[May 23, 2018] |
|
NetApp Reports Fourth Quarter and Fiscal Year 2018 Results
NetApp (NASDAQ: NTAP) today reported financial results for the fourth
quarter and fiscal year 2018, ended April 27, 2018.
"The fourth quarter marked a great finish to a strong year. We
successfully pivoted to the growth areas of the market, expanded our
opportunity with HCI and new cloud partnerships, and improved
operational discipline to deliver sustained and profitable growth," said
George Kurian, chief executive officer. "Clear innovation leadership,
coupled with strong go-to-market execution, has enabled us to gain share
in all key product categories and in every geography. Our momentum with
customers continues to accelerate and we are increasingly viewed as a
critical strategic partner for data-driven digital transformations."
Fourth Quarter Fiscal Year 2018 Financial Results
-
Net Revenues: $1.64 billion, increased 11% year-over-year from
$1.48 billion in the fourth quarter of fiscal 2017
-
Net Income: GAAP net income of $271 million, compared to GAAP
net income of $190 million in the fourth quarter of fiscal 2017;
non-GAAP net income1 of $288 million, compared to non-GAAP
net income of $239 million in the fourth quarter of fiscal 2017
-
Earnings per Share: GAAP earnings per share2 of
$0.99 compared to GAAP earnings per share of $0.68 in the fourth
quarter of fiscal 2017; non-GAAP earnings per share of $1.05, compared
to non-GAAP earnings per share of $0.86 in the fourth quarter of
fiscal 2017
-
Cash, Cash Equivalents and Investments: $5.4 billion at the end
of fiscal 2018
-
Cash from Operations: $494 million, compared to $365 million in
the fourth quarter of fiscal 2017
-
Share Repurchase and Dividend: Returned $397 million to
shareholders through share repurchases and a cash dividend
Fiscal Year 2018 Financial Results
-
Net Revenues: $5.91 billion, increased 7% year-over-year from
$5.52 billion in fiscal 2017
-
Net Income: GAAP net income of $76 million*, compared to GAAP
net income of $509 million in fiscal 2017; non-GAAP net income of $957
million, compared to non-GAAP net income of $768 million in fiscal 2017
-
Earnings per Share: GAAP earnings per share of $0.28*, compared
to GAAP earnings per share of $1.81 in fiscal 2017; non-GAAP earnings
per share of $3.47, compared to non-GAAP earnings per share of $2.73
in fiscal 2017
-
Cash from Operations: $1.48 billion, compared to $986 million
in fiscal year 2017
-
Share Repurchase and Dividend: Returned $1.01 billion to
shareholders through share repurchases and cash dividends
*On December 22, 2017, The 2017 Tax Reform Reconciliation Act was
enacted into law. This tax reform legislation contains several key tax
provisions that affected the company, including a one-time mandatory
transition tax on accumulated foreign earnings and a reduction of the
U.S. corporate income tax rate to 21% effective January 1, 2018, among
others. GAAP net income in fiscal year 2018 was impacted by a resulting
one-time charge of approximately $850 million.
|
First Quarter Fiscal Year 2019 Financial Outlook
|
The Company provided the following financial guidance for the
first quarter of fiscal year 2019:
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• Net revenues are expected to be in the range of $1.365 billion
to $1.465 billion
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GAAP
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Non-GAAP
|
• Earnings per share is expected to be in the range of:
|
|
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$0.53-$0.59
|
|
|
$0.76-$0.82
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Full Fiscal Year 2019 Financial Outlook
|
The Company provided the following financial guidance for the full
fiscal year 2019:
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• Net revenues are expected to grow in the mid-single digits
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GAAP
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Non-GAAP
|
• Consolidated gross margins are expected to be:
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~62%
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~63%
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• Operating margins are expected to be in the range of:
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18%-19%
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20%-21%
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• Effective tax rate is expected to be:
|
|
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~22%
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~18%
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Dividend
-
In the first quarter of fiscal year 2019, the Company will double its
quarterly dividend to $0.40 per share. The quarterly dividend will be
paid on July 25, 2018 to shareholders of record as of the close of
business on July 6, 2018.
Fourth Quarter Fiscal Year 2018 Business Highlights
-
Ducati partners with NetApp to drive digital transformation of
motorcycle racing in the MotoGP World Championship, counting on the NetApp™
Data Fabric as it participates in 19 races in 15 countries on 5
continents around the globe. Ducati will use NetApp technologies to
modernize its IT and data protection infrastructure, enhancing data
protection and security.
-
NetApp helps customers build General Data Protection
Regulation (GDPR)-compliant processes. NetApp helps
customers integrate NetApp and partner technologies to enable them to
identify where personal information is held, improve their data
management and governance processes, and build GDPR-compliant
processes into their day-to-day activities.
-
NetApp is one of the few data management companies with a
dedicated healthcare solutions team and is uniquely positioned to
assist healthcare organizations providing secure access to critical
information, so customers can quickly accelerate workloads and
analytics and can integrate cloud data services with industry-leading
simplicity and efficiency.
Webcast and Conference Call Information
NetApp will host a conference call to discuss these results today at
2:00 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 4:00 p.m. Pacific Time today.
About NetApp
NetApp is the data authority for hybrid cloud. We provide a full range
of hybrid cloud data services that simplify management of applications
and data across cloud and on-premises environments to accelerate digital
transformation. Together with our partners, we empower global
organizations to unleash the full potential of their data to expand
customer touchpoints, foster greater innovation, and optimize their
operations. For more information, visit www.netapp.com.
#DataDriven
"Safe Harbor" Statement Under U.S. Private Securities Litigation
Reform Act of 1995
This 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 First Quarter Fiscal Year 2019 Financial Outlook and the Full
Fiscal Year 2019 Financial Outlook sections, statements about our
ability to deliver sustained and profitable growth, and statements about
the acceleration of our momentum with customers. 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
expand our total available market and grow our portfolio of products,
customer demand for and acceptance of our products and services, our
ability to successfully execute new business models, our ability to
successfully execute on our Data Fabric strategy to generate profitable
growth and stockholder return 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 reports on Form
10-Q and 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.
Footnotes
1Non-GAAP net income excludes, when applicable,
(a) amortization of intangible assets, (b) stock-based compensation
expenses, (c) litigation settlements, (d) acquisition-related expenses,
(e) restructuring charges, (f) asset impairments, (g) gains/losses on
the sale of properties, and (h) 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. 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.
2GAAP earnings per share and non-GAAP earnings per share are
calculated using the diluted number of shares.
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.
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. Litigation settlements. NetApp may periodically incur charges
or benefits related to litigation settlements. NetApp excludes these
charges and benefits, when significant, because it does not believe they
are reflective of ongoing business and operating results.
D. 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.
E. 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.
F. 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.
G. 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.
H. 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.
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NETAPP, INC.
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CONDENSED CONSOLIDATED BALANCE SHEETS
|
(In millions)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
April 27,
|
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|
April 28,
|
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|
2018
|
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|
2017
|
|
|
|
|
|
|
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|
|
ASSETS
|
|
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|
|
|
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|
|
|
|
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|
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Current assets:
|
|
|
|
|
|
|
|
|
Cash, cash equivalents and investments
|
|
|
$
|
5,391
|
|
|
$
|
4,921
|
Accounts receivable
|
|
|
|
1,009
|
|
|
|
731
|
Inventories
|
|
|
|
126
|
|
|
|
163
|
Other current assets
|
|
|
|
330
|
|
|
|
383
|
Total current assets
|
|
|
|
6,856
|
|
|
|
6,198
|
|
|
|
|
|
|
|
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|
Property and equipment, net
|
|
|
|
756
|
|
|
|
799
|
Goodwill and purchased intangible assets, net
|
|
|
|
1,833
|
|
|
|
1,815
|
Other non-current assets
|
|
|
|
420
|
|
|
|
681
|
Total assets
|
|
|
$
|
9,865
|
|
|
$
|
9,493
|
|
|
|
|
|
|
|
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|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
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|
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|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
$
|
609
|
|
|
$
|
347
|
Accrued expenses
|
|
|
|
825
|
|
|
|
782
|
Commercial paper notes
|
|
|
|
385
|
|
|
|
500
|
Current portion of long-term debt
|
|
|
|
-
|
|
|
|
749
|
Short-term deferred revenue and financed unearned services revenue
|
|
|
|
1,804
|
|
|
|
1,744
|
Total current liabilities
|
|
|
|
3,623
|
|
|
|
4,122
|
Long-term debt
|
|
|
|
1,541
|
|
|
|
744
|
Other long-term liabilities
|
|
|
|
961
|
|
|
|
249
|
Long-term deferred revenue and financed unearned services revenue
|
|
|
|
1,673
|
|
|
|
1,598
|
Total liabilities
|
|
|
|
7,798
|
|
|
|
6,713
|
|
|
|
|
|
|
|
|
|
Stockholders' equity
|
|
|
|
2,067
|
|
|
|
2,780
|
Total liabilities and stockholders' equity
|
|
|
$
|
9,865
|
|
|
$
|
9,493
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
NETAPP, INC.
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
(In millions, except per share amounts)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
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Year Ended
|
|
|
|
|
April 27, 2018
|
|
|
April 28, 2017
|
|
|
April 27, 2018
|
|
|
April 28, 2017
|
|
|
|
|
|
|
|
|
|
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|
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|
|
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Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product
|
|
|
$
|
1,011
|
|
|
$
|
852
|
|
|
$
|
3,461
|
|
|
$
|
3,006
|
|
Software maintenance
|
|
|
|
247
|
|
|
|
242
|
|
|
|
958
|
|
|
|
965
|
|
Hardware maintenance and other services
|
|
|
|
383
|
|
|
|
387
|
|
|
|
1,492
|
|
|
|
1,548
|
|
Net revenues
|
|
|
|
1,641
|
|
|
|
1,481
|
|
|
|
5,911
|
|
|
|
5,519
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of product
|
|
|
|
500
|
|
|
|
444
|
|
|
|
1,738
|
|
|
|
1,614
|
|
Cost of software maintenance
|
|
|
|
6
|
|
|
|
6
|
|
|
|
25
|
|
|
|
28
|
|
Cost of hardware maintenance and other services
|
|
|
|
113
|
|
|
|
118
|
|
|
|
449
|
|
|
|
487
|
|
Total cost of revenues
|
|
|
|
619
|
|
|
|
568
|
|
|
|
2,212
|
|
|
|
2,129
|
|
Gross profit
|
|
|
|
1,022
|
|
|
|
913
|
|
|
|
3,699
|
|
|
|
3,390
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing
|
|
|
|
461
|
|
|
|
405
|
|
|
|
1,729
|
|
|
|
1,633
|
|
Research and development
|
|
|
|
203
|
|
|
|
191
|
|
|
|
783
|
|
|
|
779
|
|
General and administrative
|
|
|
|
71
|
|
|
|
70
|
|
|
|
280
|
|
|
|
271
|
|
Restructuring charges
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
52
|
|
Gain on sale of properties
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(218
|
)
|
|
|
(10
|
)
|
Total operating expenses
|
|
|
|
735
|
|
|
|
666
|
|
|
|
2,574
|
|
|
|
2,725
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from operations
|
|
|
|
287
|
|
|
|
247
|
|
|
|
1,125
|
|
|
|
665
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense), net
|
|
|
|
16
|
|
|
|
1
|
|
|
|
41
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
|
303
|
|
|
|
248
|
|
|
|
1,166
|
|
|
|
665
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes
|
|
|
|
32
|
|
|
|
58
|
|
|
|
1,090
|
|
|
|
156
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
$
|
271
|
|
|
$
|
190
|
|
|
$
|
76
|
|
|
$
|
509
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
$
|
1.02
|
|
|
$
|
0.70
|
|
|
$
|
0.28
|
|
|
$
|
1.85
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
$
|
0.99
|
|
|
$
|
0.68
|
|
|
$
|
0.28
|
|
|
$
|
1.81
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in net income per share calculations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
265
|
|
|
|
270
|
|
|
|
268
|
|
|
|
275
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
|
273
|
|
|
|
278
|
|
|
|
276
|
|
|
|
281
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends declared per share
|
|
|
$
|
0.20
|
|
|
$
|
0.19
|
|
|
$
|
0.80
|
|
|
$
|
0.76
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NETAPP, INC.
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(In millions)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Year Ended
|
|
|
|
|
April 27, 2018
|
|
|
April 28, 2017
|
|
|
April 27, 2018
|
|
|
April 28, 2017
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
$
|
271
|
|
|
$
|
190
|
|
|
$
|
76
|
|
|
$
|
509
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
|
48
|
|
|
|
53
|
|
|
|
198
|
|
|
|
226
|
|
Stock-based compensation
|
|
|
|
36
|
|
|
|
46
|
|
|
|
161
|
|
|
|
195
|
|
Deferred income taxes
|
|
|
|
19
|
|
|
|
17
|
|
|
|
277
|
|
|
|
90
|
|
Gain on sale of properties
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(218
|
)
|
|
|
(10
|
)
|
Other items, net
|
|
|
|
(19
|
)
|
|
|
2
|
|
|
|
(27
|
)
|
|
|
(6
|
)
|
Changes in assets and liabilities, net of acquisitions of
businesses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
|
(264
|
)
|
|
|
(127
|
)
|
|
|
(272
|
)
|
|
|
81
|
|
Inventories
|
|
|
|
(28
|
)
|
|
|
(38
|
)
|
|
|
37
|
|
|
|
(65
|
)
|
Accounts payable
|
|
|
|
147
|
|
|
|
81
|
|
|
|
262
|
|
|
|
94
|
|
Accrued expenses
|
|
|
|
104
|
|
|
|
35
|
|
|
|
162
|
|
|
|
(86
|
)
|
Deferred revenue and financed unearned services revenue
|
|
|
|
226
|
|
|
|
111
|
|
|
|
124
|
|
|
|
(37
|
)
|
Long-term taxes payable
|
|
|
|
(9
|
)
|
|
|
10
|
|
|
|
714
|
|
|
|
(6
|
)
|
Changes in other operating assets and liabilities, net
|
|
|
|
(37
|
)
|
|
|
(15
|
)
|
|
|
(16
|
)
|
|
|
1
|
|
Net cash provided by operating activities
|
|
|
|
494
|
|
|
|
365
|
|
|
|
1,478
|
|
|
|
986
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Redemptions (purchases) of investments, net
|
|
|
|
168
|
|
|
|
(45
|
)
|
|
|
(10
|
)
|
|
|
(43
|
)
|
Purchases of property and equipment
|
|
|
|
(48
|
)
|
|
|
(38
|
)
|
|
|
(145
|
)
|
|
|
(175
|
)
|
Proceeds from sale of properties
|
|
|
|
-
|
|
|
|
-
|
|
|
|
210
|
|
|
|
-
|
|
Acquisitions of businesses, net of cash acquired
|
|
|
|
-
|
|
|
|
(8
|
)
|
|
|
(75
|
)
|
|
|
(8
|
)
|
Other investing activities, net
|
|
|
|
-
|
|
|
|
4
|
|
|
|
(1
|
)
|
|
|
6
|
|
Net cash provided by (used in) investing activities
|
|
|
|
120
|
|
|
|
(87
|
)
|
|
|
(21
|
)
|
|
|
(220
|
)
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from issuance of common stock under employee stock award
plans
|
|
|
|
16
|
|
|
|
28
|
|
|
|
173
|
|
|
|
140
|
|
Payments for taxes related to net share settlement of stock awards
|
|
|
|
(8
|
)
|
|
|
(6
|
)
|
|
|
(75
|
)
|
|
|
(48
|
)
|
Repurchase of common stock
|
|
|
|
(344
|
)
|
|
|
(129
|
)
|
|
|
(794
|
)
|
|
|
(705
|
)
|
Proceeds from (repayments of) commercial paper notes, net
|
|
|
|
(247
|
)
|
|
|
107
|
|
|
|
(115
|
)
|
|
|
499
|
|
Issuance of long-term debt, net
|
|
|
|
-
|
|
|
|
-
|
|
|
|
795
|
|
|
|
-
|
|
Repayment of short-term loan
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(850
|
)
|
Repayment of long-term debt
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(750
|
)
|
|
|
-
|
|
Dividends paid
|
|
|
|
(53
|
)
|
|
|
(51
|
)
|
|
|
(214
|
)
|
|
|
(208
|
)
|
Other financing activities, net
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(6
|
)
|
|
|
(7
|
)
|
Net cash used in financing activities
|
|
|
|
(636
|
)
|
|
|
(51
|
)
|
|
|
(986
|
)
|
|
|
(1,179
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
|
(11
|
)
|
|
|
4
|
|
|
|
26
|
|
|
|
(11
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
|
(33
|
)
|
|
|
231
|
|
|
|
497
|
|
|
|
(424
|
)
|
Cash and cash equivalents:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of period
|
|
|
|
2,974
|
|
|
|
2,213
|
|
|
|
2,444
|
|
|
|
2,868
|
|
End of period
|
|
|
$
|
2,941
|
|
|
$
|
2,444
|
|
|
$
|
2,941
|
|
|
$
|
2,444
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NETAPP, INC.
|
|
SUPPLEMENTAL DATA
|
|
(In millions except net income per share, percentages, DSO, DIO,
DPO, CCC and Inventory Turns)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q4 FY'18
|
|
|
Q3 FY'18
|
|
|
Q4 FY'17
|
|
|
FY 2018
|
|
|
FY 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product
|
|
|
$
|
1,011
|
|
|
$
|
920
|
|
|
$
|
852
|
|
|
$
|
3,461
|
|
|
$
|
3,006
|
|
Strategic
|
|
|
$
|
745
|
|
|
$
|
647
|
|
|
$
|
596
|
|
|
$
|
2,449
|
|
|
$
|
1,971
|
|
Mature
|
|
|
$
|
266
|
|
|
$
|
273
|
|
|
$
|
256
|
|
|
$
|
1,012
|
|
|
$
|
1,035
|
|
Software Maintenance
|
|
|
$
|
247
|
|
|
$
|
237
|
|
|
$
|
242
|
|
|
$
|
958
|
|
|
$
|
965
|
|
Hardware Maintenance and Other Services
|
|
|
$
|
383
|
|
|
$
|
366
|
|
|
$
|
387
|
|
|
$
|
1,492
|
|
|
$
|
1,548
|
|
Hardware Maintenance Support Contracts
|
|
|
$
|
310
|
|
|
$
|
299
|
|
|
$
|
313
|
|
|
$
|
1,213
|
|
|
$
|
1,265
|
|
Professional and Other Services
|
|
|
$
|
73
|
|
|
$
|
67
|
|
|
$
|
74
|
|
|
$
|
279
|
|
|
$
|
283
|
|
Net Revenues
|
|
|
$
|
1,641
|
|
|
$
|
1,523
|
|
|
$
|
1,481
|
|
|
$
|
5,911
|
|
|
$
|
5,519
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Geographic Mix
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% of Q4
|
|
|
% of Q3
|
|
|
% of Q4
|
|
|
% of
|
|
|
% of
|
|
|
|
|
FY'18
|
|
|
FY'18
|
|
|
FY'17
|
|
|
FY 2018
|
|
|
FY 2017
|
|
|
|
|
Revenue
|
|
|
Revenue
|
|
|
Revenue
|
|
|
Revenue
|
|
|
Revenue
|
|
Americas
|
|
|
|
51
|
%
|
|
|
54
|
%
|
|
|
54
|
%
|
|
|
54
|
%
|
|
|
56
|
%
|
Americas Commercial
|
|
|
|
39
|
%
|
|
|
44
|
%
|
|
|
42
|
%
|
|
|
41
|
%
|
|
|
43
|
%
|
U.S. Public Sector
|
|
|
|
12
|
%
|
|
|
10
|
%
|
|
|
12
|
%
|
|
|
13
|
%
|
|
|
13
|
%
|
EMEA
|
|
|
|
34
|
%
|
|
|
32
|
%
|
|
|
32
|
%
|
|
|
32
|
%
|
|
|
31
|
%
|
Asia Pacific
|
|
|
|
15
|
%
|
|
|
14
|
%
|
|
|
14
|
%
|
|
|
14
|
%
|
|
|
13
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pathways Mix
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% of Q4
|
|
|
% of Q3
|
|
|
% of Q4
|
|
|
% of
|
|
|
% of
|
|
|
|
|
FY'18
|
|
|
FY'18
|
|
|
FY'17
|
|
|
FY 2018
|
|
|
FY 2017
|
|
|
|
|
Revenue
|
|
|
Revenue
|
|
|
Revenue
|
|
|
Revenue
|
|
|
Revenue
|
|
Direct
|
|
|
|
21
|
%
|
|
|
22
|
%
|
|
|
22
|
%
|
|
|
21
|
%
|
|
|
22
|
%
|
Indirect
|
|
|
|
79
|
%
|
|
|
78
|
%
|
|
|
78
|
%
|
|
|
79
|
%
|
|
|
78
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Gross Margins
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q4 FY'18
|
|
|
Q3 FY'18
|
|
|
Q4 FY'17
|
|
|
FY 2018
|
|
|
FY 2017
|
|
Non-GAAP Gross Margin
|
|
|
|
63.0
|
%
|
|
|
62.6
|
%
|
|
|
62.5
|
%
|
|
|
63.4
|
%
|
|
|
62.3
|
%
|
Product
|
|
|
|
51.5
|
%
|
|
|
50.2
|
%
|
|
|
48.9
|
%
|
|
|
50.9
|
%
|
|
|
47.4
|
%
|
Software Maintenance
|
|
|
|
97.6
|
%
|
|
|
97.5
|
%
|
|
|
97.5
|
%
|
|
|
97.4
|
%
|
|
|
97.1
|
%
|
Hardware Maintenance and Other Services
|
|
|
|
71.0
|
%
|
|
|
71.3
|
%
|
|
|
70.3
|
%
|
|
|
70.6
|
%
|
|
|
69.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Income from Operations, Income before Income Taxes &
Effective Tax Rate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q4 FY'18
|
|
|
Q3 FY'18
|
|
|
Q4 FY'17
|
|
|
FY 2018
|
|
|
FY 2017
|
|
Non-GAAP Income from Operations
|
|
|
$
|
335
|
|
|
$
|
310
|
|
|
$
|
306
|
|
|
$
|
1,126
|
|
|
$
|
950
|
|
% of Net Revenues
|
|
|
|
20.4
|
%
|
|
|
20.4
|
%
|
|
|
20.7
|
%
|
|
|
19.0
|
%
|
|
|
17.2
|
%
|
Non-GAAP Income before Income Taxes
|
|
|
$
|
351
|
|
|
$
|
324
|
|
|
$
|
307
|
|
|
$
|
1,167
|
|
|
$
|
950
|
|
Non-GAAP Effective Tax Rate
|
|
|
|
17.9
|
%
|
|
|
15.7
|
%
|
|
|
22.1
|
%
|
|
|
18.0
|
%
|
|
|
19.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Net Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q4 FY'18
|
|
|
Q3 FY'18
|
|
|
Q4 FY'17
|
|
|
FY 2018
|
|
|
FY 2017
|
|
Non-GAAP Net Income
|
|
|
$
|
288
|
|
|
$
|
273
|
|
|
$
|
239
|
|
|
$
|
957
|
|
|
$
|
768
|
|
Non-GAAP Weighted Average Common Shares Outstanding, Diluted
|
|
|
|
273
|
|
|
|
276
|
|
|
|
278
|
|
|
|
276
|
|
|
|
281
|
|
Non-GAAP Income per Share, Diluted
|
|
|
$
|
1.05
|
|
|
$
|
0.99
|
|
|
$
|
0.86
|
|
|
$
|
3.47
|
|
|
$
|
2.73
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Select Balance Sheet Items
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q4 FY'18
|
|
|
Q3 FY'18
|
|
|
Q4 FY'17
|
|
|
|
|
|
|
|
|
|
Deferred Revenue and Financed Unearned Services Revenue
|
|
|
$
|
3,477
|
|
|
$
|
3,269
|
|
|
$
|
3,342
|
|
|
|
|
|
|
|
|
|
DSO (days)
|
|
|
|
56
|
|
|
|
45
|
|
|
|
45
|
|
|
|
|
|
|
|
|
|
DIO (days)
|
|
|
|
19
|
|
|
|
15
|
|
|
|
26
|
|
|
|
|
|
|
|
|
|
DPO (days)
|
|
|
|
90
|
|
|
|
72
|
|
|
|
56
|
|
|
|
|
|
|
|
|
|
CCC (days)
|
|
|
|
(15
|
)
|
|
|
(11
|
)
|
|
|
15
|
|
|
|
|
|
|
|
|
|
Inventory Turns
|
|
|
|
20
|
|
|
|
24
|
|
|
|
14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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'18
|
|
|
Q3 FY'18
|
|
|
Q4 FY'17
|
|
|
FY 2018
|
|
|
FY 2017
|
|
Net Cash Provided by Operating Activities
|
|
|
$
|
494
|
|
|
$
|
420
|
|
|
$
|
365
|
|
|
$
|
1,478
|
|
|
$
|
986
|
|
Purchases of Property and Equipment
|
|
|
$
|
48
|
|
|
$
|
32
|
|
|
$
|
38
|
|
|
$
|
145
|
|
|
$
|
175
|
|
Free Cash Flow
|
|
|
$
|
446
|
|
|
$
|
388
|
|
|
$
|
327
|
|
|
$
|
1,333
|
|
|
$
|
811
|
|
Free Cash Flow as a % of Net Revenues
|
|
|
|
27.2
|
%
|
|
|
25.5
|
%
|
|
|
22.1
|
%
|
|
|
22.6
|
%
|
|
|
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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NETAPP, INC.
|
|
RECONCILIATION OF NON-GAAP TO GAAP
|
|
INCOME STATEMENT INFORMATION
|
|
(In millions, except net income per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q4'FY18
|
|
|
Q3'FY18
|
|
|
Q4'FY17
|
|
|
FY2018
|
|
|
FY2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME (LOSS)
|
|
|
$
|
271
|
|
|
$
|
(506
|
)
|
|
$
|
190
|
|
|
$
|
76
|
|
|
$
|
509
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets
|
|
|
|
12
|
|
|
|
14
|
|
|
|
13
|
|
|
|
53
|
|
|
|
48
|
|
Stock-based compensation
|
|
|
|
36
|
|
|
|
38
|
|
|
|
46
|
|
|
|
161
|
|
|
|
195
|
|
Litigation settlements
|
|
|
|
-
|
|
|
|
5
|
|
|
|
-
|
|
|
|
5
|
|
|
|
-
|
|
Restructuring charges
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
52
|
|
Gain on sale of properties
|
|
|
|
-
|
|
|
|
(218
|
)
|
|
|
-
|
|
|
|
(218
|
)
|
|
|
(10
|
)
|
Income tax effects
|
|
|
|
(31
|
)
|
|
|
84
|
|
|
|
(10
|
)
|
|
|
24
|
|
|
|
(26
|
)
|
Tax reform
|
|
|
|
-
|
|
|
|
856
|
|
|
|
-
|
|
|
|
856
|
|
|
|
-
|
|
NON-GAAP NET INCOME
|
|
|
$
|
288
|
|
|
$
|
273
|
|
|
$
|
239
|
|
|
$
|
957
|
|
|
$
|
768
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COST OF REVENUES
|
|
|
$
|
619
|
|
|
$
|
582
|
|
|
$
|
568
|
|
|
$
|
2,212
|
|
|
$
|
2,129
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets
|
|
|
|
(9
|
)
|
|
|
(10
|
)
|
|
|
(8
|
)
|
|
|
(36
|
)
|
|
|
(29
|
)
|
Stock-based compensation
|
|
|
|
(3
|
)
|
|
|
(3
|
)
|
|
|
(4
|
)
|
|
|
(13
|
)
|
|
|
(17
|
)
|
NON-GAAP COST OF REVENUES
|
|
|
$
|
607
|
|
|
$
|
569
|
|
|
$
|
556
|
|
|
$
|
2,163
|
|
|
$
|
2,083
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COST OF PRODUCT REVENUES
|
|
|
$
|
500
|
|
|
$
|
468
|
|
|
$
|
444
|
|
|
$
|
1,738
|
|
|
$
|
1,614
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets
|
|
|
|
(9
|
)
|
|
|
(10
|
)
|
|
|
(8
|
)
|
|
|
(36
|
)
|
|
|
(29
|
)
|
Stock-based compensation
|
|
|
|
(1
|
)
|
|
|
-
|
|
|
|
(1
|
)
|
|
|
(3
|
)
|
|
|
(4
|
)
|
NON-GAAP COST OF PRODUCT REVENUES
|
|
|
$
|
490
|
|
|
$
|
458
|
|
|
$
|
435
|
|
|
$
|
1,699
|
|
|
$
|
1,581
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COST OF HARDWARE MAINTENANCE AND OTHER SERVICES REVENUES
|
|
|
$
|
113
|
|
|
$
|
108
|
|
|
$
|
118
|
|
|
$
|
449
|
|
|
$
|
487
|
|
Adjustment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation
|
|
|
|
(2
|
)
|
|
|
(3
|
)
|
|
|
(3
|
)
|
|
|
(10
|
)
|
|
|
(13
|
)
|
NON-GAAP COST OF HARDWARE MAINTENANCE AND OTHER SERVICES REVENUES
|
|
|
$
|
111
|
|
|
$
|
105
|
|
|
$
|
115
|
|
|
$
|
439
|
|
|
$
|
474
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GROSS PROFIT
|
|
|
$
|
1,022
|
|
|
$
|
941
|
|
|
$
|
913
|
|
|
$
|
3,699
|
|
|
$
|
3,390
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets
|
|
|
|
9
|
|
|
|
10
|
|
|
|
8
|
|
|
|
36
|
|
|
|
29
|
|
Stock-based compensation
|
|
|
|
3
|
|
|
|
3
|
|
|
|
4
|
|
|
|
13
|
|
|
|
17
|
|
NON-GAAP GROSS PROFIT
|
|
|
$
|
1,034
|
|
|
$
|
954
|
|
|
$
|
925
|
|
|
$
|
3,748
|
|
|
$
|
3,436
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NETAPP, INC.
|
|
RECONCILIATION OF NON-GAAP TO GAAP
|
|
INCOME STATEMENT INFORMATION
|
|
(In millions, except net income per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q4'FY18
|
|
|
Q3'FY18
|
|
|
Q4'FY17
|
|
|
FY2018
|
|
|
FY2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SALES AND MARKETING EXPENSES
|
|
|
$
|
461
|
|
|
$
|
423
|
|
|
$
|
405
|
|
|
$
|
1,729
|
|
|
$
|
1,633
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets
|
|
|
|
(3
|
)
|
|
|
(4
|
)
|
|
|
(5
|
)
|
|
|
(17
|
)
|
|
|
(19
|
)
|
Stock-based compensation
|
|
|
|
(15
|
)
|
|
|
(16
|
)
|
|
|
(20
|
)
|
|
|
(68
|
)
|
|
|
(84
|
)
|
NON-GAAP SALES AND MARKETING EXPENSES
|
|
|
$
|
443
|
|
|
$
|
403
|
|
|
$
|
380
|
|
|
$
|
1,644
|
|
|
$
|
1,530
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RESEARCH AND DEVELOPMENT EXPENSES
|
|
|
$
|
203
|
|
|
$
|
193
|
|
|
$
|
191
|
|
|
$
|
783
|
|
|
$
|
779
|
|
Adjustment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation
|
|
|
|
(11
|
)
|
|
|
(11
|
)
|
|
|
(13
|
)
|
|
|
(49
|
)
|
|
|
(59
|
)
|
NON-GAAP RESEARCH AND DEVELOPMENT EXPENSES
|
|
|
$
|
192
|
|
|
$
|
182
|
|
|
$
|
178
|
|
|
$
|
734
|
|
|
$
|
720
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GENERAL AND ADMINISTRATIVE EXPENSES
|
|
|
$
|
71
|
|
|
$
|
72
|
|
|
$
|
70
|
|
|
$
|
280
|
|
|
$
|
271
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation
|
|
|
|
(7
|
)
|
|
|
(8
|
)
|
|
|
(9
|
)
|
|
|
(31
|
)
|
|
|
(35
|
)
|
Litigation settlements
|
|
|
|
-
|
|
|
|
(5
|
)
|
|
|
-
|
|
|
|
(5
|
)
|
|
|
-
|
|
NON-GAAP GENERAL AND ADMINISTRATIVE EXPENSES
|
|
|
$
|
64
|
|
|
$
|
59
|
|
|
$
|
61
|
|
|
$
|
244
|
|
|
$
|
236
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RESTRUCTURING CHARGES
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
52
|
|
Adjustment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring charges
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(52
|
)
|
NON-GAAP RESTRUCTURING CHARGES
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAIN ON SALE OF PROPERTIES
|
|
|
$
|
-
|
|
|
$
|
(218
|
)
|
|
$
|
-
|
|
|
$
|
(218
|
)
|
|
$
|
(10
|
)
|
Adjustment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on sale of properties
|
|
|
|
-
|
|
|
|
218
|
|
|
|
-
|
|
|
|
218
|
|
|
|
10
|
|
NON-GAAP GAIN ON SALE OF PROPERTIES
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES
|
|
|
$
|
735
|
|
|
$
|
470
|
|
|
$
|
666
|
|
|
$
|
2,574
|
|
|
$
|
2,725
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets
|
|
|
|
(3
|
)
|
|
|
(4
|
)
|
|
|
(5
|
)
|
|
|
(17
|
)
|
|
|
(19
|
)
|
Stock-based compensation
|
|
|
|
(33
|
)
|
|
|
(35
|
)
|
|
|
(42
|
)
|
|
|
(148
|
)
|
|
|
(178
|
)
|
Litigation settlements
|
|
|
|
-
|
|
|
|
(5
|
)
|
|
|
-
|
|
|
|
(5
|
)
|
|
|
-
|
|
Restructuring charges
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(52
|
)
|
Gain on sale of properties
|
|
|
|
-
|
|
|
|
218
|
|
|
|
-
|
|
|
|
218
|
|
|
|
10
|
|
NON-GAAP OPERATING EXPENSES
|
|
|
$
|
699
|
|
|
$
|
644
|
|
|
$
|
619
|
|
|
$
|
2,622
|
|
|
$
|
2,486
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NETAPP, INC.
|
|
RECONCILIATION OF NON-GAAP TO GAAP
|
|
INCOME STATEMENT INFORMATION
|
|
(In millions, except net income per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q4'FY18
|
|
|
Q3'FY18
|
|
|
Q4'FY17
|
|
|
FY2018
|
|
|
FY2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME FROM OPERATIONS
|
|
|
$
|
287
|
|
|
$
|
471
|
|
|
$
|
247
|
|
|
$
|
1,125
|
|
|
$
|
665
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets
|
|
|
|
12
|
|
|
|
14
|
|
|
|
13
|
|
|
|
53
|
|
|
|
48
|
|
Stock-based compensation
|
|
|
|
36
|
|
|
|
38
|
|
|
|
46
|
|
|
|
161
|
|
|
|
195
|
|
Litigation settlements
|
|
|
|
-
|
|
|
|
5
|
|
|
|
-
|
|
|
|
5
|
|
|
|
-
|
|
Restructuring charges
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
52
|
|
Gain on sale of properties
|
|
|
|
-
|
|
|
|
(218
|
)
|
|
|
-
|
|
|
|
(218
|
)
|
|
|
(10
|
)
|
NON-GAAP INCOME FROM OPERATIONS
|
|
|
$
|
335
|
|
|
$
|
310
|
|
|
$
|
306
|
|
|
$
|
1,126
|
|
|
$
|
950
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME BEFORE INCOME TAXES
|
|
|
$
|
303
|
|
|
$
|
485
|
|
|
$
|
248
|
|
|
$
|
1,166
|
|
|
$
|
665
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets
|
|
|
|
12
|
|
|
|
14
|
|
|
|
13
|
|
|
|
53
|
|
|
|
48
|
|
Stock-based compensation
|
|
|
|
36
|
|
|
|
38
|
|
|
|
46
|
|
|
|
161
|
|
|
|
195
|
|
Litigation settlements
|
|
|
|
-
|
|
|
|
5
|
|
|
|
-
|
|
|
|
5
|
|
|
|
-
|
|
Restructuring charges
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
52
|
|
Gain on sale of properties
|
|
|
|
-
|
|
|
|
(218
|
)
|
|
|
-
|
|
|
|
(218
|
)
|
|
|
(10
|
)
|
NON-GAAP INCOME BEFORE INCOME TAXES
|
|
|
$
|
351
|
|
|
$
|
324
|
|
|
$
|
307
|
|
|
$
|
1,167
|
|
|
$
|
950
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PROVISION FOR INCOME TAXES
|
|
|
$
|
32
|
|
|
$
|
991
|
|
|
$
|
58
|
|
|
$
|
1,090
|
|
|
$
|
156
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax effects
|
|
|
|
31
|
|
|
|
(84
|
)
|
|
|
10
|
|
|
|
(24
|
)
|
|
|
26
|
|
Tax reform
|
|
|
|
-
|
|
|
|
(856
|
)
|
|
|
-
|
|
|
|
(856
|
)
|
|
|
-
|
|
NON-GAAP PROVISION FOR INCOME TAXES
|
|
|
$
|
63
|
|
|
$
|
51
|
|
|
$
|
68
|
|
|
$
|
210
|
|
|
$
|
182
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME (LOSS) PER SHARE
|
|
|
$
|
0.99
|
|
|
$
|
(1.89
|
)
|
|
$
|
0.68
|
|
|
$
|
0.28
|
|
|
$
|
1.81
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets
|
|
|
|
0.04
|
|
|
|
0.05
|
|
|
|
0.05
|
|
|
|
0.19
|
|
|
|
0.17
|
|
Stock-based compensation
|
|
|
|
0.13
|
|
|
|
0.14
|
|
|
|
0.17
|
|
|
|
0.58
|
|
|
|
0.69
|
|
Litigation settlements
|
|
|
|
-
|
|
|
|
0.02
|
|
|
|
-
|
|
|
|
0.02
|
|
|
|
-
|
|
Restructuring charges
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
0.19
|
|
Gain on sale of properties
|
|
|
|
-
|
|
|
|
(0.81
|
)
|
|
|
-
|
|
|
|
(0.79
|
)
|
|
|
(0.04
|
)
|
Income tax effects
|
|
|
|
(0.11
|
)
|
|
|
0.31
|
|
|
|
(0.04
|
)
|
|
|
0.09
|
|
|
|
(0.09
|
)
|
Tax reform
|
|
|
|
-
|
|
|
|
3.19
|
|
|
|
-
|
|
|
|
3.10
|
|
|
|
-
|
|
NON-GAAP NET INCOME PER SHARE
|
|
|
$
|
1.05
|
|
|
$
|
0.99
|
|
|
$
|
0.86
|
|
|
$
|
3.47
|
|
|
$
|
2.73
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In Q3'FY18, our GAAP net loss per share was calculated using
basic shares of 268 million, as the impact of common stock
equivalents would have been anti-dilutive. Additionally, each
adjustment presented in the reconciliation was computed using basic
shares. However, because we reported net income on a non-GAAP basis,
non-GAAP net income per share was computed using diluted shares of
276 million. As a result of the difference in the number of shares,
the summation of GAAP net loss per share and the adjustments does
not equal non-GAAP net income per share.
|
|
|
|
|
|
RECONCILIATION OF NON-GAAP TO GAAP
|
|
GROSS MARGIN
|
|
($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q4'FY18
|
|
|
Q3'FY18
|
|
|
Q4'FY17
|
|
|
FY2018
|
|
|
FY2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin-GAAP
|
|
|
|
62.3
|
%
|
|
|
61.8
|
%
|
|
|
61.6
|
%
|
|
|
62.6
|
%
|
|
|
61.4
|
%
|
Cost of revenues adjustments
|
|
|
|
0.7
|
%
|
|
|
0.9
|
%
|
|
|
0.8
|
%
|
|
|
0.8
|
%
|
|
|
0.8
|
%
|
Gross margin-Non-GAAP
|
|
|
|
63.0
|
%
|
|
|
62.6
|
%
|
|
|
62.5
|
%
|
|
|
63.4
|
%
|
|
|
62.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP cost of revenues
|
|
|
$
|
619
|
|
|
$
|
582
|
|
|
$
|
568
|
|
|
$
|
2,212
|
|
|
$
|
2,129
|
|
Cost of revenues adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets
|
|
|
|
(9
|
)
|
|
|
(10
|
)
|
|
|
(8
|
)
|
|
|
(36
|
)
|
|
|
(29
|
)
|
Stock-based compensation
|
|
|
|
(3
|
)
|
|
|
(3
|
)
|
|
|
(4
|
)
|
|
|
(13
|
)
|
|
|
(17
|
)
|
Non-GAAP cost of revenues
|
|
|
$
|
607
|
|
|
$
|
569
|
|
|
$
|
556
|
|
|
$
|
2,163
|
|
|
$
|
2,083
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues
|
|
|
$
|
1,641
|
|
|
$
|
1,523
|
|
|
$
|
1,481
|
|
|
$
|
5,911
|
|
|
$
|
5,519
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF NON-GAAP TO GAAP
|
|
PRODUCT GROSS MARGIN
|
|
($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q4'FY18
|
|
|
Q3'FY18
|
|
|
Q4'FY17
|
|
|
FY2018
|
|
|
FY2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product gross margin-GAAP
|
|
|
|
50.5
|
%
|
|
|
49.1
|
%
|
|
|
47.9
|
%
|
|
|
49.8
|
%
|
|
|
46.3
|
%
|
Cost of product revenues adjustments
|
|
|
|
1.0
|
%
|
|
|
1.1
|
%
|
|
|
1.1
|
%
|
|
|
1.1
|
%
|
|
|
1.1
|
%
|
Product gross margin-Non-GAAP
|
|
|
|
51.5
|
%
|
|
|
50.2
|
%
|
|
|
48.9
|
%
|
|
|
50.9
|
%
|
|
|
47.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP cost of product revenues
|
|
|
$
|
500
|
|
|
$
|
468
|
|
|
$
|
444
|
|
|
$
|
1,738
|
|
|
$
|
1,614
|
|
Cost of product revenues adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets
|
|
|
|
(9
|
)
|
|
|
(10
|
)
|
|
|
(8
|
)
|
|
|
(36
|
)
|
|
|
(29
|
)
|
Stock-based compensation
|
|
|
|
(1
|
)
|
|
|
-
|
|
|
|
(1
|
)
|
|
|
(3
|
)
|
|
|
(4
|
)
|
Non-GAAP cost of product revenues
|
|
|
$
|
490
|
|
|
$
|
458
|
|
|
$
|
435
|
|
|
$
|
1,699
|
|
|
$
|
1,581
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product revenues
|
|
|
$
|
1,011
|
|
|
$
|
920
|
|
|
$
|
852
|
|
|
$
|
3,461
|
|
|
$
|
3,006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF NON-GAAP TO GAAP
|
|
HARDWARE MAINTENANCE AND OTHER SERVICES GROSS MARGIN
|
|
($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q4'FY18
|
|
|
Q3'FY18
|
|
|
Q4'FY17
|
|
|
FY2018
|
|
|
FY2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hardware maintenance and other services gross margin-GAAP
|
|
|
|
70.5
|
%
|
|
|
70.5
|
%
|
|
|
69.5
|
%
|
|
|
69.9
|
%
|
|
|
68.5
|
%
|
Cost of hardware maintenance and other services revenues adjustment
|
|
|
|
0.5
|
%
|
|
|
0.8
|
%
|
|
|
0.8
|
%
|
|
|
0.7
|
%
|
|
|
0.8
|
%
|
Hardware maintenance and other services gross margin-Non-GAAP
|
|
|
|
71.0
|
%
|
|
|
71.3
|
%
|
|
|
70.3
|
%
|
|
|
70.6
|
%
|
|
|
69.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP cost of hardware maintenance and other services revenues
|
|
|
$
|
113
|
|
|
$
|
108
|
|
|
$
|
118
|
|
|
$
|
449
|
|
|
$
|
487
|
|
Cost of hardware maintenance and other services revenues adjustment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation
|
|
|
|
(2
|
)
|
|
|
(3
|
)
|
|
|
(3
|
)
|
|
|
(10
|
)
|
|
|
(13
|
)
|
Non-GAAP cost of hardware maintenance and other services revenues
|
|
|
$
|
111
|
|
|
$
|
105
|
|
|
$
|
115
|
|
|
$
|
439
|
|
|
$
|
474
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hardware maintenance and other services revenues
|
|
|
$
|
383
|
|
|
$
|
366
|
|
|
$
|
387
|
|
|
$
|
1,492
|
|
|
$
|
1,548
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF NON-GAAP TO GAAP
|
|
EFFECTIVE TAX RATE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q4'FY18
|
|
|
Q3'FY18
|
|
|
Q4'FY17
|
|
|
FY2018
|
|
|
FY2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP effective tax rate
|
|
|
|
10.6
|
%
|
|
|
204.3
|
%
|
|
|
23.4
|
%
|
|
|
93.5
|
%
|
|
|
23.5
|
%
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax effects
|
|
|
|
7.3
|
%
|
|
|
(12.1
|
)%
|
|
|
(1.3
|
)%
|
|
|
(2.1
|
)%
|
|
|
(4.3
|
)%
|
Tax reform
|
|
|
|
-
|
%
|
|
|
(176.5
|
)%
|
|
|
-
|
%
|
|
|
(73.4
|
)%
|
|
|
-
|
%
|
Non-GAAP effective tax rate
|
|
|
|
17.9
|
%
|
|
|
15.7
|
%
|
|
|
22.1
|
%
|
|
|
18.0
|
%
|
|
|
19.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES
|
|
TO FREE CASH FLOW (NON-GAAP)
|
|
(In millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q4'FY18
|
|
|
Q3'FY18
|
|
|
Q4'FY17
|
|
|
FY2018
|
|
|
FY2017
|
|
Net cash provided by operating activities
|
|
|
$
|
494
|
|
|
$
|
420
|
|
|
$
|
365
|
|
|
$
|
1,478
|
|
|
$
|
986
|
|
Purchases of property and equipment
|
|
|
|
(48
|
)
|
|
|
(32
|
)
|
|
|
(38
|
)
|
|
|
(145
|
)
|
|
|
(175
|
)
|
Free cash flow
|
|
|
$
|
446
|
|
|
$
|
388
|
|
|
$
|
327
|
|
|
$
|
1,333
|
|
|
$
|
811
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 2019
|
|
|
|
|
|
|
|
|
|
|
First Quarter
|
|
|
|
|
Fiscal 2019
|
|
|
|
|
|
|
|
Non-GAAP Guidance - Net Income Per Share
|
|
|
$0.76 - $0.82
|
|
|
|
|
|
|
|
Adjustments of Specific Items to Net Income
|
|
|
|
|
|
Per Share for the First Quarter Fiscal 2019:
|
|
|
|
|
|
Amortization of intangible assets
|
|
|
|
(0.05
|
)
|
Stock-based compensation expense
|
|
|
|
(0.15
|
)
|
Restructuring charges
|
|
|
|
(0.07
|
)
|
Income tax effects
|
|
|
|
0.04
|
|
Total Adjustments
|
|
|
|
(0.23
|
)
|
|
|
|
|
|
|
GAAP Guidance - Net Income Per Share
|
|
|
$0.53 - 0.59
|
|
|
|
|
|
|
|
NETAPP, INC.
|
RECONCILIATION OF NON-GAAP GUIDANCE TO GAAP
|
FISCAL 2019
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
GROSS MARGIN
|
|
|
|
|
Gross Margin - Non-GAAP Guidance
|
|
|
~63%
|
Adjustment:
|
|
|
|
Cost of revenues adjustments
|
|
|
(1)%
|
Gross Margin - GAAP Guidance
|
|
|
~62%
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING MARGIN
|
|
|
|
|
Operating Margin - Non-GAAP Guidance
|
|
|
20% - 21%
|
Adjustments:
|
|
|
|
Amortization of intangible assets
|
|
|
(1)%
|
Stock-based compensation expense
|
|
|
(2)%
|
Gain on sale of properties
|
|
|
1%
|
Operating Margin - GAAP Guidance
|
|
|
18% - 19%
|
|
|
|
|
|
|
|
|
|
|
|
EFFECTIVE TAX RATE
|
|
|
|
|
Effective Tax Rate - Non-GAAP Guidance
|
|
|
~18%
|
Adjustment:
|
|
|
|
Income tax effects
|
|
|
4%
|
Effective Tax Rate - GAAP Guidance
|
|
|
~22%
|
|
|
|
|
|
|
|
|
Some items may not add or recalculate due to rounding
|
|
|
|
|
|
|
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20180523006284/en/
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