NetApp : Quarterly report which provides a continuing view of a company's financial position

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

• ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

  For the quarterly period ended January 25, 2019

  or

• ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

  For the transition period from to

Delaware

(State or other jurisdiction of incorporation or organization)

Commission File Number 000-27130

NetApp, Inc.

(Exact name of registrant as specified in its charter)

1395 Crossman Avenue,

Sunnyvale, California 94089

(Address of principal executive offices, including zip code)

[phone]

(Registrant's telephone number, including area code)

77-0307520 (I.R.S. Employer Identification No.)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☑	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

As of February 13, 2019, there were 246,974,767 shares of the registrant's common stock, $0.001 par value, outstanding.

No ☒

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION

Item 1	Condensed Consolidated Financial Statements (Unaudited)	3
Condensed Consolidated Balance Sheets as of January 25, 2019 and April 27, 2018	3
Condensed Consolidated Statements of Operations for the Three and Nine Months Ended January 25, 2019 and January 26, 2018	4
Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended January 25, 2019 and
January 26, 2018	5
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended January 25, 2019 and January 26, 2018	6
Notes to Condensed Consolidated Financial Statements	7
Item 2	Management's Discussion and Analysis of Financial Condition and Results of Operations	27
Item 3	Quantitative and Qualitative Disclosures About Market Risk	42
Item 4	Controls and Procedures	43
Item 1	44
Item 1A	44
Item 2	54
Item 3	55
Item 4	55
Item 5	55
Item 6	56
SIGNATURE	57

PART II - OTHER INFORMATION

Legal Proceedings

Risk Factors

Unregistered Sales of Equity Securities and Use of Proceeds Defaults upon Senior Securities

Mine Safety Disclosures

Other Information Exhibits

TRADEMARKS

© 2019 NetApp, Inc. All Rights Reserved. No portions of this document may be reproduced without prior written consent of NetApp, Inc. NetApp, the NetApp logo, and the marks listed athttp://www.netapp.com/TM are trademarks of NetApp, Inc. Other company and product names may be trademarks of their respective owners.

2

PART I - FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements (Unaudited)

NETAPP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions, except par value)

(Unaudited)

January 25, 2019

Current assets:

Cash and cash equivalents Short-term investments Accounts receivable Inventories

Other current assets

Total current assets Property and equipment, net Goodwill

Other intangible assets, net Other non-current assets

ASSETS

$

Total assets

$

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable Accrued expenses Commercial paper notes

Current portion of long-term debt

Short-term deferred revenue and financed unearned services revenue

Total current liabilities

Long-term debt

Other long-term liabilities

Long-term deferred revenue and financed unearned services revenue

Total liabilities

$

7,1887,715

Commitments and contingencies (Note 15)

Stockholders' equity:

Common stock and additional paid-in capital, $0.001 par value; 247 and 263 shares issued and outstanding as of January 25, 2019 and April 27, 2018

Retained earnings (accumulated deficit) Accumulated other comprehensive loss

Total stockholders' equity

Total liabilities and stockholders' equity

-(68 )

1,2302,276

$

See accompanying notes to condensed consolidated financial statements.

April 27, 2018

2,271$ 2,941

1,7782,450

8721,047

100122

340392

5,3616,952

763756

1,7421,739

5694

496450

8,418$ 9,991

497$ 609

730825

163385

399

-

1,6411,712

3,4303,531

1,1441,541

898992

1,7161,651

1,2982,355

(9 ) (70 )

8,418$ 9,991

3

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per share amounts)

(Unaudited)

Three Months EndedJanuary 25, 2019

Revenues:

Product

Software maintenance

Hardware maintenance and other services

Net revenues

Cost of revenues:

Cost of product

Cost of software maintenance

Cost of hardware maintenance and other services

Total cost of revenues

Gross profit Operating expenses:

Sales and marketing

Research and development

General and administrative

Restructuring charges

Gain on sale of properties

Total operating expenses Income from operations Other income, net

Income before income taxes Provision for income taxes Net income (loss)

Net income (loss) per share:

Basic

Diluted

Shares used in net income (loss) per share calculations:

Basic

Diluted

Cash dividends declared per share

$

• 967$ 2393571,563

1,539

469

10

102

581

982

401

203

67--

671

311

8

319

70

$$$

249$

1.00$ 0.98$

250255

January 26, 2018

952$

221

3661,0951,109

469

108

583

956

419

193

72-

(2 1 8 )

466

490

14

504

983

(4 7 9 )$

(1 .7 9 )$ (1 .7 9 )$

268268

$

0.40$

0.20$

See accompanying notes to condensed consolidated financial statements.

Nine Months EndedJanuary 25, 2019

January 26, 2018

2,755$ 2,498704668

4,5544,275

1,2951,242

6

2519

315334

1,6351,595

2,9192,6801,2181,263622580209209

19-

-(2 1 8 )

2,0681,834

851846

3325

884871

1111,045

773$

3.01$ 2.94$

(0 .6 5 ) (0 .6 5 )

257269

263269

1.20$ 0.60

4

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In millions)

(Unaudited)

.

Three Months Ended

Net income (loss)

Other comprehensive income (loss):

Foreign currency translation adjustments Defined benefit obligations:

Reclassification adjustments related to defined benefit obligations

Income tax effect

Unrealized gains (losses) on available-for-sale securities:

Unrealized holding gains (losses) arising during the period

Other comprehensive income (loss)

Comprehensive income (loss)

$

January 25,	January 26,	January 25,	January 26,
2019	2018	2019	2018

249$

(1 )

(1 )187

(4 7 9 )$

(5 )

(1 )-

(17 )(23 )

$

256$

(5 0 2 )$

See accompanying notes to condensed consolidated financial statements.

Nine Months Ended

773$

(1 7 4 )

(4 )

3

(2 )172

(2 ) 1

(15 )

775$

(1 8 7 )

5