01—Abstract
Summary
Summary of the 10-K/A filed December 6, 2002. Cited figures are marked; the original filing is the authoritative source.
This Form 10-K/A amends Items 7, 7a, 8 and 14 of Network Appliance, Inc.'s annual report for the fiscal year ended April 30, 2002, originally filed June 28, 2002.
The amendment was filed to revise the disclosure of future minimum non-cancelable operating lease payments (Note 14), which were restated downward in total from $154,424 thousand as previously reported to $46,914 thousanda as revised, following the company's purchase of its Sunnyvale headquarters site and termination of the related operating leases for $249.8 million. The amendment does not otherwise update disclosures or reflect later events. Fiscal 2002 was a difficult year.
Total revenues fell to $798.4 millionb from $1,006.2 million in fiscal 2001, product revenues declined 23.8% to $729.9 million, and service revenues rose 41.6% to $68.5 million. The company reported net income of $3.0 million, or $0.01 per diluted share, compared with $74.9 million in fiscal 2001. Operating results were hurt by restructuring charges of $12.2 million, a $13.0 million impairment loss on investments, and sales and marketing expenses that stayed high at $284.4 million.
Cash flow from operations was $143.9 millionc, and capital expenditures were $284.2 million, mainly for the Sunnyvale land and buildings. The balance sheet at April 30, 2002 showed cash, cash equivalents and short-term investments of $454.1 million, total assets of $1.11 billion and stockholders' equity of $858.5 million. Management stated that existing liquidity and capital resources are sufficient to fund operations for at least the next twelve months, and it expects about $29.8 million in annual cost savings from the restructuring actions taken in the second and fourth quarters of fiscal 2002.
02—Key points
Key Highlights
- Total revenues were $798.4 million in fiscal 2002, down from $1,006.2 million in fiscal 2001.
- Product revenues decreased 23.8% to $729.9 million, while service revenues increased 41.6% to $68.5 million.
- Net income was $3.0 million ($0.01 per diluted share), compared with $74.9 million in fiscal 2001.
- Restructuring charges totaled $12.2 million, and a $13.0 million other-than-temporary write-down was recorded on investments.
- Future minimum lease payments were revised to $46.9 million from $154.4 million after the Sunnyvale headquarters site was purchased for $249.8 million.
- Cash, cash equivalents and short-term investments were $454.1 million at April 30, 2002, and cash from operations was $143.9 million.
- Management expects about $29.8 million in annual cost savings from the fiscal 2002 restructuring actions.
03—Questions
Frequently Asked Questions
Why was this 10-K/A filed?
The amendment revises the disclosure of future minimum non-cancelable operating lease payments in Note 14. The previously reported total of $154.4 million was corrected to $46.9 million after management determined the original calculation was improper. The filing does not otherwise update disclosures or reflect events after the original June 28, 2002 10-K.
How did Network Appliance perform financially in fiscal 2002?
Revenue fell to $798.4 million from $1,006.2 million, and net income dropped to $3.0 million from $74.9 million. Product revenue declined 23.8%, while service revenue grew 41.6%. Restructuring charges and investment write-downs contributed to the decline in profit.
What happened with the Sunnyvale headquarters facility?
In the fourth quarter of fiscal 2002, the company bought the land and buildings at its Sunnyvale headquarters site for $249.8 million and terminated the related operating leases. This purchase was the main driver of the $284.2 million in capital expenditures for the year and increased property and equipment, net, to $345.2 million.
Does the company have enough liquidity?
Management stated that its existing liquidity and capital resources are sufficient to fund operations for at least the next twelve months. Cash, cash equivalents and short-term investments totaled $454.1 million at April 30, 2002, and the company had no amounts outstanding under its $5.0 million line of credit.
What restructuring actions were taken and what savings are expected?
The company took two restructuring actions in fiscal 2002: an August 2001 workforce reduction of about 200 employees with facility consolidation, which carried a $8.0 million charge, and an April 2002 engineering facility closure with a 34-employee headcount reduction, which carried a $5.9 million charge. Management expects annual cost savings of about $29.8 million from these actions.
04—Continue