UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
x |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended July 31, 2015
or
¨ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number 000-27130
NetApp, Inc.
(Exact name of registrant as specified in its charter)
Delaware |
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77-0307520 |
(State or other jurisdiction of |
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(I.R.S. Employer |
incorporation or organization) |
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Identification No.) |
495 East Java Drive,
Sunnyvale, California 94089
(Address of principal executive offices, including zip code)
(408) 822-6000
(Registrant’s telephone number, including area code)
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 x No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes x No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer x |
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Accelerated filer ¨ |
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Non-accelerated filer ¨ |
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Smaller reporting company ¨ |
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(Do not check if a smaller reporting company) |
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).Yes ¨ No x
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
As of August 31, 2015, there were 294,900,435 shares of the registrant’s common stock, $0.001 par value, outstanding.
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Item 1 |
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3 |
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Condensed Consolidated Balance Sheets as of July 31, 2015 and April 24, 2015 |
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3 |
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4 |
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5 |
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6 |
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7 |
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Item 2 |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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22 |
Item 3 |
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34 |
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Item 4 |
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35 |
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Item 1 |
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36 |
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Item 1A |
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36 |
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Item 2 |
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46 |
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Item 3 |
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46 |
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Item 4 |
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46 |
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Item 5 |
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46 |
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Item 6 |
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46 |
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47 |
TRADEMARKS
© 2015 NetApp, Inc. All rights reserved. No portions of this document may be reproduced without prior written consent of NetApp, Inc. Specifications are subject to change without notice. NetApp, the NetApp logo, Go Further, Faster, AltaVault, ASUP, AutoSupport, Campaign Express, Cloud ONTAP, Clustered Data ONTAP, Customer Fitness, Data ONTAP, DataMotion, Fitness, Flash Accel, Flash Cache, Flash Pool, FlashRay, FlexArray, FlexCache, FlexClone, FlexPod, FlexScale, FlexShare, FlexVol, FPolicy, GetSuccessful, LockVault, Manage ONTAP, Mars, MetroCluster, MultiStore, NetApp Insight, OnCommand, ONTAP, ONTAPI, RAID DP, RAID-TEC. SANtricity, SecureShare, Simplicity, Simulate ONTAP, SnapCenter, Snap Creator, SnapCopy, SnapDrive, SnapIntegrator, SnapLock, SnapManager, SnapMirror, SnapMover, SnapProtect, SnapRestore, Snapshot, SnapValidator, SnapVault, StorageGRID, Tech OnTap, Unbound Cloud, WAFL and other names are trademarks or registered trademarks of NetApp Inc., in the United States and/or other countries.
2
PART I — FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements (Unaudited)
NETAPP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except par value)
(Unaudited)
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July 31, 2015 |
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April 24, 2015 |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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$ |
2,324 |
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$ |
1,922 |
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Short-term investments |
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2,626 |
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3,404 |
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Accounts receivable |
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415 |
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779 |
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Inventories |
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193 |
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146 |
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Other current assets |
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561 |
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522 |
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Total current assets |
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6,119 |
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6,773 |
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Property and equipment, net |
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1,011 |
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1,030 |
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Goodwill |
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1,027 |
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1,027 |
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Other intangible assets, net |
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64 |
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90 |
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Other non-current assets |
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476 |
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481 |
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Total assets |
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$ |
8,697 |
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$ |
9,401 |
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LIABILITIES AND STOCKHOLDERS' EQUITY |
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Current liabilities: |
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Accounts payable |
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$ |
249 |
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$ |
284 |
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Accrued expenses |
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592 |
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701 |
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Short-term deferred revenue and financed unearned services revenue |
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1,639 |
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1,724 |
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Total current liabilities |
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2,480 |
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2,709 |
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Long-term debt |
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1,488 |
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1,487 |
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Other long-term liabilities |
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302 |
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318 |
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Long-term deferred revenue and financed unearned services revenue |
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1,427 |
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1,473 |
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Total liabilities |
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5,697 |
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5,987 |
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Commitments and contingencies (Note 15) |
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Stockholders' equity: |
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Common stock and additional paid-in capital, $0.001 par value, (297 and 306 shares issued and outstanding as of July 31, 2015 and April 24, 2015, respectively) |
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3,065 |
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3,385 |
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Retained earnings (accumulated deficit) |
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(31 |
) |
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53 |
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Accumulated other comprehensive loss |
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(34 |
) |
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(24 |
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Total stockholders' equity |
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3,000 |
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3,414 |
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Total liabilities and stockholders' equity |
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$ |
8,697 |
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$ |
9,401 |
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See accompanying notes to condensed consolidated financial statements.
3
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share amounts)
(Unaudited)
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Three Months Ended |
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July 31, 2015 |
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July 25, 2014 |
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Revenues: |
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Product |
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$ |
664 |
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$ |
883 |
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Software maintenance |
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248 |
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221 |
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Hardware maintenance and other services |
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423 |
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385 |
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Net revenues |
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1,335 |
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1,489 |
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Cost of revenues: |
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Cost of product |
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345 |
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394 |
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Cost of software maintenance |
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10 |
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8 |
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Cost of hardware maintenance and other services |
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164 |
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149 |
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Total cost of revenues |
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519 |
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551 |
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Gross profit |
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816 |
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938 |
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Operating expenses: |
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Sales and marketing |
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492 |
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480 |
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Research and development |
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244 |
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228 |
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General and administrative |
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79 |
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70 |
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Restructuring and other charges |
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27 |
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— |
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Total operating expenses |
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842 |
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778 |
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Income (loss) from operations |
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(26 |
) |
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160 |
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Other income, net |
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4 |
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— |
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Income (loss) before income taxes |
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(22 |
) |
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160 |
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Provision for income taxes |
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8 |
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72 |
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Net income (loss) |
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$ |
(30 |
) |
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$ |
88 |
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Net income (loss) per share: |
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Basic |
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$ |
(0.10 |
) |
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$ |
0.27 |
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Diluted |
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$ |
(0.10 |
) |
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$ |
0.27 |
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Shares used in net income (loss) per share calculations: |
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Basic |
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304 |
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323 |
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Diluted |
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304 |
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329 |
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Cash dividends declared per share |
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$ |
0.180 |
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$ |
0.165 |
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See accompanying notes to condensed consolidated financial statements.
4
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In millions)
(Unaudited)
. |
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Three Months Ended |
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July 31, 2015 |
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July 25, 2014 |
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Net income (loss) |
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$ |
(30 |
) |
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$ |
88 |
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Other comprehensive income (loss): |
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Foreign currency translation adjustments |
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(1 |
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(1 |
) |
Defined benefit obligations: |
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Defined benefit obligation adjustments |
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— |
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2 |
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Reclassification adjustments related to defined benefit obligations |
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1 |
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— |
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Unrealized losses on available-for-sale securities: |
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Unrealized holding losses arising during the period |
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(9 |
) |
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(2 |
) |
Unrealized gains (losses) on cash flow hedges: |
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Unrealized holding losses arising during the period |
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(2 |
) |
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(1 |
) |
Reclassification adjustments for losses included in net income (loss) |
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1 |
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2 |
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Other comprehensive income (loss) |
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(10 |
) |
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— |
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Comprehensive income (loss) |
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$ |
(40 |
) |
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$ |
88 |
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See accompanying notes to condensed consolidated financial statements.
5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
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Three Months Ended |
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July 31, 2015 |
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July 25, 2014 |
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Cash flows from operating activities: |
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Net income (loss) |
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$ |
(30 |
) |
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$ |
88 |
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Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
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Depreciation and amortization |
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69 |
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78 |
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Stock-based compensation |
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77 |
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62 |
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Deferred income taxes |
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(51 |
) |
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8 |
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Excess tax benefit from stock-based compensation |
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(2 |
) |
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(43 |
) |
Other non-cash items, net |
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17 |
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38 |
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Changes in assets and liabilities: |
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Accounts receivable |
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361 |
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271 |
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Inventories |
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(47 |
) |
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18 |
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Other operating assets |
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17 |
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(13 |
) |
Accounts payable |
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(33 |
) |
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(62 |
) |
Accrued expenses |
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(119 |
) |
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(227 |
) |
Deferred revenue and financed unearned services revenue |
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(121 |
) |
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(26 |
) |
Other operating liabilities |
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(9 |
) |
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24 |
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Net cash provided by operating activities |
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129 |
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216 |
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Cash flows from investing activities: |
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Purchases of investments |
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(238 |
) |
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(332 |
) |
Maturities, sales and collections of investments |
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1,016 |
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523 |
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Purchases of property and equipment |
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(38 |
) |
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(58 |
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Other investing activities, net |
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2 |
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— |
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Net cash provided by investing activities |
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|
742 |
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133 |
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Cash flows from financing activities: |
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Issuance of common stock under employee stock award plans |
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19 |
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28 |
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Repurchase of common stock |
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(430 |
) |
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(119 |
) |
Excess tax benefit from stock-based compensation |
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2 |
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43 |
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Issuance of long-term debt, net |
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— |
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|
495 |
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Dividends paid |
|
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(54 |
) |
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(53 |
) |
Other financing activities, net |
|
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(1 |
) |
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(2 |
) |
Net cash provided by (used in) financing activities |
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(464 |
) |
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392 |
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Effect of exchange rate changes on cash and cash equivalents |
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(5 |
) |
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— |
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Net increase in cash and cash equivalents |
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|
402 |
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|
741 |
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Cash and cash equivalents: |
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Beginning of period |
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1,922 |
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|
2,291 |
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End of period |
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$ |
2,324 |
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$ |
3,032 |
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See accompanying notes to condensed consolidated financial statements.
6
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Description of Business and Significant Accounting Policies
NetApp, Inc. (we, us, or the Company) provides software, systems and services to manage and store computer data. We enable enterprises, service providers, governmental organizations, and partners to envision, deploy and evolve their information technology environments and to reduce costs and risk while driving growth and success for their organizations.
Basis of Presentation and Preparation
Our fiscal year is reported on a 52- or 53-week year ending on the last Friday in April. An additional week is included in the first fiscal quarter approximately every six years to realign fiscal months with calendar months. Fiscal year 2016, ending on April 29, 2016 is a 53-week year, with a 14th week included in its first quarter. Fiscal year 2015, which ended on April 24, 2015, was a 52-week year, with 13 weeks in its first quarter.
The accompanying unaudited condensed consolidated financial statements have been prepared by the Company, and reflect all adjustments, consisting only of normal recurring adjustments, that are, in the opinion of management, necessary for the fair presentation of our financial position, results of operations, comprehensive income (loss) and cash flows for the interim periods presented. The statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information and in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, these statements do not include all information and footnotes required by GAAP for annual consolidated financial statements, and should be read in conjunction with our audited consolidated financial statements as of and for the fiscal year ended April 24, 2015 contained in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on June 12, 2015. The results of operations for the three months ended July 31, 2015 are not necessarily indicative of the operating results to be expected for the full fiscal year or future operating periods.
The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Such estimates include, but are not limited to, revenue recognition, reserves and allowances; inventory valuation and purchase order accruals; valuation of goodwill and intangibles; restructuring reserves; product warranties; employee benefit accruals; stock-based compensation; loss contingencies; investment impairments; income taxes and fair value measurements. Actual results could differ materially from those estimates.
There have been no significant changes in our significant accounting policies as of and for the three months ended July 31, 2015, as compared to the significant accounting policies described in our Annual Report on Form 10-K for the fiscal year ended April 24, 2015.
2. Recent Accounting Standards Not Yet Effective
In August 2015, the Financial Accounting Standards Board (FASB) issued an update that deferred the effective date of the new guidance they previously issued in May 2014 related to the recognition and reporting of revenue that establishes a comprehensive new revenue recognition model designed to depict the transfer of goods or services to a customer in an amount that reflects the consideration the entity expects to receive in exchange for those goods or services. The guidance allows for the use of either the full or modified retrospective transition method. This new standard will be effective for us beginning April 28, 2018, although adoption as of the original effective date of April 29, 2017 is permitted. We are currently evaluating the impact of this new standard on our consolidated financial statements, as well as which transition method and adoption date we intend to use.
7
3. Statements of Cash Flows Additional Information
Non-cash investing activities and supplemental cash flow information are as follows (in millions):
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Three Months Ended |
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July 31, 2015 |
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July 25, 2014 |
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Non-cash Investing Activities: |
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Capital expenditures incurred but not paid |
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$ |
13 |
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$ |
12 |
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Supplemental Cash Flow Information: |
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Income taxes paid, net of refunds |
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$ |
40 |
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$ |
68 |
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Interest paid |
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$ |
20 |
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$ |
12 |
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4. Purchased Intangible Assets, Net
Purchased intangible assets, net are summarized below (in millions):
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July 31, 2015 |
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April 24, 2015 |
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Gross |
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Accumulated |
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Net |
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Gross |
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Accumulated |
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Net |
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Assets |
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Amortization |
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Assets |
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Assets |
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Amortization |
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Assets |
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Developed technology |
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$ |
304 |
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|
$ |
(242 |
) |
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$ |
62 |
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$ |
313 |
|
|
$ |
(225 |
) |
|
$ |
88 |
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Customer contracts/relationships |
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5 |
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(3 |
) |
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2 |
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5 |
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(3 |
) |
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2 |
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Other purchased intangibles |
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|
1 |
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|
|
(1 |
) |
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— |
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3 |
|
|
|
(3 |
) |
|
|
— |
|
Total purchased intangible assets |
|
$ |
310 |
|
|
$ |
(246 |
) |
|
$ |
64 |
|
|
$ |
321 |
|
|
$ |
(231 |
) |
|
$ |
90 |
|
In the three months ended July 31, 2015, we recorded a charge of $11 million to fully impair developed technology related to our fiscal 2013 acquisition of CacheIQ as a result of our discontinued use of such technology. The impairment charge is included in accumulated amortization in the table above.
Amortization expense for purchased intangible assets is summarized below (in millions):
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Three Months Ended |
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Statement of |
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|
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July 31, 2015 |
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July 25, 2014 |
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Operations Classifications |
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Developed technology |
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$ |
14 |
|
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$ |
15 |
|
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Cost of revenues |
Customer contracts/relationships |
|
|
— |
|
|
|
— |
|
|
Operating expenses |
Total |
|
$ |
14 |
|
|
$ |
15 |
|
|
|
As of July 31, 2015, future amortization expense related to purchased intangible assets is as follows (in millions):
Fiscal Year |
|
Amount |
|
|
Remainder of 2016 |
|
$ |
40 |
|
2017 |
|
|
10 |
|
2018 |
|
|
6 |
|
2019 |
|
|
5 |
|
2020 |
|
|
3 |
|
Total |
|
$ |
64 |
|
5. Balance Sheet Details
Cash and cash equivalents (in millions):
|
|
July 31, 2015 |
|
|
April 24, 2015 |
|
||
Cash |
|
$ |
2,120 |
|
|
$ |
1,666 |
|
Cash equivalents |
|
|
204 |
|
|
|
256 |
|
Cash and cash equivalents |
|
$ |
2,324 |
|
|
$ |
1,922 |
|
8
|
|
July 31, 2015 |
|
|
April 24, 2015 |
|
||
Purchased components |
|
$ |
63 |
|
|
$ |
36 |
|
Finished goods |
|
|
130 |
|
|
|
110 |
|
Inventories |
|
$ |
193 |
|
|
$ |
146 |
|
Other current assets (in millions):
|
|
July 31, 2015 |
|
|
April 24, 2015 |
|
||
Prepaid expenses and other current assets |
|
$ |
271 |
|
|
$ |
268 |
|
Deferred tax assets |
|
|
290 |
|
|
|
254 |
|
Other current assets |
|
$ |
561 |
|
|
$ |
522 |
|
Property and equipment, net (in millions):
|
|
July 31, 2015 |
|
|
April 24, 2015 |
|
||
Land |
|
$ |
265 |
|
|
$ |
265 |
|
Buildings and improvements |
|
|
606 |
|
|
|
607 |
|
Leasehold improvements |
|
|
109 |
|
|
|
107 |
|
Computer, production, engineering and other equipment |
|
|
759 |
|
|
|
754 |
|
Computer software |
|
|
369 |
|
|
|
372 |
|
Furniture and fixtures |
|
|
85 |
|
|
|
85 |
|
Construction-in-progress |
|
|
38 |
|
|
|
33 |
|
|
|
|
2,231 |
|
|
|
2,223 |
|
Accumulated depreciation and amortization |
|
|
(1,220 |
) |
|
|
(1,193 |
) |
Property and equipment, net |
|
$ |
1,011 |
|
|
$ |
1,030 |
|
Other non-current assets (in millions):
|
|
July 31, 2015 |
|
|
April 24, 2015 |
|
||
Deferred tax assets |
|
$ |
273 |
|
|
$ |
256 |
|
Other assets |
|
|
203 |
|
|
|
225 |
|
Other non-current assets |
|
$ |
476 |
|
|
$ |
481 |
|
Accrued expenses (in millions):
|
|
July 31, 2015 |
|
|
April 24, 2015 |
|
||
Accrued compensation and benefits |
|
$ |
258 |
|
|
$ |
359 |
|
Product warranty liability |
|
|
54 |
|
|
|
58 |
|
Other current liabilities |
|
|
280 |
|
|
|
284 |
|
Accrued expenses |
|
$ |
592 |
|
|
$ |
701 |
|
9
Equipment and software systems sales include a standard product warranty. The following tables summarize the activity related to product warranty liabilities and their balances as reported in our condensed consolidated balance sheets (in millions):
|
|
Three Months Ended |
|
|||||
|
|
July 31, 2015 |
|
|
July 25, 2014 |
|
||
Balance at beginning of period |
|
$ |
86 |
|
|
$ |
110 |
|
Expense accrued during the period |
|
|
9 |
|
|
|
10 |
|
Warranty costs incurred |
|
|
(14 |
) |
|
|
(16 |
) |
Balance at end of period |
|
$ |
81 |
|
|
$ |
104 |
|
|
|
July 31, 2015 |
|
|
April 24, 2015 |
|
||
Accrued expenses |
|
$ |
54 |
|
|
$ |
58 |
|
Other long-term liabilities |
|
|
27 |
|
|
|
28 |
|
Total warranty liabilities |
|
$ |
81 |
|
|
$ |
86 |
|
Warranty expense accrued during the period includes amounts accrued for systems at the time of shipment, adjustments for changes in estimated costs for warranties on systems shipped in the period and changes in estimated costs for warranties on systems shipped in prior periods.
Deferred revenue and financed unearned services revenue (in millions):
|
|
July 31, 2015 |
|
|
April 24, 2015 |
|
||
Deferred product revenue |
|
$ |
25 |
|
|
$ |
17 |
|
Deferred services revenue |
|
|
2,934 |
|
|
|
3,075 |
|
Financed unearned services revenue |
|
|
107 |
|
|
|
105 |
|
Total |
|
$ |
3,066 |
|
|
$ |
3,197 |
|
|
|
|
|
|
|
|
|
|
Reported as: |
|
|
|
|
|
|
|
|
Short-term |
|
$ |
1,639 |
|
|
$ |
1,724 |
|
Long-term |
|
|
1,427 |
|
|
|
1,473 |
|
Total |
|
$ |
3,066 |
|
|
$ |
3,197 |
|
Deferred product revenue represents unrecognized revenue related to undelivered product commitments and other product deliveries that have not met all revenue recognition criteria. Deferred services revenue represents customer payments made in advance for services, which include software and hardware maintenance contracts and other services. Financed unearned services revenue represents undelivered services for which cash has been received under certain third-party financing arrangements. See Note 15 for additional information related to these arrangements.
6. Other income, net
Other income, net consists of the following (in millions):
|
|
Three Months Ended |
|
|||||
|
|
July 31, 2015 |
|
|
July 25, 2014 |
|
||
Interest income |
|
$ |
13 |
|
|
$ |
8 |
|
Interest expense |
|
|
(11 |
) |
|
|
(9 |
) |
Other income, net |
|
|
2 |
|
|
|
1 |
|
Total other income, net |
|
$ |
4 |
|
|
$ |
— |
|
10
7. Financial Instruments and Fair Value Measurements
The accounting guidance for fair value measurements provides a framework for measuring fair value on either a recurring or nonrecurring basis, whereby the inputs used in valuation techniques are assigned a hierarchical level. The following are the three levels of inputs to measure fair value:
Level 1: Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2: Inputs that reflect quoted prices for identical assets or liabilities in less active markets; quoted prices for similar assets or liabilities in active markets; benchmark yields, reported trades, broker/dealer quotes, inputs other than quoted prices that are observable for the assets or liabilities; or inputs that are derived principally from or corroborated by observable market data by correlation or other means.
Level 3: Unobservable inputs that reflect our own assumptions incorporated in valuation techniques used to measure fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available.
We consider an active market to be one in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis, and consider an inactive market to be one in which there are infrequent or few transactions for the asset or liability, the prices are not current, or price quotations vary substantially either over time or among market makers. Where appropriate, our own or the counterparty’s non-performance risk is considered in measuring the fair values of liabilities and assets, respectively.
Investments
The following is a summary of our investments (in millions):
|
|
July 31, 2015 |
|
|
April 24, 2015 |
|
||||||||||||||||||||||||||
|
|
Cost or |
|
|
|
|
|
Estimated |
|
|
Cost or |
|
|
|
|
|
Estimated |
|
||||||||||||||
|
|
Amortized |
|
|
Gross Unrealized |
|
|
Fair |
|
|
Amortized |
|
|
Gross Unrealized |
|
|
Fair |
|
||||||||||||||
|
|
Cost |
|
|
Gains |
|
|
Losses |
|
|
Value |
|
|
Cost |
|
|
Gains |
|
|
Losses |
|
|
Value |
|
||||||||
Corporate bonds |
|
$ |
1,712 |
|
|
$ |
3 |
|
|
$ |
(2 |
) |
|
$ |
1,713 |
|
|
$ |
2,249 |
|
|
$ |
9 |
|
|
$ |
— |
|
|
$ |
2,258 |
|
U.S. Treasury and government debt securities |
|
|
838 |
|
|
|
1 |
|
|
|
— |
|
|
|
839 |
|
|
|
1,056 |
|
|
|
2 |
|
|
|
— |
|
|
|
1,058 |
|
Foreign government debt securities |
|
|
44 |
|
|
|
— |
|
|
|
— |
|
|
|
44 |
|
|
|
38 |
|
|
|
— |
|
|
|
— |
|
|
|
38 |
|
Commercial paper |
|
|
25 |
|
|
|
— |
|
|
|
— |
|
|
|
25 |
|
|
|
20 |
|
|
|
— |
|
|
|
— |
|
|
|
20 |
|
Certificates of deposit |
|
|
209 |
|
|
|
— |
|
|
|
— |
|
|
|
209 |
|
|
|
286 |
|
|
|
— |
|
|
|
— |
|
|
|
286 |
|
Mutual funds |
|
|
34 |
|
|
|
— |
|
|
|
— |
|
|
|
34 |
|
|
|
32 |
|
|
|
— |
|
|
|
— |
|
|
|
32 |
|
Total debt and equity securities |
|
$ |
2,862 |
|
|
$ |
4 |
|
|
$ |
(2 |
) |
|
$ |
2,864 |
|
|
$ |
3,681 |
|
|
$ |
11 |
|
|
$ |
— |
|
|
$ |
3,692 |
|
As of July 31, 2015, gross unrealized losses related to individual securities were not significant.
The following table presents the contractual maturities of our debt investments as of July 31, 2015 (in millions):
|
|
Amortized Cost |
|
|
Fair Value |
|
||
Due in one year or less |
|
$ |
1,024 |
|
|
$ |
1,025 |
|
Due after one year through five years |
|
|
1,804 |
|
|
|
1,805 |
|
|
|
$ |
2,828 |
|
|
$ |
2,830 |
|
Actual maturities may differ from the contractual maturities because borrowers may have the right to call or prepay certain obligations.
11
Fair Value of Financial Instruments
The following table summarizes our financial assets and liabilities measured at fair value on a recurring basis (in millions):
|
|
July 31, 2015 |
|
|||||||||
|
|
|
|
|
|
Fair Value Measurements at Reporting Date Using |
|
|||||
|
|
Total |
|
|
Level 1 |
|
|
Level 2 |
|
|||
Cash |
|
$ |
2,120 |
|
|
$ |
2,120 |
|
|
$ |
— |
|
Corporate bonds |
|
|
1,713 |
|
|
|
— |
|
|
|
1,713 |
|
U.S. Treasury and government debt securities |
|
|
839 |
|
|
|
138 |
|
|
|
701 |
|
Foreign government debt securities |
|
|
44 |
|
|