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 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.

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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.☑

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 ~~25, 2019,~~30, 2020, the last business day of the registrant’s most recently completed second fiscal quarter, was ~~$7,099,736,024~~$5,651,372,914 (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 ~~5, 2020, 221,816,300~~2, 2021, 223,217,394 shares of the registrant’s common stock, $0.001 par value, were outstanding.

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 ~~24, 2020.~~30, 2021.

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:

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:

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.

NetApp, Inc. (NetApp, we, or us) is a ~~leader~~global cloud-led, data-centric software company, building on a rich history of software innovation. We bring enterprise-grade data services to the leading clouds, and the simple flexibility of cloud into the data center. We help organizations run large and demanding workloads on the public cloud and in hybrid cloud ~~data services. In a world of increasing complexity, we simplify.~~environments with industry-leading solutions that work across diverse environments and the leading public clouds. We help our customers ensure their data and applications are in the right place at the right time with the right characteristics and capabilities to enable new insights and accelerate innovation. We do this by helping customers build their data fabrics. Together with our partners, we empower organizations to ~~unleash~~lead with data in the ~~full potential~~age of ~~their data to expand customer touchpoints, foster greater innovation and optimize their operations.~~accelerated digital transformation. We were incorporated in 1992 and are headquartered in ~~Sunnyvale,~~San Jose, California.

In a world where technology is pervasive and changing ~~our everyday lives,~~expectations, digital transformation tops the strategic agenda in most organizations. To successfully transform, data must become the lifeblood of an organization, accelerating efforts to ~~optimize operations,~~ create ~~innovative business opportunities and enable~~ new customer ~~touchpoints.~~experiences and seize opportunities for innovation, while at the same time, optimizing operations for cost, scale, speed, and agility. Digital transformations are driving IT organizations to future-proof on-premises investments for a cloud-next world, move enterprise workloads to the cloud, and continually pursue the promise of cloud-native innovation. Meeting these requirements means transforming IT to take control and thrive in a multi-cloud world. This puts IT leaders under ~~tremendous~~ pressure to harness today’s wealth of data and leverage technology to create ~~new~~ value across the entire ~~organization - all with limited time, resources~~organization.

Our strategy is to apply our rich data-centric software innovation to enable customers to thrive in a hybrid cloud world and budget. Digital transformation requires IT transformation. This is no small undertaking. Organizations are innovating on their choice of clouds, building private clouds to gain speed and agility, and modernizing and simplifying ITbuild data fabrics to accelerate ~~critical business applications - sometimes all at the same time.~~

~~NetApp helps customers move from building data centers to building data fabrics.~~data-driven digital transformations. A data fabric simplifies the integration and orchestration of data services across clouds and on-premises to accelerate digital transformation. ItWe help organizations to get the most out of their cloud experience – whether public, private or hybrid – by enabling IT to discover, integrate, automate, optimize, protect, and secure data and applications. NetApp delivers consistent and integrated hybrid cloud data services for data visibility and insights, data access and control and data protection and security. Data fabric is an architecture and set of data services that provide consistent capabilities across a choice of endpoints spanning on-premises and multiple cloud environments. Only NetApp can deliver the full range of capabilities organizations need for their data ~~fabrics:~~fabrics, enabling the ~~power to discover resources, integrate disparate data services, automate operations, optimize, and protect and secure data everywhere.~~

For customers looking to transform with cloud, only NetApp offers data services across the world’s biggest clouds: Microsoft Azure, Amazon Web Services (AWS) and Google Cloud Platform. Customers can choose the cloud resources that are best for their workloads and reduce the complexities of managing data across multiple clouds and on premises.

~~For customers looking to grow by adding new capabilities, speed and agility to their current environment, NetApp provides leading private cloud capabilities. This enables customers~~business to deliver ~~new~~the data and applications ~~and services faster and run existing workloads more efficiently. Customers enjoy performance,~~to the right place at ~~scale, on premises, all~~the right time with ~~a single experience that unifies on-premises and public cloud.~~

~~For customers looking~~the right capabilities to run their current application environment more efficiently, NetApp provides high-performing, cloud-integrated technologies and converged and hyper-converged infrastructures. This includes a highly differentiated portfolio of all-flash and hybrid array offerings. Customers get better results with simplicity, speed and automation across core, edge, and cloud.fuel innovation.

NetApp ~~helps organizations unleash the power of their data to meet business demands~~provides software, systems and ~~gain a competitive edge. Our products, solutions, and~~cloud services ~~portfolio focus on customers’ top IT imperatives as they undertake digital transformations. NetApp’s unique approach to data services enables~~that allow organizations to ~~modernize and simplify IT, build private clouds for speed and agility, and fuel data-driven innovation on any cloud.~~

~~During fiscal year 2020, NetApp introduced Keystone - our group of programs, offerings and services that simplify~~run their applications from the ~~business of hybrid~~data center to the cloud, ~~data services. It provides flexible cloud consumption models that make it easy to buy, easy to consume and easy to operate NetApp capabilities,~~ whether ~~it's on premises or~~they are developing in the ~~public cloud. With Keystone companies can lessen~~cloud, moving to the complexities associated with IT infrastructure and lifecycle management. Keystone gives IT buyers a clear, easy-to-understand path forward for managing IT, providing employees time to focus on more important business.

~~For IT organizations that want to take advantage of NetApp capabilities available on all the public clouds with~~ cloud, ~~native, fully integrated and managed data and storage services paid for as a true utility, Keystone starts with NetApp cloud data services. For IT organizations that want cloud-like experiences in~~or creating their own ~~data center, NetApp Keystone subscription~~cloudlike experiences on-premises.

NetApp's public cloud services ~~offer a public cloud-like experience based on performance tier~~(formerly referred to as “Cloud Data Services”) are delivered as cloud-based software and ~~storage service type – block, file, or object, available~~ as ~~customer-managed or NetApp-managed. For IT organizations that want to continue to buy capital infrastructure and capital equipment, Keystone offers a radically simplified experience.~~Software-as-a-Service (SaaS). Our unique combination of efficiency, performance and availability guarantees helps IT organizations protect their storage investment. NetApp Active IQ AI-driven insights optimize the health of systems while predicting capacity and performance bottlenecks from an easy-to-use dashboard.

~~NetApp Cloud Data Services is a~~ portfolio of enterprise-class solutions ~~that enable~~and services enables customers to fully control and manage storage systems in the cloud, consume high-performance storage services for primary workloads, and optimize cloud environments for cost and ~~efficiency –~~efficiency. These solutions and services are generally available on ~~all~~ the ~~biggest clouds.~~leading public clouds, including Microsoft Azure, Google Cloud Platform and Amazon Web Services (AWS).

The public cloud services portfolio can be categorized into four solution areas:

NetApp Cloud Volumes delivers cloud storage as acustomer-managed software or as a fully managed service, enabling customers to choose whether to fully control and manage their own storage ~~system~~systems in the cloud or simply ~~choose~~select their performance levels, service level agreements (SLAs), and service level objectives (SLOs).

Customers benefit from the ability to migrate data to the cloud ~~with ease,~~ securely and efficiently with built-in data transport features and services for existing NetApp or third-party storage and can choose where to deploy primary workloads without having to re-architect the applications or databases. ~~Products include:~~ ~~Cloud Volumes ONTAP, Azure~~These cloud storage offerings are available on the major cloud providers, including Microsoft (Azure NetApp ~~Files, Cloud~~Files), Google (Cloud Volumes Service for Google ~~Cloud,~~ Cloud), and ~~Cloud~~ Amazon (Cloud Volumes Service for ~~AWS~~AWS).

~~NetApp~~ For those customers who wish to manage their own cloud storage ~~offers~~implementation, we offer Cloud Volumes ONTAP, a cloud-based data management ~~capabilities previously unavailable in public clouds, with services that deliver protection, orchestration, and optimization, as well as security and compliance.~~service built on NetApp ONTAP storage software.

~~Cloud Sync delivers simple, rapid, and continuous data migration and synchronization service for file systems with any cloud or on-premises target.~~

NetApp’s Cloud Tiering service allows customers to retain on-premises, high-performance All Flash FAS (AFF) and FAS Solid-State Disk (SSD) storage and combine it with the benefits of cloud economics, leveraging the low costs of Azure Blob and Amazon S3 object storage.

~~NetApp Global File Cache is a software-based solution that delivers fast and secure access to data for users by caching ‘active data’ sets to distributed offices globally.~~

SaaS Backup service is a complete software-as-a-service (SaaS) offering that enables organizations to protect Office 365 and Salesforce data against threats or accidental deletion with secure backup and restore.Controls

~~Cloud Manager~~ provides IT experts and cloud architects with a centralized control plane to manage, monitor, and automate data in hybrid-cloud environments, ~~providing~~delivering an integrated experience of ~~NetApp’s~~NetApp's Cloud ~~Data~~Solutions and Services.

NetApp ~~Fabric Orchestrator~~Virtual Desktop Service (VDS) enables organizations to deploy, manage, and optimize virtual desktop environments through a SaaS-delivered global control plane for virtual desktop management that functions as an extension of their cloud environment.

~~NetApp Fabric Orchestrator discovers data, applications,~~Cloud Services and ~~services by securely connecting to public, private, and on-premises providers. All assets discovered sit behind a unified Data Fabric API and a single user interface.~~Analytics

~~NetApp Cloud Insights~~ is an infrastructure monitoring tool that gives organizations visibility into their entire infrastructure with the ability to monitor, troubleshoot, and optimize cost across all resources, including public clouds and private data centers.

NetApp Cloud Sync delivers simple, rapid, and continuous data migration and synchronization service for file systems with any cloud or on-premises target.

NetApp Cloud Compliance, driven by artificial intelligence algorithms with automated controls for data privacy regulations such as the General Data Protection Regulation (GDPR), California Consumer Privacy Act (CCPA), and more, enables organizations to get their business application data, on-premises data, and cloud environments privacy-ready.

NetApp Cloud Tiering service allows customers to retain on-premises, high-performance All-Flash FAS (AFF) and FAS Solid-State Disk (SSD) storage and combine it with the benefits of cloud economics. By leveraging the low costs of Azure Blob and Amazon S3 object storage for cold data, organizations can optimize their investments.

NetApp SaaS Backup service is a secure, encrypted cloud-native offering that safeguards business-critical Microsoft Office 365 data from corruption, malicious or accidental deletion via a backup and restore offering.

NetApp Cloud Backup delivers seamless and cost-effective backup and restore capabilities for protecting and archiving cloud and on-premises ONTAP data.

NetApp Global File Cache is a software-based solution that delivers fast and secure access to data for users by caching active data sets to distributed offices globally.

Spot by NetApp offers a portfolio of compute and storage services that monitor and analyze applications' needs and automatically optimize cloud resources to meet those needs. These cloud operations services help drive cloud resource optimization in real-time for both compute and storage, offering significant operational savings while maintaining SLAs and SLOs.

Spot Cloud Analyzer by NetApp is a cloud management and optimization dashboard. It provides a gateway to other tools that optimize cloud spending, including tracking and monitoring of cloud expenses, identifying waste and potential optimization points, and providing executable action items.

Spot Eco by NetApp automates reserved instance lifecycle management. By providing comprehensive lifecycle management, Eco is a flexible reserved capacity management service that allows users to plan, buy, and sell reserved instances.

Spot Ocean by NetApp provides automation for cloud infrastructure containers. It continuously analyzes how containers are using infrastructure and automatically scales compute resources to maximize utilization and availability.

Spot Wave by NetApp allows organizations to automate infrastructure provisioning, management, and scaling for big data cloud environments. Wave simplifies, automates, and optimizes cloud infrastructure for Apache Spark running on Kubernetes.

Spot Elastigroup by NetApp simplifies and automates cloud infrastructure for scale-out applications running in Microsoft Azure, Google Cloud Platform and Amazon AWS, freeing operations teams from infrastructure management burdens. It continuously analyzes resource usage and provides autoscaling groups that optimize compute resources to ensure availability and meet resource demands using the lowest-cost compute options.

NetApp Virtual Desktop Managed Service (VDMS) provides turnkey virtual desktops as a managed service for the expanding enterprise. VDMS integrates a complete Desktop-as-a-Service (DaaS) solution with our data services infrastructure for a simple per-user monthly fee.

NetApp Hybrid Cloud Solutions isare a portfolio of offerings that deliver on-premises, private cloud, and hybrid ~~multicloud~~cloud services, designed to operate with public cloud data services ~~and~~(e.g., Microsoft Azure, Google Cloud Platform, AWS) through a simplified customer experience. ~~These~~

Our hybrid cloud solutions enable customers to modernize their IT architectures with cloud-connected ~~flash~~storage offerings (flash and disk) to free the resources necessary to fund ~~transformation, as well as~~business transformation. Additionally, they help organizations simplify and automate virtualized workloads, accelerate the DevOps journey and build service provider-like ~~infrastructure, and optimize unstructured data.~~infrastructure.

is the foundational software underpinning most of NetApp's storage solutions, as well as NetApp’s cloud storage solutions. With ONTAP 9, customers can ~~build a hybrid cloud that is the foundation of~~connect their on-premises NetApp infrastructure to multiple public clouds, creating a Data ~~Fabric, spanning disk, flash, and cloud.~~Fabric. ONTAP 9 provides flexibility to design and deploy a storage environment across the ~~widest~~broadest range of architectures - engineered systems, software-defined storage (SDS), and the cloud -– while unifying data management across all of them, as well as SAN and

With ONTAP, customers get a comprehensive, industry-leading portfolio of storage efficiency capabilities. Inline data compression, deduplication, and compaction work together to reduce storage costs and maximize the amount of data stored. Customers can multiply savings with space-efficient NetApp Snapshot™ copies, thin provisioning, replication, and cloning technologies.

The hybrid cloud solutions portfolio can be categorized into three solutions areas:

~~NetApp AFF A-Series all-flash arrays combine industry-leading~~All-Flash FAS (AFF) series is a scale-out platform built for virtualized environments, combining low-latency performance ~~efficiency, and~~via flash memory (also known as a solid-state storage disk) with best-in-class data management, ~~with seamless~~built-in efficiencies, integrated data protection, multiprotocol support, and nondisruptive operations; cloud ~~connectivity. Powered by ONTAP,~~and on-premises. AFF, A-series systems accelerate, manage, and protect business-critical data while eliminating performance silos by seamlessly integrating into a cluster with hybrid FAS systems, enabling workloads to transparently move between high-performance tiers and low-cost capacity tiers.

~~The NetApp AFF C190 storage system,~~ powered by ONTAP, ~~software, offers~~allows customers to connect to clouds for more data services, data tiering, caching, and disaster recovery. The AFF Series has a ~~simple, smart,~~portfolio of products designed for multiple markets and ~~secure enterprise-class flash system for an affordable price. Designed for IT generalists, it helps meet new business requirements~~price/performance considerations, from smaller channel commercial market offerings to large-scale, global enterprises.

NetApp Fabric Attached Storage (FAS) series are high-volume unstructured, high-capacity data storage devices powered by NetApp ONTAP. NetApp FAS Storage Arrays provide customers with a ~~modern all-flash array that provides comprehensive data services, integrated data protection, seamless scalability, new levels~~balance of performance and ~~cloud integration.~~capacity running either disk drives, hybrid-flash or newer, cost-efficient flash memory known as Quad-level cell (QLC). QLC based systems (FAS500f) are designed for a balanced ratio of capacity and performance. FAS systems cost-effectively deliver data protection, security, and scalability.

~~NetApp FAS arrays, powered by ONTAP software, are optimized~~FlexPod is a converged infrastructure solution. It combines servers (compute), storage resources, and the network fabric to create an agile, efficient, and scalable platform for ~~easy deployment and operation while also having~~hosting applications. Using Cisco Validated Design methodologies, the flexibility to handle future growth and cloud integration. The FAS family’s range of capabilities for SAN and NAS workloads make it an ideal solution for general-purpose business applications as well as backup and retention.

~~FlexPod~~^® platform is a portfolio of pre-validated designs ~~and integration that combine~~used to meet the challenges of simplifying deployments for best-in-class data center architectures based on the Cisco Unified Computing System ~~integrated infrastructure~~ and NetApp data storage components to reduce risk and accelerate the deployment of data center infrastructure. Customers and partners can choose from more than 100 validated application and infrastructure designs to confidently power AI, multicloud, and modern enterprise applications.solutions.

NetApp ~~ONTAP Select~~E/EF series is built for dedicated, high-bandwidth applications that need simple, fast SAN storage with enterprise-grade reliability. The E-Series is available as a hybrid-flash platform, while the EF-Series is all-flash. Running on the SANtricity storage operating system, the E/EF-Series storage appliances are designed for performance-sensitive workloads like real-time analytics, HPC, and databases.

~~ONTAP Select converts~~NetApp StorageGRID is a ~~server’s internal SSDs or HDDs,~~software-defined object storage solution for large archives, media repositories, and web data stores. Using the industry-standard object APIs like the Amazon Simple Storage Service (S3), the StorageGRID solution, running on the ElementOS data management storage operating system, is provided both as ~~well~~a NetApp-branded storage solution and as ~~HCI and external array storage into an agile, flexible~~a software-defined solution on third-party hardware.

NetApp SolidFire is a scale-out, all-flash storage platform ~~with many~~designed for large-scale infrastructure. It is primarily positioned for private cloud solutions. SolidFire, running on the ElementOS data management storage operating system, allows customers to manage storage performance independent of ~~the same dedicated~~capabilities and guarantee performance to thousands of applications within a single storage ~~system benefits based on NetApp ONTAP. ONTAP Select can be deployed on new servers or on existing server infrastructure for added flexibility.~~platform.

NetApp ~~MAX Data~~HCI, powered by the ElementOS data management storage operating system, allows independent scaling of compute and storage, adapting to workloads with consistent performance. Organizations can consolidate workloads and reduce costs with unified data orchestration and integration across public, private, and on-premises environments.

~~Memory Accelerated~~ Data (MAX Data) moves beyond caching to true memory tiering for next-generation Intel Optane DC persistent memory (Optane DC PMM) - providing application performance and enterprise data protection. With MAX Data software, companies can realize the promise of real-time data analytics to deliver orders-of-magnitude faster transactions for business applications, such as Oracle, and for NoSQL databases, such as MongoDB.

NetApp Data Availability Services (NDAS) simplify the protection and management of NetApp ONTAP data from primary to secondary to cloud S3 storage. Simplified orchestration improves performance of backup workflows when protecting large numbers of volumes, thereby increasing productivity, reducing cost and providing rapid time to business insight.Protection

~~NetApp SnapCenter~~^® ~~software~~software is designed to deliver ~~high performance~~high-performance backup and recovery for database and application workloads hosted on ONTAP storage. This software simplifies backup, restore, and clone lifecycle management with a unified, scalable platform for application-consistent data protection and application-integrated workflows. Leveraging storage-based data management, SnapCenter ~~enables~~provides increased performance and availability and reduced testing and development times.

~~NetApp SnapMirror~~^® ~~software~~software is a cost-effective, easy-to-use unified replication solution, replicating data at high speeds across the Data Fabric. SnapMirror delivers ~~powerful~~robust data management capabilities for virtualization, protecting critical data while providing the flexibility to move data between locations and storage tiers, including cloud service providers.

~~NetApp SnapLock~~^® software delivers high-performance disk-based data permanence for HDD and SSD deployments. ~~Part of our proven NetApp ONTAP storage software,~~ SnapLock helps provide data integrity and retention, enabling electronic records to be both unalterable and rapidly accessible.

NetApp ~~StorageGRID Object Storage Software~~Data Availability Services simplify the protection and management of NetApp ONTAP data from primary to secondary to cloud S3 storage. Simplified orchestration improves the performance of backup workflows when protecting large numbers of volumes, thereby increasing productivity, reducing cost, and providing rapid time to business insight.

NetApp ~~StorageGRID~~^®ONTAP Storage Management System is the foundation of NetApp's hybrid cloud and public cloud storage solutions. ONTAP 9 can be deployed on AFF, FAS and/or FlexPod systems. ONTAP 9 provides flexibility to design and deploy a storage environment across the broadest range of architectures - engineered systems, software-defined ~~object-based~~ storage, ~~solution that provides intelligent policy-driven~~and the cloud - while unifying data management. StorageGRID supports industry-standard object APIs like the Amazon Simple Storage Service (S3) API. Organizations can optimize data availability, performance, geo-distribution, retention, protection,management across all of them, as well as NAS, SAN, and ~~storage cost with metadata-driven policies.~~Object environments.

~~NetApp Element~~^®ElementOS software delivers agility through scale-out flexibility, predictable performance, and automation integrations so organizations can build clouds to accelerate new services. Integrated into the NetApp Data Fabric, ~~Element~~ElementOS software enables innovative architectures with flexible scale for our ~~customers’~~customers' private clouds.

NetApp SolidFire all-flash storage systems, powered by Element software, are architected for rapidly transforming environments. As the foundation for private cloud infrastructure, SolidFire allows independent scaling, consistent performance, and automation integrations. SolidFire enables organizations to get closer to the speed and simplicity of business in the cloud while exceeding the demands of keeping data on-premises.

NetApp’s disaggregated HCI, powered by Element software, allows independent scaling of compute and storage, adapting to workloads with consistent performance. Organizations can consolidate workloads and reduce costs with unified data orchestration and integration across public, private, and on-premises environments.

software is the data management software that powers and administers the NetApp ~~E-Series and EF-Series~~E/EF Series storage ~~arrays with~~arrays. SANtricity software ~~offer~~offers industry-leading performance, reliability, and ease of use. These capabilities mean that storage administrators can make configuration changes, perform maintenance, and expand storage capacity without disrupting I/O to attached hosts.

NetApp EF-Series all-flash arrays, powered by SANtricity software, deliver fast, consistent response times to accelerate high-performance databases and data analytics. Designed specifically for mixed-workload environments, including big data analytics, technical computing, video surveillance, and backup and recovery, the EF-Series provides leading price/performance, configuration flexibility, and simplicity in a compact package to help organizations make decisions faster, more actionable, and more secure.

NetApp E-series Hybrid Flash systems, powered by SANtricity software, are built for dedicated, high-bandwidth applications like data analytics, video surveillance, and disk-based backup that need simple, fast, reliable SAN storage.

NetApp Active IQ ~~Predictive Analytics~~Digital Advisor uses artificial intelligence to provide insights, guidance, and ~~Support~~

~~Active IQ~~^® ~~Predictive Analytics~~actions, so customers can readily improve storage system availability, security, and ~~Support~~performance. This predictive analytics and support solution continuously assesses telemetry data, drawing on trillions of real-time and historical diagnostic records and known risk signatures to spot potential problems before they have a business impact. Active IQ can also look across the community to identify trends and suggest ways to enhance infrastructure security and efficiency.

~~NetApp~~ OnCommand Insight enables organizations to simplify operational management of complex private and hybrid cloud and virtual IT environments. Insight is a single solution to enable cross-domain, multi-vendor resource management and analysis across networks, storage, and servers in physical and virtual environments.

NetApp OnCommand Insight helps IT organizations monitor and troubleshoot across multivendor on-premises systems and cloud resources to meet SLAs. IT can optimize infrastructure to ensure applications are running on the right tier, as well as identify and reclaim unused resources to reduce cost.

~~NetApp OnCommand Workflow Automation~~ (WFA) is a software solution that delivers on the Data Fabric ~~vision, providing automation~~vision. It helps automate storage management tasks, such as provisioning, migration, decommissioning, and ~~integration~~cloning storage. WFA enables users to build workflows to complete tasks specified by their processes.

NetApp Astra is a fully managed application-aware data management service built for Kubernetes workloads. Astra allows organizations to protect, recover, and move applications deployed on Kubernetes with no software to download, install, manage, or upgrade.

With Astra, NetApp extends its industry-leading data management services into the Kubernetes ecosystem. Astra helps organizations manage cloud-native applications and legacy workloads with critical capabilities, including data protection, disaster/data recovery with remote backups, simplified application portability, and migration with active clones. Entire applications, along with their data, can be moved from one Kubernetes cluster to another, no matter where the clusters are located.

NetApp Keystone provides a portfolio of payment solutions and storage-as-a-service offerings for hybrid cloud environments to deliver greater agility, financial flexibility, and reduced financial risk to help companies meet their business outcomes and reduce and or defer payment.

Keystone simplifies the ~~demands~~business of ~~today’s evolving~~hybrid cloud data services. It provides flexible cloud consumption models that simplify how to buy, consume and operate NetApp capabilities.

For IT ~~organization. Storage architects or administrators can define workflows~~organizations that want cloud-like experiences in their own data center, NetApp Keystone subscription services offer a public cloud-like experience based on ~~policies~~performance tier and ~~service-~~

~~level objectives~~storage service type –block, file, or object, available as customer-managed solution or NetApp-managed solution. For IT organizations that want to ~~align them with organizational~~continue to buy capital infrastructure and ~~NetApp best practices, as well as maintain control over development~~capital equipment, Keystone offers a radically simplified experience. Our combination of efficiency, performance and ~~maintenance of the automated workflows to align with changing business requirements.~~ availability guarantees helps IT organizations protect their storage investment.

~~Professional services teams from~~ NetApp and our ~~partners~~partners' services teams offer assessment, design, and implementation services that help customers optimize their on-premises, private cloud, hybrid cloud, and/or public cloud IT environments.

NetApp strategic consulting services provide executive-level, high-touch consulting services to help organizations facilitate the alignment of their business and technology goals. Our proven expertise can help organizations define a long-term data fabric strategy and operations model for their enterprise and execute IT initiatives to drive digital transformation.

NetApp's Professional Services team helps organizations mitigate risk and streamline solution design, deployment, migration, and integration—on-premises, in private and hybrid clouds, as well as in the public clouds — to bring the benefits of new technology to their businesses faster. Highly skilled services experts can deliver a secure, optimized environment that provides the consistent, high-quality outcomes one expects from the start.

NetApp Managed Services help optimize performance and efficiency in your hybrid cloud and ITon-premises environments. These NetApp experts ~~help customers deploy new capabilities with confidence. Our highly responsive~~manage the infrastructure using our proven methodology and best practices, freeing the organization's IT staff to focus on enabling the IT transformation required to move the business forward.

The NetApp Global Support organization supplies systems, processes, and people wherever ~~they are~~ needed to provide continuous operation in complex and critical environments. Our services offer IT organizations the right expertise to envision, deploy, and operate data management solutions, to accelerate innovation, and to increase lifetime solution value.

Using a company’s specific business goals as our benchmark, NetApp Services delivers the expertise to tailor a data fabric strategy for our customers. By designing, deploying, and integrating foundational strategies to accelerate the digital transformation journey, customers gain greater data accessibility and flexibility, reduced IT complexity and cost, and the enhanced IT agility needed to harness technology innovation faster in a hybrid multicloud world. Our proven methodologies, validated designs, and best practices are geared to ensure desired business and technical outcomes.

Operational Support Services help our customers deliver greater business value. NetApp seasoned experts manage, support, and optimize on-premises and hybrid-cloud workloads. The NetApp Services team optimizes data storage system utilization, efficiency, and consistency and delivers actionable intelligence for managing data with proactive and predictive technology. Our offerings include independent support services, support account managers, residency services, and managed services.

We market and sell our products and services in numerous countries throughout the world. Our sales efforts are organized around the evolving needs of our customers, and our marketing initiatives reflect this focus. NetApp uses a multichannel distribution strategy. We sell our products, solutions and services to end-user business customers and service providers through a direct sales force and an ecosystem of partners. Our marketing is focused on building our brand reputation, ~~and~~creating market awareness, communicating ~~product~~customer advantages and generating demand ~~generation~~ for our sales force and channel partners.

Our ~~marketing efforts consist~~diversified customer base spans industry segments and vertical markets such as energy, financial services, government, technology, internet, life sciences, healthcare services, manufacturing, media, entertainment, animation, video postproduction and telecommunications. NetApp focuses primarily on the cloud-data services, hybrid cloud, and storage markets. We design our products to meet the needs of ~~product, field, channel, solutions, and digital marketing and public relations. Marketing provides the focus and market advantage for NetApp~~our broad customer base – from large enterprises to ~~be customer-focused at every touch point, drive demand, and acquire new buyers and~~midsize customers. ~~This is critical to accelerate NetApp’s profitable and sustainable growth.~~

~~We form lasting~~Our partnerships with the industry’s ~~best~~leading cloud, infrastructure, consulting, application, and reseller partners are created with one goal in mind: the success of our customers. Global enterprises, local businesses, and government installations look to NetApp and our ecosystem of partners to help maximize the business value of their IT investments.

Our diversified customer base spans industry segments and vertical markets such as energy, financial services, government, high technology, internet, life sciences, healthcare services, manufacturing, media, entertainment, animation, video postproduction and telecommunications. NetApp focuses primarily on the cloud data services, hybrid cloud, and storage markets. We design our products to meet the needs of our broad customer base – from large enterprises to midsize customers.

NetApp uses a multichannel distribution strategy. We sell our products, solutions and services to end-user business customers and service providers through a direct sales force and an ecosystem of partners. We work with a wide range of partners for our customers, including technology partners, value-added resellers, system integrators, OEMs, service providers and distributors. During fiscal ~~2020,~~2021, sales through our indirect channels represented ~~79%~~77% of our net revenues. Our global partner ecosystem is critical to NetApp’s growth and success. We are continually strengthening existing partnerships and investing in new ones to ensure we are meeting the evolving needs of our customers.

As of April ~~24, 2020,~~30, 2021, our worldwide sales and marketing functions consisted of approximately ~~5,100~~5,400 managers, sales representatives and technical support personnel. We have field sales offices in approximately 4327 countries. Sales to customers Arrow Electronics, Inc. and Tech Data Corporation ~~which are distributors,~~ accounted for ~~25%~~24% and ~~21%~~20% of our net revenues, respectively, in fiscal ~~2020.~~2021. Information about sales to and accounts receivables from our major customers, segment disclosures, foreign operations and net sales attributable to our geographic regions is included in Note 16 – Segment, Geographic, and Significant Customer Information of the Notes to Consolidated Financial Statements.

We have historically experienced a sequential decline in revenues in the first quarter of our fiscal year, as the sales organization spends time developing new business after higher close rates in the fourth quarter, and because sales to European customers are typically weaker during the summer months. During the second quarter of our fiscal year, we have historically experienced increased sales, driven by the government sector, concurrent with the end of the U.S. federal government’s fiscal year in September, as well as an increase in business from European markets. We derive a majority of our revenue in any given quarter from customer orders booked in the same quarter. ~~Bookings~~Customer orders and revenues typically follow intra-quarter seasonality patterns weighted toward the back end of the quarter. If recurring services and cloud revenue continues to increase as a percentage of our total revenues, historical seasonal patterns may become less pronounced.

We manufacture products based on a combination of specific order requirements and forecasts of our customers’ demand. Orders are generally placed by customers on an as-needed basis. A substantial portion of our products is sold on the basis of standard purchase orders that are cancelable prior to shipment without penalty. In certain circumstances, purchase orders are subject to change with respect to quantity of product or timing of delivery resulting from changes in customer requirements. Our business is characterized by seasonal and intra-quarter variability in demand, as well as short lead times and product delivery schedules. Accordingly, backlog at any given time ~~might~~may not be a meaningful indicator of future revenue.

We have outsourced manufacturing operations to third parties located in Memphis, Tennessee; Fremont, California; San Jose, California; San Antonio, Texas; Guadalajara, Mexico; Schiphol Airport, The Netherlands; Komarom and Tiszaujvaros, Hungary; Wuxi and Tianjin, China; Taoyuan City, Taiwan; and Singapore. These operations include materials procurement, commodity management, component engineering, test engineering, manufacturing engineering, product assembly, product assurance, quality control, final test, and global logistics. We rely on a limited number of suppliers for materials, as well as several key subcontractors for the production of certain subassemblies and finished systems. We strive to have multiple suppliers qualified to provide critical components where possible and have our products manufactured in a number of locations to mitigate our supply chain risk. Our strategy has been to develop close relationships with our suppliers, maximizing the exchange of critical information and facilitating the implementation of joint quality programs. We use contract manufacturers for the production of major subassemblies and final system configuration. This manufacturing strategy minimizes capital investments and overhead expenditures while creating flexibility for rapid expansion.

We are certified to the International Organization for Standardization (ISO) 9001:~~2008~~2015 and ISO 14001:~~2004~~2015 certification standards. We ~~are also a partner of~~have been Tier 2 certified under the U.S. Customs and Border Protection’s (CBP) Customs Trade Partnership Against Terrorism (CTPAT) ~~program.~~program since January 2015.

Our research and development team delivers innovation to help customers modernize their IT environment and ~~harness~~unlock the ~~power~~best of ~~private and public clouds.~~cloud. Our R&D structure allows us to align and accelerate the execution of our strategies and roadmaps across product groups. We leverage our talent and shared IP for ~~cloud~~cloud- and ~~hybrid cloud~~hybrid-cloud solutions ~~and talents~~ to remain agile to changing market conditions. Our R&D priorities are to help customers harness the power of ~~public~~public- and multi-cloud solutions, enabling modern data management applications and services, and to enable simple cloud-like experiences ~~on-premises~~on-premises. We design our products and services from the ground up with cloud connectivity in mind, including tiering, disaster recovery, replication, bursting, and migration.

We conduct research and development activities in various locations throughout the world. Total research and development expenses were $881 million, $847 million ~~$827 million~~ and ~~$783~~$827 million in fiscal 2021, 2020 ~~2019~~ and ~~2018,~~2019, respectively. These costs consist primarily of personnel and related costs incurred to conduct product development activities. Although we develop many of our products internally, we ~~may~~also acquire technology through business combinations or through licensing from third parties when appropriate. We believe that technical leadership is essential to our success, and we expect to continue to commit substantial resources to research and development.

We operate in an industry in which there are rapid technological advances in hardware, software, and related services offerings. Cloud, digital transformation, and artificial intelligence initiatives are driving changes in customer and solution requirements.

We compete with many companies in the markets we ~~serve, including established public companies, newly public companies~~serve. Our hybrid cloud solutions primarily compete with ~~a strong flash focus,~~legacy IT and ~~new market entrants addressing the growing opportunity for hyper converged systems.~~storage vendors. Some offer a broad spectrum of IT products, solutions and services ~~(full-stack vendors)~~ and others offer a more limited set of ~~storage~~storage- and ~~data management~~data-management products, solutions or services.

Technology trends – for example, the emergence of hosted (or cloud) storage, SaaS, hyperconverged infrastructure, and flash storage – are driving significant changes in storage architectures and solution requirements.

We compete against Dell Technologies/EMC Corporation, Hewlett Packard Enterprise Company, Hitachi Vantara, and International Business Machines Corporation, as well as Pure Storage, Nutanix, and other smaller players. Customer storage needs may also be addressed by Additionally, public cloud ~~service providers. Cloud service~~ providers ~~provide~~offer customers storage as an operating expense which competes with more traditional storage offerings that customers acquire through capital expenditures. ~~While~~We both partner with and compete against cloud providers with our public cloud software and services. We rarely see legacy vendors competing in the ~~short-~~cloud.

We face ongoing product and ~~long-term impact~~price competition in all areas of ~~these evolving trends cannot be predicted, NetApp is confident that~~ our ~~customers recognize the value in our cloud~~business, including from both branded- and ~~Data Fabric strategies. Our strategy includes integrating and building relationships with leading cloud providers.~~generic-product competitors.

Our current and potential competitors may establish cooperative relationships among themselves or with third parties, including some of our partners. It is possible that new competitors or alliances among competitors might emerge and ~~rapidly acquire significant market share.~~further increase competitive pressures.

We consider our software innovation, cloud integration, and ~~our~~ technology partnerships key to our competitive differentiation. We believe our competitive advantage also includes the nature of the relationships we form with our customers and partners worldwide. We strive to deliver an outstanding experience in every interaction we have with our customers and partners through our product, service, and support offerings, which enable us to provide our customers ~~with~~ a full range of expertise before, during and after their ~~purchase.~~purchases.

~~NetApp~~We generally ~~relies~~rely on patent, copyright, trademark, trade secret and contract laws to establish and maintain our proprietary rights in our technology, products and services. While our intellectual property rights are important to our success, we believe that our business is not materially dependent on any particular patent, trademark, copyright, license or other individual intellectual property right. We have been granted or own by assignment well over atwo thousand U.S. patents, hundreds of pending U.S. patent applications, and many corresponding patents and patent applications in other countries. From time to time, we may make certain intellectual property available under an open source license. Our primary trademarks are NetApp and the NetApp design logo, which are registered trademarks in the U.S. and in many other countries. In addition, we have trademarks and trademark registrations in the U.S. and other countries covering our various product or service names.

We generally enter into confidentiality agreements with our employees, resellers, distributors, customers, and suppliers. In addition, through various licensing arrangements, we receive certain rights to the intellectual property of others. We expect to maintain current licensing arrangements and to secure additional licensing arrangements in the future, as needed and to the extent available on reasonable terms and conditions, to support continued development and sales of our products and services. Some of these licensing arrangements require or ~~might~~may require royalty payments and other licensing fees. The amount of these payments and fees ~~might~~may depend on various factors, including but not limited to the structure of royalty payments; offsetting considerations, if any; and the degree of use of the licensed technology.

The industry in which we compete is characterized by rapidly changing technology, a large number of patents, and frequent claims and related litigation regarding intellectual property rights, and we may be exposed to various risks related to such claims or legal proceedings. If we are unable to protect our intellectual property, we ~~might~~may be subject to increased competition that could materially and adversely affect our ~~operating results.~~business operations, financial condition, results of operations and/or cash flows.

We are committed to the success of our customers and partners, to delivering value to our stockholders, and to positively affecting the communities where our employees work and live. We firmly believe that we can accomplish these objectives concurrently with our commitment to sustainability. We are committed to the prevention of pollution; efficient use of natural resources; and minimizing, relative to the growth of the company, the environmental impacts from our operations, products, and services, as well as complying with laws and regulations related to these areas. Our environmental management system provides the framework for setting, monitoring, and continuously improving our environmental goals and objectives.

We are voluntarily measuring, monitoring, and publicly reporting our scope 1 and scope 2 greenhouse gas emissions and participate in the CDP, which is a global standardized mechanism by which companies report their greenhouse gas emissions to customers and institutional investors. We promote alternative transportation programs through education and awareness campaigns, and we continuously seek to optimize the energy efficiency of our buildings, labs, and data centers. At both the global and regional/state levels, various laws and regulations have been implemented or are under consideration to mitigate the effects of climate change caused by greenhouse gas emissions. Environmental laws are complex, change frequently, and have tended to become more stringent over time. However, it is often difficult to anticipate future regulations pertaining to environmental matters and to estimate

their impacts on our operations. Based on current information, we believe that our primary risk related to climate change is the risk of increased energy costs. We are not currently subject to a ~~cap and trade~~cap-and-trade system or any other mitigation measures that could be material to our operations, nor are we aware of any such measures that will impact us in the near future. Additionally, we have implemented disaster recovery and business resiliency measures to mitigate the physical risks our facilities, business, and supply chain might face as a consequence of severe ~~weather-/~~weather/climate-related phenomena such as earthquakes, floods, droughts, and other such natural occurrences.

We are also subject to other federal, state, and local regulations regarding workplace safety and protection of the environment. Various international, federal, state, and local provisions regulate the use and discharge of certain hazardous materials used in the manufacture of our products. Failure to comply with environmental regulations in the future could cause us to incur substantial costs or subject us to business interruptions. We believe we are substantially compliant with all applicable environmental laws. All of our products meet the requirements of the Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH); Waste Electrical and Electronic Equipment (WEEE); Restriction of Hazardous Substances (RoHS); and China RoHS directives. We have maintained an environmental management system since December 2004. As part of ISO 14001 requirements, we set local environmental performance goals such as reducing energy use per square foot and minimizing waste generated on site, that are aligned with our overall corporate strategy. We also conduct periodic reviews and are subject to third-party audits of our operations, and we monitor environmental legislation and requirements to help make sure we are taking necessary measures to remain in compliance with applicable laws, not only in our operations but also for our products.

We take pride in attracting and retaining leading talent in the industry based on a culture-fit approach. From our inception, NetApp has worked to build a model company and has embraced a culture of openness and trust. At NetApp, our employees are supported and encouraged to be innovative, and we communicate openly and transparently so that employees can focus on critical and impactful work that ties directly to our business strategy. We continue to invest in our global workforce to support diversity and inclusion and to support our employees’ well-being and development.

We believe diversity, inclusion and belonging leads to more innovation, better access to talent and improved business outcomes. Our strategies are intended to increase the demographic and cognitive diversity of our employee population, promote a culture of inclusion and to leverage such diversity to achieve business results. For more information about our commitment to diversity, inclusion and belonging, go to the “Diversity Inclusion and Belonging” section of our website.

Our healthcare options offer competitive, comprehensive coverage for our employees and their families, including:

Insurance and income protection. We provide life, accidental death and dismemberment and disability insurance programs. For additional peace of mind, we also offer supplemental insurance for our employees and their dependents.

Financial and savings programs. We offer flexible spending accounts, an employee stock purchase plan and a competitive 401(k) retirement plan with a company match. Our 401(k) plan gives employees more options to maximize retirement savings with pre-tax, Roth and after-tax contributions. We help our employees prepare for retirement by capitalizing on their total compensation and helping them save.

Employee Wellbeing. We provide a wide range of wellbeing programs and tools to ensure employees and their families have the resources they need when they need them. We offer emotional wellbeing resources and programs such as back-up child and elder care, student debt repayment, educational assistance, and legal services for employees and their dependents. NetApp also offers a variety of time-off programs to help support our employees who need time-off. Employees also have access to discounts and fitness centers.

Giving Back. The NetApp Serves Program supports how our employees want to make a difference in the world. In 2019, more than 2,800 NetApp employees donated over 64,000 hours to serve their communities and make an impact around the world. The NetApp Serves program encourages employees to volunteer through individual, team or company efforts.

At NetApp, the health and safety of our employees, customers, and partners is our number one priority. Like all businesses, we have been closely monitoring the COVID-19 outbreak. We are following guidance from the U.S. Centers for Disease Control (CDC), the World Health Organization (WHO), and international and local health authorities in countries where we operate. Our goal is to reduce the risk that anyone at NetApp might contract or inadvertently spread the virus. We have taken the following proactive steps to help protect ourselves and others and minimize the spread of COVID-19:

We continue to monitor the situation closely and may revise these measures or implement further measures in coordination with best practices and updated guidance from the relevant authorities.

As of April ~~24, 2020,~~30, 2021, we had approximately ~~10,800~~11,000 employees worldwide. None of our employees are represented by a labor union and we consider relations with our employees to be good. ~~Competition~~

Please visit our website for ~~technical personnel in the industry in which we compete is intense. We believe that~~more detailed information regarding our ~~future success depends in part~~human capital programs and initiatives. Nothing on our continued ability to hire, assimilate, and retain qualified personnel. To date, we believe that we have been successful in recruiting qualified employees, but there is no assurance that we will continue towebsite shall be ~~successful in the future.~~deemed incorporated by reference into this Annual Report on Form 10-K.

Henri Richard retired from his position as the Company’s Executive Vice President, Worldwide Field and Customer Operations on June 5, 2020. Cesar Cernuda is expected to join the Company as President in July 2020. Therefore, our fourOur executive officers and their ages as of June 10, ~~2020,~~2021, were as follows:

George Kurian was appointed chief executive officer on June 1, ~~2015 and president on May 20, 2016.~~2015. He joined our board of directors in June 2015. From September 2013 to May 2015, he was executive vice president of product operations, overseeing all aspects of technology strategy, product and solutions development across our product portfolio. Mr. Kurian joined NetApp in April 2011 as the senior vice president of the storage solutions group and was appointed to senior vice president of the Data ONTAP group in December 2011. Prior to NetApp, from 2002 to 2011, Mr. Kurian held several positions at Cisco Systems, including most recently vice president and general manager of the application networking and switching technology group. From 1999 to 2002, Mr. Kurian was the vice president of product management and strategy at Akamai Technologies. Prior to that, he was a management consultant with McKinsey and Company, and led software engineering and product management teams at Oracle Corporation. Mr. Kurian is a board member at Cigna Corporation, a global health services company.Mr. Kurian holds a BS degree in electrical engineering from Princeton University and an MBA degree from Stanford University.

César Cernuda joined NetApp in July 2020 as president and is responsible for leading the company’s global go-to-market organization spanning sales, marketing, services, support, and customer success. Before joining NetApp, Mr. Cernuda held various leadership positions in sales, marketing, and product development. He has more than 20 years of international experience, launching

and growing businesses in major markets around the world. He worked at Microsoft for 23 years in senior roles, including vice president of worldwide sales and marketing for Microsoft Dynamics, president of the Microsoft Asia-Pacific region, and most recently president of the company’s Latin America and Caribbean theater and corporate vice president worldwide. Mr. Cernuda is a graduate of the Harvard Business School Executive Leadership Program and the Program for Management Development at IESE Business School – University of Navarra. He earned his Bachelor of Business Administration from ESIC Business & Marketing School.

Michael J. Berry joined NetApp in March 2020 as executive vice president and chief financial officer, overseeing the worldwide finance, investor relations, workplace resources and IT organizations. Mr. Berry has served as a chief financial officer for 1516 years in both public and private companies including McAfee, FireEye, Informatica, and SolarWinds. Most recently he was executive vice president and chief financial officer at McAfee where he was responsible for all aspects of finance, including financial planning, accounting, tax and treasury, as well as operations and shared services. Mr. Berry is a board member of Rapid7 and FinancialForce, holding the ~~chairman~~chair of the audit committee position at each company. Mr. Berry holds a BS degree in finance from Augsburg University and an MBA degree in finance from the University of St. Thomas.

Brad Anderson joined NetApp in January 2018 and is the executive vice president and general manager (GM) of the hybrid cloud group, with responsibility for driving the strategy and development of NetApp’s hybrid cloud solutions portfolio. Prior to NetApp Mr. Anderson spent nine years as senior vice president and GM of HP Compaq’s servers business and seven years as president and GM of Dell's enterprise solution group. Immediately prior to joining NetApp, Mr. Anderson served as president and chief operating officer of Gravitant, a cloud service brokerage platform company. Mr. Anderson holds a BS degree in petroleum engineering from Texas A&M University and an MBA degree from Harvard Business School.

Matthew K. Fawcett joined NetApp in September ~~2010 as senior~~2010. As executive vice president, ~~general counsel, secretary~~chief strategy and ~~chief compliance officer. He~~legal officer, Mr. Fawcett is responsible for ~~all~~leading our corporate strategy, corporate development, government relations and legal affairs ~~worldwide, including corporate governance and securities law compliance, intellectual property matters, commercial contracts, mergers and acquisitions, and government relations.~~worldwide. Prior to joining NetApp, from 1999 to August 2010, Mr. Fawcett served in various positions at JDS Uniphase Corporation, an optical components company, including as senior vice president, general counsel, and corporate secretary. Prior to joining JDSU, Mr. Fawcett was counsel at Fujitsu and worked in private practice at Morrison & Foerster LLP. Mr. Fawcett serves on the board of the Law Foundation of Silicon Valley and on various advisory boards. Mr. Fawcett holds a BA degree from the University of California at Berkeley and a JD degree from the University of California at Los Angeles.

Our internet address is www.netapp.com. We make available through our internet website our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, amendments to those reports and other documents filed or furnished pursuant to the Exchange Act of 1934, as soon as reasonably practicable after we electronically file such materials with, or furnish them to, the SEC.

The SEC maintains an internet site (www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.

The information included elsewhere in this Annual Report on Form 10-K should be considered and understood in the context of the following risk factors, which describe circumstances that may materially harm our future business, operating results or financial condition. The following discussion reflects our current judgment regarding the most significant risks we face. These risks can and will change in the future.

If we are unable to ~~predict the extent to which the global COVID-19 pandemic may adversely impact our business operations, financial condition, results of operations or cash flows.~~

~~The novel coronavirus, or COVID-19, pandemic~~develop, introduce and ~~efforts to control its spread have significantly curtailed the movement of people, goods and services worldwide, including in most or all of the regions in which we sell our~~gain market acceptance for new products and services while managing the transition from older ones, or if we cannot provide the expected level of quality and ~~conduct~~support for our new products and services, our business, ~~operations. While~~operating results, financial condition and cash flows could be harmed.

Our future growth depends upon the successful development and introduction of new hardware and software products and services. Due to the complexity of storage software, subsystems and appliances and the difficulty in gauging the engineering effort required to produce new products and services, such products and services are subject to significant technical and quality control risks.

If we are ~~currently considered an essential business in many of~~unable, for technological, customer reluctance or other reasons, to develop, introduce and gain market acceptance for new products and services, as and when required by the key regions in which we operate, including in the United States (U.S.), there is no guarantee that we will continue to be classified as such. We have taken precautionary measures intended to minimize the risk of the virus to our employees,market and our customers, our business, operating results, financial condition and ~~the communities in which we operate,~~cash flows could be materially and adversely affected.

New or additional product introductions, including ~~office closures~~new software and ~~working remotely for the vast majority of employees, all of which could negatively impact our business. The magnitude~~cloud offerings, such as Astra by NetApp, Spot by NetApp and ~~duration of the disruption~~new hardware and ~~resulting decline in business activity is uncertain~~all-flash storage products, subject us to additional financial and ~~has limited~~operational risks, including our ability to forecast ~~future~~customer preferences and/or demand, our ability to successfully manage the transition from older products and solutions, our ability to forecast the impact of customers’ demand for ~~our~~new products, services and ~~services. The COVID-19 pandemic has, and we expect it to continue to, adversely affect our business in a variety of ways, including by negatively impacting~~solutions or the ~~demand for our~~ products ~~and services,~~being replaced, and our ability to ~~build~~manage production capacity to meet the demand for new products and convert our sales pipeline (including delayed and deferred purchases); restricting our sales, marketing and distribution efforts; disrupting our supply chain and our ability to deliver product to customers; and constraining business operations, research and development capabilities, engineering, design and manufacturing processes and other important business activities.services. In addition, ~~the COVID-19 pandemic has disrupted the operations of our suppliers, customers and partners for an indefinite period of time, including~~ as ~~a result of travel restrictions and/~~new or business shutdowns and limited access to capital markets, all of which have and may continue to negatively impact our business and results of operations, including cash flows. Accordingly, we expect the COVID-19 pandemic to have a negative impact on our future sales and results of operations, the magnitude and duration of which we are unable to predict. Additionally, concerns over the economic impact of COVID-19 pandemic have caused extreme volatility in financial and other capital markets, which volatility has and may continue to adversely impact our stock price and could impact our ability to access capital markets. More generally, the COVID-19 pandemic has adversely affected economies and financial markets globally, potentially leading to a prolonged economic downturn, which could decrease technology spending and adversely affect demand for our offerings and harm our business and results of operations for an extended period of time. To the extent that the COVID-19 pandemic adversely affects our business and financial results, it may also have the effect of heightening many of the other risks described in this “Risk Factors” section and those incorporated by reference herein, such as those relating to ourenhanced products and services are introduced, we must avoid excessive levels of older product inventories and related components and ensure that new products and services can be delivered to meet customers’ demands. Further risks inherent in the introduction of new products, services and solutions include the uncertainty of price-performance relative to products of competitors, competitors’ responses to the introductions, delays in sales caused by the desire of customers to evaluate new products for extended periods of time and our partners’ investment in selling our new products and solutions. If these risks are not managed effectively, we could experience material risks to our business, operating results, financial ~~performance, credit rating~~condition and ~~debt obligations.~~cash flows.

As we enter new or emerging markets, we will likely increase demands on our service and support operations and may be exposed to additional competition. We may not be able to provide products, services and support to effectively compete for these market opportunities.

Our business may be harmed by technological trends in our market or if we are unable to keep pace with rapid industry, technological and market changes.

Our industry and the markets in which we compete have historically experienced significant growth due to the increase in the demand for storage and data management solutions by consumers, enterprises and ~~government bodies~~governments around the world, and the ~~resultant~~ purchases of storage and data management solutions to address this demand. However, despite continued data growth, our traditional market, the networked storage hardware market, experienced a decline in each of the last three calendar years due to a combination of customers delaying purchases in the face of technology transitions, increasing adoption of cloud environments built on commodity hardware, increased storage efficiency, and changing economic and business environments. While customers are navigating through their information technology (IT) transformations, which leverage modern architectures and hybrid cloud environments, they are also reducing IT budgets, looking for simpler solutions, and ~~rethinking~~changing how they consume IT. This evolution is diverting spending towards transformational projects and architectures like flash, hybrid cloud, IT as a service, converged infrastructure, and software defined storage. We are unable to predict whether the impact of the COVID-19 pandemic will accelerate the decline of our traditional market and increase demand for our cloud offerings. Our business may be adversely impacted if we are unable to keep pace with rapid industry, technological or market changes or if our Data Fabric strategy is not accepted in the marketplace. As a result of these and other factors discussed in this report, our revenue may decline on a year-over-year basis, as it did in fiscal years ~~2016,~~ 2017 and 2020. The future impact of these trends on both short- and long-term growth patterns is uncertain. If the general historical rate of industry growth declines, if the growth rates of the specific markets in which we compete decline, and/or if the consumption model of storage changes and our new and existing products, services and solutions do not receive customer acceptance, our business, operating results, ~~and~~ financial condition and cash flows could suffer.

If we are unable to develop, introduce and gain market acceptance for new products and services while managing the transition from older ones, or if we cannot provide the expected level of quality and support for our new products and services, our business, operating results and financial condition could be harmed.

If we are unable, for technological, customer reluctance or other reasons, to develop, introduce and gain market acceptance for new products and services, as and when required by the market and our customers, our business, operating results and financial condition could be materially and adversely affected.

New or additional product introductions, including new hardware and software offerings, such as NetApp HCI, Cloud Volumes ONTAP, and new all flash storage products, subject us to additional financial and operational risks, including our ability to forecast customer preferences and/or demand, our ability to successfully manage the transition from older products and solutions, our ability to forecast the impact of customers’ demand for new products, services and solutions or the products being replaced, and our ability to manage production capacity to meet the demand for new products and services. In addition, as new or enhanced products and services are introduced, we must also avoid excessive levels of older product inventories and related components and ensure that new products and services can be delivered to meet customers’ demands. Further risks inherent in the introduction of new products, services and solutions include the uncertainty of price-performance relative to products of competitors, competitors’ responses to the introductions, delays in sales caused by the desire of customers to evaluate new products for extended periods of time and our partners’ investment in selling our new products and solutions. If these risks are not managed effectively, we could experience material risks to our operations, financial condition and business model.

As we enter new or emerging markets, we will likely increase demands on our service and support operations and may be exposed to additional competition. We may not be able to provide products, service and support to effectively compete for these market opportunities.

Our sales and distribution structure makes forecasting revenues difficult and, if disrupted, could harm our business, operating ~~results.~~results, financial condition and cash flows.

Our business and sales models make revenues difficult to forecast. We sell to a variety of customers directly and through various channels, with a corresponding variety of sales cycles, and we recently reorganized our sales resources to improve the alignment of those resources with customer and market opportunities. The reorganization of our sales resources could result in short or long-term disruption of our sales cycles and harm our operating results.cycles. The majority of our sales are made and/or fulfilled indirectly through channel partners, including value-added resellers, systems integrators, distributors, original equipment manufacturers (OEMs) and strategic business partners, which now include ~~hyperscalers.~~public cloud providers. This structure significantly complicates our ability to forecast future revenue, especially within any particular fiscal quarter or year. Moreover, our relationships with our indirect channel partners and strategic business partners are critical to our success. The loss of one or more of our key indirect channel partners in a given geographic area or the failure of our channel or strategic partners to promote our products could harm our operating results. Qualifying and developing new indirect channel partners typically requires a significant investment of time and resources before acceptable levels of productivity are met. If we fail to maintain our relationships with our indirect channel partners and strategic partners, if their financial condition, business or customer relationships were to weaken, if they fail to comply with legal or regulatory requirements, or if we were to cease to do business with them for these or other reasons, our business, operating results, ~~and~~ financial condition and cash flows could be harmed.

Increasing competition and industry consolidation could harm our business, operating results, financial condition and ~~operating results.~~cash flows.

The storage and data management markets are intensely competitive and are characterized by rapidly changing technology and fragmentation. We compete with many companies in the markets we serve, including established public companies, newer public companies with a strong flash focus, and new market entrants addressing the growing opportunity for ~~hyper-converged systems.~~application data management for Kubernetes. Some offer a broad spectrum of IT products and services (full-stack vendors) and others offer a more limited set of storage and data management products or services. Technology trends, such as the emergence of hosted or public cloud storage, SaaS and flash storage are driving significant changes in storage architectures and solution requirements. Cloud service ~~providers~~provider competitors provide customers storage for their data centers on demand, without requiring a capital expenditure, which meets rapidly evolving business needs and has changed the competitive landscape. The impacts of the COVID-19 pandemic, including the increase in the number of employees working remotely, ~~could accelerate~~has accelerated customer adoption of competitors’ cloud solutions and ~~contribute~~contributed to increased competition in the market.

Competitors may develop new technologies or products in advance of us or establish new business models, more flexible contracting models or new technologies disruptive to us. By extending our flash, cloud storage and converged infrastructure offerings, we are competing in new segments with both traditional competitors and new competitors, particularly smaller emerging storage vendors. The longer-term potential and competitiveness of these emerging vendors remains to be determined. In cloud and converged infrastructure, we also compete with large well-established competitors.

~~For additional information regarding our competitors, see the section entitled “Competition” contained in Item 1 – Business of Part I of this Form 10-K.~~ It is possible that new competitors or alliances among competitors might emerge and rapidly acquire significant market share or buying power. An increase in industry consolidation might result in stronger competitors that are better able to compete as full-stack vendors for customers and achieve increased economies of scale in the supply chain. ~~For example, in April 2017, HP Enterprise completed their acquisition of Nimble Storage.~~ In addition, current and potential competitors have established or might establish cooperative relationships among themselves or with third parties, including some of our partners or suppliers. For additional information regarding our competitors, see the section entitled “Competition” contained in Item 1 – Business of Part I of this Form 10-K.

Continuing uncertain economic and political conditions restrict our visibility and may harm our business, operating results, including our revenue growth and ~~profitability.~~profitability, financial condition and cash flows.

Continuing global economic uncertainty, political conditions and fiscal challenges in the U.S. and abroad have, among other things, limited our ability to forecast future demand for our products, contributed to increased periodic volatility in the computer, storage and networking industries at large, as well as the IT market, impacted availability of supplies and could constrain future access to capital for our suppliers, customers and partners. The impacts of these circumstances are global and pervasive, and the timing and nature of any ultimate resolution of these matters remain highly uncertain. ~~For example, we are unable~~Adverse macroeconomic conditions, including inflation, slower growth or recession, new or increased tariffs or other barriers to ~~predict~~global trade, changes to fiscal and monetary policy and higher interest rates, could materially adversely impact the ~~economic impact of the ongoing COVID-19 pandemic on us or~~demand for our ~~employees, suppliers, customers~~products and ~~partners, and consequently we withdrew~~ our ~~guidance for the fourth quarter of our fiscal 2020 and have limited our fiscal 2021 guidance to cover only the first quarter of fiscal 2021.~~operating results. We are also unable to predict whether increased customer spending on our cloud offerings and virtual desktop infrastructure will continue ~~during and~~ after the COVID-19 pandemic. Consequently, we expect these concerns to challenge our business for the foreseeable future, which could cause harm to our operating results. Such conditions have resulted, and may in the future again result, in failure to meet our forecasted financial expectations and to achieve historical levels of revenue growth.

Transition to consumption-based business models may adversely affect our revenues and profitability in other areas of our ~~business.~~business and as a result may harm our business, operating results, financial condition and cash flows.

We offer customers a full range of consumption models, including the deployment of our software through our subscription and cloud-based Software as a Service (SaaS), and utility pricing and managed services offerings for our hardware and software systems.

These business models continue to evolve, and we may not be able to compete effectively, generate significant revenues or maintain the profitability of our consumption-based offerings. Additionally, the increasing prevalence of cloud and SaaS delivery models offered by us and our competitors may unfavorably impact the pricing of our on-premise hardware and software offerings and could have a dampening impact on overall demand for our on-premise hardware and software product and service offerings, which could reduce our revenues and profitability, at least in the near term. If we do not successfully execute our consumption model strategy or anticipate the needs of our customers, our revenues and profitability could decline.

As customer demand for our consumption model offerings increases, we will experience differences in the timing of revenue recognition between our traditional hardware and software license arrangements ~~including for the software license components of enterprise software license agreements~~ (for which revenue is generally recognized in full at the time of delivery), relative to our consumption model offerings (for which revenue is generally recognized ratably over the term of the arrangement). We incur certain expenses associated with the infrastructure and marketing of our consumption model offerings in advance of our ability to recognize the revenues associated with these offerings.

~~Our quarterly~~Due to the global nature of our business, risks inherent in our international operations could materially harm our business.

A significant portion of our operations are located, and a significant portion of our revenues are derived, outside of the U.S. In addition, most of our products are manufactured outside of the U.S., and we have research and development, sales and service centers overseas. Accordingly, our business and future operating results could be adversely impacted by factors affecting our international operations including, among other things, local political or economic conditions, trade protection and export and import requirements, tariffs, local labor conditions, transportation costs, government spending patterns, acts of terrorism, international conflicts and natural disasters in areas with limited infrastructure and adverse public health developments. In particular, the ongoing COVID-19 pandemic and current trade tensions between the U.S. and China could impact our business and operating results. For products we manufacture in Mexico, tensions between the U.S. and Mexico related to trade and border security issues could delay our shipments to customers, or impact pricing or our business and operating results. In addition, due to the global nature of our business, we are subject to complex legal and regulatory requirements in the U.S. and the foreign jurisdictions in which we operate and sell our products, including antitrust and anti-competition laws, rules and regulations, and regulations related to data privacy, data protection, and cybersecurity. We are also subject to the potential loss of proprietary information due to piracy, misappropriation, or laws that may ~~fluctuate~~be less protective of our intellectual property rights than U.S. laws. Such factors could have an adverse impact on our business, operating results, financial condition and cash flows.

We face exposure to adverse movements in foreign currency exchange rates as a result of our international operations. These exposures may change over time as business practices evolve, and they could have a material adverse impact on our operating results, financial condition and cash flows. We utilize forward and option contracts in an attempt to reduce the adverse earnings impact from the effect of exchange rate fluctuations on certain assets and liabilities. Our hedging strategies may not be successful, and currency exchange rate fluctuations could have a material adverse effect on our operating results and cash flows. In addition, our foreign currency exposure on assets, liabilities and cash flows that we do not hedge could have a material impact on our financial results in periods when the U.S. dollar significantly fluctuates in relation to foreign currencies.

Moreover, in many foreign countries, particularly in those with developing economies, it is common to engage in business practices that are prohibited by our internal policies and procedures, or U.S. laws and regulations applicable to us, such as the Foreign Corrupt Practices Act. There can be no assurance that all our employees, contractors and agents, as well as those companies to which we outsource certain of our business operations, will comply with these policies, procedures, laws and/or regulations. Any such violation could subject us to fines and other penalties, which could have a material adverse effect on our business, operating results, financial condition and cash flows.

If we are unable to attract and retain qualified personnel, our business, operating results, financial condition and cash flows could be harmed.

Our continued success depends, in part, on our ability to hire and retain qualified personnel and to advance our corporate strategy and preserve the key aspects of our corporate culture. Because our future success is dependent on our ability to continue to enhance and introduce new products, we are particularly dependent on our ability to hire and retain qualified engineers, including in emerging areas of technology such as artificial intelligence and machine learning. In addition, to increase revenues, we will be required to increase the productivity of our sales force and support infrastructure to achieve adequate customer coverage. Competition for qualified employees, particularly in Silicon Valley, is intense. We have periodically reduced our workforce, including reductions announced in fiscal years 2019, 2020 and 2021, and these actions may make it more difficult to attract and retain qualified employees. Our inability to hire and retain qualified management and skilled personnel, particularly engineers, salespeople and key executive management, could disrupt our development efforts, sales results, business relationships and/or our ability to execute our business plan and strategy on a timely basis and could materially and adversely affect our operating results, financial condition and cash flows.

Equity grants are a critical component of our current compensation programs. If we reduce, modify or eliminate our equity programs or fail to grant equity competitively, we may have difficulty attracting and retaining critical employees.

In addition, because of the structure of our sales, cash and equity incentive compensation plans, we may be at increased risk of losing employees at certain times. For example, the retention value of our compensation plans decreases after the payment of periodic bonuses or the vesting of equity awards.

Our acquisitions may not achieve expected benefits, and may increase our liabilities, disrupt our existing business and harm our operating results, financial condition and cash flows.

As part of our strategy, we seek to acquire other businesses and technologies to complement our current products, expand the breadth of our markets, or enhance our technical capabilities. For example, in both fiscal 2021 and fiscal 2020 we acquired two privately held companies. The benefits we have received, and expect to receive, from these and other acquisitions depend on our ability to successfully conduct due diligence, negotiate the terms of the acquisition and integrate the acquired business into our systems, procedures and organizational structure. Any inaccuracy in our acquisition assumptions or any failure to uncover liabilities or risks associated with the acquisition, such as differing or inadequate cybersecurity and data privacy protection controls, make the acquisition on favorable terms, integrate the acquired business or assets as and when expected or retain key employees of the acquired company may reduce or eliminate the expected benefits of the acquisition to us, increase our costs, disrupt our operations, result in additional liabilities, investigations and litigation, and may also harm our strategy, our business and our operating results. The failure to achieve expected acquisition benefits may also result in impairment charges for goodwill and purchased intangible assets.

We often incur expenses before we receive related benefits, and expenses may be difficult to reduce quickly if demand declines.

We base our expense levels in part on future revenue expectations and a significant percentage of our expenses are fixed. It is difficult to reduce our fixed costs quickly, and if revenue levels are below our expectations, operating results could be adversely impacted. During periods of uneven growth or decline, we may incur costs before we realize the anticipated related benefits, which could also harm our operating results. We have made, and will continue to make, significant investments in engineering, sales, service and support, marketing and other functions to support and grow our business. We are likely to recognize the costs associated with these investments earlier than some of the related anticipated benefits, such as revenue growth, and the return on these investments may be lower, or may develop more slowly, than we expect, which could harm our ~~common stock price.~~

Initiatives intended to make our cost structure, business processes and systems more efficient may not achieve the expected benefits and could inadvertently have ~~fluctuated~~an adverse effect on our business, operating results, financial condition and cash flows.

We continuously seek to make our cost structure and business processes more efficient, including by moving our business activities from higher-cost to lower-cost locations, outsourcing certain business processes and functions, and implementing changes to our business information systems. These efforts involve a significant investment of financial and human resources and significant changes to our current operating processes. In addition, as we move operations into lower-cost jurisdictions and outsource certain business processes, we become subject to new regulatory regimes and lose control of certain aspects of our operations and, as a consequence, become more dependent upon the systems and business processes of third-parties. If we are unable to move our operations, outsource business processes and implement new business information systems in a manner that complies with local law and maintains adequate standards, controls and procedures, the quality of our products and services may suffer and we may be subject to increased litigation risk, either of which could have an adverse effect on our business, operating results and financial condition. Additionally, we may not achieve the expected benefits of these and other transformational initiatives, which could harm our business, operating results, financial condition and cash flows.

We are exposed to credit risks and our investment portfolio may experience fluctuations in market value or returns.

We maintain an investment portfolio of various holdings, types, and maturities. Credit ratings and pricing of our investments can be negatively affected by liquidity, credit deterioration, financial results, economic risk, political risk, sovereign risk or other factors. As a result, the value and liquidity of our investments and the returns thereon may fluctuate substantially. A resurgence of COVID-19 or other circumstances could result in an economic slowdown and possibly cause a global recession. An economic slowdown or increased regional or global economic uncertainty may lead to failures of counterparties, including financial institutions, governments and insurers, which could result in a material decline in the past and will continue to do so, sometimes materially. All of the matters discussed in this Risk Factors section could impact our operating results in any fiscal quarter or year. In addition to those matters, we face the following issues, which could impact our quarterly results:

~~If our operating results fall below our forecasts and the expectations of public market analysts and investors, the trading price~~value of our ~~common stock may decline.~~investment portfolio and substantially reduce our investment returns.

If we are unable to maintain and develop relationships with strategic partners, our revenues may be harmed.

Our growth strategy includes developing and maintaining strategic partnerships with major third-party software and hardware vendors to integrate our products into their products and also co-market our products with them. A number of our strategic partners are industry leaders that offer us expanded access to segments of the storage and data management markets. In particular, strategic partnerships with ~~hyperscalers~~public cloud providers and other cloud service vendors are critical to the success of our cloud-based business. However, there is intense competition for attractive strategic partners, and these relationships may not be exclusive, may not generate

significant revenues and may be terminated on short notice. For instance, some of our partners are also partnering with our competitors, which may increase the availability of competing solutions and harm our ability to grow our relationships with those partners. Moreover, some of our partners, particularly large, more diversified technology companies, including major cloud providers, are also competitors, thereby complicating our relationships. If we are unable to establish new partnerships or maintain existing partnerships, if our strategic partners favor their relationships with other vendors in the storage industry or if our strategic partners increasingly compete with us, we could experience lower than expected revenues, suffer delays in product development, or experience other harm to our business, operating results, financial condition and ~~financial condition.~~cash flows.

A portion of our revenues is generated by large, recurring purchases from various customers, resellers and distributors. A loss, cancellation or delay in purchases by any of these parties has negatively affected our revenues in the past, and could negatively affect our revenues in the future.

A significant portion of our net revenues is generated through sales to a limited number of customers and distributors. We generally do not enter into binding purchase commitments with our customers, resellers and distributors for extended periods of time, and thus there is no guarantee we will continue to receive large, recurring orders from these customers, resellers or distributors. For example, our reseller agreements generally do not require minimum purchases, and our customers, resellers and distributors can stop purchasing and marketing our products at any time. In addition, unfavorable economic conditions may negatively impact the solvency of our customers, resellers and distributors or the ability of such customers, resellers and distributors to obtain credit to finance purchases of our products. If any of our key customers, resellers or distributors changes its pricing practices, reduces the size or frequency of its orders for our products, or stops purchasing our products altogether, our operating results, ~~and~~ financial condition and cash flows could be materially adversely impacted.

Our success depends upon our ability to effectively plan and manage our resources and restructure our business in response to changing market conditions and market demand for our products, and such actions may have an adverse effect on our business, operating results, financial condition and cash flows.

Our ability to successfully offer our products and services in a rapidly evolving market requires an effective planning, forecasting, and management process to enable us to effectively scale and adjust our business in response to fluctuating market opportunities and conditions.

We recently reorganized our sales resources, which included changes and additions to our sales leadership team, to gain operational efficiencies and improve the alignment of our resources with customer and market opportunities. We expect to continue developing our sales organization and go-to-market model towards these goals throughout fiscal 2022. The reorganization of our sales resources, and ongoing evolution of our go-to-market model, could result in short or long-term disruption of our sales cycles, may not produce the efficiencies and benefits desired, and could harm our operating results, financial condition and cash flows.

In response to changes in market conditions and market demand for our products, we have in the past undertaken cost savings initiatives. For example, in May 2018, April 2019, May 2019, May 2020 and August 2020 we executed restructuring events designed to streamline our business, reduce our cost structure and focus our resources on key strategic opportunities. As a result, we have recognized substantial restructuring charges. In fiscal 2020, we further reorganized our go-to-market organization to streamline operations and improve alignment with customer and market opportunities. In the first quarter of fiscal 2021, we realigned resources to optimize our business and fund our biggest opportunities. We may in the future undertake initiatives that could include reorganizing our workforce, restructuring, disposing of, and/or otherwise discontinuing certain products, or a combination of these actions. Rapid changes in the size, alignment or organization of our workforce, including our business unit structure and sales account coverage, could adversely affect our ability to develop, sell and deliver products and services as planned or impair our ability to realize our current or future business and financial objectives. Any decision to take these actions may result in charges to earnings associated with, among other things, inventory or other fixed, intangible or goodwill asset reductions (including, without limitation, impairment charges), workforce and facility reductions and penalties and claims from third-party resellers or users of discontinued products. Charges associated with these activities could harm our operating results. In addition to the costs associated with these activities, we may not realize any of the anticipated benefits of the underlying restructuring activities.

Reduced U.S. government demand could materially harm our business, operating results, financial condition and cash flows. In addition, we could be harmed by claims that we have or a channel partner has failed to comply with regulatory and contractual requirements applicable to sales to the U.S. government.

The U.S. government is an important customer for us. However, government demand is uncertain, as it is subject to political and budgetary fluctuations and constraints. Events such as the U.S. federal government shutdown from December 2018 to January 2019 and continued uncertainty regarding the U.S. budget and debt levels have increased demand uncertainty for our products. In addition, like other customers, the U.S. government may evaluate competing products and delay purchasing in the face of the technology transitions taking place in the storage industry. If the U.S. government or an individual agency or multiple agencies within the U.S. government continue to reduce or shift their IT spending patterns, our operating results, including revenues may be harmed.

Selling our products to the U.S. government, whether directly or through channel partners, also subjects us to certain regulatory and contractual requirements. Failure to comply with these requirements by either us or our channel partners could subject us to investigations, fines, and other penalties, which could materially harm our operating results and financial condition. As an example, the United States Department of Justice (DOJ) and the General Services Administration (GSA) have in the past pursued claims against and financial settlements with IT vendors, including us and several of our competitors and channel partners, under the False Claims Act and other statutes related to pricing and discount practices and compliance with certain provisions of GSA contracts for sales to the federal government. Although the DOJ and GSA currently have no claims pending against us, we could face claims in the future. Violations of certain regulatory and contractual requirements, including with respect to data security, could also result in us being suspended or debarred from future government contracting. Any of these outcomes could have a material adverse effect on our business, operating results, financial condition and cash flows.

If we do not achieve forecasted ~~bookings~~sales orders in any quarter, our operating results, financial ~~results~~condition and cash flows could be harmed.

We derive a majority of our revenues in any given quarter from orders booked in the same quarter. ~~Bookings~~Orders typically follow intra-quarter seasonality patterns weighted toward the back end of the quarter. If we do not achieve the level, timing and mix of ~~bookings~~orders consistent with our quarterly targets and historical patterns, or if we experience cancellations of significant orders, our operating results, financial ~~results~~condition and cash flows could be harmed.

Our gross margins reflect a variety of factors, including competitive pricing, component and product design, and the volume and relative mix of revenues from product, software ~~maintenance,~~support, hardware ~~maintenance~~support and other services offerings. Increased component costs, increased pricing and discounting pressures, the relative and varying rates of increases or decreases in component costs and product prices, or changes in the mix of revenue or decreased volume from product, software ~~maintenance,~~support, hardware ~~maintenance~~support and other services offerings could harm our revenues, gross margins or earnings. Our gross margins are also impacted by the cost of any materials that are of poor quality and our sales and distribution activities, including, without limitation, pricing actions, rebates, sales initiatives and discount levels, and the timing of service contract renewals.

The costs of third-party components comprise a significant portion of our product costs. While we generally have been able to manage our component and product design costs, we may have difficulty managing these costs if supplies of certain components become limited or component prices increase. Any such limitation could result in an increase in our product costs. An increase in component or design costs relative to our product prices could harm our gross margins and earnings.

We ~~rely~~are exposed to the credit and non-payment risk of our customers, resellers and distributors, especially during times of economic uncertainty and tight credit markets, which could result in material losses.

Most of our sales to customers are on an open credit basis, with typical payment terms of 30 days. We may experience increased losses as potentially more customers are unable to pay all or a ~~limited number~~portion of ~~suppliers for critical product components.~~

~~We rely on a limited number of suppliers for drives and other components utilized~~their obligations to us, particularly in the ~~assembly~~current environment when access to sources of liquidity may be limited as a result of the global COVID-19 pandemic. Beyond our open credit arrangements, some of our ~~products, including certain single source suppliers,~~customers have entered into recourse and non-recourse financing leasing arrangements using third-party leasing companies. Under the terms of recourse leases, which ~~has subjected us, and could~~are generally three years or less, we remain liable for the aggregate unpaid remaining lease payments to the third-party leasing companies in the ~~future subject us,~~event of end-user customer default. During periods of economic uncertainty, our exposure to ~~price rigidity, periodic supply constraints,~~credit risks from our customers increases. In addition, our exposure to credit risks of our customers may increase further if our customers and ~~the inability~~their customers or their lease financing sources are adversely affected by global economic conditions.

Risks Related to ~~produce our products with the quality~~Our Products and in the quantities demanded. Consolidation among suppliers, particularly within the semiconductor and disk drive industries, has contributed to price rigidity and may in the future create supply constraints. When industry supply is constrained, our suppliers may allocate volumes away from us and to our competitors, all of which rely on many of the same suppliers as we do. Accordingly, our operating results may be harmed.Services

Any disruption to our supply chain could materially harm our business, operating results, financial condition and ~~financial condition.~~cash flows.

We do not manufacture our products or their components. Instead, we rely on third parties to ~~make~~manufacture our products and critical components, such as disk drives, as well as for associated logistics. Our lack of direct responsibility for, and control over, these elements of our business, as well as the diverse international geographic locations of our manufacturing partners and suppliers, creates significant risks for us, including, among other things:

•Impacts on our supply chain from adverse public health developments, including outbreaks of contagious diseases such as the ongoing COVID-19 pandemic;

•No guarantees of supply and limited ability to control the quality, quantity and cost of our products or of their components;

•The potential for binding price or purchase commitments with our suppliers at higher than market rates;

•Limited ability to adjust production volumes in response to our customers’ demand fluctuations;

•Business, legal compliance, litigation and financial concerns affecting our suppliers or their ability to manufacture and ship our products in the quantities, quality and manner we require; and

•Disruptions due to floods, earthquakes, storms and other natural disasters, particularly in countries with limited infrastructure and disaster recovery resources.

Such risks have subjected us, and could in the future subject us, to supply constraints, price increases and minimum purchase requirements and our business, operating results, ~~and~~ financial condition and cash flows could be harmed. For example, the current global shortage of semiconductors could reduce our flexibility to react to product mix changes and un-forecasted orders. The risks associated with our outsourced manufacturing model are particularly acute when we transition products to new facilities or manufacturers, introduce and increase volumes of new products or qualify new contract manufacturers or suppliers, at which times our ability to manage the relationships among us, our manufacturing partners and our component suppliers, becomes critical. New manufacturers, products, components or facilities create increased costs and risk that we will fail to deliver high quality products in the required volumes to our customers. Any failure of a manufacturer or component supplier to meet our quality, quantity or delivery requirements in a cost-effective manner will harm our business, including customer relationships and as a result could harm our operating results, financial condition and ~~customer relationships.~~cash flows.

~~Due to~~We rely on a limited number of suppliers for critical product components.

We rely on a limited number of suppliers for drives and other components utilized in the ~~global nature of our business, risks inherent in our international operations could materially harm our business.~~

~~A significant portion of our operations are located, and a significant portion of our revenues are derived, outside of the U.S. In addition, most~~assembly of our products, ~~are manufactured outside~~including certain single source suppliers, which has subjected us, and could in the future subject us, to price rigidity, periodic supply constraints, and the inability to produce our products with the quality and in the quantities demanded. Consolidation among suppliers, particularly within the semiconductor and disk drive industries, has contributed to price rigidity and supply constraints. When industry supply is constrained, our suppliers may allocate volumes away from us and to our competitors, all of which rely on many of the ~~U.S., and~~same suppliers as we ~~have research and development, sales and service centers overseas.~~do. Accordingly, our business and future operating results could be adversely impacted by factors affecting our international operations including, among other things, local political or economic conditions, trade protection and export and import requirements, tariffs, local labor conditions, transportation costs, government spending patterns, acts of terrorism, international conflicts and natural disasters in areas with limited infrastructure and adverse public health developments. In particular, the ongoing COVID-19 pandemic, current trade tensions between the U.S. and China, including newly imposed tariffs in 2019, and the United Kingdom’s withdrawal from the European Union, effective on January 31, 2020, could impact our business and operating results. For products we manufacture in Mexico, tensions between the U.S. and Mexico related to trade and border security issues could delay our shipments to customers, or impact pricing or our business and operating results. In addition, due to the global nature of our business, we are subject to complex legal and regulatory requirements in the U.S. and the foreign jurisdictions in which we operate and sell our products, including antitrust and anti-competition laws, rules and regulations, and regulations related to data privacy, data protection, and cybersecurity. We are also subject to the potential loss of proprietary information due to piracy, misappropriation, or laws that may be less protective of our intellectual property rights than U.S. laws. Such factors could have an adverse impact on our business, operating results, ~~and~~ financial ~~condition.~~

We face exposure to adverse movements in foreign currency exchange rates as a result of our international operations. These exposures may change over time as business practices evolve, and they could have a material adverse impact on our financial results and cash flows. We utilize forward and option contracts in an attempt to reduce the adverse earnings impact from the effect of exchange rate fluctuations on certain assets and liabilities. Our hedging strategies may not be successful, and currency exchange rate fluctuations could have a material adverse effect on our operating results and cash flows. In addition, our foreign currency exposure on assets, liabilitiescondition and cash flows ~~that we do not hedge could have a material impact on our financial results in periods when the U.S. dollar significantly fluctuates in relation to foreign currencies.~~

~~We often incur expenses before we receive related benefits, and expenses~~ may be ~~difficult to reduce quickly if demand declines.~~

Our effective tax rate is influenced by a variety of factors, many of which are outside of our control. These factors include among other things, fluctuations in our earnings and financial results in the various countries and states in which we do business, the outcome of income tax audits and changes to the tax laws in such jurisdictions. Changes to any of these factors could materially impact our operating results.

We receive significant tax benefits from sales to our non-U.S. customers. These benefits are contingent upon existing tax laws and regulations in the U.S. and in the countries in which our international operations are located. Future changes in domestic or international tax laws and regulations or a change in how we manage our international operations could adversely affect our ability to continue realizing these tax benefits.

Many countries around the world are beginning to implement legislation and other guidance to align their international tax rules with the Organisation for Economic Co-operation and Development’s Base Erosion and Profit Shifting recommendations and related action plans that aim to standardize and modernize global corporate tax policy, including changes to cross-border tax, transfer-pricing documentation rules and nexus-based tax incentive practices. As a result, many of these changes, if enacted, could increase our worldwide effective tax rate and harm our financial position and results of operations.

We are routinely subject to income tax audits in the U.S. and several foreign tax jurisdictions. If the ultimate determination of income taxes or at-source withholding taxes assessed under these audits results in amounts in excess of the tax provision we have recorded or reserved for, our operating results, cash flows and financial condition could be adversely affected.

Our effective tax rate could also be adversely affected by different and evolving interpretations of existing law or regulations, which in turn would negatively impact our operating and financial results. Additionally, our effective tax rate could also be adversely affected if there is a change in international operations, our tax structure and how our operations are managed and structured, and as a result, we could experience harm to our operating results and financial condition. The U.S. tax law changes enacted through the Tax Cuts and Jobs Act effective in December 2017 are subject to further interpretations from the U.S. federal and state governments and regulatory organizations, such as the Treasury Department and/or Internal Revenue Service. Changes to interpretations of the law could change the amount or accounting treatment of the expense we have recorded in relation to the transition tax. We have elected to pay the transition tax over a period of eight years. As result, our cash flows from operating activities will be adversely impacted until the additional tax provisions are paid in full.

If a data center or other third-party who relies on our products experiences a disruption in service or a loss of data, such disruption could be attributed to the quality of our products, thereby causing financial or reputational harm to our business.

Our clients, including data centers, SaaS, cloud computing and internet infrastructure and bandwidth providers, rely on our products for their data storage needs. Our clients may authorize third-party technology providers to access their data on our systems. Because we do not control the transmissions between our clients, their customers, and third-party technology providers, or the processing of such data by third-party technology providers, we cannot ensure the complete integrity or security of such transmissions or processing. Errors or wrongdoing by clients, their customers, or third-party technology providers resulting in actual or perceived security breaches may result in such actual or perceived breaches being attributed to us.

A failure or inability to meet our clients’ expectations with respect to security and confidentiality through a disruption in the services provided by these third-party vendors, or the loss or alteration of data stored by such vendors, could result in financial or reputational harm to our business to the extent that such disruption or loss is caused by, or perceived by our customers to have been caused by, defects in our products. Moreover, the risk of reputational harm may be magnified and/or distorted through the rapid dissemination of information over the internet, including through news articles, blogs, social media, and other online communication forums and services. This may affect our ability to retain clients and attract new business.harmed.

If a cybersecurity or other security breach occurs on our systems, within our supply chain, or on our end-user customer systems, or if stored data is improperly accessed, customers may reduce or cease using our solutions, our reputation may be harmed and we may incur significant liabilities.

We store and transmit, and sell products and services that store and transmit, personal, sensitive and proprietary data related to our products, our employees, customers, clients and partners (including third-party vendors such as data centers and providers of SaaS, cloud computing, and internet infrastructure and bandwidth), and their respective customers, including intellectual property, books of record and personal information. It is critical to our business strategy that our infrastructure, products and services remain secure and are perceived by customers, clients and partners to be secure. There are numerous and evolving risks to cybersecurity and privacy, including criminal hackers, state-sponsored intrusions, industrial espionage, human error and technological vulnerabilities. Cybersecurity incidents or other security breaches could result in (1) unauthorized access to, or loss or unauthorized use, alteration, or disclosure of, such information; (2) litigation, indemnity obligations, government investigations and proceedings, and other possible liabilities; (3) negative publicity; and (4) disruptions to our internal and external operations. Any of these could damage our reputation and public perception of the security and reliability of our products, as well as harm our business and cause us to incur significant liabilities. In addition, a cybersecurity incident or loss of personal information, or other security breach could result in other negative consequences, including remediation costs, disruption of internal operations, increased cybersecurity protection costs and lost revenues.

Our clients and customers use our platforms for the transmission and storage of sensitive data. We do not review the information or content that our clients and their customers upload and store, and, therefore, we have no direct control over the substance of the information or content stored within our platforms. If our employees, or our clients, partners or their respective customers use our platforms for the transmission or storage of personal or other sensitive information or our supply chain cybersecurity is compromised and our security measures are breached as a result of third-party action, employee error, malfeasance, stolen or fraudulently obtained log-in credentials or otherwise, our reputation could be damaged, our business may be harmed and we could incur significant liabilities.

High-profile cyberattacks and security breaches have increased in recent years, with the potential for such acts heightened as a result of the number of employees working remotely due to COVID-19. Security industry experts and government officials have warned about the risks of hackers and cyberattacks targeting IT products and businesses. Because techniques used to obtain unauthorized access or to sabotage systems change frequently and often are not recognized until launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative measures. As we continue to increase our client base and expand our brand, we may become more of a target for third parties seeking to compromise our security systems and we anticipate that hacking attempts and cyberattacks will increase in the future. We cannot give assurance that we will always be successful in preventing or repelling unauthorized access to our systems. We also may face delays in our ability to identify or otherwise respond to any cybersecurity incident or any other breach. Additionally, we use third-party service providers to provide some services to us that involve the storage or transmission of data, such as SaaS, cloud computing, and internet infrastructure and bandwidth, and they face various cybersecurity threats and also may suffer cybersecurity incidents or other security breaches.

Many jurisdictions have enacted or are enacting laws requiring companies to notify regulators or individuals of data security incidents involving certain types of personal data. These mandatory disclosures regarding security incidents often lead to widespread negative publicity. Moreover, the risk of reputational harm may be magnified and/or distorted through the rapid dissemination of information over the internet, including through news articles, blogs, social media, and other online communication forums and services. Any security incident, loss of data, or other security breach, whether actual or perceived, or whether impacting us or our third-party service providers, could harm our reputation, erode customer confidence in the effectiveness of our data security measures, negatively impact our ability to attract new customers, cause existing customers to elect not to renew their support contracts or their SaaS subscriptions, or subject us to third-party lawsuits, regulatory fines or other action or liability, which could materially and adversely affect our business and operating results.

There can be no assurance that the limitations of liability in our contracts would be enforceable or adequate or would otherwise protect us from any such liabilities or damages with respect to any particular claim. Our existing general liability insurance coverage and coverage for errors and omissions may not continue to be available on acceptable terms or may not be available in sufficient amounts to cover one or more large claims, or our insurers may deny coverage as to any future claim. The successful assertion of one or more large claims against us that exceeds available insurance coverage, or the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could have a material adverse effect on our business, operating results, financial condition and cash flows.

Failure to comply with new and existing laws and regulations relating to privacy, data protection, and information security could cause harm to our reputation, result in liability and adversely impact our business.

Our business is subject to increasing regulation by various federal, state and international governmental agencies responsible for enacting and enforcing laws and regulations relating to privacy, data protection, and information security. The rapidly evolving regulatory framework in this area is likely to remain uncertain for the foreseeable future. In addition, changes in the interpretation and enforcement of existing laws and regulations could impact our business operations and those of our partners, vendors and customers. ~~Privacy~~Customers, privacy advocates and industry groups also may propose new and different self-regulatory standards or standards of care that may legally or contractually apply to us, and these standards may be subject to change. These factors create uncertainty and we cannot yet determine the ~~impacts~~impact such future laws, regulations and standards, or changes to such laws, regulations, or standards, or to their interpretation or enforcement, may have on our business or the businesses of our partners, vendors and customers. In addition, changes in the interpretation of existing laws and regulations could impact our business operations and those of our partners, vendors and customers.

Because the interpretation and application of many laws and regulations relating to privacy, data protection and information security, along with industry standards, are uncertain, it is possible that relevant laws, regulations, or standards may be interpreted and applied in manners that are, or are alleged to be, inconsistent with our data management practices or the features of our products. Any failure, or perceived failure, by us or our business partners to comply with federal, state or international laws and regulations relating to privacy, data protection, and information security, commitments relating to privacy, data protection, and information security contained in our contracts, self-regulatory standards that apply to us or that third parties assert are applicable to us, or our policies or notices we post or make available could subject us to claims, investigations, sanctions, enforcement actions and other proceedings, disgorgement of profits, fines, damages, civil and criminal liability, penalties or injunctions.

Additionally, as a technology provider, our customers expect that we can demonstrate compliance with laws and regulations relating to privacy, data protection, and information security, and our inability or perceived inability to do so may adversely impact sales of our products and services, particularly to customers in highly-regulated industries. We have invested company resources in complying with new laws, regulations, and other obligations relating to privacy, data protection, and information security, and we may be required to make additional, significant changes in our business operations, all of which may adversely affect our revenue and our business overall. As a result of any inability ~~or inability~~ to comply with such laws and regulations, our reputation and brand may be harmed, we could incur significant costs, and financial and operating results could be materially adversely affected, and we could be required to modify or change our products or our business practices, any of which could have an adverse effect on our business. Our business could be subject to stricter obligations, greater fines and private causes of action under the enactment of new laws and regulations relating to privacy, data protection, and information security, including but not limited to, the European Union General Data Protection Regulation, which ~~became effective on May 25, 2018, and which~~ provides for penalties of up to 20 million Euros or four percent of our annual global revenues, ~~and~~ the California Consumer Privacy Act ~~which became effective on January 1, 2020.~~

~~Our success depends upon our ability to effectively plan~~ and manage our resources and restructure our business in response to changing market conditions and market demand for our products, and such actions may have an adverse effect on our financial and operating results.

~~In response to changes in market conditions and market demand for our products, we have in~~ the past undertaken cost savings initiatives. For example, in May 2018, April 2019 and May 2019 we executed restructuring events designed to streamline our business, reduce our cost structure and focus our resources on key strategic opportunities. As a result, we have recognized substantial restructuring charges. In fiscal 2018, we moved to a business unit structure to enable us to develop the organization and systems to successfully execute a multi-product business. In fiscal 2020, we further reorganized our go-to-market organization to streamline operations and improve alignment with customer and market opportunities. We may in the future undertake initiatives that could include reorganizing our workforce, restructuring, disposing of, and/or otherwise discontinuing certain products, or a combination of these actions. Rapid changes in the size, alignment or organization of our workforce, including our business unit structure and sales account coverage, could adversely affect our ability to develop, sell and deliver products and services as planned or impair our ability to realize our current or future business and financial objectives. Any decision to take these actions may result in charges to earnings associated with, among other things, inventory or other fixed, intangible or goodwill asset reductions (including, without limitation, impairment charges), workforce and facility reductions and penalties and claims from third-party resellers or users of discontinued products. Charges associated with these activities would harm our operating results. In addition to the costs associated with these activities, we may not realize any of the anticipated benefits of the underlying restructuring activities.California Privacy Rights Act.

If our products or services are defective, or are perceived to be defective as a result of improper use or maintenance, our operating results, including gross margins, ~~operating results~~ and customer relationships may be harmed.

Our products and services are complex. We have experienced in the past, and expect to experience in the future, quality issues impacting certain products, and in the future, we could experience reliability issues with services we provide. Such quality and reliability issues may be due to, for example, our own designs or processes, the designs or processes of our suppliers, and/or flaws in third-party software used in our products. These types of risks are most acute when we are introducing new products. Quality or reliability issues have and could again in the future cause customers to experience outages or disruptions in service, data loss or data corruption. If we fail to remedy a product defect or flaw, we may experience a failure of a product line, temporary or permanent withdrawal from a product or market, damage to our reputation, loss of revenue, inventory costs or product reengineering expenses and higher ongoing warranty and service costs, and these occurrences could have a material impact on our gross margins, business and operating results. In addition, we exercise little control over how our customers use or maintain our products and services, and in some cases improper usage or maintenance could impair the performance of our products and services, which could lead to a perception of a quality or reliability issue. Customers may experience losses that may result from or are alleged to result from defects or flaws in our products and services, which could subject us to claims for damages, including consequential damages.

~~If we are unable to attract and retain qualified personnel, our business, operating results and financial condition could be harmed.~~

~~Our continued success depends,~~Changes in part, on our ability to hire and retain qualified personnel and to preserve the key aspects of our corporate culture. Because our future success is dependent on our ability to continue to enhance and introduce new products, we are particularly dependent on our ability to hire and retain qualified engineers, including in emerging areas of technology such as artificial intelligence and machine learning. In addition, to increase revenues, we will be required to increase the productivity of our sales force and support infrastructure to achieve adequate customer coverage. Competition for qualified employees, particularly in Silicon Valley, is intense. We have periodically reduced our workforce, including reductions announced in fiscal 2019 and fiscal 2020, and these actions may make it more difficult to attract and retain qualified employees. Our inability to hire and retain qualified management and skilled personnel, particularly engineers, salespeople and key executive management, could be disruptiveregulations relating to our ~~development efforts, sales results, business relationships and/~~products or ~~our ability to execute our business plan and strategy on a timely basis and could materially and adversely affect our operating results.~~

~~Equity grants are a critical component of our current compensation programs. If we reduce, modify or eliminate our equity programs, we may have difficulty attracting and retaining critical employees.~~

~~Our acquisitions~~manufacture, sourcing, distribution or use thereof, may ~~not achieve expected benefits, and may increase our liabilities, disrupt our existing business and harm our operating results.~~

As part of our strategy, we seek to acquire other businesses and technologies to complement our current products, expand the breadth of our markets, or enhance our technical capabilities. For example, in both fiscal 2020 and fiscal 2018 we acquired two privately held companies. The benefits we have received, and expect to receive, from these and other acquisitions depend on our ability to successfully conduct due diligence, negotiate the terms of the acquisition and integrate the acquired business into our systems, procedures and organizational structure. Any inaccuracy in our acquisition assumptions or any failure to uncover liabilities or risks associated with the acquisition, make the acquisition on favorable terms, integrate the acquired business or assets as and when expected or retain key employees of the acquired company may reduce or eliminate the expected benefits of the acquisition to us, increase our costs, disrupt our operations, result in additional liabilities, investigations and litigation, and may also harm our strategy, our business and our operating results. The failure to achieve expected acquisition benefits may also result in impairment charges for goodwill and purchased intangible assets.

Reduced U.S. government demand could materially harm our business and operating results. In addition, we could be harmed by claims that we have or a channel partner has failed to comply with regulatory and contractual requirements applicable to sales to the U.S. government.

Initiatives intended to make our cost structure, business processes and systems more efficient may not achieve the expected benefits and could inadvertently have an adverse effect on our business, operating results and financial condition.

~~There~~The laws and regulations governing the manufacturing, sourcing, distribution and use of our products have become more complex and stringent over time. For example, in addition to various environmental laws relating to carbon emissions, the use and discharge of hazardous materials and the use of certain minerals originating from identified conflict zones, many governments, including the U.S., the United Kingdom and Australia, have adopted regulations concerning the risk of human trafficking in supply chains which govern how workers are ~~risks associated~~recruited and managed. We incur costs to comply with the requirements of such laws. Further, since our ~~outstanding and future indebtedness.~~

~~As of April 24, 2020,~~supply chain is complex, we ~~had $1.2 billion aggregate principal amount of outstanding indebtedness for~~may face reputational harm if our ~~senior notes~~customers or other stakeholders conclude that mature at specific dates in calendar years 2021, 2022 and 2024, and we had an aggregate of $523 million of commercial paper notes outstanding with maturities primarily less than three months. We may incur additional indebtedness in the future under existing credit facilities and/or enter into new financing arrangements. We may fail to pay these or additional future obligations, as and when required. Specifically, if we are unable to ~~generate sufficient cash flows from operations or to borrow sufficient funds~~verify sufficiently the origins of the minerals used in the future to service or refinance our debt, our business, operating results and financial condition will be harmed. Any downgrades from credit rating agencies such as Moody’s Investors Service or Standard & Poor’s Rating Services may adversely impact our ability to obtain additional financingproducts we sell or the ~~terms~~actions of our suppliers with respect to workers. As the laws and regulations governing our products continue to expand and change, our costs are likely to rise, and the failure to comply with any such ~~financing~~laws and reduce the market capacity for our commercial paper. Furthermore, if prevailing interest rates or other factors result in higher interest rates upon any potential future financing, then interest expense related to the refinance indebtedness would increase. Significant volatility in capital markets caused by the COVID-19 pandemic has recently heightened these risks.

~~In addition, all our debt and credit facility arrangements~~regulations could subject us to continued compliance with restrictive and financial covenants. If we do not comply with these covenants or otherwise default under the arrangements, we may be required to repay any outstanding amounts borrowed under these agreements. Moreover, compliance with these covenants may restrict our strategic or operational flexibility in the future, which could harm our business ~~operating results and financial condition.~~

~~We are exposed to credit~~interruptions, litigation risks and ~~our investment portfolio may experience fluctuations in market value or returns.~~

We maintain an investment portfolio of various holdings, types, and maturities. Credit ratings and pricing of our investments can be negatively affected by liquidity, credit deterioration, financial results, economic risk, political risk, sovereign risk or other factors. As a result, the value and liquidity of our investments and the returns thereon may fluctuate substantially. Further, the impact of the COVID-19 pandemic could exacerbate an economic slowdown and possibly cause a global recession. An economic slowdown or increased regional or global economic uncertainty may lead to failures of counterparties, including financial institutions, governments and insurers which could result in a material decline in the value of our investment portfolio and substantially reduce our investment returns.

~~Our failure to adjust to emerging standards in the storage and data management industry may harm our business.~~

~~Emerging standards in the storage and data management markets may adversely affect the UNIX~~^®~~, Windows~~^® and World Wide Web server markets upon which we depend. For example, we provide our open access data retention solutions to customers within the financial services, healthcare, pharmaceutical and government market segments, industries that are subject to various evolving governmental regulations with respect to data access, reliability and permanence in the U.S. and in the other countries in which we operate. If our products do not meet and continue to comply with these evolving governmental regulations in this regard, customers in these market and geographical segments will not purchase our products, and we may not be able to expand our product offerings in these market and geographical segments at the rates which we have forecasted.reputational harm.

Some of our products are subject to U.S. export control laws and other laws affecting the countries in which our products and services may be sold, distributed, or delivered, and any violation of these laws could have a material and adverse effect on our business, operating results, financial condition and ~~financial condition.~~cash flows.

Due to the global nature of our business, we are subject to import and export restrictions and regulations, including the Export Administration Regulations administered by the Commerce Department’s Bureau of Industry and Security (BIS) and the trade and economic sanctions regulations administered by the Treasury Department’s Office of Foreign Assets Control (OFAC). The U.S., through the BIS and OFAC, places restrictions on the sale or export of certain products and services to certain countries and persons. The BIS and OFAC have also placed restrictions on dealing with certain "blocked” entities, such as Russia’s federal security service (FSB), including the Company’s filing of notifications to the FSB for exporting certain products to Russia. Violators of these export control and sanctions laws may be subject to significant penalties, which may include significant monetary fines, criminal proceedings

against them and their officers and employees, a denial of export privileges, and suspension or debarment from selling products to the federal government. Our products could be shipped to those targets by third parties, including potentially our channel partners, despite our precautions.

If we were ever found to have violated U.S. export control laws, we may be subject to various penalties available under the laws, any of which could have a material and adverse impact on our business, operating results and financial condition. Even if we were not found to have violated such laws, the political and media scrutiny surrounding any governmental investigation of us could cause us significant expense and reputational harm. Such collateral consequences could have a material adverse impact on our business, operating results, financial condition and ~~financial condition.~~cash flows.

Our failure to protect our intellectual property could harm our business, operating results, financial condition and ~~financial condition.~~cash flows.

Our success depends significantly upon developing, maintaining and protecting our proprietary technology. We rely on a combination of patents, copyrights, trademarks, trade secrets, confidentiality procedures and contractual provisions with employees, resellers, strategic partners and customers, to protect our proprietary rights. We currently have multiple U.S. and international patent applications pending and multiple U.S. and international patents issued. The pending applications may not be approved, and our existing and future patents may be challenged. If such challenges are brought, the patents may be invalidated. We may not be able to develop proprietary products or technologies that are patentable, and patents issued to us may not provide us with any competitive advantages and may be challenged by third parties. Further, the patents of others may materially and adversely affect our ability to do business. In addition, a failure to obtain and defend our trademark registrations may impede our marketing and branding efforts and competitive condition. Litigation may be necessary to protect our proprietary technology. Any such litigation may be time-consuming and costly. Despite our efforts to protect our proprietary rights, unauthorized parties may attempt to copy aspects of our products or obtain and use information that we regard as proprietary. In addition, the laws of some foreign countries do not protect proprietary rights to as great an extent as do the laws of the U.S. Our means of protecting our proprietary rights may not be adequate or our competitors may independently develop similar technology, duplicate our products, or design around patents issued to us or other intellectual property rights of ours. In addition, while we train employees in confidentiality practices and include terms in our employee and consultant agreements to protect our intellectual property, there is persistent risk that some individuals will improperly take our intellectual property after terminating their employment or other engagements with us, which could lead to intellectual property leakage to competitors and a loss of our competitive advantages.

We compete in markets in which intellectual property infringement claims arise in the normal course of business. Third parties have, from time to time, asserted intellectual property-related claims against us, including claims for alleged patent infringement brought by non-practicing entities. Such claims may be made against our products and services, our customers’ use of our products and services, or a combination of our products and third-party products. We also may be subject to claims and indemnification obligations from customers and resellers with respect to third-party intellectual property rights pursuant to our agreements with them. If we refuse to indemnify or defend such claims, even in situations in which the third-party’s allegations are meritless, then customers and resellers may refuse to do business with us.

Patent litigation is particularly common in our industry. We have been, and continue to be, in active patent litigations with non-practicing entities. While we vigorously defend our ability to compete in the marketplace, there is no guarantee that, in patent or other types of intellectual property litigation, we will prevail at trial or be able to settle at a reasonable cost. If a judge or jury were to find that our products infringe, we could be required to pay significant monetary damages and be subject to an injunction that could cause product shipment delays, require us to redesign our products, affect our ability to supply or service our customers, and/or require us to enter into compulsory royalty or licensing agreements.

We expect that companies in the network storage and data management markets will increasingly be subject to infringement claims as the number of products and competitors in our industry segment grows and the functionality of products in different industry segments overlaps. Any such claims, and any such infringement claims discussed above, could be time consuming, result in costly litigation, cause suspension of product shipments or product shipment delays, require us to redesign our products, or require us to enter into royalty or licensing agreements, any of which could materially and adversely affect our operating ~~results.~~results, financial condition and cash flows. Such royalty or licensing agreements, if required, may not be available on terms acceptable to us or at all.

We rely on software from third parties, and a failure to properly manage our use of third-party software could result in increased costs or loss of revenue.

Many of our products are designed to include software licensed from third parties. Such third-party software includes software licensed from commercial suppliers and software licensed under public open source licenses. We have internal processes to manage our use of such third-party software. However, if we fail to adequately manage our use of third-party software, then we may be subject to copyright infringement or other third-party claims. If we are non-compliant with a license for commercial software, then we may be required to pay penalties or undergo costly audits pursuant to the license agreement. In the case of open-source software licensed under certain “copyleft” licenses, the license itself may require, or a court-imposed remedy for non-compliant use of the open source

software may require, that proprietary portions of our own software be publicly disclosed or licensed. This could result in a loss of intellectual property rights, increased costs, damage to our reputation and/or a loss of revenue.

Our failure to adjust to emerging standards in the storage and data management industry may harm our business.

Emerging standards in the storage and data management markets may adversely affect the UNIX^®, Windows^® and World Wide Web server markets upon which we depend. For example, we provide our open access data retention solutions to customers within the financial services, healthcare, pharmaceutical and government market segments, industries that are subject to various evolving governmental regulations with respect to data access, reliability and permanence in the U.S. and in the other countries in which we operate. If our products do not meet and continue to comply with these evolving governmental regulations in this regard, customers in these market and geographical segments will not purchase our products, and we may not be able to expand our product offerings in these market and geographical segments at the rates which we have forecasted.

Our stock price is subject to changes in recommendations or earnings estimates by financial analysts, changes in investors' or analysts' valuation measures for our stock, changes in our capital structure, including issuance of additional debt, changes in our credit ratings, our ability to pay dividends and to continue to execute our stock repurchase program as planned and market trends unrelated to our performance.

Our ability to pay quarterly dividends and to continue to execute our stock repurchase program as planned will be subject to, among other things, our financial condition and operating results, available cash and cash flows in the U.S., capital requirements, and other factors. Future dividends are subject to declaration by our Board of Directors, and our stock repurchase program does not obligate us to acquire any specific number of shares. However, if we fail to meet any investor expectations related to dividends and/or stock repurchases, the market price of our stock could decline significantly, and could have a material adverse impact on investor confidence. Additionally, price volatility of our stock over a given period may cause the average price at which we repurchase our own stock to exceed the stock’s market price at a given point in time.

Furthermore, speculation in the press or investment community about our strategic position, financial condition, results of operations or business can cause changes in our stock price. These factors, as well as general economic and political conditions and the timing of announcements in the public market regarding new products or services, product enhancements or technological advances by our competitors or us, and any announcements by us of acquisitions, major transactions, or management changes may adversely affect our stock price.

Our quarterly operating results may fluctuate materially, which could harm our common stock price.

Our operating results have fluctuated in the past and will continue to do so, sometimes materially. All of the matters discussed in this Risk Factors section could impact our operating results in any fiscal quarter or year. In addition to those matters, we face the following issues, which could impact our quarterly results:

If our operating results fall below our forecasts and the expectations of public market analysts and investors, the trading price of our common stock may decline.

As of April 30, 2021, we had $2.7 billion aggregate principal amount of outstanding indebtedness for our senior notes that mature at specific dates in calendar years 2022, 2024, 2025, 2027 and 2030. We may incur additional indebtedness in the future under existing credit facilities and/or enter into new financing arrangements. We may fail to pay these or additional future obligations, as and when required. Specifically, if we are unable to generate sufficient cash flows from operations or to borrow sufficient funds in the future to service or refinance our debt, our business, operating results, financial condition and cash flows will be harmed. Any downgrades from credit rating agencies such as Moody’s Investors Service or Standard & Poor’s Rating Services may adversely

impact our ability to obtain additional financing or the terms of such financing and reduce the market capacity for our commercial paper. Furthermore, if prevailing interest rates or other factors result in higher interest rates upon any potential future financing, then interest expense related to the refinance indebtedness would increase.

In addition, all our debt and credit facility arrangements subject us to continued compliance with restrictive and financial covenants. If we do not comply with these covenants or otherwise default under the arrangements, we may be required to repay any outstanding amounts borrowed under these agreements. Moreover, compliance with these covenants may restrict our strategic or operational flexibility in the future, which could harm our business, operating results, financial condition and cash flows.

We are ~~exposed~~unable to predict the ~~credit~~extent to which the global COVID-19 pandemic may adversely impact our business, operating results, financial condition, and ~~non-payment~~cash flows.

The COVID-19 pandemic and efforts to control its spread have significantly curtailed the movement of people, goods and services worldwide, including in most or all of the regions in which we sell our products and services and conduct our business operations. While we are currently considered an essential business in many of the key regions in which we operate, including in the United States (U.S.), there is no guarantee that we will continue to be classified as such. We have taken precautionary measures intended to minimize the risk of the virus to our employees, our customers, ~~resellers~~ and ~~distributors, especially during times~~the communities in which we operate such as India, including office closures and working remotely for the vast majority of ~~economic uncertainty and tight credit markets,~~employees, all of which could ~~result~~negatively impact our business. The magnitude and duration of the disruption and resulting decline in ~~material losses.~~

~~Most~~business activity is uncertain and has limited our ability to forecast future demand for our products and services. The COVID-19 pandemic and its uneven recovery have adversely affected, and we expect may continue to adversely affect, our business in a variety of ways, including by negatively impacting the demand for our products and services, and our ability to build and convert our sales pipeline (including delayed and deferred purchases); restricting our sales, marketing and distribution efforts; disrupting our supply chain and our ability to deliver product to customers; and constraining business operations, research and development capabilities, engineering, design and manufacturing processes and other important business activities, including in India. In addition, the COVID-19 pandemic has disrupted the operations of our ~~sales to~~suppliers, customers ~~are on~~and partners for an ~~open credit basis, with typical payment terms~~indefinite period of 30 days. We may experience increased losses as potentially more customers are unable to pay all or a portion of their obligations to us, particularly in the current environment when access to sources of liquidity is limitedtime, including as a result of travel restrictions and/or business shutdowns and limited access to capital markets, all of which have and may continue to negatively impact our business and results of operations, including cash flows. Accordingly, we expect the ~~global~~ COVID-19 ~~pandemic. Beyond~~pandemic to have a negative impact on our ~~open credit arrangements, some~~future sales and results of operations, the magnitude and duration of which we are unable to predict. Additionally, concerns over the economic impact of COVID-19 pandemic have caused extreme volatility in financial and other capital markets, which volatility has and may continue to adversely impact our ~~customers have entered into recourse~~stock price and ~~non-recourse financing leasing arrangements using third-party leasing~~

~~companies. Under~~could impact our ability to access capital markets. More generally, the terms of recourse leases, which are generally three years or less, we remain liable for the aggregate unpaid remaining lease payments to the third-party leasing companies in the event of end-user customer default. During periods of economic uncertainty, our exposure to credit risks from our customers increases. In addition, our exposure to credit risks of our customers may increase further if our customers and their customers or their lease financing sources areCOVID-19 pandemic has adversely affected economies and financial markets globally, potentially leading to a prolonged economic downturn, which could decrease technology spending and adversely affect demand for our offerings and harm our business and results of operations for an extended period of time. To the extent that the COVID-19 pandemic adversely affects our business and financial results, it may also have the effect of heightening many of the other risks described in this “Risk Factors” section and those incorporated by ~~global economic conditions.~~reference herein, such as those relating to our products and services, financial performance, credit rating and debt obligations.

Our business could be materially and adversely affected as a result of natural disasters, terrorist acts or other catastrophic events.

We depend on the ability of our personnel, inventories, equipment and products to move reasonably unimpeded around the world. Any political, military, terrorism, global trade, world health or other issue that hinders this movement or restricts the import or export of materials could lead to significant business disruptions. For example, the ongoing COVID-19 pandemic is impeding the mobility of our personnel, inventories, equipment and products and disrupting our business operations. Furthermore, any economic failure or other material disruption caused by natural disasters, including fires, floods, hurricanes, earthquakes, and volcanoes; power loss or shortages; environmental disasters; telecommunications or business information systems failures or break-ins and similar events could also adversely affect our ability to conduct business. If such disruptions result in cancellations of customer orders or contribute to a general decrease in economic activity or corporate spending on IT, or directly impact our marketing, manufacturing, financial and logistics functions, or impair our ability to meet our customer demands, our operating results and financial condition could be materially adversely affected. Our headquarters is located in Northern California, an area susceptible to earthquakes and wildfires. If any significant disaster were to occur there, our ability to operate our business and our operating results, financial condition and cash flows could be ~~impaired.~~adversely impacted.

Our effective tax rate is influenced by a variety of factors, many of which are outside of our control. These factors include among other things, fluctuations in our earnings and financial results in the various countries and states in which we do business, changes to the tax laws in such jurisdictions and the outcome of income tax audits. Changes ~~in regulations relating~~to any of these factors could materially impact our operating results, financial condition and cash flows.

We receive significant tax benefits from sales to our ~~products or their components, or the manufacture, sourcing, distribution or use thereof, may harm our business and operating results.~~

~~The~~non-U.S. customers. These benefits are contingent upon existing tax laws and regulations governing the manufacturing, sourcing, distribution and use of our products have become more complex and stringent over time. For example, in addition to various environmental laws relating to carbon emissions, the use and discharge of hazardous materials and the use of certain minerals originating from identified conflict zones, many governments, including the U.S., the United Kingdom and Australia, have adopted regulations concerning the risk of human trafficking in supply chains which govern how workers are recruited and managed. We incur costs to comply with the requirements of such laws. Further, since our supply chain is complex, we may face reputational harm if our customers or other stakeholders conclude that we are unable to verify sufficiently the origins of the minerals used in the ~~products we sell~~U.S. and in the countries in which our international operations are located. Future changes in domestic or ~~the actions of our suppliers with respect to workers. As the~~

international tax laws and regulations ~~governing~~or a change in how we manage our ~~products~~international operations could adversely affect our ability to continue realizing these tax benefits.

Many countries around the world are beginning to ~~expand~~implement legislation and ~~change,~~other guidance to align their international tax rules with the Organisation for Economic Co-operation and Development’s Base Erosion and Profit Shifting recommendations and related action plans that aim to standardize and modernize global corporate tax policy, including changes to cross-border tax, transfer-pricing documentation rules and nexus-based tax incentive practices. As a result, many of these changes, if enacted, could increase our ~~costs are likely to rise,~~worldwide effective tax rate and ~~the failure to comply with any~~harm our operating result, financial condition and cash flows.

Our effective tax rate could also be adversely affected by changes in tax laws and regulations and interpretations of such laws and regulations, which in turn would negatively impact our earnings and cash and cash equivalent balances we currently maintain. Additionally, our effective tax rate could ~~subject us~~also be adversely affected if there is a change in international operations, our tax structure and how our operations are managed and structured, and as a result, we could experience harm to ~~business interruptions, litigation risks~~our operating results and ~~reputational harm.~~financial condition. Evolving or revised tax laws and regulations globally, including the 2017 Tax Cuts and Jobs Act deferral on tax deductions for certain research and development expenses could change the amount or accounting treatment of the expense we occur in the future. President Biden has detailed his Made in America Tax Plan which includes proposed increases to tax rates on both domestic and foreign income. If these proposals are ultimately enacted into legislation, they could materially impact our operations and financial results.

~~Our stock price is subject to changes~~income tax audits in ~~recommendations~~the U.S. and several foreign tax jurisdictions. If the ultimate determination of income taxes or ~~earnings estimates by financial analysts, changes~~at-source withholding taxes assessed under these audits results in ~~investors'~~amounts in excess of the tax provision we have recorded or ~~analysts' valuation measures~~reserved for, our stock, changes in our capital structure, including issuance of additional debt, changes in our credit ratings, our ability to pay dividends and to continue to execute our stock repurchase program as planned and market trends unrelated to our performance.

~~Our ability to pay quarterly dividends and to continue to execute our stock repurchase program as planned will be subject to, among other things, our~~operating results, financial condition and ~~operating results, available cash and~~ cash flows in the U.S., capital requirements, and other factors. Future dividends are subject to declaration by our Board of Directors, and our stock repurchase program does not obligate us to acquire any specific number of shares. For example, during the first quarter of fiscal 2021 we announced the suspension of our stock repurchases to strengthen our liquidity position given the uncertainty surrounding the overall impact of the ongoing COVID-19 pandemic. However, if we fail to meet any expectations related to dividends and/or stock repurchases, the market price of our stock could decline significantly, and could have a material adverse impact on investor confidence. Additionally, price volatility of our stock over a given period may cause the average price at which we repurchase our own stock to exceed the stock’s market price at a given point in time.be adversely affected.

We owned or leased, domestically and internationally, the following properties as of April ~~24, 2020.~~

We own approximately 0.7 million square feet of facilities at our Sunnyvale, California headquarters. The Sunnyvale site supports research and development, corporate general administration, sales and marketing, global services and operations.30, 2021.

We own approximately 0.8 million square feet of facilities in Research Triangle Park (RTP), North Carolina. In addition, we own 65 acres of undeveloped land. The RTP site supports research and development, global services and sales and marketing.

We own ~~forty acres of land and approximately 0.3 million square feet of facilities in Wichita, Kansas. This site supports sales and marketing, research and development, and global services.~~

~~We own~~ approximately 0.7 million square feet of facilities in Bangalore, India on 14 acres of land. The Bangalore site supports research and development, marketing and global services.

We executed a lease for our new corporate headquarters located in San Jose, California in April 2021. The lease commenced on June 1, 2021 and includes approximately 0.3 million square feet of office space. The San Jose site supports research and development, corporate general administration, sales and marketing, global services and operations.

We lease other sales offices and research and development facilities throughout the U.S. and internationally. We expect that our existing facilities and those being developed worldwide are suitable and adequate for our requirements over at least the next two years and that additional space will be available if needed.

For a discussion of legal proceedings, see Note 18 – Commitments and Contingencies of the Notes to Consolidated Financial Statements.

The Company’s common stock is traded on the NASDAQ Stock Market LLC (“NASDAQ”) under the symbol NTAP.

The price range per share of common stock presented below represents the highest and lowest intraday sales prices for the Company’s common stock on the NASDAQ during each quarter of our two most recent fiscal years.

	Fiscal 2020				Fiscal 2019				Fiscal 2021				Fiscal 2020
	High		Low		High		Low		High		Low		High		Low
First Quarter	$	73.69	$	58.04	$	83.14	$	63.81	$	49.65	$	39.81	$	73.69	$	58.04
Second Quarter	$	59.84	$	44.55	$	88.08	$	70.26	$	48.94	$	40.08	$	59.84	$	44.55
Third Quarter	$	65.38	$	55.00	$	83.95	$	54.50	$	70.64	$	43.92	$	65.38	$	55.00
Fourth Quarter	$	60.96	$	34.66	$	78.35	$	61.00	$	78.77	$	58.83	$	60.96	$	34.66

As of June ~~5, 2020~~2, 2021 there were ~~436~~456 holders of record of our common stock.

The Company paid cash dividends of $0.48 per outstanding common share in each quarter of fiscal 2021 for an aggregate of $427 million, $0.48 per outstanding common share in each quarter of fiscal 2020 for an aggregate of $439 million, and $0.40 per outstanding common share in each quarter of fiscal 2019 for an aggregate of $403 ~~million, and $0.20 per outstanding common share in each quarter of fiscal 2018 for an aggregate of $214~~ million. In the first quarter of fiscal ~~2021,~~2022, the Company declared a cash dividend of ~~$0.48~~$0.50 per share of common stock, payable on July ~~29, 2020~~28, 2021 to shareholders of record as of the close of business on July ~~10, 2020.~~9, 2021.

The following graph shows a comparison of cumulative total shareholder return, calculated on a dividend reinvested basis, of an investment of $100 for the Company, the S&P 500 Index, the S&P 500 Information Technology Index and the S&P 1500 Technology Hardware & Equipment Index for the five years ended April ~~24, 2020.~~30, 2021. The comparisons in the graphs below are based upon historical data and are not indicative of, nor intended to forecast, future performance of our common stock. The graph and related information shall not be deemed “soliciting material” or be deemed to be “filed” with the SEC, nor shall such information be incorporated by reference into any past or future filing with the SEC, except to the extent that such filing specifically states that such graph and related information are incorporated by reference into such filing.

Among NetApp, Inc., the S&P 500 Index, the S&P 500 Information Technology Index and the S&P 1500 Technology Hardware & Equipment Index*

*$100 invested on April ~~24, 2015~~29, 2016 in stock or index, including reinvestment of dividends. Data points are the last day of each fiscal year for the Company’s common stock and each of the indexes.

	April 2015		April 2016		April 2017		April 2018		April 2019		April 2020		April 2016		April 2017		April 2018		April 2019		April 2020		April 2021
NetApp, Inc.	$	100.00	$	67.14	$	115.80	$	199.05	$	217.15	$	134.90	$	100.00	$	172.47	$	296.45	$	323.40	$	200.91	$	361.06
S&P 500 Index	$	100.00	$	99.69	$	117.55	$	134.24	$	150.80	$	148.44	$	100.00	$	117.92	$	134.66	$	151.27	$	148.91	$	223.20
S&P 500 Information Technology Index	$	100.00	$	98.39	$	133.18	$	166.85	$	203.36	$	233.12	$	100.00	$	135.36	$	169.58	$	206.69	$	236.93	$	376.88
S&P 1500 Technology Hardware & Equipment Index	$	100.00	$	80.59	$	119.36	$	138.97	$	170.23	$	194.68	$	100.00	$	148.11	$	172.45	$	211.24	$	241.57	$	429.57

We believe that a number of factors may cause the market price of our common stock to fluctuate significantly. See Item 1A. – Risk Factors.

The following table provides information with respect to the shares of common stock repurchased by us during the three months ended April ~~24, 2020:~~30, 2021:

Total Number of Shares

Approximate Dollar Value

Total Number

Average

Purchased as Part of

of Shares That May Yet

of Shares

Price Paid

Publicly Announced

Be Purchased Under The

Period

Purchased

per Share

Program

Repurchase Program

(Shares in thousands)

(Shares in thousands)

(Dollars in millions)

January 25, 2020 - February 21, 2020

1,780

$
56.18

336,816

$
539

February 22, 2020 - March 20, 2020

1,481

$
41.48

338,297

$
477

March 21, 2020 - April 24, 2020

—

$
—

338,297

$
477

Total

3,261

$
49.50

					Total Number of Shares		Approximate Dollar Value
	Total Number		Average		Purchased as Part of		of Shares That May Yet
	of Shares		Price Paid		Publicly Announced		Be Purchased Under The
Period	Purchased		per Share		Program		Repurchase Program
	(Shares in thousands)				(Shares in thousands)		(Dollars in millions)
January 30, 2021 - February 26, 2021		200	$	68.54		339,269	$	413
February 27, 2021 - March 26, 2021		525	$	67.02		339,794	$	378
March 27, 2021 - April 30, 2021		352	$	74.16		340,146	$	352
Total		1,077	$	69.63

In May 2003, our Board of Directors approved a stock repurchase program. As of April ~~24, 2020,~~30, 2021, our Board of Directors ~~has~~had authorized the repurchase of up to $13.6 billion of our common stock ~~including a $4.0 billion increase approved by~~under our ~~Board of Directors in April 2018.~~stock repurchase program, and on May 28, 2021, authorized an additional $500 million. Since inception of the program through April ~~24, 2020,~~30, 2021, we repurchased a total of ~~338~~340 million shares of our common stock for an aggregate purchase price of ~~$13.1~~$13.3 billion. Under this program, we may purchase shares of our outstanding common stock through solicited or unsolicited transactions in the open market, in privately negotiated transactions, through accelerated share repurchase programs, pursuant to a Rule 10b5-1 plan or in such other manner as deemed appropriate by our management. The stock repurchase program may be suspended or discontinued at any time, and it was suspended ~~in March 2020~~for the first half of fiscal 2021 due to the economic impact of the COVID-19 pandemic. We reinitiated our stock repurchase program in the third quarter of fiscal 2021.

~~The following selected consolidated financial data set forth below was derived from our historical audited consolidated financial statements~~Item 6. Selected Financial Data

We have elected to early adopt the amendment to Item 301 of Regulation S-K and ~~should be read~~are omitting this disclosure in conjunction with Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations and Item 8 – Financial Statements and Supplementary Data, and other financial data included elsewhere in this Annual Report on Form 10-K. Our historical results of operations are not indicative of our future results of operations.

Fiscal Year Ended

April 24, 2020

April 26, 2019

April 27, 2018 ⁽²⁾

April 28, 2017 ⁽²⁾

April 29, 2016

(In millions, except per share amounts)

Net revenues

$
5,412

$
6,146

$
5,919

$
5,491

$
5,546

Gross profit

$
3,623

$
3,945

$
3,709

$
3,364

$
3,373

Provision for income taxes ⁽¹⁾

$
125

$
99

$
1,083

$
140

$
116

Net income

$
819

$
1,169

$
116

$
481

$
229

Net income per share, basic

$
3.56

$
4.60

$
0.43

$
1.75

$
0.78

Net income per share, diluted

$
3.52

$
4.51

$
0.42

$
1.71

$
0.77

Shares used in basic computation

230

254

268

275

294

Shares used in diluted computation

233

259

276

281

297

Cash dividends declared per share

$
1.92

$
1.60

$
0.80

$
0.76

$
0.72

~~(1)~~ ~~In fiscal 2018, our provision for income taxes included significant charges attributable to United States tax reform.~~

~~(2) Fiscal 2018 and 2017 have been adjusted for our retrospective adoption of the accounting standard~~ ~~Revenue from Contracts with Customers (ASC 606)~~.reliance thereon.

The following discussion of our financial condition and results of operations should be read together with the financial statements and the accompanying notes set forth under Item 8. – Financial Statements and Supplementary Data. The following discussion also contains trend information and other forward-looking statements that involve a number of risks and uncertainties. The Risk Factors set forth in Item 1A. – Risk Factors are hereby incorporated into the discussion by reference.

NetApp is a ~~leader~~global cloud-led, data-centric software company that give organizations the freedom to put data to work in ~~hybrid cloud data services. In a world of increasing complexity, we simplify.~~the applications that elevate their business. We help our customers ~~ensure~~get the most out of their data with industry-leading cloud data services, storage systems, and ~~applications~~software. Throughout our history, we have kept our focus on one thing – the data, continuously improving how data are managed, stored, analyzed, protected, and moved. Our strategy has been shaped around helping our customers embrace the full potential of new technologies – from the rise of the internet, to helping large enterprise customers in vertical markets, to bringing new systems to market. Today, we are focused on unlocking the right place at the right time with the right characteristics and capabilities in order to achieve new insights and accelerate innovation. Only NetApp delivers everything IT organizations need to build their own unique data fabrics.best of cloud.

NetApp helps customers move from building data centers to building data ~~fabrics.~~fabrics that achieve business objectives. A data fabric simplifies the integration and orchestration of data services across clouds and on-premises to accelerate digital transformation. ~~Only~~We help organizations to get the most out of their cloud experience – whether private, public, or hybrid – by enabling IT to discover, integrate, automate, optimize, protect, and secure data and applications. NetApp ~~can deliver~~delivers the full range of capabilities organizations need for their data ~~fabrics:~~fabrics, enabling the ~~power~~business to ~~discover resources, integrate disparate~~deliver the right data and applications to the right place at the right time with the right capabilities to fuel innovation.

We bring the enterprise-grade data services ~~automate operations, optimize over time,~~our customers rely on into the cloud, and ~~protect~~the simple flexibility of cloud into the data center. Our industry-leading solutions work across diverse environments and ~~secure data everywhere.~~the world’s biggest clouds. NetApp can help a company wherever it is on its hybrid cloud journey.

~~Together with our partners, we empower organizations to unleash the full potential of their data to expand customer touchpoints, foster greater innovation and optimize their operations.~~

We focus on delivering an exceptional customer experience to become our customers’ preferred data partner. NetApp’s unique approach to data ~~services~~ enables organizations to ~~drive data-driven innovation with the cloud, build clouds~~create new customer experiences, seize every opportunity to ~~gain~~innovate, and optimize operations for cost, scale, speed, and agility ~~and modernize and simplify IT to accelerate critical business applications.~~– all while thriving in a multi-cloud world.

We employ a multichannel distribution strategy, selling products and services to end users and service providers through a direct sales force and through channel partners, including value-added resellers, system integrators, original equipment manufacturers (OEMs) and distributors.

To provide visibility into our transition from older products to our newer, higher growth products and clarity into the dynamics of our product revenue, we group our products by “Strategic” and “Mature” solutions. As our product portfolio evolves, market dynamics change, and management continues to assess our largest ~~growth~~ opportunities, we periodically change how we group ~~certain products. Beginning~~product revenue. To provide improved visibility into the value created by our software innovation and R&D investment, beginning in fiscal ~~2020, Strategic~~2021, we no longer group our products by “Strategic” and “Mature” solutions, but instead disclose the “Software” and “Hardware” components of our product revenues. The engineering DNA of NetApp and the value we provide to customers is grounded in software (particularly our ONTAP OS) and we will continue to look for opportunities to highlight and reinvest in this innovation engine. Software product revenue includes ~~all-flash array products: A-series arrays (AFF), SolidFire, and EF-series, including all related add-on hardware and operating system (OS)~~the OS software ~~NetApp HCI, StorageGrid,~~ and optional add-on software ~~products. Mature now includes hybrid and all-disk array products:~~solutions attached to our systems across our entire product set: All-Flash FAS, ~~and E-series, including all related add-on hardware and OS software, and original equipment manufacturers (OEM) products. Prior to this grouping change,~~SolidFire, EF-series, Hybrid FAS, ~~products~~E-series, NetApp HCI, and ~~E-Series were included in Strategic, while all add-on hardware and OS software were included in Mature. For comparability, Strategic and Mature~~StorageGrid. Hardware product revenues ~~presented for~~include the ~~prior year periods have been recast based on the revised groupings.~~non-software component of our systems across our entire product set.

In addition to our products and solutions, we provide a variety of services to our customers, including software ~~maintenance,~~support, hardware ~~maintenance~~support and other services including professional services, ~~global support solutions,~~ and customer education and training to help customers most effectively build their unique data fabrics and efficiently manage their data. Revenues generated by our Public Cloud Services (formerly referred to as Cloud Data ~~Services~~Services) offerings, are included in software ~~maintenance~~support revenues.

The novel coronavirus, or COVID-19, pandemic and efforts to control its spread have significantly curtailed the movement of people, goods and services worldwide, including in most or all of the regions in which we sell our products and services and conduct our business operations. We have taken precautionary measures intended to minimize the risk of the virus to our employees, our customers, and the communities in which we operate. Since March 2020, the vast majority of our employees have been working remotely and we have suspended business travel.

During ~~the fourth quarter of~~ fiscal ~~2020,~~2021, due to ~~increased~~ macroeconomic uncertainty caused by COVID-19, we ~~observed~~continued to observe certain customers delay purchases of our products and services, while other customers accelerated or placed new orders to address the

demands of remote working and digital ~~business, though on a net basis the impact to product revenues was unfavorable.~~business. We also experienced certain logistical challenges in delivering our products and services to customers in

certain regions, and minor supply chain constraints. Given recent developments in the broader technology supply chain, we have begun to invest in inventory and certain longer-term commitments to help mitigate the risk of supply shortages.

We believe our existing balances of cash, cash equivalents and investments, cash generated from operations, and ability to access capital markets and committed lines of credit will be sufficient to satisfy our working capital needs, capital expenditures, dividends, stock repurchases, required debt repayments and other liquidity requirements associated with our operations. ~~In March 2020, we suspended our stock repurchase program.~~

The magnitude and duration of the disruption to our business, and impact to our operational and financial performance, caused by COVID-19 pandemic isremain uncertain. Refer to Item 1A. – Risk Factors for the significant risks we have identified as a result of the COVID-19 pandemic.

The following table provides an overview of ~~some of our~~ key financial metrics for each of the last three fiscal years (in millions, except per share amounts and percentages):

	Year Ended									Year Ended
	April 24, 2020			April 26, 2019			April 27, 2018			April 30, 2021			April 24, 2020			April 26, 2019
Net revenues	$	5,412		$	6,146		$	5,919		$	5,744		$	5,412		$	6,146
Gross profit	$	3,623		$	3,945		$	3,709		$	3,815		$	3,623		$	3,945
Gross profit margin percentage		67	%		64	%		63	%		66	%		67	%		64	%
Income from operations	$	945		$	1,221		$	1,158		$	1,031		$	945		$	1,221
Income from operations as a percentage of net revenues		17	%		20	%		20	%		18	%		17	%		20	%
Provision for income taxes	$	125		$	99		$	1,083		$	232		$	125		$	99
Net income	$	819		$	1,169		$	116		$	730		$	819		$	1,169
Diluted net income per share	$	3.52		$	4.51		$	0.42		$	3.23		$	3.52		$	4.51
Net cash provided by operating activities	$	1,060		$	1,341		$	1,478		$	1,333		$	1,060		$	1,341

During fiscal ~~2020,~~2021, we repurchased 25approximately 2 million shares of our common stock at an average price of ~~$56.34~~$67.61 per share, for an aggregate purchase price of ~~$1.4 billion.~~$125 million. We also declared aggregate cash dividends ~~of an aggregate~~ of $1.92 per share in fiscal ~~2020,~~2021, for which we paid ~~an aggregate~~a total of ~~$439~~$427 million.

On May 23, 2019, we acquired all the outstanding shares of privately-held Cognigo Research Ltd., a provider of data discovery classification software designed to manage and protect critical data, for $53 million in cash.

~~On March 6, 2020, we acquired all the outstanding shares of privately-held Talon Storage Solutions, Inc., a provider of next generation software-defined storage solutions, for $23 million in cash.~~

On April 28, 2020, ~~in the first quarter of fiscal 2021,~~ we acquired all the outstanding shares of privately-held Cloud Jumper Corporation, a provider of virtual desktop infrastructure and remote desktop services solutions, for ~~approximately~~ $34 million in cash.

On July 9, 2020, we acquired all the outstanding shares of privately-held Spot, Inc. (Spot) for $340 million in cash. Spot is a provider of compute management cost optimization services on the public clouds and is based in Israel.

In each of the first quarter and second quarter of fiscal ~~2020,~~2021, we announced aseparate restructuring ~~plan~~plans to reduce costs and redirect resources to our highest return activities, which included a reduction in our global workforce by less than 1% and approximately 2%5%, respectively, and incurred charges of approximately ~~$21~~$5 million and $37 million, respectively, consisting primarily of employee severance costs. See Note 13 – Restructuring Charges for additional information.

In June 2020, we issued $750 million aggregate principal amount of ~~Lease Accounting Standard~~1.875% Senior Notes due 2025, $550 million aggregate principal amount of 2.375% Senior Notes due 2027 and $700 million aggregate principal amount of 2.70% Senior Notes due 2030, for which we received total proceeds of approximately $2.0 billion, net of discount and issuance costs. On July 27, 2020, we extinguished our 3.375% Senior Notes due June 2021 for an aggregate cash redemption price of $513 million, plus accrued and unpaid interest and fees.

In April 2021, we announced the sale of our corporate headquarters located in Sunnyvale, California, consisting primarily of land, buildings and improvements, for cash proceeds of $365 million. The assets sold had a net book value totaling $210 million. To facilitate an orderly transition to a new location, we executed short-term lease agreements with the buyer to lease back these properties. The agreed lease payments were below market rates and as a result we recognized an asset of $7 million for the difference between the fair value of the leases and the agreed lease payments. The cash proceeds, less direct selling costs, plus the fair value of the below-market leases resulted in a net gain on the sale of $156 million.

Contemporaneous with the sale, we executed a lease with a separate landlord for our new corporate headquarters located in San Jose, California, which is comprised of approximately three hundred thousand square feet of office space. The lease commenced in the first quarter of fiscal 2020, we adopted the new accounting standard Leases (ASC 842) using the modified retrospective approach, electing the optional transition method of not adjusting our comparative period financial statements. Adoption of the new standard resulted in the recognition2022 and requires future minimum undiscounted payments of approximately ~~$149~~$180 million ~~of operating~~over the initial 11-year lease right-of-use assets, net of deferred rent and restructuring liabilities, and $158 million of lease liabilities on our consolidated balance sheets as of the beginning of fiscal 2020. See Note 10 – Leases in the Notes to Consolidated Financial Statementsterm. It also provides us two successive renewal options, each for ~~additional information.~~

On ~~September~~ 27, 2019, we made an aggregate cash payment of $400 million to extinguish our 2.00% Senior Notes at maturity. This repayment was funded through the sale of short-term commercial paper notes issued under our existing program and cash on hand.

In September 2017, we entered into an agreement to sell certain land and buildings located in Sunnyvale, California, through two separate and independent closings, the first of which was completed in the third quarter of fiscal 2018. The remaining properties, consisting of land, were classified as assets held for sale, and included as other current assets in our consolidated balance sheets as of April 26, 2019. On August 29, 2019, the second closing occurred and we consummated the sale of the land, with a net book value of $53 million, and received cash proceeds of $96 million, resulting in a gain, net of direct selling costs, of $38 million.five years.

Our consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (GAAP), which require management to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities, net revenues and expenses, and the disclosure of contingent assets and liabilities. Our estimates are based on historical experience and various other assumptions that we believe to be reasonable under the circumstances, including the ongoing COVID-19 pandemic, the results of which form the basis for making judgments about the carrying values of assets and liabilities. We believe that the accounting estimates employed and the resulting balances are reasonable; however, actual results may differ from these estimates and such differences may be material.

The summary of significant accounting policies is included in Note 1 – Description of Business and Significant Accounting Policies of the Notes to Consolidated Financial Statements. An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, if different estimates reasonably could have been used, or if changes in the estimate that are reasonably possible could materially impact the financial statements. The accounting policies described below reflect the significant judgments, estimates and assumptions used in the preparation of the consolidated financial statements.

Our contracts with customers often include the transfer of multiple products and services to the customer. In determining the amount and timing of revenue recognition, we assess which products and services are distinct performance obligations and allocate the

transaction price, which may include fixed and/or variable amounts, among each performance obligation on a relative standalone selling price (SSP) basis. The following are the key estimates and assumptions and corresponding uncertainties included in this approach:

Inventories consist primarily of purchased components and finished goods and are stated at the lower of cost or net realizable value, which approximates actual cost on a first-in, first-out basis. A provision is recorded when inventory is determined to be in excess of anticipated demand or obsolete in order to adjust inventory to its estimated realizable value. The following are the key estimates and assumptions and corresponding uncertainties for estimating the value of our inventories:

We allocate the purchase price of acquisitions to identifiable assets acquired and liabilities assumed at their acquisition date fair values based on established valuation techniques. Goodwill represents the residual value as of the acquisition date, which in most cases is measured as the excess of the purchase consideration transferred over the net of the acquisition date fair values of the assets acquired and liabilities assumed.

The carrying values of purchased intangible assets are reviewed whenever events and circumstances indicate that the net book value of an asset may not be recovered through expected future cash flows from its use and eventual disposition. We periodically review the estimated remaining useful lives of our intangible assets. This review may result in impairment charges or shortened useful lives, resulting in charges to our consolidated statements of ~~operations.~~income.

We review goodwill for impairment annually and whenever events or changes in circumstances indicate the carrying amount of our reporting unit may exceed its fair value. The provisions of the accounting standard for goodwill allow us to first assess qualitative factors to determine whether it is necessary to perform the quantitative goodwill impairment test. For our annual goodwill impairment test in the fourth quarter of fiscal ~~2020,~~2021, we performed a quantitative test and determined the fair value of our reporting unit substantially exceeded its carrying amount, therefore, found no impairment of goodwill. To date, the impacts of the COVID-19 pandemic have not significantly adversely affected the fair value of our reporting unit.

The following are the key estimates and assumptions and corresponding uncertainties for estimating the value of our goodwill and purchased intangible assets:

Our investments in debt securities are reported at fair value and are subject to periodic impairment review. Unrealized gains and losses related to changes in the fair value of these securities are recognized in accumulated other comprehensive income, net of tax, unless they are determined to be other-than-temporary impairments. The ultimate value realized on these securities is subject to market price volatility until they are sold.

The following are the key estimates and assumptions and corresponding uncertainties for the valuation of our investment securities:

We are subject to income taxes in the United States and numerous foreign jurisdictions. We compute our provision for income taxes using the asset and liability method, under which deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating losses and tax credit carryforwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates that apply to taxable income in effect for the years in which those tax assets or liabilities are expected to be realized or settled. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.

The following are the key estimates and assumptions and corresponding uncertainties for our income taxes:

See Note 1 – Description of Business and Significant Accounting ~~policies~~Policies for the impact to our financial statements of the adoption of the accounting standard ~~Leases (ASC 842)~~update on the measurement of credit losses on financial instruments in the first quarter of fiscal ~~2020.~~2021.

See Note 2 – Recent Accounting Standards Not Yet Effective of the Notes to Consolidated Financial Statements for a full description of new accounting pronouncements, including the respective expected dates of adoption and effects on our financial statements.

Our fiscal year is reported on a 52- or 53-week year that ends 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 2021, ending on April 30, 2021 is a 53-week year, with 14 weeks included in its first quarter and 13 weeks in each subsequent quarter. Fiscal year 2020, which ended on April 24, 2020, and fiscal year 2019, which ended on April 26, 2019 ~~and fiscal year 2018, which ended on April 27, 2018,~~ were ~~all~~both 52-week years. Unless otherwise stated, references to particular years, quarters, months and periods refer to our fiscal years ended in April and the associated quarters, months and periods of those fiscal years.

The following table sets forth certain Consolidated Statements of ~~Operations~~Income data as a percentage of net revenues for the periods indicated:

	Fiscal Year												Fiscal Year
	2020				2019				2018				2021				2020				2019
Revenues:
Product		55		%		61		%		60		%		52		%		55		%		61		%
Software maintenance		19				15				15
Hardware maintenance and other services		26				24				25
Software support														22				19				15
Hardware support and other services														26				26				24
Net revenues		100				100				100				100				100				100
Cost of revenues:
Cost of product		25				29				29				25				25				29
Cost of software maintenance		1				1				—
Cost of hardware maintenance and other services		7				7				8
Cost of software support														2				1				1
Cost of hardware support and other services														7				7				7
Gross profit		67				64				63				66				67				64
Operating expenses:
Sales and marketing		29				27				29				30				29				27
Research and development		16				13				13				15				16				13
General and administrative		5				5				5				4				5				5
Restructuring charges		—				1				—				1				—				1
Acquisition-related expense														—				—				—
Gain on sale or derecognition of assets		(1	)			(1	)			(4	)			(3	)			(1	)			(1	)
Total operating expenses		49				44				43				48				49				44
Income from operations		17				20				20				18				17				20
Other income (expense), net		—				1				1
Other (expense) income, net														(1	)			—				1
Income before income taxes		17				21				20				17				17				21
Provision for income taxes		2				2				18				4				2				2
Net income		15		%		19		%		2		%		13		%		15		%		19		%

The increase in net revenues for fiscal ~~2020 were $5,412 million, a decrease of $734 million, or 12%~~2021 compared to fiscal 2019, reflecting lower product and hardware maintenance and other services revenues, partially offset by higher software maintenance revenues. Product revenues were negatively impacted by a reduction of customer demand2020 was primarily due to ~~the COVID-19 pandemic~~an increase in hardware and software support revenues, which benefited from an additional week in the ~~fourth~~first quarter of fiscal ~~2020.~~ ~~Net~~2021, while product revenues ~~for fiscal 2019~~ were ~~$6,146 million, an increase of $227 million, or 4% compared to fiscal 2018, reflecting higher product and software maintenance~~relatively flat. Product revenues ~~partially offset by slightly lower hardware maintenance and other services revenues.~~

~~Gross profit~~ as a percentage of net revenues ~~for fiscal 2020 increased~~decreased by ~~almost~~approximately three points compared to fiscal 2019, primarily as a result of software and hardware maintenance revenues representing a higher percentage of total revenues in fiscal 2020, due to the decline in product revenues, and, to a lesser extent, slightly higher gross profit margins on product revenues and hardware maintenance and other services revenues. Gross profit margins on product revenues in fiscal 2020 increased one percentage point compared to fiscal 2019, primarily due to a higher mix of AFF product sales in the current year, partially offset by a decrease in high-margin revenue recognized from the software license component of several ELAs. G~~ross profit as a percentage of net revenues for fiscal 2019 increased by one and a half~~ percentage points compared to fiscal ~~2018, reflecting higher margins on product~~2020. Fluctuations in foreign currency exchange rates benefited net revenues ~~and hardware maintenance and other services revenues.~~

~~Sales and marketing, research and development, and general and administrative expenses~~by approximately one percentage point for fiscal ~~2020 totaled $2,695 million, or 50% of net revenues, representing an increase of five percentage points~~2021 compared to fiscal ~~2019, primarily due to lower net revenues in fiscal~~ 2020. Sales and marketing, research and development, and general and administrative expenses for fiscal 2019 totaled $2,762 million, or 45% of net revenues, representing a decrease of two percentage points compared to fiscal 2018, primarily due to higher net revenues in fiscal 2019.

The decrease in net revenues for fiscal 2020 compared to fiscal 2019 was primarily due to a decrease ~~of $760 million~~ in product revenues. Product revenues as a percent of net revenues decreased six percentage points in fiscal 2020 compared to fiscal 2019.

The increase in net revenues for fiscal 2019 compared to fiscal 2018 was primarily due to an increase of $230 million in product revenues. Product revenues as a percent of net revenues increased one and a half percentage points in fiscal 2019 compared to fiscal 2018.

Sales through our indirect channels represented ~~79%~~77%, ~~76%~~79% and ~~79%~~76% of net revenues in fiscal 2021, 2020 ~~2019~~ and ~~2018,~~2019, respectively.

The following customers, each of which is a distributor, accounted for 10% or more of net revenues:

	Fiscal Year									Fiscal Year
	2020			2019			2018			2021			2020			2019
Arrow Electronics, Inc.		25	%		24	%		23	%		24	%		25	%		24	%
Tech Data Corporation		21	%		20	%		20	%		20	%		21	%		20	%

Product revenues are derived through the sale of our ~~strategic and mature~~data solutions and consist of sales of configured all-flash array and ~~Hybrid~~hybrid systems, which are bundled hardware and software products, as well as add-on flash, disk and/or hybrid storage and related OS, NetApp HCI, StorageGrid, OEM products and add-on optional software.

~~Under~~Total product revenues were relatively flat in fiscal 2021 compared to fiscal 2020, suffering from less favorable macroeconomic conditions through most of the ~~strategic and mature product groupings, as described~~current year, in part due to the economic uncertainty caused by the COVID-19 pandemic, but then improving in the ~~Executive Overview section above,~~last quarter of the year. Sales of all-flash array systems increased in the current year, though this increase was offset by a decline in sales of our other products. Fluctuations in foreign currency exchange rates benefited product revenues ~~from strategic solutions represented 60% of product revenues in~~by approximately one percentage point for fiscal ~~2020,~~2021 compared to ~~56% in~~ fiscal ~~2019. Product revenues from mature solutions represented 40% of~~2020.

~~Product~~ revenues declined in fiscal 2020 compared to ~~the prior year~~fiscal 2019 primarily due to less favorable macroeconomic conditions, ~~and~~ lower enterprise IT spending throughout fiscal 2020 and go-to-market execution issues experienced in the first quarter of fiscal 2020 with some of our largest global customer accounts. Additionally, in the fourth quarter of fiscal 2020, increasing macroeconomic uncertainty caused by the COVID-19 pandemic contributed to demand weakness, while associated logistical challenges led to delays in deliveries of products and services to certain customers.

~~Total~~As discussed in the Overview section, beginning in fiscal 2021, we disclose the software and hardware components of our product revenues. Because our revenue recognition policy under generally accepted accounting principles in the United States of America (GAAP) defines a configured storage system, inclusive of the operating system software essential to its functionality, as a single performance obligation, the hardware and software components of our product revenues are considered non-GAAP measures. The hardware and software components of our product revenues are derived from ~~strategic solutions~~an estimated fair value allocation of the transaction price of our contracts with customers, down to the level of the product hardware and software components. This allocation is primarily based on the contractual prices at which NetApp has historically billed customers for such respective components. We believe that the presentation of the software and hardware components of our product revenues is meaningful to investors and management as it illustrates the significance of the Company’s software and provides improved visibility into the value created by our software innovation and R&D investment.

Revenues from the hardware component of product revenues totaled ~~$1,806~~$1,355 million, representing 45% of product revenues, in fiscal 2021, compared to $1,541 million, representing 51% of product revenues, in fiscal 2020, ~~reflecting a 14% decrease from $2,100~~compared to $1,935 million, representing 52% of product revenues, in fiscal ~~2019, with sales~~2019. The software component of ~~most~~ product ~~types declining~~revenues totaled $1,636 million, representing 55% of product revenues, in ~~the current year. A portion~~fiscal 2021, compared to $1,454 million, representing 49% of ~~the decrease was also attributable to substantially lower~~product revenues, ~~recognized~~ in fiscal 2020, ~~related~~compared to $1,820 million, representing 48% of product revenues, in fiscal 2019. The increase in the software ~~license~~ component percentage of ~~ELAs,~~product revenues in fiscal 2021 is primarily due to a ~~significant decrease in the aggregate value~~higher mix of ~~new ELAs executed during the current year. Total product~~all-flash array systems revenues, ~~from mature solutions totaled $1,189 in fiscal 2020, reflecting~~which contain a ~~28% decrease from $1,655 million in fiscal 2019, and a decline in sales~~higher proportion of ~~most product types, including our Hybrid FAS and OEM~~software components than other products.

Total product revenues from strategic solutions totaled $2,100 million in fiscal 2019, reflecting a 23% increase from $1,709 million in fiscal 2018. This increase was primarily due to over $100 million of revenues from the software license component of several ELAs in fiscal 2019 which were recognized up-front. Comparable ELA revenues were immaterial in fiscal 2018. Revenues generated from the sale of optional add-on software unrelated to ELAs, and NetApp HCI also increased in fiscal 2019. Total product revenue from mature solutions totaled $1,655 million in fiscal 2019 reflecting a 9% decrease from $1,816 million in fiscal 2018, reflecting the movement of customers to our newer products, partially offset by an increase in add-on hardware, and related OS software revenues.

Software ~~maintenance~~support revenues are associated with contracts which entitle customers to receive unspecified product upgrades and enhancements on a when-and-if-available basis, bug fixes and patch releases, as well as internet and telephone access to technical support personnel located in our global support centers.

The growth in software ~~maintenance~~support revenues reflects higher Public Cloud Services revenue and the higher aggregate contract value of the installed base under software ~~maintenance~~support contracts, which is recognized as revenue ratably over the terms of the underlying contracts.

Software support for fiscal 2021 benefitted from the continued growth in all-flash array product sales, as all-flash systems carry a higher support dollar content than our other products. Software support revenues were also favorably impacted by the additional week of deferred revenue amortization in the first quarter of fiscal 2021, which contributed approximately $20 million of additional revenues.

Hardware ~~Maintenance~~Support and Other Services Revenues (in millions, except percentages):

Hardware ~~maintenance~~support and other services revenues include hardware ~~maintenance,~~support, professional services and educational and training services revenues.

Hardware ~~maintenance~~support contract revenues were $1,195 million, $1,142 million ~~$1,182 million~~ and ~~$1,214~~$1,182 million in fiscal 2021, 2020 and 2019, respectively. The increase in fiscal 2021 is primarily due to the additional week in the first quarter of fiscal 2021, which contributed approximately $20 million of additional revenues, and ~~2018, respectively, reflecting a year over year~~an increase in our installed base. The decrease ~~of 4% and 3%~~ in fiscal 2020 ~~and fiscal 2019, respectively. These decreases were~~was primarily attributable to a decline in average selling price ~~(ASP)~~ on contracts executed during ~~those years, as well as lower contract renewal rates in fiscal 2019.~~the year.

Professional services and educational and training services revenues were $277 million, $241 million ~~$263 million~~ and ~~$278~~$263 million in fiscal 2021, 2020 ~~2019~~ and ~~2018,~~2019, respectively.

	Fiscal Year									Fiscal Year
	2020			2019			2018			2021			2020			2019
United States, Canada and Latin America (Americas)		53	%		56	%		54	%		54	%		53	%		56	%
Europe, Middle East and Africa (EMEA)		32	%		30	%		32	%		31	%		32	%		30	%
Asia Pacific (APAC)		15	%		14	%		14	%		15	%		15	%		14	%

Americas revenues consist of sales to Americas commercial and United States (U.S.) public sector markets. Demand across geographies was relatively consistent in fiscal 2021 compared to fiscal 2020. During fiscal 2020, Americas revenues were negatively impacted by general macroeconomic conditions in the region and go-to-market execution issues with some of our largest customer accounts in the first quarter of fiscal 2020, which was reflected in the geographic distribution of revenues as a percentage of net revenues in fiscal 2020 compared to fiscal 2019. During fiscal 2019, Americas revenues as a percentage of net revenues increased, reflecting higher product revenues due in part to several large ELAs, while EMEA revenues decreased slightly, primarily reflecting the unfavorable impact of foreign exchange rate fluctuations.

Our cost of revenues consists of three elements: (1) cost of product revenues, which includes the costs of manufacturing and shipping our storage products, amortization of purchased intangible assets, inventory write-downs, and warranty costs, (2) cost of software ~~maintenance,~~support, which includes the costs of providing software ~~maintenance~~support and third-party royalty costs and (3) cost of hardware ~~maintenance~~support and other services revenues, which includes costs associated with providing support activities for hardware ~~maintenance,~~support, global support partnership programs, professional services and educational and training services.

The changes in cost of product revenues consisted of the following (in percentage points of the total change):

	Fiscal 2020 to Fiscal 2019			Fiscal 2019 to Fiscal 2018
	Percentage Change Points			Percentage Change Points		Fiscal 2021 to Fiscal 2020			Fiscal 2020 to Fiscal 2019
Materials costs		(22	)		—		7			(22	)
Other		—			1
Excess and obsolete inventory							(1	)		—
Warranty							(1	)		—
Total change		(22	)		1		5			(22	)

Cost of product revenues represented ~~46%~~48%, ~~47%~~46% and ~~49%~~47% of product revenues for fiscal 2021, 2020 ~~2019~~ and ~~2018,~~2019, respectively. Materials cost represented ~~86%~~89%, ~~90%~~86% and ~~91%~~90% of product costs for fiscal 2021, 2020 and 2019, respectively.

Total materials costs increased by approximately $96 million in fiscal 2021 compared to fiscal 2020. The trend in product mix toward all-flash array systems, which have higher margins, but carry higher materials costs, than hybrid systems, was the primary driver of these increases. Excess and ~~2018, respectively.~~obsolete inventory reserves and warranty expenses were lower in fiscal 2021 compared to fiscal 2020.

Product gross margins in fiscal 2021 decreased by two percentage points compared to fiscal 2020 primarily due to a decrease in the average selling prices of most of our products, partially offset by a higher mix of all-flash array product sales.

Materials costs decreased $393 million in fiscal 2020 compared to fiscal 2019, primarily due to a decline in product revenue and, to a lesser extent, a decline in the price of certain product components. ~~Margins on~~

Product gross margins in fiscal 2020 increased one percentage point compared to fiscal 2019, primarily due to a higher mix of all-flash array product sales in fiscal 2020, partially offset by a decrease in high-margin revenue recognized from the software license component of several enterprise license agreements.

Cost of software support revenues increased in fiscal 2021 compared to fiscal 2020, reflecting the increase in Public Cloud Services revenue and an increase in amortization expense for ~~strategic solutions were higher~~acquired developed technology. Cost of software support revenues increased in fiscal 2020 compared to fiscal 2019, ~~reflecting a decrease~~ in line with the ~~average unit materials cost of AFF systems, partially offset by less high-margin revenue related to the~~increase in software license components of several ELAs. Margins on revenue recognized for mature solutions were relatively flat in fiscal 2020 compared to fiscal 2019, as the benefit from lower average unit materials costs of FAS Hybrid systems was offset by lower average selling prices.

Materials costs decreased $5 million in fiscal 2019 compared to fiscal 2018, primarily due to a decline in the price of certain product components. The average unit materials costs of our systems decreased slightly in fiscal 2019 compared to fiscal 2018. Margins on revenue recognized for strategic solutions were higher in fiscal 2019 compared to fiscal 2018 primarily due to the benefit of high margins realized on the software license components of several ELAs, and, to a lesser extent, higher ASPs. Margins for mature products also increased slightly in fiscal 2019. Foreign exchange rate fluctuations resulted in a slight unfavorable impact to margins in fiscal 2019.

support revenues. Cost of software ~~maintenance~~support revenues represented 5%7%, 4%5% and 3%4% of software ~~maintenance~~support revenues for fiscal 2021, 2020 ~~2019~~ and ~~2018,~~2019, respectively.

Cost of Hardware ~~Maintenance~~Support and Other Services Revenues (in millions, except percentages):

Cost of hardware ~~maintenance~~support and other services revenues increased in fiscal 2021 compared to fiscal 2020, in line with the increase in hardware support and other services revenues. Cost of hardware support and other services revenues decreased ~~$41 million, or 10%,~~ in fiscal 2020 compared to fiscal 2019, ~~and decreased $33 million, or 7%, in fiscal 2019 compared to fiscal 2018,~~ primarily due to the favorable impact of cost savings initiatives, and the decrease in hardware ~~maintenance~~support and other services revenues. Costs represented 27%, ~~29%~~27% and ~~30%~~29% of hardware ~~maintenance~~support and other services revenues for fiscal 2021, 2020 and 2019, ~~and 2018,~~ respectively.

Sales and Marketing, Research and Development and General and Administrative Expenses

Sales and marketing, research and development, and general and administrative expenses for fiscal 2021 totaled $2,882 million, or 50% of net revenues, remaining relatively flat in percentage points as compared to fiscal 2020. Sales and marketing, research and development, and general and administrative expenses for fiscal 2020 totaled $2,695 million, or 50% of net revenues, representing an increase of five percentage points compared to fiscal 2019, primarily due to lower net revenues in fiscal 2020.

Compensation costs represent the largest component of operating expenses. Included in compensation costs are salaries, benefits, other compensation-related costs, stock-based compensation expense and employee incentive compensation plan costs.

Total compensation costs included in operating expenses increased by $225 million, or 15% during fiscal 2021 compared to fiscal 2020, primarily reflecting higher incentive compensation expense, a 3% increase in average headcount and the impact of one additional week in the first quarter of fiscal 2021.

Total compensation costs included in operating expenses decreased $22 million, or 1% during fiscal 2020 compared to fiscal 2019, primarily due to lower incentive compensation expenses, ~~reflecting lower operating performance against goals,~~ partially offset by higher salaries, reflecting a 3% increase in average headcount.

Total compensation costs included in operating expenses decreased $15 million, or 1% during fiscal 2019 compared to fiscal 2018, primarily due to lower incentive compensation expenses reflecting lower operating performance against goals, and, to a lesser extent, the favorable impact of foreign exchange rate fluctuations, partially offset by higher salaries and benefits expense, reflecting a slight increase in average headcount.

Sales and marketing expenses consist primarily of compensation costs, commissions, outside services, ~~allocated~~ facilities and IT support costs, advertising and marketing promotional expense and travel and entertainment expense. The changes in sales and marketing expenses consisted of the ~~following:~~following (in percentage points of the total change):

	Fiscal 2020 to Fiscal 2019			Fiscal 2019 to Fiscal 2018
	Percentage Change Points			Percentage Change Points			Fiscal 2021 to Fiscal 2020			Fiscal 2020 to Fiscal 2019
Compensation costs		(1	)		(2	)		9			(1	)
Commissions		(2	)		—			3			(2	)
Facilities and IT support costs		—			(1	)
Advertising and marketing promotional expense								1			—
Travel and entertainment								(4	)		—
Other		(1	)		—			1			(1	)
Total change		(4	)		(3	)		10			(4	)

The increase in compensation costs in fiscal 2021 compared to fiscal 2020 reflected an increase in average headcount of 7%, with this expansion of our sales and marketing teams supporting our ability to execute on key market opportunities. Compensation costs for fiscal 2021 also reflected the impact of one additional week in the first quarter.

The increase in commissions expense for fiscal 2021 is primarily due to higher performance against sales goals than in fiscal 2020. Advertising and marketing promotional expense increased in fiscal 2021 compared to fiscal 2020, primarily due to higher spending levels on certain projects. Travel and entertainment spend decreased significantly due to the ongoing COVID-19 pandemic.

The decrease in compensation costs in fiscal 2020 compared to fiscal 2019 reflects a slight reduction in average headcount, while the decrease in commissions expense was primarily due to lower performance against sales goals. We incurred $3 million of non-recurring expenses in fiscal 2020, primarily due to the cancellation of a major sales event, as a direct result of the COVID-19 pandemic.

The decrease in compensation costs in fiscal 2019 compared to fiscal 2018 reflects a slight reduction in average headcount and, to a lesser extent, the favorable impact of foreign exchange rate fluctuations. Facilities and IT support costs decreased during fiscal 2019 primarily due to cost containment efforts.

Research and development expenses consist primarily of compensation costs, ~~allocated~~ facilities and IT support costs, depreciation, equipment and software related costs, prototypes, non-recurring engineering charges and other outside services costs. Changes in research and development expense consisted of the ~~following:~~following (in percentage points of the total change):

	Fiscal 2020 to Fiscal 2019		Fiscal 2019 to Fiscal 2018
	Percentage Change Points		Percentage Change Points		Fiscal 2021 to Fiscal 2020			Fiscal 2020 to Fiscal 2019
Compensation costs		2		3		7			2
Development projects and outside services		—		1		(1	)		—
Facilities and IT support costs		—		2		(1	)		—
Travel and entertainment						(1	)		—
Total change		2		6		4			2

The ~~increases~~increase in compensation costs during fiscal 2021 compared to fiscal 2020 was primarily due to higher incentive compensation expense, while average headcount was relatively consistent in each period. Compensation costs for fiscal 2021 also reflected the impact of one additional week in the first quarter. The decrease in development projects and outside services was primarily due to the lower spending on certain engineering projects. The decrease in facilities and IT support costs was primarily due to cost containment efforts, and lower travel and entertainment expense was due to the impact of the ongoing COVID-19 pandemic.

The increase in compensation costs during fiscal 2020 ~~and~~compared to fiscal 2019 ~~compared to the respective prior years, were~~was attributable to ~~increases~~an increase in average headcount of 8% ~~and 7%~~, ~~respectively,~~ resulting in higher salaries and benefits expense. ~~These increases were~~This increase was partially offset by lower incentive compensation plan ~~expense, though to a greater degree in fiscal 2020 than in fiscal 2019.~~expense. The

average headcount increase in ~~each year reflects~~fiscal 2020 reflected our ~~ongoing~~ investment in additional engineering resources to support the expansion and enhancement of products and solutions targeted at our most important customer and market opportunities.

~~Facilities and IT support costs increased in fiscal 2019 in connection with the increase in average headcount, while in fiscal 2020 incremental projects were not funded in an effort to contain costs.~~

Development projects and outside services expense increased in fiscal 2019 compared to fiscal 2018 as a result of higher spending on materials and services associated with engineering activities to develop new products and enhance the existing portfolio.

General and administrative expenses consist primarily of compensation costs, professional and corporate legal fees, outside services and ~~allocated~~ facilities and IT support costs. Changes in general and administrative expense consisted of the ~~following:~~following (in percentage points of total change):

	Fiscal 2020 to Fiscal 2019			Fiscal 2019 to Fiscal 2018
	Percentage Change Points			Percentage Change Points			Fiscal 2021 to Fiscal 2020			Fiscal 2020 to Fiscal 2019
Compensation costs		(7	)		(3	)		9			(7	)
Professional and legal fees and outside services		5			1			(14	)		5
Litigation settlement								2			—
Facilities and IT support costs		(3	)		—			1			(3	)
Other		—			1
Total change		(5	)		(1	)		(2	)		(5	)

The ~~decreases~~increase in compensation costs ~~for~~in fiscal 2021 compared to fiscal 2020 was primarily due to higher incentive compensation expense, while average headcount was relatively consistent in each period. The decrease in professional and legal fees and outside services expense in fiscal 2021 was primarily due to lower spending on business transformation projects in the current year. The increase in facilities and IT support costs was primarily due to higher spending levels on IT projects. During the second quarter of fiscal 2021, we incurred a litigation settlement charge of approximately $5 million that was included in general and administrative expenses in our consolidated statements of income.

The decrease in compensation costs in fiscal 2020 compared to fiscal 2019 ~~compared to the respective prior years, were~~was primarily attributable to lower incentive compensation plan expense and ~~for fiscal 2020,~~ lower stock-based compensation expense. While average headcount increased in ~~both~~ fiscal 2020 ~~and~~compared to fiscal 2019, salaries and benefits expense remained relatively flat as a greater percentage of employees were located in lower cost geographies.

The ~~increases~~increase in professional and legal fees and outside services expense in fiscal 2020 ~~and~~compared to fiscal 2019 ~~were~~was due to higher spending levels on projects and outside services.

The decrease in facilities and IT support costs in fiscal 2020 compared to fiscal 2019 was primarily due to lower spending levels on IT projects.

In an effort to reduce our cost structure and redirect resources to our highest return activities, in fiscal years 2021, 2020 and 2019, we initiated a number of business realignment plans designed to streamline our business and focus on key strategic opportunities, resulting in aggregate reductions of our global workforce of approximately 6% in fiscal 2021, 2% in fiscal 2020 and less than 3% in fiscal 2019, for which we recognized aggregate charges of $42 million, $21 million and $35 million, respectively, consisting primarily of employee severance costs. See Note 13 – Restructuring Charges of the Notes to Consolidated Financial Statements for more details regarding our restructuring plans.

During fiscal 2021, we incurred $16 million of acquisition-related costs, primarily legal and consulting fees associated with our acquisition and subsequent integration of Spot Inc.

In ~~September 2017,~~April 2021, we ~~entered into~~sold certain land and buildings located in Sunnyvale, California with an agreement to sell certain properties for a total of $306 million, through two separate and independent closings. During fiscal 2018, the first closing occurred, and we consummated the sale of properties with aaggregate net book value of ~~$66~~$210 million ~~for~~and received cash proceeds of ~~$210~~$365 million, resulting in a gain, net of direct selling ~~costs,~~cost, and adjusted for below-market rent, of ~~$142~~$156 million. ~~During~~

In September 2017, we entered into an agreement to sell certain land and buildings located in Sunnyvale, California, through two separate and independent closings, the first

~~quarter~~ of which was completed in fiscal ~~2020,~~2018. On August 29, 2019, the second closing occurred and we consummated the sale of the land, with a net book value of $53 million, and received cash proceeds of $96 million, resulting in a gain, net of direct selling costs, of $38 million.

In addition, during fiscal 2018, our continuing involvement with properties subject to a sale-leaseback arrangement entered into in fiscal 2016 ended, and as a result we recorded non-cash sales of properties, extinguished the associated financing obligations and recognized gains of $76 million.

In February 2019, we contributed cash and other assets with a total book value of $7 million to a newly formed joint venture with Lenovo in exchange for a non-controlling 49% equity interest in the new entity, Lenovo NetApp Technology Limited (“LNTL”). The value of our equity interest was $80 million, resulting in a gain of $73 million in fiscal 2019.

	Fiscal Year															Fiscal Year
	2020			2019			% Change			2018			% Change			2021			2020			% Change			2019			% Change
Interest income	$	48		$	88			(45	)%	$	79			11	%	$	9		$	48			(81	)%	$	88			(45	)%
Interest expense		(55	)		(58	)		(5	)%		(62	)		(6	)%		(74	)		(55	)		35	%		(58	)		(5	)%
Other income, net		6			17			(65	)%		24			(29	)%
Other (expense) income, net																	(4	)		6			(167	)%		17			(65	)%
Total	$	(1	)	$	47		NM			$	41			15	%	$	(69	)	$	(1	)	NM			$	47		NM

Interest income decreased during fiscal 2021 compared to fiscal 2020 due to both a reduction in the size of our investment portfolio and lower yields earned on the investments. Interest income decreased during fiscal 2020 compared to fiscal 2019, primarily due to a reduction in the size of our investment portfolio as a result of our sale of approximately $1.0 billion of available-for-sale debt securities in the first quarter of fiscal 2020 and net maturities over the remainder of the year.

Interest ~~income~~expense increased during fiscal ~~2019~~2021 compared to fiscal ~~2018, primarily due to a shift~~2020, as we issued Senior Notes in ~~our investment portfolio to higher-yielding investments,~~aggregate principal amount of $2.0 billion in the first quarter of fiscal 2021. The impact from the issuance of these Senior Notes was partially offset by ~~a decrease~~the extinguishment of our Senior Notes due June 2021 in the ~~size~~first quarter of ~~the portfolio.~~

fiscal 2021, and a lower average outstanding commercial paper balance during fiscal 2021. Interest expense remained relatively flat in fiscal 2020 compared to fiscal 2019 as we repaid our maturing Senior Notes, but increased our average outstanding commercial paper balance. ~~Interest expense decreased slightly during~~

In fiscal ~~2019 compared to fiscal 2018, primarily~~2021, other (expense) income, net includes a $6 million gain recognized on our sale of a minority equity interest in a privately held company for proceeds of approximately $8 million. This benefit was more than offset by a $14 million loss recognized from the extinguishment of our Senior Notes due ~~to a reduction~~June 2021 in the ~~average amount~~first quarter of ~~interest-bearing debt outstanding.~~fiscal 2021.

Other (expense) income, net decreased during fiscal 2020 compared to fiscal 2019, primarily due to a $10 million impairment of our equity method investment in LNTL and the net unfavorable impact of foreign exchange rate fluctuations in fiscal 2020, partially offset by a $14 million gain we realized from the sale of approximately $1.0 billion of available-for-sale debt securities. ~~The decrease in other income, net during fiscal 2019 compared to fiscal 2018 was primarily attributable to differences in net foreign exchange gains.~~

Our effective tax rate for fiscal ~~2020~~2021 was ~~13.2%~~24.1% compared to an effective tax rate of ~~7.8%~~13.2% for fiscal 2019, and an effective tax rate of 90.3% for fiscal 2018. Our effective tax rates reflect the impact of a significant amount of our earnings, primarily income from our European operations, being taxed in foreign jurisdictions at rates below the U.S. statutory tax rate.2020. Our effective tax rate for fiscal ~~2020~~2021 was higher than the prior year primarily due to the impact of taxes resulting from the integration of acquired companies

and a shift in jurisdictional mix of income resulting in a lower foreign rate ~~differential, a higher global minimum tax on intangible income (GMT) provision, and reduced benefit attributable to stock-based compensation.~~

~~Key components of~~differential. Additionally, the ~~effective tax rate of 13.2% in~~ fiscal 2020 tax provision included a benefit of $61 million, or 6.4 percentage points, related to the lapse of statutes of limitations, an expense of $32 million, or 3.4 percentage points, for GMT, a benefit of $40 million, or 4.2 percentage points, from foreign profits taxed at effective tax rates lower than the U.S. federal statutory rate of 21%, a benefit of $16 million, or 1.7 percentage points, from the generation of federal research credits, an expense of $15 million, or 1.6 percentage points, related to transition tax adjustments, and a benefit of $4 million, or 0.4 percentage points, attributable to stock-based compensation.

Key components of the effective tax rate of 7.8% in fiscal 2019 included a benefit of $84 million, or 6.6 percentage points, from foreign profits taxed at effective tax rates lower than the U.S. federal statutory rate of 21%, a benefit of $48 million, or 3.8 percentage points, related to the effects on the resolution of certain income tax examinations, a benefit of $19 million, or 1.5 percentage points, attributable to stock-based compensation, and a benefit of $17 million, or 1.3 percentage points, from the generation of federal research credits.

Key components of the effective tax rate of 90.3% in fiscal 2018 included a one-time transition tax charge on accumulated foreign earnings of approximately $732 million, or 61.0 percentage points, a charge of $108 million, or 9.0 percentage points, related to the remeasurement of deferred tax assets and liabilities due to tax rate changes, offset by a benefit of $108 million, or 9.0 percentage points, from foreign profits taxed at effective tax rates lower than our blended U.S. federal statutory rate of 30.5%, and a tax benefit of $23 million, or 1.9 percentage points, attributable to stock-based compensation.

~~During fiscal 2020, we recognized a discrete~~ benefit of $61 million related to the lapse of ~~statutes~~statute of limitations ~~on our~~compared to a benefit of $6 million recognized in fiscal ~~2014 and 2015 federal income~~2021. Our effective tax ~~returns. During~~rate for fiscal 2019 ~~we recognized a discrete benefit~~ of ~~$48 million arising from the~~7.8% was lower than fiscal 2020 as it included larger benefits related to foreign profits taxed at effective settlement of an Internal Revenue Service audit for fiscal 2012 and fiscal 2013. In addition, we are effectively subject to federal tax examination adjustments for tax years ended on or after fiscal 2001, in that we have carryforward attributes from these years that could be subject to adjustment in the tax years of utilization.

~~On December 22, 2017, the Tax Cuts and Jobs Act (TCJA) was enacted into law. The TCJA made significant changes to the U.S. corporate income tax system including a reduction of~~rates lower than the U.S. federal corporate income tax rate from 35% to 21%, the imposition of a one-time transition tax on deferred foreign earnings, and the creation of new taxes on certain foreign-sourced earnings. ASC 740, Income Taxes, requires companies to recognize the effect of the tax law changes in the period of enactment. However, the SEC staff issued Staff Accounting Bulletin 118, which allowed companies to record provisional amounts during a measurement period not to extend beyond one year from the TCJA enactment date.

~~As a result of the U.S. federal corporate income tax rate change, effective~~statutory rates as of January 1, 2018, we remeasured our deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future periods. During fiscal 2018, we recorded $108 million of tax expensewell as larger benefits related to all tax rate changes. Upon finalization of our provisional estimates during the third quarter of fiscal 2019, we recorded tax expense of $6 million related to deferred tax assets for equity-based compensation awards to our executives.

The TCJA imposed a mandatory, one-time transition tax on accumulated foreign earnings and profits not previously subject to U.S. income tax at a rate of 15.5% on earnings to the extent of foreign cash and other liquid assets, and 8% on the remaining earnings. In fiscal 2018, we recorded a $732 million discrete tax expense for the estimated U.S. federal and state income tax impacts of the transition tax. In the third quarter of fiscal 2019, we finalized our computation of the transition tax and recorded a reduction of $5 million to our provisional estimate.

Under the TCJA, the GMT provisions impose a tax on foreign income in excess of a deemed return on tangible assets of foreign corporations. Under U.S. GAAP, companies are allowed to make an accounting policy election to either (i) account for GMT as a component of tax expense in the period in which a company is subject to the rules, or (ii) account for GMT in a company’s measurement of deferred taxes. We have elected to recognize the GMT as a period cost and thus recorded $32 million and $22 million of tax expense for federal and state impacts for fiscal 2020 and fiscal 2019, respectively.stock-based compensation.

(In millions, except percentages)

April 24,

2020

April 26,

2019

April 30,

2021

April 24,

2020

Cash, cash equivalents and short-term investments

2,882

3,899

4,596

2,882

Principal amount of debt

1,673

1,799

2,650

1,673

	Fiscal Year						Fiscal Year
(In millions)	2020			2019			2021		2020
Net cash provided by operating activities	$	1,060		$	1,341		$	1,333	$	1,060
Net cash provided by investing activities		1,269			704			21		1,269
Net cash used in financing activities		(1,960	)		(2,631	)
Net cash provided by (used in) financing activities								444		(1,960	)
Effect of exchange rate changes on cash, cash equivalents and restricted cash		(34	)		(30	)		71		(34	)
Net increase (decrease) in cash, cash equivalents and restricted cash	$	335		$	(616	)
Net increase in cash, cash equivalents and restricted cash							$	1,869	$	335

As of April ~~24, 2020,~~30, 2021, our cash, cash equivalents and short-term investments totaled ~~$2.9~~$4.6 billion, reflecting ~~a decrease~~an increase of ~~$1.0~~$1.7 billion from April ~~26, 2019.~~24, 2020. The ~~decrease~~increase was primarily due to ~~$1.4~~$2.0 billion ~~paid~~of net proceeds from the issuance of Senior Notes, $1.3 billion of cash provided by operating activities and $365 million proceeds from the sale of properties in Sunnyvale, California, partially offset by $513 million used for the ~~repurchase~~extinguishment of our ~~common stock, $439~~Senior Notes due June 2021, $420 million used for the net repayment of commercial paper notes with original maturities of three months or less, $350 million used for the acquisitions of two privately-held companies, $427 million used for the payment of dividends, ~~$400 million used for the repayment of our Senior Notes due September 2019, and $124~~$162 million in purchases of property and equipment ~~partially offset by $273~~and $125 million ~~in proceeds from the issuance~~used to repurchase shares of ~~commercial paper notes, net, $96 million in proceeds from the sale of properties and $1.1 billion of cash provided by operating activities.~~our common stock. Working capital ~~decreased~~increased by ~~$1.0~~$1.9 billion to ~~$0.7~~$2.5 billion as of April 30, 2021 compared to April 24, 2020 primarily due to the ~~decreases~~increases in cash, cash equivalents and short-term investments discussed above.

During fiscal 2021, we generated cash from operating activities of $1.3 billion, reflecting net income of $730 million, adjusted by adding non-cash depreciation and amortization expense of $207 million and non-cash stock-based compensation expense of $197 million and subtracting the gain on sale or derecognition of assets of $156 million.

Significant changes in assets and liabilities during fiscal 2021 included the following:

During fiscal 2020, we generated cash from operating activities of $1.1 billion, reflecting net income of $819 million, adjusted by adding non-cash depreciation and amortization expense of $193 million and non-cash stock-based compensation expense of $153 million and asubtracting the gain on derecognition of assets of $38 million.

~~Changes~~Significant changes in assets and liabilities during fiscal 2020 included the following:

During fiscal 2019, we generated cash from operating activities of $1.3 billion, reflecting net income of $1.2 billion, adjusted by non-cash depreciation and amortization of $197 million, stock-based compensation of $158 million and a gain on derecognition of assets of $73 million.47

~~Changes in assets and liabilities during fiscal 2019 included the following:~~

We expect that cash provided by operating activities may materially fluctuate in future periods due to a number of factors, including fluctuations in our operating results, shipment linearity, accounts receivable collections performance, inventory and supply chain management, vendor payment initiatives, tax benefits or charges from stock-based compensation, and the timing and amount of compensation and other payments.

During fiscal 2021, we generated $365 million from the sale of properties located in Sunnyvale, California and $160 million from maturities and sales of investments in available-for-sale debt securities, net of purchases. We paid $350 million to acquire two privately-held companies and $162 million for capital expenditures.

During fiscal 2020, we generated $1.4 billion from maturities and sales of investments in available-for-sale debt securities, net of purchases and paid $124 million for capital expenditures. Additionally, we received $96 million for the sale of land in Sunnyvale, California and paid $73 million to acquire two privately-held companies.

~~During fiscal 2019, we generated $876 million from maturities and sales of investments, net of purchases, and paid $173 million for capital expenditures.~~

During fiscal 2021, we received $2.0 billion from the issuance of Senior Notes, which was partially offset by the use of $513 million for the extinguishment of our Senior Notes due June 2021, $420 million for the net repayment of commercial paper notes with original maturities of three months or less, $427 million for the payment of dividends, and $125 million for the repurchase of two million shares of our common stock.

During fiscal 2020, we used $1.4 billion for the purchase of 25 million shares of our common stock, $439 million for the payment of dividends and $400 million for the repayment of our Senior Notes due September ~~2019,~~2019. These purchases and payments were partially offset by $273 million in proceeds from the issuance of commercial paper notes, net and $102 million in proceeds from the issuance of common stock under employee common stock award ~~plans.~~

During fiscal 2019, we used $2.1 billion for the repurchase of 29 million shares of our common stock, $403 million for the payment of dividends, and $136 million for the repayment of commercial paper notes, net, partially offset by $121 million in proceeds from issuance of common stock under employee stock purchase plans.

Key factors that could affect our cash flows include changes in our revenue mix and profitability, our ability to effectively manage our working capital, in particular, accounts receivable, accounts payable and inventories, the timing and amount of stock repurchases and payment of cash dividends, the impact of foreign exchange rate changes, our ability to effectively integrate acquired products, businesses and technologies, and the timing of repayments of our debt. Based on past performance and our current business outlook, we believe that our sources of liquidity, including ~~potential future issuances of debt, equity or other securities,~~cash generated from operations, and our ability to access capital markets and committed credit lines will satisfy our working capital needs, capital expenditures, investment requirements, stock repurchases, cash dividends, contractual obligations, commitments, principal and interest payments on our debt and other liquidity requirements associated with operations and meet our cash requirements for at least the next 12 months. However, in the event our liquidity is insufficient, we may be required to curtail spending and implement additional cost saving measures and restructuring actions or enter into new financing arrangements. We cannot be certain that we will continue to generate cash flows at or above current levels or that we will be able to obtain additional financing, if necessary, on satisfactory terms, if at all. For further discussion of factors that could affect our cash flows and liquidity requirements, including the impact of the COVID-19 pandemic, see Item 1A. Risk Factors.

Our principal sources of liquidity as of April ~~24, 2020~~30, 2021 consisted of cash, cash equivalents and short-term investments, cash we expect to generate from operations, and our commercial paper program and related credit facility.

Cash, cash equivalents and short-term investments consisted of the following (in millions):

	April 24, 2020		April 26, 2019		April 30, 2021		April 24, 2020
Cash and cash equivalents	$	2,658	$	2,325	$	4,529	$	2,658
Short-term investments		224		1,574		67		224
Total	$	2,882	$	3,899	$	4,596	$	2,882

As of April 30, 2021 and April 24, 2020, ~~and April 26, 2019,~~ $2.5 billion ~~and $3.7 billion, respectively,~~ of cash, cash equivalents and short-term investments were held by various foreign subsidiaries and were generally based in U.S. dollar-denominated holdings, while ~~$0.4~~$2.1 billion and ~~$0.2~~$0.4 billion, respectively, were available in the U.S. The ~~TCJA~~Tax Cuts and Jobs Act (TCJA) enacted into law in December 2017 imposed a one-time transition tax on substantially all accumulated foreign earnings through December 31, 2017, and generally allows companies to make distributions of foreign earnings without incurring additional federal taxes. As a part of the recognition of the impacts of the TCJA, we ~~have~~ reviewed our projected global cash requirements and ~~have~~ determined that certain historical and future foreign earnings ~~will~~were no longer be indefinitely reinvested.

Our principal liquidity requirements are primarily to meet our working capital needs, support ongoing business activities, fund research and development, meet capital expenditure needs, invest in critical or complementary technologies through asset purchases and/or business acquisitions, service interest and principal payments on our debt, fund our stock repurchase program, and pay dividends, as and if declared and invest in critical and complimentary technologies through asset purchases and or business acquisitions, including our recently announced definitive agreement to acquire Spot Inc. a provider of compute management and cost optimization services on the public clouds. For more information, see Note 19 – Subsequent Events of the Notes to Consolidated Financial Statements.declared.

The principal objectives of our investment policy are the preservation of principal and maintenance of liquidity. We attempt to mitigate default risk by investing in high-quality investment grade securities, limiting the time to maturity and monitoring the counter-parties and underlying obligors closely. We believe our cash equivalents and short-term investments are liquid and accessible. We are not aware of any significant deterioration in the fair value of our cash equivalents or investments from the values reported as of April ~~24, 2020.~~30, 2021.

Our investment portfolio has been and will continue to be exposed to market risk due to trends in the credit and capital markets. We continue to closely monitor current economic and market events to minimize the market risk of our investment portfolio. We routinely monitor our financial exposure to both sovereign and non-sovereign borrowers and counterparties. We utilize a variety of planning and financing strategies in an effort to ensure our worldwide cash is available when and where it is needed. ~~Based on past performance~~

and current expectations, we believe our cash and cash equivalents, investments, cash generated from operations, and ability to access capital markets and committed credit lines will satisfy, through at least the next 12 months, our liquidity requirements, both in total and domestically, including the following: working capital needs, capital expenditures, business acquisitions, stock repurchases, cash dividends, contractual obligations, commitments, principal and interest payments on debt, and other liquidity requirements associated with our operations. We also have an automatic shelf registration statement on file with the Securities and Exchange Commission (SEC). We may in the future offer an additional unspecified amount of debt, equity and other securities.

The following table summarizes the principal amount of our Senior Notes as of April ~~24, 2020~~30, 2021 (in millions):

3.375% Senior Notes Due June 2021	$	500
3.25% Senior Notes Due December 2022		250	$	250
3.30% Senior Notes Due September 2024		400		400
1.875% Senior Notes Due June 2025				750
2.375% Senior Notes Due June 2027				550
2.70% Senior Notes Due June 2030				700
Total	$	1,150	$	2,650

Interest on the Senior Notes is payable semi-annually. For further information on the underlying terms, see Note 9 – Financing Arrangements of the Notes to Consolidated Financial Statements.

We have a commercial paper program (the Program), under which we may issue unsecured commercial paper notes. Amounts available under the Program may be borrowed, repaid and re-borrowed, with the aggregate face or principal amount of the notes outstanding under the program at any time not to exceed $1.0 billion. The maturities of the notes can vary, but may not exceed 397 days from the date of issue. The notes are sold under customary terms in the commercial paper market and may be issued at a discount from par or, alternatively, may be sold at par and bear interest at rates dictated by market conditions at the time of their issuance. The proceeds from the issuance of the notes are used for general corporate purposes. ~~As of April 24, 2020, we had~~No commercial paper notes were outstanding ~~with an aggregate principal amount~~as of ~~$523 million, a weighted-average interest rate of 2.01% and maturities primarily less than three months.~~April 30, 2021.

In connection with the Program, we have a senior unsecured credit agreement ~~that expires on December 10, 2021.~~ with a syndicated group of lenders. The credit agreement, which was amended on January 22, 2021, provides for a $1.0 billion revolving unsecured credit facility, ~~that serves as~~with a ~~back-up~~sublimit of $50 million available for the ~~Program. Proceeds from the facility may also be used for general corporate purposes, providing another potential source~~issuance of ~~liquidity to the extent that the~~letters of credit on our behalf. The credit facility ~~exceeds the outstanding debt issued under the Program. The credit agreement also includes options that allow~~matures on January 22, 2026, with an option for us to ~~request an increase in~~extend the ~~facility of up to an additional $300 million and to extend its~~ maturity date for two additional ~~one-year~~1-year periods, ~~both~~ subject to certain conditions. The proceeds of the loans may be used by us for general corporate purposes and as liquidity support for our existing commercial paper program. As of April ~~24, 2020,~~30, 2021, we were ~~in compliance~~compliant with all associated covenants in ~~this agreement.~~ the agreement. No amounts were drawn against this credit facility during any of the periods presented.

We expect to fund our capital expenditures, including our commitments related to facilities, equipment, operating leases and internal-use software development projects over the next few years through existing cash, cash equivalents, investments and cash generated from operations. The timing and amount of our capital requirements cannot be precisely determined and will depend on a number of factors, including future demand for products, changes in the network storage industry, hiring plans and our decisions related to the financing of our facilities and equipment requirements. We anticipate capital expenditures for fiscal ~~2021~~2022 to be between ~~$175~~$225 million and ~~$225~~$250 million.

On May ~~26, 2020,~~28, 2021, we declared a cash dividend of ~~$0.48~~$0.50 per share of common stock, payable on July ~~29, 2020~~28, 2021 to holders of record as of the close of business on July ~~10, 2020.~~9, 2021.

As of April ~~24, 2020,~~30, 2021, our Board of Directors had authorized the repurchase of up to $13.6 billion of our common stock under our stock repurchase ~~program.~~program, and on May 28, 2021 authorized the repurchase of an additional $500 million of our common stock. Under this program, we may purchase shares of our outstanding common stock through solicited or unsolicited transactions in the open market, in privately negotiated transactions, through accelerated share repurchase programs, pursuant to a Rule 10b5-1 plan or in such other manner as deemed appropriate by our management. The stock repurchase program may be suspended or discontinued at any time. Since the May 13, 2003 inception of this program through April ~~24, 2020,~~30, 2021, we repurchased a total of ~~338~~340 million shares of our common stock at an average price of ~~$38.86~~$39.02 per share, for an aggregate purchase price of ~~$13.1~~$13.3 billion. As of April ~~24, 2020,~~30, 2021, the remaining authorized amount for stock repurchases under this program was ~~$0.5~~$0.3 billion.

~~During~~In the ~~first quarter~~ordinary course of ~~fiscal 2021,~~business, we ~~announced~~make commitments to third-party contract manufacturers and component suppliers to manage manufacturer lead times and meet product forecasts, and to other parties, to purchase various key components used in the ~~suspension~~manufacture of our ~~stock repurchases to strengthen our liquidity position given the uncertainty surrounding the overall impact of the ongoing COVID-19 pandemic. The timing~~products. In addition, we have open purchase orders and ~~amount of stock repurchase transactions and future dividends will depend on market conditions, corporate business and financial considerations and regulatory requirements.~~

~~The impact of~~ contractual obligations onassociated with our ~~liquidity and capital resources~~ordinary course of business for which we have not yet received goods or services. These off-balance sheet purchase commitments totaled $800 million at April 30, 2021, of which $584 million is due in ~~future periods should be analyzed in conjunction~~fiscal 2022, with the ~~factors that impact our cash flows from operations discussed previously. The following table summarizes our contractual obligations at April 24, 2020 (in millions):~~

2021

2022

2023

2024

2025

Thereafter

Total

Purchase commitments with contract
manufacturers and component suppliers ⁽¹⁾

$
479

$
39

$
42

$
44

$
47

$
—

$
651

Other purchase obligations ⁽²⁾

133

34

11

7

4

4

193

Total off-balance sheet commitments

612

73

53

51

51

4

844

Commercial paper notes ⁽³⁾

523

—

—

—

—

—

523

Long-term debt obligations ⁽⁴⁾

38

530

271

13

407

—

1,259

Long-term financing arrangements

3

—

—

—

—

—

3

Uncertain tax positions ⁽⁵⁾

136

Total contractual obligations

$
1,176

$
603

$
324

$
64

$
458

$
4

$
2,765

Some of the amounts in the table above are based on management’s estimates and assumptions, including the commitment duration, the possibility of renewal or termination, anticipated actions by management and third parties and other factors. Because these estimates and assumptions are subjective, our actual future obligations may vary from those reflected in the table.remainder due thereafter.

While most of our arrangements for sales include short-term payment terms, from time to time we provide long-term financing to creditworthy customers. We have generally sold receivables financed through these arrangements on a non-recourse basis to third party financing institutions within 10 days of the contracts’ dates of execution, and we classify the proceeds from these sales as cash flows from operating activities in our consolidated statements of cash flows. We account for the sales of these receivables as “true sales” as defined in the accounting standards on transfers of financial assets, as we are considered to have surrendered control of these financing receivables. ~~Provided all other revenue recognition criteria have been met, we recognize product revenues for these arrangements, net of any payment discounts from financing transactions, upon product acceptance.~~ We sold ~~$59~~$102 million and ~~$87~~$59 million of receivables during fiscal 2021 and 2020, ~~and 2019,~~ respectively.

In addition, we enter into arrangements with leasing companies for the sale of our hardware systems products. These leasing companies, in turn, lease our products to end-users. The leasing companies generally have no recourse to us in the event of default by the ~~end-user and we recognize revenue upon delivery to the end-user customer, if all other revenue recognition criteria have been met.~~end-user.

Some of the leasing arrangements described above have been financed on a recourse basis through third-party financing institutions. Under the terms of recourse leases, which are generally three years or less, we remain liable for the aggregate unpaid remaining lease payments to the third-party leasing companies in the event of end-user customer default. These arrangements are generally collateralized by a security interest in the underlying assets. Where we provide a guarantee for recourse leases, we recognize revenues in accordance with our revenue recognition policy, as updated to reflect the adoption of ASC 606. In connection with certain recourse financing arrangements, we receive advance payments associated with undelivered elements that are subject to customer refund rights. We defer revenue associated with these advance payments until the related refund rights expire and we perform the services. As of April ~~24, 2020~~30, 2021 and April ~~26, 2019,~~24, 2020, the aggregate amount by which such contingencies exceeded the associated

liabilities was not significant. To date, we have not experienced significant losses under our lease financing programs or other financing arrangements.

We have entered into service contracts with certain of our end-user customers that are supported by third-party financing arrangements. If a service contract is terminated as a result of our non-performance under the contract or our failure to comply with the terms of the financing arrangement, we could, under certain circumstances, be required to acquire certain assets related to the service contract or to pay the aggregate unpaid ~~financing~~ payments under such arrangements. As of April ~~24, 2020,~~30, 2021, we have not been required to make any payments under these arrangements, and we believe the likelihood of having to acquire a material amount of assets or make payments under these arrangements is remote. The portion of the financial arrangement that represents unearned services revenue is included in deferred revenue and financed unearned services revenue in our consolidated balance sheets.

Our off-balance sheet arrangements with suppliers are discussed in the contractual obligations section above. Additionally, we enter into indemnification agreements with third parties in the ordinary course of business. Generally, these indemnification agreements require us to reimburse losses suffered by the third-parties due to various events, such as lawsuits arising from patent or copyright infringement. These indemnification obligations are considered off-balance sheet arrangements under accounting guidance.

We are subject to various legal proceedings and claims which arise in the normal course of business. See further details on such matters in Note 18 – Commitments and Contingencies of the Notes to Consolidated Financial Statements.

We are exposed to market risk related to fluctuations in interest rates and foreign currency exchange rates. We use certain derivative financial instruments to manage foreign currency exchange risks. We do not use derivative financial instruments for speculative or trading purposes. All financial instruments are used in accordance with management-approved policies.

Fixed Income Investments — As of April ~~24, 2020,~~30, 2021, we had fixed income debt investments of ~~$224~~$67 million. Our investment portfolio primarily consists of investments with original maturities greater than three months at the date of purchase, which are classified as available-for-sale investments. These investments, which consist primarily of corporate bonds, U.S. Treasury and government debt securities, and certificates of deposit, are subject to interest rate and interest income risk and will decrease in value if market interest rates increase. Conversely, declines in interest rates, including the impact from lower credit spreads, could have a material adverse impact on interest income for our investment portfolio. A hypothetical 100 basis point increase in market interest rates from levels as of April ~~24, 2020~~30, 2021 would have resulted in a decrease in the fair value of our fixed-income securities of ~~approximately $2~~less than $1 million. Volatility in market interest rates over time will cause variability in our interest income. We do not use derivative financial instruments in our investment portfolio.

Our investment policy is to limit credit exposure through diversification and investment in highly rated securities. We further mitigate concentrations of credit risk in our investments by limiting our investments in the debt securities of a single issuer and by diversifying risk across geographies and type of issuer. We actively review, along with our investment advisors, current investment ratings, company-specific events and general economic conditions in managing our investments and in determining whether there is a significant decline in fair value that is other-than-temporary. We monitor and evaluate our investment portfolio on a quarterly basis for any other-than-temporary impairments.

Debt — As of April ~~24, 2020,~~30, 2021 we have outstanding ~~$1.2~~$2.7 billion aggregate principal amount of Senior Notes. We carry these instruments at face value less unamortized discount and issuance costs on our consolidated balance sheets. Since these instruments bear interest at fixed rates, we have no financial statement risk associated with changes in interest rates. However, the fair value of these instruments fluctuates when interest rates change. See Note 9 – Financing Arrangements of the Notes to Consolidated Financial Statements for more information.

~~Commercial Paper Program and~~ Credit Facility — We are exposed to the impact of changes in interest rates in connection with our $1.0 billion ~~commercial paper program and our $1.0 billion~~ five-year revolving credit facility. Borrowings under ~~these arrangements~~the facility accrue interest at rates that vary based on certain market rates and our credit rating on our Senior Notes. Consequently, our interest expense ~~fluctuates~~would fluctuate with any changes in these market interest rates or in our credit rating ~~when~~if we were to borrow any amounts under ~~these arrangements.~~the credit facility. As of April 24, 2020, we had commercial paper notes outstanding with an aggregate principal amount of $523 million, weighted-average interest rates of 2.01% and maturities primarily less than three months. As of April 24, 2020, there were30, 2021, no amounts were outstanding under the credit facility. ~~See Note 9 – Financing Arrangements of the Notes to Consolidated Financial Statements for more information.~~

We hedge risks associated with certain foreign currency transactions to minimize the impact of changes in foreign currency exchange rates on earnings. We utilize foreign currency exchange forward and option contracts to hedge against the short-term impact of foreign currency fluctuations on certain foreign currency denominated monetary assets and liabilities. We also use foreign currency exchange forward contracts to hedge foreign currency exposures related to forecasted sales transactions denominated in certain foreign currencies. These derivatives are designated and qualify as cash flow hedges under accounting guidance for derivatives and hedging.

We do not enter into foreign currency exchange contracts for speculative or trading purposes. In entering into foreign currency exchange forward and option contracts, we have assumed the risk that might arise from the possible inability of counterparties to meet the terms of the contracts. We attempt to limit our exposure to credit risk by executing foreign currency exchange contracts with creditworthy multinational commercial banks. All contracts have a maturity of less than 12 months. See Note 12 – Derivatives and Hedging Activities of the Notes to Consolidated Financial Statements for more information regarding our derivatives and hedging activities.

		April 24, 2020			April 26, 2019
		(In millions, except par value)							April 30, 2021			April 24, 2020
ASSETS	ASSETS							ASSETS
Current assets:
Cash and cash equivalents		$	2,658		$	2,325			$	4,529		$	2,658
Short-term investments			224			1,574				67			224
Accounts receivable			973			1,216				945			973
Inventories			145			131				114			145
Other current assets			274			364				346			274
Total current assets			4,274			5,610				6,001			4,274
Property and equipment, net			727			759				525			727
Goodwill			1,778			1,735				2,039			1,778
Other intangible assets, net			44			47				101			44
Other non-current assets			699			590				694			699
Total assets		$	7,522		$	8,741			$	9,360		$	7,522

LIABILITIES AND STOCKHOLDERS' EQUITY	LIABILITIES AND STOCKHOLDERS' EQUITY							LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable		$	426		$	542			$	420		$	426
Accrued expenses			774			851				970			774
Commercial paper notes			522			249				0			522
Current portion of long-term debt			—			400
Short-term deferred revenue and financed unearned services revenue			1,894			1,825				2,062			1,894
Total current liabilities			3,616			3,867				3,452			3,616
Long-term debt			1,146			1,144				2,632			1,146
Other long-term liabilities			714			797				650			714
Long-term deferred revenue and financed unearned services revenue			1,804			1,843				1,941			1,804
Total liabilities			7,280			7,651				8,675			7,280

Commitments and contingencies (Note 18)

Stockholders' equity:
Preferred stock, $0.001 par value, 5 shares authorized; 0 shares issued or outstanding as of April 24, 2020 or April 26, 2019			—			—
Common stock and additional paid-in capital, $0.001 par value, 885 shares authorized; 219 and 240 shares issued and outstanding as of April 24, 2020 and April 26, 2019, respectively			284			1,133
Preferred stock, $0.001 par value, 5 shares authorized; 0 shares issued or outstanding as of April 30, 2021 or April 24, 2020										0			0
Common stock and additional paid-in capital, $0.001 par value, 885 shares authorized; 222 and 219 shares issued and outstanding as of April 30, 2021 and April 24, 2020, respectively										504			284
Retained earnings			—			—				211			0
Accumulated other comprehensive loss			(42	)		(43	)			(30	)		(42	)
Total stockholders' equity			242			1,090				685			242
Total liabilities and stockholders' equity		$	7,522		$	8,741			$	9,360		$	7,522

	Year Ended
	April 24, 2020			April 26, 2019			April 27, 2018			Year Ended
	(In millions, except per share amounts)									April 30, 2021			April 24, 2020			April 26, 2019
Revenues:
Product	$	2,995		$	3,755		$	3,525		$	2,991		$	2,995		$	3,755
Software maintenance		1,034			946			902
Hardware maintenance and other services		1,383			1,445			1,492
Software support											1,281			1,034			946
Hardware support and other services											1,472			1,383			1,445
Net revenues		5,412			6,146			5,919			5,744			5,412			6,146
Cost of revenues:
Cost of product		1,368			1,752			1,738			1,432			1,368			1,752
Cost of software maintenance		48			35			25
Cost of hardware maintenance and other services		373			414			447
Cost of software support											95			48			35
Cost of hardware support and other services											402			373			414
Total cost of revenues		1,789			2,201			2,210			1,929			1,789			2,201
Gross profit		3,623			3,945			3,709			3,815			3,623			3,945
Operating expenses:
Sales and marketing		1,585			1,657			1,706			1,744			1,585			1,657
Research and development		847			827			783			881			847			827
General and administrative		263			278			280			257			263			278
Restructuring charges		21			35			—			42			21			35
Acquisition-related expense											16			0			0
Gain on sale or derecognition of assets		(38	)		(73	)		(218	)		(156	)		(38	)		(73	)
Total operating expenses		2,678			2,724			2,551			2,784			2,678			2,724
Income from operations		945			1,221			1,158			1,031			945			1,221
Other income (expense), net		(1	)		47			41
Other (expense) income, net											(69	)		(1	)		47
Income before income taxes		944			1,268			1,199			962			944			1,268
Provision for income taxes		125			99			1,083			232			125			99
Net income	$	819		$	1,169		$	116		$	730		$	819		$	1,169
Net income per share:
Basic	$	3.56		$	4.60		$	0.43		$	3.29		$	3.56		$	4.60
Diluted	$	3.52		$	4.51		$	0.42		$	3.23		$	3.52		$	4.51
Shares used in net income per share calculations:
Basic		230			254			268			222			230			254
Diluted		233			259			276		��	226			233			259

	Year Ended
	April 24, 2020			April 26, 2019			April 27, 2018			Year Ended
	(In millions)									April 30, 2021			April 24, 2020			April 26, 2019
Net income	$	819		$	1,169		$	116		$	730		$	819		$	1,169
Other comprehensive income (loss):
Other comprehensive income:
Foreign currency translation adjustments		(8	)		(7	)		2			15			(8	)		(7	)
Defined benefit obligations:
Defined benefit obligation adjustments		3			(2	)		1			(3	)		3			(2	)
Reclassification adjustments related to defined benefit obligations		(2	)		(2	)		(2	)		0			(2	)		(2	)
Income tax effect		1			1			1			0			1			1
Unrealized gains (losses) on available-for-sale securities:
Unrealized holding gains (losses) arising during the period		22			36			(43	)
Reclassification adjustments for gains included in net income		(14	)		—			—
Unrealized gains on cash flow hedges:
Unrealized gains on available-for-sale securities:
Unrealized holding gains arising during the period		5			2			—			0			22			36
Reclassification adjustments for gains included in net income		(6	)		(1	)		—			0			(14	)		0
Other comprehensive income (loss):		1			27			(41	)
Unrealized gains (losses) on cash flow hedges:
Unrealized holding (losses) gains arising during the period											(11	)		5			2
Reclassification adjustments for losses (gains) included in net income											11			(6	)		(1	)
Other comprehensive income											12			1			27
Comprehensive income	$	820		$	1,196		$	75		$	742		$	820		$	1,196

	Year Ended
	April 24, 2020			April 26, 2019			April 27, 2018			Year Ended
	(In millions)									April 30, 2021			April 24, 2020			April 26, 2019
Cash flows from operating activities:
Net income	$	819		$	1,169		$	116		$	730		$	819		$	1,169
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		193			197			198			207			193			197
Non-cash operating lease cost		51			—			—			52			51			0
Stock-based compensation		153			158			161			197			153			158
Deferred income taxes		(17	)		(3	)		270			(6	)		(17	)		(3	)
Gain on sale or derecognition of assets		(38	)		(73	)		(218	)		(156	)		(38	)		(73	)
Other items, net		1			2			(27	)		24			1			2
Changes in assets and liabilities, net of acquisitions of businesses:
Accounts receivable		238			(185	)		(289	)		62			238			(185	)
Inventories		(14	)		(9	)		36			31			(14	)		(9	)
Other operating assets		84			(73	)		(38	)		(60	)		84			(73	)
Accounts payable		(117	)		(57	)		262			(11	)		(117	)		(57	)
Accrued expenses		(177	)		42			162			134			(177	)		42
Deferred revenue and financed unearned services revenue		54			343			139			193			54			343
Long-term taxes payable		(163	)		(164	)		714			(57	)		(163	)		(164	)
Other operating liabilities		(7	)		(6	)		(8	)		(7	)		(7	)		(6	)
Net cash provided by operating activities		1,060			1,341			1,478			1,333			1,060			1,341
Cash flows from investing activities:
Purchases of investments		(13	)		(41	)		(1,389	)		(5	)		(13	)		(41	)
Maturities, sales and collections of investments		1,383			917			1,379			165			1,383			917
Purchases of property and equipment		(124	)		(173	)		(145	)		(162	)		(124	)		(173	)
Proceeds from sale of properties		96			—			210			371			96			0
Acquisitions of businesses, net of cash acquired		(73	)		(3	)		(75	)		(350	)		(73	)		(3	)
Other investing activities, net		—			4			(1	)		2			0			4
Net cash provided by (used in) investing activities		1,269			704			(21	)
Net cash provided by investing activities											21			1,269			704
Cash flows from financing activities:
Proceeds from issuance of common stock under employee stock award plans		102			121			173			98			102			121
Payments for taxes related to net share settlement of stock awards		(79	)		(96	)		(75	)		(42	)		(79	)		(96	)
Repurchase of common stock		(1,411	)		(2,111	)		(794	)		(125	)		(1,411	)		(2,111	)
Proceeds from (repayments of) commercial paper notes, original maturities of three months or less, net		172			(136	)		(115	)
(Repayments of) proceeds from commercial paper notes, original maturities of three months or less, net											(420	)		172			(136	)
Issuances of debt, net of issuance costs		111			—			795			2,057			111			0
Repayments of debt		(410	)		—			(750	)
Repayments and extinguishment of debt											(689	)		(410	)		0
Dividends paid		(439	)		(403	)		(214	)		(427	)		(439	)		(403	)
Other financing activities, net		(6	)		(6	)		(6	)		(8	)		(6	)		(6	)
Net cash used in financing activities		(1,960	)		(2,631	)		(986	)
Net cash provided by (used in) financing activities											444			(1,960	)		(2,631	)
Effect of exchange rate changes on cash, cash equivalents and restricted cash		(34	)		(30	)		26			71			(34	)		(30	)
Net increase (decrease) in cash, cash equivalents and restricted cash		335			(616	)		497			1,869			335			(616	)
Cash, cash equivalents and restricted cash:
Beginning of period		2,331			2,947			2,450			2,666			2,331			2,947
End of period	$	2,666		$	2,331		$	2,947		$	4,535		$	2,666		$	2,331

	Common Stock and Additional Paid-in Capital						Retained			Accumulated															Accumulated
							Earnings			Other						Common Stock and									Other
							(Accumulated			Comprehensive						Additional Paid-in Capital						Retained			Comprehensive
	Shares			Amount			Deficit)			Loss			Total			Shares			Amount			Earnings			Loss			Total
	(In millions, except per share amounts)
Balances, April 28, 2017		269		$	2,769		$	209		$	(29	)	$	2,949
Net income		—			—			116			—			116
Other comprehensive loss		—			—			—			(41	)		(41	)
Issuance of common stock under employee stock award plans, net of taxes		9			99			—			—			99
Repurchase of common stock		(15	)		(568	)		(226	)		—			(794	)
Stock-based compensation		—			161			—			—			161
Cash dividends declared ($0.80 per common share)		—			(106	)		(108	)		—			(214	)
Balances, April 27, 2018		263			2,355			(9	)		(70	)		2,276			263		$	2,355		$	(9	)	$	(70	)	$	2,276
Cumulative-effect of adoption of ASU 2016-16		—			—			(51	)		—			(51	)		0			0			(51	)		0			(51	)
Net income		—			—			1,169			—			1,169			—			0			1,169			0			1,169
Other comprehensive income		—			—			—			27			27			0			0			0			27			27
Issuance of common stock under employee stock award plans, net of taxes		6			25			—			—			25			6			25			0			0			25
Repurchase of common stock		(29	)		(1,002	)		(1,109	)		—			(2,111	)		(29	)		(1,002	)		(1,109	)		0			(2,111	)
Stock-based compensation		—			158			—			—			158			—			158			0			0			158
Cash dividends declared ($1.60 per common share)		—			(403	)		—			—			(403	)		—			(403	)		0			0			(403	)
Balances, April 26, 2019		240			1,133			—			(43	)		1,090			240			1,133			0			(43	)		1,090
Cumulative-effect of adoption of ASC 842		—			—			6			—			6			—			0			6			0			6
Net income		—			—			819			—			819			—			0			819			0			819
Other comprehensive income		—			—			—			1			1			—			0			0			1			1
Issuance of common stock under employee stock award plans, net of taxes		4			23			—			—			23			4			23			0			0			23
Repurchase of common stock		(25	)		(625	)		(786	)		—			(1,411	)		(25	)		(625	)		(786	)		0			(1,411	)
Stock-based compensation		—			153			—			—			153			—			153			0			0			153
Cash dividends declared ($1.92 per common share)		—			(400	)		(39	)		—			(439	)		—			(400	)		(39	)		0			(439	)
Balances, April 24, 2020		219		$	284		$	—		$	(42	)	$	242			219			284			0			(42	)		242
Net income																	—			0			730			0			730
Other comprehensive income																	—			0			0			12			12
Issuance of common stock under employee stock award plans, net of taxes																	5			56			0			0			56
Repurchase of common stock																	(2	)		(3	)		(122	)		0			(125	)
Stock-based compensation																	—			197			0			0			197
Cash dividends declared ($1.92 per common share)																	—			(30	)		(397	)		0			(427	)
Balances, April 30, 2021																	222		$	504		$	211		$	(30	)	$	685

Description of Business — NetApp, Inc. (we, us, or the Company) is a global cloud-led, data-centric software company that provides ~~global~~ organizations the ability to manage and share their data across on-premises, private and public clouds. ~~Together with our partners, we~~We provide a full range of enterprise-class software, systems and services solutions that customers use to modernize their infrastructures, build next generation data centers and harness the power of hybrid clouds.

Fiscal Year — 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 2021, ending on April 30, 2021 is a 53-week year, with 14 weeks included in its first quarter and 13 weeks in each subsequent quarter. Fiscal year 2020, which ended on April 24, 2020, and fiscal year 2019, which ended on April 26, 2019 ~~and fiscal year 2018, which ended on April 27, 2018,~~ were ~~all~~both 52-week years. Unless otherwise stated, references to particular years, quarters, months and periods refer to the Company’s fiscal years ended on the last Friday of April and the associated quarters, months and periods of those fiscal years.

Principles of Consolidation — The consolidated financial statements include the Company and its subsidiaries. Intercompany accounts and transactions are eliminated in consolidation.

In ~~February~~June 2016,the FASB issued an accounting standards update on the measurement of credit losses on financial ~~reporting~~instruments. The standard introduces a new model for ~~leasing arrangements, including~~measuring and recognizing credit losses on financial instruments, requiring ~~lessees to recognize an operating lease with a term greater than one year on their balance sheets as a right-of-use (ROU) asset and corresponding lease liability,~~financial assets measured at amortized cost basis to be presented at the ~~present value of the lease payments. In the first quarter of fiscal~~net amount expected to be collected. It also requires that credit losses be recorded through an allowance for credit losses. On April 25, 2020, we adopted ~~this new~~the standard using the modified retrospective approach, electing the optional transition approach of not adjusting our comparative period financial statements for the impacts of adoption. We also elected the package of practical expedients that did not require uswith no material impact to reassess existing leases under the new guidance, and the practical expedient to not separate lease and non-lease components for all leases. Adoption of the new standard during the first quarter of fiscal 2020 resulted in the recognition of approximately $149 million of operating lease ROU assets, net of deferred rent and lease restructuring liabilities, $158 million of lease liabilities, and a cumulative-effect adjustment to retained earnings of $6 million on our consolidated balance sheets. Adoption of the standard did not have a material impact on our consolidated statements of operations or consolidated statements of cash flows. Additional information is presented below and in Note 10 – Leases.financial statements.

Use of Estimates — The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (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; 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, including impacts from the COVID-19 pandemic, the anticipated effects of which have been incorporated, as applicable, into management’s estimates as of and for the year ended April ~~24, 2020.~~30, 2021.

Cash Equivalents — We consider all highly liquid debt investments with original maturities of three months or less at the time of purchase to be cash equivalents.

Available-for-Sale Investments — We classify our investments in debt securities as available-for-sale investments. Debt securities primarily consist of corporate bonds, U.S. Treasury and government debt securities and certificates of deposit. These ~~available-for-sale~~ investments are primarily held in the custody of a major financial institution. A specific identification method is used to determine the cost basis of debt securities sold. These investments are recorded in the consolidated balance sheets at fair value.

Unrealized gains and temporary losses, net of related taxes, are included in accumulated other comprehensive income (loss) (AOCI). Upon realization, those amounts are reclassified from AOCI to earnings. The amortization of premiums and discounts on the investments are included in our results of operations. Realized gains and losses ~~on our available-for-sale investments~~ are calculated based on the specific identification method.

We classify our investments as current or noncurrent based on the nature of the investments and their availability for use in current operations.

Other-than-Temporary Impairments on Investments — All of our available-for-sale investments are subject to periodic impairment review. When the fair value of a debt security is less than its amortized cost, it is deemed impaired, and we assess whether the

impairment is other-than-temporary. An impairment is considered other-than-temporary if (i) we have the intent to sell the security, (ii) it is more likely than not that we will be required to sell the security before recovery of the entire amortized cost basis, or (iii) we do not expect to recover the entire amortized cost basis of the security. If impairment is considered other-than-temporary based on condition (i) or (ii) described above, the entire difference between the amortized cost and the fair value of the debt security is recognized in the results of operations. If an impairment is considered other-than-temporary based on condition (iii) described above, the amount representing credit losses (defined as the difference between the present value of the cash flows expected to be collected

and the amortized cost basis of the debt security) is recognized in earnings, and the amount relating to all other factors is recognized in other comprehensive income (OCI).

Inventories — Inventories are stated at the lower of cost or net realizable value, which approximates actual cost on a first-in, first-out basis. We write down excess and obsolete inventory based on the difference between the cost of inventory and the estimated net realizable value. Net realizable value ~~based upon assumptions about~~is estimated using management’s best estimate of forecasts for future demand ~~forecasts~~ and expectations regarding market conditions. At the point of a loss recognition, a new, lower cost basis for that inventory is established, and subsequent changes in facts or circumstances do not result in the restoration or increase in that newly established basis. In addition, we record a liability for firm, non-cancelable and unconditional purchase commitments with contract manufacturers and suppliers for quantities in excess of our future demand forecasts consistent with our valuation of excess and obsolete inventory.

Depreciation and amortization is computed using the straight-line method, generally over the following periods:

Construction in progress will be depreciated over the estimated useful lives of the respective assets when they are ready for use. We capitalize interest on significant facility assets under construction and on significant software development projects.

Software Development Costs — The costs for the development of new software products and substantial enhancements to existing software products are expensed as incurred until technological feasibility has been established, at which time any additional costs would be capitalized in accordance with the accounting guidance for software. Because our current process for developing software is essentially completed concurrently with the establishment of technological feasibility, which occurs upon the completion of a working model, no costs have been capitalized for any of the periods presented.

Internal-Use Software Development Costs — We capitalize qualifying costs, which are incurred during the application development stage, for computer software developed or obtained for internal-use and amortize them over the software’s estimated useful life.

Business Combinations — We recognize identifiable assets acquired and liabilities assumed at their acquisition date fair values. Goodwill as of the acquisition date is measured as the excess of consideration transferred over the net of the acquisition date fair values of the assets acquired and the liabilities assumed. While we use our best estimates and assumptions as a part of the purchase price allocation process to accurately value assets acquired and liabilities assumed at the acquisition date, our estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, we record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill to the extent that we identify adjustments to the preliminary purchase price allocation. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to our consolidated statements of ~~operations.~~income.

Goodwill and Purchased Intangible Assets — Goodwill is recorded when the consideration paid for an acquisition exceeds the fair value of net tangible and intangible assets acquired. Purchased intangible assets with finite lives are generally amortized on a straight-line basis over their economic lives of three to five years for developed technology, two to five years for customer contracts/relationships, two to three years for covenants not to compete and two to five years for trademarks and trade names as we believe this method most closely reflects the pattern in which the economic benefits of the assets will be consumed. In-process research and development is accounted for as an indefinite lived intangible asset and is assessed for potential impairment annually until development is complete or when events or circumstances indicate that their carrying amounts might be impaired. Upon completion of development, in-process research and development is accounted for as a finite-lived intangible asset.

The carrying value of goodwill is tested for impairment on an annual basis in the fourth quarter of our fiscal year, or more frequently if we believe indicators of impairment exist. Triggering events for impairment reviews may be indicators such as adverse

industry or economic trends, restructuring actions, lower projections of profitability, or a sustained decline in our market capitalization. For the purpose of impairment testing, we have a single reporting unit. The performance of the quantitative impairment test requires comparing the fair value of our reporting unit to its carrying amount, including goodwill. The fair value of our reporting unit is based on our entity level market capitalization, as determined through quoted market prices. An impairment exists if the fair value of our reporting unit is lower than its carrying amount. The impairment loss is measured based on the amount by which the

carrying amount of our reporting unit exceeds its fair value, with the recognized loss not to exceed the total amount of goodwill. The fair value of our reporting unit has substantially exceeded its carrying amount in all periods presented.

Impairment of Long-Lived Assets — We review the carrying values of long-lived assets whenever events and circumstances, such as reductions in demand, lower projections of profitability, significant changes in the manner of our use of acquired assets, or significant negative industry or economic trends, indicate that the net book value of an asset may not be recovered through expected future cash flows from its use and eventual disposition. If this review indicates that there is an impairment, the impaired asset is written down to its fair value, which is typically calculated using: (i) quoted market prices and/or (ii) expected future cash flows utilizing a discount rate. Our estimates regarding future anticipated cash flows, the remaining economic life of the products and technologies, or both, may differ from those used to assess the recoverability of assets. In that event, impairment charges or shortened useful lives of certain long-lived assets may be required, resulting in charges to our consolidated statements of ~~operations~~income when such determinations are made.

Derivative Instruments — Our derivative instruments, which are carried at fair value in our consolidated balance sheets, consist of foreign currency exchange contracts as described below:

Balance Sheet Hedges — We utilize foreign currency exchange forward and option contracts to hedge against the short-term impact of foreign currency exchange rate fluctuations related to certain foreign currency denominated monetary assets and liabilities, primarily intercompany receivables and payables. These derivative instruments are not designated as hedging instruments and do not subject us to material balance sheet risk due to exchange rate movements because the gains and losses on these contracts are intended to offset the gains and losses in the underlying foreign currency denominated monetary assets and liabilities being hedged, and the net amount is included in earnings.

Cash Flow Hedges — We utilize foreign currency exchange forward contracts to hedge foreign currency exchange exposures related to forecasted sales transactions denominated in certain foreign currencies. These derivative instruments are designated and qualify as cash flow hedges and, in general, closely match the underlying forecasted transactions in duration. The effective portion of the contracts’ gains and losses resulting from changes in fair value is recorded in AOCI until the forecasted transaction is recognized in the consolidated statements of ~~operations.~~income. When the forecasted transactions occur, we reclassify the related gains or losses on the cash flow hedges into net revenues. If the underlying forecasted transactions do not occur, or it becomes probable that they will not occur within the defined hedge period, the gains or losses on the related cash flow hedges are reclassified from AOCI and recognized immediately in earnings. We measure the effectiveness of hedges of forecasted transactions on a monthly basis by comparing the fair values of the designated foreign currency exchange forward purchase contracts with the fair values of the forecasted transactions. Any ineffective portion of the derivative hedging gain or loss, as well as changes in the fair value of the derivative’s time value (which are excluded from the assessment of hedge effectiveness), are recognized in earnings.

Factors that could have an impact on the effectiveness of our hedging programs include the accuracy of forecasts and the volatility of foreign currency markets. These programs reduce, but do not entirely eliminate, the impact of currency exchange movements. Currently, we do not enter into any foreign currency exchange forward contracts to hedge exposures related to firm commitments. Cash flows from our derivative programs are included under operating activities in the consolidated statements of cash flows.

Revenue Recognition — We recognize revenue by applying the following five step approach.

Customarily we have a purchase order from or executed contract with our customers that establishes the goods and services to be transferred and the consideration to be received.

We combine two or more contracts entered into at or near the same time with the same customer as a single contract if the contracts are negotiated as one package with a single commercial objective, if the amount of consideration to be paid on one contract depends on the price or performance of the other contract or if the goods and services promised in each of the contracts are a single performance obligation.

Our contracts with customers may include hardware systems, software licenses, software ~~maintenance,~~support, hardware ~~maintenance~~support and other services. Software ~~maintenance~~support contracts entitle our customers to receive unspecified ~~product~~ upgrades and enhancements on a when-and-if-available basis, and patch releases. Hardware ~~maintenance~~support services include contracts for extended warranty and technical support with minimum response times. Other services include professional services and customer education and training services.

We identify performance obligations in our contracts to be those goods and services that are distinct. A good or service is distinct where the customer can benefit from the good or service either on its own or together with other resources that are readily available from third parties or from us, and is distinct in the context of the contract, where the transfer of the good or service is separately identifiable from other promises in the contract.

If a contract includes multiple promised goods or services, we apply judgment to determine whether promised goods or services are distinct. If they are not, we combine the goods and services until we have a distinct performance obligation. A configured storage system inclusive of the operating system (OS) software essential to its functionality is considered a single performance obligation, while optional add-on software is a separate performance obligation. In general, hardware ~~maintenance,~~support, software ~~maintenance,~~support, and different types of professional services are each separate performance obligations.

In certain instances, we enter into enterprise license agreements (ELAs) with our customers which transfer to them the right to deploy an unlimited or capped number of OS or optional add-on software licenses and obligate us to provide software ~~maintenance~~support through the ELA term. In general, we treat the software license component and software ~~maintenance~~support component of ELAs as separate performance obligations.

We determine the transaction price of our contracts with customers based on the consideration to which we will be entitled in exchange for transferring goods or services. Consideration promised may include fixed amounts, variable amounts or both. We sell professional services either on a time and materials basis or under fixed price projects.

We evaluate variable consideration in arrangements with contract terms such as rights of return, potential penalties and acceptance clauses. We generally use the expected value method, primarily relying on our history, to estimate variable consideration. However, when we believe it to provide a better estimate, we use the most likely amount method. In either case, we consider variable consideration only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur. Reassessments of our variable consideration may occur as historical information changes. Transaction prices are also adjusted for the effects of time value of money if the timing of payments provides either the customer or us a significant benefit of financing.

Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation on a relative standalone selling price basis. We determine standalone selling price based on the price at which the performance obligation is sold separately. If the standalone selling price is not observable through past transactions, we estimate the standalone selling price ~~taking into account available information such as~~by maximizing the use of observable inputs including pricing strategy, market data, internally-approved pricing guidelines related to the performance obligations and other observable inputs. We regularly review standalone selling prices and maintain internal controls over the establishment and updates of these estimates. Variable consideration is also allocated to the performance obligations. If the terms of variable consideration relate to one performance obligation, it is entirely allocated to that obligation. Otherwise, it is allocated to all the performance obligations in the contract.

We typically recognize revenue at a point in time upon the transfer of goods to a customer. Products we transfer at a point in time include our configured hardware systems, OS software licenses, optional add-on software licenses and add-on hardware. Services are typically transferred over time and revenue is recognized based on an appropriate method for measuring our progress toward completion of the performance obligation. Our stand-ready services, including both hardware and software ~~maintenance~~ support, are transferred ratably over the period of the contract. For other services such as our fixed professional services contracts, we use an input

method to determine the percentage of completion. That is, we estimate the effort to date versus the expected effort required over the life of the contract.

Deferred Commissions – — We capitalize sales commissions that are incremental direct costs of obtaining customer contracts for which revenue is not immediately recognized and classify them as current or non-current based on the terms of the related contracts. Capitalized commissions are amortized based on the transfer of goods or services to which they relate, typically over one to three years, and are also periodically reviewed for impairment. Amortization expense is recorded to sales and marketing expense in our consolidated statements of ~~operations.~~income.

~~Product Warranties~~ — Estimated future hardware and software warranty costs are recorded as a cost of product revenues at the time of product shipment, based on historical and projected warranty claim rates, historical and projected cost-per-claim and knowledge of specific product failures that are outside our typical experience. Factors that affect our warranty liability include the number of installed units subject to warranty protection, product failure rates, and estimated materials, distribution and labor costs. We assess the adequacy of our warranty accrual each quarter and adjust the amount as considered necessary.

Leases − — We determine if an arrangement is or contains a lease at inception, and we classify leases as operating or finance leases at commencement. In our consolidated balance sheets, operating lease ~~ROU~~right-of-use (ROU) assets are included in other non-current assets, while finance lease ROU assets are included in property and equipment, net. Lease liabilities for both types of leases are included in accrued expenses and other long-term liabilities. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments over that term.

Operating and finance lease ROU assets and liabilities are recognized at commencement based on the present value of lease payments over the lease term. ROU assets also include any lease payments made prior to lease commencement and exclude lease incentives. The lease term is the noncancelable period of the lease and includes options to extend or terminate the lease when it is reasonably certain that an option will be exercised. As the rate implicit in our leases is typically not readily determinable, in computing the present value of lease payments we generally use our incremental borrowing rate based on information available at the commencement date. Variable lease payments not dependent on an index or rate are expensed as incurred and not included within the calculation of ROU assets and lease liabilities. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term.

We do not separate non-lease components from lease components for any class of leases, and we do not recognize ROU assets and lease liabilities for leases with a lease term of twelve months or less.

Foreign Currency Translation — For international subsidiaries whose functional currency is the local currency, gains and losses resulting from translation of these foreign currency financial statements into U.S. dollars are recorded in AOCI. For international subsidiaries where the functional currency is the U.S. dollar, gains and losses resulting from the process of remeasuring foreign currency financial statements into U.S. dollars are included in other (expense) income, ~~(expense),~~ net.

Benefit Plans — We record actuarial gains and losses associated with defined benefit plans within AOCI and amortize net gains or losses in excess of 10 percent of the greater of the market value of plan assets or the plans' projected benefit obligation on a straight-line basis over the remaining estimated service life of plan participants. The measurement date for all defined benefit plans is our fiscal year end.

Stock-Based Compensation — We measure and recognize stock-based compensation for all stock-based awards, including employee stock options, restricted stock units (RSUs), including time-based RSUs and performance-based RSUs (PBRSUs), and rights to purchase shares under our employee stock purchase plan (ESPP), based on their estimated fair value, and recognize the costs in our financial statements using the single option straight-line approach over the requisite service period for the entire award.

The fair value of employee time-based RSUs, and PBRSUs that include a performance condition, is equal to the market value of our common stock on the grant date of the award, less the present value of expected dividends during the vesting period, discounted at a risk-free interest rate. The fair value of PBRSUs that include a market condition is measured using a Monte Carlo simulation model on the date of grant.

The fair value of time-based RSUs, and PBRSUs that include a market condition, is not remeasured as a result of subsequent stock price fluctuations. ~~The fair value of PBRSUs that include a performance condition is remeasured when~~When there is a change in management’s estimate of expected achievement relative to the performance target ~~resulting~~for PBRSUs that include a performance condition, such as our achievement against a cumulative Adjusted Operating Income target, the change in estimate results in the recognition of a cumulative adjustment of stock-based compensation expense.

Our expected term assumption is based primarily on historical exercise and post-vesting forfeiture experience. Our stock price volatility assumption is based on a combination of our historical and implied volatility. The risk-free interest rates are based upon United States (U.S.) Treasury bills with equivalent expected terms, and the expected dividends are based on our history and expected dividend payouts.

Income Taxes — Deferred income tax assets and liabilities are provided for temporary differences that will result in tax deductions or income in future periods, as well as the future benefit of tax credit carryforwards. A valuation allowance reduces tax assets to their estimated realizable value.

We recognize the tax liability for uncertain income tax positions on the income tax return based on the two-step process prescribed in the interpretation. The first step is to determine whether it is more likely than not that each income tax position would be sustained upon audit. The second step is to estimate and measure the tax benefit as the amount that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority. Estimating these amounts requires us to determine the probability of various possible outcomes. We evaluate these uncertain tax positions on a quarterly basis. We recognize interest and penalties related to unrecognized tax benefits within the provision for income ~~tax expense~~taxes line inon the accompanying consolidated statements of ~~operations.~~income.

Net Income per Share — Basic net income per share is computed by dividing income available to common stockholders by the weighted-average number of common shares outstanding. Diluted net income per share is computed giving effect to ~~all~~the weighted-average number of dilutive potential shares that were outstanding during the ~~period.~~period using the treasury stock method. Potential dilutive common shares consist primarily of outstanding stock options, shares to be purchased under our employee stock purchase plan and unvested RSUs.

Treasury Stock — We account for treasury stock under the cost method. Upon the retirement of treasury stock, we allocate the value of treasury shares between common stock, additional paid-in capital and retained earnings.

In June 2016, the FASB issued an accounting standards update on the measurement of credit losses on financial instruments. The standard introduces a new model for measuring and recognizing credit losses on financial instruments, requiring financial assets measured at amortized cost basis to be presented at the net amount expected to be collected.It also requires that credit losses be recorded through an allowance for credit losses. This new standard will be effective for us in our first quarter of fiscal 2021 and, upon adoption, we are required to apply a modified retrospective transition approach through a cumulative-effect adjustment to retained earnings, though a prospective transition approach is required for debt securities for which an other-than-temporary impairment had been recognized before the effective date. Based on the composition of our investment portfolio, current market conditions, including those related to the ongoing COVID-19 pandemic, and historical credit loss activity, the adoption of this standard is not expected to have a material impact on our consolidated financial statements.Pronouncements

Although there are several ~~other~~ new accounting pronouncements issued or proposed by the FASB that we have adopted or will adopt, as applicable, we do not believe any of these accounting pronouncements had or will have a material impact on our consolidated financial position, operating results or disclosures.

Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash equivalents, investments, foreign currency exchange contracts and accounts receivable. Cash equivalents and short-term investments consist primarily of corporate bonds, U.S. Treasury and government debt securities and certificates of deposit, all of which are considered high investment grade. Our policy is to limit the amount of credit exposure through diversification and investment in highly rated securities. We further mitigate concentrations of credit risk in our investments by limiting our investments in the debt securities of a single issuer and by diversifying risk across geographies and type of issuer. The COVID-19 pandemic has led to an increase in market volatility and liquidity challenges for certain companies. However, it has not currently resulted in a material increase in the credit risk associated with our financial instruments.

By entering into foreign currency exchange contracts, we have assumed the risk that might arise from the possible inability of counterparties to meet the terms of their contracts. The counterparties to these contracts are major multinational commercial banks, and we do not expect any losses as a result of counterparty defaults.

We sell our products primarily to large organizations in different industries and geographies. We do not require collateral or other security to support accounts receivable. In addition, we maintain an allowance for potential credit losses. To reduce credit risk, we perform ongoing credit evaluations on our customers’ financial condition. We establish an allowance for doubtful accounts based upon factors surrounding the credit risk of customers, historical trends and other information, including the expected impact of macroeconomic disruptions such as the COVID-19 pandemic, and, to date, such losses have been within management’s expectations. Concentrations of credit risk with respect to trade accounts receivable are limited due to the wide variety of customers who are dispersed across many geographic regions.

There are no concentrations of business transacted with a particular market that would severely impact our business in the near term. However, we rely on a limited number of suppliers for certain key components and a few key contract manufacturers to manufacture most of our products; any disruption, including as a result of the COVID-19 pandemic, or termination of these arrangements could materially adversely affect our operating results.

On April 28, 2020, we acquired all the outstanding shares of privately-held Cloud Jumper Corporation (Cloud Jumper), a provider of virtual desktop infrastructure and remote desktop services solutions based in North Carolina, for $34 million in cash.

The acquisition date fair values of the assets acquired and liabilities assumed are as follows (in millions):

On July 9, 2020, we acquired all the outstanding shares of privately-held Spot, Inc. (Spot), a provider of compute management cost optimization services on the public clouds based in Israel, for $340 million in cash. The acquisition of Spot will allow us to establish an application driven infrastructure for the continuous optimization of both compute and storage, which we believe will facilitate customers deploying more applications to the cloud.

The acquisition date fair values of the assets acquired and liabilities assumed are as follows (in millions):

The components of the Spot intangible assets acquired were as follows (in millions, except useful life):

The acquired assets and assumed liabilities of Spot and Cloud Jumper were recorded at their estimated fair values. We determined the estimated fair values with the assistance of valuations and appraisals performed by third party specialists and estimates made by management. We expect to realize revenue synergies, leverage and expand the existing Spot and Cloud Jumper sales channels and product development resources, and utilize their existing workforces. We also anticipate opportunities for growth through the ability to leverage additional future products and capabilities. These factors, among others, contributed to a purchase price in excess of the estimated fair value of their identifiable net assets acquired, and as a result, we have recorded goodwill in connection with both of these acquisitions. The goodwill is not deductible for income tax purposes.

The results of operations related to the acquisition of both Spot and Cloud Jumper have been included in our consolidated statements of income from their respective acquisition dates. Pro forma results of operations have not been presented because the impact from these acquisitions would not have been material to our consolidated results of operations for each of the fiscal years ended April 30, 2021 and April 24, 2020.

On March 6, 2020, we acquired all the outstanding shares of privately-held Talon Storage Solutions, Inc., a provider of next generation software-defined storage solutions, for $23 million in cash.

The ~~preliminary~~ acquisition date fair values of the assets acquired and liabilities assumed are as follows (in millions):

				Amount
Cash	$	2		$	2
Developed technology intangible asset		6			6
Customer contracts/relationships		4			4
Other assets		4			4
Goodwill		13			13
Total assets acquired		29			29
Liabilities assumed		(6	)		(6	)
Total purchase price	$	23		$	23

The acquisition date fair values of the assets acquired and liabilities assumed are as follows (in millions):

				Amount
Cash	$	2		$	2
Developed technology intangible asset		26			26
Goodwill		30			30
Total assets acquired		58			58
Liabilities assumed		(5	)		(5	)
Total purchase price	$	53		$	53

On September 17, 2018, we acquired all of the outstanding shares of a privately-held software company for $3 million in cash. Substantially all of the purchase price was recorded to goodwill.

On August 4, 2017, we acquired all of the outstanding shares of Greenqloud ehf., a privately-held provider of cloud management software based in Iceland, for $51 million in cash, of which we allocated $10 million to developed technology, $38 million to goodwill, and the remainder to other assets.

On June 15, 2017, we acquired all of the outstanding shares of Plexistor Ltd., a privately-held provider of software defined memory architecture based in Israel, for $24 million in cash, of which we allocated $6 million to developed technology, $17 million to goodwill, and the remainder to other assets.

Balance as of April 27, 2018	$	1,739
Additions		3
Derecognition		(7	)
				Amount
Balance as of April 26, 2019		1,735		$	1,735
Additions		43			43
Balance as of April 24, 2020	$	1,778			1,778
Additions					261
Balance as of April 30, 2021				$	2,039

We derecognized goodwill during fiscal 2019 in connection with our contribution of a group of assets to a newly formed joint venture with Lenovo in exchange for a non-controlling ownership interest in the new entity. Refer to Note 6 – Supplemental Financial Information for additional details.

	April 24, 2020							April 26, 2019							April 30, 2021							April 24, 2020
	Gross		Accumulated			Net		Gross		Accumulated			Net		Gross		Accumulated			Net		Gross		Accumulated			Net
	Assets		Amortization			Assets		Assets		Amortization			Assets		Assets		Amortization			Assets		Assets		Amortization			Assets
Developed technology	$	192	$	(152	)	$	40	$	160	$	(113	)	$	47	$	215	$	(147	)	$	68	$	192	$	(152	)	$	40
Customer contracts/relationships		4		—			4		41		(41	)		—		38		(8	)		30		4		0			4
Other purchased intangibles																3		0			3		0		0			0
Total purchased intangible assets	$	196	$	(152	)	$	44	$	201	$	(154	)	$	47	$	256	$	(155	)	$	101	$	196	$	(152	)	$	44

Amortization expense for purchased intangible assets is summarized below (in millions):

	Year Ended						Statement of	Year Ended						Statements of
	April 24, 2020		April 26, 2019		April 27, 2018		Operations Classifications	April 30, 2021		April 24, 2020		April 26, 2019		Income Classifications
Developed technology	$	39	$	36	$	36	Cost of revenues	$	41	$	39	$	36	Cost of revenues
Customer contracts/relationships		—		10		14	Operating expenses		8		0		10	Operating expenses
Other purchased intangibles		—		—		3	Operating expenses
Total	$	39	$	46	$	53		$	49	$	39	$	46

As of April ~~24, 2020,~~30, 2021, future amortization expense related to purchased intangible assets is as follows (in millions):

Fiscal Year	Amount	Amount
2021	28
2022	12	$	36
Thereafter	4
2023		29
2024		17
2025		16
2026		3
Total	44	$	101

The following table presents cash and cash equivalents as reported in our consolidated balance sheets, as well as the sum of cash, cash equivalents and restricted cash as reported on our consolidated ~~statement~~statements of cash flows:

	April 24, 2020		April 26, 2019		April 30, 2021		April 24, 2020
Cash and cash equivalents	$	2,658	$	2,325	$	4,529	$	2,658
Restricted cash		8		6		6		8
Cash, cash equivalents and restricted cash	$	2,666	$	2,331	$	4,535	$	2,666

	April 24, 2020		April 26, 2019		April 30, 2021		April 24, 2020
Purchased components	$	28	$	8	$	22	$	28
Finished goods		117		123		92		117
Inventories	$	145	$	131	$	114	$	145

	April 24, 2020			April 26, 2019			April 30, 2021			April 24, 2020
Land	$	103		$	106		$	46		$	103
Buildings and improvements		597			605			356			597
Leasehold improvements		89			86			83			89
Computer, production, engineering and other equipment		802			817			869			802
Computer software		359			357			305			359
Furniture and fixtures		106			105			93			106
Construction-in-progress		32			10			46			32
		2,088			2,086			1,798			2,088
Accumulated depreciation and amortization		(1,361	)		(1,327	)		(1,273	)		(1,361	)
Property and equipment, net	$	727		$	759		$	525		$	727

In April 2021, we announced the sale of our corporate headquarters located in Sunnyvale, California, consisting primarily of land, buildings and improvements, for cash proceeds of $365 million. The assets sold had a net book value totaling $210 million. To facilitate an orderly transition to a new location, we executed short-term lease agreements with the buyer to lease back these properties. The agreed lease payments were below market rates and as a result we recognized an asset of $7 million for the difference between the fair value of the leases and the agreed lease payments. The cash proceeds, less direct selling costs, plus the fair value of the below-market leases, resulted in a net gain on the sale of these properties of $156 million.

In September 2017, we entered into an agreement to sell certain land and buildings located in Sunnyvale, California ~~with a book value of $118 million, for a total of $306 million,~~ through two separate and independent closings. ~~Upon the completion of the~~The first closing occurred in fiscal 2018, we consummated the sale of properties with a net book value of $66 million for cash proceeds of $210 million, resulting in a gain, net of direct selling costs, of $142 million. The remaining properties, consisting of land, were classified as assets held-for-sale, and included as other current assets in our consolidated balance sheets as of April 26, 2019.2018. On August 26, 2019, the second closing occurred and we consummated the sale of the land, with a net book value of $53 million, and received cash proceeds of $96 million, resulting in a gain, net of direct selling costs, of $38 million.

Depreciation and amortization expense related to property and equipment, net is summarized below (in millions):

	April 24, 2020		April 26, 2019		April 30, 2021		April 24, 2020
Deferred tax assets	$	220	$	201	$	219	$	220
Operating lease ROU assets		137		—		114		137
Other assets		342		389		361		342
Other non-current assets	$	699	$	590	$	694	$	699

During fiscal 2019, we formed a joint venture with Lenovo (Beijing) Information Technology Ltd. (“Lenovo”) in China and, in February 2019, contributed assets to the newly formed entity, Lenovo NetApp Technology Limited (“LNTL”), in exchange for a non-controlling ~~49%~~49% equity interest. The group of assets we contributed and derecognized met the definition of a business and included cash, fixed assets, customer relationships and an allocation of goodwill, with an aggregate book value of $7$7 million. The fair value of our equity interest in LNTL of ~~$80~~$80 million, based on discounted cash flows, resulted in a non-cash gain of ~~$73~~$73 million. We accounted for our ownership interest as an equity method investment and have presented it in ~~Other~~other non-current assets on our consolidated balance ~~sheet.~~ sheets. The book value of our investment as of April 30, 2021 and April 24, 2020 was $71 million and ~~April 26, 2019 was~~ $67 million, ~~and $78 million, respectively, reflecting~~respectively. The book value as of April 24, 2020 reflected a $10 million other-than-temporary impairment charge recorded to other (expense) income, ~~(expense),~~ net in the fourth quarter of fiscal 2020 attributable to a decline in growth rate projections for LNTL, in part due to the COVID-19 pandemic.

LNTL is integral to our sales channel strategy in China, acting as a distributor of our offerings to customers headquartered there, and involved in certain OEM sales to Lenovo. It will also endeavor to localize our products and services, and to develop new joint offerings for the China market by leveraging NetApp and Lenovo technologies.

	April 24, 2020		April 26, 2019		April 30, 2021		April 24, 2020
Accrued compensation and benefits	$	322	$	433	$	505	$	322
Product warranty liabilities		26		25		21		26
Operating lease liabilities		51		—		49		51
Other current liabilities		375		393		395		375
Accrued expenses	$	774	$	851	$	970	$	774

Equipment and software systems sales include a standard product warranty. Estimated future hardware and software warranty costs are recorded as a cost of product revenues at the time of product shipment, based on historical and projected warranty claim rates, historical and projected cost-per-claim and knowledge of specific product failures that are outside our typical experience.

The following tables summarize the activity related to product warranty liabilities and their balances as reported in our consolidated balance sheets (in millions):

	Year Ended						Year Ended
	April 24, 2020			April 26, 2019			April 30, 2021			April 24, 2020			April 26, 2019
Balance at beginning of period	$	40		$	40		$	41		$	40		$	40
Expense accrued during the period		26			22			13			26			22
Warranty costs incurred		(25	)		(22	)		(22	)		(25	)		(22	)
Balance at end of period	$	41		$	40		$	32		$	41		$	40

	April 24, 2020		April 26, 2019		April 30, 2021		April 24, 2020
Accrued expenses	$	26	$	25	$	21	$	26
Other long-term liabilities		15		15		11		15
Total warranty liabilities	$	41	$	40	$	32	$	41

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.

	April 24, 2020		April 26, 2019		April 30, 2021		April 24, 2020
Liability for uncertain tax positions	$	136	$	252	$	127	$	136
Income taxes payable		399		447		351		399
Product warranty liabilities		15		15		11		15
Operating lease liabilities		93		—		71		93
Other liabilities		71		83		90		71
Other long-term liabilities	$	714	$	797	$	650	$	714

	Year Ended									Year Ended
	April 24, 2020			April 26, 2019			April 27, 2018			April 30, 2021			April 24, 2020			April 26, 2019
Interest income	$	48		$	88		$	79		$	9		$	48		$	88
Interest expense		(55	)		(58	)		(62	)		(74	)		(55	)		(58	)
Other income, net		6			17			24			(4	)		6			17
Other income (expense), net	$	(1	)	$	47		$	41
Other (expense) income, net										$	(69	)	$	(1	)	$	47

Supplemental cash flow information related to our operating leases is included in Note 10 – Leases. Non-cash investing and ~~financing activities and~~other supplemental cash flow information are ~~as follows:~~presented below:

	Year Ended						Year Ended
	April 24, 2020		April 26, 2019		April 27, 2018		April 30, 2021		April 24, 2020		April 26, 2019
Non-cash Investing and Financing Activities:
Non-cash Investing Activities:
Capital expenditures incurred but not paid	$	15	$	9	$	24	$	15	$	15	$	9
Non-cash extinguishment of sale-leaseback financing obligations	$	—	$	—	$	130
Supplemental Cash Flow Information:
Income taxes paid, net of refunds	$	276	$	205	$	87	$	338	$	276	$	205
Interest paid	$	50	$	53	$	58	$	57	$	50	$	53

~~To provide visibility into our transition from older products to our newer, higher growth products and clarity into~~Product revenues include the ~~dynamics~~sale of our product revenue, we group our products by “Strategic” and “Mature” solutions. As our product portfolio evolves, market dynamics change, and management continues to assess our largest growth opportunities, we periodically change how we group certain products. Beginning in fiscal 2020, Strategic includes all-flash array products: A-series arrays, SolidFire, and EF-series, including all related add-on hardware and ~~operating system (OS)~~ software solutions across our entire product set, including All-Flash FAS, SolidFire, EF-series, Hybrid FAS, E-series, NetApp HCI, ~~StorageGrid,~~ and optional add-on software products. Mature now includes hybrid and all-disk array products: FAS and E-series, including all related add-on hardware and OS software, and original equipment manufacturers products. Prior to this grouping change, Hybrid FAS products and E-Series were included in Strategic, while all add-on hardware and OS software were included in Mature. For comparability, Strategic and Mature revenues presented for the prior year periods have been recast based on the revised groupings.

StorageGrid. In addition to the sale of our products and solutions, we provide a variety of services to our customers, including software ~~maintenance,~~support, hardware ~~maintenance~~support and other services including professional services, ~~global support solutions,~~ and customer education and training. Revenues generated by our Public Cloud Services (formerly referred to as Cloud Data Services) offerings, are included in software support revenues.

The following table depicts the disaggregation of revenue by our products and services (in millions):

Revenues by geographic region are presented in Note 16 – Segment, Geographic, and Significant Customer Information.

The following table summarizes the components of our deferred revenue and financed unearned services balance as reported in our consolidated balance sheets (in millions):

	April 24, 2020		April 26, 2019		April 30, 2021		April 20, 2020
Deferred product revenue	$	75	$	84	$	59	$	75
Deferred services revenue		3,567		3,502		3,873		3,567
Financed unearned services revenue		56		82		71		56
Total	$	3,698	$	3,668	$	4,003	$	3,698

Reported as:
Short-term	$	1,894	$	1,825	$	2,062	$	1,894
Long-term		1,804		1,843		1,941		1,804
Total	$	3,698	$	3,668	$	4,003	$	3,698

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~~support 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 18 – Commitments and Contingencies for additional information related to these arrangements.

The following tables summarize the activity related to deferred revenue and financed unearned services revenue (in millions):

	Year Ended						Year Ended
	April 24, 2020			April 26, 2019			April 30, 2021			April 20, 2020
Balance at beginning of period	$	3,668		$	3,363		$	3,698		$	3,668
Additions		2,513			2,763			3,191			2,513
Revenue recognized during the period		(2,483	)		(2,458	)		(2,886	)		(2,483	)
Balance at end of period	$	3,698		$	3,668		$	4,003		$	3,698

During the years ended April 30, 2021 and April 24, 2020, ~~and April 26, 2019,~~ we recognized ~~$1,822~~$1,894 million and ~~$1,722~~$1,822 million, respectively, that was included in the deferred revenue and financed unearned services revenue balance at the beginning of the respective periods.

As of April ~~24, 2020,~~30, 2021, the aggregate amount of the transaction price allocated to the remaining performance obligations related to customer contracts that are unsatisfied or partially unsatisfied was ~~$3,698~~$4,003 million, which is equivalent to our deferred revenue and unearned services revenue balance. Because customer orders are typically placed on an as-needed basis, and cancellable without penalty prior to shipment, orders in backlog may not be a meaningful indicator of future revenue and have not been included in this amount. We expect to recognize as revenue approximately ~~51%~~52% of our deferred revenue and financed unearned services revenue balance in the next 12 months, approximately ~~25%~~24% in the next 13 to 24 months, and the remainder thereafter.

The following tables summarize the activity related to deferred commissions and their balances as reported in our consolidated balance sheets (in millions):

	Year Ended						Year Ended
	April 24, 2020			April 26, 2019			April 30, 2021			April 24, 2020
Balance at beginning of period	$	172		$	137		$	156		$	172
Additions		79			112			142			79
Expense recognized during the period		(95	)		(77	)		(101	)		(95	)
Balance at end of period	$	156		$	172		$	197		$	156

	April 24, 2020		April 26, 2019		April 30, 2021		April 24, 2020
Other current assets	$	67	$	75	$	86	$	67
Other non-current assets		89		97		111		89
Total deferred commissions	$	156	$	172	$	197	$	156

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.

The following is a summary of our investments at their cost or amortized cost for the years ended April 30, 2021 and April 24, 2020 (in millions):

	April 24, 2020								April 26, 2019
	Cost or						Estimated		Cost or							Estimated
	Amortized		Gross Unrealized				Fair		Amortized		Gross Unrealized					Fair
	Cost		Gains		Losses		Value		Cost		Gains		Losses			Value		April 30, 2021		April 24, 2020
Corporate bonds	$	155	$	1	$	—	$	156	$	1,359	$	2	$	(8	)	$	1,353	$	58	$	155
U.S. Treasury and government debt securities		68		—		—		68		214		—		(1	)		213		8		68
Certificates of deposit		158		—		—		158		117		—		—			117		61		158
Mutual funds		33		—		—		33		35		—		—			35		40		33
Total debt and equity securities	$	414	$	1	$	—	$	415	$	1,725	$	2	$	(9	)	$	1,718	$	167	$	414

The fair value of our investments approximates their cost or amortized cost for both periods presented.

During fiscal 2020, we sold approximately $1.0 billion of corporate bonds held by foreign subsidiaries and recognized a gain on sale of $14 million, which is presented in other (expense) income, ~~(expense),~~ net on our consolidated statement of ~~operations.~~income.

The following table presents the contractual maturities of our debt investments as of April ~~24, 2020~~30, 2021 (in millions):

	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	315	$	315	$	102	$	102
Due after one year through five years		61		62		20		21
Due after five years through ten years		5		5		5		5
	$	381	$	382	$	127	$	128

Actual maturities may differ from the contractual maturities because borrowers may have the right to call or prepay certain obligations.

The following table summarizes our financial assets and liabilities measured at fair value on a recurring basis (in millions):

	April 24, 2020								April 30, 2021
				Fair Value Measurements at Reporting Date Using								Fair Value Measurements at Reporting Date Using
	Total			Level 1		Level 2			Total			Level 1		Level 2
Cash	$	2,500		$	2,500	$	—		$	4,468		$	4,468	$	0
Corporate bonds		156			—		156			59			0		59
U.S. Treasury and government debt securities		68			44		24			8			4		4
Certificates of deposit		158			—		158			61			0		61
Total cash, cash equivalents and short-term investments	$	2,882		$	2,544	$	338		$	4,596		$	4,472	$	124
Other items:
Mutual funds ⁽¹⁾	$	6		$	6	$	—		$	8		$	8	$	0
Mutual funds ⁽²⁾	$	27		$	27	$	—		$	32		$	32	$	0
Foreign currency exchange contracts assets ⁽¹⁾	$	4		$	—	$	4		$	9		$	0	$	9
Foreign currency exchange contracts liabilities ⁽³⁾	$	(2	)	$	—	$	(2	)	$	(1	)	$	0	$	(1	)

	April 26, 2019								April 24, 2020
				Fair Value Measurements at Reporting Date Using								Fair Value Measurements at Reporting Date Using
	Total			Level 1		Level 2			Total			Level 1		Level 2
Cash	$	2,216		$	2,216	$	—		$	2,500		$	2,500	$	0
Corporate bonds		1,353			—		1,353			156			0		156
U.S. Treasury and government debt securities		213			131		82			68			44		24
Certificates of deposit		117			—		117			158			0		158
Total cash, cash equivalents and short-term investments	$	3,899		$	2,347	$	1,552		$	2,882		$	2,544	$	338
Other items:
Mutual funds ⁽¹⁾	$	6		$	6	$	—		$	6		$	6	$	0
Mutual funds ⁽²⁾	$	29		$	29	$	—		$	27		$	27	$	0
Foreign currency exchange contracts assets ⁽¹⁾	$	4		$	—	$	4		$	4		$	0	$	4
Foreign currency exchange contracts liabilities ⁽³⁾	$	(1	)	$	—	$	(1	)	$	(2	)	$	0	$	(2	)

Our Level 2 debt instruments are held by a custodian who prices some of the investments using standard inputs in various asset price models or obtains investment prices from third-party pricing providers that incorporate standard inputs in various asset price models. These pricing providers utilize the most recent observable market information in pricing these securities or, if specific prices are not available for these securities, use other observable inputs like market transactions involving identical or comparable securities. We review Level 2 inputs and fair value for reasonableness and the values may be further validated by comparison to multiple independent pricing sources. In addition, we review third-party pricing provider models, key inputs and assumptions and understand the pricing processes at our third-party providers in determining the overall reasonableness of the fair value of our Level 2 debt instruments. As of April ~~24, 2020~~30, 2021 and April ~~26, 2019,~~24, 2020, we have not made any adjustments to the prices obtained from our third-party pricing providers.

As of April ~~24, 2020~~30, 2021 and April ~~26, 2019,~~24, 2020, the fair value of our long-term debt was approximately ~~$1,176~~$2,736 million and ~~$1,553~~$1,176 million, respectively. The fair value of our long-term debt was based on observable market prices in a less active market. The fair value of our commercial paper notes approximated their carrying value. All of our debt obligations are categorized as Level 2 instruments.

The following table summarizes information relating to our long-term debt, which we collectively refer to as our Senior Notes (in millions, except interest rates):

		April 24, 2020			April 26, 2019			Effective Interest Rate	April 30, 2021			April 24, 2020
	Effective Interest Rate	Amount			Amount
2.00% Senior Notes Due September 2019	2.32%	$	—		$	400
3.375% Senior Notes Due June 2021	3.54%		500			500		3.54%	$	0		$	500
3.25% Senior Notes Due December 2022	3.43%		250			250		3.43%		250			250
3.30% Senior Notes Due September 2024	3.42%		400			400		3.42%		400			400
1.875% Senior Notes Due June 2025								2.03%		750			0
2.375% Senior Notes Due June 2027								2.51%		550			0
2.70% Senior Notes Due June 2030								2.81%		700			0
Total principal amount			1,150			1,550				2,650			1,150
Unamortized discount and issuance costs			(4	)		(6	)			(18	)		(4	)
Total senior notes			1,146			1,544			$	2,632		$	1,146
Less: Current portion of long-term debt			—			(400	)
Total long-term debt		$	1,146		$	1,144

In June 2020, we issued $750 million aggregate principal amount of 1.875% Senior Notes due 2025, $550 million aggregate principal amount of 2.375% Senior Notes due 2027 and $700 million aggregate principal amount of 2.70% Senior Notes due 2030, for which we received total proceeds of approximately $2.0 billion, net of discount and issuance costs. Interest on these Senior Notes is payable semi-annually in June and December.

Our ~~$400 million,~~ 3.30% Senior Notes, with a principal amount of $400 million, were issued in September 2017 with interest paid semi-annually in March and September. Our ~~3.375% Senior Notes and~~ 3.25% Senior Notes, with a principal ~~amounts~~amount of ~~$500 million and~~ $250 million, ~~respectively,~~ were issued in ~~June 2014 and~~ December 2012 ~~respectively. Interest on these Senior Notes is~~with interest paid semi-annually in June and December. .

Our Senior Notes, which are unsecured, unsubordinated obligations, rank equally in right of payment with any existing and future senior unsecured ~~indebtedness.~~ indebtedness

On ~~September~~July 27, ~~2019,~~2020, we ~~paid $400 million to extinguish~~extinguished our ~~2.00%~~3.375% Senior Notes ~~at maturity.~~due June 2021 for an aggregate cash redemption price of $513 million, plus accrued and unpaid interest. As part of the debt extinguishment, we recognized a loss of $14 million during the first quarter of fiscal year 2021, which includes a cash redemption premium of $13 million and the write-off of unamortized discount and issuance costs totaling $1 million. The loss on extinguishment of debt is included in other (expense) income, net in our consolidated statement of income for the year ended April 30, 2021.

We may redeem the Senior Notes in whole or in part, at any time at our option at specified redemption prices. In addition, upon the occurrence of certain change of control triggering events, we may be required to repurchase the Senior Notes under specified terms. The Senior Notes also include covenants that limit our ability to incur debt secured by liens on assets or on shares of stock or indebtedness of our subsidiaries; to engage in certain sale and lease-back transactions; and to consolidate, merge or sell all or substantially all of our assets. As of April ~~24, 2020,~~30, 2021, we were in compliance with all covenants associated with the Senior Notes.

As of April ~~24, 2020,~~30, 2021, our aggregate future principal debt maturities are as follows (in millions):

Fiscal Year	Amount		Amount
2022		500	$	0
2023		250		250
2024				0
2025		400		400
2026				750
Thereafter				1,250
Total	$	1,150	$	2,650

We have a commercial paper program (the Program), under which we may issue unsecured commercial paper notes. Amounts available under the Program, as amended onin July ~~17,~~ 2017, may be borrowed, repaid and re-borrowed, with the aggregate face or principal amount of the notes outstanding under the Program at any time not to exceed $1.0 billion. The maturities of the notes can vary, but may not exceed 397 days from the date of issue. The notes are sold under customary terms in the commercial paper market and may be issued at a discount from par or, alternatively, may be sold at par and bear interest at rates dictated by market conditions at the time of their issuance. The proceeds from the issuance of the notes are used for general corporate purposes. AsWhile 0 commercial paper notes were outstanding as of April ~~24, 2020 and April 26, 2019,~~30, 2021, we had commercial paper notes outstanding with an aggregate principal amount of $523 million, ~~and $249 million, respectively,~~a weighted-average interest ~~rates~~rate of 2.01% ~~and 2.73%~~, ~~respectively,~~ and maturities primarily less than three months as of April 24, 2020. During fiscal year 2021, we received proceeds of $75 million from the issuance, and made repayments of $176 million for the settlement, of commercial paper notes with original maturities greater than three months. During fiscal 2020, we received proceeds of $111 million from the issuance, and made repayments of $10 million for the settlement, of commercial paper notes with original maturities greater than three months.

In connection with the Program, we have a senior unsecured credit agreement with a syndicated group of ~~lenders that expires on December 10, 2021.~~ lenders. The credit agreement, aswhich was amended on ~~July 17, 2017,~~January 22, 2021, provides for a $1.0 billion revolving unsecured credit facility, with a sublimit of $50 million ~~letter~~available for the issuance of letters of credit ~~sub-facility, that serves as a back-up for the Program. Proceeds from the facility may also be used for general corporate purposes to the extent that the~~on our behalf. The credit facility ~~exceeds the outstanding debt issued under the Program. The credit agreement includes options that allow~~matures on January 22, 2026, with an option for us to ~~request an increase in~~extend the ~~facility of up to an additional $300 million and to extend its~~ maturity date for 2 additional ~~one-year~~1-year periods, ~~both~~ subject to certain conditions. The proceeds of the loans may be used by us for general corporate purposes and as liquidity support for our existing commercial paper program. As of April ~~24, 2020,~~30, 2021, we were ~~in compliance~~compliant with all associated covenants in ~~this agreement.~~ the agreement. NaN amounts were drawn against this credit facility during any of the periods presented.

In fiscal 2016, we entered into a sale-leaseback arrangement of certain of our land and buildings, under which we leased back certain of our properties rent free over lease terms ending at various dates through December 31, 2017. These properties did not qualify for sale-leaseback accounting and as a result they were accounted for as financing transactions. During fiscal 2018, we terminated leases under the arrangement and recorded a non-cash sale of properties with a net book value of $54 million, the extinguishment of $130 million in financing obligations, and a gain of $76 million. There are 0 balances remaining on our consolidated balance sheets as of April 24, 2020 or April 26, 2019 associated with this sale-leaseback arrangement.

We lease real estate, equipment and automobiles in the U.S. and internationally. Our real estate leases, which ~~represent~~are responsible for the majority of our aggregate ROU asset and liability balances, include leases for office space, data centers and other facilities, and as of April 30, 2021, have remaining lease terms of up to 15 years. Some of these leases contain options that allow us to extend or terminate the lease agreement. Our equipment leases are primarily for servers and networking equipment and as of April 30, 2021, have remaining lease terms of up to 4 ~~years, while~~years. As of April 30, 2021, our automobile leases have remaining lease terms of up to 5 years. All our leases are classified as operating leases except for certain immaterial equipment finance leases.

In June 2020, we entered into a build-to-suit lease agreement for an office building with future undiscounted payments of approximately $67 million. Because the Company does not control the underlying asset during the construction period, the Company is not considered the owner of the asset under construction for accounting purposes. The lease will commence upon completion of the construction of the office building which is expected to be in the third quarter of fiscal 2022. The initial term of the lease is twenty years with options to renew the lease during the lease term. A ROU asset and related lease liability will be measured and recognized in our financial statements in the period the lease commences.

In April 2021, we entered into a lease for our new corporate headquarters located in San Jose, California, which is comprised of approximately 300 square feet of office space and requires future minimum undiscounted payments of approximately $180 million over the initial 11-year lease term. The lease agreement also provides us 2 successive renewal options, each for five years. A ROU asset and related lease liability will be measured and recognized in our financial statements upon lease commencement in the first quarter of fiscal 2022.

The components of lease cost related to our operating leases were as follows (in millions):

	Year Ended		Year Ended
	April 24, 2020		April 30, 2021		April 24, 2020
Operating lease cost	$	55	$	55	$	55
Variable lease cost		16		11		16
Total lease cost	$	71	$	66	$	71

Variable lease cost is primarily attributable to amounts paid to lessors for common area maintenance and utility charges under our real estate leases.

The supplemental cash flow information related to our operating leases is as follows (in millions):

	Year Ended		Year Ended
	April 24, 2020		April 30, 2021		April 24, 2020
Cash paid for amounts included in the measurement of operating lease liabilities	$	56	$	57	$	56
Right-of-use assets obtained in exchange for new operating lease obligations	$	41	$	31	$	41

The supplemental balance sheet information related to our operating leases is as follows (in millions, except lease term and discount rate):

	April 24, 2020			April 30, 2021			April 24, 2020
Other non-current assets	$	137		$	114		$	137
Total operating lease ROU assets	$	137		$	114		$	137

Accrued expenses	$	51		$	49		$	51
Other long-term liabilities		93			71			93
Total operating lease liabilities	$	144		$	120		$	144

Weighted Average Remaining Lease Term	3.9 years			3.4 years			3.9 years

Weighted Average Discount Rate		2.7	%		2.9	%		2.7	%

Future minimum operating lease payments as of April ~~24, 2020~~30, 2021, which exclude the undiscounted payments for the aforementioned build-to-suit and corporate headquarters leases to commence in fiscal 2022, are as follows (in millions):

~~Prior to our adoption of the new lease standard, future minimum operating lease payments as of April 26, 2019, which were undiscounted and excluded non-lease components, were as follows (in millions):~~

The 1999 Plan — As most recently amended on September 12, 2019, the 1999 Stock Option Plan (the Plan) comprises five separate equity incentive programs: (i) the Discretionary Option Grant Program under which options may be granted to eligible individuals at a fixed price per share; (ii) the Stock Appreciation Rights Program under which eligible persons may be granted stock appreciation rights that allow individuals to receive the appreciation in fair market value of the shares; (iii) the Stock Issuance Program under which eligible individuals may be issued shares of common stock directly; (iv) the Performance Share and Performance Unit Program under which eligible persons may be granted performance shares or performance units which result in payment to the participant only if performance goals or other vesting criteria are achieved and (v) the Automatic Award Program

under which nonemployee board members automatically receive equity grants at designated intervals over their period of board service. In August 2019, the Plan was extended for a 10-year term.

Under the Plan, the Board of Directors may grant to employees, nonemployee directors, consultants and independent advisors options to purchase shares of our common stock during their period of service. The exercise price for an incentive stock option and a nonstatutory option cannot be less than 100% of the fair market value of the common stock on the grant date. ~~Options granted under the Plan generally vest over a~~ ~~four-year~~ ~~period. Options granted generally have a term of~~ ~~seven years~~ ~~after the grant date, subject to earlier termination upon the occurrence of certain events.~~ The Plan prohibits the repricing of any outstanding stock option or stock appreciation right after it has been granted or to cancel any outstanding stock option or stock appreciation right and immediately replace it with a new stock option or stock appreciation right with a lower exercise price unless approved by stockholders. RSUs granted under the Plan include time-based RSUs that generally vest over a four-year period with 25% vesting on each anniversary of the grant date. The Compensation Committee of the Board of Directors (the Compensation Committee) has the discretion to use different vesting schedules. In addition, performance-based RSUs may be granted under the Plan and are subject to performance criteria and vesting terms specified by the Compensation Committee.

Under the Plan, the number of shares reserved for issuance is reduced by 2 shares for every share subject to a full value award, which are specified to be grants that are in the form of performance shares and/or performance unit awards, stock, restricted stock or restricted stock units. The Plan (i) limits the number of shares that may be granted pursuant to awards under the Stock Issuance Program to a participant in any calendar year to 1 million, (ii) limits the initial value of performance units a participant may receive to not more than $5 million and (iii) limits the number of performance shares a participant may receive in a calendar year to 1 million.

~~During fiscal 2020, the shares reserved for issuance under the Plan were increased by 4 million shares of common stock.~~

As of April ~~24, 2020, 27~~30, 2021, 18 million shares were available for grant under the Plan.

~~As of April 24, 2020 and April 26, 2019, we had less~~Less than 1 million stock options ~~outstanding.~~were outstanding as of April 30, 2021 and April 24, 2020.

Additional information related to our stock options is summarized below (in millions):

	Year Ended						Year Ended
	April 24, 2020		April 26, 2019		April 27, 2018		April 30, 2021		April 24, 2020		April 26, 2019
Intrinsic value of exercises	$	5	$	31	$	37	$	11	$	5	$	31
Proceeds received from exercises	$	4	$	25	$	88	$	8	$	4	$	25
Fair value of options vested	$	1	$	2	$	8	$	5	$	1	$	2

~~The aggregate intrinsic value represents the pre-tax difference between the exercise price of stock options and the quoted market price of our stock on that day for all in-the-money options.~~

In fiscal 2021, 2020 and 2019, ~~and 2018,~~we granted PBRSUs to certain of our executives. Each PBRSU has performance-based vesting criteria (in addition to the ~~service based~~service-based vesting criteria) such that the PBRSU cliff-vests at the end of either an approximate one, two ~~year~~ or three year performance period, which began on the date specified in the grant agreement and typically ends on the last day of the first, second or third fiscal year, respectively, following the grant date. The number of shares of common stock that will be issued to settle ~~the~~most of these PBRSUs at the end of the applicable performance and service period will range from 0% to 200% of a target number of shares originally granted. For most of the PBRSUs granted in fiscal 2021 and half of the PBRSUs granted in fiscal 2020 and 2019, ~~and all of the PBRSUs granted in fiscal 2018,~~ the number of shares issued will depend upon our Total Stockholder Return (TSR) as compared to the TSR of a specified group of benchmark peer companies (each expressed as a growth rate percentage) calculated as of the ~~applicable period~~ end ~~date.~~of the performance period. The fair values of these awards were fixed at grant date using a Monte Carlo simulation model. For the remaining PBRSUs granted in fiscal 2020 and 2019, the number of shares issued will depend upon our achievement against a cumulative Adjusted Operating Income (AOI) target, as defined in the grant agreements, for the three-year periods from fiscal 2020 through 2022 and fiscal 2019 through 2021, respectively. The fair values of these AOI PBRSUs were established consistent with our methodology for valuing time-based RSUs, while compensation cost is being recognized based on the probable outcome of the performance condition. The aggregate grant date fair value of all PBRSUs granted in fiscal 2021, 2020 and 2019 ~~and 2018~~ was $27 million, $18 million ~~$24 million~~ and ~~$20~~$24 million, respectively, and these amounts are being recognized to expense over the shorter of the remaining applicable performance or service periods.

As of April 30, 2021, April 24, 2020 and April 26, 2019, ~~and April 27, 2018,~~ there were approximately 1 million PBRSUs outstanding.

The following table summarizes information related to RSUs, including PBRSUs, (in millions, except for fair value):

	Number of Shares			Weighted- Average Grant Date Fair Value		Number of Shares			Weighted- Average Grant Date Fair Value
Outstanding as of April 28, 2017		11		$	28.81
Granted		4		$	39.74
Vested		(5	)	$	30.59
Forfeited		(1	)	$	29.54
Outstanding as of April 27, 2018		9		$	32.91		9		$	32.91
Granted		3		$	63.40		3		$	63.40
Vested		(3	)	$	32.02		(3	)	$	32.02
Forfeited		(1	)	$	36.61		(1	)	$	36.61
Outstanding as of April 26, 2019		8		$	45.68		8		$	45.68
Granted		4		$	51.39		4		$	51.39
Vested		(4	)	$	38.87		(4	)	$	38.87
Forfeited		(1	)	$	48.30		(1	)	$	48.30
Outstanding as of April 24, 2020		7		$	51.40		7		$	51.40
Granted							6		$	42.46
Vested							(3	)	$	44.74
Forfeited							(1	)	$	51.20
Outstanding as of April 30, 2021							9		$	47.75

We primarily use the net share settlement approach upon vesting, where a portion of the shares are withheld as settlement of employee withholding taxes, which decreases the shares issued to the employee by a corresponding value. The number and value of the shares netted for employee taxes are summarized in the table below (in millions):

	Year Ended						Year Ended
	April 24, 2020		April 26, 2019		April 27, 2018		April 30, 2021		April 24, 2020		April 26, 2019
Shares withheld for taxes		1		1		2		1		1		1
Fair value of shares withheld	$	79	$	96	$	75	$	42	$	79	$	96

Eligible employees are offered shares through a 24-month offering period, which consists of 4 consecutive 6-month purchase periods. Employees may purchase a limited number of shares of the Company’s stock at a discount of up to 15% of the lesser of the market value at the beginning of the offering period or the end of each 6-month purchase period. On September 12, 2019, the ESPP was amended to increase the shares reserved for issuance by 2 million shares of common stock. As of April ~~24, 2020, 7~~30, 2021, 5 million shares were available for issuance. The following table summarizes activity related to the purchase rights issued under the ESPP (in millions):

	Year Ended						Year Ended
	April 24, 2020		April 26, 2019		April 27, 2018		April 30, 2021		April 24, 2020		April 26, 2019
Shares issued under the ESPP		2		3		4		2		2		3
Proceeds from issuance of shares	$	98	$	96	$	85	$	90	$	98	$	96

Stock-based compensation expense is included in the consolidated statements of ~~operations~~income as follows (in millions):

	Year Ended						Year Ended
	April 24, 2020		April 26, 2019		April 27, 2018		April 30, 2021		April 24, 2020		April 26, 2019
Cost of product revenues	$	3	$	4	$	3	$	4	$	3	$	4
Cost of hardware maintenance and other services revenues		10		10		10
Cost of hardware support and other services revenues								10		10		10
Sales and marketing		66		67		68		92		66		67
Research and development		53		48		49		64		53		48
General and administrative		21		29		31		27		21		29
Total stock-based compensation expense	$	153	$	158	$	161	$	197	$	153	$	158
Income tax benefit for stock-based compensation	$	15	$	15	$	29	$	17	$	15	$	15

As of April ~~24, 2020,~~30, 2021, total unrecognized compensation expense related to our equity awards was ~~$280~~$333 million, which is expected to be recognized on a straight-line basis over a weighted-average remaining service period of ~~2.1~~2.2 years.

The valuation of RSUs and ESPP purchase rights and the underlying weighted-average assumptions are summarized as follows:

	Year Ended									Year Ended
	April 24, 2020			April 26, 2019			April 27, 2018			April 30, 2021			April 24, 2020			April 26, 2019
RSUs:
Risk-free interest rate		1.7	%		2.6	%		1.4	%		0.2	%		1.7	%		2.6	%
Expected dividend yield		2.9	%		2.4	%		2.0	%		4.4	%		2.9	%		2.4	%
Weighted-average fair value per share granted	$	51.39		$	63.40		$	39.74		$	42.46		$	51.39		$	63.40

ESPP:
Expected term in years		1.2			1.2			1.2			1.2			1.2			1.2
Risk-free interest rate		2.0	%		2.6	%		1.4	%		0.2	%		2.0	%		2.6	%
Expected volatility		33	%		31	%		28	%		47	%		33	%		31	%
Expected dividend yield		3.1	%		2.4	%		2.0	%		4.4	%		3.1	%		2.4	%
Weighted-average fair value per right granted	$	10.15		$	18.07		$	12.34		$	10.08		$	10.15		$	18.07

As of April ~~24, 2020,~~30, 2021, our Board of Directors ~~has~~had authorized the repurchase of up to $13.6 billion of our common stock under our stock repurchase ~~program.~~program, and on May 28, 2021 authorized an additional $500 million. Under this program, which we may suspend or discontinue at any time, we may purchase shares of our outstanding common stock through solicited or unsolicited transactions in the open market, in privately negotiated transactions, through accelerated share repurchase programs, pursuant to a Rule 10b5-1 plan or in such other manner as deemed appropriate by our management. In March 2020, we suspended our repurchases under the program due to the economic impact of the COVID-19 pandemic. We reinitiated our stock repurchase program during the third quarter of fiscal year 2021.

The following table summarizes activity related to this program (in millions, except per share amounts):

Since the May 13, 2003 inception of our stock repurchase program through April ~~24, 2020,~~30, 2021, we repurchased a total of ~~338~~340 million shares of our common stock at an average price of ~~$38.86~~$39.02 per share, for an aggregate purchase price of ~~$13.1~~$13.3 billion.

Our Board of Directors has the authority to issue up to 5 million shares of preferred stock and to determine the price, rights, preferences, privileges, and restrictions, including voting rights, of those shares without any further vote or action by the stockholders. NaN shares of preferred stock were issued or outstanding in any period presented.

The following is a summary of our fiscal 2021, 2020 ~~2019~~ and ~~2018~~2019 activities related to dividends on our common stock (in millions, except per share amounts).

	Year Ended						Year Ended
	April 24, 2020		April 26, 2019		April 27, 2018		April 30, 2021		April 24, 2020		April 26, 2019
Dividends per share declared	$	1.92	$	1.60	$	0.80	$	1.92	$	1.92	$	1.60
Dividend payments allocated to additional paid-in capital	$	400	$	403	$	106	$	30	$	400	$	403
Dividend payments allocated to retained earnings	$	39	$	—	$	108	$	397	$	39	$	0

On May ~~26, 2020,~~28, 2021, we declared a cash dividend of ~~$0.48~~$0.50 per share of common stock, payable on July ~~29, 2020~~28, 2021 to shareholders of record as of the close of business on July ~~10, 2020.~~9, 2021. The timing and amount of future dividends will depend on market conditions,

corporate business and financial considerations and regulatory requirements. All dividends declared have been determined by the Company to be legally authorized under the laws of the state in which we are incorporated.

Changes in accumulated other comprehensive income (loss) (AOCI) by component, net of tax, are summarized below (in millions):

	Foreign Currency Translation Adjustments			Defined Benefit Obligation Adjustments			Unrealized Gains (Losses) on Available- for-Sale Securities			Unrealized Gains (Losses) on Derivative Instruments			Total			Foreign Currency Translation Adjustments			Defined Benefit Obligation Adjustments			Unrealized Gains (Losses) on Available- for-Sale Securities			Unrealized Gains (Losses) on Derivative Instruments			Total
Balance as of April 27, 2018	$	(27	)	$	—		$	(43	)	$	—		$	(70	)	$	(27	)	$	0		$	(43	)	$	0		$	(70	)
OCI before reclassifications, net of tax		(7	)		(2	)		36			2			29			(7	)		(2	)		36			2			29
Amounts reclassified from AOCI, net of tax		—			(1	)		—			(1	)		(2	)		0			(1	)		0			(1	)		(2	)
Total OCI		(7	)		(3	)		36			1			27			(7	)		(3	)		36			1			27
Balance as of April 26, 2019		(34	)		(3	)		(7	)		1			(43	)		(34	)		(3	)		(7	)		1			(43	)
OCI before reclassifications, net of tax		(8	)		3			22			5			22			(8	)		3			22			5			22
Amounts reclassified from AOCI, net of tax		—			(1	)		(14	)		(6	)		(21	)		0			(1	)		(14	)		(6	)		(21	)
Total OCI		(8	)		2			8			(1	)		1			(8	)		2			8			(1	)		1
Balance as of April 24, 2020	$	(42	)	$	(1	)	$	1		$	—		$	(42	)		(42	)		(1	)		1			0			(42	)
OCI before reclassifications, net of tax																	15			(3	)		0			(11	)		1
Amounts reclassified from AOCI, net of tax																	0			0			0			11			11
Total OCI																	15			(3	)		0			0			12
Balance as of April 30, 2021																$	(27	)	$	(4	)	$	1		$	0		$	(30	)

We use derivative instruments to manage exposures to foreign currency risk. Our primary objective in holding derivatives is to reduce the volatility of earnings and cash flows associated with changes in foreign currency exchange rates. The maximum length of time over which forecasted foreign currency denominated revenues are hedged is 12 months. The program is not designated for trading or speculative purposes. Our derivatives expose us to credit risk to the extent that the counterparties may be unable to meet the terms of our agreements with them. We seek to mitigate such risk by limiting our counterparties to major financial institutions. In addition, the potential risk of loss with any one counterparty resulting from this type of credit risk is monitored on an ongoing basis. We also have in place master netting arrangements to mitigate the credit risk of our counterparties and to potentially reduce our losses due to counterparty nonperformance. We present our derivative instruments as net amounts in our ~~condensed~~ consolidated balance sheets. The gross and net fair value amounts of such instruments were not material as of April ~~24, 2020~~30, 2021 or April ~~26, 2019.~~24, 2020. All contracts have a maturity of less than 12 months.

The notional amount of our outstanding U.S. dollar equivalent foreign currency exchange forward contracts consisted of the following (in millions):

	April 24, 2020		April 26, 2019		April 30, 2021		April 24, 2020
Cash Flow Hedges
Forward contracts purchased	$	124	$	103	$	167	$	124
Balance Sheet Contracts
Forward contracts sold	$	254	$	121	$	497	$	254
Forward contracts purchased	$	108	$	363	$	117	$	108

The effect of cash flow hedges recognized in net revenues is presented in the consolidated statements of comprehensive income and Note 11 – Stockholders’ Equity.

The effect of derivative instruments not designated as hedging instruments recognized in other (expense) income, net on our consolidated statements of ~~operations~~income was as follows (in millions):

In the ~~first~~second quarter of fiscal ~~2020,~~year 2021, we ~~announced~~committed to a restructuring plan (the ~~May 2019~~August 2020 Plan) to ~~reduce costs~~optimize our business and ~~redirect resources to~~fund our ~~highest return activities, which included a reduction in~~biggest opportunities. In connection with the plan, we reduced our global workforce ofby approximately 2%5%. Charges related to the plan consisted primarily of employee severance-related costs. Substantially all activities under the plan have been completed.

In the first quarter of fiscal year 2021, we executed a restructuring plan (the May 2020 Plan) to reduce costs and redirect resources to our highest return activities, which included a reduction in our global workforce by less than 1%. Charges related to the plan consisted primarily of employee severance-related costs. Substantially all activities under the plan have been completed.

Management has previously approved several restructuring actions, including the ~~November 2016~~May 2019 Plan, April 2019 Plan, May 2018 Plan and ~~April 2019~~November 2016 Plan, under which we reduced our global workforce by 6%approximately 2%, approximately 1%, less than 2%, and ~~approximately 1%~~6%, respectively. Charges related to ~~our~~these restructuring plans consisted primarily of employee severance-related costs. Substantially all activities under the May 2019 Plan were complete as of the end of fiscal 2020, and substantially all activities under the April 2019 Plan were complete as of the end of fiscal 2020. Substantially all activities under the November 2016 Plan and the May 2018 Plan were complete as of the end of fiscal 2018 and 2019, ~~respectively. Substantially all activities under the April 2019 Plan were complete as of the end of fiscal 2020.~~respectively.

Activities related to our restructuring plans are summarized as follows (in millions):

	May 2019 Plan			April 2019 Plan			May 2018 Plan			November 2016 Plan			Total			Total
Balance as of April 28, 2017	$	—		$	—		$	—		$	13		$	13
Net charges		—			—			—			—			—
Cash payments		—			—			—			(7	)		(7	)
Balance as of April 27, 2018		—			—			—			6			6		$	6
Net charges		—			16			19			—			35			35
Cash payments		—			(1	)		(19	)		(2	)		(22	)		(22	)
Balance as of April 26, 2019		—			15			—			4			19			19
Net charges		21			—			—			—			21			21
Cash payments		(20	)		(15	)		—			—			(35	)		(35	)
Other		—			—			—			(4	)		(4	)		(4	)
Balance as of April 24, 2020	$	1		$	—		$	—		$	—		$	1			1
Net charges																	42
Cash payments																	(42	)
Balance as of April 30, 2021																$	1

Upon adoption of the new lease accounting standard in the first quarter of fiscal 2020, the remaining lease-related liabilities associated with the November 2016 Plan were recognized as a reduction to the lease right-of-use asset recorded at transition.

Liabilities for our restructuring activities are included in accrued expenses in our consolidated balance sheets.

	Year Ended						Year Ended
	April 24, 2020		April 26, 2019		April 27, 2018		April 30, 2021		April 24, 2020		April 26, 2019
Domestic	$	379	$	678	$	589	$	433	$	379	$	678
Foreign		565		590		610		529		565		590
Total	$	944	$	1,268	$	1,199	$	962	$	944	$	1,268

	Year Ended								Year Ended
	April 24, 2020			April 26, 2019			April 27, 2018		April 30, 2021			April 24, 2020			April 26, 2019
Current:
Federal	$	83		$	26		$	764	$	82		$	83		$	26
State		9			27			10		22			9			27
Foreign		50			49			39		134			50			49
Total current		142			102			813		238			142			102
Deferred:
Federal		(26	)		35			239		6			(26	)		35
State		(6	)		(6	)		27		2			(6	)		(6	)
Foreign		15			(32	)		4		(14	)		15			(32	)
Total deferred		(17	)		(3	)		270		(6	)		(17	)		(3	)
Provision for income taxes	$	125		$	99		$	1,083	$	232		$	125		$	99

The provision for income taxes differs from the amount computed by applying the statutory federal income tax rate as follows (in millions):

	Year Ended									Year Ended
	April 24, 2020			April 26, 2019			April 27, 2018			April 30, 2021			April 24, 2020			April 26, 2019
Tax computed at federal statutory rate	$	198		$	266		$	366		$	202		$	198		$	266
State income taxes, net of federal benefit		10			16			18			23			10			16
Foreign earnings in lower tax jurisdictions ~~(1)~~		(40	)		(84	)		(108	)		(26	)		(40	)		(84	)
Stock-based compensation		(4	)		(19	)		(23	)		6			(4	)		(19	)
Research and development credits		(16	)		(17	)		(10	)		(13	)		(16	)		(17	)
Global minimum tax on intangible income		32			22			—			19			32			22
Transition tax and related reserves		15			(5	)		732			1			15			(5	)
Tax rate changes		—			—			108
Tax charge from integration of acquired companies											35			0			0
Resolution of income tax matters ~~(2)~~(1)		(61	)		(48	)		—			(6	)		(61	)		(48	)
Non-taxable gain on joint venture formation		—			(14	)		—			0			0			(14	)
Domestic production activities deduction		—			(13	)		(7	)		0			0			(13	)
Other		(9	)		(5	)		7			(9	)		(9	)		(5	)
Provision for income taxes	$	125		$	99		$	1,083		$	232		$	125		$	99

On December 22, 2017, the Tax Cuts and Jobs Act (TCJA) was enacted into law. The TCJA made significant changes to the U.S. corporate income tax system including a reduction of the U.S. federal corporate income tax rate from 35% to 21%, the imposition of a one-time transition tax on deferred foreign earnings, and the creation of new taxes on certain foreign-sourced earnings. ASC 740, Income Taxes, requires companies to recognize the effect of the tax law changes in the period of enactment. However, the SEC staff issued Staff Accounting Bulletin 118, which allowed companies to record provisional amounts during a measurement period not to extend beyond one year from the TCJA enactment date.

As a result of the U.S. federal corporate income tax rate change, effective as of January 1, 2018, we remeasured our deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future periods. During fiscal 2018, we recorded $108 million of tax expense related to all tax rate changes. Upon finalization of our provisional estimates during fiscal 2019, we recorded tax expense of $6 million related to deferred tax assets for equity-based compensation awards to our executives.

The TCJA imposed a mandatory, one-time transition tax on accumulated foreign earnings and profits not previously subject to U.S. income tax at a rate of 15.5% on earnings to the extent of foreign cash and other liquid assets, and 8% on the remaining earnings. In fiscal 2018, we recorded a $732 million discrete tax expense for the estimated U.S. federal and state income tax impacts of the transition tax. In fiscal 2019, we finalized our computation of the transition tax and recorded a reduction of $5 million to our provisional estimate.

Under the TCJA, the global minimum tax on intangible income (GMT) provisions impose a tax on foreign income in excess of a deemed return on tangible assets of foreign corporations. Under U.S. GAAP, companies are allowed to make an accounting policy election to either (i) account for GMT as a component of tax expense in the period in which a company is subject to the rules, or (ii) account for GMT in a company’s measurement of deferred taxes. We have elected to recognize the GMT as a period cost and thus recorded $32 million and $22 million of tax expense for federal and state impacts for fiscal 2020 and fiscal 2019, respectively.

The components of our deferred tax assets and liabilities are as follows (in millions):

	April 24, 2020			April 26, 2019			April 30, 2021			April 24, 2020
Deferred tax assets:
Reserves and accruals	$	72		$	50		$	65		$	72
Net operating loss and credit carryforwards		113			139			115			113
Stock-based compensation		15			16			18			15
Deferred revenue		242			205			226			242
Other		14			16			20			14
Gross deferred tax assets		456			426			444			456
Valuation allowance		(104	)		(123	)		(107	)		(104	)
Deferred tax assets, net of valuation allowance		352			303			337			352
Deferred tax liabilities:
Prepaids and accruals		49			31			51			49
Acquired intangibles		40			32			28			40
Property and equipment		33			31			31			33
Other		20			10			24			20
Total deferred tax liabilities		142			104			134			142
Deferred tax assets, net of valuation allowance and deferred tax liabilities	$	210		$	199		$	203		$	210

The valuation allowance ~~decreased~~increased by ~~$19~~$3 million in fiscal ~~2020.~~2021. The ~~decrease~~increase is mainly attributable to corresponding changes in deferred tax assets, primarily ~~foreign tax credit carryforwards and~~ certain state tax credit carryforwards.

As of April ~~24, 2020,~~30, 2021, we have federal net operating loss and tax credit carryforwards of approximately $1$6 million and $2$1 million, respectively. In addition, we have gross state net operating loss and tax credit carryforwards of ~~$26~~$23 million and ~~$131~~$130 million, respectively. The majority of the state credit carryforwards are California research credits which are offset by a valuation allowance as we believe it is more likely than not that these credits will not be utilized. We also have $3$1 million of foreign net operating losses, and ~~$23~~$28 million of foreign tax credit carryforwards where the majority is generated by our Dutch subsidiary which are fully offset by a valuation allowance. Certain acquired net operating loss and credit carryforwards are subject to an annual limitation under Internal Revenue Code Section 382, but are expected to be realized with the exception of those which have a valuation allowance. The federal, state, and foreign net operating loss carryforwards and credits will expire in various years from fiscal ~~2021~~2022 through ~~2038.~~2035. The federal NOLs, California research credit and Dutch foreign tax credit carryforwards do not expire.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in millions):

	Year Ended									Year Ended
	April 24, 2020			April 26, 2019			April 27, 2018			April 30, 2021			April 24, 2020			April 26, 2019
Balance at beginning of period	$	296		$	348		$	218		$	211		$	296		$	348
Additions based on tax positions related to the current year		5			11			131			7			5			11
Additions for tax positions of prior years		1			26			—			11			1			26
Decreases for tax positions of prior years		(10	)		(35	)		(1	)		0			(10	)		(35	)
Settlements		(81	)		(54	)		—			(8	)		(81	)		(54	)
Balance at end of period	$	211		$	296		$	348		$	221		$	211		$	296

As of April ~~24, 2020,~~30, 2021, we had ~~$211~~$221 million of gross unrecognized tax benefits, of which ~~$136~~$127 million has been recorded in other long-term liabilities. Unrecognized tax benefits of ~~$136~~$126 million, including penalties, interest and indirect benefits, would affect our provision for income taxes if recognized. ~~As a result of U.S. tax reform, we recorded provisional gross unrecognized tax benefits of $114 million during fiscal 2018.~~

We recognized ~~a benefit~~expense for ~~adjustments~~increases to accrued interest and penalties related to unrecognized tax benefits in the income tax provision of approximately $1 million in fiscal 2021, a benefit of $8 million in fiscal 2020 and a benefit of $4 million in fiscal ~~2019 and an expense of $5 million in fiscal 2018.~~2019. Accrued interest and penalties of ~~$10~~$11 million and ~~$18~~$10 million were recorded in the consolidated balance sheets as of April 30, 2021 and April 24, 2020, ~~and April 26, 2019,~~ respectively.

The tax years that remain subject to examination for our major tax jurisdictions are shown below:

Fiscal Years Subject to Examination for Major Tax Jurisdictions at April ~~24, 2020~~30, 2021

We are currently undergoing various income tax audits in the U.S. and several foreign tax jurisdictions. Transfer pricing calculations are key topics under these audits and are often subject to dispute and appeals. We are effectively subject to federal tax examination adjustments for tax years ended on or after fiscal 2001, in that we have carryforward attributes from these years that could be subject to adjustment in the tax years of utilization.

In September 2010, the Danish Tax Authorities issued a decision concluding that distributions declared in 2005 and 2006 by our Danish subsidiary were subject to Danish at-source dividend withholding tax. We do not believe that our Danish subsidiary is liable for such withholding tax and filed an appeal with the Danish Tax Tribunal. In December 2011, the Danish Tax Tribunal issued a ruling in favor of NetApp. The Danish tax examination agency appealed this decision at the Danish High Court (DHC) in March 2012. In February 2016, the DHC requested a preliminary ruling from the Court of Justice of the European Union (CJEU). ~~Parties were heard before the court in October 2017.~~ In March 2018, the Advocate General issued an opinion which was largely in favor of NetApp. The CJEU was not bound by the opinion of the Advocate General and issued its preliminary ruling in February 2019. The CJEU ruling did not preclude the Danish Tax Authorities from imposing withholding tax on distributions based on the benefits of certain European Union directives. ~~The preliminary ruling will be reviewed and may be subjected to additional briefing by the DHC. Once complete,~~On May 3, 2021, the DHC ~~will then issue its final decision. While~~reached a decision resulting in NetApp prevailing on the ~~timing and outcome~~predominate distribution made in 2005. The smaller distribution made in 2006 was ruled in favor of ~~a final~~the Danish Tax Authorities. On May 28, 2021, the Danish Tax Authorities appealed the DHC decision ~~on this matter is uncertain, we~~to the Danish Supreme Court. We believe it is more likely than not that our distributions were not subject to withholding tax and we ~~intend~~will continue to ~~vigorously defend any withholding tax claims by~~support our position in the appeals process with the Danish ~~Tax Authorities.~~Supreme Court.

We continue to monitor the progress of ongoing discussions with tax authorities and the impact, if any, of the expected expiration of the statute of limitations in various taxing jurisdictions. We engage in continuous discussion and negotiation with taxing authorities regarding tax matters in multiple jurisdictions. We believe that within the next 12 months, it is reasonably possible that either certain audits will conclude, certain statutes of limitations will lapse, or both. As a result of uncertainties regarding tax audits and their possible outcomes, an estimate of the range of possible impacts to unrecognized tax benefits in the next twelve months cannot be made at this time.

Prior to the passage of the TCJA, we had not provided U.S. income taxes and foreign withholding taxes on the undistributed earnings of foreign subsidiaries because we had intended to indefinitely reinvest such earnings outside the U.S. The TCJA imposed a one-time transition tax on substantially all accumulated foreign earnings through December 31, 2017 and generally allows companies to make distributions of foreign earnings without incurring additional federal taxes. As a part of the provisional estimates recorded during fiscal 2018, we considered the impacts of the TCJA and reviewed our projected global cash requirements and have determined that certain historical and future foreign earnings will no longer be indefinitely reinvested. As of April ~~24, 2020,~~30, 2021, we continue to record a deferred tax liability related to state taxes on unremitted earnings of certain foreign entities. We estimate the unrecognized deferred tax liability related to the earnings we expect to be indefinitely reinvested to be immaterial. We will continue to monitor our plans to indefinitely reinvest undistributed earnings of foreign subsidiaries and will assess the related unrecognized deferred tax liability considering our ongoing projected global cash requirements, tax consequences associated with repatriation and any U.S. or foreign government programs designed to influence remittances.

The following is a calculation of basic and diluted net income per share (in millions, except per share amounts):

	Year Ended						Year Ended
	April 24, 2020		April 26, 2019		April 27, 2018		April 30, 2021		April 24, 2020		April 26, 2019
Numerator:
Net income	$	819	$	1,169	$	116	$	730	$	819	$	1,169
Denominator:
Shares used in basic computation		230		254		268		222		230		254
Dilutive impact of employee equity award plans		3		5		8		4		3		5
Shares used in diluted computation		233		259		276		226		233		259
Net Income per Share:
Basic	$	3.56	$	4.60	$	0.43	$	3.29	$	3.56	$	4.60
Diluted	$	3.52	$	4.51	$	0.42	$	3.23	$	3.52	$	4.51

NaN million potential shares from outstanding employee equity awards were excluded from the diluted net income per share calculations for each of fiscal 2021 and 2020, while 1 million potential shares were excluded from the calculations for ~~each of~~ fiscal 2019, ~~and 2018,~~ as their inclusion would have been anti-dilutive.

We operate in 1 industry segment: the design, manufacturing, marketing, and technical support of high-performance storage and data management solutions. We conduct business globally, and our sales and support activities are managed on a geographic basis. Our management reviews financial information presented on a consolidated basis, accompanied by disaggregated information it receives from our internal management system about revenues by geographic region, based on the location from which the customer relationship is managed, for purposes of allocating resources and evaluating financial performance. We do not allocate costs of revenues, research and development, sales and marketing, or general and administrative expenses to our geographic regions in this internal management reporting because management does not review operations or operating results, or make planning decisions, below the consolidated entity level.

Summarized revenues by geographic region based on information from our internal management system and utilized by our Chief Executive Officer, who is considered our Chief Operating Decision Maker, is as follows (in millions):

	Year Ended						Year Ended
	April 24, 2020		April 26, 2019		April 27, 2018		April 30, 2021		April 24, 2020		April 26, 2019
United States, Canada and Latin America (Americas)	$	2,863	$	3,425	$	3,207	$	3,097	$	2,863	$	3,425
Europe, Middle East and Africa (EMEA)		1,742		1,847		1,873		1,775		1,742		1,847
Asia Pacific (APAC)		807		874		839		872		807		874
Net revenues	$	5,412	$	6,146	$	5,919	$	5,744	$	5,412	$	6,146

Americas revenues consist of sales to Americas commercial and U.S. public sector markets. Sales to customers inside the U.S. were $2,784 million, $2,584 million ~~$3,116 million~~ and ~~$2,878~~$3,116 million during fiscal 2021, 2020 ~~2019~~ and ~~2018,~~2019, respectively.

The majority of our assets, excluding cash, cash equivalents, short-term investments and accounts receivable, were attributable to our domestic operations. The following table presents cash, cash equivalents and short-term investments held in the U.S. and internationally in various foreign subsidiaries (in millions):

	April 24, 2020		April 26, 2019		April 30, 2021		April 24, 2020
U.S.	$	385	$	159	$	2,098	$	385
International		2,497		3,740		2,498		2,497
Total	$	2,882	$	3,899	$	4,596	$	2,882

With the exception of property and equipment, we do not identify or allocate our long-lived assets by geographic area. The following table presents property and equipment information for geographic areas based on the physical location of the assets (in millions):

	April 24, 2020		April 26, 2019		April 30, 2021		April 24, 2020
U.S.	$	540	$	572	$	340	$	540
International		187		187		185		187
Total	$	727	$	759	$	525	$	727

The following customers, each of which is a distributor, accounted for 10% or more of our net revenues:

	Year Ended									Year Ended
	April 24, 2020			April 26, 2019			April 27, 2018			April 30, 2021			April 24, 2020			April 26, 2019
Arrow Electronics, Inc.		25	%		24	%		23	%		24	%		25	%		24	%
Tech Data Corporation		21	%		20	%		20	%		20	%		21	%		20	%

	April 24, 2020			April 26, 2019			April 30, 2021			April 24, 2020
Arrow Electronics, Inc.		13	%		11	%		10	%		13	%
Tech Data Corporation		19	%		24	%		21	%		19	%

Our 401(k) Plan is a deferred salary arrangement under Section 401(k) of the Internal Revenue Code. Under the 401(k) Plan, participating U.S. employees may defer a portion of their pre-tax earnings, up to the IRS annual contribution limit. We match 100% of the first 2% of eligible earnings an employee contributes to the 401(k) Plan, and then match 50% of the next 4% of eligible earnings an employee contributes. An employee receives the full 4% match when he/she contributes at least 6% of his/her eligible earnings, up to a maximum calendar year matching contribution of $6,000. Our employer matching contributions to the 401(k) Plan were as follows (in millions):

We have a non-qualified deferred compensation plan that allows a group of employees within the U.S. to contribute base salary and commissions or incentive compensation on a tax deferred basis in excess of the IRS limits imposed on 401(k) plans. The marketable securities related to these investments are held in a Rabbi Trust. The related deferred compensation plan assets and liabilities under the non-qualified deferred compensation plan were as follows (in millions):

	April 24, 2020		April 26, 2019		April 30, 2021		April 24, 2020
Deferred compensation plan assets	$	33	$	35	$	40	$	33
Deferred compensation liabilities reported as:
Accrued expenses	$	6	$	6	$	8	$	6
Other long-term liabilities	$	27	$	29	$	32	$	27

Certain of our executive officers were eligible to participate in our Executive Retirement Medical Plan (the ERM Plan). Prior to its termination in fiscal 2020, the ERM Plan provided, upon retirement, medical benefits beyond the COBRA maximum benefit period to a defined group of senior executives based on minimum age, years of service and position. The ERM Plan was unfunded and there was no minimum funding requirement.

In November 2016, we made certain amendments to the ERM Plan, which prior to amendment, provided group health insurance benefits to eligible retirees. Effective January 1, 2017, the amended ERM Plan provided each eligible retiree with a capped reimbursement of premiums for the period from January 1, 2017 through December 31, 2019. During the period from December 31, 2019 through December 31, 2021, participants in the ERM Plan are eligible to receive a lump sum cash payment equal to two years of projected health care costs, or a prorated portion thereof, pursuant to the methodology set forth in the ERM Plan. Such payments were, or will be, made by us outside the ERM Plan as the ERM Plan was terminated on December 31, 2019.

We maintain various defined benefit plans to provide termination and postretirement benefits to certain eligible employees outside of the U.S. We also provide disability benefits to certain eligible employees in the U.S. Eligibility is determined based on the terms of our plans and local statutory requirements.

The funded status of our defined benefit plans, which is recognized in other long-term liabilities in our consolidated balance sheets, was as follows (in millions):

	April 24, 2020			April 26, 2019			April 30, 2021			April 24, 2020
Fair value of plan assets	$	32		$	31		$	38		$	32
Benefit obligations		(59	)		(61	)		(72	)		(59	)
Unfunded obligations	$	(27	)	$	(30	)	$	(34	)	$	(27	)

In the ordinary course of business, we make commitments to third-party contract manufacturers and component suppliers to manage manufacturer lead times and meet product forecasts, and to other parties, to purchase various key components used in the manufacture of our products. A significant portion of our reported purchase commitments arising from these agreements consist of firm, non-cancelable, and unconditional commitments. As of April ~~24, 2020,~~30, 2021, we had ~~$651~~$576 million in non-cancelable purchase commitments for inventory. We record a liability for firm, non-cancelable and unconditional purchase commitments for quantities in excess of our future demand forecasts consistent with the valuation of our excess and obsolete inventory. As of April ~~24, 2020~~30, 2021 and April ~~26, 2019,~~24, 2020, such liability amounted to $6$15 million and ~~$16~~$6 million, respectively, and is included in accrued expenses in our consolidated balance sheets. To the extent that such forecasts are not achieved, our commitments and associated accruals may change.

In addition to inventory commitments with contract manufacturers and component suppliers, we have open purchase orders and contractual obligations associated with our ordinary course of business for which we have not yet received goods or services. As of April ~~24, 2020,~~30, 2021, we had ~~$193~~$224 million in other purchase obligations.

Of the total $800 million in purchase commitments, $584 million is due in fiscal 2022, with the remainder due thereafter.

While most of our arrangements for sales include short-term payment terms, from time to time we provide long-term financing to creditworthy customers. We have generally sold receivables financed through these arrangements on a non-recourse basis to third party financing institutions within 10 days of the contracts’ dates of execution, and we classify the proceeds from these sales as cash flows from operating activities in our consolidated statements of cash flows. We account for the sales of these receivables as “true sales” as defined in the accounting standards on transfers of financial assets, as we are considered to have surrendered control of these financing receivables. Provided all other revenue recognition criteria have been met, we recognize product revenues for these arrangements, net of any payment discounts from financing transactions, upon product acceptance. We sold $102 million, $59 million ~~$87 million~~ and ~~$67~~$87 million of receivables during fiscal 2021, 2020 ~~2019~~ and ~~2018,~~2019, respectively.

In addition, we enter into arrangements with leasing companies for the sale of our hardware systems products. These leasing companies, in turn, lease our products to end-users. The leasing companies generally have no recourse to us in the event of default by the end-user and we recognize revenue upon delivery to the end-user customer, if all other revenue recognition criteria have been met.

Some of the leasing arrangements described above have been financed on a recourse basis through third-party financing institutions. Under the terms of recourse leases, which are generally three years or less, we remain liable for the aggregate unpaid remaining lease payments to the third-party leasing companies in the event of end-user customer default. These arrangements are generally collateralized by a security interest in the underlying assets. Where we provide a guarantee for recourse leases and collectability is probable, we account for these transactions as sales type leases. If collectability is not probable, the cash received is recorded as a deposit liability and revenue is deferred until the arrangement is deemed collectible. For leases that we are not a party to, other than providing recourse, we recognize revenue when control is transferred. As of April ~~24, 2020~~30, 2021 and April ~~26, 2019,~~24, 2020, the aggregate amount by which such contingencies exceeded the associated liabilities was not significant. To date, we have not experienced significant losses under our lease financing programs or other financing arrangements.

We have entered into service contracts with certain of our end-user customers that are supported by third-party financing arrangements. If a service contract is terminated as a result of our non-performance under the contract or our failure to comply with the terms of the financing arrangement, we could, under certain circumstances, be required to acquire certain assets related to the service contract or to pay the aggregate unpaid financing payments under such arrangements. As of April ~~24, 2020,~~30, 2021, we have not been required to make any payments under these arrangements, and we believe the likelihood of having to acquire a material amount of assets or make payments under these arrangements is remote. The portion of the financial arrangement that represents unearned services revenue is included in deferred revenue and financed unearned services revenue in our consolidated balance sheets.

We enter into standard indemnification agreements in the ordinary course of business. Pursuant to these agreements, we agree to defend and indemnify other parties, primarily our customers or business partners or subcontractors, for damages and reasonable costs incurred in any suit or claim brought against them alleging that our products sold to them infringe any U.S. patent, copyright, trade secret, or similar right. If a product becomes the subject of an infringement claim, we may, at our option: (i) replace the product with another non-infringing product that provides substantially similar performance; (ii) modify the infringing product so that it no longer infringes but remains functionally equivalent; (iii) obtain the right for the customer to continue using the product at our expense and for the reseller to continue selling the product; (iv) take back the infringing product and refund to the customer the purchase price paid less depreciation amortized on a straight-line basis. We have not been required to make material payments pursuant to these provisions historically. We have not recorded any liability at April 24, 2020 related to these guarantees since the maximum amount of potential future payments under such guarantees, indemnities and warranties is not determinable, other than as described above.

When a loss is considered probable and reasonably estimable, we record a liability in the amount of our best estimate for the ultimate loss. However, the likelihood of a loss with respect to a particular contingency is often difficult to predict and determining a meaningful estimate of the loss or a range of loss may not be practicable based on the information available and the potential effect of future events and decisions by third parties that will determine the ultimate resolution of the contingency.

On August 14, 2019, a purported securities class action lawsuit was filed in the United States District Court for the Northern District of California, naming as defendants NetApp and certain of our executive officers. The complaint alleges that the defendants violated Section 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and SEC Rule 10b-5, by making materially false or misleading statements with respect to our financial guidance for fiscal 2020, as provided on May 22, 2019. Members of the alleged class are purchasers of the Company’s stock between May 22, 2019 and August 1, 2019, the date we provided revised financial guidance for fiscal 2020. The complaint alleges unspecified damages based on the decline in the market price of our shares following the issuance of the revised guidance on August 1, 2019. NetApp’s Motion to Dismiss was granted and on February 26, 2021 and the judge entered judgment in favor of NetApp. On March 26, 2021, Plaintiffs filed a notice of appeal. We believe the complaint is without merit and intend to defend the case vigorously.

We are subject to various other legal proceedings and claims that arise in the normal course of business. We may, from time to time, receive claims that we are infringing third parties’ intellectual property rights, including claims for alleged patent infringement brought by non-practicing entities. We are currently involved in patent litigations brought by non-practicing entities and other third parties. We believe we have strong arguments that our products do not infringe and/or the asserted patents are invalid, and we intend to vigorously defend against the plaintiffs’ claims. However, there is no guarantee that we will prevail at trial and if a jury were to find that our products infringe, we could be required to pay significant monetary damages, and may cause product shipment delays or stoppages, require us to redesign our products, or require us to enter into royalty or licensing agreements.

Although management at present believes that the ultimate outcome of these proceedings, individually and in the aggregate, will not materially harm our financial position, results of operations, cash flows, or overall trends, legal proceedings are subject to inherent uncertainties, and unfavorable rulings or other events could occur. Unfavorable resolutions could include significant monetary damages. In addition, in matters for which injunctive relief or other conduct remedies are sought, unfavorable resolutions could include an injunction or other order prohibiting us from selling one or more products at all or in particular ways or requiring other remedies. An unfavorable outcome may result in a material adverse impact on our business, results of operations, financial position, and overall trends. NaN material accrual has been recorded as of April ~~24, 2020~~30, 2021 related to such matters.

~~On April 28, 2020, we acquired all the outstanding shares of privately-held~~ ~~Cloud Jumper Corporation, a provider of virtual desktop infrastructure and remote desktop services solutions, for approximately $34 million in cash. We are in the process of completing the purchase price allocation for this acquisition.~~

On June 3, 2020, we entered into a definitive agreement to acquire all the outstanding shares of Spot, Inc. (“Spot”), a privately-held company and provider of compute management and cost optimization services on the public clouds. The acquisition of Spot will allow us to establish an application driven infrastructure for the continuous optimization of both compute and storage, which we believe will facilitate customers deploying more applications to the cloud. The acquisition is subject to the satisfaction of certain regulatory approvals and other customary closing conditions.

~~Selected quarterly financial data is as follows (in millions, except per share amounts):~~

Quarter Ended

July 26,
2019

October 25,
2019

January 24,
2020

April 24,
2020

Net revenues

$
1,236

$
1,371

$
1,404

$
1,401

Gross profit

$
816

$
925

$
941

$
941

Provision (benefit) for income taxes

$
16

$
56

$
(1
)

$
54

Net income

$
103

$
243

$
277

$
196

Net income per share, basic

$
0.43

$
1.03

$
1.23

$
0.89

Net income per share, diluted

$
0.42

$
1.03

$
1.21

$
0.88

Quarter Ended

July 27,
2018

October 26,
2018

January 25,
2019

April 26,
2019

Net revenues

$
1,474

$
1,517

$
1,563

$
1,592

Gross profit

$
963

$
974

$
982

$
1,026

Provision (benefit) for income taxes

$
(11
)

$
52

$
70

$
(12
)
Net income

$
283

$
241

$
249

$
396

Net income per share, basic

$
1.08

$
0.93

$
1.00

$
1.62

Net income per share, diluted

$
1.05

$
0.91

$
0.98

$
1.59

We have audited the accompanying consolidated balance sheets of NetApp, Inc. and subsidiaries (the "Company") as of April ~~24, 2020~~30, 2021 and April ~~26, 2019,~~24, 2020, the related consolidated statements of ~~operations,~~income, comprehensive income, cash flows and stockholders’ equity for each of the three years in the period ended April ~~24, 2020,~~30, 2021, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of April ~~24, 2020~~30, 2021 and April ~~26, 2019,~~24, 2020, and the results of its operations and its cash flows for each of the three years in the period ended April ~~24, 2020,~~30, 2021, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of April ~~24, 2020,~~30, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated June ~~15, 2020,~~21, 2021, expressed an unqualified opinion on the Company's internal control over financial reporting.

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Certain of the Company’s revenue contracts with customers include multiple promises (such as hardware systems, software licenses, software and hardware ~~maintenance,~~support, and other services). The Company typically negotiates contracts with its customers, and while many of these contracts contain standard terms and conditions, certain large enterprises and distributors may have customer specific terms and performance obligations due to the nature of the contracts.

Pursuant to accounting principles generally accepted in the United States of America, the Company is required to evaluate whether each performance obligation represents goods and services that are distinct. A good or service is distinct where the customer can benefit from the good or service either on its own or together with other resources that are readily available from third parties or from the Company, and is distinct in the context of the contract, where the transfer of the good or service is separately identifiable from other promises in the contract. The evaluation of performance obligations can require significant judgment and could change the amount of revenue recognized in a given period.

We identified the evaluation of performance obligations in certain large enterprise and distributor contracts as a critical audit matter because of the judgment management makes in evaluating such contracts and the impact of such judgment on the amount of revenue recognized in a given period. This required a high degree of auditor judgment and an increased extent of testing.

Our audit procedures related to the Company’s evaluation of performance obligations for certain large enterprise and distributor contracts included the following, among others:

• We tested the effectiveness of internal controls related to the review of large enterprise and distributor contracts specifically around the review of the terms and conditions and proper evaluation of performance obligations.

• We evaluated management’s significant accounting policies related to revenue recognition for reasonableness and compliance with generally accepted accounting principles.

• We selected a sample of contracts for large enterprise and distributor customers and performed the following:

o Obtained and read contract source documents for each selection, including master agreements, amendments, and other documents that were part of the contract.

o Assessed the terms and conditions in the contract source documents and evaluated the appropriateness of management’s application of their accounting policies in the evaluation of performance obligations.

o Where applicable, tested the mathematical accuracy of management’s calculations of revenue and the associated allocation of the transaction price to the various performance obligations.

We have audited the internal control over financial reporting of NetApp, Inc. and subsidiaries (the “Company”) as of April ~~24, 2020,~~30, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of April ~~24, 2020,~~30, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended April ~~24, 2020,~~30, 2021 of the Company and our report dated June ~~15, 2020,~~21, 2021, expressed an unqualified opinion on those financial statements.

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

The phrase “disclosure controls and procedures” refers to controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934, as amended (the Exchange Act), such as this Annual Report on Form 10-K, is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the U.S. Securities and Exchange Commission (SEC). Disclosure controls and procedures are also designed to ensure that such information is accumulated and communicated to our management, including our Chief Executive Officer (CEO) and our Chief Financial Officer (CFO), as appropriate to allow timely decisions regarding required disclosure.

Under the supervision and with the participation of our management, including our CEO and CFO, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of April ~~24, 2020,~~30, 2021, the end of the fiscal period covered by this Annual Report on Form 10-K (the Evaluation Date). Based on this evaluation, our CEO and CFO concluded as of the Evaluation Date that our disclosure controls and procedures were effective such that the information required to be disclosed in our SEC reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and (ii) is accumulated and communicated to our management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, our management concluded that, as of April ~~24, 2020,~~30, 2021, our internal control over financial reporting was effective at the reasonable assurance level based on those criteria.

The effectiveness of our internal control over financial reporting as of April ~~24, 2020~~30, 2021 has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report, which is included in Part II, Item 8 of this Annual Report on Form 10-K.

There has been no change in our internal control over financial reporting identified in connection with our evaluation required by paragraph (d) of rules 13a-15 and 15d-15 under the Exchange Act that occurred during the fourth quarter of fiscal ~~2020~~2021 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

This disclosure is made pursuant to Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012 which added subsection (r) to Section 13 of the Exchange Act (Section 13(r)). Section 13(r) requires an issuer to disclose in its annual or quarterly reports whether it or any of its affiliates have knowingly engaged in certain activities, transactions or dealings relating to certain countries including Russia. Disclosure of such activities, transactions or dealings is required even when conducted outside the United States by non-U.S. persons in compliance with applicable law, and whether or not such activities are sanctionable under U.S. law.

During the period from April 25, 2020 to April 30, 2020, we filed notifications with the Russian Federal Security Service (“FSB”) for two products. Those notifications are required under Russian law to qualify our products for importation into, and distribution within, the Russian Federation. The filing of those notifications with the FSB is specifically authorized under OFAC General License 1B, as amended as of March 2, 2021.

The filing of the production notifications with the FSB is a regulatory compliance procedure required under Russian law for the importation and distribution of our products in Russia. We have not sold or supplied any goods or services directly or indirectly to the FSB, and we have not derived any revenues from any such notifications to the FSB.

We may, in the future, file additional notifications for our products with the FSB to the extent those product notifications are required under Russian law to qualify the products for importation or distribution in Russia, but only so long as those activities are authorized by OFAC General License 1B or any successor general license or other authorization issued by OFAC.

The information required by Item 10 with respect to our executive officers is incorporated herein by reference from the information under Item 1 – Business of Part I of this Annual Report on Form 10-K under the section entitled “Executive Officers.” The information required by Item 10 with respect to the Company’s directors and corporate governance is incorporated herein by reference from the information provided under the headings “Election of Directors” and “Corporate Governance,” respectively, in the Proxy Statement for the ~~2020~~2021 Annual Meeting of Stockholders, which will be filed with the Securities and Exchange Commission within 120 days of our year ended April ~~24, 2020.~~30, 2021. The information required by Item 405 of Regulation S-K is incorporated herein by reference from the information provided under the heading ~~“Section~~“Delinquent Section 16(a) ~~Beneficial Ownership Reporting Compliance”~~Reports” in the Proxy Statement for the ~~2020~~2021 Annual Meeting of Stockholders.

We have adopted a written code of ethics that applies to our Board of Directors and all of our employees, including our principal executive officer and principal financial and accounting officer. A copy of the code of ethics, which we refer to as our “Code of Conduct,” is available on our website at http://netapp.com/us/media/code-of-conduct.pdf. We will post any amendments to or waivers from the provisions of our Code of Conduct on our website.

Information regarding the compensation of executive officers and directors of the Company is incorporated by reference from the information under the headings “Executive Compensation and Related Information” and “Director Compensation,” respectively, in our Proxy Statement for the ~~2020~~2021 Annual Meeting of Stockholders.

Information regarding security ownership of certain beneficial owners and management and related stockholder matters is incorporated by reference from the information under the heading “Security Ownership of Certain Beneficial Owners and Management” in our Proxy Statement for the ~~2020~~2021 Annual Meeting of Stockholders.

Information regarding certain relationships and related transactions and director independence is incorporated by reference from the information under the headings “Corporate Governance” and “Certain Transactions with Related Parties” in our Proxy Statement for the ~~2020~~2021 Annual Meeting of Stockholders.

The information required by this item is incorporated by reference from the information under the caption “Audit Fees” in our Proxy Statement for the ~~2020~~2021 Annual Meeting of Stockholders.

With the exception of the information incorporated in Items 10, 11, 12, 13 and 14 of this Annual Report on Form 10-K, NetApp’s Proxy Statement is not deemed “filed” as part of this Annual Report on Form 10-K.

See index to Consolidated Financial Statements in Part II, Item 8 of this Form 10-K

All financial statement schedules have been omitted, since the required information is not applicable or is not present in amounts sufficient to require submission of the schedule, or because the information required is included in the consolidated financial statements and notes thereto included in this Form 10-K.

Incorporation by Reference

Exhibit No

Description

Form

File No.

Exhibit

Filing Date

Description

Form

File No.

Exhibit

Filing Date

3.1

Certificate of Incorporation of the Company, as amended.

10-Q

000-27130

3.1

November 26, 2013

Certificate of Incorporation of the Company, as amended.

10-Q

000-27130

3.1

November 26, 2013

3.2

Bylaws of the Company.

8-K

000-27130

3.1

April 30, 2018

Bylaws of the Company.

8-K

000-27130

3.1

April 30, 2018

4.1

Indenture dated December 12, 2012, by and between the Company and U.S. Bank National Association.

8-K

000-27130

4.1

December 12, 2012

Indenture dated December 12, 2012, by and between the Company and U.S. Bank National Association.

8-K

000-27130

4.1

December 12, 2012

4.2

First Supplemental Indenture dated December 12, 2012, by and between the Company and U.S. Bank National Association.

8-K

000-27130

4.2

December 12, 2012

First Supplemental Indenture dated December 12, 2012, by and between the Company and U.S. Bank National Association.

8-K

000-27130

4.2

December 12, 2012

4.3

Second Supplemental Indenture dated June 5, 2014 by and between the Company and U.S. Bank National Association.

8-K

000-27130

4.1

June 5, 2014

Second Supplemental Indenture dated June 5, 2014 by and between the Company and U.S. Bank National Association.

8-K

000-27130

4.1

June 5, 2014

4.4

Third Supplemental Indenture dated September 29, 2017 by and between the Company and U.S. Bank National Association.

8-K

000-27130

4.2

September 29, 2017

Third Supplemental Indenture dated September 29, 2017 by and between the Company and U.S. Bank National Association.

8-K

000-27130

4.2

September 29, 2017

4.5

Description of Securities of the Company

—

Fourth Supplemental Indenture, dated June 22, 2020, by and between NetApp, Inc. and U.S. Bank National Association.

8-K

000-27130

4.2

June 22, 2020

4.6

Description of Capital Stock of the Company

—

10.1*

Form of Indemnification Agreement by and between the Company and each of its directors and executive officers.

10-Q

000-27130

10.1

August 28, 2014

Form of Indemnification Agreement by and between the Company and each of its directors and executive officers.

10-Q

000-27130

10.1

August 28, 2014

10.2*

Form of Change of Control Severance Agreement.

8-K

000-27130

10.1

June 28, 2016

Form of Change of Control Severance Agreement.

8-K

000-27130

10.1

May 22, 2019

10.3*

Form of Change of Control Severance Agreement.

8-K

000-27130

10.1

May 22, 2019

The Company’s Amended and Restated Executive Compensation Plan, as amended effective June 20, 2018.

10-Q

000-27130

10.1

August 21, 2018

10.4*

The Company’s Amended and Restated Executive Compensation Plan, as amended effective June 20, 2018.

10-Q

000-27130

10.1

August 21, 2018

The Company’s Deferred Compensation Plan.

8-K

000-27130

2.1

July 7, 2005

10.5*

The Company’s Deferred Compensation Plan.

8-K

000-27130

2.1

July 7, 2005

The Company’s Amended and Restated Employee Stock Purchase Plan, as amended effective July 19, 2018.

DEF 14A

000-27130

Appendix B

August 1, 2018

10.6*

The Company’s Amended and Restated Employee Stock Purchase Plan, as amended effective July 19, 2018.

DEF 14A

000-27130

Appendix B

August 1, 2018

The Company’s Amended and Restated 1995 Stock Incentive Plan. (P)

DEF 14A

000-27130

August 21, 1998

10.7*

The Company’s Amended and Restated 1995 Stock Incentive Plan. (P)

DEF 14A

000-27130

August 21, 1998

Form of Stock Option Agreement approved for use under the Company’s amended and restated 1995 Stock Option Plan.

10-K

000-27130

10.21

July 8, 2005

10.8*

Form of Stock Option Agreement approved for use under the Company’s amended and restated 1995 Stock Option Plan.

10-K

000-27130

10.21

July 8, 2005

		Incorporation by Reference					Incorporation by Reference
Exhibit No	Description	Form	File No.	Exhibit	Filing Date	Description	Form	File No.	Exhibit	Filing Date

10.37*	Outside Director Compensation Policy (effective September 1, 2018) of the Company.	10-Q	000-27130	10.1	February 11, 2019
10.33*						Outside Director Compensation Policy (effective September 1, 2018) of the Company.	10-Q	000-27130	10.1	February 11, 2019

10.38*	Offer Letter for employment at the Company to Ronald Pasek, dated March 22, 2016.	10-K	000-27130	10.35	June 22, 2016
10.34						NetApp, Inc. Executive Retiree Health Plan, as amended and restated.	8-K	000-27130	10.1	November 21, 2016


10.35						Amended and Restated Credit Agreement, dated as of January 22, 2021, by and among NetApp, Inc., the lenders from time to time party thereto and JPMorgan Chase Bank, N.A., as administrative agent.	8-K	000-27130	10.1	January 22, 2021

10.36						Form of Dealer Agreement between the Company, as issuer, and each Dealer.	8-K	000-27130	10.2	December 12, 2016

10.37						Collared Accelerated Share Repurchase Transaction dated as of June 5, 2013, by and between the Company and Goldman, Sachs & Co.	10-Q	000-27130	10.1	August 29, 2013

10.38						Agreement of Purchase and Sale and Joint Escrow Instructions dated as of March 9, 2016 by and between the Company and Google Inc.	10-K	000-27130	10.41	June 22, 2016

10.39	NetApp, Inc. Executive Retiree Health Plan, as amended and restated.	8-K	000-27130	10.1	November 21, 2016	First Amendment to Agreement of Purchase and Sale and Joint Escrow Instructions dated as of March 11, 2016, by and between the Company and Google Inc.	10-K	000-27130	10.42	June 22, 2016

10.40	Credit Agreement, dated as of December 12, 2016, by and among the Company, the lenders from time to time party thereto, JPMorgan Chase Bank, N.A., as administrative agent, Bank of America, N.A. and Wells Fargo Bank, National Association, as co-syndication agents, and The Bank of Tokyo-Mitsubishi UFJ, Ltd. and Citibank, N.A., as co-documentation agents.	8-K	000-27130	10.1	December 12, 2016	Second Amendment to Agreement of Purchase and Sale and Joint Escrow Instructions dated as of April 8, 2016, by and between the Company and Google Inc.	10-K	000-27130	10.43	June 22, 2016

10.41	Amendment No. 1 to Credit Agreement, dated as of July 17, 2017, by and among the Company, the financial institutions listed on the signature pages and JPMorgan Chase Bank, N.A., as administrative agent.	8-K	000-27130	10.1	July 17, 2017	Agreement of Purchase and Sale and Joint Escrow Instructions dated as of September 11, 2017 by and between the Company and Google Inc.	10-Q	000-27130	10.2	November 29, 2017

10.42	Form of Dealer Agreement between the Company, as issuer, and each Dealer.	8-K	000-27130	10.2	December 12, 2016	First Amendment to Agreement of Purchase and Sale and Joint Escrow Instructions dated as of October 2, 2017, by and between the Company and Google LLC.	10-Q	000-27130	10.3	November 29, 2017

10.43	Collared Accelerated Share Repurchase Transaction dated as of June 5, 2013, by and between the Company and Goldman, Sachs & Co.	10-Q	000-27130	10.1	August 29, 2013	Second Amendment to Agreement of Purchase and Sale and Joint Escrow Instructions dated as of October 25, 2017, by and between the Company and Google LLC.	10-Q	000-27130	10.4	November 29, 2017

10.44	Agreement of Purchase and Sale and Joint Escrow Instructions dated as of March 9, 2016 by and between the Company and Google Inc.	10-K	000-27130	10.41	June 22, 2016

10.45	First Amendment to Agreement of Purchase and Sale and Joint Escrow Instructions dated as of March 11, 2016, by and between the Company and Google Inc.	10-K	000-27130	10.42	June 22, 2016

10.46	Second Amendment to Agreement of Purchase and Sale and Joint Escrow Instructions dated as of April 8, 2016, by and between the Company and Google Inc.	10-K	000-27130	10.43	June 22, 2016

10.47	Agreement of Purchase and Sale and Joint Escrow Instructions dated as of September 11, 2017 by and between the Company and Google Inc.	10-Q	000-27130	10.2	November 29, 2017

		Incorporation by Reference					Incorporation by Reference
Exhibit No	Description	Form	File No.	Exhibit	Filing Date	Description	Form	File No.	Exhibit	Filing Date

10.44						Third Amendment to Agreement of Purchase and Sale and Joint Escrow Instructions dated as of October 31, 2017, by and between the Company and Google LLC.	10-Q	000-27130	10.1	February 22, 2018

10.45						Fourth Amendment to Agreement of Purchase and Sale and Joint Escrow Instructions dated as of November 2, 2017, by and between the Company and Google LLC.	10-Q	000-27130	10.2	February 22, 2018

10.46						Fifth Amendment to Agreement of Purchase and Sale and Joint Escrow Instructions dated as of November 8, 2017, by and between the Company and Google LLC.	10-Q	000-27130	10.3	February 22, 2018

10.47						Sixth Amendment to Agreement of Purchase and Sale and Joint Escrow Instructions dated as of November 10, 2017, by and between the Company and Google LLC.	10-Q	000-27130	10.4	February 22, 2018

10.48	First Amendment to Agreement of Purchase and Sale and Joint Escrow Instructions dated as of October 2, 2017, by and between the Company and Google LLC.	10-Q	000-27130	10.3	November 29, 2017	Seventh Amendment to the Agreement of Purchase and Sale and Joint Escrow Instructions dated as of March 15, 2019 by and between the Company and Google LLC.	10-K	000-27130	10.54	June 18, 2019

10.49	Second Amendment to Agreement of Purchase and Sale and Joint Escrow Instructions dated as of October 25, 2017, by and between the Company and Google LLC.	10-Q	000-27130	10.4	November 29, 2017	Separation Agreement dated May 28, 2020 by and between the Company and Henri Richard.	10-K	000-27130	10.57	June 15, 2020

10.50	Third Amendment to Agreement of Purchase and Sale and Joint Escrow Instructions dated as of October 31, 2017, by and between the Company and Google LLC.	10-Q	000-27130	10.1	February 22, 2018	Offer Letter for employment at the Company to César Cernuda, date March 23, 2020.	10-K	000-27130	10.58	June 15, 2020

10.51	Fourth Amendment to Agreement of Purchase and Sale and Joint Escrow Instructions dated as of November 2, 2017, by and between the Company and Google LLC.	10-Q	000-27130	10.2	February 22, 2018	Senior Executive Employment Contract by and between NetApp Sales Spain S.L., a subsidiary of the Company, and Cesar Cernuda, effective January 1, 2021	10-Q	000-27130	10.1	January 29, 2021

10.52	Fifth Amendment to Agreement of Purchase and Sale and Joint Escrow Instructions dated as of November 8, 2017, by and between the Company and Google LLC.	10-Q	000-27130	10.3	February 22, 2018	Offer Letter for employment at the Company to Michael J. Berry, dated January 30, 2020.	10-Q	000-27130	10.1	August 28, 2020

10.53	Sixth Amendment to Agreement of Purchase and Sale and Joint Escrow Instructions dated as of November 10, 2017, by and between the Company and Google LLC.	10-Q	000-27130	10.4	February 22, 2018	Underwriting Agreement, dated June 17, 2020, by and among the Company, Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, BofA Securities, Inc. and Morgan Stanley & Co. LLC.	8-K	000-27130	1.1	June 17, 2020

10.54	Seventh Amendment to the Agreement of Purchase and Sale and Joint Escrow Instructions dated as of March 15, 2019 by and between the Company and Google LLC.	10-K	000-27130	10.54	June 18, 2019
10.55	Separation Agreement dated August 14, 2019 by and between the Company and Joel Reich.	10-Q	000-27130	10.1	November 18, 2019
10.56	Separation Agreement dated April 3, 2020 by and between the Company and Ronald Pasek.	—	—	—	—
10.57	Separation Agreement dated May 28, 2020 by and between the Company and Henri Richard.	—	—	—	—
10.58	Offer Letter for employment at the Company to César Cernuda, date March 23, 2020.	—	—	—	—

21.1	Subsidiaries of the Company.	—	—	—	—	Subsidiaries of the Company.	—	—	—	—
23.1	Consent of Independent Registered Public Accounting Firm.	—	—	—	—	Consent of Independent Registered Public Accounting Firm.	—	—	—	—

		Incorporation by Reference
Exhibit No	Description	Form	File No.	Exhibit	Filing Date

24.1	Power of Attorney (see signature page).	—	—	—	—

31.1	Certification of the Chief Executive Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002.	—	—	—	—

31.2	Certification of the Chief Financial Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002.	—	—	—	—

32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002.	—	—	—	—

32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002.	—	—	—	—

101.INS	Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document	—	—	—	—

101.SCH	Inline XBRL Taxonomy Extension Schema Document	—	—	—	—

101.CAL	Inline XBRL Taxonomy Calculation Linkbase Document	—	—	—	—

101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document	—	—	—	—

101.LAB	Inline XBRL Taxonomy Label Linkbase Document	—	—	—	—

101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document	—	—	—	—
104	Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints George Kurian and Michael J. Berry, and each of them, as his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitutes, may lawfully do or cause to be done by virtue thereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Delaware		77-0307520
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

Title of each class	Trading Symbol(s)		Name of exchange on which registered
Common Stock, $0.001 Par Value	NTAP		The NASDAQ Stock Market LLC

	PART I

Item 1	Business	65
Item 1A	Risk Factors	15
Item 1B	Unresolved Staff Comments	28
Item 2	Properties	28
Item 3	Legal Proceedings	28
Item 4	Mine Safety Disclosures	28

	PART II

Item 5	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	29
Item 6	Selected Financial Data	32
Item 7	Management’s Discussion and Analysis of Financial Condition and Results of Operations	33
Item 7A	Quantitative and Qualitative Disclosures About Market Risk	5250
Item 8	Financial Statements and Supplementary Data	5452
Item 9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	9490
Item 9A	Controls and Procedures	9490
Item 9B	Other Information	9490

	PART III

Item 10	Directors, Executive Officers and Corporate Governance	9592
Item 11	Executive Compensation	9592
Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	9592
Item 13	Certain Relationships and Related Transactions, and Director Independence	9592
Item 14	Principal Accounting Fees and Services	9592

	PART IV

Item 15	Exhibits, Financial Statement Schedules	9592
Signatures		~~102~~99


Name	Age	Position
George Kurian	5354	Chief Executive Officer ~~and~~
César Cernuda	49	President
Michael Berry	5758	Executive Vice President and Chief Financial Officer
Brad Anderson	6162	Executive Vice President, Hybrid Cloud Group
Matthew K. Fawcett	5253	~~Senior~~Executive Vice President, ~~General Counsel~~Chief Strategy and Legal Officer, and Secretary

	Key Estimates and Assumptions		Key Uncertainties

•	We evaluate whether products and services promised in our contracts with customers are distinct performance obligations that should be accounted for separately versus together.	•	In certain contracts, the determination of our distinct performance obligations requires significant judgment. As our business and offerings to customers change over time, the products and services we determine to be distinct performance obligations may change. Such changes may adversely impact the amount of revenue and gross margin we report in a particular period.

•	In determining the transaction price of our contracts, we estimate variable consideration based on the expected value, primarily relying on our history. In certain situations, we may also use the most likely amount as the basis of our estimate.	•	We may have insufficient relevant historical data or other information to arrive at an accurate estimate of variable consideration using either the “expected value” or “most likely amount” method. Additionally, changes in business practices, such as those related to sales returns or marketing programs, may introduce new forms of variable consideration, as well as more complexity and uncertainty in the estimation process.

•	In contracts with multiple performance obligations, we establish SSPs based on the price at which products and services are sold separately. If SSPs are not observable through past transactions, we estimate them ~~using~~by maximizing the use of observable inputs ~~available information~~ including ~~but not limited to,~~pricing strategy, market data, internally-approved pricing guidelines related to the performance obligations and other observable inputs.	•	As our business and offerings evolve over time, modifications to our pricing and discounting methodologies, changes in the scope and nature of product and service offerings and/or changes in customer segmentation may result in a lack of consistency, making it difficult to establish and/or maintain SSPs. Changes in SSPs could result in different and unanticipated allocations of revenue in contracts with multiple performance obligations. These factors, among others, may adversely impact the amount of revenue and gross margin we report in a particular period.

	Fiscal Year Ended
	April 24, 2020		April 26, 2019		April 27, 2018 ⁽²⁾		April 28, 2017 ⁽²⁾		April 29, 2016
	(In millions, except per share amounts)
Net revenues	$	5,412	$	6,146	$	5,919	$	5,491	$	5,546
Gross profit	$	3,623	$	3,945	$	3,709	$	3,364	$	3,373
Provision for income taxes ⁽¹⁾	$	125	$	99	$	1,083	$	140	$	116
Net income	$	819	$	1,169	$	116	$	481	$	229
Net income per share, basic	$	3.56	$	4.60	$	0.43	$	1.75	$	0.78
Net income per share, diluted	$	3.52	$	4.51	$	0.42	$	1.71	$	0.77
Shares used in basic computation		230		254		268		275		294
Shares used in diluted computation		233		259		276		281		297
Cash dividends declared per share	$	1.92	$	1.60	$	0.80	$	0.76	$	0.72

	Key Estimates and Assumptions		Key Uncertainties

•	The assessment of fair value for goodwill and purchased intangible assets is based on factors that market participants would use in an orderly transaction in accordance with the accounting guidance for the fair value measurement of nonfinancial assets. The valuation of purchased intangible assets is principally based on estimates of the future performance and cash flows expected to be generated by the acquired assets from the acquired business.	•	While we employ experts to determine the acquisition date fair value of acquired intangibles, the fair values of assets acquired and liabilities assumed are based on significant management assumptions and estimates, which are inherently uncertain and highly subjective and as a result, actual results may differ from estimates. If different assumptions were to be used, it could materially impact the purchase price allocation. Volatile macroeconomic and market conditions caused by the COVID-19 pandemic have increased the level of uncertainty and subjectivity of certain management assumptions and estimates.

•	Evaluations of possible goodwill and purchased intangible asset impairment require us to make judgments and assumptions related to the allocation of our balance sheet and income statement amounts and estimate future cash flows and fair market values of our reporting unit and assets.	•	In response to changes in industry and market conditions, we could be required to strategically realign our resources and consider restructuring, disposing of, or otherwise exiting businesses, which could result in an impairment of goodwill or purchased intangible assets. Assumptions and estimates about expected future cash flows and the fair values of our reporting unit and purchased intangible assets are complex and subjective. They can be affected by a variety of factors, including external factors such as the adverse impact of unanticipated changes in macroeconomic conditions, such as those related to the COVID-19 pandemic, and technological changes or new product introductions from competitors. They can also be affected by internal factors such as changes in business strategy or in forecasted product life cycles and roadmaps. Our ongoing consideration of these and other factors could result in future impairment charges or accelerated amortization expense, which could adversely affect our operating results.

	Key Estimates and Assumptions		Key Uncertainties

•	The estimated fair value of our debt securities, and the associated accounting for unrealized losses is based on an evaluation of current economic and market conditions, the credit rating of the security’s issuer, the length of time and extent the security’s fair value has been below its amortized cost and our ability and intent to hold the security for a period of time sufficient to allow for anticipated recovery in value. If we determine that an investment has an other-than-temporary decline in fair value, we recognize the investment loss in earnings.	•	The fair value of our investments in debt securities could decrease significantly from uncertainties in the credit and capital markets, credit rating downgrades and/or solvency of the issuer or decreases in the marketability of the securities, with the ongoing COVID-19 pandemic contributing to these uncertainties. If the fair value of our investments decreases significantly and, if because of changes in our ability and intent to continue to hold the securities or other factors, it is determined to be other-than-temporary, we may incur impairment charges that could adversely affect our results of operations.

	Key Estimates and Assumptions		Key Uncertainties

•	Our income tax provision is based on existing tax law and advanced pricing agreements or letter rulings we have with various tax authorities.	•	Our provision for income taxes is subject to volatility and could be adversely impacted by future changes in existing tax laws, such as a change in tax rate, possible U.S. changes to the taxation of earnings of our foreign subsidiaries, and uncertainties as to future renewals of favorable tax agreements and rulings.

•	The determination of whether we should record or adjust a valuation allowance against our deferred tax assets is based on assumptions regarding our future profitability.	•	Our future profits could differ from current expectations resulting in a change to our determination as to the amount of deferred tax assets that are more likely than not to be realized. We could adjust our valuation allowance with a corresponding impact to the tax provision in the period in which such determination is made.

•	The estimates for our uncertain tax positions are based primarily on company specific circumstances, applicable tax laws, tax opinions from outside firms and past results from examinations of our income tax returns.	•	Significant judgment is required in evaluating our uncertain tax positions. Although we believe our reserves are reasonable, no assurance can be given that the final tax outcome or tax court rulings of these matters will not be different from that which is reflected in our historical tax provisions and accruals.



Consolidated Balance Sheets as of April ~~24, 2020~~30, 2021 and April ~~26, 2019~~24, 2020	5553

Consolidated Statements of ~~Operations~~Income for the years ended April 30, 2021, April 24, 2020 and April 26, 2019 ~~and April 27, 2018~~	5654

Consolidated Statements of Comprehensive Income for the years ended April 30, 2021, April 24, 2020 and April 26, 2019 ~~and April 27, 2018~~	5755

Consolidated Statements of Cash Flows for the years ended April 30, 2021, April 24, 2020 and April 26, 2019 ~~and April 27, 2018~~	5856

Consolidated Statements of Stockholders’ Equity for the years ended April 30, 2021, April 24, 2020 and April 26, 2019 ~~and April 27, 2018~~	5957

Notes to Consolidated Financial Statements	60

~~Selected Quarterly Financial Data (Unaudited)~~	9058

Reports of Independent Registered Public Accounting Firm	9187

		Depreciation Life
Buildings and improvements		10 to 40 years
Furniture and fixtures		5 years
Computer, production, engineering and other equipment		2 to 3 years
Computer software		3 to 5 years
Leasehold improvements		Shorter of remaining lease term or useful life

	Amount
Cash	$	24
Intangible assets		84
Goodwill		249
Other assets		6
Total assets acquired		363
Liabilities assumed		(23	)
Total purchase price	$	340

			Estimated useful life
	Amount		(years)
Developed technology	$	53		5
Customer contracts/relationships		28		5
Trade name		3		3
Total intangible assets	$	84

	Operating Leases
Fiscal 2021	$	53
Fiscal 2022		40
Fiscal 2023		23
Fiscal 2024		15
Fiscal 2025		9
Thereafter		11
Total lease payments	$	151
Less: Interest		(7	)
Total	$	144

	Year Ended								Statements of Income
	April 30, 2021		April 24, 2020			April 26, 2019			Classification
Recognized gains on defined benefit obligations	$	0	$	(2	)	$	(2	)	Operating expenses
Realized gains on available-for-sale securities		0		(14	)		0		Other (expense) income, net
Realized losses (gains) on cash flow hedges		11		(6	)		(1	)	Net revenues
Total reclassifications	$	11	$	(22	)	$	(3	)

2016 — ~~2020~~2021		United States — federal income tax
~~2011~~2012 — ~~2020~~2021		United States — state and local income tax
~~2013~~2014 — ~~2020~~2021		Australia
2015 — ~~2020~~2021		Germany
2007 — ~~2020~~2021		India
~~2013~~2014 — ~~2020~~2021		Japan
~~2014~~2017 — ~~2020~~2021		The Netherlands
~~2017~~2016 — ~~2020~~2021		United Kingdom
2016 — ~~2020~~2021		Canada

	Quarter Ended
	July 26, 2019			October 25, 2019		January 24, 2020			April 24, 2020
Net revenues	$	1,236		$	1,371	$	1,404		$	1,401
Gross profit	$	816		$	925	$	941		$	941
Provision (benefit) for income taxes	$	16		$	56	$	(1	)	$	54
Net income	$	103		$	243	$	277		$	196
Net income per share, basic	$	0.43		$	1.03	$	1.23		$	0.89
Net income per share, diluted	$	0.42		$	1.03	$	1.21		$	0.88

	Quarter Ended
	July 27, 2018			October 26, 2018		January 25, 2019			April 26, 2019
Net revenues	$	1,474		$	1,517	$	1,563		$	1,592
Gross profit	$	963		$	974	$	982		$	1,026
Provision (benefit) for income taxes	$	(11	)	$	52	$	70		$	(12	)
Net income	$	283		$	241	$	249		$	396
Net income per share, basic	$	1.08		$	0.93	$	1.00		$	1.62
Net income per share, diluted	$	1.05		$	0.91	$	0.98		$	1.59

NETAPP, INC.

By:		/s/ GEORGE KURIAN
		George Kurian
		Chief Executive Officer and ~~President~~Director (Principal Executive Officer and Principal Operating Officer)

Date: June ~~15, 2020~~21, 2021

Signature	Title	Date

/s/ GEORGE KURIAN	Chief Executive Officer and ~~President~~Director (Principal Executive Officer and Principal Operating Officer)	June ~~15, 2020~~21, 2021
George Kurian		June ~~15, 2020~~21, 2021

/s/ MICHAEL J. BERRY	Executive Vice President and Chief Financial Officer (Principal Financial Officer)	June ~~15, 2020~~21, 2021
Michael J. Berry		June ~~15, 2020~~21, 2021

/s/ ~~SCOTT R. ALLEN~~ ~~Scott R. Allen~~ROBERT PARKS	~~Senior~~ Vice President and Chief Accounting Officer ~~(Principal~~ (Principal Accounting Officer)	June ~~15, 2020~~21, 2021
Robert Parks		June ~~15, 2020~~21, 2021

/s/ T. MICHAEL NEVENS	Chairman of the Board	June ~~15, 2020~~21, 2021
T. Michael Nevens	Chairman of the Board	June ~~15, 2020~~21, 2021

/s/ GERALD HELD	Director	June ~~15, 2020~~21, 2021
Gerald Held	Director	June ~~15, 2020~~21, 2021

/s/ KATHRYN M. HILL	Director	June ~~15, 2020~~21, 2021
Kathryn M. Hill	Director	June ~~15, 2020~~21, 2021

/s/ DEBORAH KERR	Director	June ~~15, 2020~~21, 2021
Deborah Kerr	Director	June ~~15, 2020~~21, 2021

/s/ SCOTT SCHENKEL	Director	June ~~15, 2020~~21, 2021
Scott Schenkel	Director	June ~~15, 2020~~21, 2021

/s/ GEORGE T. SHAHEEN	Director	June ~~15, 2020~~21, 2021
George T. Shaheen	Director	June ~~15, 2020~~21, 2021
/s/ CARRIE PALIN	Director	June 21, 2021
Carrie Palin
/s/ DEEPAK AHUJA	Director	June ~~15, 2020~~21, 2021
Deepak Ahuja

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company