Cisco Systems Reports Third Quarter Earnings.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. -- 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 NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :CSCO CSCO Cisco Systems Incorporated (stock symbol) CSCO Chief Supply Chain Officer ) --Q3 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 : $6.2 billion (10.1% increase year over year; 2.1% increase quarter over quarter) --Q3 Net Income: $1.4 billion GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ; $1.5 billion 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 --Q3 Earnings Per Share: $0.21 GAAP; $0.23 pro forma 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 third quarter results for the period ended April 30, 2005. Net sales for the third quarter of fiscal 2005 were $6.2 billion, compared with $5.6 billion for the third quarter of fiscal 2004, an increase of 10.1 percent, and compared with $6.1 billion for the second quarter of fiscal 2005, an increase of 2.1 percent. Net income for the third quarter of fiscal 2005, on a 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 (GAAP) basis, was $1.4 billion or $0.21 per share, compared with $1.2 billion or $0.17 per share for the third quarter of fiscal 2004, and compared with $1.4 billion or $0.21 per share for the second quarter of fiscal 2005. Pro forma net income for the third quarter of fiscal 2005 was $1.5 billion or $0.23 per share, compared with $1.4 billion or $0.19 per share for the third quarter of fiscal 2004, and compared with $1.5 billion or $0.22 per share for the second quarter of fiscal 2005. A reconciliation between net income on a GAAP basis and pro forma net income is provided in a table immediately following the Pro Forma Consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: Statements of Operations. Net sales for the first nine months of fiscal 2005 were $18.2 billion, compared with $16.1 billion for the first nine months of fiscal 2004, an increase of 13.0 percent. Net income for the first nine months of fiscal 2005, on a GAAP basis, was $4.2 billion or $0.63 per share, compared with $3.0 billion or $0.43 per share for the first nine months of fiscal 2004. Net income on a GAAP basis for the first nine months of fiscal 2004 included a non-cash cumulative stock compensation charge of $567 million, or $0.08 per share relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the implementation of Financial Accounting Standards Board Financial Accounting Standards Board (FASB) Board composed of independent members who create and interpret Generally Accepted Accounting Principles (GAAP). Interpretation No. 46(R). Pro forma net income for the first nine months of fiscal 2005 was $4.4 billion or $0.67 per share, compared with $3.9 billion or $0.54 per share for the first nine months of fiscal 2004. During the third quarter of fiscal 2005, Cisco completed the acquisitions of Airespace, Inc. and Protego Networks, Inc. "Today's results are a clear indication that our integrated technology strategy is working -- customers are realizing the benefits of an intelligent network architecture," said John Chambers John Chambers could be any of the following people:
Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. momentum we are seeing across product families, geographies and market segments clearly points to Cisco's strong competitive advantage." Chambers continued, "As we continue to manage the business for long-term growth, we are pleased with our very solid results in what is typically a seasonally challenging quarter. Customers are experiencing how the network can provide tremendous value to their businesses. We are seeing service providers, in particular, realize the true power of IP networking in delivering comprehensive products and services to their end users, with Cisco as a key business partner every step of the way." Cisco will discuss third quarter fiscal 2005 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. Financial Highlights --Cash flows from operations were $1.9 billion for the third quarter of fiscal 2005, compared with $2.4 billion for the third quarter of fiscal 2004, and compared with $1.8 billion for the second quarter of fiscal 2005. --Cash and cash equivalents and total investments were $16.1 billion at the end of the third quarter of fiscal 2005, compared with $19.3 billion at the end of the fourth quarter of fiscal 2004, and compared with $16.5 billion at the end of the second quarter of fiscal 2005. --During the third quarter of fiscal 2005, Cisco repurchased 114 million shares of common stock at an average price of $17.91 per share for an aggregate purchase price of $2.0 billion. As of April 30, 2005, Cisco had repurchased and retired 1.4 billion shares of Cisco common stock at an average price of $18.06 per share for an aggregate purchase price of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $24.7 billion since the inception INCEPTION. The commencement; the beginning. In making a will, for example, the writing is its inception. 3 Co. 31 b; Plowd. 343. Vide Consummation; Progression. of the stock repurchase Stock repurchase A firm's repurchase of outstanding shares of its common stock. program. --Days sales outstanding (DSO See CSO. ) in accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying at the end of the third quarter of fiscal 2005 were 33 days, compared with 28 days at the end of the fourth quarter of fiscal 2004, and compared with 34 days at the end of the second quarter of fiscal 2005. --Inventory turns were 6.5 in the third quarter of fiscal 2005, compared with 6.4 in the fourth quarter of fiscal 2004, and compared with 6.5 in the second quarter of fiscal 2005. "This quarter's results demonstrate that we have the right strategy in place to deliver profitable growth," said Dennis Powell Dennis Clay Powell (born August 13, 1963 in Moultrie, Georgia) is a former pitcher in Major League Baseball. He pitched from 1985-1993 for the Los Angeles Dodgers and Seattle Mariners. As a hitter, he had three hits in his career; all were doubles. , chief financial officer, Cisco Systems. "Cisco is clearly delivering on its long-term financial priorities with revenue up 13 percent and pro forma operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. up 18 percent year to date." Business Highlights --British Telecom announced that it selected Cisco as a preferred supplier to build its 21st Century Network. --Cisco announced a definitive agreement to acquire privately held Sipura Technology Sipura Technology, Inc. is a Voice over IP (VoIP) startup company based in San Jose, California founded on 2003 with its siblings VideoCore and Komodo Technology, Inc. that makes VoIP telephone adapters including the Sipura Phone Adapter SPA2100, SPA3000, SPA9000, as well as SPA , Inc., a leader in consumer voice-over-IP (VoIP) technology and a key technology provider for Linksys Linksys is a division of Cisco Systems that sells products for home and small office networks. Originally founded in 1988, Linksys was acquired by Cisco in 2003[1]. (R), a division of Cisco Systems, Inc. --Merrill Lynch Lynch may be:
(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. system to support 14,000 financial advisers in approximately 600 Merrill Lynch Merrill Lynch & Co., Inc. (NYSE: MER TYO: 8675 ), through its subsidiaries and affiliates, provides capital markets services, investment banking and advisory services, wealth management, asset management, insurance, banking and related products and services on a global basis. offices nationwide. --Linksys announced that it shipped more than one million VoIP ports in six months to the consumer market. --Hewlett-Packard deployed Cisco optical transport and storage area network (SAN) technology solutions. --Sprint selected Cisco as the strategic solution provider for its converged Cisco based IP next generation network and Comcast Comcast Corporation, (NASDAQ: CMCSA) is the largest[1] cable television (CATV) company and the second largest Internet service provider in the United States. selected Cisco to help build its IP next generation network. --Vancouver International Airport Authority consolidated 23 networks by deploying a single, converged network The integration of the telephone system with IP-based data networks. See softswitch. (networking) converged network - A single network that can carry voice, video and data. utilizing Cisco IP Communications A general term for networks that use the IP protocol for voice (VoIP) and video traffic. See IP telephony. , routers and switches, and wireless systems throughout the airport. --Japan-based NTT NTT Nippon Telegraph and Telephone Corporation NTT New Technology Telescope NTT National Technology Transfer, Inc NTT Name That Tune (TV game show) NTT National Tree Trust NTT Number Theoretic Transform Communications Corporation is using Cisco multicast (1) To transmit data to multiple recipients on the network at the same time using one transmission stream to the switches, at which point data are distributed out to the end users on separate lines. virtual-private-network (VPN (Virtual Private Network) A private network that is configured within a public network (a carrier's network or the Internet) in order to take advantage of the economies of scale and management facilities of large networks. ) technology in the backbone network A backbone network provides a path for the exchange of information between different LANs or subnetworks.[1] A backbone can tie together diverse networks in the same building, in different buildings in a campus environment, or over wide areas. for its "Arcstar IP-VPN" service. --Seoul-based service provider KT started offering "triple play" service, or data, voice and video, supported by the Cisco ONS ONS Office for National Statistics (UK) ONS One Night Stand ONS Onslaught (Unreal Tournament 2004) ONS Oncology Nursing Society ONS Object Naming Service ONS Offshore Northern Seas 15454 Multiservice Provisioning Platform (MSPP (MultiService Provisioning Platform) A high-end Cisco router that supports TDM circuits, packets and optical connections at the edge of the network. See MSSP and MSTP. ). --Cisco introduced the Cisco XR 12000 Series of routers, which represents the combination of the 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) XR Software with the capabilities of the Cisco 12000 Series routers. --Cisco added more than 10 new products, software enhancements and services across its security product portfolio, including new intrusion prevention See IPS and IDS. , application firewall, SSL (Secure Sockets Layer) The leading security protocol on the Internet. Developed by Netscape, SSL is widely used to do two things: to validate the identity of a Web site and to create an encrypted connection for sending credit card and other personal data. VPN, and endpoint security innovations. --Cisco announced a definitive agreement to acquire privately held Topspin Communications Topspin Communications a leading InfiniBand Vendor was acquired by Cisco Systems , Inc., a leading provider of server fabric switches. Editor's Note Editor's Note (foaled in 1993 in Kentucky) is an American thoroughbred Stallion racehorse. He was sired by 1992 U.S. Champion 2 YO Colt Forty Niner, who in turn was a son of Champion sire Mr. Prospector and out of the mare, Beware Of The Cat. Trained by D. : --Q3 FY'05 conference call to discuss Cisco's results along with its outlook for Q4 FY'05 to be held at 1:30 p.m. Pacific Time on Tuesday Tuesday: see week. , May 10, 2005. Conference call number is 888-790-3156 (United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. ); 630-395-0021 (international). --Conference call replay will be available from 4:30 p.m. Pacific Time on May 10, 2005 to 4:30 p.m. Pacific Time on May 17, 2005 at 800-216-4453 (United States); 402-220-3881 (international). The replay is also available from May 10, 2005 through July July: see month. 22, 2005 on the Cisco Investor Relations Investor relations The process by which the corporation communicates with its investors. Website at http://www.cisco.com/go/investors. --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 on May 10, 2005. 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://www.cisco.com/go/investors. --A Q&A with Cisco's CEO and CFO See Chief Financial Officer. on Q3 FY'05 results will be available at http://newsroom.cisco.com. About Cisco Systems Cisco Systems, Inc. (NASDAQ:CSCO), the worldwide leader in networking for the Internet, celebrates 20 years of commitment to technology innovation, industry leadership and corporate social responsibility. Information about Cisco can be found at http://www.cisco.com. For ongoing news, go to http://newsroom.cisco.com. This release may be deemed to contain 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. , which are subject to the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provisions of the Private 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. Reform Act of 1995. These forward-looking statements include, among other things, statements 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 due to a variety of factors, including: business and economic conditions and growth trends in the networking industry and in various geographic geographic /geo·graph·ic/ (je?o-graf´ik) in pathology, of or referring to a pattern that is well demarcated, resembling outlines on a map. geographic pertaining to geography. regions; global economic conditions and uncertainties in the geopolitical ge·o·pol·i·tics n. (used with a sing. verb) 1. The study of the relationship among politics and geography, demography, and economics, especially with respect to the foreign policy of a nation. 2. a. environment; 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 timing of orders and manufacturing lead times; changes in customer order patterns or customer mix; insufficient in·suf·fi·cient adj. 1. Not sufficient. 2. Incapable of proper functioning. , 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. ; 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; increased competition in the networking industry; 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 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. , shareholder and other matters; our ability to recruit RECRUIT. A newly made soldier. and retain key personnel; our ability to manage financial risk; currency fluctuations and other international factors; potential volatility Volatility 1. A statistical measure of the tendency of a market or security to rise or fall sharply within a period of time. 2. A variable in option pricing formulas that denotes the extent to which the return of the underlying asset will fluctuate between now and the in operating results and other factors listed in Cisco's 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. The financial information contained in this release should be read in conjunction conjunction, in astronomy conjunction, in astronomy, alignment of two celestial bodies as seen from the earth. Conjunction of the moon and the planets is often determined by reference to the sun. with the consolidated financial statements Consolidated Financial Statements The 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 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. Cisco's results of operations for the three and nine months ended April 30, 2005 are not necessarily indicative indicative: see mood. 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 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. Cisco provides pro forma net income and pro forma net income per share data as additional information to help investors better understand 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 and may be different from pro forma measures used by other companies. Cisco believes that this presentation of pro forma net income and pro forma net income per share provides useful information to management and investors regarding certain additional financial and business trends relating to its financial condition and results of operations. Cisco believes when GAAP net income and GAAP net income per share are viewed in conjunction with pro forma net income and pro forma net income per share, investors are provided with a more meaningful understanding of Cisco's ongoing operating performance. In addition, Cisco's management uses these measures for reviewing the financial results of Cisco. Copyright (C) 2005 Cisco Systems, Inc. All rights reserved. Cisco, Cisco Systems, the Cisco Systems logo and Linksys 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 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.
Cisco Systems, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per-share amounts)
(Unaudited)
Three Months Ended Nine Months Ended
------------------- --------------------
April 30, May 1, April 30, May 1,
2005 2004 2005 2004
--------- -------- --------- ---------
NET SALES:
Product $ 5,189 $ 4,730 $ 15,328 $ 13,543
Service 998 890 2,892 2,576
--------- ------- -------- --------
Total net sales 6,187 5,620 18,220 16,119
--------- ------- -------- --------
COST OF SALES:
Product 1,697 1,452 5,012 4,193
Service 355 301 1,005 855
--------- ------- -------- --------
Total cost of sales 2,052 1,753 6,017 5,048
--------- ------- -------- --------
GROSS MARGIN 4,135 3,867 12,203 11,071
OPERATING EXPENSES:
Research and development 790 801 2,362 2,295
Sales and marketing 1,180 1,131 3,414 3,295
General and administrative 237 215 684 605
Payroll tax on stock
option exercises 3 3 7 12
Stock-based compensation
related to acquisitions
and investments 47 101 126 188
Amortization of purchased
intangible assets 54 60 171 182
In-process research and
development 6 2 20 3
--------- ------- -------- --------
Total operating expenses 2,317 2,313 6,784 6,580
--------- ------- -------- --------
OPERATING INCOME 1,818 1,554 5,419 4,491
Interest income 142 127 399 388
Other income, net 8 40 65 177
--------- ------- -------- --------
Interest and other
income, net 150 167 464 565
--------- ------- -------- --------
INCOME BEFORE PROVISION FOR
INCOME TAXES AND CUMULATIVE
EFFECT OF ACCOUNTING CHANGE 1,968 1,721 5,883 5,056
Provision for income taxes 563 510 1,682 1,468
--------- ------- -------- --------
INCOME BEFORE CUMULATIVE
EFFECT OF ACCOUNTING CHANGE 1,405 1,211 4,201 3,588
Cumulative effect of
accounting change, net of
tax -- -- -- (567)
--------- ------- -------- --------
NET INCOME $ 1,405 $ 1,211 $ 4,201 $ 3,021
--------- ------- -------- --------
Income per share before
cumulative effect of
accounting change:
Basic $ 0.22 $ 0.18 $ 0.64 $ 0.52
--------- ------- -------- --------
Diluted $ 0.21 $ 0.17 $ 0.63 $ 0.51
--------- ------- -------- --------
Net income per share:
Basic $ 0.22 $ 0.18 $ 0.64 $ 0.44
--------- ------- -------- --------
Diluted $ 0.21 $ 0.17 $ 0.63 $ 0.43
--------- ------- -------- --------
Shares used in per-share
calculation:
Basic 6,435 6,816 6,529 6,872
--------- ------- -------- --------
Diluted 6,541 7,074 6,656 7,095
--------- ------- -------- --------
Cisco Systems, Inc.
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per-share amounts)
(Unaudited)
Three Months Ended Nine Months Ended
------------------- -------------------
April 30, May 1, April 30, May 1,
2005 2004 2005 2004
--------- -------- --------- --------
NET SALES:
Product $ 5,189 $ 4,730 $ 15,328 $13,543
Service 998 890 2,892 2,576
--------- -------- --------- --------
Total net sales 6,187 5,620 18,220 16,119
--------- -------- --------- --------
COST OF SALES:
Product 1,697 1,452 5,012 4,193
Service 355 301 1,005 855
--------- -------- --------- --------
Total cost of sales 2,052 1,753 6,017 5,048
--------- -------- --------- --------
GROSS MARGIN 4,135 3,867 12,203 11,071
OPERATING EXPENSES:
Research and development 790 801 2,362 2,295
Sales and marketing 1,180 1,131 3,414 3,295
General and administrative 237 215 684 605
--------- -------- --------- --------
Total operating expenses
(a) (b) (c) (d) 2,207 2,147 6,460 6,195
--------- -------- --------- --------
OPERATING INCOME
(a) (b) (c) (d) 1,928 1,720 5,743 4,876
Interest income 142 127 399 388
Other income, net (e) 8 40 12 92
--------- -------- --------- --------
Interest and other income,
net (e) 150 167 411 480
--------- -------- --------- --------
INCOME BEFORE PROVISION FOR
INCOME TAXES
(a) (b) (c) (d) (e) 2,078 1,887 6,154 5,356
Provision for income taxes (f) 582 528 1,723 1,499
--------- -------- --------- --------
NET INCOME $ 1,496 $ 1,359 $ 4,431 $ 3,857
--------- -------- --------- --------
Net income per share:
Basic $ 0.23 $ 0.20 $ 0.68 $ 0.56
--------- -------- --------- --------
Diluted $ 0.23 $ 0.19 $ 0.67 $ 0.54
--------- -------- --------- --------
Shares used in per-share
calculation:
Basic 6,435 6,816 6,529 6,872
--------- -------- --------- --------
Diluted 6,541 7,074 6,656 7,095
--------- -------- --------- --------
A reconciliation between net
income on a GAAP basis and
pro forma net income is as
follows:
GAAP net income $ 1,405 $ 1,211 $ 4,201 $ 3,021
(a) In-process research and
development 6 2 20 3
(b) Payroll tax on stock
option exercises 3 3 7 12
(c) Stock-based compensation
related to acquisitions and
investments 47 101 126 188
(d) Amortization of purchased
intangible assets 54 60 171 182
(e) Gain on publicly traded
equity securities -- -- (53) (85)
(f) Income tax effect (19) (18) (41) (31)
(g) Cumulative effect of
accounting change, net of
tax -- -- -- 567
--------- -------- --------- --------
Pro forma net income $ 1,496 $ 1,359 $ 4,431 $ 3,857
--------- -------- --------- --------
For the three-month period ended January 29, 2005, pro forma net
income and pro forma net income per share excluded the following
items: in-process research and development of $2 million; payroll tax
on stock option exercises of $3 million; stock-based compensation
related to acquisitions and investments of $39 million; amortization
of purchased intangible assets of $57 million and income tax effect of
($19) million.
Cisco Systems, Inc.
CONSOLIDATED BALANCE SHEETS
(In millions)
(Unaudited)
April 30, July 31,
2005 2004
--------- ---------
ASSETS
Current assets:
Cash and cash equivalents $ 2,641 $ 3,722
Short-term investments 2,397 4,947
Accounts receivable, net of allowance for
doubtful accounts of $175 at April 30, 2005
and $179 at July 31, 2004 2,241 1,825
Inventories 1,280 1,207
Deferred tax assets 1,537 1,827
Prepaid expenses and other current assets 867 815
--------- ---------
Total current assets 10,963 14,343
Investments 11,111 10,598
Property and equipment, net 3,298 3,290
Goodwill 5,063 4,198
Purchased intangible assets, net 459 325
Other assets 3,076 2,840
--------- ---------
TOTAL ASSETS $ 33,970 $ 35,594
--------- ---------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 706 $ 657
Income taxes payable 1,418 963
Accrued compensation 1,258 1,466
Deferred revenue 3,800 3,527
Other accrued liabilities 2,005 2,090
--------- ---------
Total current liabilities 9,187 8,703
Deferred revenue 1,016 975
--------- ---------
Total liabilities 10,203 9,678
--------- ---------
Minority interest 11 90
Shareholders' equity 23,756 25,826
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $ 33,970 $ 35,594
--------- ---------
Cisco Systems, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
Nine Months Ended
-------------------
April 30, May 1,
2005 2004
--------- ---------
Cash flows from operating activities:
Net income $ 4,201 $ 3,021
Adjustments to reconcile net income to net cash
provided by operating activities:
Cumulative effect of accounting change, net
of tax -- 567
Depreciation and amortization 751 945
Stock-based compensation related to
acquisitions and investments 126 188
Provision for doubtful accounts 3 19
Provision for inventory 161 124
Deferred income taxes 216 305
Tax benefits from employee stock option plans 196 454
In-process research and development 20 3
Net (gains) losses and impairment charges on
investments (83) (149)
Change in operating assets and liabilities:
Accounts receivable (407) (203)
Inventories (229) (371)
Prepaid expenses and other current assets 24 (13)
Lease receivables, net (123) (71)
Accounts payable 41 1
Income taxes payable 277 144
Accrued compensation (213) (41)
Deferred revenue 315 543
Other accrued liabilities (144) (498)
--------- ---------
Net cash provided by operating
activities 5,132 4,968
--------- ---------
Cash flows from investing activities:
Purchases of short-term investments (3,775) (10,008)
Proceeds from sales and maturities of short-term
investments 7,926 10,911
Purchases of investments (11,313) (16,054)
Proceeds from sales and maturities of investments 9,221 16,820
Acquisition of property and equipment (470) (487)
Acquisition of businesses, net of cash and cash
equivalents (611) (104)
Change in investments in privately held companies (160) 20
Purchase of minority interest of Cisco Systems,
K.K. (Japan) (9) (71)
Other 92 146
--------- ---------
Net cash provided by investing
activities 901 1,173
--------- ---------
Cash flows from financing activities:
Issuance of common stock 592 930
Repurchase of common stock (7,743) (7,082)
Other 37 35
--------- ---------
Net cash used in financing activities (7,114) (6,117)
--------- ---------
Net (decrease) increase in cash and cash
equivalents (1,081) 24
Cash and cash equivalents, beginning of period 3,722 3,925
--------- ---------
Cash and cash equivalents, end of period $ 2,641 $ 3,949
--------- ---------
Note: Certain reclassifications have been made to
prior period balances in order to conform to the
current period's presentation.
Cisco Systems, Inc.
ADDITIONAL FINANCIAL INFORMATION
(In millions)
(Unaudited)
April 30, July 31,
2005 2004
--------- ---------
CASH AND CASH EQUIVALENTS AND TOTAL INVESTMENTS
Cash and cash equivalents $ 2,641 $ 3,722
Fixed income securities 12,591 14,411
Publicly traded equity securities 917 1,134
--------- ---------
Total $ 16,149 $ 19,267
--------- ---------
INVENTORIES
Raw materials $ 86 $ 58
Work in process 427 416
Finished goods:
Distributor inventory and deferred cost of
sales 371 316
Manufacturing finished goods 185 206
--------- ---------
Total finished goods 556 522
Service-related spares 180 177
Demonstration systems 31 34
--------- ---------
Total $ 1,280 $ 1,207
--------- ---------
PROPERTY AND EQUIPMENT, NET
Land, buildings, and leasehold improvements $ 3,490 $ 3,429
Computer equipment and related software 1,241 1,120
Production, engineering, and other equipment 2,981 2,643
Operating lease assets 111 94
Furniture and fixtures 354 356
--------- ---------
8,177 7,642
Less, accumulated depreciation and
amortization (4,879) (4,352)
--------- ---------
Total $ 3,298 $ 3,290
--------- ---------
LEASE RECEIVABLES, NET (a)
Current $ 244 $ 215
Noncurrent 317 231
--------- ---------
Total $ 561 $ 446
--------- ---------
OTHER ASSETS
Deferred tax assets $ 1,139 $ 1,130
Investments in privately held companies 436 354
Income tax receivable 857 690
Lease receivables, net 317 231
Other 327 435
--------- ---------
Total $ 3,076 $ 2,840
--------- ---------
DEFERRED REVENUE
Service $ 3,322 $ 3,047
Product 1,494 1,455
--------- ---------
Total $ 4,816 $ 4,502
--------- ---------
Reported as:
Current $ 3,800 $ 3,527
Noncurrent 1,016 975
--------- ---------
Total $ 4,816 $ 4,502
--------- ---------
Note: Certain reclassifications have been made to
prior period balances in order to conform to the
current period's presentation.
(a) The current portion of lease receivables, net, is recorded in
prepaid expenses and other current assets and the noncurrent
portion is recorded in other assets in the Consolidated Balance
Sheets.
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