Cover and table of contents

10-K 1 ntap-10k_20170428.htm 10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

(Mark One)

☑	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the fiscal year ended April 28, 2017

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		77-0307520
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		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)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Name of exchange on which registered
Common Stock, $0.001 Par Value		The NASDAQ Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act:

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☑ No ☐

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ 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 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 ☑ No ☐

Indicate by a check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☐

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		☐	(Do not check if a smaller reporting company)	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 ☐ No ☑

The aggregate market value of voting stock held by non-affiliates of the registrant, as of October 28, 2016, the last business day of the registrant’s most recently completed second fiscal quarter, was $4,706,796,074 (based on the closing price for shares of the registrant’s common stock as reported by the NASDAQ Global Select Market on that date). Shares of common stock held by each executive officer, director, and holder of 5% or more of the outstanding common stock have been excluded in that such persons may be deemed to be affiliates. This determination of possible affiliate status is not a conclusive determination for other purposes.

On June 9, 2017, 271,737,598 shares of the registrant’s common stock, $0.001 par value, were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

The information called for by Part III of this Form 10-K is hereby incorporated by reference from the definitive Proxy Statement for our annual meeting of stockholders, which will be filed with the Securities and Exchange Commission not later than 120 days after April 28, 2017.

TABLE OF CONTENTS

		PART I
Item 1		Business		4
Item 1A		Risk Factors		14
Item 1B		Unresolved Staff Comments		24
Item 2		Properties		24
Item 3		Legal Proceedings		24
Item 4		Mine Safety Disclosures		24
		PART II
Item 5		Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		25
Item 6		Selected Financial Data		28
Item 7		Management’s Discussion and Analysis of Financial Condition and Results of Operations		29
Item 7A		Quantitative and Qualitative Disclosures About Market Risk		49
Item 8		Financial Statements and Supplementary Data		50
Item 9		Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		88
Item 9A		Controls and Procedures		88
Item 9B		Other Information		88
		PART III
Item 10		Directors, Executive Officers and Corporate Governance		89
Item 11		Executive Compensation		89
Item 12		Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		89
Item 13		Certain Relationships and Related Transactions, and Director Independence		89
Item 14		Principal Accounting Fees and Services		89
		PART IV
Item 15		Exhibits, Financial Statement Schedules		89
Signatures				90

Cautionary Note on Forward-Looking Statements

This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act). Forward-looking statements are all statements (and their underlying assumptions) included in this document that refer, directly or indirectly, to future events or outcomes and, as such, are inherently not factual, but rather reflect only our current projections for the future. Consequently, forward-looking statements usually include words such as “estimate,” “intend,” “plan,” “predict,” “seek,” “may,” “will,” “should,” “would,” “could,” “anticipate,” “expect,” “believe,” or similar words, in each case, intended to refer to future events or circumstances. A non-comprehensive list of the topics including forward-looking statements in this document includes:

	•	our future financial and operating results;

	•	our strategy;

	•	our beliefs and objectives for future operations, research and development;

	•	expectations regarding future product releases, growth and performance;

	•	political, economic and industry trends;

	•	expected timing of, customer acceptance of and benefits from, product introductions, developments and enhancements;

	•	expected benefits from acquisitions, including our acquisition of SolidFire, Inc. and joint ventures, growth opportunities and investments;

	•	expected outcomes from legal, regulatory and administrative proceedings;

	•	our competitive position;

	•	our short-term and long-term cash requirements, including, without limitation, anticipated capital expenditures;

	•	our anticipated tax rate;

	•	the repayment of our indebtedness; and

	•	future uses of our cash, including, without limitation, the continuation of our stock repurchase and cash dividend programs.

All forward-looking statements included in this document are inherently uncertain as they are based on management’s current expectations and assumptions concerning future events, and are subject to numerous known and unknown risks and uncertainties. Therefore, actual events and results may differ materially from these forward-looking statements. Factors that could cause actual results to differ materially from those described herein include, but are not limited to:

	•	the overall growth, structure and changes in the networked storage hardware market;

	•	our ability to expand our total available market and grow our portfolio of products;

	•	our ability to gain customer acceptance of new products and enable customer transitions from older products;

	•	our ability to successfully execute new business models;

	•	general global political, macroeconomic and market conditions;

	•	our ability to accurately forecast demand for our products and services, and future financial performance;

	•	our ability to successfully manage our backlog;

	•	our ability to successfully execute on our Data Fabric strategy to generate profitable growth and stockholder return;

	•	disruptions in our supply chain, which could limit our ability to ship products to our customers in the amounts and at the prices forecasted;

	•	our ability to maintain our customer, partner, supplier and contract manufacturer relationships on favorable terms and conditions;

	•	our ability to maintain our gross profit margins;

	•	our ability to timely and successfully introduce and increase volumes of new products and services and to forecast demand and pricing for the same;

	•	changes in U.S. government spending;

	•	the actions of our competitors including, without limitation, their ability to introduce competitive products and to acquire businesses and technologies that negatively impact our strategy, operations or customer demand for our products;

	•	the impact of industry consolidation affecting our suppliers, competitors, partners and customers;

	•	our ability to grow direct and indirect sales and to efficiently provide global service and support;

	•	our ability to design, manufacture and market products meeting global environmental standards;

	•	failure of our products and services to meet our customers’ quality requirements, including, without limitation, any epidemic failure event relating to our systems installed by our customers in their IT infrastructures;

	•	our ability to resolve ongoing litigation, tax audits, government audits, inquiries and investigations in line with our expectations;

	•	the availability of acceptable financing to support our future cash requirements;

	•	our ability to effectively integrate acquired businesses, products and technologies;

	•	valuation and liquidity of our investment portfolio;

	•	foreign exchange rate impacts;

	•	our ability to successfully recruit and retain critical employees and to manage our investment in people, process and systems;

	•	our ability to anticipate techniques used to obtain unauthorized access or to sabotage systems and to implement adequate preventative measures against cybersecurity and other security breaches; and

	•	those factors discussed under the heading “Risk Factors” elsewhere in this Annual Report on Form 10-K.

Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this document and are based upon information available to us at this time. These statements are not guarantees of future performance. Except as required by law, we disclaim any obligation to update information in any forward-looking statement. Actual results could vary from our forward-looking statements due to the foregoing factors as well as other important factors.

PART I