01—Abstract
Summary
Summary of the 10-K filed June 25, 2003. Cited figures are marked; the original filing is the authoritative source.
Network Appliance, Inc. reported total revenues of $892.1 milliona for fiscal 2003 (year ended April 30, 2003), up from $798.4 million in fiscal 2002, with net income of $76.5 million, or $0.22 per diluted share, compared with $3.0 million in fiscal 2002.
Income from operations was $87.6 millionb, versus a loss of $1.1 million a year earlier. Product revenue rose to $802.3 million and service revenue to $89.8 million, with international revenues making up 42.1% of the total. Product gross margin improved to 65.1% and service gross margin to 26.5%, while sales and marketing expense stayed the largest operating cost at $304.2 million.
Balance sheet strength improved over the year. Total assets reached $1.32 billionc and stockholders' equity $987.4 million. Cash, cash equivalents and short-term investments totaled $618.8 million, and working capital rose to $588.5 million.
Operating cash flow was $195.3 milliond. Management believes existing liquidity is sufficient for at least the next twelve months. In May 2003 the board approved a $150.0 million open-ended stock repurchase program.
The company flagged risks tied to quarterly fluctuations, dependence on a limited number of suppliers and contract manufacturers, intense competition from EMC, Hitachi Data Systems, HP, IBM and Sun, and the continued growth of the storage and content delivery markets. It also expects interest income to decline in fiscal 2004 and general and administrative expenses to rise in absolute dollars because of its ERP investment.
02—Key points
Key Highlights
- Total revenues were $892.1 million in fiscal 2003, up from $798.4 million in fiscal 2002.
- Net income was $76.5 million, or $0.22 per diluted share, versus $3.0 million in fiscal 2002.
- Income from operations was $87.6 million, compared with a loss of $1.1 million in fiscal 2002.
- Product gross margin rose to 65.1% from 63.3%, and service gross margin rose to 26.5% from 18.2%.
- International revenues were $375.2 million, or 42.1% of total revenues.
- Cash, cash equivalents and short-term investments reached $618.8 million, and operating cash flow was $195.3 million.
- In May 2003 the board approved a $150.0 million open-ended stock repurchase program.
03—Questions
Frequently Asked Questions
How did Network Appliance perform financially in fiscal 2003?
Total revenues grew to $892.1 million from $798.4 million, and net income increased to $76.5 million from $3.0 million. Product revenue was $802.3 million and service revenue was $89.8 million.
What drove the improvement in profitability?
The filing cites higher gross margins on both products and services, along with lower research and development and general and administrative expenses in absolute dollars. Product gross margin benefited from product and add-on software mix and higher average selling prices for new products, and service gross margin improved on operational and cost efficiencies.
How strong is the company's financial position?
Total assets were $1.32 billion and stockholders' equity was $987.4 million at April 30, 2003. Cash, cash equivalents and short-term investments totaled $618.8 million, and management believes liquidity is sufficient for at least the next twelve months.
What risks does the filing highlight for investors?
The filing highlights quarterly results that may fluctuate, reliance on a limited number of suppliers and contract manufacturers, intense competition from companies including EMC and Hewlett-Packard, dependence on continued growth in the storage and content delivery markets, and international operations.
What capital allocation actions were announced?
On May 13, 2003, the board approved a $150.0 million stock repurchase program with no set end date, to be funded from working capital. The company has never paid cash dividends and intends to retain available funds.
04—Continue