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Cisco Reports Fourth Quarter and Fiscal Year 2013 Earnings


Cisco Reports Fourth Quarter and Fiscal Year 2013 Earnings

SAN JOSE, CA -- (Marketwired) -- 08/14/13 -- Cisco (NASDAQ: CSCO)


 
--  Q4 Revenue: $12.4 billion (increase of 6% year over year)
--  Q4 Earnings per Share: $0.42 GAAP; $0.52 non-GAAP
--  FY 2013 Revenue: $48.6 billion (increase of 6% year over year)
--  FY 2013 Earnings per Share: $1.86 GAAP; $2.02 non-GAAP

Cisco, the worldwide leader in networking that transforms how people connect, communicate and collaborate, today reported its fourth quarter and fiscal year results for the period ended July 27, 2013. Cisco reported fourth quarter revenue of $12.4 billion, net income on a generally accepted accounting principles (GAAP) basis of $2.3 billion or $0.42 per share, and non-GAAP net income of $2.8 billion or $0.52 per share.

"My confidence in our ability to be the #1 IT Company is increasing. Our fourth quarter was a record on many fronts, with record revenue, and record non-GAAP operating income, non-GAAP net income, and non-GAAP earnings per share. In every case, we exceeded the midpoint of our guidance. We also generated $4 billion in operating cash flow in the quarter, another record," stated Cisco Chairman and CEO John Chambers.

"Now, more than ever, our customers and our partners want Cisco's help navigating the inconsistent global landscape successfully. They recognize the benefit of a partner who is not only the leader in their product categories, but can bring technologies and solutions together in an architecture to lower operating costs, reduce time to results, and future proof their investments."


 
                                                                            
                              Q4 GAAP Results                               
                                                                            
                                    Q4 2013        Q4 2012     Vs. Q4 2012  
                                -------------- -------------- ------------- 
Revenue                         $ 12.4 billion $ 11.7 billion           6.2%
Net Income                      $  2.3 billion $  1.9 billion          18.4%
Earnings per Share              $         0.42 $         0.36          16.7%
                                                                            
                                                                            
                            Q4 Non-GAAP Results                             
                                                                            
                                    Q4 2013        Q4 2012     Vs. Q4 2012  
                                -------------- -------------- ------------- 
Net Income                      $  2.8 billion $  2.5 billion          12.7%
Earnings per Share              $         0.52 $         0.47          10.6%
                                                                            
                                                                            
                          Fiscal Year GAAP Results                          
                                                                            
                                    FY 2013        FY 2012     Vs. FY 2012  
                                -------------- -------------- ------------- 
Revenue                         $ 48.6 billion $ 46.1 billion           5.5%
Net Income                      $ 10.0 billion $  8.0 billion          24.2%
Earnings per Share              $         1.86 $         1.49          24.8%
                                                                            
                                                                            
                        Fiscal Year Non-GAAP Results                        
                                                                            
                                    FY 2013        FY 2012     Vs. FY 2012  
                                -------------- -------------- ------------- 
Net Income                      $ 10.9 billion $ 10.0 billion           8.5%
Earnings per Share              $         2.02 $         1.85           9.2%

GAAP net income and GAAP earnings per share for the fourth quarter and fiscal year ended July 27, 2013 include the previously disclosed charge of $0.03 per share for the TiVo, Inc. ("TiVo") patent litigation settlement. This charge was excluded from non-GAAP earnings per share. A reconciliation between net income on a GAAP basis and non-GAAP net income is provided in the table below.

Cisco will discuss fourth quarter and fiscal year 2013 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 $4.0 billion for the fourth quarter of
    fiscal 2013, compared with $3.1 billion for the third quarter of
    fiscal 2013, and compared with $3.1 billion for the fourth quarter of
    fiscal 2012. Cash flows from operations were $12.9 billion for fiscal
    2013, compared with $11.5 billion for fiscal 2012.
    
    
--  Cash and cash equivalents and investments were $50.6 billion at the
    end of the fourth quarter of fiscal 2013, compared with $47.4 billion
    at the end of the third quarter of fiscal 2013, and compared with
    $48.7 billion at the end of the fourth quarter of fiscal 2012.

Dividends and Stock Repurchase Program


 
--  During the fourth quarter of fiscal 2013:
    
    
    --  Cisco paid a cash dividend of $0.17 per common share, or $918
        million.
        
        
    --  Cisco repurchased approximately 47 million shares of common stock
        under the stock repurchase program at an average price of $24.80
        per share for an aggregate purchase price of $1.2 billion.
        
        
--  During fiscal year 2013:
    
    
    --  Cisco paid cash dividends in the aggregate amount of $0.62 per
        common share, or $3.3 billion.
        
        
    --  Cisco repurchased approximately 128 million shares of common stock
        under the stock repurchase program at an average price of $21.63
        per share for an aggregate purchase price of $2.8 billion. As of
        July 27, 2013, Cisco had repurchased and retired 3.9 billion
        shares of Cisco common stock at an average price of $20.40 per
        share for an aggregate purchase price of approximately $78.9
        billion since the inception of the stock repurchase program. The
        remaining authorized amount for stock repurchases under this
        program is approximately $3.1 billion with no termination date.

"Our financial strategy is working as our profits grew faster than revenue for the full fiscal year," stated Frank Calderoni, executive vice president and chief financial officer. "Our fourth quarter also delivered solid financial results as we continued to deliver profitable growth to maximize shareholder value for the long-term."

Select Global Business Highlights


 
--  Cisco completed its acquisition of privately held Ubiquisys Limited, a
    leading provider of intelligent 3G and long-term evolution (LTE)
    small-cell technologies designed to provide seamless connectivity
    across mobile heterogeneous networks for service providers.
--  Cisco completed its acquisition of privately held JouleX, Inc. a
    leader in enterprise IT energy management for network-attached and
    data center assets.
--  Cisco announced its intent to acquire privately held Composite
    Software, Inc., a leader in data virtualization software and services.
--  Cisco announced a definitive agreement to acquire Sourcefire, Inc. a
    leader in intelligent cybersecurity solutions, with the goal of
    integrating world-class products, technologies and research teams to
    provide continuous and pervasive advanced threat protection.
--  Cisco completed its acquisition of SolveDirect Service Management
    GmbH, a privately held company headquartered in Vienna, Austria that
    provides innovative, cloud-delivered services management integration
    software and services.
--  At the Microsoft Worldwide Partner Conference, Cisco announced it
    would team with Microsoft to accelerate the deployment of private and
    hybrid cloud infrastructure worldwide.
--  Cisco released an Internet of Everything (IoE) Value Index study
    predicting that the IoE-the networked connection of people, process,
    data and things-is expected to enable global private-sector businesses
    to generate at least $613 billion in global profits in 2013.

Cisco Innovation


 
--  Cisco introduced the Carrier Routing System-X (CRS-X), its newest
    addition to the industry-leading CRS family. The CRS-X is designed to
    provide unmatched economical scale and lasting investment protection
    to more than 750 customers worldwide, including global
    telecommunications service providers and organizations.
--  Cisco announced that it has opened an innovation center in Israel in
    collaboration with Pelephone Communications Ltd., an Israeli telecom
    service provider, to develop and deploy a radio network topology for
    handling the surge in demand for mobile Internet services.
--  Cisco announced the evolution of its network services strategy for
    virtual and cloud networks by integrating the market-leading
    Citrix(R) NetScaler(R) application delivery controller (ADC)
    technology into the Cisco Unified Fabric Cloud Network Services
    portfolio.
--  At Cisco Live! in Orlando, Cisco unveiled a new data center networking
    architecture designed to usher in the era of Application-Centric
    Infrastructure by transforming data centers to better address the
    demands of new and current applications in the cloud era.
--  Cisco took another significant step in the evolution of its networking
    portfolio, introducing new and updated Cisco Catalyst(R) switching
    and Integrated Services Router products that provide high-performing,
    fully programmable enterprise networking solutions.

Select Customer Announcements


 
--  Cisco announced that it was selected by Vodafone Hutchison Australia
    (VHA) to accelerate deployment of VHA's 4G long-term evolution (LTE)
    network with the Cisco(R) ASR 5500 as the mobile multimedia core
    platform.
--  Cisco announced that Manchester City will be the first Premier League
    team to offer Cisco Connected Stadium Wi-Fi and StadiumVision(TM)
    Mobile solutions.
--  Cisco announced that Czech telecommunications operator T-Mobile has
    chosen the Cisco ASR 5000 Series to manage its mobile data traffic
    from the new LTE network, together with existing 2G and 3G networks.
--  The Universidad San Sebastian in Chile has updated its voice,
    data and wireless connectivity using Cisco technology to serve more
    than 26,000 students and 2,500 teachers.
--  Cisco announced that TIM Brazil, one of Brazil's leading service
    providers, has selected Cisco Videoscape(TM) Distribution Suite
    Transparent Caching (VDS-TC) to enable the delivery of video content
    across multiple screens, protocols, applications and networks.
--  Cisco announced that Polymetal, a leading precious metals company in
    Russia and Kazakhstan, has deployed a distributed telephone network
    based on Cisco Unified Communications.
--  The University of Virginia Center for Telehealth was selected as the
    first member of the Cisco Healthcare Center of Excellence program.
--  The Stock Exchange of Thailand has implemented Cisco's Data Center
    architecture to increase operational flexibility and streamline its
    online trading platform.
--  By using the Cisco service provider Wi-Fi solution, Hong Kong
    telecommunications service provider PCCW-HKT became the first service
    provider in the Greater China region to deploy the next-generation
    802.11ac Wi-Fi network.
--  Cisco announced that Vodafone India, one of India's leading
    telecommunications service providers, will be deploying Cisco's
    end-to-end networking solutions to evolve to a complete IP-based
    architecture in India.

Editor's Note:


 
--  The Q4 and fiscal year 2013 conference call to discuss Cisco's results
    along with its business outlook will be held on Wednesday, August 14,
    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 4:00 p.m. Pacific Time,
    August 14, 2013 to 4:00 p.m. Pacific Time, August 21, 2013 at
    1-866-507-3618 (United States) or 1-203-369-1892 (international). The
    replay will also be available via webcast from August 14, 2013 through
    October 21, 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, August 14, 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 IT that helps companies seize the opportunities of tomorrow by proving that amazing things can happen when you connect the previously unconnected. For ongoing news, please go to http://thenetwork.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 our ability to be the #1 IT company; the desire of our customers and partners for Cisco's help to successfully navigate the inconsistent global landscape; the benefits to our customers of our leadership in their product categories and our ability to bring technologies and solutions together in an architecture to lower operating costs and accomplish other business objectives; our financial strategy and our ability to continue profitable growth to maximize shareholder value for the long term; and the expectation that the Internet of Everything (IoE) will enable global private-sector businesses to generate profits) 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-K and 10-Q filed on September 12, 2012 and May 21, 2013, 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-K and 10-Q as each may be amended from time to time. Cisco's results of operations for the three months and the year ended July 27, 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.

This 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, significant litigation settlements (such as the patent litigation settlement with TiVo in the fourth quarter of fiscal 2013), 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, Catalyst, Cisco StadiumVision, and Cisco 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   Fiscal Year Ended 
                                     ------------------  ------------------ 
                                     July 27,  July 28,  July 27,  July 28, 
                                       2013      2012      2013      2012   
                                     --------  --------  --------  -------- 
REVENUE:                                                                    
  Product                            $  9,736  $  9,150  $ 38,029  $ 36,326 
  Service                               2,681     2,540    10,578     9,735 
                                     --------  --------  --------  -------- 
    Total revenue                      12,417    11,690    48,607    46,061 
                                     --------  --------  --------  -------- 
COST OF SALES:                                                              
  Product                               4,154     3,729    15,541    14,505 
  Service                                 916       876     3,626     3,347 
             
                        --------  --------  --------  -------- 
    Total cost of sales                 5,070     4,605    19,167    17,852 
                                     --------  --------  --------  -------- 
GROSS MARGIN                            7,347     7,085    29,440    28,209 
OPERATING EXPENSES:                                                         
  Research and development              1,517     1,416     5,942     5,488 
  Sales and marketing                   2,360     2,417     9,538     9,647 
  General and administrative              590       711     2,264     2,322 
  Amortization of purchased                                                 
   intangible assets                       66        91       395       383 
  Restructuring and other charges          --        79       105       304 
                                     --------  --------  --------  -------- 
    Total operating expenses            4,533     4,714    18,244    18,144 
                                     --------  --------  --------  -------- 
OPERATING INCOME                        2,814     2,371    11,196    10,065 
  Interest income                         171       167       654       650 
  Interest expense                       (143)     (147)     (583)     (596)
  Other income (loss), net                 29        (5)      (40)       40 
                                     --------  --------  --------  -------- 
    Interest and other income, net         57        15        31        94 
                                     --------  --------  --------  -------- 
                                                                            
INCOME BEFORE PROVISION FOR INCOME                                          
 TAXES                                  2,871     2,386    11,227    10,159 
Provision for income taxes                601       469     1,244     2,118 
                                     --------  --------  --------  -------- 
    NET INCOME                       $  2,270  $  1,917  $  9,983  $  8,041 
                                     ========  ========  ========  ======== 
Net income per share:                                                       
  Basic                              $   0.42  $   0.36  $   1.87  $   1.50 
                                     ========  ========  ========  ======== 
  Diluted                            $   0.42  $   0.36  $   1.86  $   1.49 
                                     ========  ========  ========  ======== 
Shares used in per-share calculation                                        
  Basic                                 5,367     5,332     5,329     5,370 
                                     ========  ========  ========  ======== 
  Diluted                               5,437     5,354     5,380     5,404 
                                     ========  ========  ========  ======== 
Cash dividends declared per common                                          
 share                               $   0.17  $   0.08  $   0.62  $   0.28 
                                     ========  ========  ========  ======== 
                                                                            
                                                                            
                                                                            
               RECONCILIATION OF GAAP TO NON-GAAP NET INCOME                
                  (In millions, except per-share amounts)                   
                                                                            
                                     Three Months Ended   Fiscal Year Ended 
                                     ------------------  ------------------ 
                                     July 27,  July 28,  July 27,  July 28, 
                                       2013      2012      2013      2012   
                                     --------  --------  --------  -------- 
GAAP net income                      $  2,270  $  1,917  $  9,983  $  8,041 
  Adjustments to cost of sales:                                             
    Share-based compensation expense       42        54       178       209 
    Amortization of acquisition-                                            
     related intangible assets            153       100       569       376 
    Impact to cost of sales from                                            
     purchase accounting adjustments                                        
     to inventory                          --        --        40        -- 
    TiVo patent litigation                                                  
     settlement (1)                       172        --       172        -- 
    Other acquisition-                                                      
     related/divestiture costs              1        --         1        -- 
    Significant asset impairments                                           
     and restructurings                    --        (5)       --       (31)
                                     --------  --------  --------  -------- 
  Total adjustments to GAAP cost of                                         
   sales                                  368       149       960       554 
                                     --------  --------  --------  -------- 
  Adjustments to operating expenses:                                        
    Share-based compensation expense      198       313       947     1,192 
    Amortization of acquisition-                                            
     related intangible assets             66        91       395       383 
    Other acquisition-                                                      
     related/divestiture costs             59         7       129        36 
    Significant asset impairments                                           
     and restructurings                    --       281        55       506 
                                     --------  --------  --------  -------- 
  Total adjustments to GAAP                                                 
   operating expenses                     323       692     1,526     2,117 
                                     --------  --------  --------  -------- 
  Total adjustments to GAAP income                                          
   before provision for income taxes      691       841     2,486     2,671 
                                     --------  --------  --------  -------- 
  Income tax effect of non-GAAP                                             
   adjustments                           (114)     (231)     (620)     (695)
  Significant tax matters (2)              --        --      (983)       -- 
                                     --------  --------  --------  -------- 
  Total adjustments to GAAP                                                 
   provision for income taxes            (114)     (231)   (1,603)     (695)
                                     --------  --------  --------  -------- 
Non-GAAP net income                  $  2,847  $  2,527  $ 10,866  $ 10,017 
                                     --------  --------  --------  -------- 
                                                                            
Diluted net income per share:                                               
GAAP                                 $   0.42  $   0.36  $   1.86  $   1.49 
                                     --------  --------  --------  -------- 
Non-GAAP                             $   0.52  $   0.47  $   2.02  $   1.85 
                                     --------  --------  --------  -------- 
                                                                            
(1) Pursuant to the terms of the previously disclosed settlement and patent 
    license agreement, Cisco paid TiVo a single lump sum of $294 million.   
    During the fourth quarter of fiscal 2013, Cisco recorded a charge of    
    $172 million in connection with this agreement. Non-GAAP net income for 
    the fourth 
quarter and fiscal year ended July 27, 2013 excluded this    
    charge.                                                                 
                                                                            
(2) For the fiscal year ended July 27, 2013, Cisco recorded a net tax       
    benefit of $983 million. This net tax benefit is comprised of an        
    Internal Revenue Service settlement of $794 million, the retroactive    
    reinstatement of the U.S. federal R&D tax credit of $72 million and a   
    tax benefit of $117 million related to prior fiscal years. Non-GAAP net 
    income excluded this net tax benefit of $983 million.                   
                                                                            
                                                                            
                                                                            
           RECONCILIATION OF GAAP TO NON-GAAP EFFECTIVE TAX RATE            
                                                                            
                                     Three Months Ended   Fiscal Year Ended 
                                    -------------------  ------------------ 
                                    July 27,   July 28,  July 27,  July 28, 
                                      2013       2012      2013      2012   
                                    --------   --------  --------  -------- 
GAAP effective tax rate                 20.9%      19.7%     11.1%     20.8%
Tax effect of non-GAAP adjustments                                          
 to net income                          (0.8)%      2.0%      9.7%      1.1%
                                    --------   --------  --------  -------- 
Non-GAAP effective tax rate             20.1%      21.7%     20.8%     21.9%
                                    --------   --------  --------  -------- 
                                                                            
                                                                            
                                                                            
                    CONDENSED CONSOLIDATED BALANCE SHEETS                   
                                (In millions)                               
                                 (Unaudited)                                
                                                                            
                                                         July 27,  July 28, 
                                                            2013      2012  
                                                         --------- ---------
ASSETS                                                                      
Current assets:                                                             
  Cash and cash equivalents                              $   7,925 $   9,799
  Investments                                               42,685    38,917
  Accounts receivable, net of allowance for doubtful                        
   accounts of $228 at July 27, 2013 and $207 at July                       
   28, 2012                                                  5,470     4,369
  Inventories                                                1,476     1,663
  Financing receivables, net                                 4,037     3,661
  Deferred tax assets                                        2,616     2,294
  Other current assets                                       1,312     1,230
                                                         --------- ---------
    Total current assets                                    65,521    61,933
Property and equipment, net                                  3,322     3,402
Financing receivables, net                                   3,911     3,585
Goodwill                                                    21,919    16,998
Purchased intangible assets, net                             3,403     1,959
Other assets                                                 3,115     3,882
                                                         --------- ---------
TOTAL ASSETS                                             $ 101,191 $  91,759
                                                         ========= =========
LIABILITIES AND EQUITY                                                      
Current liabilities:                                                        
  Short-term debt                                        $   3,283 $      31
  Accounts payable                                           1,029       859
  Income taxes payable                                         192       276
  Accrued compensation                                       3,378     2,928
  Deferred revenue                                           9,262     8,852
  Other current liabilities                                  5,048     4,785
                                                         --------- ---------
    Total current liabilities                               22,192    17,731
Long-term debt                                              12,928    16,297
Income taxes payable                                         1,748     1,844
Deferred revenue                                             4,161     4,028
Other long-term liabilities                                  1,034       558
                                                         --------- ---------
Total liabilities                                           42,063    40,458
Total equity                                                59,128    51,301
                                                         --------- ---------
TOTAL LIABILITIES AND EQUITY                             $ 101,191 $  91,759
                                                         ========= =========
                                                                            
                                                                            
                                                                            
                   CONSOLIDATED STATEMENTS OF CASH FLOWS                    
                               (In millions)                                
                                (Unaudited)                                 
                                                                            
                                                          Fiscal Year Ended 
                                                         ------------------ 
                                                         July 27,  July 28, 
                                                           2013      2012   
                                                         --------  -------- 
Cash flows from operating activities:                                       
  Net income                                             $  9,983  $  8,041 
  Adjustments to reconcile net income to net cash                           
   provided by operating activities:                                        
    Depreciation, amortization, and other                   2,351     2,602 
    Share-based compensation expense                        1,120     1,401 
    Provision for receivables                                  44        50 
    Deferred income taxes                                     (37)     (314)
    Excess tax benefits from share-based compensation         (92)      (60)
    Net losses (gains) on investments                           9       (31)
    Change in operating assets and liabilities, net of                      
     effects of acquisitions and divestitures:                              
      Accounts receivable                                  (1,001)      272 
      Inventories                                             218      (287)
      Financing receivables                                  (723)     (846)
      Other assets                                            (27)     (674)
      Accounts payable                                        164        (7)
      Income taxe
s, net                                      (239)      418 
      Accrued compensation                                    330      (101)
      Deferred revenue                                        598       727 
      Other liabilities                                       196       300 
                                                         --------  -------- 
        Net cash provided by operating activities          12,894    11,491 
                                                         --------  -------- 
                                                                            
Cash flows from investing activities:                                       
  Purchases of investments                                (36,608)  (41,810)
  Proceeds from sales of investments                       14,799    27,365 
  Proceeds from maturities of investments                  17,909    12,103 
  Acquisition of property and equipment                    (1,160)   (1,126)
  Acquisition of businesses, net of cash and cash                           
   equivalents acquired                                    (6,766)     (375)
  Purchases of investments in privately held companies       (225)     (380)
  Return of investments in privately held companies           209       242 
  Other                                                        74       166 
                                                         --------  -------- 
        Net cash used in investing activities             (11,768)   (3,815)
                                                         --------  -------- 
                                                                            
Cash flows from financing activities:                                       
  Issuances of common stock                                 3,338     1,372 
  Repurchases of common stock - repurchase program         (2,773)   (4,560)
  Shares repurchased for tax withholdings on vesting of                     
   restricted stock units                                    (330)     (200)
  Short-term borrowings, maturities less than 90 days,                      
   net                                                        (20)     (557)
  Issuances of debt, maturities greater than 90 days           24        -- 
  Repayments of debt, maturities greater than 90 days         (16)       -- 
  Excess tax benefits from share-based compensation            92        60 
  Dividends paid                                           (3,310)   (1,501)
  Other                                                        (5)     (153)
                                                         --------  -------- 
        Net cash used in financing activities              (3,000)   (5,539)
                                                         --------  -------- 
Net (decrease) increase in cash and cash equivalents       (1,874)    2,137 
Cash and cash equivalents, beginning of fiscal year         9,799     7,662 
                                                         --------  -------- 
Cash and cash equivalents, end of fiscal year            $  7,925  $  9,799 
                                                         ========  ======== 
                                                                            
Cash paid for:                                                              
Interest                                                 $    682  $    681 
Income taxes, net                                        $  1,519  $  2,014 
                                                                            
                                                                            
                                                                            
                      ADDITIONAL FINANCIAL INFORMATION                      
                               (In millions)                                
                                (Unaudited)                                 
                                                                            
                                                         July 27,  July 28, 
                                                           2013      2012   
                                                         --------  -------- 
Cash and Cash Equivalents and Investments:                                  
  Cash and cash equivalents                              $  7,925  $  9,799 
  Fixed income securities                                  39,888    37,297 
  Publicly traded equity securities                         2,797     1,620 
                                                         --------  -------- 
      Total                                              $ 50,610  $ 48,716 
                                                         ========  ======== 
Inventories:                                                                
  Raw materials                                          $    105  $    127 
  Work in process                                              24        35 
  Finished goods:                                                           
    Distributor inventory and deferred cost of sales          572       630 
    Manufactured finished goods                               480       597 
                                                         --------  -------- 
    Total finished goods                                    1,052     1,227 
  Service-related spares                                      256       213 
  Demonstration systems                                        39        61 
                                                         --------  -------- 
      Total                                              $  1,476  $  1,663 
                                                         ========  ======== 
                                                                            
Property and equipment, net:                                                
  Land, buildings, and building and leasehold                               
   improvements                                          $  4,426  $  4,363 
  Computer equipment and related software                   1,416     1,469 
  Production, engineering, and other equipment              5,721     5,364 
  Operating lease assets                                      326       300 
  Furniture and fixtures                                      497       487 
                                                         --------  -------- 
                                                           12,386    11,983 
  Less accumulated depreciation and amortization           (9,064)   (8,581)
                                                         --------  -------- 
      Total                                              $  3,322  $  3,402 
                                                         ========  ======== 
Other assets:                                                               
  Deferred tax assets                                    $  1,539  $  2,270 
  Investments in privately held companies                     833       858 
  Other                                                       743       754 
                                                         --------  -------- 
      Total                                              $  3,115  $  3,882 
                                                         ========  ======== 
Deferred revenue:                                                           
  Service                                                $  9,403  $  9,173 
  Product:                                                                  
    Unrecognized revenue on product shipments and other                     
     deferred revenue                                       3,340     2,975 
    Cash receipts related to unrecognized revenue from                      
     two-tier distributors                                    680       732 
                                                         --------  -------- 
    Total product d
eferred revenue                          4,020     3,707 
                                                         --------  -------- 
      Total                                              $ 13,423  $ 12,880 
                                                         ========  ======== 
Reported as:                                                                
  Current                                                $  9,262  $  8,852 
  Noncurrent                                                4,161     4,028 
                                                         --------  -------- 
      Total                                              $ 13,423  $ 12,880 
                                                         ========  ======== 
                                                                            
                                                                            
                                                                            
                 SUMMARY OF SHARE-BASED COMPENSATION EXPENSE                
                                (In millions)                               
                                                                            
                                     Three Months Ended   Fiscal Year Ended 
                                    ------------------- --------------------
                                    July 27,  July 28,  July 27,   July 28, 
                                       2013      2012      2013       2012  
                                    --------- --------- ---------  ---------
Cost of sales - product             $       9 $      14 $      40  $      53
Cost of sales - service                    33        40       138        156
                                    --------- --------- ---------  ---------
Share-based compensation expense in                                         
 cost of sales                             42        54       178        209
                                    --------- --------- ---------  ---------
Research and development                   58       104       286        401
Sales and marketing                       101       159       484        588
General and administrative                 39        50       175        203
Restructuring and other charges            --         2        (3)        --
                                    --------- --------- ---------  ---------
Share-based compensation expense in                                         
 operating expenses                       198       315       942      1,192
                                    --------- --------- ---------  ---------
Total share-based compensation                                              
 expense                            $     240 $     369 $   1,120  $   1,401
                                    ========= ========= =========  =========
Income tax benefit for share-based                                          
 compensation                       $      53 $      64 $     285  $     335
                                    ========= ========= =========  =========
                                                                            
                                                                            
                                                                            
                         ACCOUNTS RECEIVABLE AND DSO                        
                          (In millions, except DSO)                         
                                                                            
                                               July 27,  April 27, July 28, 
                                                  2013      2013      2012  
                                               --------- --------- ---------
Accounts receivable, net                       $   5,470 $   4,942 $   4,369
Days sales outstanding in accounts receivable                               
 (DSO)                                                40        37        34
                                                                            
                                                                            
                                                                            
           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       
                                            ------------------------------- 
                                            July 27,   April 27,  July 28,  
                                               2013       2013       2012   
                                            ---------  ---------  --------- 
Annualized inventory turns - GAAP                13.8       12.4       11.7 
  Cost of sales adjustments                      (1.0)      (0.5)      (0.4)
                                            ---------  ---------  --------- 
Annualized inventory turns - non-GAAP            12.8       11.9       11.3 
                                                                            
GAAP cost of sales                          $   5,070  $   4,705  $   4,605 
Cost of sales adjustments:                                                  
  Share-based compensation expense                (42)       (44)       (54)
  Amortization of acquisition-related                                       
   intangible assets                             (153)      (146)      (100)
  TiVo patent litigation settlement              (172)        --         -- 
  Other acquisition-related/divestiture                                     
   costs                                           (1)        --         -- 
  Significant asset impairments and                                         
   restructurings                                  --         --          5 
                                            ---------  ---------  --------- 
Non-GAAP cost of sales                      $   4,702  $   4,515  $   4,456 
                                            ---------  ---------  --------- 
                                                                            
                                                                            
                                                                            
                DIVIDENDS PAID AND REPURCHASE OF COMMON STOCK               
            (In millions, except dividends paid per common share)           
                                                                            
                                                                 Fiscal Year
                                Three Months Ended                  Ended   
                 ----------------------------------------------- -----------
                  July 27,    April 27,  January 26, October 27,  July 27,  
                     2013        2013        2013        2012        2013   
                 ----------- ----------- ----------- ----------- -----------
                                                                            
Dividends paid   $       918 $       905 $       743 $       744 $     3,310
Repurchase of                                                               
 common stock                                                               
 under the stock                                                            
 repurchase                                                                 
 program               1,160         860         500         253       2,773
                 ----------- ----------- ----------- ----------- -----------
Total            $     2,078 $     1,765 $     1,243 $       997 $     6,083
                 ----------- ----------- ----------- ----------- -----------
                     
                                                       
Dividends paid                                                              
 per common                                                                 
 share           $      0.17 $      0.17 $      0.14 $      0.14 $      0.62

Press Contact: Marc Musgrove Cisco 1 (408) 525-6320 mmusgrov@cisco.com

Investor Relations Contact: Melissa Selcher Cisco 1 (408) 424-1335 mselcher@cisco.com

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