Cisco Systems Reports Fourth Quarter and Fiscal Year 2002 Earnings; Company Also Announces Expansion of Stock Repurchase Program.Business Editors SAN JOSE San Jose, city, United States San Jose (sănəzā`, săn hōzā`), city (1990 pop. 782,248), seat of Santa Clara co., W central Calif.; founded 1777, inc. 1850. , Calif.--(BUSINESS WIRE)--Aug. 6, 2002 Cisco Systems “Cisco” redirects here. For other uses, see Cisco (disambiguation). Cisco System,Inc. (NASDAQ: CSCO, HKSE: 4333 ) is an American multinational corporation with 54,000 employees and annual revenue of US $28.48 billion as of 2006. , Inc. (Nasdaq:CSCO CSCO Cisco Systems Incorporated (stock symbol) CSCO Chief Supply Chain Officer ). -- Q4 conference call to be held at 1:45 p.m. PDT on Tuesday, Aug. 6; conference call number is 888-790-1779 (United States), 312-470-7077 (International Callers) -- Conference call replay available from 8/6/02 at 4:30 p.m. PDT through 8/13/02 at 800-839-1151 (United States), 402-998-1598 (International Callers) -- Additional information regarding Cisco's financials, as well as corresponding Web cast with visuals designed to guide participants through the call also available at 1:45 p.m. PST, please visit our investor relations site at http://www.cisco.com/go/inves tors -- Additional information regarding Cisco's fiscal year 2002 and Q4 available on Cisco's news site, including: -- Cisco Technology Innovation Highlights for Fiscal Year 2002: http://newsroom.cisco.com/dll s/hd_080602.html -- Customer Highlights and Technology Innovation Fact Sheet for the Fourth Quarter: http://newsroom.cisco.com/dll s/hd_080602b.html -- A Q&A with CEO John Chambers and CFO Larry Carter will be available after the earnings conference call at: http://newsroom.cisco.com Cisco Systems, Inc., the worldwide leader in networking for the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the , today reported its fourth quarter and fiscal year results for the period ended July July: see month. 27, 2002. Net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight for the fourth quarter of fiscal 2002 were $4.8 billion, compared to $4.3 billion for the fourth quarter of fiscal 2001, an increase of 12%, and compared to $4.8 billion for the third quarter of fiscal 2002. Net income for the fourth quarter of fiscal 2002 on a generally accepted accounting principle (GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ) basis, was $772 million or $0.10 per share, compared with net income of $7 million or $0.00 per share for the fourth quarter of fiscal 2001, and $729 million or $0.10 per share for the third quarter of fiscal 2002. Pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma net income for the fourth quarter of fiscal 2002, which excludes the effects of acquisition charges, payroll tax Payroll Tax Tax an employer withholds and/or pays on behalf of their employees based on the wage or salary of the employee. In most countries, including the U.S., both state and federal authorities collect some form of payroll tax. on employee stock option exercises, and certain nonrecurring Non`re`cur´ring a. 1. Nonrecurrent; as, the costs of a layoff are considered as a nonrecurring expense s>. items, was $1.0 billion or $0.14 per share, compared with pro forma net income of $163 million or $0.02 per share for the fourth quarter of fiscal 2001, and $838 million or $0.11 per share for the third quarter of fiscal 2002. During the quarter, Cisco completed the acquisitions of Hammerhead Networks Hammerhead Networks was founded in April of 2000. It was based in Billerica, Massachusetts and produced software solutions for the delivery of Internet Protocol service features. Its CEO was Eddie Sullivan. , Inc. and Navarro Networks Navarro Networks was a developer of ethernet-based ASIC components based in Plano, Texas, in the United States.. They produced a high end Network processor for ethernet and other applications. Navarro Networks was founded in 2000. , Inc. The total combined purchase price recorded during the quarter, including assumed liabilities, was approximately $260 million. In addition, Cisco took a one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. charge of $28 million, or less than $0.01 per share on an after-tax basis After-tax basis The comparison basis used to analyze the net after-tax returns on a corporate taxable bond and a municipal tax-free bond. , as a write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. of in-process research and development. Net sales for fiscal 2002 were $18.9 billion, compared to $22.3 billion for fiscal 2001, a decrease of 15%. GAAP net income for fiscal 2002 was $1.9 billion or $0.25 per share, compared with a net loss of $1.0 billion or $0.14 per share for fiscal 2001. Pro forma net income for fiscal 2002 was $2.9 billion or $0.39 per share, compared with pro forma net income of $3.1 billion or $0.41 per share for fiscal 2001. Cash and cash equivalents and total investments were $21.5 billion at fiscal year-end Fiscal Year-End The completion of a one-year, or 12-month, accounting period. Notes: The reason that a company's fiscal year often differs from the calendar year and does not close on Dec 31, is due to the nature of company's needs. 2002. Cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses was $1.6 billion for the fourth quarter and $6.6 billion for the full fiscal year 2002. "This was another solid quarter for Cisco, despite the ongoing challenges in the economy," said Cisco President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. John Chambers John Chambers could be any of the following people:
Further commenting on Cisco's performance, Chambers noted, "Throughout this challenging time, we have focused on four key areas: profits, cash generation, productivity, and profitable market-share gains. We have consistently improved quarter by quarter in each of these categories, with our fourth quarter bringing in more than $1 billion in pro forma net income, $1.6 billion in cash from operations, a 22 percent productivity increase over last year's fourth quarter and 12 percent year-over-year revenue growth compared to a 44 percent decline by our top ten competitors." "We continue to see global leaders capturing the productivity benefits that result from Internet business solutions based on Cisco networks," said Chambers. "Cisco continues to innovate in·no·vate v. in·no·vat·ed, in·no·vat·ing, in·no·vates v.tr. To begin or introduce (something new) for or as if for the first time. v.intr. To begin or introduce something new. in core routing and switching technologies that serve as the foundation of our customers' productivity gains, as well as in emerging technology markets that we believe will drive the next wave of productivity, such as IP telephony The two-way transmission of voice over a packet-switched IP network, which is part of the TCP/IP protocol suite. The terms "IP telephony" and "voice over IP" (VoIP) are synonymous. , storage, security and mobility." Stock Repurchase Stock repurchase A firm's repurchase of outstanding shares of its common stock. Program Expanded Cisco also today announced that its board of directors has increased the company's stock repurchase program to a total of up to $8 billion through September September: see month. 12, 2003. This represents an increase of $5 billion from the original $3 billion authorized au·thor·ize tr.v. au·thor·ized, au·thor·iz·ing, au·thor·iz·es 1. To grant authority or power to. 2. To give permission for; sanction: in September 2001. Of the $8 billion total, approximately $2 billion has been repurchased to date. Market Segment Update Enterprise Enterprise customers continue to be cautious but steady in spending. Cisco's strategy is focused on providing market-leading technology solutions that help its customers extend their enterprises across traditional corporate boundaries. Cisco continued its market-share leadership in enterprise routing, switching, security, and voice over IP, with new products introduced across all of these categories during the quarter. This momentum is a direct result of organizations seeking to maximize benefits of current IT investments while preparing for the future. Examples include the Bulgarian Ministry of Transportation and Communications, which is deploying Cisco's Internet Protocol See Internet and TCP/IP. (networking) Internet Protocol - (IP) The network layer for the TCP/IP protocol suite widely used on Ethernet networks, defined in STD 5, RFC 791. IP is a connectionless, best-effort packet switching protocol. (IP) telephony Meaning "sound over distance," it refers to electronically transmitting the human voice. In the beginning, telephony dealt only with analog signals in the circuit-switched networks of the telephone companies. solution, and FINAMA Asset Management in France, which is implementing an IP storage area network with Cisco technology. In Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of , more than 20 schools, universities and educational boards have implemented Cisco voice solutions. Cisco also introduced new enterprise IP storage, content switching, and network management solutions during the quarter, while reaching a major milestone by shipping its one-millionth Noun 1. one-millionth - one part in a million equal parts millionth common fraction, simple fraction - the quotient of two integers IP telephone. The company continues to see acceptance of voice-over-IP technologies with more than eight million voice ports shipped worldwide. Service Provider The worldwide service provider market remained challenged as carriers searched for innovative ways to generate revenue while controlling expenses. In response to this need, Cisco continued working closely with service providers to both identify and deploy profitable services, while also helping them to reduce costs through internal productivity improvements. Service providers are also looking to Cisco for assistance in the development and marketing of revenue-generating services that meet their enterprise customers' needs today. An example of this collaboration Working together on a project. See collaborative software. is the Cisco alliance with Sprint, announced earlier this fiscal year. As a result of this alliance, Sprint has gained five major customers over the past quarter, including Chico's Chico's is the name of more than one retail chain:
Chartered in 1891 and named for Thomas Meredith, founder of the Biblical Recorder, the Baptist Female University opened in 1891 in a facility in downtown Raleigh. , Elon Elon (ē`lŏn), in the Bible. 1 Hittite father-in-law of Esau. 2 Ancestor of the Elonites. 3 Judge of Israel. 4 Danite town. University, and Starwood Hotels and Resorts Worldwide. Cisco introduced several new technology innovations intended to reduce service providers' total cost of ownership, allowing them to use their current assets Current Assets Appearing on a company's balance sheet, it represents cash, accounts receivable, inventory, marketable securities, prepaid expenses, and other assets that can be converted to cash within one year. to scale existing services and lay a foundation for future services. Among them were two new advanced multiservice switches (1) A network switch that not only handles data, but adequately supports the real time transmission of voice and video. (2) A network device that supports multiple switching and routing protocols. -- the Cisco MGX MGX Montenegro Airlines, Yugoslavia (ICAO code) MGX Media Gateways (R) 8950 and the Cisco MGX 8830 -- that allowed carriers to offer new packet-based services such as IP virtual private networks (VPNs) and IP telephony on top of their existing ATM or Multiprotocol Label Switching (networking) Multiprotocol Label Switching - (MPLS) A packet switching protocol developed by the IETF. Initially developed to improve switching speed, other benefits are now seen as being more important. (MPLS (1) (MultiProtocol Lambda Switching) The earlier name for GMPLS. See GMPLS. (2) (MultiProtocol Label Switching) A standard from the IETF for including routing information in the packets of an IP network. ) infrastructure. Additionally, Cisco introduced the industry's most comprehensive portfolio of technologies for enabling managed central services over MPLS VPNs MPLS VPN is a family of methods for harnessing the power of Multiprotocol Label Switching (MPLS) to create Virtual Private Networks (VPNs). MPLS is well suited to the task as it provides traffic isolation and differentiation without substantial overhead. . These new technologies, available in Cisco IOS Cisco IOS (originally Internetwork Operating System) is the software used on the vast majority of Cisco Systems routers and all current Cisco network switches. IOS is a package of routing, switching, internetworking and telecommunications functions tightly integrated with a (R) Software, deliver greater simplicity and functionality to Layer 3 MPLS VPN architectures, enabling service providers to move beyond providing connectivity services to offering their customers value-added services A value-added service (VAS) is a telecommunications industry term for non-core services or, in short, all services beyond standard voice calls and fax transmissions. . Commercial The commercial market segment remains an area of healthy growth for network adoption and deployment of intelligent network solutions. The emerging markets, which include network security, mobility, and converged voice and data solutions, are of specific interest to small- and medium-sized Me´di`um-sized` a. 1. Having a medium size; as, a medium-sized man s>. Adj. 1. medium-sized - intermediate in size medium-size, moderate-size, moderate-sized businesses (SMBs). Cisco took another step forward in bringing intelligent services to the midsized network edge with the introduction of enhanced security services Security services are state institutions for the provision of intelligence, primarily of a strategic nature, but also including protective security intelligence. Examples include the Security Service (MI5) and the Secret Intelligence Service (MI6) in the United Kingdom, and the on the Cisco Catalyst(R) 3550 and 2950 Series Intelligent Ethernet switches A device that connects clients and servers to each other in an Ethernet network. See switched Ethernet. . These services deliver more secure network administration, stronger user authentication See authentication. , and improved security management. Independent research by AMI-Partners estimates that of the more than 14 million SMBs worldwide with local area networks (LANs), approximately nine million have more than one office location. According to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. AMI, the global number of SMBs expected to adopt wide area networks (WANs), storage area networks (SANs), or VPNs is projected to grow at annual rates of 20 to 50 percent during the next three-to-four quarters as these businesses network their distributed locations for enhanced productivity. This trending represents ongoing demand for Cisco's portfolio of networking infrastructure solutions to benefit the SMB market See SMB. place. The commercial market remains interested in the convergence of data and voice networks to reduce cost and improve productivity. The introduction of new Cisco access routers See edge router and remote access router. and customer premises equipment See CPE. is expected to increase as small and medium businesses seek to take advantage of IP telephony as a cost-effective cost-effective, n the minimal expenditure of dollars, time, and other elements necessary to achieve the health care result deemed necessary and appropriate. means to gain competitive advantage. Editors Note: -- Q4 conference call to be held at 1:45 p.m. PDT on Tuesday, Aug. 6; conference call number is 888-790-1779 (United States), 312-470-7077 (International Callers) -- Conference call replay available from 8/6/02 at 4:30 p.m. PDT through 8/13/02 at 800-839-1151 (United States), 402-998-1598 (International Callers) -- Additional information regarding Cisco's financials, as well as corresponding Web cast with visuals designed to guide participants through the call also available at 1:45 p.m. PST, please visit our investor relations site at http://www.cisco.com/go/inves tors -- Additional information regarding Cisco's fiscal year 2002 and Q4 available on Cisco's news site, including: -- Cisco Technology Innovation Highlights for Fiscal Year 2002: http://newsroom.cisco.com/dll s/hd_080602.html -- Customer Highlights and Technology Innovation Fact Sheet for the Fourth Quarter: http://newsroom.cisco.com/dll s/hd_080602b.html -- A Q&A with CEO John Chambers and CFO Larry Carter will be available after the earnings conference call at: http://newsroom.cisco.com About Cisco Systems Cisco Systems, Inc., (NASDAQ: CSCO) is the worldwide leader in networking for the Internet. News and information are available at www.cisco.com. This release contains projections and other forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. regarding future events 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. Readers are referred to the documents filed by Cisco with the SEC, specifically the most recent reports on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. , 10-Q and 8-K, each as it may be amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. from time to time, which identify important risk factors that could cause actual results to differ from those contained in the forward-looking statements. In addition to these risk factors, other factors that could cause actual results to differ materially include the following: business and economic conditions and growth trends in the networking industry in various geographic regions; global economic conditions; overall information technology spending; the growth of the Internet and levels of capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. on Internet-based systems; variations in customer demand for products and services, including sales to the service provider market; the ability to successfully restructure existing businesses; the timing of orders and manufacturing lead times; changes in customer order patterns; insufficient, excess or obsolete inventory Obsolete Inventory Term that refers to inventory that is at the end of its product life cycle and has not seen any sales or usage for a set period of time usually determined by the industry. This type of inventory has to be written down and can cause large losses for a company. ; variations in sales channels, product costs, or mix of products sold; the ability to successfully reduce overhead and manage expenses; the ability to successfully acquire businesses and technologies and to successfully integrate and operate these acquired businesses and technologies; increased competition in the networking industry; dependence on the introduction and market acceptance of new product offerings and standards; rapid technological and market change; the trend towards sales of integrated network A network that supports both data and voice and/or different networking protocols. See converged network and new public network. solutions; manufacturing and sourcing risks; Internet infrastructure problems and government regulation of the Internet; international operations Internal Operations (I.O., IO or I/O) is a fictional American Intelligence Agency in Wildstorm comics. It was originally called International Operations. I.O. first appeared in WildC.A.T.S. volume 1 #1 (August, 1992) and was created by Brandon Choi and Jim Lee. ; the timing and amount of employer payroll tax to be paid on employees' gains on stock options exercised; litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. involving patents, intellectual property, antitrust Antitrust The antitrust laws apply to virtually all industries and to every level of business, including manufacturing, transportation, distribution, and marketing. They prohibit a variety of practices that restrain trade. , stockholder and other matters; possible disruption disruption /dis·rup·tion/ (dis-rup´shun) a morphologic defect resulting from the extrinsic breakdown of, or interference with, a developmental process. in commercial activities occasioned by terrorist activity and armed conflict, such as changes in logistics and security arrangements, and reduced end-user (job) end-user - The person who uses a computer application, as opposed to those who developed or support it. The end-user may or may not know anything about computers, how they work, or what to do if something goes wrong. purchases relative to expectations; exposure to credit risks relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc certain customers and credit exposures in weakened weak·en tr. & intr.v. weak·ened, weak·en·ing, weak·ens To make or become weak or weaker. weak  en·er n. markets; the ability to recruit and retain key personnel; stock price
volatility; financial risk management; and potential volatility in
operating results, among others. The financial information contained in
this release should be read in conjunction with the consolidated
financial statements Consolidated Financial StatementsThe combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge and notes thereto there·to adv. 1. To that, this, or it. 2. Archaic In addition to that; furthermore. thereto Adverb Formal 1. to that or it 2. included in Cisco's most recent reports on Form 10-K and Form 10-Q Form 10-Q See 10-Q. , each as it may be amended from time to time. Cisco's results of operations for the three and twelve months ended July 27, 2002 are not necessarily indicative of Cisco's operating results for any future periods. Cisco provides pro forma net income and pro forma net income per share data as additional information for its operating results. These measures are not in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with, or an alternative for, generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting and may be different from pro forma measures used by other companies. Catalyst, Cisco, Cisco IOS, Cisco Systems, the Cisco Systems logo, and MGX are registered trademarks or trademarks of Cisco Systems, Inc. and/or and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. its affiliates in the U.S. and certain other countries. All other trademarks mentioned in this document or Web site 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. Copyright(c)2002 Cisco Systems, Inc. All rights reserved.
Cisco Systems, Inc.
Consolidated Statements of Operations
(in Millions, Except Per-share Amounts)
(Unaudited)
Three Months Ended Twelve Months Ended
--------------------- -----------------------
July 27, July 28, July 27, July 28,
2002 2001 2002 2001
---------- ---------- ----------- -----------
NET SALES:
Product $ 3,998 $ 3,577 $ 15,669 $ 19,559
Service 831 721 3,246 2,734
-------- -------- --------- ---------
Total net sales 4,829 4,298 18,915 22,293
-------- -------- --------- ---------
COST OF SALES:
Product 1,306 1,635 5,914 10,198
Service 240 227 988 1,023
-------- -------- --------- ---------
Total cost of
sales 1,546 1,862 6,902 11,221
-------- -------- --------- ---------
GROSS MARGIN 3,283 2,436 12,013 11,072
OPERATING EXPENSES:
Research and
development 797 893 3,301 3,778
Sales and
marketing 1,028 1,138 4,235 5,240
General and
administrative 152 190 611 768
Restructuring
costs and other
special charges -- -- -- 1,170
Payroll tax on
employee stock
option exercises -- 5 7 55
Amortization of
deferred
stock-based
compensation 43 49 176 155
Amortization of
goodwill -- 196 -- 690
Amortization of
purchased
intangible assets 288 102 699 365
In-process
research and
development 28 -- 65 855
-------- -------- --------- ---------
Total
operating
expenses 2,336 2,573 9,094 13,076
-------- -------- --------- ---------
OPERATING INCOME (LOSS) 947 (137) 2,919 (2,004)
Net gains (losses) on
investments -- -- (858) 190
Interest and other
income, net 150 199 649 940
-------- -------- --------- ---------
INCOME (LOSS) BEFORE
PROVISION
FOR INCOME TAXES 1,097 62 2,710 (874)
Provision for income
taxes 325 55 817 140
-------- -------- --------- ---------
NET INCOME (LOSS) $ 772 $ 7 $ 1,893 $ (1,014)
======== ======== ========= =========
Net income (loss) per
share--basic $ 0.11 $ 0.00 $ 0.26 $ (0.14)
======== ======== ========= =========
Net income (loss) per
share--diluted (1) $ 0.10 $ 0.00 $ 0.25 $ (0.14)
======== ======== ========= =========
Shares used in per-
share calculation--
basic 7,292 7,294 7,301 7,196
======== ======== ========= =========
Shares used in per-
share calculation--
diluted (1) 7,410 7,484 7,447 7,196
======== ======== ========= =========
Note 1: Diluted net loss per share for the twelve months ended
July 28, 2001 is computed using the weighted-average number of common
shares outstanding during the period and excludes common-equivalent
shares, as their effect is anti-dilutive. The dilutive potential
common shares that were antidilutive for fiscal 2001 amounted to 348
million shares.
Cisco Systems, Inc.
Pro Forma Consolidated Statements of Operations
(See Pro Forma Adjustments Listed in Table Below)
(in Millions, Except Per-share Amounts)
(Unaudited)
Three Months Ended Twelve Months Ended
--------------------- ---------------------
July 27, July 28, July 27, July 28,
2002 2001 2002 2001
---------- ---------- ----------- ----------
NET SALES:
Product $ 3,998 $ 3,577 $ 15,669 $ 19,559
Service 831 721 3,246 2,734
-------- -------- --------- ---------
Total net sales 4,829 4,298 18,915 22,293
-------- -------- --------- ---------
COST OF SALES:
Product 1,319 1,822 6,439 8,136
Service 240 227 988 1,023
-------- -------- --------- ---------
Total cost of
sales 1,559 2,049 7,427 9,159
-------- -------- --------- ---------
GROSS MARGIN 3,270 2,249 11,488 13,134
OPERATING EXPENSES:
Research and
development 797 893 3,301 3,778
Sales and marketing 1,028 1,138 4,235 5,240
General and
administrative 152 190 611 768
-------- -------- --------- ---------
Total
operating
expenses 1,977 2,221 8,147 9,786
-------- -------- --------- ---------
OPERATING INCOME 1,293 28 3,341 3,348
Interest and other
income, net 150 199 649 940
-------- -------- --------- ---------
INCOME BEFORE PROVISION
FOR INCOME TAXES 1,443 227 3,990 4,288
Provision for income
taxes 404 64 1,117 1,202
-------- -------- --------- ---------
NET INCOME $ 1,039 $ 163 $ 2,873 $ 3,086
======== ======== ========= =========
Net income per share--
basic $ 0.14 $ 0.02 $ 0.39 $ 0.43
======== ======== ========= =========
Net income per share--
diluted $ 0.14 $ 0.02 $ 0.39 $ 0.41
======== ======== ========= =========
Shares used in per-share
calculation--basic 7,292 7,294 7,301 7,196
======== ======== ========= =========
Shares used in per-share
calculation--diluted 7,410 7,484 7,447 7,544
======== ======== ========= =========
The above pro forma amounts have been adjusted to exclude
the following items:
In-process research and
development $ 28 $ -- $ 65 $ 855
Payroll tax on employee
stock option exercises -- 5 7 55
Amortization of
deferred stock-based
compensation 43 49 176 155
Amortization of
goodwill -- 196 -- 690
Amortization of purchased
intangible assets 288 102 699 365
Net (gains) losses on
investments -- -- 858 (190)
Restructuring costs and
other special charges -- -- -- 1,170
Excess inventory
(benefit) charge (13) (187) (525) 2,062
Income tax effect (79) (9) (300) (1,062)
-------- -------- --------- ---------
$ 267 $ 156 $ 980 $ 4,100
======== ======== ========= =========
Cisco Systems, Inc.
Consolidated Balance Sheets
(in Millions)
(Unaudited)
July 27, July 28,
2002 2001
----------- ----------
ASSETS
Current assets:
Cash and cash equivalents $ 9,484 $ 4,873
Short-term investments 3,172 2,034
Accounts receivable, net of allowance
for doubtful accounts
of $335 at July 27, 2002 and $288
at July 28, 2001 1,105 1,466
Inventories, net 880 1,684
Deferred tax assets 2,030 1,809
Lease receivables, net 239 405
Prepaid expenses and other current assets 523 564
--------- ---------
Total current assets 17,433 12,835
Investments 8,800 10,346
Restricted investments -- 1,264
Property and equipment, net 4,102 2,591
Goodwill 3,565 3,189
Purchased intangible assets, net 797 1,470
Lease receivables, net 39 253
Other assets 3,059 3,290
--------- ---------
TOTAL ASSETS $ 37,795 $ 35,238
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 470 $ 644
Income taxes payable 579 241
Accrued compensation 1,365 1,058
Deferred revenue 3,143 2,470
Other accrued liabilities 2,496 2,553
Restructuring liabilities 322 386
--------- ---------
Total current liabilities 8,375 7,352
Deferred revenue 749 744
--------- ---------
Total liabilities 9,124 8,096
Minority interest 15 22
Shareholders' equity 28,656 27,120
--------- ---------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 37,795 $ 35,238
========= =========
Cisco Systems, Inc.
Consolidated Statements of Cash Flows
(in Millions)
(Unaudited)
Twelve Months Ended
---------------------
July 27, July 28,
2002 2001
---------- ----------
Cash flows from operating activities:
Net income (loss) $ 1,893 $ (1,014)
Adjustments to reconcile net income (loss)
to net cash
provided by operating activities:
Depreciation and amortization 1,957 2,236
Provision for doubtful accounts 91 268
Provision for inventory 149 2,775
Deferred income taxes (573) (924)
Tax benefits from employee stock
option plans 61 1,397
In-process research and development 53 739
Net (gains) losses on investments
and provision for losses 1,127 43
Restructuring costs and other
special charges -- 501
Change in operating assets and
liabilities:
Accounts receivable 270 569
Inventories 673 (1,644)
Prepaid expenses and other
current assets (28) (25)
Accounts payable (174) (105)
Income taxes payable 389 (434)
Accrued compensation 307 (256)
Deferred revenue 678 1,629
Other accrued liabilities (222) 251
Restructuring liabilities (64) 386
-------- ---------
Net cash provided by
operating activities 6,587 6,392
-------- ---------
Cash flows from investing activities:
Purchases of short-term investments (5,473) (4,594)
Proceeds from sales and maturities of
short-term investments 5,868 4,370
Purchases of investments (15,760) (18,306)
Proceeds from sales and maturities of
investments 15,317 15,579
Purchases of restricted investments (291) (941)
Proceeds from sales and maturities of
restricted investments 1,471 1,082
Acquisition of property and equipment (2,641) (2,271)
Acquisition of businesses, net of cash and
cash equivalents 16 (13)
Change in lease receivables, net 380 457
Purchases of investments in privately held
companies (58) (1,161)
Lease deposits 320 (320)
Purchase of minority interest of Cisco
Systems, K.K. (Japan) (115) (365)
Other 159 (520)
-------- ---------
Net cash used in
investing activities (807) (7,003)
-------- ---------
Cash flows from financing activities:
Issuance of common stock 655 1,262
Repurchase of common stock (1,854) --
Other 30 (12)
-------- ---------
Net cash (used in)
provided by financing
activities (1,169) 1,250
-------- ---------
Net increase in cash and cash equivalents 4,611 639
Cash and cash equivalents, beginning of fiscal
year 4,873 4,234
-------- ---------
Cash and cash equivalents, end of fiscal year $ 9,484 $ 4,873
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