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UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
    Form 10-K
  (Mark One)þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    January 31, 2008oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)  OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission file number:
    001-33445
    Netezza Corporation
 (Exact Name of Registrant as
    Specified in Its Charter)
  Delaware

04-3527320(State or Other Jurisdiction
    of
    Incorporation or Organization)

(I.R.S. Employer
    Identification Number)200 Crossing Boulevard
    Framingham, Massachusetts

01702(Zip Code)(Address of Principal Executive
    Offices)   Registrants telephone number, including area code:
 (508) 665-6800
    Securities registered pursuant to Section 12(b) of the
    Act:
  Title of Each Class

Name of Each Exchange on Which RegisteredCommon Stock, par value $0.001 per share

NYSE Arca   Securities registered pursuant to Section 12(g) of the
    Act:
 None
  o þ
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. o
    Large accelerated
    filer o

Accelerated
    filer o

Non-accelerated
    filer þ
    (Do not check if a smaller reporting company)

Smaller reporting
    company o   Rule 12b-2 o þ
      DOCUMENTS
    INCORPORATED BY REFERENCE
  Form 10-K.




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NETEZZA
    CORPORATION
  ANNUAL
    REPORT ON
    FORM 10-K
    FOR FISCAL YEAR 2008
  TABLE OF CONTENTS
   
 PagePART I.Item 1.


Business


1Item 1A.


Risk Factors


11Item 1B.


Unresolved Staff Comments


26Item 2.


Properties


26Item 3.


Legal Proceedings


27Item 4.


Submission of Matters to a Vote of Security
    Holders


27PART II.Item 5.


Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities


27Item 6.


Selected Financial Data


29Item 7.


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


30Item 7A.


Quantitative and Qualitative Disclosures about
    Market Risk


43Item 8.


Financial Statements and Supplementary Data


45Item 9.


Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


76Item 9A.


Controls and Procedures


76Item 9B.


Other Information


76PART III.Item 10.


Directors, Executive Officers and Corporate
    Governance


76Item 11.


Executive Compensation


77Item 12.


Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


77Item 13.


Certain Relationships and Related Transactions,
    and Director Independence


77Item 14.


Principal Accountant Fees and Services


77PART IV.Item 15.


Exhibits and Financial Statement Schedules


78EX-10.12 Lease, dated January 2, 2008 by and between the Registrant and NE Williams II, LLCEX-21.1 Subsidiaries of the RegistrantEX-23.1 Consent of PricewaterhouseCoopers LLPEX-31.1 Section 302 Certification of CEOEX-31.2 Section 302 Certification of CFOEX-32.1 Section 906 Certification of CEO and CFO




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PART 1  FORWARD-LOOKING STATEMENTS
  Form 10-K
  Form 10-K Form 10-K. Form 10-K.
  INFORMATION
  Form 10-K, Form 10-Q, Form 8-K, 1-800-SEC-0330.
     508-665-4623




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ITEM 1.
    BUSINESS  Company
    Overview
      
    Fast data query response times through our proprietary
    Intelligent Query Streaming technology.
    Massive scalability through our proprietary Asymmetric Massively
    Parallel Processing, or AMPP, architecture.
    Simplicity of installation, operation and administration.
    Cost effectiveness through the use of industry-standard server
    and storage components packaged in a single unified solution.      (508) 665-6800. www.netezza.com Form 10-K.
  Form 10-K.
   1




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Industry
    Background
  Proliferation
    of Data
    
    Telecommunications.  The telecommunications
    industry is characterized by intense competition and customer
    attrition, or churn. Targeted marketing
    opportunities and the rapid response to behavior trends are
    paramount to the success of telecommunications service providers
    in retaining existing customers and attracting new customers.
    Customer relationship management, or CRM, analyses need to be
    constantly and quickly performed, to enable service providers to
    market to at-risk customers before they churn, offer new
    products and services to those most likely to buy, and identify
    and manage key customer relationships. Other key analytical
    needs of telecommunications service providers include call data
    record analysis for revenue assurance, billing and least-cost
    routing, fraud detection and network management.
    E-Business.  For
    online businesses, the process of collecting, analyzing and
    reporting data about page visits, otherwise known as click
    stream analysis, is required for constant monitoring of website
    performance and customer pattern changes. In addition to needing
    to address the operational and customer relationship challenges
    faced by traditional retailers,
    e-businesses
    must also analyze hundreds of millions or even billions of click
    stream data records to track and respond to customer behavior
    patterns in real time. Additionally, with online advertising
    becoming a major revenue generator, many
    e-businesses
    and their advertisers need to understand who is looking at the
    advertisements and their actions as a result of viewing the
    advertisements. Fast analysis of online activity can enable
    better cross-selling of products, prevent customers from
    abandoning shopping carts or leaving the web site, and mitigate
    click stream fraud.
    Retail.  With thousands of products and
    millions of customers, many retailers need sophisticated systems
    to track, manage and optimize customer and supplier
    relationships. Targeted marketing programs often require the
    analysis of millions of customer transactions. To prevent supply
    shortages large retailers must integrate and analyze customer
    transaction data, vendor delivery schedules and RFID supply
    chain data. Other useful analyses for retail companies include
    market basket analysis of the items customers buy in
    a given shopping session, customer loyalty programs for frequent
    buyers, overstock/understock and supply chain optimization.
    Financial Services.  Financial services
    institutions generate terabytes of data related to millions of
    client purchases, banking transactions and contacts with
    marketing, sales and customer service across multiple channels.
    This data contains crucial business information on client
    preferences and buying behavior, and can reveal insights that
    enable stronger customer relationship management and increase
    the lifetime value of the customer. In addition, risk management
    and portfolio management applications require analysis of vast
    amounts of rapidly changing data for fraud prevention and loan
    analysis. With extensive compliance and regulatory requirements,
    financial institutions are required to retain an ever-increasing
    amount of data and need to make this data available for detailed
    reporting on a periodic basis.
    Analytic Service Providers.  The primary
    purpose of these companies is providing business intelligence
    support to enterprises on an outsourced basis. Analytic service
    providers serving many industries, including retail,
    telecommunications, healthcare and others, provide clients with
    domain expertise in database-driven marketing and customer
    segmentation. Since their clients are looking for faster
    turn-arounds for more sophisticated reports on continuously
    increasing amounts of data, these companies require solutions
    that will scale better with lower cost of ownership to meet
    their clients service-level agreements, while improving
    their own profitability.
    Government.  As some of the largest creators
    and consumers of data, government agencies around the world need
    to access, analyze and share vast amounts of up-to-date data
    quickly and efficiently. These agencies face a broad range of
    challenges, including identifying terrorist threats and reducing
    fraud, waste and abuse. Iterative analysis on many terabytes of
    data with high performance is crucial for achieving these
    missions. 2




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
    Healthcare.  Healthcare providers seek to
    analyze terabytes of operational and patient care data to
    measure drug effectiveness and interactions, improve quality of
    care and streamline operations through more cost-effective
    services. Pharmaceutical companies rely on data analysis to
    speed new drug development and increase marketing effectiveness.
    In the future, these companies plan to incorporate large amounts
    of genomic data into their analyses in order to tailor drugs for
    more personalized medicine.      Growing
    Role of the Data Warehouse
      Growth in Users of Business Intelligence.
  Increasing Number and Sophistication of Data
    Queries.
  Need for Real-time Data Availability.
  Limitations
    of Traditional Data Warehouse Systems
   3




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Inefficient Execution of Complex and Ad Hoc
    Queries.
  Difficult and Costly Procurement Process.
  Complex Infrastructure Installation and
    Deployment.
  Slow Response to Changing Business Needs.
  Costly Ongoing Administration and
    Maintenance.
  Inefficient Power, Cooling and Footprint
    Requirements.
  Limited Scalability.
 4




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Our
    Solution
      Superior Performance.
  Easy and Cost-Effective Procurement.
  Quick and Easy Infrastructure Installation and
    Deployment.
  Rapid Adaptation to Changing Business
    Needs.
  Minimal Ongoing Administration and
    Maintenance.
 5




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Small Footprint, and Low Power and Cooling
    Requirements.
  High Degree of Scalability.
  Our
    Products
    10000 Series 10000 Series
  5000 Series
    Smallest

LargestConfiguration

Configuration(NPS 5200)

(NPS 10800)Snippet Processing Units (SPUs)


28



896User Data Capacity (Terabytes)


3



100Data Scan Rate (Terabytes/hour)


6



190   Product Partnerships and Alliances.
  Technology
    and Architecture
    
    Moving processing intelligence to a record stream adjacent to
    storage significantly enhances performance and scalability. Our
    approach allows us to perform database operations in a
    streaming fashion. This patent-pending Netezza
    innovation is called Intelligent Query Streaming technology. The
    approach of traditional solutions requires data from storage to
    be moved through many stages before database operations can be
    performed. 6




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
    Performance and scalability goals can be met using elements of
    both symmetric multi-processing, or SMP, and massively parallel
    processing, or MPP, applying each method where it is best suited
    to meet the specific needs of analytic applications operating on
    terabytes of data. We believe our architectural approach, which
    we refer to as AMPP, provides significant improvements in
    performance and scalability as compared to traditional data
    warehouse systems. We have several patents pending surrounding
    our AMPP architecture.      
    The first tier is a high-performance Linux SMP host that
    compiles data query tasks received from business intelligence
    applications, and generates query execution plans. It then
    divides a query into a sequence of sub-tasks, or snippets that
    can be executed in parallel, and distributes the snippets to the
    second tier for execution.
    The second tier consists of dozens to many hundreds of snippet
    processing units, or SPUs, operating in parallel. Each SPU is an
    intelligent query processing and storage node, and consists of a
    commodity processor, dedicated memory, a disk drive and a field
    programmable gate array, or FPGA, acting as a disk controller
    with hard-wired logic to manage data flows.    Customers
        Service
    and Support
    on-site
 7




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three-day on-site on-site
      Sales and
    Marketing
            Research
    and Development
   8




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Manufacturing
          Competition
     9




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Intellectual
    Property
         10




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Employees
    ITEM 1A.
    RISK
    FACTORS  Risks
    Related to Our Business and Industry
  Form 10-K,
  We
    have a history of losses, and we may not maintain profitability
    in the future.
    Our
    operating results may fluctuate significantly from quarter to
    quarter and may fall below expectations in any particular fiscal
    quarter, which could adversely affect the market price of our
    common stock.
      
    the typical recording of a significant portion of our quarterly
    sales in the final month of the quarter, whereby small delays in
    completion of sales transactions could have a significant impact
    on our operating results for that quarter; 11




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
    the relatively high average selling price of our products and
    our dependence on a limited number of customers for a
    substantial portion of our revenue in any quarterly period,
    whereby the loss of or delay in a customer order could
    significantly reduce our revenue for that quarter; for instance,
    four customers each accounted for greater than 5% of our total
    revenues during fiscal 2008 and our ten largest customers
    accounted for approximately 48% of our revenues in fiscal 2008;
    the possibility of seasonality in demand for our products;
    the addition of new customers or the loss of existing customers;
    the rates at which customers purchase additional products or
    additional capacity for existing products from us;
    changes in the mix of products and services sold;
    the rates at which customers renew their maintenance and support
    contracts with us;
    our ability to enhance our products with new and better
    functionality that meet customer requirements;
    the timing of recognizing revenue as a result of revenue
    recognition rules, including due to the timing of delivery and
    receipt of our products;
    the length of our product sales cycle;
    the productivity and growth of our salesforce;
    service interruptions with any of our single source suppliers or
    manufacturing partners;
    changes in pricing by us or our competitors, or the need to
    provide discounts to win business;
    the timing of our product releases or upgrades or similar
    announcements by us or our competitors;
    the timing of investments in research and development related to
    new product releases or upgrades;
    our ability to control costs, including operating expenses and
    the costs of the components used in our products;
    volatility in our stock price, which may lead to higher stock
    compensation expenses pursuant to Statement of Financial
    Accounting Standards No. 123(R), Share-Based
    Payment, or SFAS No. 123(R), which first became
    effective for us in fiscal 2007 and requires that employee
    stock-based compensation be measured based on fair value on
    grant date and treated as an expense that is reflected in our
    financial statements over the recipients service period;
    future accounting pronouncements and changes in accounting
    policies;
    costs related to the acquisition and integration of companies,
    assets or technologies;
    technology and intellectual property issues associated with our
    products; and
    general economic trends, including changes in information
    technology spending or geopolitical events such as war or
    incidents of terrorism.    Our
    limited operating history and the emerging nature of the data
    warehouse market make it difficult to evaluate our current
    business and future prospects, and may increase the risk of your
    investment.
   12




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
    attract new customers and maintain current customer
    relationships;
    continue to develop and upgrade our data warehouse solutions;
    respond quickly and effectively to competitive pressures;
    offer competitive pricing or provide discounts to customers in
    order to win business;
    manage our expanding operations;
    maintain adequate control over our expenses;
    maintain adequate internal controls and procedures;
    maintain our reputation, build trust with our customers and
    further establish our brand; and
    identify, attract, retain and motivate qualified personnel.    We
    depend on a single product family, the Netezza Performance
    Server family, for all of our revenue, so we are particularly
    vulnerable to any factors adversely affecting the sale of that
    product family.
    If we
    lose key personnel, or if we are unable to attract and retain
    highly-qualified personnel on a cost-effective basis, it will be
    more difficult for us to manage our business and to identify and
    pursue growth opportunities.
    If we
    are unable to develop and introduce new products and
    enhancements to existing products, if our new products and
    enhancements to existing products do not achieve market
    acceptance, or if we fail to manage product transitions, we may
    fail to increase, or may lose, market share.
   13




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We
    face intense and growing competition from leading technology
    companies as well as from emerging companies. Our inability to
    compete effectively with any or all of these competitors could
    impact our ability to achieve our anticipated market penetration
    and achieve or sustain profitability.
        Our
    success depends on the continued recognition of the need for
    business intelligence in the marketplace and on the adoption by
    our customers of data warehouse appliances, often as
    replacements for existing systems, to enable business
    intelligence. If we fail to improve our products to further
    drive this market migration as well as to successfully compete
    with alternative approaches and products, our business would
    suffer.
   14




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Claims
    that we infringe or otherwise misuse the intellectual property
    of others could subject us to significant liability and disrupt
    our business, which could have a material adverse effect on our
    business and operating results.
    
    be time-consuming and expensive to defend, whether meritorious
    or not;
    cause shipment delays;
    divert the attention of our technical and managerial resources;
    require us to enter into royalty or licensing agreements with
    third parties, which may not be available on terms that we deem
    acceptable, if at all;
    prevent us from operating all or a portion of our business or
    force us to redesign our products, which could be difficult and
    expensive and may degrade the performance of our products;
    subject us to significant liability for damages or result in
    significant settlement payments; and/or
    require us to indemnify our customers, distribution partners or
    suppliers.    Our
    products must interoperate with our customers information
    technology infrastructure, including customers software
    applications, networks, servers and data-access protocols, and
    if our products do not do so successfully, we may experience a
    weakening demand for our products.
   15




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If we
    fail to enhance our brand, our ability to expand our customer
    base will be impaired and our operating results may
    suffer.
    We may
    not receive significant revenues from our current research and
    development efforts for several years, if at all.
    Our
    sales cycles can be long and unpredictable, and our sales
    efforts require considerable time and expense, which contribute
    to the unpredictability and variability of our financial
    performance and may adversely affect our
    profitability.
     16




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Our
    company is growing rapidly and we may be unable to manage our
    growth effectively.
    Our
    ability to sell to U.S. federal government agencies is subject
    to evolving laws and policies that could have a material adverse
    effect on our growth prospects and operating results, and our
    contracts with the U.S. federal government may impose
    requirements that are unfavorable to us.
    E-government
      
    terminate contracts for convenience at any time without cause;
    obtain detailed cost or pricing information;
    receive most favored customer pricing;
    perform routine audits;
    impose equal employment and hiring standards;
    require products to be manufactured in specified countries; 17




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
    restrict
    non-U.S. ownership
    or investment in our company; and
    pursue administrative, civil or criminal remedies for
    contractual violations.    Our
    international operations are subject to additional risks that we
    do not face in the United States, which could have an adverse
    effect on our operating results.
    
    difficulties in staffing and managing our foreign offices and
    the increased travel, infrastructure and legal and compliance
    costs associated with multiple international locations;
    general economic conditions in the countries in which we
    operate, including seasonal reductions in business activity in
    the summer months in Europe, during Lunar New Year in parts of
    Asia and in other periods in various individual countries;
    longer payment cycles for sales in foreign countries and
    difficulties in enforcing contracts and collecting accounts
    receivable;
    additional withholding taxes or other taxes on our foreign
    income, and tariffs or other restrictions on foreign trade or
    investment;
    imposition of, or unexpected adverse changes in, foreign laws or
    regulatory requirements, many of which differ from those in the
    United States;
    increased length of time for shipping and acceptance of our
    products;
    difficulties in repatriating overseas earnings;
    increased exposure to foreign currency exchange rate risk;
    reduced protection for intellectual property rights in some
    countries;
    costs and delays associated with developing products in multiple
    languages; and
    political unrest, war, incidents of terrorism, or responses to
    such events.    Our
    future revenue growth will depend in part on our ability to
    further develop our indirect sales channel, and our inability to
    effectively do so will impair our ability to grow our revenues
    as we anticipate.
   18




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Our
    ability to sell our products and retain customers is highly
    dependent on the quality of our maintenance and support services
    offerings, and our failure to offer high-quality maintenance and
    support could have a material adverse effect on our operating
    results.
  on-site
  Our
    products are highly technical and may contain undetected
    software or hardware defects, which could cause data
    unavailability, loss or corruption that might result in
    liability to our customers and harm to our reputation and
    business.
    
    loss of customers;
    negative publicity and damage to our reputation;
    diversion of our engineering, customer service and other
    resources;
    increased service and warranty costs; and
    loss or delay in revenue or market acceptance of our products.   19




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It is
    difficult to predict our future capital needs and we may be
    unable to obtain additional financing that we may need, which
    could have a material adverse effect on our business, operating
    results and financial condition.
    
    develop or enhance our products;
    support additional capital expenditures;
    respond to competitive pressures;
    fund operating losses in future periods; or
    take advantage of acquisition or expansion opportunities.    A
    substantial portion of our long-term marketable securities is
    invested in highly rated auction rate securities. Failures in
    these auctions may affect our liquidity.
  and/or
  If we
    are unable to protect our intellectual property rights, our
    competitive position could be harmed or we could be required to
    incur significant expenses to enforce our rights.
   20




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Our
    products may be subject to open source licenses, which may
    restrict how we use or distribute our solutions or require that
    we release the source code of certain technologies subject to
    those licenses.
      We may
    engage in future acquisitions that could disrupt our business,
    cause dilution to our stockholders, reduce our financial
    resources and result in increased expenses.
    
    the purchase price we pay could significantly deplete our cash
    reserves, impair our future operating flexibility or result in
    dilution to our existing stockholders;
    we may find that the acquired company, assets or technology do
    not further improve our financial and strategic position as
    planned; 21




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
    we may find that we overpaid for the company, asset or
    technology, or that the economic conditions underlying our
    acquisition have changed;
    we may have difficulty integrating the operations and personnel
    of the acquired company;
    we may have difficulty retaining the employees with the
    technical skills needed to enhance and provide services with
    respect to the acquired assets or technologies;
    the acquisition may be viewed negatively by customers, financial
    markets or investors;
    we may have difficulty incorporating the acquired technologies
    or products with our existing product lines;
    we may encounter difficulty entering and competing in new
    product or geographic markets;
    we may encounter a competitive response, including price
    competition or intellectual property litigation;
    we may have product liability, customer liability or
    intellectual property liability associated with the sale of the
    acquired companys products;
    we may be subject to litigation by terminated employees or third
    parties;
    we may incur debt, one-time write-offs, such as acquired
    in-process research and development costs, and restructuring
    charges;
    we may acquire goodwill and other intangible assets that are
    subject to impairment tests, which could result in future
    impairment charges;
    our ongoing business and managements attention may be
    disrupted or diverted by transition or integration issues and
    the complexity of managing geographically or culturally diverse
    enterprises; and
    our due diligence process may fail to identify significant
    existing issues with the target companys product quality,
    product architecture, financial disclosures, accounting
    practices, internal controls, legal contingencies, intellectual
    property and other matters.      We
    currently rely on a single contract manufacturer to assemble our
    products, and our failure to manage our relationship with our
    contract manufacturer successfully could negatively impact our
    ability to sell our products.
     22




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We
    depend on a continued supply of components for our products from
    third-party suppliers, and if shortages of these components
    arise, we may not be able to secure enough components to build
    new products to meet customer demand or we may be forced to pay
    higher prices for these components.
    We
    currently rely on a contract engineering firm for quality
    assurance and product integration engineering.
    Future
    interpretations of existing accounting standards could adversely
    affect our operating results.
  SOP 97-2, SOP 98-9, SOP 97-2 SOP 98-9,
  
    undelivered elements for which we do not have vendor-specific
    objective evidence of fair value; 23




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
    requirements that we deliver services for significant
    enhancements and modifications to customize our software for a
    particular customer; or
    material acceptance criteria.    If we
    fail to maintain an effective system of internal controls, we
    might not be able to report our financial results accurately or
    prevent fraud; in that case, our stockholders could lose
    confidence in our financial reporting, which could negatively
    impact the price of our stock.
  Form 10-K
  We are
    subject to governmental export controls that could impair our
    ability to compete in international markets.
    Adverse
    changes in economic conditions and reduced information
    technology spending may negatively impact our
    business.
   24




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Risks
    Related to our Common Stock
  The
    trading price of our common stock is likely to be
    volatile.
    
    changes in operating performance and stock market valuations of
    other technology companies generally or those that sell data
    warehouse solutions in particular;
    actual or anticipated fluctuations in our operating results;
    the financial guidance that we may provide to the public, any
    changes in such guidance, or our failure to meet such guidance;
    changes in financial estimates by securities analysts, our
    failure to meet such estimates, or failure of analysts to
    initiate or maintain coverage of our stock;
    the publics response to our press releases or other public
    announcements by us, including our filings with the SEC;
    announcements by us or our competitors of significant technical
    innovations, customer wins or losses, acquisitions, strategic
    partnerships, joint ventures or capital commitments;
    introduction of technologies or product enhancements that reduce
    the need for our products;
    the loss of key personnel;
    the development and sustainability of an active trading market
    for our common stock;
    lawsuits threatened or filed against us;
    future sales of our common stock by our officers or
    directors; and
    other events or factors affecting the economy generally,
    including those resulting from political unrest, war, incidents
    of terrorism or responses to such events.      Future
    sales of shares by existing stockholders could cause our stock
    price to decline.
  lock-up
  If
    securities or industry analysts do not publish research or
    publish unfavorable research about our business, our stock price
    and trading volume could decline.
   25




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Provisions
    in our certificate of incorporation and by-laws and Delaware law
    might discourage, delay or prevent a change in control of our
    company or changes in our management and, therefore, may
    negatively impact the trading price of our common
    stock.
    
    establish a classified board of directors so that not all
    members of our board are elected at one time;
    provide that directors may only be removed for cause;
    authorize the issuance of blank check preferred
    stock that our board of directors could issue to increase the
    number of outstanding shares and to discourage a takeover
    attempt;
    eliminate the ability of our stockholders to call special
    meetings of stockholders;
    prohibit stockholder action by written consent, which has the
    effect of requiring all stockholder actions to be taken at a
    meeting of stockholders;
    provide that the board of directors is expressly authorized to
    make, alter or repeal our by-laws; and
    establish advance notice requirements for nominations for
    election to our board of directors or for proposing matters that
    can be acted upon by stockholders at stockholder meetings.    Insiders
    own a significant portion of our outstanding common stock and
    will therefore have substantial control over us and will be able
    to influence corporate matters.
    ITEM 1B.
    UNRESOLVED
    STAFF COMMENTS    ITEM 2.
    PROPERTIES   26




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Form 10-K.
  ITEM 3.
    LEGAL
    PROCEEDINGS    ITEM 4.
    SUBMISSION
    OF MATTERS TO A VOTE OF SECURITY HOLDERS   PART II  ITEM 5.
    MARKET
    FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS
    AND ISSUER PURCHASES OF EQUITY SECURITIES  Market
    Information for Common Stock
    High

LowSecond fiscal quarter ended July 31, 2007 (from
    July 19, 2007)

$
17.39


$
15.00Third fiscal quarter ended October, 31, 2007

$
15.95


$
11.25Fourth fiscal quarter ended January 31, 2008

$
14.81


$
9.45     Stockholders
    Dividend
    Policy
   27




---



##### Table of Contents



Comparative
    Stock Performance Graph
    COMPARISON
    OF CUMULATIVE TOTAL RETURN
  
  Months Ending
  BasePeriodCompany/Index


7/19/07


7/31/07


8/31/07


9/30/07


10/31/07


11/30/07


12/31/07


1/31/08Netezza Corporation



100




87.69




80.51




71.94




79.07




76.02




79.36




56.70S&P 500 Index



100




93.70




95.11




98.66




100.23




96.04




95.38




89.66S&P Information Technology Index



100




93.83




96.53




100.19




107.34




98.77




100.27




87.74   Recent
    Sales of Unregistered Securities
  Form 10-Q.
     28




---



##### Table of Contents



Use of
    Proceeds from Public Offering of Common Stock
  Form S-1 No. 333-141522),
  Purchases
    of Equity Securities by the Issuer and Affiliated
    Purchasers
    ITEM 6.
    SELECTED
    FINANCIAL DATA  Form 10-K.
  Fiscal Year Ended January 31,2008

2007

2006

2005

2004(In thousands, except share and per share amounts)Summary of Operations:Revenue

$
126,686


$
79,621


$
53,851


$
36,029


$
13,633Operating income (loss)


403



(8,251
)


(14,034
)


(3,134
)


(9,807
)Income (loss) before cumulative effect of change in accounting
    principle and accretion to preferred stock


1,994



(7,975
)


(13,807
)


(3,014
)


(9,952
)Accretion to preferred stock


(2,853
)


(5,931
)


(5,797
)


(4,096
)


(3,877
)Net loss attributable to common shareholders


(859
)


(13,906
)


(19,822
)


(7,110
)


(13,829
)Net loss per share attributable to common
    stockholders  basic and diluted

$
(0.03
)

$
(1.90
)

$
(2.99
)

$
(1.17
)

$
(2.41
)Weighted average common shares outstanding  basic and
    diluted


33,988,696



7,319,231



6,635,274



6,077,538



5,735,952   As of January 31,2008

2007

2006

2005

2004(In thousands)Balance Sheet Data:Working capital

$
92,501


$
25,899


$
20,329


$
28,708


$
19,387Total assets


198,752



69,199



45,864



39,443



26,731Long-term debt, less current portion






4,099



2,489







704Convertible redeemable preferred stock






97,131



91,200



80,904



61,156Total stockholders equity (deficit)


136,475



(81,123
)


(67,932
)


(49,110
)


(41,977
)  29




---



##### Table of Contents



ITEM 7.
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS  Form 10-K. Form 10-K Form 10-K. Form 10-K Form 10-K. Form 10-K.
  Overview
       30




---



##### Table of Contents



Revenue
    Product Revenue. e-business,
  Services Revenue.
  Cost
    of Revenue and Gross Profit
    on-site
   31




---



##### Table of Contents



Operating
    Expenses
    Sales and
    Marketing Expenses
    Research
    and Development Expenses
    General
    and Administrative Expenses
   32




---



##### Table of Contents



Other
  Interest
    Income (Expense), Net
    Other
    Income (Expense), Net
  non-U.S. dollar
  Application
    of Critical Accounting Policies and Use of Estimates
    Form 10-K,
  
    revenue recognition;
    stock-based compensation;
    inventory valuation;
    warranty reserves;
    accounting for income taxes; and
    valuation of investments.    Revenue
    Recognition
    
    Evidence of an arrangement.  We consider a
    non-cancelable agreement signed by the customer and us to be
    persuasive evidence of an arrangement.
    Delivery has occurred.  We consider delivery to
    have occurred when product has been delivered to the customer
    and no post-delivery obligations exist other than ongoing
    support obligations. In instances where customer acceptance is
    required, delivery is deemed to have occurred when customer
    acceptance has been achieved. 33




---



##### Table of Contents




    Fees are fixed or determinable.We consider the fee to be
    fixed or determinable unless the fee is subject to refund or
    adjustment or is not payable within normal payment terms. If the
    fee is subject to refund or adjustment, we recognize revenue
    when the right to a refund or adjustment lapses. If offered
    payment terms exceed our normal terms, we recognize revenue as
    the amounts become due and payable or upon the receipt of cash.
    Collection is deemed probable.We conduct a credit review
    for all transactions at the inception of an arrangement to
    determine the creditworthiness of the customer. Collection is
    deemed probable if, based upon our evaluation, we expect that
    the customer will be able to pay amounts under the arrangement
    as payments become due. If we determine that collection is not
    probable, revenue is deferred and recognized upon the receipt of
    cash.      Stock-Based
    Compensation
  Accounting for Stock Issued to
    Employees
  EITF 96-18, Accounting for Equity Instruments That Are Issued to
    Other Than Employees for Acquiring, or in Conjunction with
    Selling, Goods or Services
  Share-Based Payment,
 34




---



##### Table of Contents



Inventory
    Valuation
  work-in-process
  Warranty
    Reserves
    Accounting
    for Income Taxes
    Accounting for Income Taxes
 35




---



##### Table of Contents



Valuation
    of Investments
   36




---



##### Table of Contents



Results
    of Operations for the Years Ended January 31, 2008, 2007
    and 2006
    Percentage ChangeFiscal Year Ended January 31,


2008 vs


2007 vs2008


2007


2006


2007


2006(In thousands)RevenueProduct

$
102,994


$
64,632


$
45,508



59.4
%


42.0
%Services


23,692



14,989



8,343



58.1
%


79.7
%Total revenue


126,686



79,621



53,851



59.1
%


47.9
%Cost of revenueProduct


42,527



26,697



18,941



59.3
%


40.9
%Services


7,716



5,403



3,491



42.8
%


54.8
%Total cost of revenue


50,243



32,100



22,432



56.5
%


43.1
%Gross margin


76,443



47,521



31,419



60.9
%


51.2
%Operating expensesSales and marketing


43,210



32,908



25,626



31.3
%


28.4
%Research and development


23,880



18,037



16,703



32.4
%


8.0
%General and administrative


8,950



4,827



3,124



85.4
%


54.5
%Total operating expenses


76,040



55,772



45,453



36.3
%


22.7
%Operating income (loss)


403



(8,251
)


(14,034
)


104.9
%


41.2
%Interest income


2,971



414



487



617.6
%


(15.0
)%Interest expense


717



765



173



(6.3
)%


342.2
%Other income (expense), net


298



627



(87
)


(52.5
)%


(820.7
)%Income (loss) before income taxes, cumulative effect of change
    in accounting principle and accretion to preferred stock


2,955



(7,975
)


(13,807
)Income tax provision


961







Income (loss) before cumulative effect of change in accounting
    principle and accretion to preferred stock

$
1,994


$
(7,975
)

$
(13,807
)Cumulative effect of change in accounting principle










(218
)Net income (loss)

$
1,994


$
(7,975
)

$
(14,025
)   Revenue
    and/or
   37




---



##### Table of Contents



Gross
    Margin
        Sales
    and Marketing Expenses
          Research
    and Development Expenses
     38




---



##### Table of Contents



General
    and Administrative Expenses
          Interest
    Income (Expense), Net
      Other
    Income (Expense), Net
  non-U.S. dollar
 39




---



##### Table of Contents



Provision
    for Income Taxes
    Liquidity
    and Capital Resources
          Fiscal Year Ended January 31,2008

2007

2006(In thousands)Net cash provided by (used in), operating activities

$
26,937


$
(11,163
)

$
(9,760
)Net cash used in investing activities


(91,759
)


(1,477
)


(5,506
)Net cash provided by financing activities


106,884



3,789



7,644   Cash
    Provided by (Used in) Operating Activities
     40




---



##### Table of Contents



Cash
    Used in Investing Activities
    Cash
    Provided by Financing Activities
    Contractual
    Obligations
    Less than





More thanContractual Obligations

Total

1 Year

1 - 3 Years

3 - 5 Years

5 Years(In thousands)Operating lease obligations


10,571



1,513



2,643



2,727



3,688Purchase obligations(1)


8,182



8,182











     (1)
    
    Purchase obligations primarily represent the value of purchase
    orders issued to our contract manufacturer, Sanmina, for the
    procurement of assembled NPS appliance systems for the next
    three months.    Off-Balance
    Sheet Arrangements
   41




---



##### Table of Contents



Uncertainty
    in Credit Markets
  Accounting for Certain Investments in Debt and Equity
    Securities
  Recent
    Accounting Pronouncements
  Fair Value Measurements FSP 157-2.
  The Fair Value Option for
    Financial Assets and Financial Liabilities Accounting for Certain Investments in Debt and Equity
    Securities
 42




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##### Table of Contents



Business Combinations
  Noncontrolling Interests in Consolidated Financial
    Statements
    ITEM 7A.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK  Foreign
    Currency Risk
   43




---



##### Table of Contents



Interest
    Rate Risk
   44




---



##### Table of Contents



ITEM 8.
    FINANCIAL
    STATEMENTS AND SUPPLEMENTARY DATA  NETEZZA
    CORPORATION
  Index To
    Consolidated Financial Statements
  REPORT OF INDEPENDENT REGISTERED PUBLIC
    ACCOUNTING FIRM


46CONSOLIDATED BALANCE SHEETS


47CONSOLIDATED STATEMENTS OF OPERATIONS


48CONSOLIDATED STATEMENTS OF STOCKHOLDERS
    EQUITY (DEFICIT)


49CONSOLIDATED STATEMENTS OF CASH FLOWS


50NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS


51  45




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##### Table of Contents



Report of
    Independent Registered Public Accounting Firm      150-5 (FSP 150-5), Issuers Accounting under FASB Statement No. 150
    for Freestanding Warrants and Other Similar Instruments on
    Shares That Are Redeemable Share-Based Payment.
      46




---



##### Table of Contents



NETEZZA
    CORPORATION
  CONSOLIDATED
    BALANCE SHEETS
  January 31,2008


2007(In thousands, except share and per share amounts)ASSETSCurrent assetsCash and cash equivalents

$
46,184


$
5,018Short term marketable securities


37,149



Accounts receivable


19,999



31,834Inventory


31,611



26,239Restricted cash


379



Other current assets


4,038



1,370Total current assets


139,360



64,461Property and equipment, net


5,467



4,228Long term marketable securities


53,775



Restricted cash






379Other long-term assets


150



131Total assets

$
198,752


$
69,199LIABILITIES, CONVERTIBLE REDEEMABLE PREFERRED STOCK AND
    STOCKHOLDERS EQUITY (DEFICIT)Current liabilitiesAccounts payable

$
5,533


$
12,683Accrued expenses


5,494



4,290Accrued compensation and benefits


5,244



4,388Current portion of note payable to bank






2,436Refundable exercise price for restricted stock






24Deferred revenue


30,588



14,741Total current liabilities


46,859



38,562Long-term deferrred revenue


15,418



9,765Note payable to bank, net of current portion






4,099Preferred stock warrant liability






765Total long-term liabilities


15,418



14,629Total liabilities


62,277



53,191Commitments and contingencies (Note 15)Convertible redeemable preferred stock, $0.001 par value;Series A; 0 and 17,280,000 shares authorized at
    January 31, 2008 and 2007, respectively; 0 and
    17,200,000 shares issued and outstanding at
    January 31, 2008 and 2007, respectively






12,805Series B; 0 and 29,425,622 shares authorized at
    January 31, 2008 and 2007, respectively; 0 and
    29,389,622 shares issued and outstanding at
    January 31, 2008 and 2007, respectively






35,245Series C; 0 and 23,058,151 shares authorized at
    January 31, 2008 and 2007, respectively; 0 and
    23,058,151 shares issued and outstanding at
    January 31, 2008 and 2007, respectively






25,700Series D; 0 and 8,147,452 shares authorized at
    January 31, 2008 and 2007, respectively; 0 and
    7,901,961 shares issued and outstanding at January 31,
    2008 and 2007, respectively






23,381Total convertible redeemable preferred stock






97,131Stockholders equity (deficit):Preferred stock, $0.001 par value; 5,000,000 and
    0 shares authorized at January 31, 2008 and 2007
    respectively; none outstanding






Common stock, $0.001 par value; 500,000,000 and
    150,000,000 shares authorized at January 31, 2008 and
    2007, respectively; 57,729,903 and 7,542,372 shares issued
    at January 31, 2008 and 2007, respectively


58



8Treasury stock, at cost; 139,062 shares at January 31,
    2008 and 2007, respectively


(14
)


(14
)Accumulated other comprehensive income


(682
)


(284
)Additional
    paid-in-capital


216,253



Accumulated deficit


(79,140
)


(80,833
)Total stockholders equity (deficit)


136,475



(81,123
)Total liabilities, convertible redeemable preferred stock and
    stockholders equity (deficit)

$
198,752


$
69,199    47




---



##### Table of Contents



NETEZZA
    CORPORATION
  CONSOLIDATED
    STATEMENTS OF OPERATIONS
  Fiscal Year Ended January 31,2008


2007


2006(In thousands, except share and per share amounts)RevenueProduct

$
102,994


$
64,632


$
45,508Services


23,692



14,989



8,343Total revenue


126,686



79,621



53,851Cost of revenueProduct


42,527



26,697



18,941Services


7,716



5,403



3,491Total cost of revenue


50,243



32,100



22,432Gross margin


76,443



47,521



31,419Operating expensesSales and marketing


43,210



32,908



25,626Research and development


23,880



18,037



16,703General and administrative


8,950



4,827



3,124Total operating expenses


76,040



55,772



45,453Operating income (loss)


403



(8,251
)


(14,034
)Interest income


2,971



414



487Interest expense


717



765



173Other income (expense), net


298



627



(87
)Income (loss) before income taxes, cumulative effect of change
    in accounting principle and accretion to preferred stock

$
2,955


$
(7,975
)

$
(13,807
)Income tax provision


961







Income (loss) before cumulative effect of change in accounting
    principle and accretion to preferred stock

$
1,994


$
(7,975
)

$
(13,807
)Cumulative effect of change in accounting principle










(218
)Net income (loss)

$
1,994


$
(7,975
)

$
(14,025
)Accretion to preferred stock


(2,853
)


(5,931
)


(5,797
)Net loss attributable to common stockholders

$
(859
)

$
(13,906
)

$
(19,822
)Net loss per share attributable to common
    stockholders  basic and diluted:Net income (loss) per share before cumulative effect of change
    in accounting principle and accretion to preferred stock

$
0.06


$
(1.09
)

$
(2.08
)Cumulative effect of change in accounting principle










(0.03
)Accretion to preferred stock


(0.09
)


(0.81
)


(0.88
)Net loss per share attributable to common
    stockholders  basic and diluted

$
(0.03
)

$
(1.90
)

$
(2.99
)Weighted average common shares outstanding  basic and
    diluted


33,988,696



7,319,231



6,635,274    48




---



##### Table of Contents



NETEZZA
    CORPORATION
  CONSOLIDATED
    STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIT)
  Additional


Other





TotalCommon Stock


Treasury Stock


Paid-in


Comprehensive


Accumulated


StockholdersShares


Par Value


Shares


Cost


Capital


Income


Deficit


Equity (Deficit)(In thousands, except share amounts)Balance at January 31, 2005


6,453,023


$
6



139,062


$
(14
)

$



$
(10
)

$
(49,092
)

$
(49,110
)Issuance of common stock upon exercise of stock options


502,436



1











111











112Vesting of restricted common stock


160,000















39











39Stock options issued to consultants


















24











24Non-cash compensation to employee


















815











815Issuance of Series D warrants in conjunction with debt
    agreement


















172











172Issuance of Series D convertible redeemable preferred
    stock, including issuance costs of $6


















(6
)










(6
)Accretion of preferred stock to redemption value


















(1,155
)






(4,642
)


(5,797
)Reclassification of preferred stock warrants to liability upon
    adoption of FSP
    150-5


























(231
)


(231
)Other comprehensive income






















75







75Net loss


























(14,025
)


(14,025
)Balance at January 31, 2006


7,115,459



7



139,062



(14
)






65



(67,990
)


(67,932
)Issuance of common stock upon exercise of stock options


304,413



1











117











118Vesting of restricted common stock


122,500















32











32Stock options issued to consultants


















37











37Stock-based compensation


















877











877Accretion of preferred stock to redemption value


















(1,063
)






(4,868
)


(5,931
)Other comprehensive income






















(349
)






(349
)Net loss


























(7,975
)


(7,975
)Balance at January 31, 2007


7,542,372



8



139,062



(14
)






(284
)


(80,833
)


(81,123
)Issuance of common stock upon exercise of stock options


802,697



1











569











570Vesting of restricted common stock


23,750















9











9Issuance of common stock upon exercise of warrants


209,048



























Stock options issued to consultants


















46











46Stock-based compensation


















4,271











4,271Accretion of preferred stock to redemption value


















(2,552
)






(301
)


(2,853
)Conversion of preferred stock to common stock


38,802,036



39











100,473











100,512Conversion of preferred stock warrants to common stock warrants


















494











494Proceeds of initial public offering, net of offering expenses


10,350,000



10











112,943











112,953Other comprehensive income






















(398
)






(398
)Net income


























1,994



1,994Balance at January 31, 2008


57,729,903


$
58



139,062


$
(14
)

$
216,253


$
(682
)

$
(79,140
)

$
136,475    49




---



##### Table of Contents



NETEZZA
    CORPORATION
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
  Fiscal Year Ended January 31,2008


2007


2006(In thousands)Cash flows from operating activitiesNet income (loss)

$
1,994


$
(7,975
)

$
(14,025
)Adjustments to reconcile net income (loss) to net cash provided
    by (used in) operating activitiesDepreciation


3,300



2,615



2,829Noncash interest expense related to issuance of warrants


183



71



27Stock based compensation expense


4,317



914



839Change in carrying value of preferred stock warrant liability


257



198



218Changes in assets and liabilitiesAccounts receivable


12,152



(17,853
)


(8,387
)Inventory


(8,763
)


(15,510
)


(2,823
)Other assets


(2,748
)


(275
)


73Accounts payable


(7,154
)


10,176



2,006Accrued compensation and benefits


856



2,278



905Accrued expenses


1,111



(553
)


2,253Deferred revenue


21,432



14,751



6,325Net cash provided by (used in) operating activities


26,937



(11,163
)


(9,760
)Cash flows from investing activitiesPurchase of investments


(134,449
)






Sales and maturities of investments


43,832







Purchases of property and equipment


(1,142
)


(1,545
)


(5,498
)Increase in restricted cash










(68
)Repayment of notes receivable from employees






68



60Net cash used in investing activities


(91,759
)


(1,477
)


(5,506
)Cash flows from financing activitiesProceeds from note payable


8,000



5,000



3,000Repayment of note payable


(14,639
)


(1,361
)


Proceeds from issuance of Series D convertible redeemable
    preferred stock










4,492Proceeds of initial public offering, net of offering expenses of
    $11,247


112,953







Proceeds from issuance of common stock upon exercise of stock
    options


570



150



152Net cash provided by financing activities


106,884



3,789



7,644Net increase (decrease) in cash and cash equivalents


42,062



(8,851
)


(7,622
)Effect of exchange rate changes on cash and cash equivalents


(896
)


(794
)


92Cash and cash equivalents, beginning of year


5,018



14,663



22,193Cash and cash equivalents, end of year

$
46,184


$
5,018


$
14,663Supplemental disclosure of cash flow informationCash paid for interest

$
588


$
656


$
125Cash paid for taxes

$
288


$



$
    50




---



##### Table of Contents



NETEZZA
    CORPORATION
 NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS  1.
    Nature of
    the Business    2.
    Summary
    of Significant Accounting Policies  Basis
    of Presentation
    Use of
    Estimates
    Cash,
    Cash Equivalents and Restricted Cash
    Investments
  Accounting
    for Certain Investments in Debt and Equity Securities
 51




---



##### Table of Contents



NETEZZA
    CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
            Derivatives
  Accounting
    for Derivative Instruments and Hedging Activities
 52




---



##### Table of Contents



NETEZZA
    CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Revenue
    Recognition
    90-day
     53




---



##### Table of Contents



NETEZZA
    CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Inventory
  first-in,
  Property
    and Equipment
    EstimatedUseful LifeEngineering test equipment


1 to 3 yearsComputer equipment and software


3 yearsFurniture and fixtures


5 yearsLeasehold improvements


Term of lease     Impairment
    of Long-Lived Assets
   54




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##### Table of Contents



NETEZZA
    CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Fair
    Value of Financial Instruments
      Freestanding
    Preferred Stock Warrants
  Accounting for Certain
    Financial Instruments with Characteristics of both Liabilities
    and Equity, paid-in-capital,
  paid-in-capital
  Research
    and Development
  Accounting for the Costs of
    Computer Software to be Sold, Leased or Otherwise
    Marketed.
 55




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##### Table of Contents



NETEZZA
    CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Foreign
    Currency Translation
  Foreign Currency
    Translation.
  Concentration
    of Credit Risk and Significant Customers
      Stock-Based
    Compensation
  Accounting for Stock Issued to Employees
  EITF 96-18, Accounting for Equity Instruments That Are Issued to
    Other Than Employees for Acquiring, or in Conjunction with
    Selling, Goods or Services
  Share-Based Payment, Accounting for Stock-Based
    Compensation,
 56




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##### Table of Contents



NETEZZA
    CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Net
    Loss Per Share
      Fiscal Year Ended January 31,2008

2007

2006Net loss attributable to common stockholders

$
(859
)

$
(13,906
)

$
(19,822
)Basic and diluted shares:Weighted average shares used to compute basic and diluted net
    loss per share


33,988,696



7,319,231



6,635,274Net loss per share attributable to common
    stockholders  basic and diluted

$
(0.03
)

$
(1.90
)

$
(2.99
)     Fiscal Year Ended January 31,2008

2007

2006Convertible preferred stock upon conversion to common stock






38,774,847



38,774,847Warrants to purchase convertible preferred stock






241,490



202,275Warrants to purchase common stock


34,893



192,036



192,036Options to purchase common stock


9,379,774



7,480,447



4,352,658   Advertising
    Expense
   57




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##### Table of Contents



NETEZZA
    CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Income
    Taxes
    Comprehensive
    Income (Loss)
      Fiscal Year Ended January 31,2008


2007


2006Net income (loss)

$
1,994


$
(7,975
)

$
(14,025
)Other comprehensive income (loss):Foreign currency adjustment


(670
)


(349
)


75Unrealized gain from investments


272







Total comprehensive income (loss)

$
1,596


$
(8,324
)

$
(13,950
)   Recent
    Accounting Pronouncements
  Fair Value Measurements FSP 157-2 FSP 157-2.
  The Fair Value Option for
    Financial Assets and Financial Liabilities
 58




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##### Table of Contents



NETEZZA
    CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Business Combinations
  Noncontrolling Interests in Consolidated Financial
    Statements
    3.
    Initial
    Public Offering      4.
    Change in
    Accounting Principle  150-5, Issuers Accounting under FASB Statement
    No. 150 for Freestanding Warrants and Other Similar
    Instruments on Shares That Are Redeemable (FSP 150-5). FSP 150-5
  FSP 150-5
 59




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##### Table of Contents



NETEZZA
    CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  paid-in-capital
  5.
    Investments      January 31, 2008Gross


Gross


EstimatedUnrealized


Unrealized


FairCost


Gains


Losses


ValueCorporate debt securitiesDue in one year or less

$
7,459


$
89


$



$
7,548Due in greater than one year


2,408



14







2,422U.S. treasury and government agency securitiesDue in one year or less


999



2







1,001Due in greater than one year


1,002



1







1,003Commercial paperDue in one year or less


16,709



166







16,875Due in greater than one year














Auction rate securitiesDue in one year or less














Due in greater than one year


62,075











62,075$
90,652


$
272


$



$
90,924      60




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##### Table of Contents



NETEZZA
    CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    6.
    Restricted
    Cash      7.
    Inventory    As of January 31,2008


2007Raw materials

$
2,203


$
2,032Finished goods


29,408



24,207$
31,611


$
26,239   8.
    Property
    and Equipment    As of January 31,2008


2007Engineering test equipment

$
11,047


$
7,822Computer equipment and software


4,329



3,194Furniture and fixtures


215



60Leasehold improvements


266



26615,857



11,342Less: accumulated depreciation


10,390



7,114$
5,467


$
4,228    61




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##### Table of Contents



NETEZZA
    CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    9.
    Accrued
    Expenses    As of January 31,2008


2007Inventory Items

$
1,771


$
1,412Sales meetings and events


930



537Legal/audit/compliance


751



446Corporate taxes


660



Partner fees


168



458Other


1,214



1,437$
5,494


$
4,290   10.
    Lines of
    Credit    No. 95-22, Balance Sheet Classification of Borrowings Outstanding
    under revolving Credit Agreements that include both a Subjective
    Acceleration Clause and a Lock-Box Arrangement
 62




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##### Table of Contents



NETEZZA
    CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  11.
    Warrants
    for Preferred Stock           63




---



##### Table of Contents



NETEZZA
    CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
             64




---



##### Table of Contents



NETEZZA
    CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    paid-in-capital
  12.
    Common
    Stock      Warrants to purchase common stock


34,893Options to purchase common stock


9,379,774Options reserved for future issuance


1,394,50010,809,167     Restricted
    Stock Agreements
  Share-Based Payment,
  Options
    and Warrants for Common Stock
   65




---



##### Table of Contents



NETEZZA
    CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
                   66




---



##### Table of Contents



NETEZZA
    CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
            13.
    Stock
    Option Plans       67




---



##### Table of Contents



NETEZZA
    CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Fiscal Year Ended


Fiscal Year EndedJanuary 31, 2008


January 31, 2007Cost of product

$
94


$
12Cost of services


116



19Sales and marketing


1,222



207Research and development


1,007



160General and administrative


1,832



479$
4,271


$
877     Fiscal Year Ended

Fiscal Year EndedJanuary 31, 2008

January 31, 2007Dividend yield


None



NoneExpected volatility


68.3
%


79.4
%Risk-free interest rate


4.4
%


4.8
%Expected life (in years)


6.2



6.5Weighted-average fair value at grant date

$
4.25


$
2.00     Fiscal Year EndedJanuary 31,2006Reported net loss

$
(14,025
)Add stock-based employee compensation expense included in net
    loss


Deduct stock-based employee compensation expense determined
    using the fair value of all awards


(99
)Pro forma net loss

$
(14,124
)  68




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##### Table of Contents



NETEZZA
    CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        WeightedWeighted

Average

AggregateNumber of

Average

Remaining

IntrinsicShares

Exercise Price

Life in Years

Value(1)Outstanding at January 31, 2005


4,663,630


$
0.43Granted


720,750


$
1.03Exercised


(662,436
)

$
0.23Canceled


(177,250
)

$
0.44Outstanding at January 31, 2006


4,544,694


$
0.55Granted


3,748,000


$
2.73Exercised


(426,913
)

$
0.35Canceled


(193,298
)

$
1.35Outstanding at January 31, 2007


7,672,483


$
1.61Granted


3,124,248


$
9.00Exercised


(983,595
)

$
0.61Canceled


(398,469
)

$
2.81Outstanding at January 31, 2008


9,414,667


$
4.12



7.78 years


$
57.3 millionExercisable at January 31, 2008


3,622,989


$
1.22



6.88 years


$
31.3 million     (1)
    
    The aggregate intrinsic value on this table was calculated based
    on the positive difference between the calculated fair value
    (1) of the Companys common stock on January 31,
    2008 ($9.86) and the exercise price of the underlying options.  Options Outstanding

Options ExercisableWeighted Average

Weighted AverageNumber of

Remaining

Exercise

Number of

Weighted AverageExercise Price Range

Shares

Life in Years

Price

Shares

Exercise Price$ 0.002 -  0.200


1,192,085



5.51


$
0.20



1,192,085


$
0.200.340 -  0.780


562,916



6.49



0.611



502,374



0.61.000 -  1.200


1,146,531



7.05



1.001



788,916



1.0012.500 -  4.500


3,471,387



8.38



2.732



1,137,364



2.6826.700 -  9.860


1,858,248



8.65



6.806







12.000 - 12.950


826,000



8.83



12.117



2,250



1213.220 - 14.000


357,500



6.88



13.71







9,414,667



7.78


$
4.12



3,622,989


$
1.22    69




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##### Table of Contents



NETEZZA
    CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    14.
    Income
    Taxes      As of January 31,2008


2007


2006FederalCurrent

$
16


$



$
Deferred






StateCurrent


39







Deferred










ForeignCurrent


906







Deferred










Total provision for income tax

$
961


$



$
       As of January 31,2008


2007Net operating loss carryforwards

$
10,410


$
13,954Research and development credit carryforwards


4,394



4,503Capitalized research and development expenses


2,867



3,581Depreciation


554



427Stock-based compensation


18



19Accrued expenses and other


5,440



3,306Net deferred tax assets


23,683



25,790Deferred tax valuation allowance


(23,683
)


(25,790
)$



$
    70




---



##### Table of Contents



NETEZZA
    CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Accounting for
    Income Taxes,
      2008

2007

2006U.S. Federal income tax statutory rate


35.0
%


(35.0
)%


(34.0
)%State taxes, net of federal taxes


(5.0
)


(2.4
)


(3.1
)Tax rate differential for international jurisdictions


.2



(0.1
)


0.6Federal and State tax credits


(10.7
)


(14.0
)


(19.0
)Permanent Items


3.6



1.8



.9Stock-based Compensation


50.6



3.7



2.4Change in valuation allowances


(41.2
)


46.0



52.232.5
%






     Accounting for Uncertain
    Tax Positions, Accounting for Income Taxes.
    Balance as of February 1, 2007

$
250Increases related to prior year tax positions


Decreases related to prior year tax positions


Increases related to current year tax positions


74Decreases related to settlements with taxing authorities


Decreases related to lapsing of statute of limitations


Balance as of January 31, 2008

$
324    71




---



##### Table of Contents



NETEZZA
    CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      and/or
  2004-2007 2004-2007. 2004-2007, 2006-2007 2005-2007.
    15.
    Commitments
    and Contingencies  Lease
    Obligations
      OperatingFiscal Year Ended January 31,

Leases2009

$
1,5132010


1,3332011


1,3102012


1,3342013


1,393Thereafter


3,688Total minimum lease payments

$
10,571  72




---



##### Table of Contents



NETEZZA
    CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Guarantees
    and Indemnification Obligations
    Warranty
      Fiscal Year Ended January 31,2008


2007


2006Balance at beginning of period

$
1,093


$
690


$
235Provision


2,071



1,737



565Warranty usage


(2,023
)


(1,334
)


(110
)Balance at end of period

$
1,141


$
1,093


$
690   16.
    Industry
    Segment, Geographic Information and Significant
    Customers  Disclosures About Segments of
    an Enterprise and Related Information,
 73




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##### Table of Contents



NETEZZA
    CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Fiscal Year Ended January 31,2008


2007


2006North America

$
104,087


$
62,282


$
49,857International


22,599



17,339



3,994Total

$
126,686


$
79,621


$
53,851     As of January 31,2008


2007North America

$
189,403


$
56,179International


9,349



13,020Total

$
198,752


$
69,199   17.
    Quarterly
    Information (unaudited and in thousands)  Fiscal Quarter EndedApril 30,

July 31,

October 31,

January 31,2006

2006

2006

2007Revenue

$
11,998


$
17,784


$
23,171


$
26,668Gross margin


7,108



10,629



13,596



16,188Net loss attributable to Common Stockholders


(4,130
)


(1,893
)


(1,494
)


(457
)Net loss per share attributable to common stockholders-basic and
    diluted

$
(0.78
)

$
(0.46
)

$
(0.20
)

$
(0.26
)   Fiscal Quarter EndedApril 30,

July 31,

October 31,

January 31,2007

2007

2007

2008Revenue

$
25,342


$
28,400


$
33,418


$
39,526Gross margin


15,299



16,963



20,094



24,087Net income (loss) attributable to Common Stockholders


(1,905
)


(1,096
)


1,586



3,409Net income (loss) per share attributable to common
    stockholders-basic

$
(0.44
)

$
(0.20
)

$
0.03


$
0.06Net income (loss) per share attributable to common
    stockholders-diluted

$
(0.44
)

$
(0.20
)

$
0.02


$
0.05   18.
    Reverse
    Stock Split  one-for-two
 74




---



##### Table of Contents



NETEZZA
    CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  19.
    Subsequent
    Events       75




---



##### Table of Contents



ITEM 9.
    CHANGES
    IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
    FINANCIAL DISCLOSURE    ITEM 9A.
    CONTROLS
    AND PROCEDURES  Rules 13a-15(e) 15d-15(e)
  Rules 13a-15(f) 15d-15(f)
  Form 10-K
  ITEM 9B.
    OTHER
    INFORMATION   PART III



Pursuant to Paragraph G(3) of the General Instructions to
    Form 10-K,
    information required by Part III (Items 10, 11, 12, 13
    and 14) is being incorporated by reference herein from our
    proxy statement to be filed with the Securities and Exchange
    Commission within 120 days of the end of the fiscal year
    ended January 31, 2008 in connection with our 2008 Annual
    Meeting of Stockholders (our Proxy Statement). ITEM 10.
    DIRECTORS,
    EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE   76




---



##### Table of Contents



ITEM 11.
    EXECUTIVE
    COMPENSATION    ITEM 12.
    SECURITY
    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
    RELATED STOCKHOLDER MATTERS    ITEM 13.
    CERTAIN
    RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
    INDEPENDENCE    ITEM 14.
    PRINCIPAL
    ACCOUNTANT FEES AND SERVICES   77




---



##### Table of Contents



ITEM 15.
    EXHIBITS AND
    FINANCIAL STATEMENT SCHEDULES    Form 10-K.
    Form 10-K.
    Incorporated by Reference toExhibit



Form and

SEC


Exhibit


Filed withNo.

Description

SEC File No.

Filing Date


No.


this 10-K3
.1

Second Amended and Restated Certificate of Incorporation

10-Q (001-33445)


9-14-2007



3.13
.2

Amended and Restated By-laws of the Registrant

S-1 (333-141522)


3-22-2007



3.34
.1

Specimen Stock Certificate Evidencing the Shares of Common Stock

S-1/A (333-141522)


6-28-2007



4.110
.1#

2000 Stock Incentive Plan, as amended

S-1 (333-141522)


3-22-2007



10.110
.2#

Form of Incentive Stock Option Agreement under 2000 Stock
    Incentive Plan

S-1 (333-141522)


3-22-2007



10.210
.3#

Form of Nonstatutory Stock Option Agreement under 2000 Stock
    Incentive Plan

S-1 (333-141522)


3-22-2007



10.310
.4#

Form of Restricted Stock Agreement under 2000 Stock Incentive
    Plan

S-1 (333-141522)


3-22-2007



10.410
.5#

2007 Stock Incentive Plan

S-1/A (333-141522)


5-4-2007



10.510
.6#

Form of Incentive Stock Option Agreement under 2007 Stock
    Incentive Plan

S-1/A (333-141522)


5-4-2007



10.610
.7#

Form of Nonstatutory Stock Option Agreement under 2007 Stock
    Incentive Plan

S-1/A (333-141522)


5-4-2007



10.710
.8#

Form of Nonstatutory Stock Option Agreement for Non-Employee
    Directors under 2007 Stock Incentive Plan

S-1/A (333-141522)


5-4-2007



10.810
.9#

Fiscal 2008 Executive Officer Incentive Bonus Plan

S-1 (333-141522)


3-22-2007



10.910
.10#

Fiscal 2009 Executive Officer Incentive Bonus Plan

8-K (001-33445)


3-3-2008



10.110
.11

Lease Agreement, dated February 12, 2004, between the
    Registrant and NDNE 9/90 200 Crossing Boulevard, L.L.C.

S-1 (333-141522)


3-22-2007



10.1010
.12

Lease, dated January 2, 2008, by and between the Registrant
    and NE Williams II, LLC













*10
.13

Third Amended and Restated Investor Rights Agreement among the
    Registrant, the Founders and the Purchasers, dated as of
    December 22, 2004

S-1 (333-141522)


3-22-2007



10.1110
.14

Amendment No. 1 to the Third Amended and Restated Investor
    Rights Agreement among the Registrant, the Founders and the
    Purchasers, dated as of June 14, 2005

S-1 (333-141522)


3-22-2007



10.12 78




---



##### Table of Contents



Incorporated by Reference toExhibit



Form and

SEC


Exhibit


Filed withNo.

Description

SEC File No.

Filing Date


No.


this 10-K10
.15#

Letter Agreement between the Registrant and James Baum, dated
    June 1, 2006

S-1 (333-141522)


3-22-2007



10.1310
.16#

Form of Executive Retention Agreement for each of Jitendra S.
    Saxena, James Baum, Patrick J. Scannell, Jr., Raymond Tacoma and
    Patricia Cotter

S-1 (333-141522)


3-22-2007



10.1410
.17#

Form of Indemnification Agreement for each of Jitendra S.
    Saxena, James Baum, Patrick J. Scannell, Jr., Raymond Tacoma,
    Patricia Cotter, Sunil Dhaliwal, Ted R. Dintersmith, Robert J.
    Dunst, Jr., Paul J. Ferri, Peter Gyenes, Charles F. Kane and
    Edward J. Zander

S-1/A (333-141522)


6-28-2007



10.1510
.18

Loan and Security Agreement between the Registrant and Silicon
    Valley Bank, dated January 31, 2007

S-1 (333-141522)


3-22-2007



10.1710
.19

Contractor Agreement between Persistent Systems Pct. Ltd and the
    Registrant, dated as of February 1, 2001

S-1/A (333-141522)


7-3-2007



10.1810
.20

Manufacturing Services Agreement by and between the Registrant
    and Sanmina-SCI Corporation, dated as of June 17, 2004, as
    amended by Amendment No. 1 to the Manufacturing Services
    Agreement, dated as of May 11, 2005

S-1/A (333-141522)


5-15-2007



10.1921
.1

Subsidiaries of the Registrant













*23
.1

Consent of PricewaterhouseCoopers LLP, Independent Registered
    Public Accountants













*31
.1

Certification of Principal Executive Officer, Pursuant to
    Securities Exchange Act
    Rules 13a-14(a)
    and 15d-14(a), as Adopted Pursuant to Section 302 of the
    Sarbanes-Oxley Act of 2002













*31
.2

Certification of Principal Financial Officer, Pursuant to
    Securities Exchange Act
    Rules 13a-14(a)
    and 15d-14(a), as Adopted Pursuant to Section 302 of the
    Sarbanes-Oxley Act of 2002













*32
.1

Certification of Principal Executive Officer and Principal
    Financial Officer Pursuant to Securities Exchange Act
    Rules 13a-14(b)
    and 15d-14(b), as Adopted Pursuant to Section 906 of the
    Sarbanes-Oxley Act of 2002













*     
    
    Confidential treatment requested as to certain portions, which
    portions have been separately filed with the Securities and
    Exchange Commission.#
    
    Management contracts or compensatory plans or arrangements
    required to be filed as an exhibit hereto pursuant to
    Item 15(a) of
    Form 10-K. 79




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##### Table of Contents



SIGNATURES
      By:
    /s/  Jitendra
    S. Saxena      Signature

Title

DateBy:

/s/  Jitendra
    S. SaxenaJitendra
    S. Saxena

Chief Executive Officer and Director (principal executive
    officer)

April 18, 2008By:

/s/  Patrick
    J. Scannell, Jr.Patrick
    J. Scannell, Jr.

Senior Vice President and Chief
    Financial Officer (principal financial and accounting officer)

April 18, 2008By:

/s/  James
    BaumJames
    Baum

Director

April 18, 2008By:

Ted
    R. Dintersmith

Director

April   , 2008By:

/s/  Robert
    J. Dunst, Jr.Robert
    J. Dunst, Jr.

Director

April 18, 2008By:

/s/  Paul
    J. FerriPaul
    J. Ferri

Director

April 18, 2008By:

/s/  Peter
    GyenesPeter
    Gyenes

Director

April 18, 2008By:

Charles
    F. Kane

Director

April   , 2008By:

Edward
    J. Zander

Director

April   , 2008  80