Financial Analyst Day – June 30, 2011

Steve Gomo

EVP and CFO

Financial Overview

Financial Overview Agenda

1. Brief review of FY11 performance

2. FY 12 projections – earnings statement &

balance sheet metrics

3. Cash flow projections & model

4. Summary

Safe Harbor

This presentation contains forward-looking statements and projections, including statements regarding

our forecasted results of operations, balance sheet metrics and cash flows; our market share and

operating goals; and the performance of our products and the benefits our products will bring to our

customers. Such statements involve risks and uncertainties, and actual results may differ materially from

our statements or projections. Factors that could cause actual results to differ from those described

herein include, but are not limited to, customer demand for our products and services; our ability to

accurately forecast customer demand; the amount of orders in future periods; our ability to achieve

anticipated pricing, cost, and gross margins levels; our ability to increase revenue and manage our

operating costs; increased competition risks associated with the anticipated growth in networked storage

market; general economic and market conditions; and our ability to design and deliver new product

architectures and enterprise service offerings that compete effectively from a price and performance

perspective. These and other equally important risks and uncertainties have been outlined in more detail

in the Company's most recent 10-K and 10-Q reports under the sections captioned “Risk Factors" on file

with the Securities Exchange Commission and accessible through our website.

During the course of today’s presentation, we will be referring to both GAAP and non-GAAP

numbers. The reconciliation between these GAAP and non-GAAP numbers can be found in the

Investor's section of our Company website at www.netapp.com/investor.

For clarity of presentation, all projections shown are at the midpoint of our expectations.

FY11 Actual Non-GAAP Financials

Revenue

year/year growth

Gross Margin

Operating Expense %

Operating Profit %

Tax Rate

Net Income

EPS

Estimated Impact of Bond Hedge

Accounting on EPS

FY 11 – actual

$5,123M

30%

65.6%

46%

20.0%

17.1%

16.9%

$2.20

add $0.05

All Financials include adoption of new revenue recognition standards

FY 11 – actual

Projected Q1 FY12 Non-GAAP Financials

Revenue

year/year growth

Gross Margin

Operating Expense %

Operating Profit %

Tax Rate

Net Income

EPS

Estimated Impact of Bond Hedge

Accounting on EPS

$5,123M

30%

65.6%

46%

20.0%

17.1%

16.9%

$2.20

add $0.05

$1,455M - $1,545M

26% - 34%

~62.7%*

~45%*

~18.2%*

18.5%

~15.0%*

$0.52 - $0.57

add $0.02

*Midpoint of targeted range

Q1 FY 12 – projected

All Financials include adoption of new revenue recognition standards

FY11 & Q1 FY12 Estimated

GAAP to Non-GAAP EPS Reconciliation

FY 11 – actual

Q1 FY12 – projected

Estimated GAAP EPS $1.71 $0.31 - $0.36

+ Amortization of Intangible Assets $0.05 $0.04

+ Stock Based Comp Expense $0.45 $0.13

+ Acquisition Related Expense $0.01 $0.04

+ Restructuring & Other Charges - $0.02

+ Non-Cash Interest Expense

(Convertible Notes) $0.14 $0.03

+ Gain on Investments ($0.01) -

+ Income Tax Effect ($0.15) ($0.05)

Estimated Non-GAAP EPS $2.20 $0.52 - $0.57

Projected FY12 Non-GAAP Financials

Revenue

year/year growth

Gross Margin

Operating Expense %

Operating Profit %

Tax Rate

Net Income

EPS

Estimated Impact of Bond Hedge

Accounting on EPS

$5,123M

30%

65.6%

46%

20.0%

17.1%

16.9%

$2.20

add $0.05

FY 11 – actual

All Financials include adoption of new revenue recognition standards

Projected FY12 Non-GAAP Financials

Revenue

year/year growth

Gross Margin

Operating Expense %

Operating Profit %

Tax Rate

Net Income

EPS

Estimated Impact of Bond Hedge

Accounting on EPS

$6,600M - $6,940M

29% - 35%

~62.5%*

~43.5%*

~19.0%*

18.5%

~15.7%*

$2.46 - $2.62

add $0.08

FY 11 – actual

FY 12 – projected

$5,123M

30%

65.6%

46%

20.0%

17.1%

16.9%

$2.20

add $0.05

*Midpoint of targeted range All Financials include adoption of new revenue recognition standards

FY11 & FY12 Estimated

GAAP to Non-GAAP EPS Reconciliation

FY 11 – actual

FY 12 – projected

Estimated GAAP EPS $1.71 $1.76 - $1.92

+ Amortization of Intangible Assets $0.05 $0.20

+ Stock Based Comp Expense $0.45 $0.43

+ Acquisition-Related Expense $0.01 $0.05

+ Restructuring & Other Charges - $0.02

+ Non-Cash Interest Expense

(Convertible Notes) $0.14 $0.14

+ Gain on Investments ($0.01) -

+ Income Tax Effect ($0.15) ($0.14)

Estimated Non-GAAP EPS $2.20 $2.46 - $2.62

FY12 Revenue Growth

Total Revenue*

$6,770M

FAS

~$6,020M

E-Series Branded

~$150M

E-Series OEM

~$600M

Annual Growth %

+ 18%

+ 20%

+ 32%

*Midpoint of targeted range

FY12 Projected Revenue Growth

FY12

Projected

Revenue*

Annual

Growth %

Product $4,705M +40%

FAS + E-Series Branded $4,105M +22%

E-Series OEM $600M n/a

Total SEM $815M +13%

Support $915M +34%

Other Services $335M -4%

Total Services $1,250M +21%

Total Company $6,770M +32%

*Midpoint of targeted range

Total Revenue % 22% 24% 26% 28% 100%

Total Services % 22% 24% 26% 28% 100%

Support % 22% 24% 26% 28% 100%

Services % 24% 24% 25% 27% 100%

Total SEM % 23% 24% 26% 27% 100%

Estimated FY12

Quarterly Revenue Linearity

Revenue Linearity Q1 ’12 Q2 ’12 Q3 ’12 Q4 ’12 FY12

Total Product % 22% 24% 26% 28% 100%

FAS + E-Series Branded % 21% 23% 26% 30% 100%

E-Series OEM % 23% 25% 27% 25% 100%

Revenue Mix Variables

FY11 –

actual

FY12 –

projected

International / Domestic 46 / 54 42 / 58

Direct / Indirect (Fulfillment) 27 / 73 22 / 78

- Arrow / Avnet 29% 30%

- Total OEM 5% 13%

Historical Revenue

Mix & Non-GAAP Gross Margin

Revenue Mix FY06 FY07 FY08 FY09 FY10 FY11

Product 76% 74% 68% 61% 61% 66%

SEM 12% 12% 15% 17% 17% 14%

Support 7% 8% 10% 13% 14% 13%

Services 5% 6% 7% 9% 8% 7%

Total Revenue 100% 100% 100% 100% 100% 100%

Gross Margin

Product % 61.5% 61.9% 60.5% 54.5%* 59.9%* 60.6%*

SEM % 97.0% 97.0% 98.2% 98.5% 98.2% 97.8%

Support % 45.7% 51.1% 59.6% 72.3%* 73.9%* 75.1%*

Services % (5.3%) (1.6%) 4.6% 14.7% 16.6% 29.7%

Consolidated % 61.4% 61.9% 62.1% 61.1% 65.0% 65.6%

* Reflects impact of reclassification of warranty expense from Support to Product

Revenue & Non-GAAP

Gross Margin Detail

Gross Margin FY11 FAS*

FY12

E-Series OEM

FY12

Consolidated

FY12

Product % 60.6% ~60% ~39% ~57%

SEM % 97.8% ~97% n/a ~97%

Support % 75.1% ~77% n/a ~77%

Services % 29.7% ~18% n/a ~18%

Consolidated % 65.6% ~65.2% ~39% ~62.5%

Revenue Mix FY11 FAS*

FY12

E-Series OEM

FY12

Consolidated

FY12

Product 66% 67% 100% 70%

SEM 14% 13% n/a 12%

Support 13% 15% n/a 13%

Services 7% 5% n/a 5%

Total Revenue 100% 100% 100% 100%

*Includes E-Series Branded

Non-GAAP Operating Expense Projections

FY 10 FY 11 FY 12*

R&D 13% 12% 12%

SG&A 36% 34% 31%

Total OpEx 49% 46% 43%

+10% +21%

$1,923M

$2,335M

+26%

~ $2,940M

*Midpoint of targeted range

Balance Sheet Metrics

FY11 –

actual

FY12 –

projected

DSO 47* Low to Mid 40s

Inventory Turns 18.1* ~20

Capital Expenditures $223M ~ $340M

Depreciation $148M ~ $200M

*Q4 FY11

Cash Flow Trend

$M FY08 FY09 FY10 FY11 FY12

Total Revenue $3,303 $3,535 $3,931 $5,123 ~$6,770*

Cash from Operations $1,009 $873 $975 $1,346 ~$1,665*

Less Capital Purchases $188 $290 $136 $223 ~$340*

Free Cash Flow $821 $584 $839 $1,124 ~$1,325*

% of Revenue 25% 17% 21% 22% ~20%

GAAP Net Income + Stock Comp

+ Non Cash Interest Expense $473 $235 $611 $901 ~$1,090*

Change in Deferred Revenue $401 $219 $177 $383 ~$410*

Cash Contribution $874 $454 $788 $1,284 ~$1,500*

% of Cash from Operations 87% 52% 81% 95% ~90%

*Midpoint of targeted range

Long Term (2-3 yr) Free Cash Flow Model*

Assumptions:

Pre-Tax profitability of ~18-21%

Revenue growth of 15% or greater

Constant mix of non-deferred / deferred revenue

Capital purchases exceed depreciation by

approximately $50 million

Target: 21% – 25% of Revenue

* Free Cash Flow is defined as cash from operations less capital expenditures

Long Term Free Cash Flow as % of Revenue

23% 23% 24% 25%

22% 23% 24% 24%

21% 22% 23% 24%

21% 22% 22% 23%

Revenue

CAGR*

30%

25%

20%

15%

Pre-Tax Profit (Op Margin + Other Income)

18% 19% 20% 21%

* Provided for illustrative purposes only - not intended to be guidance.

Financial Summary

Projected performance reflects underlying health of

core business, plus contribution from E-Series

– Core business model is intact

Potential for operating efficiencies from acquisition

going forward

Cash generation remains strong

– Enables share repurchase per our objectives