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                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                             ---------------------
                                   FORM 10-K

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<C>          <S>
    [X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
             OF THE SECURITIES EXCHANGE ACT OF 1934



             FOR THE FISCAL YEAR ENDED JUNE 30, 2001




    [ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
             OF THE SECURITIES EXCHANGE ACT OF 1934



             FOR THE TRANSITION PERIOD FROM           TO          .
</Table>

                        COMMISSION FILE NUMBER: 0-21432
                             ---------------------

                              AUSPEX SYSTEMS, INC.
             (Exact name of registrant as specified in its charter)

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<S>                                            <C>
                   DELAWARE                                      93-0963760
       (State or other jurisdiction of                        (I.R.S. Employer
        incorporation or organization)                      Identification No.)
</Table>

                              2800 SCOTT BOULEVARD
                         SANTA CLARA, CALIFORNIA 95050
                    (Address of principal executive offices)

       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (408) 566-2000
                           WEB SITE (WWW.AUSPEX.COM)

          SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
                                      NONE

          SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
                         COMMON STOCK, $.001 PAR VALUE

                        PREFERRED SHARE PURCHASE RIGHTS
                                (Title of Class)

     Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.  Yes [X]     No [ ]

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.  Yes [ ]     No [X]

     As of September 13, 2001, 45,464,519 shares of Common Stock of Registrant
were outstanding. The aggregate market value of the shares held by
non-affiliates of the Registrant (based upon the closing price of the
Registrant's Common Stock on September 13, 2001 of $4.28 per share) was
approximately $119,642,388.

                      DOCUMENTS INCORPORATED BY REFERENCE

     Part III incorporates information by reference from the definitive proxy
statement for the Annual Meeting of Stockholders scheduled to be held on
November 15, 2001.
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                               TABLE OF CONTENTS

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                                   PART I
Item 1.   BUSINESS....................................................    4
          The Company.................................................    4
          Markets and Customers.......................................    5
          Products....................................................    5
          Optional NS2000 Software....................................    6
          Technology..................................................    7
          Legacy models...............................................    8
          Distribution................................................    9
          Customer Service and Support................................    9
          Manufacturing...............................................    9
          Engineering and Development.................................   10
          Competition.................................................   10
          Intellectual Property and Licenses..........................   11
          Employees...................................................   11
          Executive Officers of the Company...........................   12
Item 2.   PROPERTIES..................................................   12
Item 3.   LEGAL PROCEEDINGS...........................................   13
Item 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.........   13

                                  PART II
Item 5.   MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
          STOCKHOLDER MATTERS.........................................   13
Item 6.   SELECTED FINANCIAL DATA.....................................   14
Item 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
          AND RESULTS OF OPERATIONS...................................   15
          Results of Operations.......................................   15
          Revenues....................................................   15
          Gross Margin................................................   18
          Operating Expenses..........................................   18
          Other Income................................................   19
          Provision for Income Taxes..................................   19
          Quarterly Results of Operations.............................   20
          Liquidity and Capital Resources.............................   21
          Factors That May Affect Future Results......................   22
Item 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET
          RISKS.......................................................   26
Item 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.................   27
Item 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
          AND FINANCIAL DISCLOSURE....................................   27

                                  PART III
Item 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT..........   28
Item 11.  EXECUTIVE COMPENSATION......................................   28
</Table>

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Item 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
          MANAGEMENT..................................................   28
Item 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS..............   28

                                  PART IV
Item 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM
          8-K.........................................................   28
          (a) 1. FINANCIAL STATEMENTS.................................   28
          2. FINANCIAL STATEMENT SCHEDULES............................   29
          3. EXHIBITS.................................................   29
          (b) REPORTS ON FORM 8-K.....................................   32
SIGNATURES............................................................   33
POWER OF ATTORNEY.....................................................   33
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS..............................   34
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS.............................   34
SUPPLEMENTAL SCHEDULES................................................   57
</Table>

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                             INTRODUCTORY STATEMENT

     References made in this Annual Report on Form 10-K to "Auspex," the
"Company," or the "Registrant" refer to Auspex Systems, Inc. and its wholly
owned subsidiaries. AUSPEX, the Auspex logo design, DataGuard, DriveGuard, FMK,
FMP, Functional Multi-Processing, Functional Multi-Processing Kernel, Functional
Multi-Processor, Functional Multiprocessor NS5000 and ServerGuard are registered
trademarks of the Company. Auspex 4Front, Auspex Control Points, All the Data
All the Time, How Information Gets Delivered, Don't Just Store Data Use it, One
World, ClusterGuard, Continuous Data Access, Data Xcelerator Engines,
DataXpress, DataXpress kernel, FastFlo File System, NetOS, NetServer,
NeTservices, Playground, ServerGuard Global, Server Guard V, Thrive Carefully,
TurboCopy, Web-Attached Storage logos and XceleRAID are trademarks of the
Company.

                           FORWARD-LOOKING STATEMENTS

     FROM TIME TO TIME, THE COMPANY MAY PUBLISH STATEMENTS THAT ARE NOT
HISTORICAL FACTS BUT ARE FORWARD-LOOKING STATEMENTS RELATING TO SUCH MATTERS AS
ANTICIPATED FINANCIAL PERFORMANCE, BUSINESS PROSPECTS, TECHNOLOGICAL
DEVELOPMENTS, NEW PRODUCTS, ENGINEERING AND DEVELOPMENT ACTIVITIES AND SIMILAR
MATTERS. SUCH STATEMENTS ARE GENERALLY IDENTIFIED BY THE USE OF FORWARD-LOOKING
WORDS AND PHRASES, SUCH AS "INTENDED," "EXPECTS," "ANTICIPATES" AND "IS (OR ARE)
EXPECTED (OR ANTICIPATED)." THESE FORWARD-LOOKING STATEMENTS INCLUDE BUT ARE NOT
LIMITED TO THOSE IDENTIFIED WITH AN ASTERISK (*) SYMBOL. ACTUAL RESULTS MAY
DIFFER MATERIALLY FROM THOSE DISCUSSED IN SUCH FORWARD-LOOKING STATEMENTS, AND
STOCKHOLDERS OF AUSPEX SHOULD CAREFULLY REVIEW THE CAUTIONARY STATEMENTS SET
FORTH IN THIS FORM 10-K, INCLUDING FACTORS THAT MAY AFFECT FUTURE RESULTS.
AUSPEX MAY FROM TIME TO TIME MAKE ADDITIONAL WRITTEN AND ORAL FORWARD-LOOKING
STATEMENTS, INCLUDING STATEMENTS CONTAINED IN AUSPEX'S FILINGS WITH THE
SECURITIES AND EXCHANGE COMMISSION AND IN ITS REPORTS TO STOCKHOLDERS. AUSPEX
DOES NOT UNDERTAKE TO UPDATE ANY FORWARD-LOOKING STATEMENTS THAT MAY BE MADE
FROM TIME TO TIME BY OR ON BEHALF OF AUSPEX.

                                        3
<PAGE>   5

                                     PART I

ITEM 1.  BUSINESS

THE COMPANY

     Auspex was formed in 1987 and was reincorporated into Delaware in 1991. The
Company develops, manufactures, distributes and supports a line of
multi-protocol (NFS(1), CIFS(2) and FTP(3)) Network Attached Storage devices,
also referred to as network file servers, network filers and NAS Gateways
(Network Attached Storage Gateways) which include specialized software for
storing, serving and managing network and computer data.

     The fiscal year ended June 30, 2001 ("fiscal year 2001") represented a year
of change for Auspex. Revenues for fiscal year 2001 were generated largely from
the NS2000 product, which was introduced during the fiscal year ended June 30,
1999 ("fiscal year 1999"). We produced a number of software releases during
fiscal year 2001, which were focused on enhancing the features of our NS2000
product and increasing its reliability. During the last quarter of fiscal year
2001, we announced the introduction of our NS3000 series of data servers, which
represent an evolution of the NS2000 product. The NS3000 features significant
improvements in performance, reliability and price performance. The Company's
focus in introducing the NS3000 series is to regain market share in the
enterprise storage space.

     The first of three server lines began shipping in the last month of fiscal
year 2001 and will be followed by two additional server lines in late September
or early October of 2001.* These additional server lines would be an expansion
of the NS3000 product line.

     The Company is continuing to utilize the services of Regent Pacific
Management, Inc., which provides the Company with management consulting
services. The services provided by Regent include the services of Gary J. Sbona,
as Chief Executive Officer and Chairman of the Board of Directors, and the
services of a number of other senior executives. The Company further
strengthened its management team with the addition of Michael Worhach, as the
Company's President, who over the past fiscal year has been instrumental in
rebuilding the Company's sales and marketing team. In addition, the Company
added new Vice Presidents of sales in Europe and North America who were given
the mandate to rebuild both the direct and indirect channels of sales and
marketing, and the Company has opened offices in Korea and China with the
intention of further strengthening its sales and support staff in Asia.* The
Company has also reorganized its marketing organization under the leadership of
Bob Iacono.

     The Company's business plan has historically focused on the creation of the
industry's first "thin" server or specialized file server, a specialized device
which utilizes highly efficient software to optimize I/O performance. The
primary market for the Company's product, which was previously known as the file
server market, is known today as the Network Attached Storage ("NAS") market. A
leading independent industry analyst projects that the segment of the NAS market
served by Auspex will grow from $6.4 billion in calendar year 2002 to almost
$14.7 billion by the calendar year 2004 (Source: Gartner Group, June 2001).*

---------------

     (1)NFS refers to the Network File System protocol, first promulgated by Sun
Microsystems, Inc. ("Sun Microsystems"), which protocol has been widely adopted
by the workstation market as a de facto standard for network file transfers.

     (2)CIFS refers to the Common Internet File Service protocol developed by
Microsoft Corporation as a networking protocol for PC clients to access files on
a PC file server in a Local Area Network ("LAN") or Wide Area Network ("WAN").

     (3)FTP ("refers to the File Transfer Protocol"), which is a standard
protocol commonly used to retrieve or store files on network file servers. FTP
is supported on UNIX, Windows, VMS, Macintosh and other popular desktop
computers. Storage devices also referred to as network file servers which
include specialized software for storing, serving and managing network data.

     * See "Forward-Looking Statements" on page 1.
                                        4
<PAGE>   6

MARKETS AND CUSTOMERS

     Historically, the Company's customer base has been largely comprised of
Fortune 1000 customers in the enterprise technical computing market. Auspex has
gained twelve years of networking expertise in this market by delivering
enterprise class data availability and scalability solutions. Auspex believes
this experience differentiates the Company from and gives it a competitive
advantage over mid-range companies in the NAS market producing NAS appliances
and general purpose servers that may be looking to establish a position in the
high-growth NAS market.*

     With the addition of the new product family represented by the NS3000
series of data server, Auspex seeks to reclaim the high availability market
required by many of these Fortune 1000 customers. The modular design, hot swap
components and levels of protection afforded by the self healing virtual server
and Server Guard V software makes Auspex a must see in many of these
organizations.

     As of June 30, 2001, approximately 2,587 Auspex NetServers had been
installed at 455 customers worldwide. Within the NAS market, NetServers are used
most commonly for the following applications: software development, electronic
design analysis ("EDA"), seismic and geophysical modeling, scientific and
academic research, product design management ("PDM") and mechanical
computer-aided design ("MCAD"), technical publishing, financial services and
streaming video. In addition, the majority of our user environments are
heterogeneous environments requiring shared access from various client operating
system's ("OS") to both Unix and Windows data simultaneously.

     Sales of products and services to the following customers accounted for 10%
or more of total revenues in the periods indicated: during fiscal year
1999 -- Intel (20%); during fiscal year 2000, there were no customers that
accounted for 10% or more of total revenues; during fiscal year 2001 -- Nissho
(16%). There can be no assurance that sales of products and services to these
customers will not decline, either in absolute dollar amounts or as a percentage
of total revenues, in future periods and that any such declines will not have a
material adverse effect on the Company's results of operations.*

PRODUCTS

     At the end of fiscal year 1999, the Company introduced its new generation
of NAS products, the NS2000 series. By the end of fiscal year 2001, 437 NS2000
systems had been shipped to 172 customers. During the fourth quarter of fiscal
year 2001, the Company introduced the NS3000 family of products, which continued
to build on the NS2000 architecture by providing faster processing, high
availability solutions and introduced a back-end Server Attached Network ("SAN")
which positions Auspex to deliver the convergence of NAS and SAN technologies.*
By the end of fiscal year 2001, 31 NS3000 systems had been shipped to 14
customers.

     The new system architecture is designed to store, manage and deliver data
to network clients with a continual focus on reliability, scalability,
UNIX/Windows NT and Windows 2000 file sharing and price/performance. The new
NS3000 and the NS2000 hardware design is based on industry standard hardware
integrated into a simple, yet powerful storage area network consisting of an
UltraSPARC Host Processor Node and one or more I/O Nodes interconnected through
a Scalable Coherent Interface ("SCI") bus. This storage area network
architecture scales to provide large amounts of storage and network
connectivity. Each I/O Node supports multiple network connections -- including
all common network interfaces -- and is architecturally scalable to 68TB. Auspex
has shipped systems with up to three-nodes and tested systems with up to five
nodes.

     The Company's strategy is to introduce new products and offer upgrades to
existing products periodically.* There can be no assurance that some customers
will not cancel orders for existing products or delay orders in anticipation of
new product availability, and should cancellations and delays occur, the
Company's revenues and operating results could be materially and adversely
affected.

---------------

     * See "Forward-Looking Statements" on page 1.
                                        5
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     The NS3000 and NS2000 series of products are based on the Company's
patented Functional Multi-Processing architecture embodied in the NetOS kernel,
which underpins its NAS architecture. NetOS separates network processing from
storage processing, thereby facilitating scaling networks and/or storage. It
also offers multi-protocol support and provides parallel backup paths for rapid
data archiving. This architecture utilizes Functional Multi-Processing, which
dedicates processors to specific tasks, such as network protocol
processing -- Network File System ("NFS") and Common Internet File System
("CIFS") -- file system management and storage management and control.

     The File and Storage Processing ("FSP") kernel incorporates the FastFLO
File System, that provides reliability and performance using advanced journaling
technology. The FSP also supports File System Snapshots for consistent system
backup and data protection. Full support is provided on the host Node for the
Network Data Management Protocol ("NDMP"). NDMP-compliant backup software
executing on the host or another network system can be used to direct each I/O
Node to backup its data at high speeds by streaming data directly from disk to
tape using Data Xcelerator Engines.

     The NS3000 family has implemented dual storage subsystems. At the low end
the NS3000 utilizes hardware Redundant Array Independent Drives ("RAID")
leveraging IBM Mylex technology with the Company's XceleRAID firmware
controllers to connect directly to low profile drive arrays (LPDA). The LPDA
like all other components of the NS3000 can be rack mounted in standard 19"
racks and also comes standard with dual AC power for power redundancy to the
power grid. At the midrange and high-end of the NS3000 family external RAID
cluster controllers are used with fibre-connectivity to the I/O Node(s)
providing a back-end SAN. This SAN architecture is leveraged by the ServerGuardV
Software product providing high-availability failover and failback capabilities
for the NS3000.

     The NS2000 implemented a hardware RAID subsystem leveraging IBM Mylex
technology with the Company's XceleRAID firmware controllers to connect directly
into the high-density disk array ("HDDA"). The HDDA provides a very large amount
of storage in a package that has the same form factor as the I/O Node itself.
All drives in the array are hot-plugable to ensure rapid, on-line replacement in
the event of a problem. A single I/O Node maximally configured with three
XceleRAID controllers and three HDDAs will support a total of three terabytes of
storage, based on using 36-gigabyte drives. A two-node system will support six
terabytes, and a three-node system will support nine and one-half terabytes. The
Company believes it has one of the highest storage densities per footprint in
the industry.

     Using this system architecture delivers three key benefits: first, higher
reliability, since there is no operating system in the data path; second,
seamless growth for networking and storage as users add I/O Nodes to their
system configuration; and third, because it appears as a single system image,
the system administrator can cost effectively configure for maximum performance
based on the application environment.

     The Company believes that the importance of the benefits of its new product
to large-scale client/server systems is demonstrated by the fact that over 80%
of the approximately 2,954 servers shipped support networks with between 50 and
800 users per server.

OPTIONAL NET SERVER SOFTWARE

     There are five software options (DataGuard, NeTservices, NetGuard,
TurboCopy and TurboReplicator) that can be purchased with the NS2000. With the
NS3000, DataGuard has been incorporated as part of the base system and the
additional ServerGuard V product has been added for system failover. In fiscal
year 2001, software licenses represented approximately 4% of the Company's
revenues.

     The first software product, DataGuard(TM), allows users to continuously
access data in the event of a disruption associated with the host operating
system. Because the data movement function is isolated from the Solaris
operating system on the host node, file services can continue in the event of a
Solaris outage, and total system availability improves.

     The second product, NeTservices, delivers seamless and fully secure file
sharing between UNIX and Windows NT and Windows 2000 by strictly adhering to the
permission schemes of both the NFS and CIFS remote file system software. This
allows users on NT and UNIX clients and/or applications to access the
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same files with full locking protection. Sold with over 75% of the Company's
servers, NeTservices reduces the total cost of ownership relative to replicating
data on separate UNIX and Windows NT and Windows 2000 servers with software,
referred to as One World, that either emulates Windows on UNIX servers or
clients or vice versa. While UNIX continues to dominate the back-end, enterprise
environments are evolving to include Windows NT and Windows 2000 clients. Thus,
the requirement to integrate Windows (including NT, 98, 95 and Windows for
Workgroups) seamlessly into the enterprise has assumed a critical position.
Combining Windows and UNIX environments poses the very important data services
challenge of having separate, distributed data servers for Windows data, as
opposed to consolidating both types of data on a single platform. Significant
benefits in the area of performance, data management, availability and file
sharing can be obtained by consolidating UNIX and Windows data on a single,
enterprise-class file server platform.

     NeTservices delivers the Windows NT and Windows 2000 networking environment
including directory services, file security and remote administration, that is
essential for enterprise-level deployment of Windows-based networks. NeTservices
is compatible with Windows 2000 clients.

     The Company believes that NeTservices is also the fastest Windows NT and
Windows 2000 server available today, based on independent industry standard
benchmarks. The product's ZD NetBench 5.01 test results exceeded 58 megabytes
per second throughout. NeTservices allows administrators to manage just one
physical copy of the shared data, with transparent, secure sharing of individual
files by UNIX and Windows NT and Windows 2000 clients. Because no client
software is required, NetServices does not create the additional overhead of
per-client administration. Locking mechanisms provide data protection while UNIX
and Windows NT and Windows 2000 clients concurrently access files.

     The third software product, NetGuard, provides for LAN, WAN and Network
Interface Card Failover for the NS2000. Failover in computer systems refers to
the ability of one component to seamlessly take over the workload of a failed
component of a similar type. The NS2000 design allows for multiple redundant
network connections to provide protection in the event of a failed network
adapter card. This feature requires support for Cisco Fast EtherChannel, which
not only provides port failover but also balances port workloads to the switch.

     The fourth and fifth software products, Turbo Copy and Turbo Replicator,
provide for bi-directional transfers between remote NS2000 systems across TCP/IP
LAN and WAN network connections. These products allow file systems to be
replicated to remote NS2000 servers for disaster recovery and business
continuity planning and implementation. TurboCopy software runs on top of
optimized NDMP compliant Turbo Replicator software and is managed by a Solaris
or NS2000 host Node. Remote replication of file and metadata to remote disks is
possible from remote geographies across WANS.

     TurboCopy can also be used to optimize data replication windows. Data can
be replicated in parallel on each of three I/O Nodes for a total data
replication performance of 270 GB+ per hour when the feature is enabled.

     Server GuardV for the NS3000 provides system heartbeat checking and
automatic failover in the event that there is a hardware or software failover on
either active system. This enables two separate systems to operate and provide
continuous availability for data that is stored on either NeTserver.

TECHNOLOGY

     Underpinning the NS2000 and NS3000 product lines are unique software
technologies that are dedicated to optimizing performance at each step of the
data delivery chain, including:

     System Management  System management is accomplished through a simple but
powerful browser interface, Control Point. Key functions of the file server can
be managed locally from the host console or remotely from any compatible
browser. Multiple servers can be monitored and managed from the same console if
desired. Control Point is implemented entirely in Java, providing for advanced
features beyond the abilities of simple HTML management tools, while ensuring
portability and ease of use. Command line equivalents are also available for all
Control Point functions.

                                        7
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     Data Management  The DataXcelerator Engines are a unique data transfer
facility that use two data-moving engines, the Block DataXcelerator ("BDX") and
the File DataXcelerator ("FDX"), to provide acceleration for system backup and
data movement. The Block DataXcelerator provides the capability to stream blocks
of data from disk to tape, tape to disk, or disk to disk. BDX provides the
foundation for extremely rapid image backup. The File DataXcelerator provides a
similar interface that acts at the level of individual files, streaming file
data from file to file, from file to tape, or from tape to file. FDX provides
the basis for rapid file by file backup to direct-attached tape. The
DataXcelerator Engines provide the basis for advanced data management, allowing
data to be easily migrated between file systems, between disk volumes, or
between Nodes.

     Network Processing  The DataXpress Kernel is a very efficient software
kernel that interfaces to the network client and acts as the manager of all data
requests. DataXpress provides greater software reliability and improved
performance. Unlike conventional operating systems, the DataXpress kernel does
not use virtual memory. All necessary code is stored in local memory so that it
can be immediately executed when needed. Because the kernel working set is
typically small, processors get the greatest possible advantage from their
built-in instruction caches, typically finding needed code already cached.
Therefore, not only does DataXpress avoid disk accesses to retrieve
instructions, but it often avoids memory accesses.

     File System Processing  The file system plays a critical role in data
management. As the demand for disk storage continues to grow, the file system
must scale to handle huge file systems, very large files, and very large numbers
of files, single directories with thousands of entries and the file semantics
and attributes of both UNIX and Windows NT and Windows 2000 environments. At the
same time, the file system must be able to maintain its internal accounting and
recover quickly in the event of an unexpected power outage or other failure. The
Company licensed file system technology from EMD and integrated it with the
Company's patented NetOS system software for performance, scalability and
reliability. The Company's file system software, FastFLO, uses journaling
technology to ensure the file system's structural integrity. It also
incorporates advanced software for File Layout Optimization and writes
clustering techniques to minimize file fragmentation and enhance read
operations. FastFLO supports both UNIX and NT/Windows security and access
control natively in the file system. This protects files access security
attributes for UNIX and Windows NT and Windows 2000 files during backup and
restore because the attributes are not stored in a separate file, a feature not
shared by some NT/Windows emulation software solutions currently on the market.

     In addition, FastFLO includes a very large disk buffers cache (I/O cache
memory) on the network and file processing element, which gives users the
flexibility to configure the amount of memory to meet their application
performance needs.

     Storage Processing  The Company's XceleRAID firmware acts as the interface
to storage and provides multiple high-speed RAID controllers to deliver high
availability and protect data from disk failure. Supported RAID levels include:
RAID 0, RAID 1, RAID 5 and RAID 7 (JBOD). XceleRAID is responsible for virtual
partition management on the storage devices, write acceleration, channel
management, disk and tape control and data transfers to I/O cache memory.

LEGACY MODELS

     The NS8000 NetServer line of products was introduced in the first quarter
of fiscal year 1999. The NS8000 delivered improved price/performance, higher
density disk packaging and new networking capabilities over previous
generations. In addition, high-density disk packaging provided a migration path
for customers to the Company's next-generation platform, the NS2000.
Predecessors of the NS8000 line of products were the NS5000, NS5500, NS6000 and
NS7000 NetServers.

     The Company also offers a number of software products in conjunction with
these Legacy models of NetServers, including, DataGuard,(TM) ServerGuard,(TM)
and NeTservices 1.0.

     End of life of the above Legacy models of NetServer was announced in fiscal
year 2000 and manufacturing of new systems subsequently ceased. Manufacturing of
new upgrade hardware ceased in fiscal year 2001. The Company is obligated to
provide maintenance services on these products through at least fiscal

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year 2005. In addition, the Company is currently offering limited upgrade
services on these products and may continue to do so depending upon availability
of components and other factors.

DISTRIBUTION

     In fiscal year 2001, product sales to end users in North America were
effected primarily through a direct sales force. Since the success of the
Company's direct sales efforts in North America depends in part upon a
sophisticated analysis of the customers' networking requirements, the Company's
system engineers work closely with the Company's sales representatives. The
Company has a direct sales organization in the United Kingdom, France and
Germany, and employs distributors in other selected European markets. In the
Pacific Rim, the Company has a sales team to support an indirect sales model.

     In the Pacific Rim, the Company acts primarily through national
distributors. For example, in Japan, the major distributor is Nissho
Electronics. The Company has established sales operations in support of
distributors in Japan, Singapore, Korea, India and other Asian countries.

     The Company believes that the large installed base of UNIX systems in
Europe represents a significant opportunity for future NetServer sales.* To
address this opportunity, the Company has direct sales and support facilities in
the United Kingdom, France and Germany. The Company also has entered into
agreements with distributors covering other selected markets in Europe, and has
continued to invest in sales and marketing efforts in Europe.

CUSTOMER SERVICE AND SUPPORT

     The Company's corporate policies are based on a commitment to customer
satisfaction and product quality.

     The Company provides customer training, and installs, maintains and
supports systems sold directly in North America and Europe. End-user customers
purchasing through indirect channels are generally serviced by the Company's
distributors or Original Equipment Manufacturers ("OEMs"). In all cases,
however, customers have direct access to the Company's service and support
through a toll-free telephone hotline available to customers, distributors and
service partners. The Company handles all customer service call management and
software support directly through its technical support centers, which are
available twenty-four (24) hours a day, three hundred sixty-five (365) days a
year, and are staffed by highly trained and experienced technical support
engineers.

     Technical support centers are located in Durham, North Carolina and
Aldermaston, UK. To supplement direct service and support and to ensure the
highest quality service while containing costs, the Company has entered into a
strategic service agreement with NCR Corporation for on-site hardware support in
the US, Europe, Latin America and Asia and with local service providers in
selected geographic areas. The Company's contract provides end users with a
warranty for parts and labor on its products, which generally range from ninety
(90) days to one year. The Company's warranty policy for product sales other
than to end-users depends on the requirements of the particular distribution
channel. The Company offers customers service agreements of varying duration.
Service revenue is recognized ratably over the contractual period as service is
provided.

MANUFACTURING

     The Company's manufacturing operations, located in Santa Clara, California,
consist of product assurance, quality control and final product assembly and
testing. The Company relies principally on contract manufacturers for
sub-assembly and testing of certain key NetServer components. The Company's
manufacturing strategy has been to develop close relationships with its
suppliers, exchange critical information and implement joint quality training
programs. This manufacturing strategy minimizes capital investment and overhead
expenditures and creates flexibility by providing the capacity for rapid
expansion. Although the
---------------

     * See "Forward-Looking Statements" on page 1.
                                        9
<PAGE>   11

Company to date has not experienced any significant production difficulties
resulting from its reliance on these manufacturers, it is possible that
production difficulties, including capacity constraints and quality control
issues, could arise in the future, which could materially and adversely affect
the Company's results of operations.

     Although the Company generally uses standard parts and components for its
products, a number of key components used in the Company's NetServer products
currently are available or purchased from single sources. These components
include disk and tape drives, microprocessors, connectors, printed circuit
boards, cable assemblies, power supplies and ASICs. Some of the suppliers of
these components have divisions which compete with the Company. (See
"Business -- Competition.") The Company generally has agreements with its sole
source suppliers with terms ranging from one to five years and believes that
alternative sources of supply and assembly for most of its sole-source
components could be obtained within a commercially practicable period.* As a
precaution, the Company carries extra inventory of some of its sole-source
components in order to provide additional time to develop an alternate supply
source or redesign the component. However, the lack of sufficient quantities of
sole or single source components, or the Company's inability to develop
alternative sources for these items, could result in delays or reductions in
product shipments which would materially and adversely affect the Company's
results of operations.

ENGINEERING AND DEVELOPMENT

     The market for high-performance network data servers has been characterized
by rapid technological advances in both hardware and software development. The
Company believes that the speed of technological advancement in its industry
requires it to invest significant amounts in research and development, and that
in order to maintain its competitive position, the Company must continue to
enhance and improve its existing products as well as to develop and successfully
introduce new products. During fiscal year 2001, the Company continued to refine
the NS2000, significantly improving its reliability, performance and adding
value-added software features such as NetGuard -- a high-availability network
failover component based on Virtual IP technology -- while also developing the
NS3000 series as follow-on products.

     By continuing to introduce new product features, the Company believes it
has maintained a leadership position in the network attached storage market.
However, there can be no assurance that the Company's products will continue to
be successful commercially. Furthermore, there can be no assurance that the
Company will be able to develop or introduce other new products in the future in
a timely manner, or that such products will be a commercial success. The Company
intends to continue to invest substantially in product development.* Current
research and development efforts are focused on delivering additional optional
software products and increasing the functionality, client protocol support,
performance, capacity, scalability and availability of its products.

     The Company's engineering and development expenses during fiscal years
2001, 2000 and 1999 were approximately $19.3 million, $30.6 million and $35.3
million, respectively.

COMPETITION

     The network attached storage market is very competitive. The Company
principally competes in the enterprise segment of this market against products
offered both by manufacturers of general-purpose computers (e.g., Sun
Microsystems, Hewlett-Packard Company, IBM and SGI) and by specialized
manufacturers of NAS products (e.g., EMC Corp. and Network Appliance). All of
these competitors possess substantially greater financial, technical and
marketing resources than Auspex, as well as substantially larger product
installed bases. While the Company believes that the price/performance
characteristics of its products are competitive, increased competition created
pricing pressures in fiscal year 2001, which materially and adversely affected
the Company's results of operations.

---------------

     * See "Forward-Looking Statements" on page 1.
                                        10
<PAGE>   12

     The Company derives a significant portion of its revenues from sales of
product upgrades to its installed base, including additional processors (or
upgrades to existing processors), memory, disk and tape drive and software. The
Company has seen an increase in competitive pressures in the last six months of
fiscal year 2001. This was in due in part to the softening of the storage market
and in recognition of the new product family announced in May. The Company has
managed to retain much of its installed base over the year. However, increased
competition may occur in the future which could materially and adversely affect
the Company's revenues and results of operations.

     Auspex is focused on delivering enterprise solutions at a price performance
level which appeals to the broader storage market. Auspex delivers solutions
that enable information sharing, facilitate data and asset consolidation in an
environment that provides fast information access, is easy to manage and is
always available and protected. In order to enhance the Company's ability to
deliver solutions in these areas, the Company has invested significantly in its
relationships with industry leaders in backup and restore, systems management,
databases, Windows 2000 and a variety of vertical applications.

     The most important measure of product quality continues to be product
reliability. To that end the Company believes that the NS3000 family of servers
provides reliability at the five nines (99.999%) level through a combination of
quality of manufacture, modular design, hot swappable and redundant components,
clustering across components (not just processors), software that is self
healing and if required a first class service and support infrastructure.

     The Company's ability to maintain its competitive position will depend, in
addition to these factors, upon its success anticipating industry trends,
investing in product research and development and effectively managing the
introduction of new products into targeted markets.*

INTELLECTUAL PROPERTY AND LICENSES

     The Company relies on a combination of patent, copyright, trademark and
trade secret laws, employee and third-party non-disclosure agreements and other
intellectual property protection methods to protect its proprietary hardware,
software and technological expertise. The Company believes, however, that its
continued success will depend principally on continuing innovation,
technological expertise, knowledge of networking, storage and applications,
distribution strength and, to a lesser extent, on its ability to protect its
proprietary technology.* Furthermore, there can be no assurance that the
Company's current or future competitors will not independently develop
technologies that are substantially equivalent or superior to the Company's
technology.

     Auspex currently holds fourteen United States patents for certain
fundamental aspects of its FMP data server architecture and has related foreign
patents and foreign patent applications for proprietary Auspex technologies.

     The Company's NetServer host processors and network processors operate in
conjunction with software licensed to the Company by Sun Microsystems. Although
the license is automatically renewable unless cancelled, there can be no
assurance that the Company will be able to continue such license renewals with
Sun Microsystems on favorable terms, or at all. The Company also licenses
software and hardware from several other companies and these licenses are also
perpetual unless cancelled or subject to periodic renewal which cannot be
assured. There can be no assurance that these vendors will continue in business
or that the licenses will continue to be available on favorable terms in the
future, or at all.

EMPLOYEES

     As of June 30, 2001, the Company employed 400 people. The recruitment of
experienced, highly skilled individuals is a top priority in an exceptionally
competitive recruiting environment. Equally important in this environment is the
retention of key talent. The Company has significantly increased its recruiting
activities and is reviewing all employee programs to ensure the retention and
continued development of its employees.
---------------

     * See "Forward-Looking Statements" on page 1.
                                        11
<PAGE>   13

Hiring and retaining key employees in the Silicon Valley employment market has
been a challenge. Although the recent economic downturn in the computer industry
has allowed us to bring in new talent across many of the functions within the
Company, there can be no assurance that the Company will be successful in hiring
and retaining qualified employees in the future. None of the Company's employees
are represented by a labor union.

EXECUTIVE OFFICERS OF THE COMPANY

     The following sets forth-certain information with respect to the executive
officers of the Company as of September 13, 2001:

<Table>
<Caption>
NAME                                        AGE                 POSITION
----                                        ---                 --------
<S>                                         <C>   <C>
Gary J. Sbona.............................  58    Chief Executive Officer and Chairman
Dennis J. Dunnigan........................  45    Chief Operating Officer
Peter R. Simpson..........................  52    Chief Financial Officer
Michael S. Worhach........................  51    President
</Table>

     Mr. Gary J. Sbona, joined the Company in February 2000 as Chairman and
Chief Executive Officer. Mr. Sbona, also, serves as Chairman and Chief Executive
Officer of: Verity, Inc., a publicly traded software company, specializing in
knowledge retrieval software, since 1997, and Accelerated Networks, Inc., a
broadband telecommunications company, since 2001. Mr. Sbona has served as a
Director of 3D Systems Corporation, a publicly traded mass customization
equipment manufacturer, since 1999 and a Director of Calico Commerce, Inc., a
publicly traded software company, since 2001. Since 1974, Mr. Sbona has also
served as the Chairman and Chief Executive Officer of Regent Pacific Management
Corporation, a professional services firm that is currently providing our
company with management services. Mr. Sbona has held positions as an officer
and/or director of numerous publicly and privately held companies.

     Mr. Michael S. Worhach joined the Company in August 2000 as President. Mr.
Worhach, previously, served as Division Vice President at Data General, a
division of EMC since 1993. At Data General, Mr Worhach had responsibility for
Americas Sales and Services and Worldwide Healthcare. From 1974 to 1992, Mr.
Worhach was employed by Unisys Corporation where he held a variety of management
positions in sales and marketing. Mr. Worhach holds a MBA from the University of
Massachusetts, Amherst, and a B.S. from Kings College, Pennsylvania.

     Mr. Dennis J. Dunnigan joined the Company in February 2000 as Chief
Operating Officer. Mr. Dunnigan has been employed by Regent Pacific Management
Corporation, a professional services company that has provided our company with
management services, since 1986. Mr. Dunnigan has held various positions with
numerous publicly and privately held companies during his employment with Regent
Pacific Management Corporation. Mr. Dunnigan holds a B. S. C. degree in
Accounting from the Santa Clara University.

     Mr. Peter R. Simpson joined the Company in March 2000 as Chief Financial
Officer. Mr. Simpson has been employed since 1989 by Regent Pacific Management
Corporation, a professional services company that is currently providing our
company with management services. Mr. Simpson has held various positions with
numerous publicly and privately held companies through his employment with
Regent Pacific Management Services. Mr. Simpson holds a MBA degree in Finance
from Golden Gate University, and is a fellow of the Institute of Chartered
Accountants in England and Wales.

ITEM 2.  PROPERTIES

     The Company is headquartered in Santa Clara, California, where it leases
approximately 98,000 square feet of space which houses administrative, finance,
sales and marketing, manufacturing, customer service and product development
activities. The lease for these facilities expires in February 2010. In
addition, the lease agreement contains three successive options to extend the
lease term for sixty months each. The Company leases additional sales and
support offices located in the United States, Canada, the United Kingdom,
France,

                                        12
<PAGE>   14

Germany, Japan and Singapore. The Company believes that its facilities are
adequate to meet the Company's current business requirements.* See also Note 4
of Notes to Consolidated Financial Statements.

ITEM 3.  LEGAL PROCEEDINGS

     From time to time, the Company is involved in legal proceedings incidental
to the conduct of its business. The Company believes that the litigation,
individually or in the aggregate, to which it is currently a party, is not
likely to have a material adverse effect on the Company's results of operations
or financial condition.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     Not applicable.

                                    PART II

ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS

     The Company's common stock has been approved for quotation on The Nasdaq
National Market under the symbol ASPX since the Company's initial public
offering in May 1993. The following table sets forth, for the periods indicated,
the range of high and low sales prices on the Nasdaq Composite, as reported in
The Wall Street Journal.

<Table>
<Caption>
                                                                HIGH       LOW
                                                              --------   -------
<S>                                                           <C>        <C>
Fourth Quarter of 2001......................................  $ 7.14     $2.66
Third Quarter of 2001.......................................  $ 8.875    $3.25
Second Quarter of 2001......................................  $12.9375   $5.50
First Quarter of 2001.......................................  $13.0625   $4.3438
Fourth Quarter of 2000......................................  $10.125    $4.75
Third Quarter of 2000.......................................  $17.375    $6.5625
Second Quarter of 2000......................................  $14.375    $4.065
First Quarter of 2000.......................................  $12.625    $8.75
</Table>

     The Company believes that a number of factors including, but not limited
to, quarterly fluctuations in results of operations may cause the market price
of its common stock to fluctuate significantly. See "Management's Discussion and
Analysis -- Factors That May Affect Future Results."

     As of September 13, 2001, the approximate number of common stockholders of
record was 599.

     The Company has not, to date, paid cash dividends on its capital stock. The
Company currently intends to retain earnings for use within its business and
does not anticipate paying cash dividends in the foreseeable future.*

---------------

     * See "Forward-Looking Statements" on page 1.
                                        13
<PAGE>   15

ITEM 6.  SELECTED FINANCIAL DATA

<Table>
<Caption>
                                                        FISCAL YEAR ENDED
                                    ----------------------------------------------------------
                                    JUNE 30,   JUNE 30,      JUNE 30,   JUNE 30,      JUNE 30,
                                      2001       2000          1999       1998          1997
                                    --------   --------      --------   --------      --------
                                             (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S>                                 <C>        <C>           <C>        <C>           <C>
Revenues..........................  $ 51,880   $ 82,199      $113,475   $168,912      $202,486
Income (loss) before income
  taxes...........................   (43,396)   (80,063)      (38,828)   (26,668)       24,362
Net income (loss).................   (44,291)   (80,760)      (39,045)   (17,334)       13,420
Dividends to preferred
  stockholders....................     5,174      2,350            --         --            --
Net income(loss) available to
  common stockholders.............   (49,465)   (83,110)      (39,045)   (17,334)       13,420
Net income (loss) per share
  Basic...........................  $  (1.18)  $  (2.95)(1)  $  (1.50)  $  (0.69)(2)  $ 0.54(3)
  Diluted.........................  $  (1.18)  $  (2.95)(1)  $  (1.50)  $  (0.69)(2)  $ 0.52(3)
Shares used for net income (loss)
  per share
  Basic...........................    41,872     28,126        25,978     25,268        24,641
  Diluted.........................    41,872     28,126        25,978     25,268        25,658
Total assets......................  $105,059   $ 61,998      $115,048   $147,193      $157,152
Long-term obligations.............  $    279   $    954      $  1,304   $     --      $     --
Cash dividends declared per common
  share...........................  $     --   $     --      $     --   $     --      $     --
</Table>

---------------

(1) Includes restructuring costs of $17.6 million. Exclusive of these charges,
    the basic and diluted net loss per share for fiscal year 2000 would have
    been $2.24.

(2) Includes costs of $9.4 million associated with write-down of disk drive
    inventory to its net realizable value as a result of rapid price declines of
    4-gigabyte disk drives and restructuring charges of $7.3 million. Exclusive
    of these charges, basic and diluted net loss per share for fiscal year 1998
    would have been $0.26.

(3) Includes the write-off of in-process research and development of $7.4
    million associated with the acquisition of Alphatronix, Inc. in the fourth
    quarter of fiscal 1997. Exclusive of this write off, basic and diluted net
    income per share for fiscal 1997 would have been $0.85 and $0.81,
    respectively.

                                        14
<PAGE>   16

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

RESULTS OF OPERATIONS

     The following table sets forth for the fiscal years indicated the
percentage of total revenues represented by certain line items in the Company's
Statements of Operations:

<Table>
<Caption>
                                                              YEARS ENDED JUNE 30,
                                                              --------------------
                                                              2001    2000    1999
                                                              ----    ----    ----
<S>                                                           <C>     <C>     <C>
Revenues....................................................  100%    100%    100%
Cost of revenues............................................   76      77      58
                                                              ---     ---     ---
Gross margin................................................   24      23      42
                                                              ---     ---     ---
Operating Expenses
  Marketing and sales.......................................   62      51      38
  Engineering and development...............................   37      37      31
  General and administrative................................   17      12       9
  Restructuring charges.....................................   --      21      --
                                                              ---     ---     ---
  Loss from operations......................................  (92)    (98)    (36)
  Other income..............................................    8       2       2
                                                              ---     ---     ---
  Loss before income taxes..................................  (84)    (96)    (34)
  Provision for (benefit from) income taxes.................    2       1      --
                                                              ---     ---     ---
  Net loss..................................................  (82)%   (97)%   (34)%
                                                              ===     ===     ===
</Table>

REVENUES

  PRODUCT REVENUE

     Product revenue includes hardware sales and software license fees. Product
revenue is recognized upon shipment. The installation of the Company's systems
is not considered a significant obligation and acceptance by the customer is not
considered a significant uncertainty. Revenues from upgrade sales are generally
recognized at the time the equipment is shipped. Provisions for product sales
returns and allowances are recorded in the same period as the related revenue is
recognized. Revenue earned under software license agreements with end-users are
generally recognized when the software has been shipped and there are no
significant obligations remaining. Revenues earned under software license
agreements are recognized in accordance with Statement of Position ("SOP") No.
97-2. Software revenues are recognized when persuasive evidence of an
arrangement exists, delivery has occurred or services have been rendered, the
fee is fixed or determinable, collectibility is probable and vendor specific
objective evidence exists to allocate a portion of the total fee to any
undelivered elements of the arrangement.

     The Company sells its products to end users through its direct sales force,
as well as through distributors and resellers. Typically, the Company's
arrangements with distributors contain provisions for price protection and stock
rotation allowances. The Company recognizes revenue on sales to distributors in
accordance with the provisions set forth by the Financial Accounting Standards
Board ("FASB") No. 48, "Revenue Recognition When Right of Return Exists,"
provided that the requirements of SOP No. 97-2 have also been met. In accordance
with FASB No. 48, the Company recognizes revenue upon shipment to distributors
provided that a) the price is substantially fixed and determinable at the time
of sale; b) the distributor's obligation to pay the Company is not contingent
upon resale of the products; c) title and risk of loss passes to the distributor
at time of shipment; d) distributor has economic substance apart from that
provided by the Company; e) the Company has no significant obligation to the
distributor to bring about resale of the products; and f) future returns can be
reasonably estimated.

                                        15
<PAGE>   17

     The Company records a provision for returns and adjustments based on
anticipated adjustments or returns from distributors. Revenue recognized is
recorded net of this provision. Typical payment terms for sales transactions are
30 days.

     The Company's contracts typically do not contain any specified or
unspecified upgrade provisions. Should the customer need any upgrading, this
would be treated as a new contract requiring a new purchase order from the
customer. Since these upgrade revenues are based on subsequent new contracts,
revenue is recognized at time of shipment of the upgrade.

     Revenue from product sales is recognized upon shipment, provided that a
purchase order has been received or a contract has been executed, there are no
uncertainties regarding customer acceptance, the fee is fixed and determinable
and collectibility is deemed probable. The Company's typical sales contracts do
not include customer acceptance clauses; however, if uncertainties regarding
customer acceptance exist, revenue is recognized when such uncertainties are
resolved.

     When contracts contain multiple elements wherein vendor specific objective
evidence exists for all undelivered elements, the Company accounts for the
undelivered elements in accordance with the "Separate Element Method" prescribed
by SOP No. 98-9. Post customer support ("PCS") services to date have consisted
of fees for providing periodic minor software maintenance releases and technical
support for the Company's products. For undelivered PCS, vendor specific
objective evidence is determined by reference to the price of the PCS products
customers are required to pay for PCS products when those products are sold
separately. PCS revenue is initially recorded as deferred revenue and revenue is
recognized ratably over the term of the relevant agreement.

     Certain sales transactions may include discounts from the normal published
list price. Revenue recognized on such sales transactions are recorded net of
the discounts.

     The software portion of the Company's systems include an operating system
that is not incidental to the overall product or its functionality. The core
operating system software that the customer purchases is pre-installed and
tested at the Company's factory prior to shipment and does not require
significant production, modification, or customization at the customer's site;
as such, the system is functional according to the Company's internal and
customer specifications at the time of shipment. The Company believes revenue
recognition at the time of shipment is appropriate as set forth under the
provisions of SOP No. 97-2 when:

     - Persuasive evidence of an agreement exists (typically a purchase order)

     - Delivery has occurred

     - The fee is fixed and determinable

     - Collectibility is probable

     The Company may offer customers a discount off the normal list price,
however, this discount generally is not significant. This discount is recorded
as a discount to list price to determine the net sales amount. The net sales
amount is recorded as revenue.

  SERVICE REVENUE

     Service revenue includes installation, maintenance and training and is
recognized ratably over the contractual period or as the services are provided.

     Installation services typically include pre-installation planning,
pre-installation site survey, physical installation of the systems, and basic
system implementation. Almost all system sales to end users includes these basic
installation services. Since installation services do not typically require
significant customization or modification at the customer's site, the Company
does not consider installation services to be a significant obligation at the
time of shipment of the systems.

     In some cases, our support and maintenance agreements are entered into for
terms exceeding 12 months. The revenue on these agreements is recognized ratably
over the term of the agreement. Long-term deferred

                                        16
<PAGE>   18

revenue reflected on our balance sheet represents our obligations that exceed 12
months. We expect to recognize the majority of this revenue within the next 24
months.*

     In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101 ("SAB 101"), "Revenue Recognition in Financial
Statements." SAB 101 provides guidance on applying generally accepted accounting
principles to revenue recognition issues in financial statements. The Company
adopted SAB 101 in its fourth quarter of fiscal 2001 and concluded that the
Company's revenue recognition policies were in compliance with SAB 101 and that
there was no cumulative effect from adoption.*

     Revenues for fiscal year 2001 of $51.9 million decreased 37% over fiscal
year 2000 revenues of $82.2 million. Revenues for fiscal year 2000 of $82.2
million decreased 28% over fiscal year 1999 revenues of $113.5 million.

     The following table sets forth the principal components of the Company's
revenues (in thousands):

<Table>
<Caption>
                                                             YEARS ENDED JUNE 30,
                                                         ----------------------------
                                                          2001      2000       1999
                                                         -------   -------   --------
<S>                                                      <C>       <C>       <C>
Product revenue........................................  $28,090   $54,607   $ 81,737
Service revenue........................................   23,790    27,592     31,738
                                                         -------   -------   --------
     Total revenues....................................  $51,880   $82,199   $113,475
                                                         =======   =======   ========
</Table>

     Product revenue decreased $26.5 million or 49% in fiscal year 2001 as
compared to fiscal year 2000, and decreased $27.1 million, or 33% in fiscal year
2000 as compared to fiscal year 1999. The fiscal year 2001 decrease is primarily
due to the Company's expected transition from the NS2000 product family to the
NS3000 product family. Many customers delayed their purchases of the Company's
products in anticipation of the new NS3000 product family which was released in
the fourth quarter of fiscal year 2001. The fiscal year 2000 decrease is
primarily due to the continued competitive pressures, slower than expected
market acceptance of the new products introduced in fiscal year 2000, and is
also attributable to some disruption and distraction caused by the restructuring
in the third quarter of fiscal year 2000. Revenue from product upgrades, which
primarily consist of additional processors (or upgrades of existing processors),
memory and disk and tape drives, decreased to 19% of total revenue in fiscal
year 2001, compared to 21% of total revenue in fiscal year 2000. Revenue from
product upgrades was 31% as a percentage of total revenue in fiscal year 1999.
The continuing decrease of upgrade sales in fiscal years 2001 and 2000 can be
attributed to the slowdown in customers, upgrading of existing Legacy products.

     The Company provides ongoing support and maintenance to its end-user
customers, distributors and OEMs, generally under annual service agreements.
Service revenue as a percentage of total revenues increased to 46% in fiscal
year 2001 as compared to 34% in fiscal year 2000, and from 28% in fiscal year
1999. The increase in service revenue as a percentage of total revenues was
primarily due to the decline in product revenues.

     The following table sets forth the Company's revenue by geographic area (in
thousands):

<Table>
<Caption>
                                                            YEARS ENDED JUNE 30,
                                               ----------------------------------------------
                                                   2001            2000             1999
                                               -------------   -------------   --------------
<S>                                            <C>       <C>   <C>       <C>   <C>        <C>
North America................................  $31,329    60%  $52,192    63%  $ 80,692    71%
Pacific Rim..................................   11,188    22%   11,443    14%    13,453    12%
Europe.......................................    9,363    18%   18,564    23%    19,330    17%
                                               -------   ---   -------   ---   --------   ---
     Total revenues..........................  $51,880   100%  $82,199   100%  $113,475   100%
                                               =======   ===   =======   ===   ========   ===
</Table>

     Revenue from North America decreased $20.9 million in fiscal year 2001
compared to fiscal year 2000 and decreased $28.5 million in fiscal year 2000
compared to fiscal year 1999.

---------------

     * See "Forward-Looking Statements" on page 1.
                                        17
<PAGE>   19

     The fiscal year 2001 decrease is primarily due to the Company's expected
product transition from the NS2000 product family to the NS3000 product family.
Many customers delayed their purchases of the Company's products in anticipation
of the new NS3000 product family which was released in the fourth quarter of
fiscal year 2001. The fiscal year 2000 decrease is primarily related to the
continued competitive pressures, slower than expected market acceptance of new
products introduced in 1999, and is also attributable to some disruption and
distraction as result of the restructuring in the third quarter of fiscal year
2000. Also, the Company's North American sales force experienced a higher than
normal attrition rate, which resulted in lower productivity. Revenue from the
Pacific Rim decreased $0.3 million in fiscal year 2001 compared to fiscal year
2000, and decreased $2.0 million in fiscal year 2000 compared to fiscal year
1999. The decrease in Pacific Rim revenue in absolute dollars in fiscal years
2001, 2000 and 1999 was primarily due to timing of new product introductions,
the reorganization of a major OEM partner, changes in senior management, and
weakness in the Japanese economy.

     In the fiscal year 2001, Nissho Electronics accounted for 16% of total
revenues. In the fiscal year 2000, no one customer accounted for 10% or more of
total revenues. Intel accounted for 20% of total revenues for the fiscal year
ended June 30, 1999.

GROSS MARGIN

     The Company's gross margin was 24%, 23% and 42% in fiscal years 2001, 2000
and 1999, respectively. Costs of revenues include material costs, manufacturing
and service overhead costs, installation and warranty expenses, obsolescence,
the cost of spare parts and other related costs. The increase in gross margins
in fiscal year 2001 compared to fiscal year 2000 reflects an absence of one time
charges taken in fiscal year 2000. The decrease in gross margin in fiscal year
2000 compared to fiscal year 1999 is directly attributable to the lower product
revenue. Furthermore, gross margin in fiscal year 2000 was impacted by provision
to inventory reserves of $3.7 million, comprised of the following:

     - A reserve of $2.9 million recorded against excess inventories of our
       Legacy product lines and an additional $0.6 million reserve of Legacy
       spare parts inventory, in each case due primarily to a decrease in demand
       and a faster decline in sales of our Legacy products than originally
       anticipated, competitive pressures, and rapid technological changes in
       our market.

     - A reserve of $0.2 million recorded to reflect current inventory at the
       lower of cost or market.

     These provisions do not relate to the restructuring that occurred during
the quarter ended March 31, 2000; rather, they were recorded to reflect obsolete
inventory comprised of our older Legacy products and changes in market values of
current inventory, in each case resulting from competitive pressures and rapid
technological changes in our market.

     The decrease in gross margin in fiscal year 2000 compared to fiscal year
1999 was due to lower prices on systems sales due to competitive pressures and
timing of new product introductions which contributed to below break-even
operations.

OPERATING EXPENSES

     Marketing and sales expenses decreased by $9.4 million in fiscal year 2001
compared to fiscal year 2000, decreased $1.2 million in fiscal year 2000
compared to fiscal year 1999, and were 62%, 51% and 38% of total revenues in
fiscal years 2001, 2000 and 1999, respectively. The fiscal years 2001 and 2000
decreases in absolute dollars reflect steps the Company has taken to streamline
operations and reduce overall costs. The increase as a percentage of total
revenues for the comparison periods is a result of lower revenues in fiscal
years 2001 and 2000.

     Engineering and development expenses decreased by $11.4 million in fiscal
year 2001 compared to fiscal year 2000, and decreased $4.7 million in fiscal
year 2000 compared to fiscal year 1999, and represented 37%, 37% and 31% of
total revenues in fiscal years 2001, 2000, and 1999, respectively. The decrease
in engineering and development expenses in fiscal years 2001 and 2000 reflects
the Company's efforts to streamline and reduce costs, and also is reflective of
the reductions due to restructuring charges taken in the third quarter of
                                        18
<PAGE>   20

fiscal year 2000. The higher engineering and development expenses in fiscal year
1999 compared to fiscal years 2000 and 2001 was primarily due to new product
development efforts of the NS2000 product family and a higher cost structure
before the restructuring that occurred in the third quarter of fiscal year 2000.

     General and administrative expenses decreased by $1.3 million in fiscal
year 2001 as compared to fiscal year 2000, and decreased $282,000 in fiscal year
2000 compared to fiscal year 1999. Such expenses represented approximately 17%,
12% and 9% of total revenues in fiscal years 2001, 2000 and 1999, respectively.
General and administrative expenses decreased in absolute dollars in both fiscal
years 2001 and 2000 due to the Company's efforts to reduce costs. The increase
in general and administrative expenses as a percentage of revenue in fiscal
years 2001 and 2000 is a result of lower revenues.

     In the quarter ended March 31, 2000, the Company recorded restructuring
charges totaling $17.6 million. These charges reflect steps the Company has
taken to strengthen its competitiveness in the growing Network Attached Storage
market, streamline operations and reduce overall costs. The restructuring
charges are comprised primarily of $3.8 million for reduction of personnel and
$13.8 million to retire excess equipment and other assets related to the
restructuring of Company operations. In connection with the restructuring
charges taken in the quarter ended March 31, 2000, the Company terminated 169
employees and has consolidated all of its Santa Clara headquarters activities
into one facility. The Company substantially completed the implementation of the
restructuring plan at the end of May 2000.

     These cost reductions are directly attributable to the restructuring. The
steps the Company has taken to reduce costs are as follows:

          (1) The termination of 169 employees.

          (2) The consolidation of our Santa Clara headquarters from three
     buildings into one building.

          (3) The retirement of idled assets and operating leases.

     The Company had substantially completed the restructuring plan by the end
of May 2000. Cost savings per year resulting from the restructuring were
approximately $40 million.

OTHER INCOME, NET

     Other income, net, was $4.4 million, $1.3 million and $2.0 million in
fiscal years 2001, 2000 and 1999, respectively. Other income, net, includes
interest income, interest expense and foreign exchange gains and losses.
Interest income was $4.4 million, $1.7 million and $2.0 million in fiscal years
2001, 2000 and 1999, respectively. The higher level of interest income is due to
the higher cash balances in fiscal year 2001 as a result of the net proceeds of
$85.5 million from a private placement offering of the Company's common stock.

PROVISION FOR INCOME TAXES

     As of June 30, 2001, the Company had gross deferred tax assets of
approximately $74.6 million. Management has determined, based on the Company's
recent history of prior operating losses, the ability to carry back net
operating losses to prior periods and its expectations for future years, that it
is more likely than not that the deferred tax asset is not realizable.* No
assurances can be given that sufficient taxable income will be generated in
future years for the utilization of the deferred tax asset. Accordingly, the
Company has provided a valuation allowance for the entire deferred tax asset as
of June 30, 2001.

     As of June 30, 2001, the Company had Net Operating Losses ("NOL") carry
forwards of approximately $158.0 million and $129.0 million for federal and
state tax purposes, respectively. If not utilized, the federal NOL carry
forwards expire by 2021, and the state NOL carry forwards expire by 2006. The
Company also has research credits of approximately $5.8 million and $3.5 million
for federal and state tax purposes, respectively. If not utilized, the federal
research credits expire through 2020.

---------------

     * See "Forward-Looking Statements" on page 1.
                                        19
<PAGE>   21

QUARTERLY RESULTS OF OPERATIONS

     The following table sets forth selected unaudited quarterly financial
information for the Company's last eight quarters. This unaudited information
has been prepared on the same basis as the audited information and in
management's opinion reflects all adjustments (which include only normal
recurring adjustments) necessary for the fair presentation of the information
for the periods presented. Based on the Company's operating history and factors
that may cause fluctuations in the quarterly results, quarter-to-quarter
comparisons should not be relied upon as indicators of future performance.
Although the Company's revenues are not generally seasonal in nature, the
Company has experienced decreases in first quarter revenues compared to the
preceding fourth quarter which are believed to result primarily from the capital
asset purchase cycle of the Company's customers.

     The level of the Company's operating expenses is partially based on its
expectations of future revenues. The Company's results of operations may be
adversely affected if revenues do not materialize in a period as expected. Since
expense levels are usually committed in advance of revenues and because only a
small portion of expenses vary with revenues, the Company's results of
operations may be impacted significantly by lower revenues. The Company's
revenues were significantly lower in the second half of the fiscal year 2001
versus the first half due primarily to many customers delaying their purchases
of the NS2000 product in anticipation of purchasing a new NS3000 product. Also
contributing to the reduction in revenue during the second half of fiscal year
2001 is the continuing slow down in customer upgrading of Legacy product that
has not been offset by the purchasing of the Company's NS2000 and NS3000
products. The Company's revenues were lower each quarter in fiscal year 2000
compared to the corresponding quarter in the prior year. This decrease in
revenues was attributable to a slow down in customer upgrading of Legacy
product, that has not been offset by customer purchasing of the NS2000 product,
and lower than expected acceptance by the market of the NS2000 product. In
addition, the Company reduced the average selling price of a system as a result
of competitive pressures.

<Table>
<Caption>
                                    Q1         Q2            Q3            Q4           YEAR
                                 --------   --------      --------      --------      --------
                                           (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                                          (UNAUDITED)
<S>                              <C>        <C>           <C>           <C>           <C>
2001 SUMMARY BY QUARTER
Revenues.......................  $ 16,070   $ 16,425      $  9,371      $ 10,014      $ 51,880
Gross margin...................     4,435      5,944(1)      1,056         1,167        12,602
Loss before provision for
  income taxes.................    (8,563)    (7,064)      (13,961)      (13,808)      (43,396)
Net loss.......................    (8,863)    (7,319)      (14,126)      (13,983)      (44,291)
Dividends to preferred
  stockholders.................     5,174         --            --            --         5,174
  Net loss available to common
     Stockholders..............   (14,037)    (7,319)      (14,126)      (13,983)      (49,465)
Net loss per share
  Basic and Diluted............  $   (.44)  $   (.16)     $   (.31)     $   (.31)     $  (1.18)
2000 SUMMARY BY QUARTER
Revenues.......................  $ 26,172   $ 22,604      $ 21,362      $ 12,061      $ 82,199
Gross margin...................     9,490      6,054         1,653         1,540(2)     18,737
Loss before provision for
  income taxes.................   (12,171)   (16,224)      (39,579)      (12,089)      (80,063)
Net loss.......................   (12,221)   (16,324)      (39,858)      (12,357)      (80,760)
Dividends to preferred
  stockholders.................        --         --         1,175         1,175         2,350
Net loss available to common
  stockholders.................   (12,221)   (16,324)      (41,033)      (13,532)      (83,110)
Net loss per share
  Basic and Diluted............  $   (.45)  $   (.59)     $  (1.42)(3)  $   (.46)     $  (2.95)(3)
</Table>

                                        20
<PAGE>   22

---------------

(1) The increase in gross margin as a percentage of revenues from the first
    quarter to the second quarter of fiscal year 2001 resulted in part from the
    use of 18GB hard drives obtained at reduced cost in certain of the Company's
    products and from more direct user revenue, which provides higher margin
    relative to distributor revenue.

(2) The increase in gross margin as a percentage of revenues from the third
    quarter to the fourth quarter of fiscal year 2000 was a result of the cost
    savings realized from the third quarter fiscal year 2000 restructuring.

(3) Includes the costs associated with restructuring charges of $17.6 million.
    Exclusive of this charge, net basic and diluted loss per share for third
    quarter of fiscal year 2000 would both have been $.81 and for fiscal year
    2000 would both have been $2.32.

LIQUIDITY AND CAPITAL RESOURCES

     The Company's cash, cash equivalents and short-term investments increased
$50.5 million as of June 30, 2001, compared to June 30, 2000. The Company used
cash of approximately $35.6 million, $43.6 million and $6.6 million in operating
activities in fiscal years 2001, 2000 and 1999 respectively. The net cash used
in operating activities in fiscal year 2001 was primarily due to funding the
Company's net loss for the year.

     The Company's principal investing activities consisted of the purchase of
property and equipment amounting to $3.8 million, $2.7 million and $15.2 million
in fiscal years 2001, 2000 and 1999, respectively. These expenditures were for
leasehold improvements, equipment for engineering and development, manufacturing
test equipment, office equipment and spare parts to support customer service
contracts. The Company's additional investing activities include the purchasing
of short-term investments which, represents the reinvestment of maturing
short-term investments and the investment of cash and cash equivalents into
short term investments.

     The Company's primary financing activities included proceeds from the sale
of its Common Stock pursuant to employee benefit plans of $2.6 million, $7.1
million and $3.1 million in fiscal years 2001, 2000 and 1999, respectively.
During fiscal year 2001, the Company's financing activities included proceeds
from the sale of common stock, resulting in net proceeds of $85.5 million. The
participants in this private placement include both existing and new
shareholders. During fiscal year 2000, the Company's financing activities
included proceeds from the sale of $25 million of preferred stock, in a private
placement. During fiscal year 1999, the Company also generated approximately
$10.9 million in proceeds from sale and leaseback of furniture, fixtures and
computer equipment.

     At June 30, 2001, the Company's principal sources of liquidity included
$79.8 million in cash, cash equivalents and short-term investments and $15.0
million available under a secured United States currency bank line of credit,
expiring March 31, 2003. At June 30, 2001, the Company had no outstanding
balance under this line of credit. There were commitments against the line of
credit, for two letters of credit totaling approximately $1,697,000, as of June
30, 2001. The line of credit is secured by the Company's cash investments with
the Company's lending institution.

     As of June 30, 2001, working capital was $62.1 million as compared with
$14.8 million as of June 30, 2000. Based on its current operating plans, the
Company believes that its existing cash, cash equivalents and short-term
investments and cash flow from operations will be sufficient to meet its working
capital and capital expenditures requirements at least through the next 12
months.*

NEW ACCOUNTING PRONOUNCEMENTS

     In June 1997, the Financial Accounting Standards Board issued SFAS No. 131,
"Disclosure about Segments of an Enterprise and Related Information." SFAS No.
131 changes the way companies report selected segment information in annual
financial statements and also requires companies to report selected

---------------

     * See "Forward-Looking Statements" on page 1.
                                        21
<PAGE>   23

segment information in interim financial reports to stockholders. The Company
operates in one reportable segment. SFAS No. 131 has been implemented by the
Company. Note 10 to the Consolidated Financial Statements contains a summary
table of industry segment, geographic and customer information.

     In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 133, "Accounting for Derivative Instruments and Hedging Activities," which
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts and for
hedging activities. It requires that a reporting entity recognize all
derivatives as either assets or liabilities in the statement of financial
position and measure those instruments at fair value. Management has reviewed
the Company's compliance with SFAS No. 133 and has concluded that the Company is
in compliance with SFAS No. 133 and that there is no material effect on the
Company's consolidated financial position, results of operations or cash flows
from adoption.

     In August 2001, the Financial Accounting Standards Board, or FASB, issued
Statement of Financial Accounting Standards, or SFAS, No. 143, "Accounting for
Obligations Associated with the Retirement of Long-Lived Assets." SFAS No. 143
addresses financial accounting and reporting for the retirement obligation of an
asset. This statement states that companies should recognize the asset
retirement cost, at their fair value, as part of the cost of the asset and
classify the accrued amount as a liability in the condensed consolidated balance
sheet. The asset retirement liability is then accreted to the ultimate payout as
interest expense. The initial measurement of the liability would be subsequently
updated for revised estimates of the discounted cash outflows. The Statement
will be effective for fiscal years beginning after June 15, 2002. The Company
has not yet determined the effect SFAS No. 143 will have on its consolidated
financial position, results of operations, or cash flows.

     In June 2001, the FASB issued SFAS No. 141, "Business Combinations." SFAS
No. 141 addresses financial accounting and reporting for business combinations
and it requires business combinations in the scope of this Statement to be
accounted for using one method, the purchase method. The provisions of this
Statement apply to all business combinations initiated after June 30, 2001. The
adoption of this Statement will not have a material effect of the Company's
consolidated financial position, results of operations, or cash flows.

     In June 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible
Assets." SFAS No. 142 addresses financial accounting and reporting for acquired
goodwill and other acquired assets. It addresses how intangible assets that are
acquired individually or with a group of other assets (but not those acquired in
a business combination) should be accounted for in financial statements upon
their acquisition. This Statement also addresses how goodwill and other
intangible assets should be accounted for after they have been initially
recognized in the financial statements. With the adoption of this Statement,
goodwill is no longer subject to amortization over its estimated useful life.
Goodwill will be assessed for impairment each year using the fair-value-based
test. This Statement becomes effective for all fiscal years beginning after
December 15, 2001, which would be for the year ended June 20, 2003 for the
Company. The Company is currently assessing the impact of the discontinued
amortization of goodwill and, while the Company is not aware of any impairment
charges, an analysis will have to be done upon adoption of this Statement to
determine if an impairment charge is necessary. The Company currently has no
goodwill or intangible assets recorded on its consolidated balance sheet, and
accordingly, the adoption of SFAS No. 142 will not have any effect on its
consolidated financial position, results of operations, or cash flows.

FACTORS THAT MAY AFFECT FUTURE RESULTS

  HISTORICAL AND FUTURE LOSSES

     The Company has a history of losses and may continue to incur future
losses. We have incurred net losses of $39.0 million for the year ended June 30,
1999, $83.1 million for the year ended June 30, 2000 and $49.5 million for the
year ended June 30, 2001. We have incurred significant losses the past four
years and may continue to incur future losses.

                                        22
<PAGE>   24

  POTENTIAL SIGNIFICANT FLUCTUATIONS IN QUARTERLY RESULTS

     The Company's operating results may fluctuate significantly from quarter to
quarter due to a combination of factors. These factors include the timing of
orders, the timing of new product introductions by the Company or its
competitors, and the mix of distribution channels through which the Company's
products are sold. The Company generally realizes higher gross margins on sales
of systems to end users and on single-system sales than on systems sold through
distributors and OEMs and on multiple-system sales. In addition, given the
Company's focus on highly configured enterprise class systems, the loss or delay
in a given quarter of a relatively limited number of system sales could
adversely affect the Company's revenues.

     Historically, the Company often has recognized a substantial portion of its
revenues in the last month of any given quarter. Because the Company's operating
expenses are based on anticipated revenue levels and because a high percentage
of the Company's expenses are relatively fixed, a small variation in the timing
of the recognition of revenues could cause significant variations in operating
results from quarter to quarter. In addition, due to the short lead time with
regards to the product's time of order to its time of shipment, the Company does
not carry any material backlog from quarter to quarter.

  COMPETITIVE MARKET

     The market for the Company's products is highly competitive. The Company
experiences substantial competition, principally from Sun Microsystems, Network
Appliance, EMC Corporation, Hewlett-Packard Company, IBM and SGI, among others.
Some companies have introduced proprietary products to provide network attached
storage. Most of the Company's competitors are better known and have
substantially greater financial, technological, production and marketing
resources than the Company. While the Company believes that the
price/performance characteristics of its products are competitive, price
competition in the markets for the Company's products is intense, the Company's
competitors have engaged, and may continue to engage in price cutting to gain a
competitive edge within the market for the Company's products. The Company's
efforts to maintain the competitiveness of its prices in such an environment has
had and may continue to have an adverse effect on the Company's business,
financial condition and results of operations. Any material reduction in the
price of the Company's products without corresponding decreases in manufacturing
costs and increases in unit volume would negatively affect gross margins, which
could in turn have a material adverse effect on the Company's business,
financial condition and results of operations. The Company also derives a
significant portion of its revenues from sales of product upgrades to its
installed base of customers, including additional processors, memory and disk
drives. Increased competition for the Company's products that results in lower
product sales could also adversely impact the Company's upgrades sales. In
addition, decisions by customers not to increase capacity to their current
systems could adversely impact the Company's revenues and results of operations.
The Company's ability to maintain its competitive position will depend upon,
among other factors, its success in anticipating industry trends, investing in
product engineering and development, developing new products with improved
price/performance characteristics and effectively managing the introduction of
new products into targeted markets.

  MANAGEMENT IN TRANSITION; EMPLOYEE TURNOVER

     Competition for employees with technical, management and other skills is
intense in the computer industry and is particularly intense in the San
Francisco Bay Area. If the Company fails to retain the services of key personnel
or to attract additional qualified employees, such failure could have a material
adverse effect on the Company's business, financial condition and results of
operations. The Company has experienced turnover of several senior members of
management.

  SOFTWARE PRODUCT RISKS

     The Company markets optional software products in addition to its line of
network file servers. These software products include: NeTservices(TM),
DriveGuard(TM), FastBackup(TM), ServerGuard(TM), ServerGuard Global(TM),
DataGuard(TM), Turbocopy, and TurbocopyReplicator. The Company also expects to
release enhance-

                                        23
<PAGE>   25

ments and new features for these products from time to time.* Although the
Company performs extensive testing prior to releasing software products, such
products may contain undetected errors or bugs when first released. These may
not be discovered until the product has been used by customers in different
application environments. Failure to discover product deficiencies or bugs could
delay product introductions, require design modifications to previously shipped
products, cause unfavorable publicity or negatively impact system shipments, any
of which could result in a materially adverse effect on the Company's business,
financial condition and results of operations.

  NEW PRODUCTS

     New product introductions by the Company or its competitors carry the risk
that customers could delay or cancel orders for existing products pending
shipment of the new products. For instance, product transition issues had an
adverse impact on North America, Europe and Pacific Rim revenues in fiscal year
2001. The Company's strategy is to continue to introduce new products and
upgrades to existing products on an ongoing basis. There can be no assurance
that the Company will not experience difficulties that delay or prevent the
successful development, introduction or marketing of these products and
enhancements or that these new products and enhancements will adequately address
market requirements, achieve market acceptance or generate substantial sales.
Additionally, delays in the launch or lack of availability of new products could
have a material adverse effect on the Company's business, financial condition
and results of operations.

  DEPENDENCE ON ESTABLISHED STANDARDS

     The rapid emergence of new or alternate standards, such as Linux, which
replace or diminish the market acceptance of UNIX operating systems, Network
File System (NFS) or Windows NT, on which the Company's products are currently
based, could materially and adversely affect the Company's results of operations
unless the Company is able to incorporate any such standards in the Company's
products in a timely manner.

  DEPENDENCE ON CERTAIN CUSTOMERS/DISTRIBUTORS

     For each of fiscal years 2001, 2000 and 1999, direct sales of products and
services to Intel represented approximately 9%, 7% and 20%, respectively, of the
Company's revenues. For each of fiscal years 2001, 2000 and 1999, indirect sales
of products and services to Nissho Electronics represented approximately 16%, 6%
and 7%. Intel and Nissho are not obligated to purchase any minimum level of
products from the Company. Additional significant reductions in product sales to
Intel and Nissho would materially and adversely affect the Company's business,
financial condition and results of operations.

  DEPENDENCE ON CERTAIN SUPPLIERS

     Certain of the Company's products contain critical components supplied by a
single or limited number of third parties. While the Company has an inventory of
these critical components, any significant or prolonged shortage of these
components or the failure of the third-party suppliers to maintain or enhance
these components could materially and adversely affect the Company's results of
operations.

  EXCESS OR OBSOLETE INVENTORY

     Managing the Company's inventory of components and finished products is a
complex task. A number of factors, including but not limited to, the need to
maintain a significant inventory of certain components which are in short supply
or which must be purchased in bulk to obtain favorable pricing, the general
unpredictability of demand for specific products and customer requests for quick
delivery schedules, may result in the Company maintaining large amounts of
inventory. Other factors, including changes in market demand and technology, may
cause inventory to become obsolete. Any excess or obsolete inventory could
result in price

---------------

     * See "Forward-Looking Statements" on page 1.
                                        24
<PAGE>   26

reductions and/or inventory write-downs, which in turn could adversely affect
the Company's business and results of operations.

  RISKS OF INTERNATIONAL SALES; EUROPEAN AND PACIFIC RIM MARKET RISKS

     During fiscal years 2001, 2000 and 1999, approximately 40%, 37%, and 29%,
respectively, of the Company's total revenues were derived from markets outside
of North America. The Company expects that sales to the Pacific Rim and Europe
will continue to represent a significant portion of its business.* However,
there can be no assurance that the Company's Pacific Rim or European operations
will continue to be successful.

     The Company's international business may be affected by changes in demand
resulting from localized economic and market conditions. For example, the
Company experienced a decrease in revenues from the Pacific Rim during fiscal
years 2001, 2000 and 1999 due to further weakness in the Japanese economy. In
addition, the Company's international business may be affected by fluctuations
in currency exchange rates and currency restrictions. The Company purchases the
majority of its materials and services in U.S. dollars, and most of its foreign
sales are transacted in U.S. dollars. Continued increases in the value of the
U.S. dollar relative to foreign currencies would make the Company's products
sold internationally less price competitive. The Company has offices in a number
of foreign countries, the operating expenses of which are also subject to the
effects of fluctuations in foreign exchange rates. Financial exposure may result
due to the timing of transactions and movement of exchange rates. The Company's
international business may further be affected by risks such as trade
restrictions, increases in tariff and freight rates and difficulties in
obtaining necessary export licenses and meeting appropriate local regulatory
standards. For example, the Company has had to modify its products in minor
respects in Japan to comply with local electromagnetic emissions standards, and
must also comply with corresponding European Economic Community standards. In
marketing its products to the European Union, the Company also must face the
challenges posed by a fragmented market complicated by local distribution
channels and local cultural considerations. For international sales, the Company
has largely relied on distributors or OEMs, most of who are entitled to carry
products of the Company's competitors. There can be no assurance that any of the
foregoing risks or issues will not have a material adverse effect on the
Company's business, financial condition and results of operations.

  STOCK MARKET FLUCTUATIONS

     In recent years, the stock market in general and the market for technology
stocks in particular, including the Company's Common Stock, have experienced
extreme price fluctuations. The market price of the Company's Common Stock may
be significantly affected by various factors such as quarterly variations in the
Company's operating results, changes in revenue growth rates for the Company as
a whole or for specific geographic areas or products, changes in earning
estimates by market analysts, the announcements of new products or product
enhancements by the Company or its competitors, speculation in the press or
analyst community, and general market conditions or market conditions specific
to particular industries. There can be no assurance that the market price of the
Company's Common Stock will not experience significant fluctuations in the
future.*

  ECONOMIC DOWNTURNS

     The Company is subject to the cyclical nature of the economy, both domestic
and international. The current downturn or any future downturns may reduce the
Company's revenue. Purchases of the Company's products are highly dependent on
the capital spending needs of the Company's customers, which are historically
minimal during an economic downturn. The economy is highly cyclical and can be
characterized by such things as constant and rapid technological change, product
obsolescence, price erosion, evolving standards, and fluctuations in product
demand. These downturns have been characterized by diminished

---------------

     * See "Forward-Looking Statements" on page 1.

     * See "Forward-Looking Statements" on page 1.
                                        25
<PAGE>   27

product demand, production over capacity, higher inventory levels and
accelerated erosion of average selling prices. The Company expects continued
weakness in the economy for the foreseeable future. The current slowdown and any
future downturns may reduce the Company's revenue and harm the Company's results
of operations.

     The terrorist attacks on September 11, 2001 along the East Coast of the
United States may exacerbate the current economic downturn. Decreased consumer
confidence resulting in less travel and fewer purchases by the American consumer
may adversely affect the capital spending needs of the Company's current and
potential customers. The possible escalation of military alternatives as a
result of the aforementioned attacks may also exacerbate or prolong the current
economic downturn. The Company has no clear indication of the length or scope of
the current economic downturn.

  INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS

     The Company currently relies on a combination of patent, copyright,
trademark and trade secret laws and contractual provisions to protect its
proprietary rights in its hardware and software products. The Company currently
holds fourteen United States patents and has filed applications for additional
patents. The Company also has filed applications for counterpart patents in
foreign countries, including Japan. There can be no assurance that the Company's
present or future competitors will not independently develop technologies that
are substantially equivalent or superior to the Company's technology. Further,
there can be no assurance that the Company's patent applications will result in
issued patents, or that the Company's issued patents will be upheld if
challenged. Additionally, there can be no assurance that third parties will not
assert intellectual property infringement claims against the Company in the
future with respect to current or future projects or that any such assertions
may not require the Company to refrain from the sale of its products, enter into
royalty arrangements or undertake costly litigation.

     The Company's adherence to industry standards with respect to its products
limits the Company's opportunities to provide proprietary features, which may be
protected. In addition, the laws of various countries in which the Company's
products may be sold may not protect the Company's products and intellectual
property rights to the same extent as the laws of the United States.

  CALIFORNIA'S CURRENT ENERGY CRISIS

     California is in the midst of an energy crisis that could disrupt the
conduct of sales, marketing, research and development, finance and other
operations at the Company's headquarters facilities. In the event of an acute
power shortage, California has, on some occasions, implemented, and may in the
future continue to implement, rolling blackouts throughout California. The
Company has emergency back-up generators which keep its business systems in
operation but the Company does not have sufficient back-up generating capacity
or alternate sources of power to keep its headquarters in full operation in the
event of a blackout. If blackouts interrupt the Company's power supply, it would
be temporarily unable to continue full operations at its headquarters. Any such
interruption could damage the Company's reputation, harm its ability to retain
existing customers and to obtain new customers, and could result in lost
revenue, any of which could substantially harm the Company's business and
results of operations.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISKS

  INTEREST RATE RISK

     The Company's exposure to market risk for changes in interest rates relate
primarily to the Company's investment portfolio. The Company does not use
derivative financial instruments in its investment portfolio. The Company
invests in high-quality credit issuers and, by policy, limits the amount of
credit exposure to any one issuer. As stated in its policy, the Company ensures
the safety and preservation of its invested principal funds by limiting default
risk, market risk and reinvestment risk.

     The Company mitigates default risk by investing in safe and high-quality
credit securities and by constantly positioning its portfolio to respond
appropriately to a significant reduction in a credit rating of any

                                        26
<PAGE>   28

investment issuer, guarantor or depository. The portfolio includes only
marketable securities with active secondary or resale markets to ensure
portfolio liquidity.

     The table below presents principal amounts and related weighted average
interest rates by year of maturity for the Company's investment portfolio.

<Table>
<Caption>
                                                            YEARS ENDED JUNE 30,
                                         ----------------------------------------------------------
                                          2002     2003   2004   2005   2006   THEREAFTER    TOTAL
                                         -------   ----   ----   ----   ----   ----------   -------
                                                               (IN THOUSANDS)
<S>                                      <C>       <C>    <C>    <C>    <C>    <C>          <C>
Cash equivalents and short-term
  investments
  Fixed rate investments...............  $79,793   --     --     --     --        --        $79,793
  Average interest rate................     4.19%  --     --     --     --        --           4.19%
</Table>

  FOREIGN CURRENCY EXCHANGE RISK

     The Company transacts business in various foreign countries. Its primary
foreign currency cash flows are in certain European countries. During fiscal
years 2001, 2000 and 1999, the Company employed a foreign currency-hedging
program utilizing foreign currency forward exchange contracts to hedge local
currency cash flows for payroll and other operating expenditures in these
European countries. Under this program, increases or decreases in the Company's
local currency operating expenses and other cash outflows, as translated into
U.S. dollars, are partially offset by realized gains and losses on the hedging
instruments. The goal of this hedging program is to economically guarantee or
lock in the exchange rates on the Company's foreign currency cash outflows
rather than to eliminate the possibility of short-term earnings volatility. As
of June 30, 2001, the Company's foreign currency forward exchange contracts were
comprised of $1.5 million in British Pounds, $0.2 million in German Marks, and
$2.5 million French Francs.

  FOREIGN EXCHANGE HEDGING

     From time to time the Company enters into foreign exchange rate contracts
to reduce its exposure to foreign currency rate changes on intercompany foreign
currency denominated balance sheet positions. The Company does not enter into
these contracts for speculative purposes. The objective of these contracts is to
partially offset the impact of foreign currency exchange rate movements on the
Company's operating results. Gains and losses on these contracts are recognized
in operations in the period in which gains and losses on the underlying
transactions occur. In the event of termination or extinguishments of a
contract, associated gains and losses are recognized in operations in the period
in which the contract is terminated.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The financial statements required by this item are incorporated by
reference from Part IV Item 14(a) 1 and 2 hereof. The selected quarterly
supplementary data is included as part of Item 7, "Management's Discussion and
Analysis of Financial Condition and Results of Operations."

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

     Not applicable.

                                    PART III

     Certain information required by Part III is omitted from this Annual Report
on Form 10-K because the Registrant will file a definitive proxy statement
within one hundred twenty (120) days after the end of its fiscal year pursuant
to Regulation 14A (the "Proxy Statement") for its Annual Meeting of Stockholders
currently scheduled for November 15, 2001, and the information included in the
Proxy Statement is incorporated herein by reference.

                                        27
<PAGE>   29

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     Information regarding the directors of the Company is incorporated by
reference to the information under the heading "Election of Directors" in the
Registrant's Proxy Statement.

     Information regarding the executive officers of the Company is incorporated
by reference to the section of Part I of this Annual Report on Form 10-K
entitled "Item 1 -- Business -- Executive Officers of the Company".

     Information regarding compliance with Section 16 of the Securities Exchange
Act of 1934, as amended, is incorporated by reference to the information under
the heading "Section 16(a) Beneficial Ownership Reporting Compliance" in the
Registrant's Proxy Statement.

ITEM 11.  EXECUTIVE COMPENSATION

     Information regarding the compensation of executive officers and directors
of the Company is incorporated by reference to the information under the heading
"Executive Compensation" and "Certain Transactions with Management" in the
Registrant's Proxy Statement.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     Incorporated by reference to the information under the heading "Security
Ownership of Certain Beneficial Owners and Management" in the Registrant's Proxy
Statement.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Incorporated by reference to the information under the caption "Certain
Transactions with Management" in the Registrant's Proxy Statement.

                                    PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

     (a) The following documents are filed as a part of this Annual Report on
Form 10-K.

     The following consolidated financial statements of Auspex Systems, Inc. are
filed as part of this Annual Report on Form 10-K.

1.  FINANCIAL STATEMENTS

<Table>
<Caption>
                                                              PAGE
                                                              ----
<S>                                                           <C>
Report of Arthur Andersen LLP, Independent Public
  Accountants...............................................
Consolidated Statements of Operations for the years ended
  June 30, 2001, 2000 and 1999..............................
Consolidated Statements of Comprehensive Income for years
  ended June 30, 2001, 2000 and 1999........................
Consolidated Balance Sheets as of June 30, 2001 and 2000....
Consolidated Statements of Stockholders' Equity for the
  years ended June 30, 2001, 2000 and 1999..................
Consolidated Statements of Cash Flows for the years ended
  June 30, 2001, 2000 and 1999..............................
Notes to Consolidated Financial Statements..................
</Table>

                                        28
<PAGE>   30

2.  FINANCIAL STATEMENT SCHEDULES

     The following consolidated financial statement schedules for each of the
three years in the period ending June 30, 2001, 2000 and 1999 are submitted
herewith:

<Table>
<Caption>
                                                               PAGE
                                                               ----
<S>                                                            <C>
Schedule II -- Valuation and Qualifying Accounts and
  Reserves..................................................
</Table>

     (All other schedules are omitted because they are not applicable or the
required information is shown in the Financial Statements or notes thereto.)

3.  EXHIBITS

     The following exhibits are included in this Annual Report on Form 10-K
(numbered in accordance with Item 601 of Regulation S-K):

<Table>
<Caption>
   EXHIBIT
   NUMBER                                    DESCRIPTION
   -------                                   -----------
<C>             <S>  <C>
 3.1(1)         --   Certificate of Incorporation of Registrant.
 3.2(19)        --   Certificate of Amendment to Certificate of Incorporation,
                     dated August 29, 2000.
 3.3(19)        --   By-laws of Registrant as amended to date.
 4.1(2)         --   Preferred Shares Rights Agreement between the Registrant and
                     The First National Bank of Boston as Rights Agent dated
                     April 19, 1995.
 4.2(3)         --   Registration Rights Agreement, dated as of January 18, 2000,
                     between Registrant and the investors named therein.
 4.3(3)         --   Certificate of Designations, Preferences and Rights of
                     Series B Convertible Preferred Stock as filed with the
                     Secretary of State of the State of Delaware on January 18,
                     2000.
 4.4(3)         --   Registration and Information Rights Agreement dated January
                     31, 1992.
10.1(1)(4)      --   1988 Stock Option Plan and forms of Incentive Stock Option
                     Agreements and Nonstatutory Stock Option Agreements, as
                     amended to date.
10.2(4)(7)      --   1993 Directors' Stock Option Plan, as amended to date.
10.3(4)(5)      --   1993 Employee Stock Purchase Plan and forms of Option
                     Agreements, as amended to date.
10.4(4)(7)      --   1997 Stock Plan, as amended to date.
10.5(4)         --   1998 Non-Statutory Stock Plan and form of Stock Option
                     Agreement, as amended to date.
10.6(7)         --   Stock Option Agreement, dated August 1, 2000, between
                     Registrant and Michael S. Worhach.
10.7(4)(6)      --   Employee Stock Option agreement, as amended, dated April 18,
                     2000 between Registrant and Gary J. Sbona.
10.8(7)         --   Employee Stock Option Agreement, dated July 3, 2000, between
                     Registrant and Paul Loucas.
10.9(3)         --   Form of Warrant to Purchase Common Stock, dated January 18,
                     2000, issued to certain investors.
10.10(18)       --   Share Purchase Agreement, dated as of September 19, 2000,
                     between Registrant and the purchasers referred to therein.
10.11(18)       --   Amendment, dated October 11, 2000, to Share Purchase
                     Agreement, dated as of September 27, 2000.
10.12(3)        --   Securities Purchase Agreement, dated as of January 18, 2000,
                     between Registrant and the investors listed on the Schedule
                     of Buyers attached thereto.
10.13(18)       --   Letter Agreement, dated September 27, 2000, between Halpern
                     Capital Advisors and Registrant.
10.14(18)       --   Warrant Purchase Agreement, dated October 17, 2000, between
                     Baruch and Shoshana Halpern and Registrant.
</Table>

                                        29
<PAGE>   31

<Table>
<Caption>
   EXHIBIT
   NUMBER                                    DESCRIPTION
   -------                                   -----------
<C>             <S>  <C>
10.15(18)       --   Form of Common Stock Purchase Warrant, dated October 17,
                     2000, issued to Baruch and Shoshana Halpern.
10.16(18)       --   Form of Common Stock Purchase Warrant, dated October 17,
                     2000, issued to Baruch and Shoshana Halpern.
10.17(6)        --   Retainer Agreement between Company and Regent Pacific
                     Management Corporation, effective February 15, 2000.
10.18           --   Amendment, dated October 17, 2000, to Retainer Agreement
                     between Company and Regent Pacific Management Corporation,
                     dated as of February 15, 2000.
10.19(1)(4)     --   401(k) Plan, as amended to date.
10.20(1)(4)     --   Summary of Executive Bonus Program.
10.21(1)(4)     --   Form of Directors' and Officers' Indemnification Agreement
                     with all of its Directors and Officers.
10.22(1)(8)     --   OEM Agreement, dated March 9, 1993, between the Registrant
                     and Fuji Xerox Company, Ltd.
10.23(1)(8)     --   Distributor Agreement, dated June 6, 1990, between the
                     Registrant and Nissho Electronics Corporation.
10.24(8)        --   Distributor Agreement, dated June 6, 1990, between the
                     Registrant and Nissho Electronics Corporation, as amended on
                     July 29, 1997.
10.25(19)       --   Authorized Distributor Agreement, dated December 5, 2000,
                     between Registrant and Bell Microproducts, Inc.
10.26(19)       --   Authorized Reseller Agreement, dated December 29, 2000,
                     effective December 27, 2000, between Registrant and Insight
                     Direct USA, Inc.
10.27(1)        --   U.S. OEM Discount Agreement between the Registrant and Sun
                     Microsystems, Inc., effective as of August 18, 1988, as
                     amended by Addendum dated September 8, 1988 and Addendum
                     dated September 14, 1989.
10.28(1)        --   Source Code License between the Registrant and Sun
                     Microsystems, Inc., dated August 31, 1988, as amended on
                     April 30, 1991, February 11, 1992 and March 18, 1992.
10.29(1)        --   NFS Software Agreement between the Registrant and Sun
                     Microsystems, Inc., dated September 29, 1988.
10.30(9)(10)    --   Software Agreement between the Registrant and AT&T
                     Information Systems Inc., dated June 2, 1988, as amended by
                     Supplement Number 1, Supplement Number 2, dated August 5,
                     1988, and Supplement Number 3, dated August 10, 1990, as
                     amended on June 28, 1993.
10.31(9)(10)    --   Sublicensing Agreement between the Registrant and AT&T
                     Information Systems Inc., dated August 30, 1988, as amended
                     on June 28, 1993.
10.32(1)        --   Software Agreement between the Registrant and UNIX System
                     Laboratories, Inc., dated April 29, 1992.
10.33(1)        --   License Agreement with the Regents of the University of
                     California, dated June 9, 1988, as amended by Addendum dated
                     October 21, 1988.
10.34(11)(12)   --   Intel Corporation Purchase Agreement between Intel
                     Corporation and the Registrant, dated March 22, 1994.
10.35(13)       --   Warranty and Service Provider Agreement between the
                     Registrant and AT&T Global Information Systems,dated April
                     15, 1994.
10.36(13)       --   SunSoft Technology License and Distribution Agreement
                     between the Registrant and SunSoft, Inc., dated December 17,
                     1993.
10.37(13)       --   Amendment No. 2 to Lease Agreement between the Registrant
                     and WHC-SIX Real Estate, dated February 28, 1996.
10.38(13)       --   Interactive SPARC Software and Sublicensing Agreement
                     between Auspex Systems, Inc. and Interactive systems
                     Corporation, dated November 15, 1991.
</Table>

                                        30
<PAGE>   32

<Table>
<Caption>
   EXHIBIT
   NUMBER                                    DESCRIPTION
   -------                                   -----------
<C>             <S>  <C>
10.39(14)       --   Lease Agreement by and Between South Bay/San Tomas
                     Associates and Auspex Systems, Inc., dated January 14, 1997,
                     for 2800 Scott Boulevard, Santa Clara facility.
10.40(14)       --   Lease Agreement by and Between South Bay/San Tomas
                     Associates and Auspex Systems, Inc., dated January 14, 1997,
                     for 2300, 2320, 2330 Central Expressway, Santa Clara
                     facility.
10.41(16)       --   Form of Change of Control Severance Agreement, filed on May
                     12, 1999.
10.42(16)       --   Form of Change of Control Severance Agreement entered into
                     the form of the Company and Bruce N. Moore, President and
                     Chief Executive Officer, dated June 16, 1999.
10.43(15)       --   Software Support Agreement between the Registrant and AT&T
                     dated July 10, 1997.
10.44(15)       --   Software Licensing Agreement between the Registrant and AT&T
                     Corporation dated June 3, 1997, as amended on September 14,
                     1998.
10.45(15)       --   Source License Agreement between the Registrant and
                     Programmed Logic Corp. Dated July 1, 1998; Bundled Hardware
                     OEM Binary License Agreement between the Registrant and
                     Programmed Logic Corp. dated July 1, 1998; Read-Only License
                     Agreement between the Registrant and Programmed Logic Corp.
                     dated July 1, 1998.
10.46(15)       --   Master Value Added Distribution Agreement between the
                     Registrant and Fuji Xerox Co. Ltd. dated May 21, 1997.
10.47(17)       --   Form of Change of Control Severance Agreement entered into
                     between the Company and Hans H. Schwarz, Senior Vice
                     President of Engineering, dated January 1, 2000.
10.48(20)       --   Line of Credit Agreement, dated March 31, 2001, between the
                     Company and Wells Fargo Bank.
21.1            --   Subsidiaries of Registrant.
23.1            --   Consent of Arthur Andersen LLP, Independent Public
                     Accountants.
24.1            --   Power of Attorney (See Page 32).
</Table>

---------------

 (1) Incorporated by reference to exhibits filed in response to Item 16(a),
     "Exhibits," of the Registrant's Registration Statement on Form S-1, as
     amended (File No. 33-60052), which was declared effective on May 11, 1993.

 (2) Incorporated by reference to Exhibit 1 filed in connection with the
     Registrant's Form 8-A, which was filed on April 20, 1995.

 (3) Incorporated by reference to exhibits filed in response to Item 7(c),
     "Exhibits," of the Registrant's Current Report on Form 8-K (File No.
     0-21432), which was filed on January 19, 2000.

 (4) Designates management contract or compensatory plan arrangements required
     to be filed as an exhibit of this Annual Report on Form 10-K pursuant to
     Item 14(c).

 (5) Incorporated by reference to exhibits filed in connection with the
     Registrant's Proxy Statement for the 1999 Annual Meeting of Stockholders,
     which was filed on October 8, 1999.

 (6) Incorporated by reference to exhibits filed in response to Item 6(a),
     "Exhibits," filed in connection with Registrant's Form 10-Q for the quarter
     ended March 31, 2000 (File No. 0-21432), which was filed on May 11, 2000.

 (7) Incorporated by reference to exhibits filed in response to Item 8,
     "Exhibits," of the Registrant's Registration Statement on Form S-8 (File
     No. 333-54900), which was filed February 2, 2001.

 (8) Confidential treatment granted by order effective May 11, 1993.

 (9) Incorporated by reference to identically numbered exhibits filed in
     connection with Registrant's Form 10-K for the fiscal year ended June 25,
     1993 (File No. 33-60052).

(10) Confidential treatment granted by order effective January 14, 1994.

(11) Incorporated by reference to Exhibit 10.1 filed in connection with
     Registrant's Form 10-Q for the quarter ended March 31, 1994 (File No.
     0-21432), which was filed on May 16, 1994.

                                        31
<PAGE>   33

(12) Confidential treatment granted by order effective July 7, 1994.

(13) Incorporated by reference to exhibits filed in connection with the
     Registrant's Form 10-K for the fiscal year ended June 30, 1994 (File No.
     0-21432), which was filed on September 28, 1994 and confidential treatment
     granted by order effective December 5, 1994.

(14) Incorporated by reference to exhibits filed in connection with Registrant's
     Form 10-K for the fiscal year ended June 30, 1997 (File No. 0-21432), which
     was filed on September 24, 1997.

(15) Incorporated by reference to exhibits filed in connection with Registrant's
     Form 10-K for the fiscal year ended June 30, 1999 (File No. 0-21432), which
     was filed on September 27, 1999.

(16) Incorporated by reference to exhibits in connection with Registrant's Form
     10-Q for the quarter ended March 31, 1999 (File No. 0-21432), which was
     filed on May 12, 1999. Form of Change of Control Severance Agreement
     entered into between the Company and each of:

     -- Steve Aleshire, Vice President of World Wide Customer Services

     -- R. Marshall Case, Vice President of Finance and Chief Financial Officer

     -- John S. Coviello, Vice President of Research and Development

     -- Dorothy Krier, Vice President of Human Resources

     -- John P. Livingston, Vice President of Operations

     -- Fred J. Wiele, Vice President of Marketing, dated November 25, 1998

(17) Incorporated by reference to exhibits in connection with Registrant's Form
     10-Q for the quarter ended December 31, 1999, which was filed on February
     10, 2000.

(18) Incorporated by reference to exhibits in connection with Registrant's Form
     10-Q for the quarter ended September 31, 2000 (File No. 0-21432), which was
     filed on November 14, 2000.

(19) Incorporated by reference to exhibits in connection with Registrant's Form
     10-Q for the quarter ended December 31, 2000 (File No. 0-21432), which was
     filed on February 14, 2001.

(20) Incorporated by reference to exhibits in connection with Registrant's Form
     10-Q for the quarter ended March 31, 2001 (File No. 0-21432), which was
     filed on May 15, 2001.

     (b) Reports on Form 8-K:

     Not applicable.

                                        32
<PAGE>   34

                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                          AUSPEX SYSTEMS, INC.

                                          By:       /s/ GARY J. SBONA
                                            ------------------------------------
                                                       Gary J. Sbona
                                                  Chief Executive Officer

Date: September 26, 2001

                               POWER OF ATTORNEY

     KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Gary J. Sbona and Peter R. Simpson,
jointly and severally, his attorneys-in-fact, each with the power of
substitution, for him in any and all capacities, to sign any amendments to this
Annual Report on Form 10-K, and to file the same, with exhibits thereto and
other documents in connection therewith with the Securities and Exchange
Commission, hereby ratifying and confirming all that each of these
attorneys-in-fact, or his or her substitute or substitutes may do, or cause to
be done, by virtue hereof.

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons in the capacities and on
the dates indicated.

<Table>
<Caption>
                   SIGNATURE                                   TITLE                       DATE
                   ---------                                   -----                       ----
<S>                                                <C>                              <C>



               /s/ GARY J. SBONA                      Chief Executive Officer       September 26, 2001
------------------------------------------------            and Director
                (Gary J. Sbona)                    (Principal Executive Officer)




              /s/ PETER R. SIMPSON                    Chief Financial Officer       September 26, 2001
------------------------------------------------      (Principal Financial and
               (Peter R. Simpson)                  Principal Accounting Officer)




               /s/ KARL C. POWELL                             Director              September 26, 2001
------------------------------------------------
                (Karl C. Powell)




              /s/ JOHN E. MCNULTY                             Director              September 26, 2001
------------------------------------------------
               (John E. McNulty)




             /s/ RICHARD E. CHAPMAN                           Director              September 26, 2001
------------------------------------------------
              (Richard E. Chapman)
</Table>

                                        33
<PAGE>   35

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Auspex Systems, Inc.:

     We have audited the accompanying consolidated balance sheets of Auspex
Systems, Inc. (a Delaware corporation) and subsidiaries as of June 30, 2001 and
2000, and the related consolidated statements of operations, comprehensive
income (loss), stockholders' equity and cash flows for each of the three years
in the period ended June 30, 2001. These financial statements and the schedule
referred to below are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

     We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

     In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Auspex
Systems, Inc. and subsidiaries as of June 30, 2001 and 2000, and the results of
their operations and their cash flows for each of the three years in the period
ended June 30, 2001 in conformity with accounting principles generally accepted
in the United States.

     Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed under Item 14(a)2 is
presented for purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic financial statements. This
schedule has been subjected to the auditing procedures applied in the audits of
the basic financial statements, and in our opinion, fairly states in all
material respects the financial data required to be set forth therein in
relation to the basic consolidated financial statements taken as a whole.

                                          /s/ ARTHUR ANDERSEN LLP

San Jose, California
July 24, 2001

                                        34
<PAGE>   36

                              AUSPEX SYSTEMS, INC.

                     CONSOLIDATED STATEMENTS OF OPERATIONS
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<Table>
<Caption>
                                                                       YEARS ENDED
                                                              ------------------------------
                                                              JUNE 30,   JUNE 30,   JUNE 30,
                                                                2001       2000       1999
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
Revenues
  Product revenue...........................................  $ 28,090   $ 54,607   $ 81,737
  Service revenue...........................................    23,790     27,592     31,738
                                                              --------   --------   --------
       Total revenues.......................................    51,880     82,199    113,475
                                                              --------   --------   --------
Cost of Revenues
  Cost of product revenue...................................    19,406     37,657     42,196
  Cost of service revenue...................................    19,872     25,805     23,598
                                                              --------   --------   --------
       Total cost of revenues...............................    39,278     63,462     65,794
                                                              --------   --------   --------
  Gross margin..............................................    12,602     18,737     47,681
                                                              --------   --------   --------
Operating Expenses
  Marketing and sales.......................................    32,182     41,619     42,808
  Engineering and development...............................    19,255     30,616     35,272
  General and administrative................................     8,926     10,184     10,466
  Restructuring charges.....................................        --     17,642         --
                                                              --------   --------   --------
       Total operating expenses.............................    60,363    100,061     88,546
                                                              --------   --------   --------
Loss from operations........................................   (47,761)   (81,324)   (40,865)
                                                              --------   --------   --------
Other Income, Net
  Interest income...........................................     4,359      1,708      2,039
  Interest expense..........................................      (169)      (112)       (35)
  Other income (expense)....................................       175       (335)        33
                                                              --------   --------   --------
       Total other income, net..............................     4,365      1,261      2,037
                                                              --------   --------   --------
  Loss before provision for income taxes....................   (43,396)   (80,063)   (38,828)
Provision for income taxes..................................       895        697        217
                                                              --------   --------   --------
Net loss....................................................   (44,291)   (80,760)   (39,045)
                                                              --------   --------   --------
Accretion and dividends to preferred stockholders...........     5,174      2,350         --
  Net loss available to common stockholders.................  $(49,465)  $(83,110)  $(39,045)
                                                              ========   ========   ========
Net loss per share
  Basic and Diluted.........................................  $  (1.18)  $  (2.95)  $  (1.50)
                                                              ========   ========   ========
Number of shares used in per share computations
  Basic and Diluted.........................................    41,872     28,126     25,978
                                                              ========   ========   ========
</Table>

  The accompanying notes are an integral part of these consolidated financial
                                  statements.
                                        35
<PAGE>   37

                              AUSPEX SYSTEMS, INC.

             CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
                                 (IN THOUSANDS)

<Table>
<Caption>
                                                                       YEARS ENDED
                                                              ------------------------------
                                                              JUNE 30,   JUNE 30,   JUNE 30,
                                                                2001       2000       1999
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
Net loss....................................................  $(44,291)  $(80,760)  $(39,045)
Other comprehensive income (loss):
  Unrealized holding gains (losses) on available-for-sale
     securities, net of tax.................................        70         32        (81)
  Foreign currency translation adjustment, net of tax.......       120        254        (34)
                                                              --------   --------   --------
Comprehensive loss..........................................  $(44,101)  $(80,474)  $(39,160)
                                                              ========   ========   ========
</Table>

  The accompanying notes are an integral part of these consolidated financial
                                  statements.
                                        36
<PAGE>   38

                              AUSPEX SYSTEMS, INC.

                          CONSOLIDATED BALANCE SHEETS
               (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

<Table>
<Caption>
                                                              JUNE 30,    JUNE 30,
                                                                2001        2000
                                                              ---------   --------
<S>                                                           <C>         <C>
                                      ASSETS
Current Assets
  Cash and cash equivalents.................................  $  30,499   $ 23,615
  Short-term investments....................................     49,294      5,671
  Accounts receivable, net of allowances of $1,830 and
     $1,720, respectively...................................      6,404      6,728
  Inventories...............................................      2,667      5,095
  Prepaid expenses and other................................      3,130      4,115
                                                              ---------   --------
       Total current assets.................................     91,994     45,224
                                                              ---------   --------
Property and Equipment
  Computer and manufacturing equipment......................     30,138     34,971
  System spares.............................................     18,473     17,322
  Furniture and fixtures....................................      1,208      1,546
  Leasehold improvements....................................      5,900      5,369
                                                              ---------   --------
                                                                 55,719     59,208
  Less -- accumulated depreciation and amortization.........    (42,777)   (44,149)
                                                              ---------   --------
       Total property and equipment, net....................     12,942     15,059
                                                              ---------   --------
Other Assets................................................        123      1,715
                                                              ---------   --------
                                                              $ 105,059   $ 61,998
                                                              =========   ========

                       LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
  Accounts payable..........................................  $   8,685   $  8,053
  Accrued liabilities.......................................     13,412     14,440
  Deferred revenue..........................................      7,838      7,907
                                                              ---------   --------
       Total current liabilities............................     29,935     30,400
                                                              ---------   --------
Long-Term Liabilities
  Deferred revenue..........................................        279        954
                                                              ---------   --------
Stockholders' Equity
  Preferred stock, $.001 par value -- 5,000,000 shares
     authorized; zero and 18,750 shares issued and
     outstanding, respectively..............................         --         --
  Common stock, $.001 par value -- 120,000,000 shares
     authorized; 45,192,119 and 29,940,804 shares issued and
     outstanding, respectively..............................         45         30
  Additional paid-in capital................................    213,652    120,191
  Accumulated deficit.......................................   (138,693)   (89,228)
  Unrealized gain (loss) from available-for-sale
     securities.............................................         59        (11)
  Cumulative translation adjustment.........................       (218)      (338)
                                                              ---------   --------
       Total stockholders' equity...........................     74,845     30,644
                                                              ---------   --------
                                                              $ 105,059   $ 61,998
                                                              =========   ========
</Table>

  The accompanying notes are an integral part of these consolidated financial
                                  statements.
                                        37
<PAGE>   39

                              AUSPEX SYSTEMS, INC.

                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                    FOR THE THREE YEARS ENDED JUNE 30, 2001
                      (IN THOUSANDS, EXCEPT SHARE AMOUNTS)

<Table>
<Caption>
                                                                                               UNREALIZED
                                                                                               GAIN (LOSS)
                                                                                  RETAINED        FROM
                             COMMON STOCK       PREFERRED STOCK    ADDITIONAL     EARNINGS     AVAILABLE-    CUMULATIVE
                          -------------------   ----------------    PAID-IN     (ACCUMULATED    FOR-SALE     TRANSLATION
                            SHARES     AMOUNT   SHARES    AMOUNT    CAPITAL       DEFICIT)     SECURITIES    ADJUSTMENT     TOTAL
                          ----------   ------   -------   ------   ----------   ------------   -----------   -----------   --------
<S>                       <C>          <C>      <C>       <C>      <C>          <C>            <C>           <C>           <C>
BALANCE, JUNE 30,
  1998..................  25,694,040    $26          --    $ --     $ 82,756     $  32,927        $ 38          $(558)     $115,189
Issuance of common stock
  to employees..........   1,040,722      1          --      --        3,147            --          --             --         3,148
Unrealized loss on
  available-for-sale
  securities............          --     --          --      --           --            --         (81)            --           (81)
Translation
  adjustment............          --     --          --      --           --            --          --            (34)          (34)
Net loss................          --     --          --      --           --       (39,045)         --             --       (39,045)
                          ----------    ---     -------    ----     --------     ---------        ----          -----      --------
BALANCE, JUNE 30,
  1999..................  26,734,762     27          --      --       85,903        (6,118)        (43)          (592)       79,177
Issuance of common stock
  to employees..........   2,104,725      2          --      --        7,096            --          --             --         7,098
Issuance of preferred
  stock through private
  placement.............          --     --      25,000      --       24,843            --          --             --        24,843
Conversion of preferred
  stock into common
  stock.................     998,299      1      (6,250)     --           (1)           --          --             --            --
Issuance of common stock
  dividends.............     103,018     --          --      --          698          (698)         --             --            --
Accretion of fair value
  of warrants...........          --     --          --      --        1,109        (1,109)         --             --            --
Accretion of preferred
  stock discount........          --     --          --      --          543          (543)         --             --            --
Unrealized gain on
  available-for-sale
  securities............          --     --          --      --           --            --          32             --            32
Translation
  adjustment............          --     --          --      --           --            --          --            254           254
Net loss................          --     --          --      --           --       (80,760)         --             --       (80,760)
                          ----------    ---     -------    ----     --------     ---------        ----          -----      --------
BALANCE, JUNE 30,
  2000..................  29,940,804     30      18,750      --      120,191       (89,228)        (11)          (338)       30,644
Issuance of common stock
  to employees..........     535,581      1          --      --        2,576            --          --             --         2,577
Issuance of common stock
  through private
  placement.............  11,320,953     11          --      --       85,545            --          --             --        85,545
Conversion of preferred
  stock into common
  stock.................   3,360,588      3     (18,750)     --           (3)           --          --             --            --
Issuance of common stock
  dividends.............      34,193     --          --      --          216          (216)         --             --            --
Accretion of fair value
  of warrants...........          --     --          --      --        3,331        (3,331)         --             --            --
Accretion of preferred
  stock discount........          --     --          --      --        1,627        (1,627)         --             --            --
Issuance of warrants for
  consulting services...          --     --          --      --          180            --          --             --           180
Unrealized gain on
  available-for-sale
  securities............          --     --          --      --           --            --          70             --            70
Translation
  adjustment............          --     --          --      --           --            --          --            120           120
Net loss................          --     --          --      --           --       (44,291)         --             --       (44,291)
                          ----------    ---     -------    ----     --------     ---------        ----          -----      --------
BALANCE, JUNE 30,
  2001..................  45,192,119    $45          --    $ --     $213,652     $(138,693)       $ 59          $(218)     $ 74,845
                          ==========    ===     =======    ====     ========     =========        ====          =====      ========
</Table>

  The accompanying notes are an integral part of these consolidated financial
                                  statements.
                                        38
<PAGE>   40

                              AUSPEX SYSTEMS, INC.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)

<Table>
<Caption>
                                                                       YEARS ENDED
                                                              ------------------------------
                                                              JUNE 30,   JUNE 30,   JUNE 30,
                                                                2001       2000       1999
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
Cash Flows from Operating Activities
  Net loss..................................................  $(44,291)  $(80,760)  $(39,045)
  Adjustments to reconcile net loss to net cash used in
     operating activities
     Depreciation and amortization..........................     7,068      9,081     13,332
     Restructuring charges, net of tax......................        --     17,642         --
     Provision to inventory reserves........................     2,733      8,602      1,888
     Warrants for consulting services.......................       180         --         --
     Changes in assets and liabilities:
       Decrease in accounts receivable......................       324     13,646      5,268
       Increase in inventories..............................    (1,455)    (4,851)    (4,819)
       Decrease in income tax receivable....................        --      4,865      4,145
       Decrease in deferred tax assets......................        --         --      8,970
       (Increase) decrease in prepaid expenses and other....       985        939       (205)
       Increase (decrease) in accounts payable..............       632     (5,263)     3,250
       Decrease in accrued liabilities......................    (1,028)    (5,735)      (513)
       Increase (decrease) in deferred revenue..............      (744)    (1,719)     1,130
                                                              --------   --------   --------
     Net cash used in operating activities..................   (35,596)   (43,553)    (6,599)
                                                              --------   --------   --------
Cash Flows from Investing Activities
  Purchases of available-for-sale short-term investments....   (61,567)    (4,791)   (38,016)
  Proceeds from sales/maturities of available-for-sale
     short-term investments.................................    18,014     15,197     49,339
  Purchase of property and equipment........................    (3,801)    (2,682)   (15,205)
  Change in other assets....................................     1,592        657       (236)
                                                              --------   --------   --------
     Net cash (used in) provided by investing activities....   (45,762)     8,381     (4,118)
                                                              --------   --------   --------
Cash Flows from Financing Activities
  Proceeds from sale of common stock to employees...........     2,577      7,098      3,148
  Proceeds from sale of common stock through private
     placement..............................................    85,545         --         --
  Proceeds from sale of preferred stock through private
     placement..............................................        --     24,843         --
  Proceeds from sale and leaseback of equipment.............        --         --     10,883
                                                              --------   --------   --------
     Net cash provided by financing activities..............    88,122     31,941     14,031
                                                              --------   --------   --------
Effect of Exchange Rate Changes on Cash.....................       120        254        (34)
                                                              --------   --------   --------
Net Increase (Decrease) in Cash and Cash Equivalents........     6,884     (2,977)     3,280
Cash and Cash Equivalents, Beginning of Year................    23,615     26,592     23,312
                                                              --------   --------   --------
Cash and Cash Equivalents, End of Year......................  $ 30,499   $ 23,615   $ 26,592
                                                              ========   ========   ========
</Table>

  The accompanying notes are an integral part of these consolidated financial
                                  statements.
                                        39
<PAGE>   41

                              AUSPEX SYSTEMS, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 JUNE 30, 2001

1.  ORGANIZATION

     Auspex Systems, Inc. (the "Company") was incorporated in 1987 in California
and reincorporated in Delaware in 1991. The Company develops, manufactures,
markets, sells and supports a line of high-performance UNIX/Windows NT
multi-protocol network file/data servers for the technical workstation market.
The Company's markets are principally in North America, Pacific Rim and Europe
and include customers in the technical and commercial computing market. See Note
10 for information on revenues and long-lived assets by geographic area.

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Basis of Presentation  Prior to the first quarter of fiscal year 2000, the
Company's fiscal year ended on the last day of the quarter within the year ended
June 30. Beginning fiscal year 2000, the Company is operating and reporting on a
52-53 week fiscal year. Accordingly, the Company's fiscal year 2000 ended on
July 1, 2000 and fiscal year 2001 ended on June 30, 2001. The Company's fiscal
quarters end on the Saturday of the thirteenth week of the quarter. For
presentation purposes, the financial statements reflect the calendar month-end
date. The change in reporting periods did not have a material effect on the
accompanying consolidated financial statements for fiscal years 2000 and 2001.

     Reclassifications Certain amounts in the consolidated financial statements
as of June 30, 2000 and 1999 and for the years ended June 30, 2000 and June 30,
1999 have been reclassified to conform with the June 30, 2001 presentation.

     Principles of Consolidation  The consolidated financial statements include
the accounts of the Company and its wholly owned subsidiaries after elimination
of intercompany accounts and transactions.

     Estimates in the Preparation of Consolidated Financial Statements  The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the consolidated financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

     Foreign Currency Translations  The functional currency of the Company's
foreign subsidiaries is the local currency. Accordingly, gains and losses
resulting from the translation of the subsidiaries' financial statements are
reported as a separate component of stockholders' equity.

     Revenue Recognition  The Company generally recognizes revenue on system
sales to end users upon shipment. Revenues from upgrade sales are generally
recognized at the time the equipment is shipped. Provisions for product sales
returns and allowances are recorded in the same period as the related revenue.

     The Company sells its products to end users through its direct sales force,
as well as through distributors and resellers. Typically, the Company's
arrangements with distributors contain provisions for price protection and stock
rotation allowances. The Company recognizes revenue on sales to distributors in
accordance with the provisions set forth by Financial Accounting Standards Board
("FASB") No. 48, "Revenue Recognition When Right of Return Exists," provided
that the requirements of Statement of Position ("SOP") No. 97-2 have also been
met. In accordance with FASB No. 48, the Company recognizes revenue upon
shipment to distributors provided that a) the price is substantially fixed and
determinable at the time of sale; b) the distributor's obligation to pay the
Company is not contingent upon resale of the products; c) title and risk of loss
passes to the distributor at time of shipment; d) distributor has economic
substance apart from that provided by the Company; e) the Company has no
significant obligation to the distributor to bring about resale of the products;
and f) future returns can be reasonably estimated.

                                        40
<PAGE>   42
                              AUSPEX SYSTEMS, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                                 JUNE 30, 2001

     The Company records a provision for returns and adjustments based on
anticipated adjustments or returns from distributors. Revenue recognized is
recorded net of this provision.

     The Company applies the provisions of SOP No. 97-2 "Software Revenue
Recognition," as amended by SOP No. 98-9, "Modification of SOP No. 97-2,
Software Revenue Recognition, With Respect to Certain Transactions."
Accordingly, revenue from product sales is recognized upon shipment, provided
that a purchase order has been received or a contract has been executed, there
are no uncertainties regarding customer acceptance, the fee is fixed and
determinable and collectibility is deemed probable. The Company's typical sales
contracts do not include customer acceptance clauses; however, if uncertainties
regarding customer acceptance exist, revenue is recognized when such
uncertainties are resolved.

     When contracts contain multiple elements wherein vendor specific objective
evidence exists for all undelivered elements, the Company accounts for the
undelivered elements in accordance with the "Separate Element Method" prescribed
by SOP No. 98-9. Post customer support ("PCS") services to date have consisted
of fees for providing periodic minor software maintenance releases and technical
support for the Company's products. For undelivered PCS, vendor-specific
objective evidence is determined by reference to the price of the PCS customers
are required to pay when the PCS is sold separately. PCS revenue is initially
recorded as deferred revenue and revenue is recognized ratably over the term of
the relevant agreement.

     Certain sales transactions may include discounts from the normal published
list price. Revenue recognized on such sales transactions are recorded net of
the discounts. Typical payment terms for sales transactions is 30 days.

     Service revenue includes installation, maintenance and training, and is
recognized ratably over the contractual period or as the services are provided.

     Installation services typically include pre-installation planning,
pre-installation site survey, physical installation of the systems, and basic
system implementation. Almost all system sales to end users includes these basic
installation services but historically there are no installation services
provided on sales to distributors (the distributor performs the installation
services). The basic installation services do not in any way change the
functionality of the systems at the customer site. The Company's sales cycle is
typically several months, and during that time the Company's sales and service
professionals participate in extensive pre-sales activities to identify and
define specific customer requirements and configurations. As such, the Company
believes that once configured and tested at the Company's factory, the Company's
systems and software conform to customer specifications prior to delivery at the
customer's site. Since installation services do not typically require
significant customization or modification at the customer's site, the Company
does not consider installation services to be a significant obligation at the
time of shipment of the systems.

     Should the customer require additional services such as data migration,
on-site system administration training, special testing, file system layout,
planning and execution, these services are sold separately. The Company
evaluates the impact of additional service requirements on revenue recognition
on a case-by-case basis. If the Company determines that such additional services
are changing the functionality of the systems or involve
modification/customization of the products, the Company defers the system and
software revenue until such services have been performed.

     In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101 ("SAB 101"), "Revenue Recognition in Financial
Statements." SAB 101 provides guidance on applying generally accepted accounting
principles to revenue recognition issues in financial statements. Management has
reviewed the Company's compliance with SAB 101 and has concluded that the
Company is in compliance with SAB 101 and that there is no cumulative effect
from adoption.

                                        41
<PAGE>   43
                              AUSPEX SYSTEMS, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                                 JUNE 30, 2001

     Cash, Cash Equivalents and Short-Term Investments  For purposes of the
statement of cash flows, all cash equivalents consist of investments in money
market deposits, commercial paper, and US Agency bonds with original maturities
of three months or less. Substantially all short-term investments consist of
corporate bonds, commercial paper, certificate of deposits, and US Agency bonds,
which the Company intends to hold between three and twelve months.

     The Company classifies its investments in debt and equity securities as
available-for-sale in accordance with Statement of Financial Accounting
Standards ("SFAS") No. 115, "Accounting for Certain Investments in Debt and
Equity Securities." Securities classified as available-for-sale are reported at
fair market value with the related unrealized gains and losses, reported as a
separate component of stockholders' equity. Realized gains and losses and
declines in value judged to be other than temporary are included in other
income, net in the consolidated statements of operations.

     At June 30, 2001, the Company's available-for-sale securities had
contractual maturities that expire at various dates through May 2003. The fair
value of available-for-sale securities was determined based on quoted market
prices at the reporting date for those securities.

     At June 30, 2001 and 2000, the amortized cost basis, aggregate fair value
and gross unrealized holding gains (losses) by major security type are as
follows (in thousands):

<Table>
<Caption>
                                                                                 UNREALIZED
                                                        AMORTIZED   AGGREGATE      GAINS
                                                          COST      FAIR VALUE    (LOSSES)
                                                        ---------   ----------   ----------
<S>                                                     <C>         <C>          <C>
JUNE 30, 2001
Available-for-Sale Securities
  US Agency (Gov't)...................................   $17,520     $17,554        $ 34
  Auction Rate Securities.............................     7,300       7,300          --
  Corp Bonds..........................................    22,336      22,348          12
  Money Market........................................     5,951       5,951          --
  Re-purchase Agreements..............................     5,390       5,390          --
  Municipals..........................................     1,000       1,000          --
  Commercial paper....................................    16,876      16,889          13
                                                         -------     -------        ----
     Total Investment in Securities...................   $76,373     $76,432        $ 59
                                                         =======     =======        ====
JUNE 30, 2000
Available-for-Sale Securities
  US Agency (Gov't)...................................   $ 4,609     $ 4,601        $ (8)
  Certificate of deposit..............................     2,001       2,000          (1)
  Corporate bonds.....................................     1,675       1,683           8
  Money market........................................     2,317       2,317          --
  Commercial paper....................................     4,984       4,974         (10)
                                                         -------     -------        ----
     Total Investment in Securities...................   $15,586     $15,575        $(11)
                                                         =======     =======        ====
</Table>

     In fiscal years 2001 and 2000, there were no significant gains or losses
realized on the Company's cash equivalents or short-term investments.

     Supplemental Statement of Cash Flows Disclosures  Cash paid for interest
during fiscal years 2001, 2000 and 1999 was approximately $26,000, $13,000 and
$11,000, respectively. Cash paid for income taxes during

                                        42
<PAGE>   44
                              AUSPEX SYSTEMS, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                                 JUNE 30, 2001

fiscal years 2001, 2000 and 1999 was approximately $739,000, $379,000, and
$726,000, respectively. Net inventory capitalized into property and equipment
was approximately $1,151,000 , $2,059,000 and $4,234,000 for fiscal years 2001,
2000 and 1999, respectively. Preferred stock conversion to common stock of
approximately $3,000 for fiscal year 2001.

     Concentrations of Credit Risk  Financial instruments which potentially
subject the Company to concentrations of credit risk consist principally of cash
investments and accounts receivable. The Company's cash investment policy limits
the amount of credit exposure to any one issuer and restricts purchase of these
investments from issuers evaluated as creditworthy. Concentrations of credit
risk in trade receivables is limited as a result of the large number of
customers comprising the Company's customer base and their dispersion across
many different industries and geographies.

     Inventories  Inventories are stated at the lower of cost (first-in,
first-out) or market, and include material, labor and manufacturing overhead
costs. Inventories consisted of the following (in thousands):

<Table>
<Caption>
                                                              JUNE 30,   JUNE 30,
                                                                2001       2000
                                                              --------   --------
<S>                                                           <C>        <C>
Purchased materials.........................................   $  442     $1,481
Systems in process..........................................    2,193      2,322
Finished goods..............................................       32      1,292
                                                               ------     ------
                                                               $2,667     $5,095
                                                               ======     ======
</Table>

     Inventories contained components and assemblies in excess of the Company's
current estimated requirements and were fully reserved at June 30, 2001 and
2000.

     Inventory capitalized into property and equipment consists primarily of
replacement parts ("systems spares") and internal-use systems. Systems spares
consist of a pool of replacement parts utilized by our customer service
organization as part of the support and maintenance programs. These replacement
parts include items such as printed circuit boards, disk drives and other field
replaceable units. Internal-use systems are utilized by our engineering and
development groups for testing and verification of our products. These internal
use systems are classified as computer and manufacturing equipment. These items
are accounted for as property and equipment by crediting the inventory accounts
and debiting property and equipment for the net carrying value. These items,
once transferred, are no longer available for resale.

     Certain of the Company's products contain critical components supplied by a
single or a limited number of third parties. The Company has an inventory of
these critical components so as to ensure an available supply of products for
its customers. Any significant shortage of these components or the failure of
the third party suppliers to maintain or enhance these components could
materially and adversely affect the Company's results of operations.

     Property And Equipment  Property and equipment are stated at cost.
Depreciation and amortization are computed using the straight-line method over
the following estimated useful lives:

<Table>
<S>                                       <C>
Computer and manufacturing equipment....  1.5 to 5 years
System spares...........................  2 to 3 years
Furniture and fixtures..................  3 years
Leasehold improvements..................  Shorter of the lease term or estimated useful life
</Table>

     Impairment of Long-Lived Assets  The Company evaluates the carrying value
of its long-lived assets under the provisions of Statement of Financial
Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment of
Long-Lived Assets and Assets to be Disposed Of." SFAS No. 121 requires
impairment

                                        43
<PAGE>   45
                              AUSPEX SYSTEMS, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                                 JUNE 30, 2001

losses to be recorded on long-lived assets used in operations, including
goodwill, when indicators of impairment are present and the undiscounted future
cash flows estimated to be generated by those assets are less than the assets'
carrying amount.

     Software Development Costs  The Company accounts for software development
costs in compliance with Statement of Financial Accounting Standards (SFAS) No.
86, "Accounting for the Costs of Computer Software to be Sold, Leased or
Otherwise Marketed". Capitalization of software development costs begins upon
the determination of technological feasibility. The determination of
technological feasibility and the ongoing assessment of the recoverability of
these costs require considerable judgment by management with respect to certain
external factors including anticipated future gross product revenues, estimated
economic life and changes in hardware and software technology.

     Amortization of capitalized software development costs begins when the
products are available for general release to customers and is computed on an
individual product basis and is the greater of the amount computed on a
units-sold basis or straight-line basis over the estimated economic life of the
product. Amortization of software development costs amounted to $12,000 for the
fiscal year ended June 30, 1999. Capitalized software development costs were
fully amortized as of June 30, 1999 and no amounts were amortized in fiscal
years 2000 and 2001.

     Technological feasibility is defined when the company has
performed/completed the following:

     When the Product has a Detail Program Design technological feasibility is
defined where the following has occurred:

     - The product design and the detail program have been completed, and all
       the necessary skills, hardware, and software technology are available to
       produce the product.

     - The Company has verified by documenting and comparing detail product
       design and product specifications, that the detail design is complete and
       compatible with the product design.

     - The Company has determined that there are no uncertainties concerning
       development issues of a high risk nature, such as novel and unique
       functions and technological innovations, or such uncertainties have been
       resolved.

     When there is no Detail Program Design:

     - The Company has a finished product design and a working model of the
       software.

     - The Company has verified, by testing, that the product design and the
       working model are complete and compatible.

     Also, since the Company's software is used as an integral part of the
Company's product (hardware), the Company does not capitalize until both:

     - Technological feasibility has been established for the software, and

     - All research and development activities for the other components of the
       product have been completed.

     During fiscal years 2001, 2000 and 1999, no costs were capitalized because,
soon after the software achieved technological feasibility, the product was
available for general release to customers.

                                        44
<PAGE>   46
                              AUSPEX SYSTEMS, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                                 JUNE 30, 2001

     Accrued Liabilities  Accrued liabilities consisted of the following (in
thousands):

<Table>
<Caption>
                                                              JUNE 30,   JUNE 30,
                                                                2001       2000
                                                              --------   --------
<S>                                                           <C>        <C>
Payroll, bonus and vacation.................................  $ 3,796    $ 3,428
Restructuring...............................................    1,347      4,257
Other.......................................................    8,269      6,755
                                                              -------    -------
                                                              $13,412    $14,440
                                                              =======    =======
</Table>

     Net Loss Per Share  Basic net loss per share is computed based only on the
weighted average number of common shares outstanding during the period and does
not give effect to the dilutive effect of common equivalent shares, such as
stock options and conversion of preferred stock. Diluted net loss per share is
computed based on the weighted average number of common shares plus dilutive
potential common shares calculated in accordance with the treasury stock method.

<Table>
<Caption>
                                                                   YEAR ENDED JUNE 30,
                                                              ------------------------------
                                                                2001       2000       1999
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
Net loss....................................................  $(44,291)  $(80,760)  $(39,045)
                                                              ========   ========   ========
Basic Loss Per Share
  Net loss available to common stockholders.................  $(49,465)  $(83,110)  $(39,045)
  Weighted average common shares outstanding................    41,872     28,126     25,978
                                                              --------   --------   --------
  Basic net loss per share..................................  $  (1.18)  $  (2.95)  $  (1.50)
                                                              ========   ========   ========
Diluted Net Loss Per Share
  Net loss available to common stockholders.................  $(49,465)  $(83,110)  $(39,045)
                                                              --------   --------   --------
  Weighted average common shares outstanding................    41,872     28,126     25,978
  Dilutive potential common shares from stock options.......        --         --         --
                                                              --------   --------   --------
  Weighted average common shares and dilutive potential
     common shares..........................................    41,872     28,126     25,978
                                                              --------   --------   --------
  Diluted net loss per share................................  $  (1.18)  $  (2.95)  $  (1.50)
                                                              ========   ========   ========
</Table>

     All options outstanding during fiscal years 2001, 2000 and 1999, of
approximately 10,902,380, 6,239,522 and 4,887,000 shares respectively, were
excluded from the computation of diluted net loss per share since their
inclusion would have been anti-dilutive due to the net loss available to common
stockholders. All weighted average stock options and warrants outstanding during
fiscal years 2001, 2000 and 1999, of approximately 13,073,564, 7,844,658 and
4,887,000 shares respectively, were excluded from the computation of diluted
loss per share since their inclusion would have been anti-dilutive due to the
net loss available to common stockholders. There were no outstanding warrants
for the Company in fiscal year 1999.

     Employee Stock Plans  In accordance with the provisions of SFAS No. 123,
"Accounting for Stock-Based Compensation," the Company applies Accounting
Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued to
Employees" and related interpretations to account for its employee stock option
and stock purchase plans, and accordingly, does not recognize compensation
expense when the exercise price equals the fair market value of the Company's
stock on the date of grant. Note 7 of the Notes to the Consolidated Financial
Statements contains a summary of the pro forma effects to reported net loss and
net loss per share as if the Company had elected to recognize compensation
expense based on the fair value of the options granted at grant date as
prescribed by SFAS No. 123.

                                        45
<PAGE>   47
                              AUSPEX SYSTEMS, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                                 JUNE 30, 2001

     Comprehensive Income  The Company adopted SFAS No. 130, "Reporting
Comprehensive Income," in the first quarter of fiscal year 1999. SFAS No. 130
establishes standards for disclosure and financial statement display for
reporting total comprehensive income and its individual components.
Comprehensive income as defined includes all changes in equity during a period
from non-owner sources. The Company's comprehensive loss includes unrealized
holding gains (losses) on available-for-sale securities and foreign currency
translation adjustments.

     The following table sets forth the components of other comprehensive income
(loss) net of income tax for the year ended June 30 (in thousands):

<Table>
<Caption>
                                                                       YEAR ENDED JUNE 30,
                                 ------------------------------------------------------------------------------------------------
                                              2001                             2000                             1999
                                 ------------------------------   ------------------------------   ------------------------------
                                              TAX       NET-OF-                TAX       NET-OF-                TAX       NET-OF-
                                 PRE-TAX   (EXPENSE)      TAX     PRE-TAX   (EXPENSE)      TAX     PRE-TAX   (EXPENSE)      TAX
                                 AMOUNT    ON BENEFIT   AMOUNT    AMOUNT    ON BENEFIT   AMOUNT    AMOUNT    ON BENEFIT   AMOUNT
                                 -------   ----------   -------   -------   ----------   -------   -------   ----------   -------
<S>                              <C>       <C>          <C>       <C>       <C>          <C>       <C>       <C>          <C>
Other comprehensive income
  (loss):
  Unrealized holding gains
    (losses) on
    available-for-sale
    securities.................   $ 70        $ --       $ 70      $ 32        $ --       $ 32      $ (81)      $ --       $ (81)
  Foreign currency translation
    adjustment.................    120          --        120       254          --        254        (34)        --         (34)
                                  ----        ----       ----      ----        ----       ----      -----       ----       -----
                                  $190        $ --       $190      $286        $ --       $286      $(115)      $ --       $(115)
                                  ====        ====       ====      ====        ====       ====      =====       ====       =====
</Table>

     Segments  In June 1997, the Financial Accounting Standards Board issued
SFAS No. 131, "Disclosure about Segments of an Enterprise and Related
Information." SFAS No. 131 changes the way companies report selected segment
information in annual financial statements and also requires companies to report
selected segment information in interim financial reports to stockholders. The
Company operates in one reportable segment. SFAS No. 131 has been implemented by
the Company. Note 10 to the Consolidated Financial Statements contains a summary
table of industry segment, geographic and customer information.

     New Accounting Pronouncements  In June 1998, the Financial Accounting
Standards Board ("FASB") issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which establishes accounting and reporting
standards for derivative instruments, including certain derivative instruments
embedded in other contracts and for hedging activities. It requires that a
reporting entity recognize all derivatives as either assets or liabilities in
the statement of financial position and measure those instruments at fair value.
Management has reviewed the Company's compliance with SFAS No. 133 and has
concluded that the Company is in compliance with SFAS No. 133 and that there is
no material effect on the Company's consolidated financial position, results of
operations or cash flows from adoption.

     In August 2001, FASB, issued SFAS, No. 143, "Accounting for Obligations
Associated with the Retirement of Long-Lived Assets." SFAS No. 143 addresses
financial accounting and reporting for the retirement obligation of an asset.
This statement states that companies should recognize the asset retirement cost,
at their fair value, as part of the cost of the asset and classify the accrued
amount as a liability in the condensed consolidated balance sheet. The asset
retirement liability is then accreted to the ultimate payout as interest
expense. The initial measurement of the liability would be subsequently updated
for revised estimates of the discounted cash outflows. The Statement will be
effective for fiscal years beginning after June 15, 2002. The Company has not
yet determined the effect SFAS No. 143 will have on its consolidated financial
position, results of operations, or cash flows.

     In June 2001, the FASB issued SFAS No. 141, "Business Combinations." SFAS
No. 141 addresses financial accounting and reporting for business combinations
and it requires business combinations in the scope of this Statement to be
accounted for using one method, the purchase method. The provisions of this
Statement apply to all business combinations initiated after June 30, 2001. The
adoption of this Statement will not have a material effect of the Company's
consolidated financial position, results of operations, or cash flows.

                                        46
<PAGE>   48
                              AUSPEX SYSTEMS, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                                 JUNE 30, 2001

     In June 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible
Assets." SFAS No. 142 addresses financial accounting and reporting for acquired
goodwill and other acquired assets. It addresses how intangible assets that are
acquired individually or with a group of other assets (but not those acquired in
a business combination) should be accounted for in financial statements upon
their acquisition. This Statement also addresses how goodwill and other
intangible assets should be accounted for after they have been initially
recognized in the financial statements. With the adoption of this Statement,
goodwill is no longer subject to amortization over its estimated useful life.
Goodwill will be assessed for impairment each year using the fair-value-based
test. This Statement becomes effective for all fiscal years beginning after
December 15, 2001, which would be for the year ended June 20, 2003 for the
Company. The Company is currently assessing the impact of the discontinued
amortization of goodwill and, while the Company is not aware of any impairment
charges, an analysis will have to be done upon adoption of this Statement to
determine if an impairment charge is necessary. The Company currently has no
goodwill or intangible assets recorded on its consolidated balance sheet, and
accordingly, the adoption of SFAS No. 142 will not have any effect on its
consolidated financial position, results of operations, or cash flows.

3.  LINE OF CREDIT

     In March 2001, the Company entered into a revolving line of credit
agreement with a bank under which it can borrow up to $15,000,000. This
agreement replaces the existing line of credit agreement entered into on
December of 1999. The line of credit bears interest either at a fluctuating rate
per annum equal to the Prime Rate in effect from time to time, or at a fixed
rate per annum determined by the bank to be a rate of 1.5 percentage points
above the LIBOR rate in effect on the first day of the applicable term. The line
of credit expires on March 31, 2003. At June 30, 2001 there were no borrowings
outstanding under the line of credit agreement. As of June 30, 2001, there were
commitments against the line of credit for two letters of credit totaling
approximately $1,697,000. The line of credit is secured by the Company's cash
investments with the aforementioned bank.

4.  COMMITMENTS AND CONTINGENCIES

     Facilities and equipment are leased under various operating leases. Rent
expense was approximately $3,960,000, $6,300,000, and $5,204,000 for fiscal
years 2001, 2000 and 1999, respectively. During 1997, the Company entered into
lease agreements for four buildings in Santa Clara, California. The leases for
these facilities commenced in March 1998 and expire in February 2010. During
fiscal year 1999, the Company entered into a sub-lease agreement for one
building in its Santa Clara facility. During fiscal year 2000, the Company
renegotiated the existing lease agreements for the facilities in Santa Clara and
consolidated from four buildings into one building, and was released from all
remaining lease obligations related to the vacated buildings.

                                        47
<PAGE>   49
                              AUSPEX SYSTEMS, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                                 JUNE 30, 2001

     As of June 30, 2001, future minimum gross lease payments under
non-cancelable leases were as follows (in thousands):

<Table>
<Caption>
                                                                                         NET
                                                              OPERATING   SUB-LEASE   OPERATING
YEARS ENDING JUNE 30,                                          LEASES     PAYMENTS     LEASES
---------------------                                         ---------   ---------   ---------
<S>                                                           <C>         <C>         <C>
  2002......................................................   $ 7,998      $(49)      $ 7,949
  2003......................................................     4,646       (37)        4,609
  2004......................................................     2,861        --         2,861
  2005......................................................     2,180        --         2,180
  2006......................................................     1,708        --         1,708
  Thereafter................................................     5,949        --         5,949
                                                               -------      ----       -------
     Total minimum lease payments...........................   $25,341      $(85)      $25,256
                                                               =======      ====       =======
</Table>

5.  RELATED PARTY TRANSACTIONS

     On February 15, 2000, Mr. Gary J. Sbona replaced Mr. Bruce N. Moore as the
Company's Chief Executive Officer and Chairman of the Board of Directors, and
the Company entered into an agreement with Regent Pacific Management
Corporation, ("Regent Pacific") a management firm of which Mr. Sbona is the
Chief Executive Officer. Pursuant to the agreement, Regent Pacific will provide
management services to the Company, including the services of Mr. Sbona as Chief
Executive Officer, one of a five person Regent Pacific management team. The
agreement has a 26-month term and may be cancelled by the Company after
expiration of the initial 20-month period, with a minimum compensation to Regent
Pacific of $6,500,000 for that initial period. The Company relies on Regent
Pacific Management Corporation for the management of Auspex and the loss of
these services could adversely affect the Company's business.

     As part of the agreement with Regent Pacific, in February 2000, the Company
granted Mr. Sbona 2,400,000 stock options which are fully vested over one year
and expire after five years. As part of the extension of the agreement with
Regent Pacific, in October 2000, the Company granted Mr. Sbona an additional
750,000 stock options which are fully vested over one year and expire after ten
years.

6.  RESTRUCTURING COSTS

     In the quarter ended March 31, 2000, the Company recorded restructuring
charges totaling approximately $17,642,000. These charges reflect steps the
Company took to strengthen its competitiveness in the growing Network Attached
Storage market, streamline operations and reduce overall costs. The
restructuring charges are comprised primarily of $3,800,000 for reduction of
personnel and $13,842,000 to retire excess equipment and other assets related to
the restructuring of company operations. In connection with the restructuring
charges taken in the quarter ended March 31, 2000, the Company terminated 169
employees and consolidated all of its Santa Clara headquarters activities into
one facility. The Company substantially completed the implementation of the
restructuring plan at the end of May 2000.

     Prior to the restructuring, expenses exceeded revenues, thereby generating
excess cash flow deficits and operating losses. As a result, the Company's cash
flow projections indicated that the Company would have exhausted its operating
cash within one year. Therefore the Company decided to restructure in the
following manner:

     - The Company terminated 169 employees, comprised of 62 employees from
       general administration and operations, 55 employees from sales and
       marketing, and 52 employees from engineering.

                                        48
<PAGE>   50
                              AUSPEX SYSTEMS, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                                 JUNE 30, 2001

     - The Company consolidated its Santa Clara headquarters, which had
       previously consisted of three buildings, into one building.

     - The Company retired idled assets and operational leases.

     The principal cash requirements for the restructuring consist of payments
relating to the termination of leases and severance packages for terminated
employees. The cash requirements relating to the restructuring for fiscal years
2002 and 2003 are expected to be $0.8 million and $0.5 million, respectively.

     The restructuring activities disrupted operations to a significant degree
during the fiscal quarter ended March 31, 2000. Due to the considerable time and
manpower required to plan and execute the restructuring, employees were forced
to divert a substantial amount of their attention from their normal duties. As
originally expected, the Company began to realize a reduction in its operating
expenses as a result of the restructuring during the fourth fiscal quarter of
2000 and fully realized such savings at the rate of $40 million per year during
fiscal year 2001.

     In the fiscal quarter ending March 31, 2000, the Company recorded $13.8
million in write-offs relating to the retirement of excess equipment and other
assets. These write-offs are comprised of two components:

          (1) Property and equipment of $9.6 million. This write-off was for
     idled assets due to the reduction of both facilities and headcount. The
     impaired assets were leasehold improvements on the facilities vacated,
     excess office furniture and excess computer hardware.

          (2) Operation asset lease write-off of $4.2 million. This write-off
     was for idled assets due to the reduction of both facilities and headcount.
     The impaired assets were leasehold improvements on the facilities vacated,
     excess office furniture and excess computer hardware.

     In both cases, for the purposes of the write-offs, the assets were given
the value most likely to be realized. None of the written-off assets remained in
use after each restructuring.

     In the third quarter of fiscal year 2000, the reduction of headcount and
consolidation of facilities resulting from the restructuring generated many idle
assets. These idle assets were either owned or were subject to an operating
lease. The impaired assets were leasehold improvements on the facilities
vacated, excess office furniture and excess computer hardware associated with
the reduced headcount and facilities.

                                        49
<PAGE>   51
                              AUSPEX SYSTEMS, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                                 JUNE 30, 2001

     The following table summarizes the Company's restructuring activity for the
fiscal years ended 2001, 2000 and 1999, respectively, (in thousands):

<Table>
<Caption>
                                                                                 EXCESS
                                                       SEVERANCE                EQUIPMENT
                                                          AND        EXCESS     AND OTHER
                                                       BENEFITS    FACILITIES    ASSETS      TOTAL
                                                       ---------   ----------   ---------   --------
<S>                                                    <C>         <C>          <C>         <C>
Reserve balances, June 30, 1998......................   $    --      $ 400      $  1,015    $  1,415
                                                        -------      -----      --------    --------
Non-cash charges.....................................        --        (86)         (877)       (963)
                                                        -------      -----      --------    --------
Reserve balances, June 30, 1999......................        --        314           138         452
                                                        -------      -----      --------    --------
Restructuring amounts................................     3,800         --        13,842      17,642
Cash Charges.........................................    (3,511)      (314)           --      (3,825)
Non-cash charges.....................................        --         --       (10,012)    (10,012)
                                                        -------      -----      --------    --------
Reserve balances, June 30, 2000......................       289         --         3,968       4,257
                                                        -------      -----      --------    --------
Reclassifications....................................       597         --          (597)         --
Cash Charges.........................................      (788)        --        (2,122)     (2,910)
                                                        -------      -----      --------    --------
Reserve balances, June 30, 2001......................   $    98      $  --      $  1,249    $  1,347
                                                        =======      =====      ========    ========
</Table>

7.  STOCK OPTION AND STOCK PURCHASE PLANS

     The Company has four stock option plans, the 1988 Employee Stock Option
Plan ("1988 Plan"), the 1997 Stock Plan ("1997 Plan"), the 1998 Non-Statutory
Stock Option Plan ("1998 Plan") and the Directors' Stock Option Plan
("Directors' Plan"), and an employee stock purchase plan ("1993 Employee Stock
Purchase Plan"). The Company accounts for these plans under APB Opinion No. 25,
under which no compensation cost has been recognized for any employees.

     Had compensation cost for these plans been determined consistent with SFAS
No. 123, the Company's net loss and basic and diluted net loss per share would
have been adjusted to the following pro forma amounts (in thousands, except per
share data):

<Table>
<Caption>
                                                         2001       2000       1999
                                                       --------   --------   --------
<S>                                                    <C>        <C>        <C>
Net loss available to common stockholders:
  As reported........................................  $(49,465)  $(83,110)  $(39,045)
  Pro forma..........................................  $(86,226)  $(92,859)  $(43,676)
Basic and Diluted net loss per share:
  As reported........................................  $  (1.18)  $  (2.95)  $  (1.50)
  Pro forma..........................................  $  (2.06)  $  (3.30)  $  (1.68)
</Table>

     The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option pricing model with the following weighted-average
assumptions used for grants in 2001, 2000 and 1999, respectively: risk-free
interest rates of 5.1%, 5.8% and 5.0%, respectively; expected volatility of
130%, 144% and 81%, respectively; no expected dividends, and an expected life of
0.52, 0.53 and 0.40 years beyond the vest date for each year's vesting increment
of an option.

     In August 1998, the Company offered its employees the ability to reprice
stock options granted prior to June 30, 1998 to the current fair market value.
As a result, the Company repriced 3,739,857 options at prices ranging from $2.75
to $18.25 per share at the then current fair market value of $2.75 per share.
Employees who submitted their option grants for repricing agreed to forgo
exercising their vested options for six months.

                                        50
<PAGE>   52
                              AUSPEX SYSTEMS, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                                 JUNE 30, 2001

     The Company may sell up to 2,100,000 shares of stock to its regular
full-time employees under the 1993 Employee Stock Purchase Plan. The Company has
sold 197,744, 152,859 and 357,101 shares in 2001, 2000 and 1999, respectively,
and has sold 1,642,044 shares through June 30, 2001. The Company sells shares at
85% of the lower of the stock's closing market price on the subscription or
purchase date of the six-month offering period. The weighted-average fair value
of shares sold in 2001, 2000 and 1999, respectively, was $5.25, $6.49 and $3.71,
respectively.

     The Company may grant options for up to 10,000,000 shares under the 1988
Plan which expired in April 1988. The Company has 267,886 shares outstanding at
June 30, 2001. The option exercise price is not less than 100% of the fair value
of the shares on the date of grant, except that non-statutory options may be
granted at 85% of such fair value. The 1988 Plan options are fully vested after
five years and expire after ten years. For options granted after November 20,
1997, options are generally fully vested after four years and expire after ten
years.

     Stockholders approved the 1997 Plan in April 1998 and amended it in fiscal
year 2000. The Company may grant options for up to 9,250,000 shares under the
1997 Plan. The Company has 4,735,865 shares outstanding at June 30, 2001. The
option exercise price is not less than 100% of the fair value of the shares on
the date of grant, except that non-statutory options may be granted at 85% of
such fair value. The 1997 Plan options are generally fully vested after two
years and expire after ten years.

     The Board of Directors approved the 1998 Plan in August 1998. The Company
may grant options for up to 3,000,000 shares under the 1998 Plan. The Company
has 2,298,629 shares outstanding at June 30, 2001. The options exercise price is
not less than 100% of the fair value of the shares on the date of grant. The
1998 Plan options are generally fully vested after four years and expire after
ten years. The Company is not currently using this plan to grant new options. In
the event that it would be necessary to use this plan to grant new options, the
options would be generally fully vested after two years and expire after ten
years.

     The Company may grant options for up to 825,000 shares under the Directors'
Plan. The Company does not have any shares outstanding at June 30, 2001 under
the Director's Plan. The option exercise price equals the closing price of the
stock on the day of the grant. The options are generally fully vested after two
years and expire after ten years.

     A summary of the status of the Company's stock option plans at June 30,
2001, 2000 and 1999 incorporating changes during the years then ended is
presented in the table below (share amounts in thousands):

<Table>
<Caption>
                                                 2001                2000                1999
                                           -----------------   -----------------   -----------------
                                             WEIGHTED-AVG.       WEIGHTED-AVG.       WEIGHTED-AVG.
                                           -----------------   -----------------   -----------------
                                                    EXERCISE            EXERCISE            EXERCISE
                                           SHARES    PRICE     SHARES    PRICE     SHARES    PRICE
                                           ------   --------   ------   --------   ------   --------
<S>                                        <C>      <C>        <C>      <C>        <C>      <C>
Outstanding at beginning of year.........   6,239    $7.52      4,857    $4.68      4,583    $9.45
Granted..................................   6,250    $7.83      6,083    $7.74      2,610    $6.34
Exercised................................    (338)   $4.55     (1,952)   $3.13       (684)   $2.67
Cancelled................................  (1,249)   $7.39     (2,749)   $6.20     (1,652)   $6.13
                                           ------              ------              ------
Outstanding at end of year...............  10,902    $7.80      6,239    $7.52      4,857    $4.68
                                           ======              ======              ======
Exercisable end of year..................   7,525    $7.96      1,605    $7.26      1,158    $3.42
                                           ======              ======              ======
Weighted fair value per option granted...            $5.11               $4.75               $1.83
</Table>

                                        51
<PAGE>   53
                              AUSPEX SYSTEMS, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                                 JUNE 30, 2001

<Table>
<Caption>
                                                            JUNE 30, 2001
                               ------------------------------------------------------------------------
                                           OPTIONS OUTSTANDING
                               --------------------------------------------      OPTIONS EXERCISABLE
                                        WEIGHTED-AVERAGE                      -------------------------
          RANGE OF                         REMAINING       WEIGHTED-AVERAGE            WEIGHTED-AVERAGE
       EXERCISE PRICES         NUMBER   CONTRACTUAL LIFE    EXERCISE PRICE    NUMBER    EXERCISE PRICE
-----------------------------  ------   ----------------   ----------------   ------   ----------------
<S>                            <C>      <C>                <C>                <C>      <C>
$1.94 - $ 6.28...............  3,028          8.64              $ 5.37        2,067         $ 5.51
$6.45 - $ 8.00...............  3,773          9.16              $ 7.68        2,135         $ 7.80
$8.25 - $ 9.69...............  3,397          5.23              $ 9.48        3,022         $ 9.47
$9.81 - $12.38...............    704          9.00              $10.80          301         $10.88
                               ------                                         -----
$1.94 - $12.38...............  10,902         7.78              $ 7.80        7,525         $ 7.96
                               ======                                         =====
</Table>

     Stockholder Rights Plan  During 1995, the Company established a stock
purchase rights plan ("the Rights Plan"), under which stockholders may be
entitled to purchase stock in the Company, or in an acquirer of the Company at a
discounted price in the event of certain efforts to acquire control of the
Company. The rights expire on the earliest of (a) April 19, 2005, (b) exchange
or redemption of the rights pursuant to the Rights Plan, or (c) consummation of
a merger or consolidation.

8.  PREFERRED STOCK

     On January 18, 2000, the Company sold $25 million of its Series B
Convertible Preferred Stock to four institutional investors in a private
placement. The Series B Convertible Preferred Stock is non-voting, carries a 7%
per annum cumulative dividend, which may be paid in cash or Common Stock, and is
convertible into the Company's Common Stock at an 8% discount. In connection
with the sale, the Company issued four-year warrants to purchase an aggregate of
1,605,136 shares of the Company's Common Stock at a price of $8.5663 per share.
During the years ended June 30, 2001 and 2000, the Company recorded $5,174,000
and $2,350,000, respectively, in dividends to holders of the Series B
Convertible Preferred Stock as a result of the 7% dividend, the 8% conversion
discount and the warrants. Each share of this stock has liquidation value of
$1,000 and pays annual dividends of 7% on a quarterly basis, payable in cash or
stock. Each share of Series B Preferred Stock is non-voting and is convertible
into Common Stock as set forth in detail in the Certificate of Designations,
Preferences and Rights of Series B Preferred Stock filed with the Secretary of
State of the State of Delaware on January 18, 2000.

     The components of the $2,350,000 charge taken for fiscal year 2000 are as
follows: $698,000 for common stock issued as preferred stock dividends,
$1,109,000 for the fair market value of the warrants issued based on the
Black-Scholes model, and $543,000 for the charge relating to the beneficial
conversion feature.

     On September 15, 2000 all Series B Preferred Stock was converted into
common stock, as a result of this redemption all prorated accounting charges
related to the dividends, warrants and Beneficial Conversion Feature have been
fully recognized during the first quarter of fiscal year 2001.

     The components of the $5,174,000 charge taken for fiscal year 2001 are as
follows: $216,000 for common stock issued as preferred stock dividends,
$3,331,000 for the fair market value of the warrants issued based on the
Black-Scholes model, and $1,627,000 for the charge relating to the beneficial
conversion feature.

                                        52
<PAGE>   54
                              AUSPEX SYSTEMS, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                                 JUNE 30, 2001

9.  INCOME TAXES

     The provision for income taxes is based upon the income (loss) before
income taxes as follows:

<Table>
<Caption>
                                                            YEARS ENDED JUNE 30,
                                                       ------------------------------
                                                         2001       2000       1999
                                                       --------   --------   --------
<S>                                                    <C>        <C>        <C>
Domestic.............................................  $(38,916)  $(80,481)  $(39,381)
Foreign..............................................  $ (4,480)  $    418   $    553
                                                       --------   --------   --------
     Total...........................................  $(43,396)  $(80,063)  $(38,828)
                                                       ========   ========   ========
</Table>

     The provision for income taxes consisted of the following (in thousands):

<Table>
<Caption>
                                                              YEARS ENDED JUNE 30,
                                                              ---------------------
                                                              2001    2000    1999
                                                              -----   -----   -----
<S>                                                           <C>     <C>     <C>
Current:
  Federal...................................................  $ --    $ --    $ --
  State.....................................................    50      80      --
  Foreign...................................................   845     617     217
                                                              ----    ----    ----
                                                               895     697     217
                                                              ----    ----    ----
Deferred:
  Federal...................................................    --      --      --
  State.....................................................    --      --      --
                                                              ----    ----    ----
                                                                --      --      --
                                                              ----    ----    ----
Net tax provision...........................................  $895    $697    $217
                                                              ====    ====    ====
</Table>

     The provision for income taxes is reconciled with the Federal statutory
rate as follows:

<Table>
<Caption>
                                                                   YEARS ENDED JUNE 30,
                                                              ------------------------------
                                                                2001       2000       1999
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
Benefit computed at Federal statutory @ 35% rate............  $(15,189)  $(28,022)  $(13,590)
  Increase in valuation allowance...........................    18,804     42,205     13,590
  State taxes, net of Federal tax benefit...................    (1,833)    (3,585)        --
  Research and development and other credits................    (1,732)    (1,163)        --
  Foreign taxes and other...................................       845     (8,738)       217
                                                              --------   --------   --------
  Net tax provision.........................................  $    895   $    697   $    217
                                                              ========   ========   ========
  Net effective tax rate....................................         1%         1%         0%
                                                              ========   ========   ========
</Table>

                                        53
<PAGE>   55
                              AUSPEX SYSTEMS, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                                 JUNE 30, 2001

     The components of the net deferred tax asset are as follows:

<Table>
<Caption>
                                                              JUNE 30,   JUNE 30,
                                                                2001       2000
                                                              --------   --------
<S>                                                           <C>        <C>
Net operating losses........................................  $ 57,999   $ 41,355
Depreciation and asset basis differences....................     2,561      1,877
Inventory reserve...........................................     1,908      3,007
Other reserves and accruals, not currently deductible for
  tax purposes..............................................     2,493      3,664
Restructuring reserve.......................................       530      1,706
Other.......................................................     9,108      4,186
                                                              --------   --------
Gross deferred tax asset....................................  $ 74,599   $ 55,795
Less: valuation allowance...................................   (74,599)   (55,795)
                                                              --------   --------
Net deferred tax asset......................................  $     --   $     --
                                                              ========   ========
</Table>

     As of June 30, 2001, the Company had gross deferred tax assets of
approximately $74.6 million. Due to the uncertainty surrounding the realization
of the future tax attributes in future tax returns, the Company has recorded a
valuation allowance against its net deferred tax assets.

     As of June 30, 2001, the Company had NOL carryforwards of approximately
$158.0 million and $129.0 million for federal and state tax purposes,
respectively. If not utilized, the federal NOL carryforwards expire through 2021
and the state NOL carryforwards expire through 2006. The Company also has
research credits of approximately $5.8 million and $3.5 million for federal and
state tax purposes, respectively. If not utilized, the federal research credits
begin to expire through 2020.

10.  INDUSTRY SEGMENT, GEOGRAPHIC AND CUSTOMER INFORMATION

     The Company, which operates in one reportable industry segment, develops,
manufactures, distributes and supports a line of multi-protocol high performance
network file servers and high availability enterprise data management software
solution for storing, serving and managing multiple terabytes of network data
for the technical network market.

     Revenues and long-lived assets by geography (net of accumulated
depreciation) consisted of the following for the years ended June 30, (in
thousands):

<Table>
<Caption>
                                         2001                   2000                   1999
                                 --------------------   --------------------   ---------------------
                                           LONG-LIVED             LONG-LIVED              LONG-LIVED
                                 REVENUE     ASSETS     REVENUE     ASSETS     REVENUE      ASSETS
                                 -------   ----------   -------   ----------   --------   ----------
<S>                              <C>       <C>          <C>       <C>          <C>        <C>
North America..................  $31,329    $12,020     $52,192    $14,189     $ 80,692    $27,967
Europe.........................    9,364        515      18,564        493       19,330        625
Pacific Rim....................   11,188        408      11,443        377       13,453        249
                                 -------    -------     -------    -------     --------    -------
     Total.....................  $51,880    $12,942     $82,199    $15,059     $113,475    $28,841
                                 =======    =======     =======    =======     ========    =======
</Table>

     In fiscal year 2001, one customer accounted for 16% of total revenues. In
fiscal year 2000, no one customer accounted for 10% or more of total revenues. A
different customer accounted for 20% of total revenues for fiscal year 1999.

                                        54
<PAGE>   56
                              AUSPEX SYSTEMS, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                                 JUNE 30, 2001

11.  SUBSEQUENT EVENT (UNAUDITED)

     Due to the rapid decline of capital spending purchases and the general
economic downturn, during the first quarter of fiscal year 2002, the Company
took actions to reduce the existing cost structure and preserve the Company's
cash. The actions were to reduce headcount by approximately 10% worldwide. Cash
expenditures related to this action, approximately $500,000 -- $800,000, will be
reflected in the Company's first quarter fiscal year 2002 results of operations.

                                        55
<PAGE>   57

                   CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

     As independent public accountants, we hereby consent to the incorporation
of our report included in this Form 10-K into the Company's previously filed
Registration Statements on Form S-8, (Nos. 33-67100, 33-76640, 333-00886,
333-56305, 333-71115, 333-56307, 333-94545 and 333-54900) and on Form S-3, (Nos.
333-40452, 333-48210 and 333-30672).

                                          /s/ ARTHUR ANDERSEN LLP

San Jose, California
September 26, 2001

                                        56
<PAGE>   58

                              AUSPEX SYSTEMS, INC.

                                  SCHEDULE II
                       VALUATION AND QUALIFYING ACCOUNTS
                                 (IN THOUSANDS)

<Table>
<Caption>
                                                         ADDITIONS   ADDITIONS
                                            BALANCE AT    CHARGED     CHARGED                 BALANCE AT
                                            BEGINNING       TO        AGAINST                   END OF
DESCRIPTION                                 OF PERIOD     EXPENSE    REVENUES    DEDUCTIONS     PERIOD
-----------                                 ----------   ---------   ---------   ----------   ----------
<S>                                         <C>          <C>         <C>         <C>          <C>
Accounts Receivable Allowances:
  Year ended June 30, 1999................   $ 1,709      $   408      $ 51       $   (761)     $1,407
  Year ended June 30, 2000................   $ 1,407      $    --      $703       $   (390)     $1,720
  Year ended June 30, 2001................   $ 1,720      $    --      $ 63       $     47      $1,830
Inventory Reserves:
  Year ended June 30, 1999................   $12,654      $ 1,888      $ --       $ (6,079)     $8,463
  Year ended June 30, 2000................   $ 8,463      $ 8,602      $ --       $(12,301)     $4,764
  Year ended June 30, 2001................   $ 4,764      $ 2,733      $ --       $ (2,353)     $5,144
Restructuring Reserve:
  Year ended June 30, 1999................   $ 1,415      $    --      $ --       $   (963)     $  452
  Year ended June 30, 2000................   $   452      $17,642      $ --       $(13,837)     $4,257
  Year ended June 30, 2001................   $ 4,257      $    --      $ --       $ (2,910)     $1,347
</Table>

                                        57
<PAGE>   59

                                 EXHIBIT INDEX

<Table>
<Caption>
   EXHIBIT
   NUMBER                                    DESCRIPTION
   -------                                   -----------
<C>             <S>  <C>
3.1(1)          --   Certificate of Incorporation of Registrant.
3.2(19)         --   Certificate of Amendment to Certificate of Incorporation,
                     dated August 29, 2000.
3.3(19)         --   By-laws of Registrant as amended to date.
4.1(2)          --   Preferred Shares Rights Agreement between the Registrant and
                     The First National Bank of Boston as Rights Agent dated
                     April 19, 1995.
4.2(3)          --   Registration Rights Agreement, dated as of January 18, 2000,
                     between Registrant and the investors named therein.
4.3(3)          --   Certificate of Designations, Preferences and Rights of
                     Series B Convertible Preferred Stock as filed with the
                     Secretary of State of the State of Delaware on January 18,
                     2000.
4.4(3)          --   Registration and Information Rights Agreement dated January
                     31, 1992.
10.1(1)(4)      --   1988 Stock Option Plan and forms of Incentive Stock Option
                     Agreements and Nonstatutory Stock Option Agreements, as
                     amended to date.
10.2(4)(7)      --   1993 Directors' Stock Option Plan, as amended to date.
10.3(4)(5)      --   1993 Employee Stock Purchase Plan and forms of Option
                     Agreements, as amended to date.
10.4(4)(7)      --   1997 Stock Plan, as amended to date.
10.5(4)         --   1998 Non-Statutory Stock Plan and form of Stock Option
                     Agreement, as amended to date.
10.6(7)         --   Stock Option Agreement, dated August 1, 2000, between
                     Registrant and Michael S. Worhach.
10.7(4)(6)      --   Employee Stock Option agreement, as amended, dated April 18,
                     2000 between Registrant and Gary J. Sbona.
10.8(7)         --   Employee Stock Option Agreement, dated July 3, 2000, between
                     Registrant and Paul Loucas.
10.9(3)         --   Form of Warrant to Purchase Common Stock, dated January 18,
                     2000, issued to certain investors.
10.10(18)       --   Share Purchase Agreement, dated as of September 19, 2000,
                     between Registrant and the purchasers referred to therein.
10.11(18)       --   Amendment, dated October 11, 2000, to Share Purchase
                     Agreement, dated as of September 27, 2000.
10.12(3)        --   Securities Purchase Agreement, dated as of January 18, 2000,
                     between Registrant and the investors listed on the Schedule
                     of Buyers attached thereto.
10.13(18)       --   Letter Agreement, dated September 27, 2000, between Halpern
                     Capital Advisors and Registrant.
10.14(18)       --   Warrant Purchase Agreement, dated October 17, 2000, between
                     Baruch and Shoshana Halpern and Registrant.
10.15(18)       --   Form of Common Stock Purchase Warrant, dated October 17,
                     2000, issued to Baruch and Shoshana Halpern.
10.16(18)       --   Form of Common Stock Purchase Warrant, dated October 17,
                     2000, issued to Baruch and Shoshana Halpern.
10.17(6)        --   Retainer Agreement between Company and Regent Pacific
                     Management Corporation, effective February 15, 2000.
10.18           --   Amendment, dated October 17, 2000, to Retainer Agreement
                     between Company and Regent Pacific Management Corporation,
                     dated as of February 15, 2000.
10.19(1)(4)     --   401(k) Plan, as amended to date.
10.20(1)(4)     --   Summary of Executive Bonus Program.
10.21(1)(4)     --   Form of Directors' and Officers' Indemnification Agreement
                     with all of its Directors and Officers.
10.22(1)(8)     --   OEM Agreement, dated March 9, 1993, between the Registrant
                     and Fuji Xerox Company, Ltd.
</Table>
<PAGE>   60

<Table>
<Caption>
   EXHIBIT
   NUMBER                                    DESCRIPTION
   -------                                   -----------
<C>             <S>  <C>
10.23(1)(8)     --   Distributor Agreement, dated June 6, 1990, between the
                     Registrant and Nissho Electronics Corporation.
10.24(8)        --   Distributor Agreement, dated June 6, 1990, between the
                     Registrant and Nissho Electronics Corporation, as amended on
                     July 29, 1997.
10.25(19)       --   Authorized Distributor Agreement, dated December 5, 2000,
                     between Registrant and Bell Microproducts, Inc.
10.26(19)       --   Authorized Reseller Agreement, dated December 29, 2000,
                     effective December 27, 2000, between Registrant and Insight
                     Direct USA, Inc.
10.27(1)        --   U.S. OEM Discount Agreement between the Registrant and Sun
                     Microsystems, Inc., effective as of August 18, 1988, as
                     amended by Addendum dated September 8, 1988 and Addendum
                     dated September 14, 1989.
10.28(1)        --   Source Code License between the Registrant and Sun
                     Microsystems, Inc., dated August 31, 1988, as amended on
                     April 30, 1991, February 11, 1992 and March 18, 1992.
10.29(1)        --   NFS Software Agreement between the Registrant and Sun
                     Microsystems, Inc., dated September 29, 1988.
10.30(9)(10)    --   Software Agreement between the Registrant and AT&T
                     Information Systems Inc., dated June 2, 1988, as amended by
                     Supplement Number 1, Supplement Number 2, dated August 5,
                     1988, and Supplement Number 3, dated August 10, 1990, as
                     amended on June 28, 1993.
10.31(9)(10)    --   Sublicensing Agreement between the Registrant and AT&T
                     Information Systems Inc., dated August 30, 1988, as amended
                     on June 28, 1993.
10.32(1)        --   Software Agreement between the Registrant and UNIX System
                     Laboratories, Inc., dated April 29, 1992.
10.33(1)        --   License Agreement with the Regents of the University of
                     California, dated June 9, 1988, as amended by Addendum dated
                     October 21, 1988.
10.34(11)(12)   --   Intel Corporation Purchase Agreement between Intel
                     Corporation and the Registrant, dated March 22, 1994.
10.35(13)       --   Warranty and Service Provider Agreement between the
                     Registrant and AT&T Global Information Systems, dated April
                     15, 1994.
10.36(13)       --   SunSoft Technology License and Distribution Agreement
                     between the Registrant and SunSoft, Inc., dated December 17,
                     1993.
10.37(13)       --   Amendment No. 2 to Lease Agreement between the Registrant
                     and WHC-SIX Real Estate, dated February 28, 1996.
10.38(13)       --   Interactive SPARC Software and Sublicensing Agreement
                     between Auspex Systems, Inc. and Interactive systems
                     Corporation, dated November 15, 1991.
10.39(14)       --   Lease Agreement by and Between South Bay/San Tomas
                     Associates and Auspex Systems, Inc., dated January 14, 1997,
                     for 2800 Scott Boulevard, Santa Clara facility.
10.40(14)       --   Lease Agreement by and Between South Bay/San Tomas
                     Associates and Auspex Systems, Inc., dated January 14, 1997,
                     for 2300, 2320, 2330 Central Expressway, Santa Clara
                     facility.
10.41(16)       --   Form of Change of Control Severance Agreement, filed on May
                     12, 1999.
10.42(16)       --   Form of Change of Control Severance Agreement entered into
                     the form of the Company and Bruce N. Moore, President and
                     Chief Executive Officer, dated June 16, 1999.
10.43(15)       --   Software Support Agreement between the Registrant and AT&T
                     dated July 10, 1997.
10.44(15)       --   Software Licensing Agreement between the Registrant and AT&T
                     Corporation dated June 3, 1997, as amended on September 14,
                     1998.
10.45(15)       --   Source License Agreement between the Registrant and
                     Programmed Logic Corp. Dated July 1, 1998; Bundled Hardware
                     OEM Binary License Agreement between the Registrant and
                     Programmed Logic Corp. dated July 1, 1998; Read-Only License
                     Agreement between the Registrant and Programmed Logic Corp.
                     dated July 1, 1998.
</Table>
<PAGE>   61

<Table>
<Caption>
   EXHIBIT
   NUMBER                                    DESCRIPTION
   -------                                   -----------
<C>             <S>  <C>
10.46(15)       --   Master Value Added Distribution Agreement between the
                     Registrant and Fuji Xerox Co. Ltd. dated May 21, 1997.
10.47(17)       --   Form of Change of Control Severance Agreement entered into
                     between the Company and Hans H. Schwarz, Senior Vice
                     President of Engineering, dated January 1, 2000.
10.48(20)       --   Line of Credit Agreement, dated March 31, 2001, between the
                     Company and Wells Fargo Bank.
21.1            --   Subsidiaries of Registrant.
23.1            --   Consent of Arthur Andersen LLP, Independent Public
                     Accountants.
24.1            --   Power of Attorney (See Page 32).
</Table>

---------------

 (1) Incorporated by reference to exhibits filed in response to Item 16(a),
     "Exhibits," of the Registrant's Registration Statement on Form S-1, as
     amended (File No. 33-60052), which was declared effective on May 11, 1993.

 (2) Incorporated by reference to Exhibit 1 filed in connection with the
     Registrant's Form 8-A, which was filed on April 20, 1995.

 (3) Incorporated by reference to exhibits filed in response to Item 7(c),
     "Exhibits," of the Registrant's Current Report on Form 8-K (File No.
     0-21432), which was filed on January 19, 2000.

 (4) Designates management contract or compensatory plan arrangements required
     to be filed as an exhibit of this Annual Report on Form 10-K pursuant to
     Item 14(c).

 (5) Incorporated by reference to exhibits filed in connection with the
     Registrant's Proxy Statement for the 1999 Annual Meeting of Stockholders,
     which was filed on October 8, 1999.

 (6) Incorporated by reference to exhibits filed in response to Item 6(a),
     "Exhibits," filed in connection with Registrant's Form 10-Q for the quarter
     ended March 31, 2000 (File No. 0-21432), which was filed on May 11, 2000.

 (7) Incorporated by reference to exhibits filed in response to Item 8,
     "Exhibits," of the Registrant's Registration Statement on Form S-8 (File
     No. 333-54900), which was filed February 2, 2001.

 (8) Confidential treatment granted by order effective May 11, 1993.

 (9) Incorporated by reference to identically numbered exhibits filed in
     connection with Registrant's Form 10-K for the fiscal year ended June 25,
     1993 (File No. 33-60052).

(10) Confidential treatment granted by order effective January 14, 1994.

(11) Incorporated by reference to Exhibit 10.1 filed in connection with
     Registrant's Form 10-Q for the quarter ended March 31, 1994 (File No.
     0-21432), which was filed on May 16, 1994.

(12) Confidential treatment granted by order effective July 7, 1994.

(13) Incorporated by reference to exhibits filed in connection with the
     Registrant's Form 10-K for the fiscal year ended June 30, 1994 (File No.
     0-21432), which was filed on September 28, 1994 and confidential treatment
     granted by order effective December 5, 1994.

(14) Incorporated by reference to exhibits filed in connection with Registrant's
     Form 10-K for the fiscal year ended June 30, 1997 (File No. 0-21432), which
     was filed on September 24, 1997.

(15) Incorporated by reference to exhibits filed in connection with Registrant's
     Form 10-K for the fiscal year ended June 30, 1999 (File No. 0-21432), which
     was filed on September 27, 1999.

(16) Incorporated by reference to exhibits in connection with Registrant's Form
     10-Q for the quarter ended March 31, 1999 (File No. 0-21432), which was
     filed on May 12, 1999. Form of Change of Control Severance Agreement
     entered into between the Company and each of:

      -- Steve Aleshire, Vice President of World Wide Customer Services

      -- R. Marshall Case, Vice President of Finance and Chief Financial Officer

      -- John S. Coviello, Vice President of Research and Development

      -- Dorothy Krier, Vice President of Human Resources
<PAGE>   62

      -- John P. Livingston, Vice President of Operations

      -- Fred J. Wiele, Vice President of Marketing, dated November 25, 1998

(17) Incorporated by reference to exhibits in connection with Registrant's Form
     10-Q for the quarter ended December 31, 1999, which was filed on February
     10, 2000.

(18) Incorporated by reference to exhibits in connection with Registrant's Form
     10-Q for the quarter ended September 31, 2000 (File No. 0-21432), which was
     filed on November 14, 2000.

(19) Incorporated by reference to exhibits in connection with Registrant's Form
     10-Q for the quarter ended December 31, 2000 (File No. 0-21432), which was
     filed on February 14, 2001.

(20) Incorporated by reference to exhibits in connection with Registrant's Form
     10-Q for the quarter ended March 31, 2001 (File No. 0-21432), which was
     filed on May 15, 2001.