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NetApp Annual Report, Year Ended Apr 25, 2008

Filing Date
Filed June 24, 2008
Period End
April 25, 2008
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 June 24, 2008. Cited figures are marked; the original filing is the authoritative source.

NetApp, Inc. (formerly known as Network Appliance, Inc.) reported fiscal 2008 (year ended April 25, 2008) total revenues of $3,303.2 milliona, up 17.8% from $2,804.3 million in fiscal 2007, and net income of $309.7 million, or $0.86 per diluted share, compared with $297.7 million in fiscal 2007.

Product revenues rose to $2,242.5 millionb, software entitlements and maintenance revenues increased 42.7% to $486.9 million, and service revenues increased 52.1% to $573.8 million. Gross margin was 60.9% of revenue and income from operations was $313.6 million, or 9.4% of revenue, down from 10.7% in fiscal 2007, as sales and marketing expense rose to 32.6% of revenue. Operating cash flow was $1,008.9 million.

The company's balance sheet shows cash, cash equivalents and short-term investments of $1,164.4 millionc at year end, and $1,700.3 million of stockholders' equity after $903.7 million of share repurchases during the year. Total long-term debt was $172.6 million under a secured credit agreement. In June 2008, after the fiscal year end, NetApp issued $1,265 million of 1.75% convertible senior notes due 2013, and used part of the proceeds to repurchase 11.6 million shares and to enter into note hedge and warrant transactions.

The filing also flags several risks for investors. Auction rate securities with a par value of $76.2 milliond had failed auctions, and the company recorded a temporary impairment of approximately $3.5 million.

The company is a defendant in patent litigation brought by Sun Microsystems, and it is cooperating with a GSA and Department of Justice investigation under the False Claims Act, for which no provision has been recorded. Management expects sales and marketing, research and development, and general and administrative expenses to increase in absolute dollars in fiscal 2009.

02—Key points

Key Highlights

  1. Total revenues rose 17.8% to $3,303.2 million in fiscal 2008, with growth across product, software entitlements and maintenance, and service revenues.
  2. Net income was $309.7 million ($0.86 per diluted share), up from $297.7 million ($0.77 per diluted share) in fiscal 2007.
  3. Income from operations was $313.6 million, or 9.4% of revenue, down from 10.7% in fiscal 2007, as sales and marketing expense increased to 32.6% of revenue.
  4. Operating cash flow was $1,008.9 million, up from $864.5 million in fiscal 2007.
  5. The company repurchased $903.7 million of common stock during fiscal 2008, leaving $496.2 million authorized for future repurchases.
  6. After year end, NetApp issued $1,265 million of 1.75% convertible senior notes due 2013, raising the pro forma long-term debt to approximately $1.438 billion.
  7. Risk items include $76.2 million par value of failed auction rate securities, pending Sun Microsystems patent litigation, and an ongoing GSA/Department of Justice False Claims Act investigation with no provision recorded.

03—Questions

Frequently Asked Questions

  1. How did NetApp's revenue and profitability trend in fiscal 2008?

    Total revenues grew 17.8% to $3,303.2 million, and net income rose to $309.7 million from $297.7 million. Operating margin declined to 9.4% from 10.7% because sales and marketing expense grew to 32.6% of revenue, compared with 32.0% in fiscal 2007.

  2. What drove the growth in service and software revenues?

    Software entitlements and maintenance revenues increased 42.7% to $486.9 million, reflecting a larger installed base of customers who purchased or renewed these arrangements. Service revenues increased 52.1% to $573.8 million, driven by higher professional services demand and growth in the maintenance installed base.

  3. How is the company's debt position changing?

    At April 25, 2008, long-term debt was $172.6 million under a secured credit agreement. In June 2008, NetApp issued $1,265 million of 1.75% convertible senior notes due 2013. The filing states that pro forma long-term debt would have been approximately $1.438 billion as of April 25, 2008, after giving effect to the notes.

  4. What legal and investment risks does the filing disclose?

    The company is in patent litigation with Sun Microsystems and is cooperating with a GSA and Department of Justice investigation into potential False Claims Act violations, with no provision recorded. It also holds auction rate securities with $76.2 million par value whose auctions have failed, and recorded a temporary impairment of about $3.5 million on those securities.

04—Continue

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