Cisco Reports Second Quarter Earnings

Cisco Reports Second Quarter Earnings 
SAN JOSE, CA -- (Marketwire) -- 02/13/13 --  Cisco (NASDAQ: CSCO) 


 
--  Q2 Net Sales: $12.1 billion (increase of 5% year over year)
--  Q2 Earnings per Share: $0.59 GAAP (includes tax benefits of $0.17);
    $0.51 non-GAAP (includes a tax benefit of $0.01)

  
Cisco, the worldwide leader in networking that transforms how people
connect, communicate and collaborate, today reported its second
quarter results for the period ended January 26, 2013. Cisco reported
second quarter net sales of $12.1 billion, net income on a generally
accepted accounting principles (GAAP) basis of $3.1 billion or $0.59
per share, and non-GAAP net income of $2.7 billion or $0.51 per
share.  
GAAP net income and GAAP earnings per share for the second quarter of
fiscal 2013 included total tax benefits of approximately $926 million
or $0.17 per share, related to a tax settlement with the Internal
Revenue Service and related to the reinstatement of the U.S. federal
research and development (R&D) tax credit on January 2, 2013.
Non-GAAP net income and non-GAAP earnings per share for the second
quarter of fiscal 2013 included a tax benefit of approximately $60
million or $0.01 per share as a result of the reinstatement of the
U.S. federal R&D tax credit on 
January 2, 2013. 
"Cisco delivered record earnings per share this quarter and record
revenue for the 8th quarter in a row in a challenging economic
environment. We continue to drive the innovation, quality and
leadership our customers expect, and we remain focused on consistent
returns to our shareholders," said John Chambers, Cisco chairman and
chief executive officer. 
"In terms of the future, we are making solid progress towards our
goal of becoming the #1 IT company in the world. As new markets grow
and are created, such as the Internet of Everything, it's very easy
to see how the intelligent network is at the center of that future.
Our customers already understand that Cisco has the architectures,
solutions and services to best help them deliver the business results
they need and we are honored to work with them and serve them each
and every day." 


 
                                                                            
                                GAAP Results                                
                                                                            
                                     Q2 2013        Q2 2012     Vs. Q2 2012 
                                 -------------- -------------- ------------ 
Net Sales                        $ 12.1 billion $ 11.5 billion          5.0%
Net Income                       $  3.1 billion $  2.2 billion         44.0%
Earnings per Share               $         0.59 $         0.40         47.5%
                                                                            
                                                                            
                              Non-GAAP Results                              
                                                                            
                                     Q2 2013        Q2 2012     Vs. Q2 2012 
                                 -------------- -------------- ------------ 
Net Income                       $  2.7 billion $  2.6 billion          6.2%
Earnings per Share               $         0.51 $         0.47          8.5%

 
Net sales for the first six months of fiscal 2013 were $24.0 billion,
compared with $22.8 billion for the first six months of fiscal 2012.
Net income for the first six months of fiscal 2013, on a GAAP basis,
was $5.2 billion or $0.98 per share, compared with $4.0 billion or
$0.73 per share for the first six months of fiscal 2012. Non-GAAP net
income for the first six months of fiscal 2013 was $5.3 billion or
$0.99 per share, compared with $4.9 billion or $0.90 per share for
the first six months of fiscal 2012. 
A reconciliation between net income on a GAAP basis and non-GAAP net
income is provided in the table on page 6. 
Cisco will discuss second 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 $3.3 billion for the second quarter of
    fiscal 2013, compared with $2.5 billion for the first quarter of
    fiscal 2013, and compared with $3.1 billion for the second quarter of
    fiscal 2012.
--  Cash and cash equivalents and investments were $46.4 billion at the
    end of the second quarter of fiscal 2013, compared with $45.0 billion
    at the end of the first quarter of fiscal 2013, and compared with
    $48.7 billion at the end of fiscal 2012.

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


 
--  The combination of cash used for dividends and common stock
    repurchases under the stock repurchase program totaled approximately
    $1.2 billion.
--  Cisco paid a cash div
idend of $0.14 per common share, or $743 million.
--  Cisco repurchased approximately 25 million shares of common stock
    under the stock repurchase program at an average price of $20.15 per
    share for an aggregate purchase price of $500 million. As of January
    26, 2013, 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 $76.9 billion since the
    inception of the stock repurchase program. The remaining authorized
    amount for stock repurchases under this program is approximately $5.1
    billion with no termination date.

  
"We delivered another solid quarter achieving profitable growth which
contributes to increasing shareholder value over the long term,"
stated Frank Calderoni, Cisco executive vice president and chief
financial officer. "We are executing consistently, and we remain
confident with our financial strategy while capitalizing on strategic
investment opportunities to help drive our continued leadership in
the industry." 
Select Global Business Highlights  


 
--  Cisco announced and completed the acquisition of privately held
    Cloupia, Inc., a software company that automates converged data center
    infrastructure, allowing enterprises and service providers to simplify
    the deployment and configuration of physical and virtual resources
    from a single management console.
--  Cisco announced and completed the acquisition of privately held
    Meraki, Inc., a leader in cloud networking offering midmarket
    customers easy-to-deploy, on-premise networking solutions that can be
    centrally managed from the cloud.
--  Cisco announced and completed the acquisition of privately held
    Cariden Technologies, Inc., a supplier of network planning, design and
    traffic management solutions for telecommunications service providers.
--  Cisco announced and completed the acquisition of BroadHop, Inc., a
    provider of next-generation policy control and service management
    technology for carrier networks worldwide.
--  Cisco announced the investment of $6 million in the venture capital
    fund Monashees Capital, a leading Brazilian VC focused on Internet
    companies and online education.
--  Belkin announced its intent to acquire Cisco's Linksys product line.
--  Cisco unveiled its new "Internet of Everything" global integrated
    marketing campaign, with a message that connecting people, process,
    data and things will make the network more valuable than ever.

  
Cisco Innovation 


 
--  Cisco unveiled Videoscape Unity(TM), its new and expanded
    Videoscape(TM) video services delivery platform, empowering service
    providers and media companies to deliver new intuitive and
    synchronized multiscreen video experiences.
--  Cisco announced new solutions under the Cisco Unified Access(TM)
    umbrella that simplify network design by converging wired and wireless
    networks.
--  Cisco introduced Cisco StadiumVision(R) Mobile, a solution that
    delivers live video to mobile devices to create an entirely new fan
    experience in sports and entertainment venues.
--  Cisco introduced its advanced Wi-Fi location data analytics platform
    to help businesses enhance customer experiences and create new
    monetization opportunities to meet the needs of the growing number of
    connected consumers.
--  Cisco announced two new connected health offerings, Connected Health
    solutions and HealthPresence(R) 2.5, designed to meet the
    increasing need in healthcare for software and services that help
    enable efficient, convenient, high-quality patient care, and more
    collaboration across the healthcare continuum.

  
Select Customer Announcements 


 
--  Cisco announced that Turkiye Is Bankasi (Isbank), the largest bank of
    Turkey, deployed a Cisco(R) Borderless Networks and Collaboration
    infrastructure to enhance business agility, speed product and service
    development, and better serve its customers.
--  ME Bank in Australia selected a Cisco and NetApp FlexPod(R) for
    VMware solution to help transform its information technology and
    operational excellence functions and to accelerate the speed with
    which it can introduce new business applications and services to
    customers.
--  SingTel announced that it is the first service provider in the
    Asia-Pacific region to globally deploy Multiprotocol Label
    Switching-Transport Profile (MPLS-TP) technology for its ConnectPlus
    E-Line service, providing its multinational corporation customers with
    scalable high-speed connections worldwide.
--  Xerox selected Cisco Unified Computing System(TM) to deliver its
    cloud-based global managed print services.
--  Cisco announced that Eastlink, a leading telecommunications service
    provider in Canada, is using Cisco Videoscape(TM) to power its new
    mobile video platform, Eastlink To Go, designed to deliver new
    consumer experiences anytime, anywhere.
--  Cisco announced that Telefonica Global Solutions, part of the
    Telefonica Group, a leading global provider of telecommunication
    services for fixed and mobile carriers, ISPs and content providers,
    selected Cisco for its enhanced Internet Protocol Next-Generation
    Network.

  
Editor's Note: 


 
--  Q2 FY2013 conference call to discuss Cisco's results along with its
    business outlook will be held on Wednesday, February 13, 2013 at 1:30
    p.m. Pacific Time. Conference call number is 1-888-848-6507 (United
    States) or 1-212-519-0847 (international).
--  Conference call replay will be available from 4:30 p.m. Pacific Time,
    February 13, 2013 to 4:30 p.m. Pacific Time, February 20, 2013 at
    1-866-484-6427 (United States) or 1-203-369-1601 (international). The
    replay also will be available via webcast from February 13, 2013
    through April 19, 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 availab
le at 1:30 p.m. Pacific
    Time, February 13, 2013. 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 innovation, value to
shareholders, the goal of becoming the #1 IT company, the future of
the intelligent network, Cisco's ability to help customers deliver
business results, strategic investment opportunities and  industry
leadership) 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 reports on Forms 10-Q and 10-K filed on
November 20, 2012 and September 12, 2012, respectively. 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 reports on Forms 10-Q and 10-K as each may be
amended from time to time. Cisco's results of operations for the
three and six months ended January 26, 2013 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.  
T
his release includes non-GAAP net income, non-GAAP effective tax
rates, 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, non-GAAP
effective tax rates, 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/divestiture 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 2013 Cisco and/or its affiliates. All rights
reserved. Cisco, the Cisco logo, Cisco Unified Access, Cisco Unified
Computing System, Cisco StadiumVison, Cisco Videoscape, Cisco
Videoscape Unity, HealthPresence, 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:
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         Six Months Ended     
                         ------------------------  ------------------------ 
                         January 26,  January 28,  January 26,  January 28, 
                             2013         2012         2013         2012    
                         -----------  -----------  -----------  ----------- 
NET SALES:                                                                  
    Product              $     9,437  $     9,118  $    18,734  $    18,070 
    Service                    2,661        2,409        5,240        4,713 
                         -----------  -----------  -----------  ----------- 
      Total net sales         12,098       11,527       23,974       22,783 
                         -----------  -----------  -----------  ----------- 
COST OF SALES:                                                              
    Product                    3,857        3,650        7,605        7,213 
    Service                      898          812        1,787        1,615 
                         -----------  -----------  -----------  ----------- 
      Total cost of                                                         
       sales                   4,755        4,462        9,392        8,828 
                         -----------  -----------  -----------  ----------- 
GROSS MARGIN                   7,343        7,065       14,582       13,955 
OPERATING EXPENSES:                                                         
    Research and                                                            
     development               1,452        1,339        2,883        2,714 
    Sales and marketing        2,387        2,395        4,803        4,847 
    General and                                                             
     administrative              584          497        1,144        1,049 
    Amortization of                                                         
     purchased                                                              
     intangible assets           118           97          240          196 
    Restructuring and                                                       
     other charges                13            3           72          205 
                         -----------  -----------  -----------  ----------- 
      Total operating                                                       
       expenses                4,554        4,331        9,142        9,011 
                         -----------  -----------  -----------  ----------- 
OPERATING INCOME               2,789        2,734        5,440        4,944 
    Interest income              160          158          321          322 
    Interest expense            (147)        (150)        (295)        (298)
    Other income (loss),                                                    
     net                         (22)           7          (55)          26 
                         -----------  -----------  -----------  ----------- 
      Interest and other                                                    
       income (loss),                                                       
       net                        (9)          15          (29)          50 
                         -----------  -----------  -----------  ----------- 
INCOME BEFORE PROVISION 
                                                    
 FOR (BENEFIT FROM)                                                         
 INCOME TAXES                  2,780        2,749        5,411        4,994 
Provision for (benefit                                                      
 from) income taxes             (363)         567          176        1,035 
                         -----------  -----------  -----------  ----------- 
    NET INCOME           $     3,143  $     2,182  $     5,235  $     3,959 
                         ===========  ===========  ===========  =========== 
                                                                            
Net income per share:                                                       
  Basic                  $      0.59  $      0.41  $      0.99  $      0.74 
                         ===========  ===========  ===========  =========== 
  Diluted                $      0.59  $      0.40  $      0.98  $      0.73 
                         ===========  ===========  ===========  =========== 
Shares used in per-share                                                    
 calculation:                                                               
  Basic                        5,318        5,368        5,310        5,381 
                         ===========  ===========  ===========  =========== 
  Diluted                      5,357        5,401        5,344        5,404 
                         ===========  ===========  ===========  =========== 
                                                                            
Cash dividends declared                                                     
 per common share        $      0.14  $      0.06  $      0.28  $      0.12 
                         ===========  ===========  ===========  =========== 
                                                                            
                                                                            
               RECONCILIATION OF GAAP TO NON-GAAP NET INCOME                
                  (In millions, except per-share amounts)                   
                                                                            
                            Three Months Ended         Six Months Ended     
                         ------------------------  ------------------------ 
                         January 26,  January 28,  January 26,  January 28, 
                             2013         2012         2013         2012    
                         -----------  -----------  -----------  ----------- 
GAAP net income          $     3,143  $     2,182  $     5,235  $     3,959 
  Adjustments to cost of                                                    
   sales:                                                                   
    Share-based                                                             
     compensation                                                           
     expense                      47           54           92          104 
    Amortization of                                                         
     acquisition-related                                                    
     intangible assets           136           90          270          177 
    Impact to cost of                                                       
     sales from purchase                                                    
     accounting                                                             
     adjustments to                                                         
     inventory                    16           --           40           -- 
    Significant asset                                                       
     impairments and                                                        
     restructurings               --          (16)          --          (21)
                         -----------  -----------  -----------  ----------- 
  Total adjustments to                                                      
   GAAP cost of sales            199          128          402          260 
                         -----------  -----------  -----------  ----------- 
  Adjustments to                                                            
   operating expenses:                                                      
    Share-based                                                             
     compensation                                                           
     expense                     255          302          519          593 
    Amortization of                                                         
     acquisition-related                                                    
     intangible assets           118           97          240          196 
    Other acquisition-                                                      
     related/divestiture                                                    
     costs                        39            7           54           15 
    Significant asset                                                       
     impairments and                                                        
     restructurings               13            3           72          205 
                         -----------  -----------  -----------  ----------- 
  Total adjustments to                                                      
   GAAP operating                                                           
   expenses                      425          409          885        1,009 
                         -----------  -----------  -----------  ----------- 
  Total adjustments to                                                      
   GAAP income before                                                       
   provision for income                                                     
   taxes                         624          537        1,287        1,269 
                         -----------  -----------  -----------  ----------- 
  Income tax effect of                                                      
   non-GAAP adjustments         (179)        (156)        (365)        (343)
  Significant tax                                                           
   matters (1) (2)              (866)          --         (866)          -- 
                         -----------  -----------  -----------  ----------- 
  Total adjustments to                                                      
   GAAP provision for                                                       
   income taxes               (1,045)        (156)      (1,231)        (343)
                         -----------  -----------  -----------  ----------- 
Non-GAAP net income      $     2,722  $     2,563  $     5,291  $     4,885 
                         -----------  -----------  -----------  ----------- 
Diluted net income per                                                      
 share:                                                                     
GAAP                     $      0.59  $      0.40  $      0.98  $      0.73 
                         -----------  -----------  -----------  ----------- 
Non-GAAP                 $      0.51  $      0.47  $      0.99  $      0.90 
                         -----------  -----------  -----------  ----------- 
                                                                            
(1) In the second quarter of fiscal 2013, the American Taxpayer Relief Act  
    of 2012 reinstated the U.S. federal R&D tax credit, retroactive to      
    January 1, 2012. GAAP net income for the second quarter and first six   
    months of fiscal 2013 included a $132 million tax benefit as a result.  
    Non-GAAP net income for the second quarter and first six months of      
    fiscal 2013 excluded the $72 million tax benefit related to fiscal 2012 
    R&D expenses.                                                           
(2) In the second quarter of fiscal 2013, the Internal Revenue Service and  
    Cisco settled all outstanding items related to Cisco's federal income   
    tax returns for the fiscal years ended July 27, 2002 through July 28,   
    2007. As a result of the settlement, Cisco recorded a net tax benefit of
    $794 million, which included related interest.                          
                                                                            
                                                                            
           RECONCILIATION OF GAAP TO NON-GAAP EFFECTIVE TAX RATE            
                                                                            
                            Three Months Ended         Six Months Ended     
                        -------------------------  ------------------------ 
                        January 26,   January 28,  January 26,  January 28, 
                            2013          2012         2013         2012    
                        -----------   -----------  -----------  ----------- 
GAAP effective tax rate       (13.1)%        20.6%         3.3%        20.7%
Tax effect of non-GAAP                                                      
 adjustments to net                                                         
 income                        33.1%          1.4%        17.7%         1.3%
                        -----------   -----------  -----------  ----------- 
Non-GAAP effective tax                                                      
 rate                          20.0%         22.0%        21.0%        22.0%
                        -----------   -----------  -----------  ----------- 
                                                                            
                                                                            
                    CONDENSED CONSOLIDATED BALANCE SHEETS                   
                                (In millions)                               
                                 (Unaudited)                                
                                                                            
                                                     January 26,   July 28, 
                                                         2013        2012   
                                                     ----------- -----------
ASSETS                                                                      
Current assets:                                                             
  Cash and cash equivalents                          $     6,847 $     9,799
  Investments                                             39,529      38,917
  Accounts receivable, net of allowance for doubtful                        
   accounts of $218 at January 26, 2013 and $207 at                         
   July 28, 2012                                           4,462       4,369
  Inventories                                              1,574       1,663
  Financing receivables, net                               3,894       3,661
  Deferred tax assets                                      2,297       2,294
  Other current assets                                     2,122       1,230
                                                     ----------- -----------
    Total current assets                                  60,725      61,933
Property and equipment, net                                3,403       3,402
Financing receivables, net                                 3,837       3,585
Goodwill                                                  21,361      16,998
Purchased intangible assets, net                           3,542       1,959
Other assets                                               3,510       3,882
                                                     ----------- -----------
TOTAL ASSETS                                         $    96,378 $    91,759
                                                     =========== ===========
LIABILITIES AND EQUITY                                                      
Current liabilities:                                                        
  Short-term debt                                    $        37 $        31
  Accounts payable                                           890         859
  Income taxes payable                                        87         276
  Accrued compensation                                     2,921       2,928
  Deferred revenue                                         9,108       8,852
  Other current liabilities                                4,907       4,785
                                                     ----------- -----------
    Total current liabilities                             17,950      17,731
Long-term debt                                            16,254      16,297
Income taxes payable                                       1,340       1,844
Deferred revenue                                           4,213       4,028
Other long-term liabilities                                1,096         558
                                                     ----------- -----------
Total liabilities                                         40,853      40,458
Total equity                                              55,525      51,301
                                                     ----------- -----------
TOTAL LIABILITIES AND EQUITY                         $    96,378 $    91,759
                                                     =========== ===========
                                                                            
                                                                            
                   CONSOLIDATED STATEMENTS OF CASH FLOWS                    
                               (In millions)                                
                                (Unaudited)                                 
                                                                            
                                                       Six Months Ended     
                                                   ------------------------ 
                                                   January 26,  January 28, 
                                                       2013         2012    
                                                   -----------  ----------- 
Cash flows from operating activities:                                       
  Net income                                       $     5,235  $     3,959 
  Adjustments to reconcile net income to net cash                           
   provided by operating activities:                                        
    Depreciation, amortization, and other                1,223        1,185 
    Share-based compensation expense                       608          695 
    Provision for receivables                               12           43 
    Deferred income taxes                                  148           29 
    Excess tax benefits from share-based                                    
     compensation                                          (32)         (32)
    Net losses (gains) on investments                       14          (11)
    Change in operating assets and liabilities,                             
     net of effects of acquisitions and                                     
     divestitures:                                                          
      Accounts receivable                                  100          761 
      Inventories                                          194         (194)
      Financing receivables                               (403)        (551)
      Other assets                                         (63)        (505)
      Accounts payable                                     (17)         (78)
      Income taxes, net                                 (1,444)         146 
      Accrued compensation                                (161)        (508)
      Deferred revenue                                     407          304 
      Other liabilities                                     (7)         191 
                                                   -----------  ----------- 
        Net cash provided by operating activities        5,814        5,434 
                                                   -----------  ----------- 
                                                                            
Cash flows from investing activities:                                       
  Purchases of investments                             (14,234)     (17,810)
  Proceeds from sales of investments                     4,991       12,291 
  Proceeds from maturities of investments                8,652        4,039 
  Acquisition of property and equipment                   (552)        (549)
  Acquisition of businesses, net of cash and cash                           
   equivalents acquired                                 (6,035)        (109)
  Purchases of investments in privately held                                
   companies                                              (116)        (231)
  Return of investments in privately held                                   
   companies                                                68          124 
  Other                                                     30          160 
                                                   -----------  ----------- 
        Net cash used in investing activities           (7,196)      (2,085)
                                                   -----------  ----------- 
                                                                            
Cash flows from financing activities:                                       
  Issuances of common stock                                652          653 
  Repurchases of common stock - repurchase program        (645)      (2,210)
  Shares repurchased for tax withholdings on                                
   vesting of restricted stock units                      (212)        (145)
  Short-term borrowings, maturities less than 90                            
   days, net                                                 4           17 
  Excess tax benefits from share-based                                      
   compensation                                             32           32 
  Dividends paid                                        (1,487)        (644)
  Other                                                     86         (153)
                                                   -----------  ----------- 
        Net cash used in financing activities           (1,570)      (2,450)
                                                   -----------  ----------- 
Net (decrease) increase in cash and cash                                    
 equivalents                                            (2,952)         899 
Cash and cash equivalents, beginning of period           9,799        7,662 
                                                   -----------  ----------- 
Cash and cash equivalents, end of period           $     6,847  $     8,561 
                                                   ===========  =========== 
Cash paid for:                                                              
Interest                                           $       341  $       340 
Income taxes                                       $     1,472  $       860 
                                                                            
                                                                            
                      ADDITIONAL FINANCIAL INFORMATION                      
                               (In millions)                                
                                (Unaudited)                                 
                                                                            
                                                   January 26,   July 28,   
                                                       2013         2012    
                                                   -----------  ----------- 
Cash and Cash Equivalents and Investments:                                  
  Cash and cash equivalents                        $     6,847  $     9,799 
  Fixed income securities                               37,421       37,297 
  Publicly traded equity securities                      2,108        1,620 
                                                   -----------  ----------- 
      Total                                        $    46,376  $    48,716 
                                                   ===========  =========== 
                                                                            
Inventories:                                                                
  Raw materials                                    $       113  $       127 
  Work in process                                           24           35 
  Finished goods:                                                           
    Distributor inventory and deferred cost of                              
     sales                                                 648          630 
    Manufactured finished goods                            498          597 
                                                   -----------  ----------- 
    Total finished goods                                 1,146        1,227 
  Service-related spares                                   248          213 
  Demonstration systems                                     43           61 
                                                   -----------  ----------- 
      Total                                        $     1,574  $     1,663 
                                                   ===========  =========== 
                                                                            
Property and equipment, net:                                                
  Land, buildings, and building and leasehold                               
   improvements                                    $     4,491  $     4,363 
  Computer equipment and related software                1,455        1,469 
  Production, engineering, and other equipment           5,642        5,364 
  Operating lease assets                                   304          300 
  Furniture and fixtures                                   493          487 
                                                   -----------  ----------- 
                                                        12,385       11,983 
  Less accumulated depreciation and amortization        (8,982)      (8,581)
                                                   -----------  ----------- 
      Total                                        $     3,403  $     3,402 
                                                   ===========  =========== 
                                                                            
Other assets:                                                               
  Deferred tax assets                              $     1,807  $     2,270 
  Investments in privately held companies                  869          858 
  Other                                                    834          754 
                                                   -----------  ----------- 
      Total                                        $     3,510  $     3,882 
                                                   ===========  =========== 
                                                                            
Deferred revenue:                                                           
  Service                                          $     9,055  $     9,173 
  Product:                                                                  
    Unrecognized revenue on product shipments and                           
     other deferred revenue                              3,309        2,975 
    Cash receipts related to unrecognized revenue                           
     from two-tier distributors                            957          732 
                                                   -----------  ----------- 
    Total product deferred revenue                       4,266        3,707 
                                                   -----------  ----------- 
      Total                                        $    13,321  $    12,880 
                                                   ===========  =========== 
Reported as:                                                                
  Current                                          $     9,108  $     8,852 
  Noncurrent                                             4,213        4,028 
                                                   -----------  ----------- 
      Total                                        $    13,321  $    12,880 
                                                   ===========  =========== 
                                                                            
                                                                            
                SUMMARY OF SHARE-BASED COMPENSATION EXPENSE                 
                               (In millions)                                
                                                                            
                            Three Months Ended         Six Months Ended     
                         ------------------------  ------------------------ 
                         January 26,  January 28,  January 26,  January 28, 
                             2013         2012         2013         2012    
                         -----------  -----------  -----------  ----------- 
Cost of sales - product  $        11  $        14  $        21  $        27 
Cost of sales - service           36           40           71           77 
                         -----------  -----------  -----------  ----------- 
Share-based compensation                                                    
 expense in cost of                                                         
 sales                            47           54           92          104 
                         -----------  -----------  -----------  ----------- 
Research and development          72           99          156          200 
Sales and marketing              135          149          265          291 
General and                                                                 
 administrative                   48           54           98          102 
Restructuring and other                                                     
 charges                          --           (2)          (3)          (2)
                         -----------  -----------  -----------  ----------- 
Share-based compensation                                                    
 expense in operating                                                       
 expenses                        255          300          516          591 
                         -----------  -----------  -----------  ----------- 
Total share-based                                                           
 compensation expense    $       302  $       354  $       608  $       695 
                         ===========  ===========  ===========  =========== 
Income tax benefit for                                                      
 share-based                                                                
 compensation            $       (80) $       (93) $      (159) $      (183)
                         ===========  ===========  ===========  =========== 
                                                                            
                                                                            
                         ACCOUNTS RECEIVABLE AND DSO                        
                          (In millions, except DSO)                         
                                                                            
                                         January 26, October 27, January 28,
                                             2013        2012        2012   
                                         ----------- ----------- -----------
Accounts receivable, net                 $     4,462 $     3,942 $     3,876
Days sales outstanding in accounts                                          
 receivable (DSO)                                 34          30          31
                                                                            
                                                                            
           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          
                                      ------------------------------------- 
                                      January 26,  October 27,  January 28, 
                                          2013         2012         2012    
                                      -----------  -----------  ----------- 
Annualized inventory turns - GAAP            11.6         11.0         11.1 
  Cost of sales adjustments                  (0.5)        (0.5)        (0.3)
                                      -----------  -----------  ----------- 
Annualized inventory turns - non-GAAP        11.1         10.5         10.8 
                                                                            
GAAP cost of sales                    $     4,755  $     4,637  $     4,462 
Cost of sales adjustments:                                                  
  Share-based compensation expense            (47)         (45)         (54)
  Amortization of acquisition-related                                       
   intangible assets                         (136)        (134)         (90)
  Impact to cost of sales from                                              
   purchase accounting adjustments to                                       
   inventory                                  (16)         (24)          -- 
  Significant asset impairments and                                         
   restructurings                              --           --           16 
                                      -----------  -----------  ----------- 
Non-GAAP cost of sales                $     4,556  $     4,434  $     4,334 
                                      -----------  -----------  ----------- 
                                                                            
                                                                            
                REPURCHASE OF COMMON STOCK AND DIVIDENDS PAID               
                                (In millions)                               
                                                                            
                                      Three Months Ended                    
                 -----------------------------------------------------------
                 January 26, October 27,  July 28,    April 28,  January 28,
                     2013        2012        2012        2012        2012   
                 ----------- ----------- ----------- ----------- -----------
Repurchase of                                                               
 common stock                                                               
 under the stock                                                            
 repurchase                                                                 
 program         $       500 $       253 $     1,800 $       550 $       466
Dividends paid           743         744         425         432         322
                 ----------- ----------- ----------- ----------- -----------
Total            $     1,243 $       997 $     2,225 $       982 $       788
                 ----------- ----------- ----------- ----------- -----------

  
Press Contact:
Robyn Jenkins-Blum 
Cisco 
1 (408) 853-9848 
rojenkin@cisco.com 
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Melissa Selcher
Cisco
1 (408) 424-1335
mselcher@cisco.com 
 
 
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