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NetApp Annual Report, Year Ended Apr 30, 2006

Filing Date
Filed July 12, 2006
Period End
April 30, 2006
Security
NTAP
In the record · 2016–202610-K1110-Q328-K97

NTAP filed 11 annual reports (10-K), 32 quarterly reports (10-Q) and 97 current reports (8-K) between 2016 and 2026.

  1. Material agreement8-K · Dec ’16Dec ’16
  2. FY2019 annual report10-K · Jun ’19Jun ’19
  3. Leadership change8-K · Sep ’21Sep ’21
  4. Leadership change8-K · Sep ’25Sep ’25

01—Abstract

Summary

Summary of the 10-K filed July 12, 2006. Cited figures are marked; the original filing is the authoritative source.

Network Appliance, Inc. reported fiscal 2006 (year ended April 30, 2006) total revenues of $2,066.5 milliona, up from $1,598.1 million in fiscal 2005, with net income of $266.5 million versus $225.8 million the prior year.

Diluted earnings per share were $0.69b, compared with $0.59 in fiscal 2005. Product revenues were $1,577.4 million, software subscriptions $239.1 million and service revenues $249.9 million. Gross margin was 60.8% of revenues, and income from operations was $308.3 million.

International revenues were $943.8 millionc, or 45.7% of total revenues. The company's balance sheet at April 30, 2006 showed cash, cash equivalents and short-term investments of $1,322.9 million, and total assets of $3,260.9 million. During the year it repurchased 17.4 million shares for $488.9 million and acquired Decru, Inc. for a total purchase price of $283.2 million.

In the fourth quarter it repatriated $405.5 milliond of foreign earnings under the American Jobs Creation Act, incurring a $22.5 million tax charge, and borrowed $300.0 million in term loans to fund that repatriation. Deferred revenue rose to $681.5 million. Looking ahead, the filing says gross margins are expected to be negatively affected by factors including global service investment cost, competition, indirect and OEM sales, and higher disk content.

Management expects service gross margins in the mid 20% range for fiscal 2007 and says the adoption of SFAS No. 123R will reduce reported earnings. The company also agreed on June 22, 2006 to sell certain NetCache assets to Blue Coat Systems, Inc. for $23.9 million in cash and 360 thousand shares of Blue Coat common stock.

02—Key points

Key Highlights

  1. Total revenues rose to $2,066.5 million in fiscal 2006 from $1,598.1 million in fiscal 2005, and net income rose to $266.5 million from $225.8 million.
  2. Gross margin was 60.8% in fiscal 2006 compared with 61.0% in fiscal 2005, with the filing attributing the slight decline to a shift in revenue mix toward disk sales and IBM OEM business.
  3. Product revenues were $1,577.4 million, software subscriptions $239.1 million, and service revenues $249.9 million.
  4. Cash, cash equivalents and short-term investments totaled $1,322.9 million at April 30, 2006, after $488.9 million of share repurchases.
  5. The company repatriated $405.5 million of accumulated foreign earnings under the American Jobs Creation Act, recording a $22.5 million tax charge, and borrowed $300.0 million in term loans to fund it.
  6. International revenues were $943.8 million, or 45.7% of total revenues for fiscal 2006.
  7. On June 22, 2006 the company agreed to sell certain NetCache assets to Blue Coat Systems, Inc. for $23.9 million in cash and 360 thousand shares of Blue Coat common stock.

03—Questions

Frequently Asked Questions

  1. How did Network Appliance perform financially in fiscal 2006?

    Total revenues were $2,066.5 million, up from $1,598.1 million in fiscal 2005. Net income was $266.5 million, or $0.69 per diluted share, compared with $225.8 million, or $0.59 per diluted share, in fiscal 2005. Income from operations was $308.3 million.

  2. What factors does management expect to pressure future gross margins?

    The filing says future gross margins are expected to be negatively affected by global service investment cost, competition, indirect sales including OEM, and high disk content, partially offset by new product introductions and enhancements and product and add-on software mix. It also notes further price decline per petabyte for its products.

  3. What was the impact of the Decru acquisition?

    Network Appliance acquired Decru, Inc. on August 26, 2005 for a total purchase price of $283.2 million, including 8.3 million shares of common stock valued at $191.9 million and $54.5 million in cash. Goodwill of $192.9 million was recorded, and $5.0 million of in-process research and development was expensed. The filing states the historical operations of Decru were not significant.

  4. How is the company financing its capital return and foreign earnings repatriation?

    During fiscal 2006 the company repurchased 17.4 million shares for $488.9 million and had $405.7 million remaining under its repurchase authorization at April 30, 2006. To fund the repatriation of $405.5 million of foreign earnings, it received $300.0 million of term loans in March 2006, with $166.2 million due in fiscal 2007 and $133.8 million in fiscal 2008.

  5. What accounting change will affect fiscal 2007 results?

    Beginning May 1, 2006, the company will adopt SFAS No. 123R using the modified prospective method. The filing estimates unearned stock-based compensation of approximately $240.5 million to be expensed over fiscal 2007 through 2010 for awards unvested at April 30, 2006, and estimates the first-quarter fiscal 2007 impact at $0.07 to $0.09 per share.

04—Continue

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