|
17 |
|
|
|
24 |
|
Asset
impairment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
11 |
|
NON-GAAP GROSS
PROFIT |
|
$ |
925 |
|
|
$ |
863 |
|
|
$ |
843 |
|
|
$ |
3,436 |
|
|
$ |
3,469 |
|
NETAPP, INC. |
|
RECONCILIATION OF NON-GAAP TO
GAAP |
|
INCOME STATEMENT INFORMATION |
|
(In millions, except net income (loss) per
share amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q4'FY17 |
|
|
Q3'FY17 |
|
|
Q4'FY16 |
|
|
FY2017 |
|
|
FY2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SALES AND
MARKETING EXPENSES |
|
$ |
405 |
|
|
$ |
381 |
|
|
$ |
434 |
|
|
$ |
1,633 |
|
|
$ |
1,792 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets |
|
|
(5 |
) |
|
|
(5 |
) |
|
|
(5 |
) |
|
|
(19 |
) |
|
|
(6 |
) |
Stock-based compensation |
|
|
(20 |
) |
|
|
(20 |
) |
|
|
(26 |
) |
|
|
(84 |
) |
|
|
(110 |
) |
NON-GAAP SALES
AND MARKETING EXPENSES |
|
$ |
380 |
|
|
$ |
356 |
|
|
$ |
403 |
|
|
$ |
1,530 |
|
|
$ |
1,676 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RESEARCH AND
DEVELOPMENT EXPENSES |
|
$ |
191 |
|
|
$ |
181 |
|
|
$ |
201 |
|
|
$ |
779 |
|
|
$ |
861 |
|
Adjustment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation |
|
|
(13 |
) |
|
|
(14 |
) |
|
|
(20 |
) |
|
|
(59 |
) |
|
|
(84 |
) |
NON-GAAP
RESEARCH AND DEVELOPMENT EXPENSES |
|
$ |
178 |
|
|
$ |
167 |
|
|
$ |
181 |
|
|
$ |
720 |
|
|
$ |
777 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GENERAL AND
ADMINISTRATIVE EXPENSES |
|
$ |
70 |
|
|
$ |
64 |
|
|
$ |
84 |
|
|
$ |
271 |
|
|
$ |
307 |
|
Adjustment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation |
|
|
(9 |
) |
|
|
(8 |
) |
|
|
(10 |
) |
|
|
(35 |
) |
|
|
(42 |
) |
NON-GAAP
GENERAL AND ADMINISTRATIVE EXPENSES |
|
$ |
61 |
|
|
$ |
56 |
|
|
$ |
74 |
|
|
$ |
236 |
|
|
$ |
265 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RESTRUCTURING
CHARGES |
|
$ |
— |
|
|
$ |
52 |
|
|
$ |
80 |
|
|
$ |
52 |
|
|
$ |
108 |
|
Adjustment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring charges |
|
|
— |
|
|
|
(52 |
) |
|
|
(80 |
) |
|
|
(52 |
) |
|
|
(108 |
) |
NON-GAAP
RESTRUCTURING CHARGES |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ACQUISITION-RELATED EXPENSE |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
6 |
|
|
$ |
— |
|
|
$ |
8 |
|
Adjustment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition-related expense |
|
|
— |
|
|
|
— |
|
|
|
(6 |
) |
|
|
— |
|
|
|
(8 |
) |
NON-GAAP
ACQUISITION-RELATED EXPENSE |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAIN ON SALE OF
PROPERTIES |
|
$ |
— |
|
|
$ |
(10 |
) |
|
$ |
(51 |
) |
|
$ |
(10 |
) |
|
$ |
(51 |
) |
Adjustment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on
sale of properties |
|
|
— |
|
|
|
10 |
|
|
|
51 |
|
|
|
10 |
|
|
|
51 |
|
NON-GAAP GAIN
ON SALE OF PROPERTIES |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
EXPENSES |
|
$ |
666 |
|
|
$ |
668 |
|
|
$ |
754 |
|
|
$ |
2,725 |
|
|
$ |
3,025 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets |
|
|
(5 |
) |
|
|
(5 |
) |
|
|
(5 |
) |
|
|
(19 |
) |
|
|
(6 |
) |
Stock-based compensation |
|
|
(42 |
) |
|
|
(42 |
) |
|
|
(56 |
) |
|
|
(178 |
) |
|
|
(236 |
) |
Restructuring charges |
|
|
— |
|
|
|
(52 |
) |
|
|
(80 |
) |
|
|
(52 |
) |
|
|
(108 |
) |
Acquisition-related expense |
|
|
— |
|
|
|
— |
|
|
|
(6 |
) |
|
|
— |
|
|
|
(8 |
) |
Gain on
sale of properties |
|
|
— |
|
|
|
10 |
|
|
|
51 |
|
|
|
10 |
|
|
|
51 |
|
NON-GAAP
OPERATING EXPENSES |
|
$ |
619 |
|
|
$ |
579 |
|
|
$ |
658 |
|
|
$ |
2,486 |
|
|
$ |
2,718 |
|
NETAPP, INC. |
|
RECONCILIATION OF NON-GAAP TO
GAAP |
|
INCOME STATEMENT INFORMATION |
|
(In millions, except net income (loss) per
share amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q4'FY17 |
|
|
Q3'FY17 |
|
|
Q4'FY16 |
|
|
FY2017 |
|
|
FY2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME FROM
OPERATIONS |
|
$ |
247 |
|
|
$ |
183 |
|
|
$ |
64 |
|
|
$ |
665 |
|
|
$ |
348 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets |
|
|
13 |
|
|
|
13 |
|
|
|
25 |
|
|
|
48 |
|
|
|
67 |
|
Stock-based compensation |
|
|
46 |
|
|
|
46 |
|
|
|
61 |
|
|
|
195 |
|
|
|
260 |
|
Asset
impairment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
11 |
|
Restructuring charges |
|
|
— |
|
|
|
52 |
|
|
|
80 |
|
|
|
52 |
|
|
|
108 |
|
Acquisition-related expense |
|
|
— |
|
|
|
— |
|
|
|
6 |
|
|
|
— |
|
|
|
8 |
|
Gain on
sale of properties |
|
|
— |
|
|
|
(10 |
) |
|
|
(51 |
) |
|
|
(10 |
) |
|
|
(51 |
) |
NON-GAAP INCOME
FROM OPERATIONS |
|
$ |
306 |
|
|
$ |
284 |
|
|
$ |
185 |
|
|
$ |
950 |
|
|
$ |
751 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME BEFORE
INCOME TAXES |
|
$ |
248 |
|
|
$ |
183 |
|
|
$ |
60 |
|
|
$ |
665 |
|
|
$ |
345 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets |
|
|
13 |
|
|
|
13 |
|
|
|
25 |
|
|
|
48 |
|
|
|
67 |
|
Stock-based compensation |
|
|
46 |
|
|
|
46 |
|
|
|
61 |
|
|
|
195 |
|
|
|
260 |
|
Asset
impairment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
11 |
|
Restructuring charges |
|
|
— |
|
|
|
52 |
|
|
|
80 |
|
|
|
52 |
|
|
|
108 |
|
Acquisition-related expense |
|
|
— |
|
|
|
— |
|
|
|
6 |
|
|
|
— |
|
|
|
8 |
|
Gain on
sale of properties |
|
|
— |
|
|
|
(10 |
) |
|
|
(51 |
) |
|
|
(10 |
) |
|
|
(51 |
) |
NON-GAAP INCOME
BEFORE INCOME TAXES |
|
$ |
307 |
|
|
$ |
284 |
|
|
$ |
181 |
|
|
$ |
950 |
|
|
$ |
748 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PROVISION FOR
INCOME TAXES |
|
$ |
58 |
|
|
$ |
37 |
|
|
$ |
68 |
|
|
$ |
156 |
|
|
$ |
116 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
tax effect of non-GAAP adjustments |
|
|
10 |
|
|
|
16 |
|
|
|
20 |
|
|
|
26 |
|
|
|
86 |
|
Income
tax expenses from integration of intellectual properties from
acquisition |
|
|
— |
|
|
|
— |
|
|
|
(64 |
) |
|
|
— |
|
|
|
(64 |
) |
Settlement of income tax audit |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(23 |
) |
NON-GAAP
PROVISION FOR INCOME TAXES |
|
$ |
68 |
|
|
$ |
53 |
|
|
$ |
24 |
|
|
$ |
182 |
|
|
$ |
115 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME
(LOSS) PER SHARE |
|
$ |
0.68 |
|
|
$ |
0.52 |
|
|
$ |
(0.03 |
) |
|
$ |
1.81 |
|
|
$ |
0.77 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets |
|
|
0.05 |
|
|
|
0.05 |
|
|
|
0.09 |
|
|
|
0.17 |
|
|
|
0.23 |
|
Stock-based compensation |
|
|
0.17 |
|
|
|
0.16 |
|
|
|
0.21 |
|
|
|
0.69 |
|
|
|
0.88 |
|
Asset
impairment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.04 |
|
Restructuring charges |
|
|
— |
|
|
|
0.19 |
|
|
|
0.28 |
|
|
|
0.19 |
|
|
|
0.36 |
|
Acquisition-related expense |
|
|
— |
|
|
|
— |
|
|
|
0.02 |
|
|
|
— |
|
|
|
0.03 |
|
Gain on
sale of properties |
|
|
— |
|
|
|
(0.04 |
) |
|
|
(0.18 |
) |
|
|
(0.04 |
) |
|
|
(0.17 |
) |
Income
tax effect of non-GAAP adjustments |
|
|
(0.04 |
) |
|
|
(0.06 |
) |
|
|
(0.07 |
) |
|
|
(0.09 |
) |
|
|
(0.29 |
) |
Income
tax expenses from integration of intellectual properties from
acquisition |
|
|
— |
|
|
|
— |
|
|
|
0.23 |
|
|
|
— |
|
|
|
0.22 |
|
Settlement of income tax audit |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.08 |
|
NON-GAAP NET
INCOME PER SHARE |
|
$ |
0.86 |
|
|
$ |
0.82 |
|
|
$ |
0.55 |
|
|
$ |
2.73 |
|
|
$ |
2.13 |
|
RECONCILIATION OF NON-GAAP TO
GAAP |
|
GROSS MARGIN |
|
($ in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q4'FY17 |
|
|
Q3'FY17 |
|
|
Q4'FY16 |
|
|
FY2017 |
|
|
FY2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
margin-GAAP |
|
|
61.6 |
% |
|
|
60.6 |
% |
|
|
59.3 |
% |
|
|
61.4 |
% |
|
|
60.8 |
% |
Cost of
revenues adjustments |
|
|
0.8 |
% |
|
|
0.9 |
% |
|
|
1.8 |
% |
|
|
0.8 |
% |
|
|
1.7 |
% |
Gross
margin-Non-GAAP |
|
|
62.5 |
% |
|
|
61.5 |
% |
|
|
61.1 |
% |
|
|
62.3 |
% |
|
|
62.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP cost of
revenues |
|
$ |
568 |
|
|
$ |
553 |
|
|
$ |
562 |
|
|
$ |
2,129 |
|
|
$ |
2,173 |
|
Cost of revenues
adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets |
|
|
(8 |
) |
|
|
(8 |
) |
|
|
(20 |
) |
|
|
(29 |
) |
|
|
(61 |
) |
Stock-based compensation |
|
|
(4 |
) |
|
|
(4 |
) |
|
|
(5 |
) |
|
|
(17 |
) |
|
|
(24 |
) |
Asset
impairment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(11 |
) |
Non-GAAP cost of
revenues |
|
$ |
556 |
|
|
$ |
541 |
|
|
$ |
537 |
|
|
$ |
2,083 |
|
|
$ |
2,077 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues |
|
$ |
1,481 |
|
|
$ |
1,404 |
|
|
$ |
1,380 |
|
|
$ |
5,519 |
|
|
$ |
5,546 |
|
RECONCILIATION OF NON-GAAP TO
GAAP |
|
PRODUCT GROSS MARGIN |
|
($ in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q4'FY17 |
|
|
Q3'FY17 |
|
|
Q4'FY16 |
|
|
FY2017 |
|
|
FY2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product gross
margin-GAAP |
|
|
47.9 |
% |
|
|
44.5 |
% |
|
|
44.0 |
% |
|
|
46.3 |
% |
|
|
47.8 |
% |
Cost of
product revenues adjustments |
|
|
1.1 |
% |
|
|
1.1 |
% |
|
|
2.8 |
% |
|
|
1.1 |
% |
|
|
2.4 |
% |
Product gross
margin-Non-GAAP |
|
|
48.9 |
% |
|
|
45.7 |
% |
|
|
46.8 |
% |
|
|
47.4 |
% |
|
|
50.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP cost of product
revenues |
|
$ |
444 |
|
|
$ |
435 |
|
|
$ |
424 |
|
|
$ |
1,614 |
|
|
$ |
1,558 |
|
Cost of product
revenues adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets |
|
|
(8 |
) |
|
|
(8 |
) |
|
|
(20 |
) |
|
|
(29 |
) |
|
|
(61 |
) |
Stock-based compensation |
|
|
(1 |
) |
|
|
(1 |
) |
|
|
(1 |
) |
|
|
(4 |
) |
|
|
(5 |
) |
Asset
impairment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(5 |
) |
Non-GAAP cost of
product revenues |
|
$ |
435 |
|
|
$ |
426 |
|
|
$ |
403 |
|
|
$ |
1,581 |
|
|
$ |
1,487 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product revenues |
|
$ |
852 |
|
|
$ |
784 |
|
|
$ |
757 |
|
|
$ |
3,006 |
|
|
$ |
2,986 |
|
RECONCILIATION OF NON-GAAP TO
GAAP |
|
HARDWARE MAINTENANCE AND OTHER SERVICES GROSS
MARGIN |
|
($ in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q4'FY17 |
|
|
Q3'FY17 |
|
|
Q4'FY16 |
|
|
FY2017 |
|
|
FY2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hardware
maintenance and other services gross margin-GAAP |
|
|
69.5 |
% |
|
|
70.8 |
% |
|
|
66.8 |
% |
|
|
68.5 |
% |
|
|
64.1 |
% |
Cost of
hardware maintenance and other services revenues adjustments |
|
|
0.8 |
% |
|
|
0.8 |
% |
|
|
1.0 |
% |
|
|
0.8 |
% |
|
|
1.6 |
% |
Hardware
maintenance and other services gross margin-Non-GAAP |
|
|
70.3 |
% |
|
|
71.6 |
% |
|
|
67.9 |
% |
|
|
69.4 |
% |
|
|
65.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP cost of hardware
maintenance and other services revenues |
|
$ |
118 |
|
|
$ |
111 |
|
|
$ |
129 |
|
|
$ |
487 |
|
|
$ |
578 |
|
Cost of hardware
maintenance and other services revenues adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation |
|
|
(3 |
) |
|
|
(3 |
) |
|
|
(4 |
) |
|
|
(13 |
) |
|
|
(19 |
) |
Asset
impairment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(6 |
) |
Non-GAAP cost of
hardware maintenance and other services revenues |
|
$ |
115 |
|
|
$ |
108 |
|
|
$ |
125 |
|
|
$ |
474 |
|
|
$ |
553 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hardware maintenance
and other services revenues |
|
$ |
387 |
|
|
$ |
380 |
|
|
$ |
389 |
|
|
$ |
1,548 |
|
|
$ |
1,611 |
|
RECONCILIATION OF NON-GAAP TO
GAAP |
|
EFFECTIVE TAX RATE |
|
|
|
|
|
|
|
|
|
|
|
|
|
Q4'FY17 |
|
|
Q3'FY17 |
|
|
Q4'FY16 |
|
|
FY2017 |
|
|
FY2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP effective
tax rate |
|
|
23.4 |
% |
|
|
20.2 |
% |
|
|
113.3 |
% |
|
|
23.5 |
% |
|
|
33.6 |
% |
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax
effect of non-GAAP adjustments |
|
|
(1.3 |
)% |
|
|
(1.6 |
)% |
|
|
(64.9 |
)% |
|
|
(4.3 |
)% |
|
|
(6.6 |
)% |
Income
tax expenses from integration of intellectual properties from
acquisition |
|
|
— |
% |
|
|
— |
% |
|
|
(35.4 |
)% |
|
|
— |
% |
|
|
(8.6 |
)% |
Settlement of income tax audit |
|
|
— |
% |
|
|
— |
% |
|
|
— |
% |
|
|
— |
% |
|
|
(3.1 |
)% |
Non-GAAP
effective tax rate |
|
|
22.1 |
% |
|
|
18.6 |
% |
|
|
13.1 |
% |
|
|
19.2 |
% |
|
|
15.4 |
% |
RECONCILIATION OF NET CASH PROVIDED BY
OPERATING ACTIVITIES |
|
TO FREE CASH FLOW (NON-GAAP) |
|
(In millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q4'FY17 |
|
|
Q3'FY17 |
|
|
Q4'FY16 |
|
|
FY2017 |
|
|
FY2016 |
|
Net cash provided by
operating activities |
|
$ |
365 |
|
|
$ |
235 |
|
|
$ |
345 |
|
|
$ |
986 |
|
|
$ |
974 |
|
Purchases of property
and equipment |
|
|
(38 |
) |
|
|
(45 |
) |
|
|
(35 |
) |
|
|
(175 |
) |
|
|
(160 |
) |
Free cash
flow |
|
$ |
327 |
|
|
$ |
190 |
|
|
$ |
310 |
|
|
$ |
811 |
|
|
$ |
814 |
|
Some items may not add or recalculate due to rounding.
NETAPP, INC. |
|
RECONCILIATION OF NON-GAAP GUIDANCE TO
GAAP |
|
EXPRESSED AS EARNINGS PER SHARE |
|
FIRST QUARTER FISCAL 2018 |
|
|
|
|
|
|
|
|
First Quarter |
|
|
|
Fiscal 2018 |
|
|
|
|
|
|
Non-GAAP Guidance - Net
Income Per Share |
|
$0.49 - $0.57 |
|
|
|
|
|
|
Adjustments of Specific
Items to Net Income |
|
|
|
|
Per Share
for the First Quarter Fiscal 2018: |
|
|
|
|
Amortization of intangible assets |
|
|
(0.05 |
) |
Stock-based compensation expense |
|
|
(0.17 |
) |
Income
tax effect of non-GAAP adjustments |
|
|
0.03 |
|
Total Adjustments |
|
|
(0.19 |
) |
|
|
|
|
|
GAAP Guidance - Net
Income Per Share |
|
$0.30 - $0.38 |
|
NETAPP, INC. |
RECONCILIATION OF NON-GAAP GUIDANCE TO
GAAP |
FISCAL 2018 |
(Unaudited) |
|
|
|
|
|
|
|
|
GROSS MARGIN |
|
|
|
Gross Margin - Non-GAAP
Guidance |
|
62% - 63% |
Adjustment: |
|
|
Cost of
revenues adjustments |
|
(1)% |
Gross Margin - GAAP
Guidance |
|
61% - 62% |
|
|
|
|
|
|
|
|
OPERATING MARGIN |
|
|
|
Operating Margin -
Non-GAAP Guidance |
|
18% - 20% |
Adjustments: |
|
|
Amortization of intangible assets |
|
(1)% |
Stock-based compensation expense |
|
(3)% |
Operating Margin - GAAP
Guidance |
|
14% - 16% |
|
|
|
|
|
|
|
|
|
|
|
EFFECTIVE TAX RATE |
|
|
|
Effective Tax Rate -
Non-GAAP Guidance |
|
19% - 20% |
Adjustment: |
|
|
Tax
effect of non-GAAP adjustments |
|
4% |
Effective Tax Rate -
GAAP Guidance |
|
23% - 24% |
Some items may not add or recalculate due to rounding.
Press Contact:
Judy Radlinsky
NetApp
1 408 822 6527
judy.radlinsky@netapp.com
Investor Contact:
Kris Newton
NetApp
1 408 822 3312
kris.newton@netapp.com
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