NetApp Reports Fourth Quarter and Fiscal Year 2015 Results
SUNNYVALE, CA -- (Marketwired) -- 05/20/15 -- NetApp (NASDAQ: NTAP)
- NetApp� clustered Data ONTAP� node shipments increased 163%; All Flash FAS units grew 260% for fiscal year 2015.
- Cash from operations for fiscal year 2015 was $1.27 billion.
- Increased first quarter fiscal year 2016 cash dividend by 9% to $0.18 per share.
NetApp (NASDAQ: NTAP) today reported financial results for the fourth quarter and fiscal year 2015, ended April 24, 2015.
Fourth Quarter Financial Results Net revenues for the fourth quarter of fiscal year 2015 were $1.54 billion. GAAP net income for the fourth quarter of fiscal year 2015 was $135 million, or $0.43 per share,(1) compared to GAAP net income of $197 million, or $0.59 per share, for the comparable period of the prior year. Non-GAAP net income for the fourth quarter of fiscal year 2015 was $202 million, or $0.65 per share,(2) compared to non-GAAP net income of $284 million, or $0.84 per share, for the comparable period of the prior year.
Fiscal Year 2015 Financial Results Net revenues for fiscal year 2015 were $6.12 billion. GAAP net income for fiscal year 2015 was $560 million, or $1.75 per share,(1) compared to GAAP net income of $638 million, or $1.83 per share, for the comparable period of the prior year. Non-GAAP net income for fiscal year 2015 was $865 million, or $2.70 per share,(2) compared to non-GAAP net income of $968 million, or $2.78 per share, for the comparable period of the prior year.
Cash, Cash Equivalents and Investments NetApp ended fiscal year 2015 with $5.33 billion of total cash, cash equivalents and investments and generated $1.27 billion in cash from operations. During fiscal year 2015, the Company returned $1.37 billion to shareholders through share repurchases and a cash dividend.
The Company increased the first quarter fiscal year 2016 dividend by 9% to $0.18 per share. The dividend will be paid on July 23, 2015, to shareholders of record as of the close of business on July 10, 2015.
"We are not satisfied with our fourth quarter results and are taking concrete action to transition NetApp for the next phase of growth," said Tom Georgens, chairman and CEO. "Clustered ONTAP is the foundation of a Data Fabric, our vision for the future of data management, which enables enterprises to realize the value of the cloud as a seamless extension of their on-premises environment. This vision is resonating well with customers and underpins our confidence."
Q1 Fiscal Year 2016 Outlook The Company provided the following financial guidance for the first quarter of fiscal year 2016:
- Net revenues are expected to be in the range of $1.275 billion to $1.375 billion
- GAAP loss per share is expected to be in the range of $0.11 to $0.06 per share
- Non-GAAP earnings per share is expected to be in the range of $0.20 to $0.25 per share
Business Highlights
- NetApp Strengthens Partnerships:
- NetApp Provides a Secure Path to Transfer Data from On-premises to Amazon Web Services Cloud Solutions. As an Amazon Machine Image, three new models of NetApp SteelStore cloud-native backup solution provide an efficient and secure approach to backing up cloud-based workloads. NetApp supports Amazon Simple Storage Service (Amazon S3) as a storage tier to NetApp StorageGRID� Webscale.
- NetApp Expands Product Portfolio:
- New All-Flash and Hybrid Storage Arrays Accelerate High Performance for Enterprise-Class SAN Applications. The new EF560 all-flash array offers consistent latency, bandwidth and IOPS critical to enterprise database and analytics applications. The hybrid E5600 storage array delivers increased performance and reliability for more capacity-intensive SAN applications including data warehousing, email and backup.
- NetApp Expands Hybrid Cloud Solutions in Support of Data Fabric Vision:
- NetApp OnCommand� Insight 7.1. The new software includes enhanced features for brokering and monitoring hybrid storage deployments as well as innovations that reduce storage operating expenses and capital expenditures while improving capacity planning.
- OnCommand Cloud Manager Software and NetApp Cloud ONTAP� Software Subscription. Customers can simplify deployment of Cloud ONTAP and OnCommand Cloud Manager by using software subscriptions that manage NetApp's customer data replication to the cloud with a single application.
- StorageGRID Appliance and StorageGRID Webscale Software for Scalable, Durable Object Storage. NetApp introduced the StorageGRID 5560 appliance and StorageGRID Webscale software 10.1, which adds support for industry-leading storage efficiency through hierarchical globally distributed erasure coding for long-term archives.
- NetApp Recognition and Awards:
- NetApp All-Flash Arrays Achieve Industry-Standard Benchmarks. NetApp's all-flash EF560 achieved the leading SPC-1 price-performance benchmark for all-flash arrays(3) with an average response time of less than one millisecond. The NetApp All Flash FAS8080 placed #5 in the SPC-1 "Top Ten" list by Performance.(3)
- 2015 Best Companies to Work For. For the 13th year in a row, NetApp is one of the Fortune 100 Best Companies to Work For. Being on the FORTUNE "100 Best" list is a testament to NetApp's strong global culture and is a reflection of the passion and commitment that employees bring to work every day.
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 Leading organizations worldwide count on NetApp for software, systems and services to manage and store their data. Customers value our teamwork, expertise and passion for helping them succeed now and into the future.
"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 Q1 Fiscal Year 2016 Outlook section, statements about our actions to transition NetApp for the next phase of growth and statements about extending our data fabric vision and our strategy. 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 economic and market conditions, changes in U.S. government spending, revenue seasonality, foreign exchange impacts, and matters specific to our business, such as customer demand for and acceptance of our products, services, execution by our sales organization, changes in storage consumption models, and our ability to continue to generate healthy operating cash flow. 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 sections titled "Risk Factors" in our most recently submitted Annual and Quarterly Reports on Forms 10-K and 10-Q, respectively. We disclaim any obligation to update information contained in this press release whether as a result of new information, future events, or otherwise.
NetApp, the NetApp logo, Cloud ONTAP, Data ONTAP, OnCommand, and StorageGRID are trademarks or registered trademarks of NetApp, Inc. in the United States and/or other countries. All other marks are the property of their respective owners.
(1)GAAP earnings per share is calculated using the diluted number of shares for all periods presented. (2)Non-GAAP net income excludes, when applicable, the amortization of intangible assets, stock-based compensation, acquisition-related income and expenses, restructuring and other charges, asset impairments, non-cash interest expense associated with our debt, net losses or gains on investments, and our GAAP tax provision, but includes a non-GAAP tax provision 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. Effective the first quarter of fiscal 2015, 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-reoccurring 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) the impact of a temporary lapse of tax law, such as the federal research credit, if such extensions have routinely been granted based on past legislative history and are expected to be reinstated in the near future. 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. (3)Storage Performance Council SPC-1 price-performance for all-flash arrays and "Top Ten" list by Performance, http://www.storageperformance.org/results/benchmark_results_spc1_top-ten/#spc1_top10_performance, January-April 2015.
NetApp Usage of Non-GAAP Financials The Company refers to the non-GAAP financial measures in making operating decisions because they provide meaningful supplemental information regarding the Company's ongoing operational performance. Non-GAAP net income excludes, when applicable, the amortization of intangible assets, stock-based compensation, acquisition-related income and expenses, restructuring and other charges, asset impairments, non-cash interest expense associated with our debt, net losses or gains on investments, and 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. Effective the first quarter of fiscal 2015, 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-reoccurring 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) the impact of a temporary lapse of tax law, such as the federal research credit, if such extensions have routinely been granted based on past legislative history and are expected to be reinstated in the near future. Non-GAAP earnings per share is calculated using the diluted number of shares for all periods.
We have excluded these items in order to enhance investors' understanding of our ongoing operations. The use of these non-GAAP financial measures has limitations and they should not solely be used to evaluate our Company without reference to their corresponding GAAP financial measures. As such, we provide non-GAAP financial measures in conjunction with GAAP financial measures.
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, these non-GAAP financial measures are used to measure Company performance for the purposes of determining employee incentive plan compensation.
NETAPP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
(Unaudited)
April 24, April 25,
2015 2014
---------- ----------
ASSETS
Current assets:
Cash, cash equivalents and investments $ 5,326.2 $ 5,003.3
Accounts receivable 778.9 855.9
Inventories 146.5 122.4
Other current assets 521.8 489.7
---------- ----------
Total current assets 6,773.4 6,471.3
Property and equipment, net 1,029.9 1,108.8
Goodwill and purchased intangible assets, net 1,116.9 1,109.6
Other non-current assets(1) 481.0 524.1
---------- ----------
Total assets $ 9,401.2 $ 9,213.8
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 283.4 $ 247.0
Accrued expenses 701.4 793.8
Short-term deferred revenue 1,724.2 1,653.8
---------- ----------
Total current liabilities 2,709.0 2,694.6
Long-term debt(1) 1,487.5 990.1
Other long-term liabilities 317.6 296.2
Long-term deferred revenue 1,473.0 1,446.4
---------- ----------
Total liabilities 5,987.1 5,427.3
Stockholders' equity 3,414.1 3,786.5
---------- ----------
Total liabilities and stockholders' equity $ 9,401.2 $ 9,213.8
========== ==========
(1) In the fourth quarter of fiscal 2015, we adopted a new accounting
standard that resulted in a reclassification of debt issuance costs of $7.5
million and $5.4 million as of April 24, 2015 and April 25, 2014,
respectively from other assets to an offset to long-term debt.
NETAPP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share amounts)
(Unaudited)
Three Months Ended Year Ended
--------------------- ---------------------
April 24, April 25, April 24, April 25,
2015 2014 2015 2014
---------- ---------- --------- ----------
Revenues:
Product $ 913.4 $ 1,042.8 $ 3,654.6 $ 3,943.9
Software maintenance 226.5 227.5 898.6 914.8
Hardware maintenance and other
services 399.8 378.7 1,569.5 1,466.4
---------- ---------- --------- ----------
Net revenues 1,539.7 1,649.0 6,122.7 6,325.1
---------- ---------- --------- ----------
Cost of revenues:
Cost of product 441.3 453.2 1,656.9 1,777.1
Cost of software maintenance 9.5 8.0 35.7 30.7
Cost of hardware maintenance
and other services 153.7 145.8 596.9 598.2
---------- ---------- --------- ----------
Total cost of revenues 604.5 607.0 2,289.5 2,406.0
---------- ---------- --------- ----------
Gross profit 935.2 1,042.0 3,833.2 3,919.1
---------- ---------- --------- ----------
Operating expenses:
Sales and marketing 470.2 475.0 1,913.2 1,898.2
Research and development 232.4 230.7 919.3 917.3
General and administrative 71.0 73.7 284.2 281.0
Restructuring and other
charges - 38.8 - 88.3
---------- ---------- --------- ----------
Total operating expenses 773.6 818.2 3,116.7 3,184.8
---------- ---------- --------- ----------
Income from operations 161.6 223.8 716.5 734.3
Other income (expense), net 2.5 2.8 (3.7) 6.4
---------- ---------- --------- ----------
Income before income taxes 164.1 226.6 712.8 740.7
Provision for income taxes 29.2 29.6 152.9 103.2
---------- ---------- --------- ----------
Net income $ 134.9 $ 197.0 $ 559.9 $ 637.5
========== ========== ========= ==========
Net income per share:
Basic $ 0.44 $ 0.60 $ 1.77 $ 1.87
========== ========== ========= ==========
Diluted $ 0.43 $ 0.59 $ 1.75 $ 1.83
========== ========== ========= ==========
Shares used in net income per
share calculations:
Basic 308.8 330.2 315.5 340.3
========== ========== ========= ==========
Diluted 313.3 336.4 320.7 347.9
========== ========== ========= ==========
Cash dividends declared per
share $ 0.165 $ 0.150 $ 0.660 $ 0.600
========== ========== ========= ==========
NETAPP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
Three Months Ended Year Ended
-------------------- --------------------
April 24, April 25, April 24, April 25,
2015 2014 2015 2014
--------- --------- --------- ---------
Cash flows from operating
activities:
Net income $ 134.9 $ 197.0 $ 559.9 $ 637.5
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and
amortization 72.6 82.1 307.2 334.1
Stock-based compensation 63.2 67.2 259.3 273.0
Excess tax benefit from
stock-based compensation (1.4) (19.1) (55.2) (52.5)
Other, net 2.3 (26.3) 31.9 (48.7)
Changes in assets and
liabilities, net of
acquisitions of businesses:
Accounts receivable (111.9) (270.0) 74.8 (56.6)
Inventories (28.7) (4.3) (24.1) 17.0
Accounts payable 84.5 57.7 38.6 (12.1)
Accrued expenses 95.4 126.8 (66.7) 32.3
Deferred revenue 87.7 133.6 122.1 106.6
Changes in other operating
assets and liabilities, net (2.0) 24.8 20.3 119.0
--------- --------- --------- ---------
Net cash provided by
operating activities 396.6 369.5 1,268.1 1,349.6
--------- --------- --------- ---------
Cash flows from investing
activities:
Redemptions (purchases) of
investments, net (686.4) 212.3 (644.8) 975.0
Purchases of property and
equipment (37.2) (56.0) (175.3) (221.4)
Acquisitions of businesses - - (84.6) -
Other investing activities,
net (1.0) 4.2 1.5 6.8
--------- --------- --------- ---------
Net cash provided by (used
in) investing activities (724.6) 160.5 (903.2) 760.4
--------- --------- --------- ---------
Cash flows from financing
activities:
Issuance of common stock 11.3 9.6 156.9 201.4
Repurchase of common stock and
forward contract (246.3) (374.5) (1,165.2) (1,881.5)
Excess tax benefit from stock-
based compensation 1.4 19.1 55.2 52.5
Repayment of debt - - - (1,264.9)
Issuance of long-term debt,
net - - 494.7 -
Dividends paid (50.5) (49.2) (207.4) (202.3)
Other financing activities,
net (1.8) (1.7) (9.4) (9.2)
--------- --------- --------- ---------
Net cash used in financing
activities (285.9) (396.7) (675.2) (3,104.0)
--------- --------- --------- ---------
Effect of exchange rate changes
on cash and cash equivalents (4.3) 5.0 (59.2) 7.9
Net increase (decrease) in cash
and cash equivalents (618.2) 138.3 (369.5) (986.1)
Cash and cash equivalents:
Beginning of period 2,539.7 2,152.7 2,291.0 3,277.1
--------- --------- --------- ---------
End of period $ 1,921.5 $ 2,291.0 $ 1,921.5 $ 2,291.0
========= ========= ========= =========
NETAPP, INC.
SUPPLEMENTAL DATA
(In millions except net income per share, percentages, DSO and Inventory
Turns)
(Unaudited)
Q4 FY'15 Q3 FY'15 Q4 FY'14 FY 2015 FY 2014
--------- --------- --------- -------- --------
Revenues
Product $ 913.4 $ 929.5 $ 1,042.8 $3,654.6 $3,943.9
Software Maintenance 226.5 226.6 227.5 898.6 914.8
Hardware Maintenance &
Other Services: 399.8 395.2 378.7 1,569.5 1,466.4
Hardware Maintenance
Support Contracts 323.1 315.6 293.7 1,252.5 1,129.6
Professional & Other
Services 76.7 79.6 85.0 317.0 336.7
--------- --------- --------- -------- --------
Net Revenues $ 1,539.7 $ 1,551.3 $ 1,649.0 $6,122.7 $6,325.1
Software Maintenance revenue was formerly called Software Entitlements &
Maintenance (SEM) revenue.
Hardware Maintenance & Other Services revenue was formerly called
Services revenue.
Branded and OEM
Revenues
Q4 FY'15 Q3 FY'15 Q4 FY'14 FY 2015 FY 2014
--------- --------- --------- -------- --------
Branded Revenue $ 1,438.0 $ 1,427.5 $ 1,539.2 $5,649.9 $5,740.4
OEM Revenue 101.7 123.8 109.8 472.8 584.7
--------- --------- --------- -------- --------
Net Revenues $ 1,539.7 $ 1,551.3 $ 1,649.0 $6,122.7 $6,325.1
Branded revenue includes revenue from all products and services sold
directly by us or our partners under the NetApp brand, including NetApp
branded E-Series products and solutions.
OEM revenue comprises revenue from the sale of our products by other
companies under their brands and includes revenue from IBM, Fujitsu, and
other E-Series OEM relationships.
Geographic Mix
% of Q4 % of Q3 % of Q4 % of FY % of FY
FY'15 FY'15 FY'14 2015 2014
Revenue Revenue Revenue Revenue Revenue
--------- --------- --------- -------- --------
Americas 57% 54% 56% 56% 56%
Americas Commercial 43% 44% 43% 43% 43%
U.S. Public Sector 14% 10% 12% 13% 12%
EMEA 30% 33% 31% 30% 31%
Asia Pacific 13% 13% 13% 13% 14%
Pathways Mix
--------- --------- --------- --------
% of Q4 % of Q3 % of Q4 % of FY % of FY
FY'15 FY'15 FY'14 2015 2014
Revenue Revenue Revenue Revenue Revenue
--------- --------- --------- -------- --------
Direct 21% 19% 17% 20% 18%
Indirect 79% 81% 83% 80% 82%
Direct revenues are those sold through our direct sales force. Indirect
revenues include those sold through value-added resellers, system
integrators, OEMs and distributors.
Indirect revenue reflects order fulfillment and is not reflective of who
is responsible for the customer relationship.
Non-GAAP Gross Margins
Q4 FY'15 Q3 FY'15 Q4 FY'14 FY 2015 FY 2014
--------- --------- --------- -------- --------
Non-GAAP Gross Margin 62.0% 64.6% 64.4% 64.0% 63.2%
Product 53.4% 57.0% 58.0% 56.5% 56.5%
Software Maintenance 95.8% 95.9% 96.5% 96.0% 96.6%
Hardware Maintenance
& Other Services 62.6% 64.5% 62.7% 63.1% 60.5%
Non-GAAP Income from
Operations, Income
before Income Taxes &
Effective Tax Rate
Q4 FY'15 Q3 FY'15 Q4 FY'14 FY 2015 FY 2014
--------- --------- --------- -------- --------
Non-GAAP Income from
Operations $ 240.3 $ 287.7 $ 344.4 $1,039.5 $1,154.7
% of Net Revenues 15.6% 18.5% 20.9% 17.0% 18.3%
Non-GAAP Income before
Income Taxes $ 242.8 $ 285.3 $ 347.2 $1,035.8 $1,169.3
Non-GAAP Effective Tax
Rate 16.7% 16.5% 18.1% 16.5% 17.2%
Non-GAAP Net Income
Q4 FY'15 Q3 FY'15 Q4 FY'14 FY 2015 FY 2014
--------- --------- --------- -------- --------
Non-GAAP Net Income $ 202.3 $ 238.3 $ 284.2 $ 864.5 $ 968.2
Weighted Average Common
Shares Outstanding,
Diluted 313.3 317.1 336.4 320.7 347.9
Non-GAAP Net Income per
Share, Diluted $ 0.65 $ 0.75 $ 0.84 $ 2.70 $ 2.78
Select Balance Sheet
Items
Q4 FY'15 Q3 FY'15 Q4 FY'14
--------- --------- ---------
Deferred Revenue $ 3,197.2 $ 3,109.7 $ 3,100.2
DSO (days) 46 39 47
Inventory Turns 16 19 19
Days sales outstanding (DSO) is defined as accounts receivable divided by
net revenues, multiplied by the number of days in the quarter.
Inventory turns is defined as annualized non-GAAP cost of revenues
divided by net inventories.
Select Cash Flow
Statement Items
Q4 FY'15 Q3 FY'15 Q4 FY'14 FY 2015 FY 2014
--------- --------- --------- -------- --------
Net Cash Provided by
Operating Activities $ 396.6 $ 274.6 $ 369.5 $1,268.1 $1,349.6
Purchases of Property
and Equipment $ 37.2 $ 28.6 $ 56.0 $ 175.3 $ 221.4
Free Cash Flow $ 359.4 $ 246.0 $ 313.5 $1,092.8 $1,128.2
Free Cash Flow as % of
Net Revenues 23.3% 15.9% 19.0% 17.8% 17.8%
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'FY15 Q3'FY15 Q4'FY14 FY2015 FY2014
-------- -------- -------- -------- --------
NET INCOME $ 134.9 $ 176.8 $ 197.0 $ 559.9 $ 637.5
Adjustments:
Amortization of
intangible assets 15.5 19.2 14.6 63.7 59.1
Stock-based
compensation 63.2 66.0 67.2 259.3 273.0
Restructuring and
other charges - - 38.8 - 88.3
Non-cash interest
expense - - - - 8.2
Income tax effect of
non-GAAP adjustments (11.3) (23.7) (33.4) (65.8) (97.9)
Settlement of income
tax audit - - - 47.4 -
-------- -------- -------- -------- --------
NON-GAAP NET INCOME $ 202.3 $ 238.3 $ 284.2 $ 864.5 $ 968.2
======== ======== ======== ======== ========
COST OF REVENUES $ 604.5 $ 573.9 $ 607.0 $2,289.5 $2,406.0
Adjustments:
Amortization of
intangible assets (15.2) (18.9) (14.3) (62.6) (57.1)
Stock-based
compensation (4.9) (5.4) (5.3) (21.8) (22.3)
-------- -------- -------- -------- --------
NON-GAAP COST OF
REVENUES $ 584.4 $ 549.6 $ 587.4 $2,205.1 $2,326.6
======== ======== ======== ======== ========
COST OF PRODUCT REVENUES $ 441.3 $ 419.6 $ 453.2 $1,656.9 $1,777.1
Adjustments:
Amortization of
intangible assets (14.7) (18.3) (13.7) (60.4) (54.8)
Stock-based
compensation (1.3) (1.4) (1.4) (5.8) (5.6)
-------- -------- -------- -------- --------
NON-GAAP COST OF PRODUCT
REVENUES $ 425.3 $ 399.9 $ 438.1 $1,590.7 $1,716.7
======== ======== ======== ======== ========
COST OF HARDWARE
MAINTENANCE AND OTHER
SERVICES REVENUES $ 153.7 $ 144.9 $ 145.8 $ 596.9 $ 598.2
Adjustments:
Amortization of
intangible assets (0.5) (0.6) (0.6) (2.2) (2.3)
Stock-based
compensation (3.6) (4.0) (3.9) (16.0) (16.7)
-------- -------- -------- -------- --------
NON-GAAP COST OF
HARDWARE MAINTENANCE
AND OTHER SERVICES
REVENUES $ 149.6 $ 140.3 $ 141.3 $ 578.7 $ 579.2
======== ======== ======== ======== ========
GROSS PROFIT $ 935.2 $ 977.4 $1,042.0 $3,833.2 $3,919.1
Adjustments:
Amortization of
intangible assets 15.2 18.9 14.3 62.6 57.1
Stock-based
compensation 4.9 5.4 5.3 21.8 22.3
-------- -------- -------- -------- --------
NON-GAAP GROSS PROFIT $ 955.3 $1,001.7 $1,061.6 $3,917.6 $3,998.5
======== ======== ======== ======== ========
SALES AND MARKETING
EXPENSES $ 470.2 $ 474.8 $ 475.0 $1,913.2 $1,898.2
Adjustments:
Amortization of
intangible assets (0.3) (0.3) (0.3) (1.1) (2.0)
Stock-based
compensation (29.5) (29.6) (30.4) (116.5) (125.0)
-------- -------- -------- -------- --------
NON-GAAP SALES AND
MARKETING EXPENSES $ 440.4 $ 444.9 $ 444.3 $1,795.6 $1,771.2
======== ======== ======== ======== ========
RESEARCH AND DEVELOPMENT
EXPENSES $ 232.4 $ 229.9 $ 230.7 $ 919.3 $ 917.3
Adjustment:
Stock-based
compensation (19.5) (21.9) (21.1) (84.1) (87.7)
-------- -------- -------- -------- --------
NON-GAAP RESEARCH AND
DEVELOPMENT EXPENSES $ 212.9 $ 208.0 $ 209.6 $ 835.2 $ 829.6
======== ======== ======== ======== ========
GENERAL AND
ADMINISTRATIVE EXPENSES $ 71.0 $ 70.2 $ 73.7 $ 284.2 $ 281.0
Adjustment:
Stock-based
compensation (9.3) (9.1) (10.4) (36.9) (38.0)
-------- -------- -------- -------- --------
NON-GAAP GENERAL AND
ADMINISTRATIVE EXPENSES $ 61.7 $ 61.1 $ 63.3 $ 247.3 $ 243.0
======== ======== ======== ======== ========
NETAPP, INC.
RECONCILIATION OF NON-GAAP TO GAAP
INCOME STATEMENT INFORMATION
(In millions, except net income per share amounts)
Q4'FY15 Q3'FY15 Q4'FY14 FY2015 FY2014
-------- -------- -------- -------- --------
RESTRUCTURING AND OTHER
CHARGES $ - $ - $ 38.8 $ - $ 88.3
Adjustment:
Restructuring and
other charges - - (38.8) - (88.3)
-------- -------- -------- -------- --------
NON-GAAP RESTRUCTURING
AND OTHER CHARGES $ - $ - $ - $ - $ -
======== ======== ======== ======== ========
OPERATING EXPENSES $ 773.6 $ 774.9 $ 818.2 $3,116.7 $3,184.8
Adjustments:
Amortization of
intangible assets (0.3) (0.3) (0.3) (1.1) (2.0)
Stock-based
compensation (58.3) (60.6) (61.9) (237.5) (250.7)
Restructuring and
other charges - - (38.8) - (88.3)
-------- -------- -------- -------- --------
NON-GAAP OPERATING
EXPENSES $ 715.0 $ 714.0 $ 717.2 $2,878.1 $2,843.8
======== ======== ======== ======== ========
INCOME FROM OPERATIONS $ 161.6 $ 202.5 $ 223.8 $ 716.5 $ 734.3
Adjustments:
Amortization of
intangible assets 15.5 19.2 14.6 63.7 59.1
Stock-based
compensation 63.2 66.0 67.2 259.3 273.0
Restructuring and
other charges - - 38.8 - 88.3
-------- -------- -------- -------- --------
NON-GAAP INCOME FROM
OPERATIONS $ 240.3 $ 287.7 $ 344.4 $1,039.5 $1,154.7
======== ======== ======== ======== ========
OTHER INCOME (EXPENSE),
NET $ 2.5 $ (2.4) $ 2.8 $ (3.7) $ 6.4
Adjustment:
Non-cash interest
expense - - - - 8.2
-------- -------- -------- -------- --------
NON-GAAP OTHER INCOME
(EXPENSE), NET $ 2.5 $ (2.4) $ 2.8 $ (3.7) $ 14.6
======== ======== ======== ======== ========
INCOME BEFORE INCOME
TAXES $ 164.1 $ 200.1 $ 226.6 $ 712.8 $ 740.7
Adjustments:
Amortization of
intangible assets 15.5 19.2 14.6 63.7 59.1
Stock-based
compensation 63.2 66.0 67.2 259.3 273.0
Restructuring and
other charges - - 38.8 - 88.3
Non-cash interest
expense - - - - 8.2
-------- -------- -------- -------- --------
NON-GAAP INCOME BEFORE
INCOME TAXES $ 242.8 $ 285.3 $ 347.2 $1,035.8 $1,169.3
======== ======== ======== ======== ========
PROVISION FOR INCOME
TAXES $ 29.2 $ 23.3 $ 29.6 $ 152.9 $ 103.2
Adjustments:
Income tax effect of
non-GAAP adjustments 11.3 23.7 33.4 65.8 97.9
Settlement of income
tax audit - - - (47.4) -
-------- -------- -------- -------- --------
NON-GAAP PROVISION FOR
INCOME TAXES $ 40.5 $ 47.0 $ 63.0 $ 171.3 $ 201.1
======== ======== ======== ======== ========
NET INCOME PER SHARE $ 0.43 $ 0.56 $ 0.59 $ 1.75 $ 1.83
Adjustments:
Amortization of
intangible assets 0.05 0.06 0.04 0.20 0.17
Stock-based
compensation 0.20 0.21 0.20 0.81 0.79
Restructuring and
other charges - - 0.11 - 0.25
Non-cash interest
expense - - - - 0.02
Income tax effect of
non-GAAP adjustments (0.04) (0.07) (0.10) (0.21) (0.28)
Settlement of income
tax audit - - - 0.15 -
-------- -------- -------- -------- --------
NON-GAAP NET INCOME PER
SHARE $ 0.65 $ 0.75 $ 0.84 $ 2.70 $ 2.78
======== ======== ======== ======== ========
RECONCILIATION OF NON-GAAP TO GAAP
GROSS MARGIN
($ in millions)
Q4'FY15 Q3'FY15 Q4'FY14 FY2015 FY2014
-------- -------- -------- -------- --------
Gross margin-GAAP 60.7% 63.0% 63.2% 62.6% 62.0%
Cost of revenues
adjustments 1.3% 1.6% 1.2% 1.4% 1.3%
-------- -------- -------- -------- --------
Gross margin-Non-GAAP 62.0% 64.6% 64.4% 64.0% 63.2%
GAAP cost of revenues $ 604.5 $ 573.9 $ 607.0 $2,289.5 $2,406.0
Cost of revenues
adjustments:
Amortization of
intangible assets (15.2) (18.9) (14.3) (62.6) (57.1)
Stock-based
compensation (4.9) (5.4) (5.3) (21.8) (22.3)
-------- -------- -------- -------- --------
Non-GAAP cost of
revenues $ 584.4 $ 549.6 $ 587.4 $2,205.1 $2,326.6
-------- -------- -------- -------- --------
Net revenues $1,539.7 $1,551.3 $1,649.0 $6,122.7 $6,325.1
RECONCILIATION OF NON-GAAP TO GAAP
PRODUCT GROSS MARGIN
($ in millions)
Q4'FY15 Q3'FY15 Q4'FY14 FY2015 FY2014
-------- -------- -------- -------- --------
Product gross margin-
GAAP 51.7% 54.9% 56.5% 54.7% 54.9%
Cost of product
revenues adjustments 1.8% 2.1% 1.4% 1.8% 1.5%
-------- -------- -------- -------- --------
Product gross margin-
Non-GAAP 53.4% 57.0% 58.0% 56.5% 56.5%
GAAP cost of product
revenues $ 441.3 $ 419.6 $ 453.2 $1,656.9 $1,777.1
Cost of product revenues
adjustments:
Amortization of
intangible assets (14.7) (18.3) (13.7) (60.4) (54.8)
Stock-based
compensation (1.3) (1.4) (1.4) (5.8) (5.6)
-------- -------- -------- -------- --------
Non-GAAP cost of product
revenues $ 425.3 $ 399.9 $ 438.1 $1,590.7 $1,716.7
-------- -------- -------- -------- --------
Product revenues $ 913.4 $ 929.5 $1,042.8 $3,654.6 $3,943.9
RECONCILIATION OF NON-GAAP TO GAAP
HARDWARE MAINTENANCE AND OTHER SERVICES GROSS MARGIN
($ in millions)
Q4'FY15 Q3'FY15 Q4'FY14 FY2015 FY2014
-------- -------- -------- -------- --------
Hardware maintenance and
other services gross
margin-GAAP 61.6% 63.3% 61.5% 62.0% 59.2%
Cost of hardware
maintenance and other
services revenues
adjustments 1.0% 1.2% 1.2% 1.2% 1.3%
-------- -------- -------- -------- --------
Hardware maintenance and
other services gross
margin-Non-GAAP 62.6% 64.5% 62.7% 63.1% 60.5%
GAAP cost of hardware
maintenance and other
services revenues $ 153.7 $ 144.9 $ 145.8 $ 596.9 $ 598.2
Cost of hardware
maintenance and other
services revenues
adjustments:
Amortization of
intangible assets (0.5) (0.6) (0.6) (2.2) (2.3)
Stock-based
compensation (3.6) (4.0) (3.9) (16.0) (16.7)
-------- -------- -------- -------- --------
Non-GAAP cost of
hardware maintenance
and other services
revenues $ 149.6 $ 140.3 $ 141.3 $ 578.7 $ 579.2
-------- -------- -------- -------- --------
Hardware maintenance and
other services revenues $ 399.8 $ 395.2 $ 378.7 $1,569.5 $1,466.4
RECONCILIATION OF NON-GAAP TO GAAP
EFFECTIVE TAX RATE
Q4'FY15 Q3'FY15 Q4'FY14 FY2015 FY2014
-------- -------- -------- -------- --------
GAAP effective tax rate 17.8% 11.6% 13.1% 21.5% 13.9%
Adjustments:
Tax effect of non-GAAP
adjustments (1.1%) 4.9% 5.1% (0.3%) 3.3%
Settlement of income
tax audit -% -% -% (4.6%) -%
-------- -------- -------- -------- --------
Non-GAAP effective tax
rate 16.7% 16.5% 18.1% 16.5% 17.2%
RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES
TO FREE CASH FLOW (NON-GAAP)
(In millions)
Q4'FY15 Q3'FY15 Q4'FY14 FY2015 FY2014
-------- -------- -------- -------- --------
Net cash provided by
operating activities $ 396.6 $ 274.6 $ 369.5 $1,268.1 $1,349.6
Purchases of property
and equipment (37.2) (28.6) (56.0) (175.3) (221.4)
-------- -------- -------- -------- --------
Free cash flow $ 359.4 $ 246.0 $ 313.5 $1,092.8 $1,128.2
INVENTORY TURNS AND RECONCILIATION OF NON-GAAP TO GAAP
COST OF REVENUES USED IN INVENTORY TURNS
(In millions, except annualized inventory turns)
Q4'FY15 Q3'FY15 Q4'FY14
-------- -------- --------
Annualized inventory
turns-GAAP 17 19 20
Cost of revenues
adjustments (1) (1) (1)
-------- -------- --------
Annualized inventory
turns-Non-GAAP 16 19 19
GAAP cost of revenues $ 604.5 $ 573.9 $ 607.0
Cost of revenues
adjustments:
Amortization of
intangible assets (15.2) (18.9) (14.3)
Stock-based
compensation (4.9) (5.4) (5.3)
-------- -------- --------
Non-GAAP cost of
revenues $ 584.4 $ 549.6 $ 587.4
-------- -------- --------
Inventory $ 146.5 $ 117.8 $ 122.4
Some items may not add
or recalculate due to
rounding.
NETAPP, INC.
RECONCILIATION OF NON-GAAP GUIDANCE TO GAAP
EXPRESSED AS EARNINGS (LOSS) PER SHARE
FIRST QUARTER FISCAL 2016
First Quarter
Fiscal 2016
------------------
Non-GAAP Guidance - Net Income Per Share* $0.20 - $0.25
Adjustments of Specific Items to Net Income
Per Share for the First Quarter Fiscal 2016:
Amortization of intangible assets (0.05)
Stock-based compensation expense (0.24)
Restructuring charges (0.09)
Income tax effect of non-GAAP adjustments 0.07
------------------
Total Adjustments (0.31)
GAAP Guidance - Net Loss Per Share** $(0.11) - $(0.06)
*Non-GAAP net income per share was computed using forecasted diluted shares
of 315 million.
**GAAP net loss per share was computed using forecasted basic shares of 309
million.
Press Contact: Meghan Fintland NetApp 1 408 822 1389 Email Contact Investor Contact: Kris Newton NetApp 1 408 822 3312 Email Contact
Source: NetApp, Inc.