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Cisco Reports First Quarter Earnings

Cisco Reports First Quarter Earnings 
SAN JOSE, CA -- (Marketwire) -- 11/13/12 --  Cisco (NASDAQ: CSCO) 


 
--  Q1 Net Sales: $11.9 billion (increase of 6% year over year)
    
    
--  Q1 Net Income: $2.1 billion GAAP (increase of 18% year over year);
    $2.6 billion non-GAAP (increase of 11% year over year)
    
    
--  Q1 Earnings per Share: $0.39 GAAP (increase of 18% year over year);
    $0.48 non-GAAP (increase of 12% year over year)

  
Cisco, the worldwide leader in networking that transforms how people
connect, communicate and collaborate, today reported its first
quarter results for the period ended October 27, 2012. Cisco reported
first quarter net sales of $11.9 billion, net income on a generally
accepted accounting principles (GAAP) basis of $2.1 billion or $0.39
per share, and non-GAAP net income of $2.6 billion or $0.48 per
share. 
"We delivered record results this quarter -- with revenue growth of 6
percent and strong earnings per share growth -- demonstrating our
vision and strategy are working," said John Chambers, chairman and
chief executive officer, Cisco. "Our innovation engine, operational
discipline and on-going evolution are enabling us to differentiate in
the market."  
Chambers continued, "Cisco is at the center of the major market
transitions -- cloud, mobility, video -- and yet we believe the
largest market transition lies ahead of us, as the Internet of
Everything becomes a reality. Cisco has the unique ability to turn
information that will flow across networks into new capabilities and
richer experiences. The Internet of Everything will create
unprecedented possibilities for businesses, individuals and
countries, and Cisco is poised to lead and fully maximize the
opportunities of this evolution." 


 
                                                                            
                                GAAP Results                                
                                                                            
                                    Q1 2013         Q1 2012     Vs. Q1 2012 
                                --------------  --------------  ----------- 
Net Sales                       $ 11.9 billion  $ 11.3 billion          5.5%
Net Income                      $  2.1 billion  $  1.8 
billion         17.7%
Earnings per Share              $         0.39  $         0.33         18.2%
                                                                            
                                                                            
                              Non-GAAP Results                              
                                                                            
                                    Q1 2013         Q1 2012     Vs. Q1 2012 
                                --------------  --------------  ----------- 
 Net Income                     $  2.6 billion  $  2.3 billion         10.6%
 Earnings per Share             $         0.48  $         0.43         11.6%

 
A reconciliation between net income on a GAAP basis and non-GAAP net
income is provided in the table on page 5. 
Cisco will discuss first quarter results and business outlook on a
conference call and webcast at 1:30 p.m. Pacific Time today. Call
information and related charts are available at
http://investor.cisco.com.  
Cash and Cash Equivalents and Investments 


 
--  Cash flows from operations were $2.5 billion for the first quarter of
    fiscal 2013, compared with $2.3 billion for the first quarter of
    fiscal 2012, and compared with $3.1 billion for the fourth quarter of
    fiscal 2012.
--  Cash and cash equivalents and investments were $45.0 billion at the
    end of the first quarter of fiscal 2013, compared with $48.7 billion
    at the end of the fourth quarter of fiscal 2012.

  
Dividends and Stock Repurchase Program  
During the first quarter of fiscal 2013: 


 
--  The combination of cash used for dividends and common stock
    repurchases under the stock repurchase program totaled approximately
    $1.0 billion.
--  Cisco paid a cash dividend of $0.14 per common share, or $744 million.
--  Cisco repurchased 15 million shares of common stock under the stock
    repurchase program at an average price of $16.44 per share for an
    aggregate purchase price of $253 million. As of October 27, 2012,
    Cisco had repurchased and retired 3.8 billion shares of Cisco common
    stock at an average price of $20.34 per share for an aggregate
    purchase price of approximately $76.4 billion since the inception of
    the stock repurchase program. The remaining authorized amount for
    stock repurchases under this program is approximately $5.6 billion
    with no termination date.

  
"Once again, we delivered strong financial performance with continued
execution on our long-term strategy of growing profits faster than
revenue and driving long-term value to our shareholders," stated
Frank Calderoni, executive vice president and chief financial
officer, Cisco. "We remain confident in our financial strategy and in
our ability to consistently execute moving forward." 
Select Global Business Highlights 


 
--  Cisco announced the completion of its acquisition of NDS Group Ltd., a
    leading provider of video software and content security solutions that
    help service providers and media companies to securely deliver and
    monetize new video experiences.
--  Cisco and NBC Olympics provided a personalized, interactive,
    multiscreen Olympics experience at the 2012 London Olympic Games to
    select users at event venues and accommodations using Cisco(R)
    Videoscape(TM).
--  Cisco and Citrix announced a significant expansion of their successful
    desktop virtualization partnership into three strategic areas: cloud
    networking, cloud orchestration, and mobile workstyles.
--  Cisco and EMC announced further collaboration to help accelerate IT
    transformation by providing customers with choice and flexibility via
    "three paths to the cloud" -- custom-design infrastructure, validated
    reference architectures, and pre-integrated converged infrastructure.

  
Cisco Innovation 


 
--  Cisco introduced an expanded and enhanced content delivery network
    portfolio, branded as the Cisco Videoscape Distribution Suite.
--  Cisco introduced a new wave of security solutions designed to fortify
    data centers against the threats they face in moving toward more
    consolidated and virtualized environments, while also helping
    businesses to take advantage of new cloud-based models.
--  Cisco announced new elastic core networking capabilities that help
    service providers to cost-effectively launch and scale
    revenue-generating services within minutes instead of months.
--  Cisco introduced a new Unified Access solution, a highly secure
    network infrastructure based on one policy source and one management
    solution for the entire network, to help organizations quickly respond
    to new business opportunities while managing rapidly changing network
    demands.
--  Cisco introduced a full suite of solutions for the SAP HANA platform
    built on the Cisco Unified Computing System(TM) allowing customers
    to experience benefits -- realtime data analytics and data warehousing
    -- in seconds instead of hours.
--  Cisco unveiled enhancements to its collaboration portfolio, delivered
    via public, private or hybrid cloud models.

  
Select Cu
stomer Announcements 


 
--  Miami International Securities Exchange, LLC announced plans to offer
    a trading platform built on Cisco's ultra-low latency intelligent
    network infrastructure and designed from the ground up to address the
    highly secure, functional and high performance demands of the
    derivatives market.
--  Cisco and Manila Electric Company (Meralco), the Philippines' largest
    distributor of electrical power, announced a collaboration to provide
    reliable computing and networking infrastructure as a foundation for
    operations on a smart grid.
--  Cisco, Barcelona's City Council, and GDF SUEZ agreed to launch, and
    agreed on the criteria for the creation of, the City Protocol (the
    first certification system for smart cities) that can be put into
    practice by any city in the world.
--  SBB-Telemach Group, the largest pay-TV platform in southeast Europe
    providing television, Internet, and telephony services, selected the
    Cisco Videoscape-capable Personal DVB Set-Tops (PDS) Series and Cisco
    Integration Services to deliver next-generation television services.
--  Cisco and the United Nations (UN) Office for the Coordination of
    Humanitarian Affairs (OCHA) reached an agreement that will allow any
    United Nations organization to access Cisco's networking technology
    solutions for emergency communications assistance during UN disaster
    relief missions.
--  Barclays Center will feature Cisco's Connected Sports and
    Entertainment solutions -- Connected Stadium Wi-Fi and
    StadiumVision(TM) to deliver a next-generation fan experience and
    make this venue one of the most technologically advanced arenas in the
    world.
--  Cisco announced that it has been selected by NBN Co. to provide
    equipment for its national data connectivity network, which is part of
    the Australian National Broadband Network.
--  Itau BBA will invest $2 million in technology to expand its Latin
    American businesses and has selected Cisco solutions for its IT
    environment, including servers, networking, increased access security
    and IP telephony systems.

  
Editor's Note: 


 
--  Q1 2013 conference call to discuss Cisco's results along with its
    business outlook will be held at 1:30 p.m. Pacific Time, Tuesday,
    November 13, 2012. Conference call number is 888-848-6507 (United
    States) or 212-519-0847 (international).
--  Conference call replay will be available from 4:30 p.m. Pacific Time,
    November 13, 2012 to 4:30 p.m. Pacific Time, November 20, 2012 at
    1-800-224-1051 (United States) or 1-402-220-3762 (international). The
    replay also will be available via webcast from November 13, 2012
    through January 18, 2013 on the Cisco Investor Relations website at
    http://investor.cisco.com.
--  Additional information regarding Cisco's financials, as well as a
    webcast of the conference call with visuals designed to guide
    participants through the call, will be available at 1:30 p.m. Pacific
    Time, November 13, 2012. Text of the conference call's prepared
    remarks will be available within 24 hours of completion of the call.
    The webcast will include both the prepared remarks and the
    question-and-answer session. This information, along with GAAP
    reconciliation information, will be available on the Cisco Investor
    Relations website at http://investor.cisco.com.

  
About Cisco  
Cisco (NASDAQ: CSCO) is the worldwide leader in networking that
transforms how people connect, communicate and collaborate.
Information about Cisco can be found at http://www.cisco.com. For
ongoing news, please go to http://newsroom.cisco.com. 
This release may be deemed to contain forward-looking statements,
which are subject to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. These forward-looking
statements include, among other things, statements regarding future
events (such as statements regarding our innovation engine and
operational strategies, operational discipline and execution, the
evolution of our industry, major market transitions and our position
with respect to such transitions) and the future financial
performance of Cisco that involve risks and uncertainties. Readers
are cautioned that these forward-looking statements are only
predictions and may differ materially from actual future events or
results due to a variety of factors, including: business and economic
conditions and growth trends in the networking industry, our customer
markets and various geographic regions; global economic conditions
and uncertainties in the geopolitical environment; overall
information technology spending; the growth and evolution of the
Internet and levels of capital spending on Internet-based systems;
variations in customer demand for products and services, including
sales to the service provider market and other customer markets; the
return on our investments in certain priorities, including our
foundational priorities, and in certain geographical locations; the
timing of orders and manufacturing and customer lead times; changes
in customer order patterns or customer mix; insufficient, excess or
obsolete inventory; variability of component costs; variations in
sales channels, product costs or mix of products sold; our ability to
successfully acquire businesses and technologies and to successfully
integrate and operate these acquired businesses and technologies; our
ability to achieve expected benefits of our partnerships; increased
competition in our product and service markets, including the data
center; dependence on the introduction and market acceptance of new
product offerings and standards; rapid technological and market
change; manufacturing and sourcing risks; product defects and
returns; litigation involving patents, intellectual property,
antitrust, shareholder and other matters, and governmental
investigations; natural catastrophic events; a pandemic or epidemic;
our ability to achieve the benefits anticipated from our investments
in sales, engineering, service, marketing and manufacturing
activities; our ability to recruit and retain key personnel; our
ability to manage financial risk, and to manage expenses during
economic downturns; risks related to the global nature of our
operations, including our operations in emerging markets; currency
fluctuations and other international factors; changes in provision
for income taxes, including changes in tax laws and regulations or
adverse outcomes resulting from examinations of our income tax
returns; potential volatility in operating results; and other factors
listed in Cisco's most recent report on Form 10-K filed on September
12, 2012. The financial information contained in this release should
be read in conjunction with the consolidated financial statements and
notes thereto included in Cisco's most recent report on Form 10-K as
it may be amended from time to time. Cisco's results of operations
for the three months ended October 27, 2012 are not necessarily
indicative of Cisco's operating results for any future periods. Any
projections in this release are based on limited information
currently available to Cisco, which is subject to change. Although
any such projections and the factors influencing them will likely
change, Cisco will not necessarily update the information, since
Cisco 
will only provide guidance at certain points during the year.
Such information speaks only as of the date of this release.  
This release includes non-GAAP net income, non-GAAP net income per
share data and non-GAAP inventory turns.  
These non-GAAP measures are not in accordance with, or an alternative
for, measures prepared in accordance with generally accepted
accounting principles and may be different from non-GAAP measures
used by other companies. In addition, these non-GAAP measures are not
based on any comprehensive set of accounting rules or principles.
Cisco believes that non-GAAP measures have limitations in that they
do not reflect all of the amounts associated with Cisco's results of
operations as determined in accordance with GAAP and that these
measures should only be used to evaluate Cisco's results of
operations in conjunction with the corresponding GAAP measures.  
Cisco believes that the presentation of non-GAAP net income and
non-GAAP net income per share data, when shown in conjunction with
the corresponding GAAP measures, provides useful information to
investors and management regarding financial and business trends
relating to its financial condition and results of operations. In
addition, Cisco believes that the presentation of non-GAAP inventory
turns provides useful information to investors and management
regarding financial and business trends relating to inventory
management based on the operating activities of the period presented. 
For its internal budgeting process, Cisco's management uses financial
statements that do not include, when applicable, share-based
compensation expense, amortization of acquisition-related intangible
assets, impact to cost of sales from purchase accounting adjustments
to inventory, other acquisition-related costs, significant asset
impairments and restructurings, the income tax effects of the
foregoing, and significant tax matters. Cisco's management also uses
the foregoing non-GAAP measures, in addition to the corresponding
GAAP measures, in reviewing the financial results of Cisco. In prior
periods, Cisco has excluded other items that it no longer excludes
for purposes of its non-GAAP financial measures. From time to time in
the future, there may be other items, such as significant gains or
losses from contingencies that Cisco may exclude for purposes of its
internal budgeting process and in reviewing its financial results.  
For additional information on the items excluded by Cisco from one or
more of its non-GAAP financial measures, refer to the Form 8-K
regarding this release furnished today to the Securities and Exchange
Commission.  
Copyright Copyright 2012 Cisco and/or its affiliates. All rights
reserved. Cisco, the Cisco logo, Cisco UCS, Cisco Unified Computing
System, StadiumVision, and Videoscape are trademarks or registered
trademarks of Cisco and/or its affiliates in the U.S. and other
countries. To view a list of Cisco trademarks, go to this URL:
www.cisco.com/go/trademarks. Third party trademarks mentioned in this
document are the property of their respective owners. The use of the
word partner does not imply a partnership relationship between Cisco
and any other company. This document is Cisco Public Information. 


 
                                                                            
                   CONSOLIDATED STATEMENTS OF OPERATIONS                    
                  (In millions, except per-share amounts)                   
                                (Unaudited)                                 
                                                                            
                                                      Three Months Ended    
                                                   ------------------------ 
                                                   October 27,  October 29, 
                                                       2012         2011    
                                                   -----------  ----------- 
NET SALES:                                                                  
  Product                                          $     9,297  $     8,952 
  Service                                                2,579        2,304 
                                                   -----------  ----------- 
    Total net sales                                     11,876       11,256 
COST OF SALES:                                                              
  Product                                                3,748        3,563 
  Service                                                  889          803 
                                                   -----------  ----------- 
    Total cost of sales                                  4,637        4,366 
                                                   -----------  ----------- 
GROSS MARGIN                                             7,239        6,890 
OPERATING EXPENSES:                                                         
  Research and development                               1,431        1,375 
  Sales and marketing                                    2,416        2,452 
  General and administrative                               560          552 
  Amortization of purchased intangible assets              122           99 
  Restructuring and other charges                           59          202 
                                                   -----------  ----------- 
    Total operating expenses                             4,588        4,680 
                                                   -----------  ----------- 
OPERATING INCOME                                         2,651        2,210 
  Interest income                                          161          164 
  Interest expense                                        (148)        (148)
  Other income (loss), net                                 (33)          19 
                                                   -----------  ----------- 
    Interest and other income (loss), net                  (20)          35 
                                                   -----------  ----------- 
INCOME BEFORE PROVISION FOR INCOME TAXES                 2,631        2,245 
Provision for income taxes                                 539          468 
                                                   -----------  ----------- 
  NET INCOME                                       $     2,092  $     1,777 
                                                   -----------  ----------- 
                                                                            
Net income per share:                                                       
Basic                                              $      0.39  $      0.33 
                                                   -----------  ----------- 
Diluted                                            $      0.39  $      0.33 
                                                   -----------  ----------- 
                                     
                                       
Shares used in per-share calculation:                                       
Basic                                                    5,301        5,394 
                                                   -----------  ----------- 
Diluted                                                  5,334        5,407 
                                                   -----------  ----------- 
                                                                            
Cash dividends declared per common share           $      0.14  $      0.06 
                                                   -----------  ----------- 
                                                                            
                                                                            
               RECONCILIATION OF GAAP TO NON-GAAP NET INCOME                
                  (In millions, except per-share amounts)                   
                                                                            
                                                      Three Months Ended    
                                                   ------------------------ 
                                                   October 27,  October 29, 
                                                       2012         2011    
                                                   -----------  ----------- 
GAAP net income                                    $     2,092  $     1,777 
                                                                            
  Adjustments to cost of sales:                                             
    Share-based compensation expense                        45           50 
    Amortization of acquisition-related intangible                          
     assets                                                134           87 
    Impact to cost of sales from purchase                                   
     accounting adjustments to inventory                    24           -- 
    Significant asset impairments and                                       
     restructurings                                         --           (5)
                                                   -----------  ----------- 
                                                                            
  Total adjustments to GAAP cost of sales                  203          132 
                                                   -----------  ----------- 
                                                                            
  Adjustments to operating expenses:                                        
    Share-based compensation expense                       264          291 
    Amortization of acquisition-related intangible                          
     assets                                                122           99 
    Other acquisition-related costs                         15            8 
    Significant asset impairments and                                       
     restructurings                                         59          202 
                                                   -----------  ----------- 
  Total adjustments to GAAP operating expenses             460          600 
                                                   -----------  ----------- 
                                                                            
  Total adjustments to GAAP income before                                   
   provision for income taxes                              663          732 
                                                   -----------  ----------- 
                                                                            
  Income tax effect                                       (186)        (187)
                                                   -----------  ----------- 
                                                                            
Non-GAAP net income                                $     2,569  $     2,322 
                                                   -----------  ----------- 
                                                                            
Diluted net income per share:                                               
                                                                            
GAAP                                               $      0.39  $      0.33 
                                                   -----------  ----------- 
                                                                            
Non-GAAP                                           $      0.48  $      0.43 
                                                   -----------  ----------- 
                                                                            
                                                                            
                    CONDENSED CONSOLIDATED BALANCE SHEETS                   
                                (In millions)                               
                                 (Unaudited)                                
                                                                            
                                                     October 27,   July 28, 
                                                         2012        2012   
                                                     ----------- -----------
ASSETS                                                                      
Current assets:                                                             
  Cash and cash equivalents                          $     4,773 $     9,799
  Investments                                             40,227      38,917
  Accounts receivable, net of allowance for doubtful                        
   accounts of $224 at October 27, 2012 and $207 at                         
   July 28, 2012                                           3,942       4,369
  Inventories                                              1,709       1,663
  Financing receivables, net                               3,726       3,661
  Deferred tax assets                                      2,253       2,294
  Other current assets                                     1,277       1,230
                                                     ----------- -----------
  Total current assets                                    57,907      61,933
Property and equipment, net                                3,409       3,402
Financing receivables, net                                 3,695       3,585
Goodwill                                                  20,443      16,998
Purchased intangible assets, net                           3,449       1,959
Other assets                                               3,740       3,882
                                                     ----------- -----------
TOTAL ASSETS                                         $    92,643 $    91,759
                                                     ----------- -----------
                                                                            
LIABILITIES AND EQUITY                                                      
Current liabilities:                                                        
  Short-term debt                                    $        55 $        31
  Accounts payable                                           889         859
  Income taxes payable                                       200         276
  Accrued compensation                                     2,710       2,928
  Deferred revenue                                         8,721       8,852
  Other current liabilities                                4,539       4,785
                                                     ----------- -----------
  Total current liabilities                               17,114      17,731
Long-term debt                                            16,272      16,297
Income taxes payable                                       1,577       1,844
Deferred revenue                       
                    3,902       4,028
Other long-term liabilities                                1,077         558
                                                     ----------- -----------
Total liabilities                                         39,942      40,458
Total equity                                              52,701      51,301
                                                     ----------- -----------
TOTAL LIABILITIES AND EQUITY                         $    92,643 $    91,759
                                                     ----------- -----------
                                                                            
                                                                            
                   CONSOLIDATED STATEMENTS OF CASH FLOWS                    
                               (In millions)                                
                                (Unaudited)                                 
                                                                            
                                                      Three Months Ended    
                                                   ------------------------ 
                                                   October 27,  October 29, 
                                                       2012         2011    
                                                   -----------  ----------- 
Cash flows from operating activities:                                       
  Net income                                       $     2,092  $     1,777 
  Adjustments to reconcile net income to net cash                           
   provided by operating activities:                                        
    Depreciation, amortization, and other                  612          621 
    Share-based compensation expense                       306          341 
    Provision for receivables                               29          (13)
    Deferred income taxes                                  135          109 
    Excess tax benefits from share-based                                    
     compensation                                          (15)         (21)
    Net losses (gains) on investments                       15          (13)
    Change in operating assets and liabilities,                             
     net of effects of acquisitions and                                     
     divestitures:                                                          
      Accounts receivable                                  615          399 
      Inventories                                           42         (168)
      Financing receivables                               (132)          (9)
      Other assets                                          99         (374)
      Accounts payable                                     (19)          36 
      Income taxes, net                                   (372)         (38)
      Accrued compensation                                (359)        (548)
      Deferred revenue                                    (295)         232 
      Other liabilities                                   (288)           2 
                                                   -----------  ----------- 
        Net cash provided by operating activities        2,465        2,333 
                                                   -----------  ----------- 
                                                                            
Cash flows from investing activities:                                       
  Purchases of investments                              (8,213)     (11,770)
  Proceeds from sales of investments                     2,447        7,721 
  Proceeds from maturities of investments                4,388        1,179 
  Acquisition of property and equipment                   (265)        (265)
  Acquisition of businesses, net of cash and cash                           
   equivalents acquired                                 (4,912)         (38)
  Purchases of investments in privately held                                
   companies                                                (9)        (153)
  Return of investments in privately held                                   
   companies                                                12           58 
  Other                                                     22           77 
                                                   -----------  ----------- 
        Net cash used in investing activities           (6,530)      (3,191)
                                                   -----------  ----------- 
Cash flows from financing activities:                                       
  Issuances of common stock                                117          203 
  Repurchases of stock - repurchase program               (183)      (1,744)
  Shares repurchased for tax withholdings on                                
   vesting of restricted stock units                      (203)        (137)
  Short-term borrowings, maturities less than 90                            
   days, net                                                23           -- 
  Excess tax benefits from share-based                                      
   compensation                                             15           21 
  Dividends paid                                          (744)        (322)
  Other                                                     14          (78)
                                                   -----------  ----------- 
        Net cash used in financing activities             (961)      (2,057)
                                                   -----------  ----------- 
                                                                            
Net decrease in cash and cash equivalents               (5,026)      (2,915)
Cash and cash equivalents, beginning of period           9,799        7,662 
                                                   -----------  ----------- 
                                                                            
Cash and cash equivalents, end of period           $     4,773  $     4,747 
                                                   -----------  ----------- 
                                                                            
Cash paid for:                                                              
Interest                                           $       221  $       220 
Income taxes                                       $       776  $       398 

 
Certain reclassifications have been made to prior period amounts to
conform to the current period's presentation. 


 
                      ADDITIONAL FINANCIAL INFORMATION                      
                               (In millions)                                
                                (Unaudited)                                 
                                                                            
                                                   October 27,    July 28,  
                                                       2012         2012    
                                                   -----------  ----------- 
CASH AND CASH EQUIVALENTS AND INVESTMENTS                                   
Cash and cash equivalents                          $     4,773  $     9,799 
Fixed income securities                                 38,464       37,297 
Publicly traded equity securities                        1,763        1,620 
                                                   -----------  ----------- 
Total                                              $    45,000  $    48,716 
                                                   -----------  ----------- 
                                                                
INVENTORIES                                                                 
Raw materials                                      $       101  $       127 
W
ork in process                                             36           35 
Finished goods:                                                             
  Distributor inventory and deferred cost of sales         671          630 
  Manufactured finished goods                              615          597 
                                                   -----------  ----------- 
Total finished goods                                     1,286        1,227 
Service-related spares                                     237          213 
Demonstration systems                                       49           61 
                                                   -----------  ----------- 
Total                                              $     1,709  $     1,663 
                                                   -----------  ----------- 
                                                                            
PROPERTY AND EQUIPMENT, NET                                                 
Land, buildings, and building & leasehold                                   
 improvements                                      $     4,458  $     4,363 
Computer equipment and related software                  1,491        1,469 
Production, engineering, and other equipment             5,495        5,364 
Operating lease assets                                     312          300 
Furniture and fixtures                                     494          487 
                                                   -----------  ----------- 
                                                        12,250       11,983 
Less accumulated depreciation and amortization          (8,841)      (8,581)
                                                   -----------  ----------- 
Total                                              $     3,409  $     3,402 
                                                   -----------  ----------- 
                                                                            
OTHER ASSETS                                                                
Deferred tax assets                                $     2,061  $     2,270 
Investments in privately held companies                    830          858 
Other                                                      849          754 
                                                   -----------  ----------- 
Total                                              $     3,740  $     3,882 
                                                   -----------  ----------- 
                                                                            
DEFERRED REVENUE                                                            
Service                                            $     8,753  $     9,173 
Product:                                                                    
  Unrecognized revenue on product shipments and                             
   other deferred revenue                                3,074        2,975 
  Cash receipts related to unrecognized revenue                             
   from two-tier distributors                              796          732 
                                                   -----------  ----------- 
Total product deferred revenue                           3,870        3,707 
                                                   -----------  ----------- 
Total                                              $    12,623  $    12,880 
                                                   -----------  ----------- 
                                                                            
Reported as:                                                                
Current                                            $     8,721  $     8,852 
Noncurrent                                               3,902        4,028 
                                                   -----------  ----------- 
Total                                              $    12,623  $    12,880 
                                                   -----------  ----------- 
                                                                            
                                                                            
                 SUMMARY OF SHARE-BASED COMPENSATION EXPENSE                
                                (In millions)                               
                                                                            
                                                       Three Months Ended   
                                                    ------------------------
                                                    October 27,  October 29,
                                                        2012         2011   
                                                    -----------  -----------
Cost of sales -- product                            $        10  $        13
Cost of sales -- service                                     35           37
                                                    -----------  -----------
Share-based compensation expense in cost of sales            45           50
                                                    -----------  -----------
                                                                            
Research and development                                     84          101
Sales and marketing                                         130          142
General and administrative                                   50           48
Restructuring and other charges                              (3)          --
                                                    -----------  -----------
Share-based compensation expense in operating                               
 expenses                                                   261          291
                                                    -----------  -----------
Total share-based compensation expense              $       306  $       341
                                                    -----------  -----------

 
The income tax benefit for share-based compensation expense was $79
million and $90 million for the three months ended October 27, 2012
and October 29, 2011, respectively. 


 
                                                                            
                         ACCOUNTS RECEIVABLE AND DSO                        
                          (In millions, except DSO)                         
                                                                            
                                                                            
                                         -----------------------------------
                                         October 27,   July 28,  October 29,
                                             2012        2012        2011   
                                         ----------- ----------- -----------
                                                                            
Accounts receivable                      $     3,942 $     4,369 $     4,300
Days sales outstanding in accounts                                          
 receivable (DSO)                                 30          34          35
                                                                            
                                                                            
           INVENTORY TURNS AND RECONCILIATION OF GAAP TO NON-GAAP           
                   COST OF SALES USED IN INVENTORY TURNS                    
              (In millions, except annualized inventory turns)              
                                                                            
                                                Three Months Ended          
                                      ------------------------------------- 
                                      October 27,    July 28,   October 29, 
                                          2012         2012         2011    
                                      -----------  -----------  ----------- 
                                                                            
Annualized inventory turns- GAAP             11.0         11.7         11.2 
    Cost of sales adjustments                (0.5)        (0.4)        (0.3)
                                      -----------  -----------  ----------- 
Annualized inventory turns- non-GAAP         10.5         11.3         10.9 
                                                                            
GAAP cost of sales                    $     4,637  $     4,605  $     4,366 
  Cost of sales adjustments:                                                
    Share-based compensation expense          (45)         (54)         (50)
    Amortization of acquisition-                                            
     related intangible assets               (134)        (100)         (87)
    Impact to cost of sales from                          
                  
     purchase accounting adjustments                                        
     to inventory                             (24)          --           -- 
    Significant asset impairments and                                       
     restructurings                            --            5            5 
                                      -----------  -----------  ----------- 
Non-GAAP cost of sales                $     4,434  $     4,456  $     4,234 
                                      -----------  -----------  ----------- 
                                                                            
                                                                            
                REPURCHASE OF COMMON STOCK AND DIVIDENDS PAID               
                                (In millions)                               
                                                                            
                    October 27,  July 28,  April 28, January 28, October 29,
Three Months Ended      2012       2012       2012       2012        2011   
                    ----------- ---------- --------- ----------- -----------
Repurchase of                                                               
 common stock under                                                         
 the stock                                                                  
 repurchase program $       253 $    1,800 $     550 $       466 $     1,544
Dividends paid              744        425       432         322         322
                    ----------- ---------- --------- ----------- -----------
Total               $       997 $    2,225 $     982 $       788 $     1,866
                    ----------- ---------- --------- ----------- -----------

  
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