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SAN JOSE, CA -- (Marketwire) -- 08/05/09 -- Cisco (NASDAQ: CSCO)

  • Q4 Net Sales: $8.5 billion (decrease of 18% year over year)

  • Q4 Net Income: $1.1 billion GAAP*; $1.8 billion non-GAAP

  • Q4 Earnings per Share: $0.19 GAAP*; $0.31 non-GAAP

  • FY 2009 Net Sales: $36.1 billion (decrease of 9% year over year)

  • FY 2009 Net Income: $6.1 billion GAAP*; $8.0 billion non-GAAP

  • FY 2009 Earnings per Share: $1.05 GAAP*; $1.35 non-GAAP

Cisco (NASDAQ: CSCO), 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 25, 2009. Cisco reported fourth quarter net sales of $8.5 billion, net income on a generally accepted accounting principles (GAAP) basis of $1.1 billion or $0.19 per share, and non-GAAP net income of $1.8 billion or $0.31 per share.

"Cisco delivered very solid quarterly and annual results in a challenging economic environment, as we continued our focus on disciplined execution and our customers' success," said John Chambers, chairman and chief executive officer, Cisco. "We are confident in our strategic position in both existing and thirty adjacent markets. We saw a number of positive signs this quarter in the economy and in our business, especially comparing our sequential quarter-over-quarter order trends. If we continue to see these positive order trends for the next one to two quarters, we believe there is a good chance we will look back and see that the tipping point occurred in our business in Q4."

Chambers continued, "Cisco's goal is transformational: to become a next-generation company and continue to enhance our market position by executing on our growth opportunities. We see the network truly becoming the platform for innovation and new business models which are enabled by collaboration technologies."



                         Q4 GAAP Results
                         ---------------

                          Q4 2009         Q4 2008       Vs. Q4 2008
                       --------------  --------------  -------------
Net Sales              $  8.5 billion  $ 10.4 billion         -17.6%
                       --------------  --------------  -------------
Net Income             $  1.1 billion* $  2.0 billion         -46.3%
                       --------------  --------------  -------------
Earnings per Share     $         0.19* $         0.33         -42.4%
                       --------------  --------------  -------------



                        Q4 Non-GAAP Results
                        -------------------

                          Q4 2009         Q4 2008        Vs. Q4 2008
                        --------------  --------------  -------------
Net Income              $  1.8 billion  $  2.4 billion         -23.2%
                        --------------  --------------  -------------
Earnings per Share      $         0.31  $         0.40         -22.5%
                        --------------  --------------  -------------



                     Fiscal Year GAAP Results
                     ------------------------

                          FY 2009         FY 2008        Vs. FY 2008
                        --------------  --------------  -------------
Net Sales               $ 36.1 billion  $ 39.5 billion          -8.7%
                        --------------  --------------  -------------
Net Income              $  6.1 billion* $  8.1 billion         -23.8%
                        --------------  --------------  -------------
Earnings per Share      $         1.05* $         1.31         -19.8%
                        --------------  --------------  -------------



                   Fiscal Year Non-GAAP Results
                   ----------------------------

                          FY 2009         FY 2008        Vs. FY 2008
                        --------------  --------------  -------------
Net Income              $  8.0 billion  $  9.6 billion         -17.0%
                        --------------  --------------  -------------
Earnings per Share      $         1.35  $         1.56         -13.5%
                        --------------  --------------  -------------

* GAAP net income and GAAP earnings per share for the fourth quarter of fiscal 2009 and for fiscal year 2009 include a tax charge of $174 million or $0.03 per share and a charge for enhanced early retirement benefits of $138 million or $0.02 per share. A reconciliation between net income on a GAAP basis and non-GAAP net income is provided in the table on page 7.

Cisco will discuss fourth quarter and fiscal year 2009 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://www.cisco.com/go/investors.

Other Financial Highlights

  • Cash flows from operations were $2.0 billion for the fourth quarter of fiscal 2009, compared with $3.5 billion for the fourth quarter of fiscal 2008, and compared with $2.0 billion for the third quarter of fiscal 2009. Cash flows from operations were $9.9 billion for fiscal 2009, compared with $12.1 billion for fiscal 2008.

  • Cash and cash equivalents and investments were $35.0 billion at the end of fiscal 2009, compared with $26.2 billion at the end of fiscal 2008, and compared with $33.6 billion at the end of the third quarter of fiscal 2009.

  • Deferred revenue was $9.4 billion at the end of fiscal 2009, compared with $8.9 billion at the end of fiscal 2008, and compared with $8.8 billion at the end of the third quarter of fiscal 2009.

  • During the fourth quarter of fiscal 2009, Cisco repurchased 42 million shares of common stock at an average price of $19.02 per share for an aggregate purchase price of $800 million. During fiscal 2009, Cisco repurchased 202 million shares of common stock at an average price of $17.89 per share for an aggregate purchase price of $3.6 billion. As of July 25, 2009, Cisco had repurchased and retired 2.8 billion shares of Cisco common stock at an average price of $20.41 per share for an aggregate purchase price of approximately $57.2 billion since the inception of the stock repurchase program. The remaining authorized repurchase amount as of July 25, 2009 was $4.8 billion with no termination date.

  • Days sales outstanding in accounts receivable (DSO) at the end of the fourth quarter of fiscal 2009 were 34 days, compared with 34 days at the end of the fourth quarter of fiscal 2008, and compared with 27 days at the end of the third quarter of fiscal 2009.

  • Inventory turns on a GAAP basis were 11.7 in the fourth quarter of fiscal 2009, compared with 11.9 in the fourth quarter of fiscal 2008, and compared with 11.0 in the third quarter of fiscal 2009. Non-GAAP inventory turns were 11.3 in the fourth quarter of fiscal 2009, compared with 11.6 in the fourth quarter of fiscal 2008, and compared with 10.7 in the third quarter of fiscal 2009.

"Today's results validate that our business strategy and disciplined expense management enabled continued profitability in a tough worldwide economic environment," said Frank Calderoni, chief financial officer, Cisco. "Our strategy and execution in operational excellence, our strong financial position as evidenced by $35 billion in cash and investments, and our continued focus on innovation are delivering results."

Select Q4 Global Business Highlights:

  • Cisco launched its Smart+Connected Communities initiative, the first business initiative incubated from the Globalisation Centre East in Bangalore, India, which provides a network-enabled blueprint for successful smart cities of the future that run on networked information.

  • Cisco introduced a new 'Cultivated Innovation Model' to accelerate local innovation in China, and announced the opening of a green technology research and development lab with Tsinghua University.

Acquisitions

  • Cisco completed its acquisition of Pure Digital Technologies, Inc., the creator of the Flip Video(TM) brand and a pioneer in developing consumer-friendly video solutions with mass-market appeal.

  • Cisco completed its acquisition of Tidal Software, Inc., a developer of intelligent application management and automation solutions.

Cisco Innovation

  • Cisco® Collaboration in Motion brings together the power of collaboration with the performance of the Cisco Unified Wireless Network to extend collaborative experiences to the mobile workspace.

  • Cisco introduced new programs and products, including the Cisco Unified IP Phone 6900 Series and Cisco Unified Videoconferencing 7.0, designed to enable its channel partners to participate in the $34 billion collaboration market.

  • AT&T, BT and Tata Communications, together with Cisco, demonstrated the technical ability for a Cisco TelePresence® user to call others on any carrier network with high levels of security and reliability.

  • Cisco announced the expansion of the Cisco Unified Computing System® family to include the new C-Series of Rack-Mount Servers designed to help accelerate the adoption of unified computing and data center virtualization solutions.

  • Cisco unveiled a set of security solutions, including embedded RSA Data Loss Prevention technology, designed to prevent loss of data across corporate networks while users are in motion.

  • Cisco announced Smart Connected Buildings as its newest emerging technology, providing the intelligence to interconnect and enable building systems over the IP network.

Select Customer Announcements

  • Cisco announced that the National Football League's Dallas Cowboys and Major League Baseball's Toronto Blue Jays have each deployed the Cisco Connected Sports solution.

  • Starwood Hotels and Tata Communications announced an agreement to roll out Cisco TelePresence rooms in selected Starwood hotels in major cities around the world. Marriott International and AT&T also announced plans to roll out Cisco TelePresence suites in 25 major cities.

  • UnitedHealth Group and Cisco launched the Connected Care program, a national telehealth network initiative to expand health care access with remote video technology.

  • In Australia, University of Queensland is working with Cisco to create a collaborative academic experience with one of the world's largest 802.11n wireless networks across 49 sites located throughout Queensland.

  • SEACOM and Cisco unveiled a new undersea fibre optic network designed to deliver unprecedented capacity and connectivity to Africa by linking south and east Africa to global networks via India and Europe.

  • Cisco and IBM teamed to help Dutch utility Nuon and the City of Amsterdam focus on smarter use of energy by enabling consumers to make more informed decisions about their energy consumption.

  • Cisco and JSC Kazakhtelecom extended their cooperation to accelerate Kazakhstan's national broadband development to help bridge the gap between urban and rural areas.

Editor's Note:

  • Q4 and FY 2009 conference call to discuss Cisco's results along with its business outlook will be held at 1:30 p.m. Pacific Time, Wednesday, August 5, 2009. Conference call number is 888-848-6507 (United States) or 212-519-0847 (international).

  • Conference call replay will be available from 4:30 p.m. Pacific Time, August 5, 2009 to 4:30 p.m. Pacific Time, August 12, 2009 at 866-357-4205 (United States) or 203-369-0122 (international). The replay also will be available via webcast from August 5, 2009 through October 16, 2009 on the Cisco Investor Relations 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, August 5, 2009. 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 Chairman and CEO John Chambers and CFO Frank Calderoni about Q4 and FY 2009 results will be available at http://newsroom.cisco.com. A video of CFO Frank Calderoni discussing the quarter can be viewed at http://blogs.cisco.com.

About Cisco

Cisco (NASDAQ: CSCO) is the worldwide leader in networking that transforms how people connect, communicate and collaborate. Information about Cisco can be found at http://www.cisco.com. For ongoing news, visit http://newsroom.cisco.com.

This release may be deemed to contain forward-looking statements, which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, among other things, statements regarding future events (such as future order trends, the enhancement of Cisco's market position, the continuing development of the network as the platform, and Cisco's continued focus on innovation) 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 market adjacencies and geographical locations during the current economic downturn; 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; 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 and engineering activities; our ability to recruit and retain key personnel; our ability to manage financial risk, and to manage expenses during the current economic downturn; 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 Form 10-K and Form 10-Q. 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 Form 10-K and Form 10-Q, as each may be amended from time to time. Cisco's results of operations for the three and twelve months ended July 25, 2009 are not necessarily indicative of Cisco's operating results for any future periods. Any projections in this release are based on limited information currently available to Cisco, which is subject to change. Although any such projections and the factors influencing them will likely change, Cisco will not necessarily update the information, since Cisco will only provide guidance at certain points during the year. Such information speaks only as of the date of this release.

This release includes non-GAAP net income, non-GAAP net income per share data, shares used in non-GAAP net income per share calculation, 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 net income per share data and shares used in non-GAAP net income per share calculation, 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, employee share-based compensation expense, in-process research and development, amortization of acquisition-related intangible assets, other acquisition-related costs, enhanced early retirement benefits, the income tax effects of the foregoing, significant effects of retroactive tax legislation, and significant transfer pricing adjustments related to share-based compensation. 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; for example, effective in the third quarter of fiscal 2009, Cisco no longer excludes payroll tax on stock option exercises. From time to time in the future, there may be other items 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 ©2009 Cisco Systems, Inc. All rights reserved. Cisco, the Cisco logo, Cisco Systems, Cisco TelePresence, Cisco Unified Computing System, Flip Video, Cisco WebEx, WebEx, and WebEx Meeting Center are registered trademarks or trademarks of Cisco Systems, Inc. and/or its affiliates in the United States and certain other countries. All other trademarks mentioned in this document are the property of their respective owners. This document is Cisco Public Information.


                  CONSOLIDATED STATEMENTS OF OPERATIONS
                  (In millions, except per-share amounts)
                                (Unaudited)


                              Three Months Ended     Twelve Months Ended
                            ----------------------  ----------------------
                             July 25,    July 26,    July 25,    July 26,
                               2009        2008        2009        2008
                            ----------  ----------  ----------  ----------
NET SALES:
Product                     $    6,729  $    8,640  $   29,131  $   33,099
Service                          1,806       1,724       6,986       6,441
                            ----------  ----------  ----------  ----------

Total net sales                  8,535      10,364      36,117      39,540
                            ----------  ----------  ----------  ----------

COST OF SALES:
Product                          2,436       3,068      10,481      11,660
Service                            638         665       2,542       2,534
                            ----------  ----------  ----------  ----------

Total cost of sales              3,074       3,733      13,023      14,194
                            ----------  ----------  ----------  ----------

GROSS MARGIN                     5,461       6,631      23,094      25,346

OPERATING EXPENSES:
Research and development         1,280       1,350       5,208       5,325
Sales and marketing              2,009       2,249       8,403       8,690
General and administrative         488         354       1,565       1,387
Amortization of purchased
 intangible assets                 164         149         533         499
In-process research and
 development                        60          --          63           3
                            ----------  ----------  ----------  ----------

Total operating expenses         4,001       4,102      15,772      15,904
                            ----------  ----------  ----------  ----------

OPERATING INCOME                 1,460       2,529       7,322       9,442

Interest income
 (expense), net                     56         188         499         824
Other income (loss), net            17         (31)       (128)        (11)
                            ----------  ----------  ----------  ----------

Interest and other
 income (loss), net                 73         157         371         813
                            ----------  ----------  ----------  ----------

INCOME BEFORE PROVISION
 FOR INCOME TAXES                1,533       2,686       7,693      10,255
Provision for income taxes         452         672       1,559       2,203
                            ----------  ----------  ----------  ----------

NET INCOME                  $    1,081  $    2,014  $    6,134  $    8,052
                            ----------  ----------  ----------  ----------

Net income per share:
Basic                       $     0.19  $     0.34  $     1.05  $     1.35
                            ----------  ----------  ----------  ----------

Diluted                     $     0.19  $     0.33  $     1.05  $     1.31
                            ----------  ----------  ----------  ----------

Shares used in per-share
 calculation:
Basic                            5,777       5,898       5,828       5,986
                            ----------  ----------  ----------  ----------

Diluted                          5,813       6,034       5,857       6,163
                            ----------  ----------  ----------  ----------

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



              RECONCILIATION OF GAAP TO NON-GAAP NET INCOME
                  (In millions, except per-share amounts)


                              Three Months Ended     Twelve Months Ended
                            ----------------------  ---------------------
                             July 25,    July 26,    July 25,    July 26,
                               2009        2008        2009        2008
                            ----------  ----------  ----------  ----------

GAAP net income             $    1,081  $    2,014  $    6,134  $    8,052

  Employee share-based
   compensation expense            305         258       1,140       1,025
  Payroll tax on stock
   option exercises(1)              --           3           1          23
  In-process research
   and development                  60          --          63           3
  Amortization of
   acquisition-related
   intangible assets               203         203         723         732
  Other acquisition-related
   costs(2)                         60          68         383         427
  Enhanced early retirement
   benefits                        138          --         138          --
                            ----------  ----------  ----------  ----------
  Total adjustments to
   GAAP income before
   provision for income
   taxes                           766         532       2,448       2,210
                            ----------  ----------  ----------  ----------

  Income tax effect               (182)       (151)       (694)       (677)
  Effect of retroactive
   tax legislation (3)              --          --        (106)         --
  Transfer pricing
   adjustment related
   to share-based
   compensation (4)                174          --         174          --
                            ----------  ----------  ----------  ----------
  Total adjustments to
   GAAP provision for
   income taxes                     (8)       (151)       (626)       (677)
                            ----------  ----------  ----------  ----------

Non-GAAP net income         $    1,839  $    2,395  $    7,956  $    9,585
                            ----------  ----------  ----------  ----------
Diluted net income per
 share:
GAAP                        $     0.19  $     0.33  $     1.05  $     1.31
                            ----------  ----------  ----------  ----------

Non-GAAP                    $     0.31  $     0.40  $     1.35  $     1.56
                            ----------  ----------  ----------  ----------

Shares used in diluted
 net income per share
 calculation:
GAAP                             5,813       6,034       5,857       6,163
                            ----------  ----------  ----------  ----------

Non-GAAP                         5,840       6,018       5,876       6,153
                            ----------  ----------  ----------  ----------

(1) Effective in the third quarter of fiscal 2009, Cisco no longer excludes
    payroll tax on stock option exercises for purposes of its non-GAAP
    financial measures.
(2) Other acquisition-related costs consist primarily of cash and share-
    based compensation expenses related to acquisitions and investments.
(3) In the first quarter of fiscal 2009, a $106 million tax benefit was
    included in the GAAP net income as a result of the Tax Extenders and
    Alternative Minimum Tax Relief Act of 2008, which reinstated the
    U.S. federal R&D tax credit retroactive to January 1, 2008.
(4) In the fourth quarter of fiscal 2009, the U.S. Court of Appeals for the
    Ninth Circuit overturned a 2005 U.S. Tax Court ruling. The decision
    changes the tax treatment of share-based compensation expenses for the
    purpose of determining intangible development costs under a company's
    research and development cost sharing arrangement. While Cisco was not
    a named party to the case, the decision resulted in a change in Cisco's
    tax benefits recognized in its financial statements.

Additional reconciliations between GAAP and non-GAAP financial measures are
provided in the tables that follow on page 11.



                        CONSOLIDATED BALANCE SHEETS
                              (In millions)
                                (Unaudited)


                                                     July 25,    July 26,
                                                       2009        2008
                                                    ----------  ----------

ASSETS
Current assets:
  Cash and cash equivalents                         $    5,718  $    5,191
  Investments                                           29,283      21,044
  Accounts receivable, net of allowance for
   doubtful accounts of $216 at July 25, 2009
   and $177 at July 26, 2008                             3,177       3,821
  Inventories                                            1,074       1,235
  Deferred tax assets                                    2,320       2,075
  Prepaid expenses and other current assets              2,605       2,333
                                                    ----------  ----------

  Total current assets                                  44,177      35,699

Property and equipment, net                              4,043       4,151
Goodwill                                                12,925      12,392
Purchased intangible assets, net                         1,702       2,089
Other assets                                             5,281       4,403
                                                    ----------  ----------

TOTAL ASSETS                                        $   68,128  $   58,734
                                                    ----------  ----------

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Current portion of long-term debt                 $       --  $      500
  Accounts payable                                         675         869
  Income taxes payable                                     166         107
  Accrued compensation                                   2,535       2,428
  Deferred revenue                                       6,438       6,197
  Other current liabilities                              3,841       3,757
                                                    ----------  ----------

  Total current liabilities                             13,655      13,858

Long-term debt                                          10,295       6,393
Income taxes payable                                     2,007         749
Deferred revenue                                         2,955       2,663
Other long-term liabilities                                539         669
                                                    ----------  ----------

Total liabilities                                       29,451      24,332
                                                    ----------  ----------

Minority interest                                           30          49

Shareholders' equity                                    38,647      34,353
                                                    ----------  ----------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY          $   68,128  $   58,734
                                                    ----------  ----------



                  CONSOLIDATED STATEMENTS OF CASH FLOWS
                              (In millions)
                               (Unaudited)


                                                     Twelve Months Ended
                                                    ----------------------
                                                     July 25,    July 26,
                                                       2009        2008
                                                    ----------  ----------
Cash flows from operating activities:
  Net income                                        $    6,134  $    8,052
Adjustments to reconcile net income to
 net cash provided by operating activities:
  Depreciation, amortization, and other
   non cash items                                        1,768       1,744
  Employee share-based compensation expense              1,140       1,025
  Share-based compensation expense related to
   acquisitions and investments                             91          87
  Provision for doubtful accounts                           54          34
  Deferred income taxes                                   (574)       (772)
  Excess tax benefits from share-based
   compensation                                            (22)       (413)
  In-process research and development                       63           3
  Net losses (gains) on investments                         80        (103)
Change in operating assets and liabilities,
 net of effects of acquisitions:
    Accounts receivable                                    610         171
    Inventories                                            187         104
    Lease receivables, net                                (222)       (488)
    Accounts payable                                      (208)         62
    Income taxes payable and receivable                    768         178
    Accrued compensation                                   175         351
    Deferred revenue                                       572       1,812
    Other assets                                          (780)       (361)
    Other liabilities                                       61         603
                                                    ----------  ----------

Net cash provided by operating activities                9,897      12,089
                                                    ----------  ----------

Cash flows from investing activities:
  Purchases of investments                             (41,225)    (22,399)
  Proceeds from sales of investments                    20,473      16,086
  Proceeds from maturities of investments               12,352       3,904
  Acquisition of property and equipment                 (1,005)     (1,268)
  Acquisition of businesses, net of cash
   and cash equivalents acquired                          (426)       (398)
  Change in investments in privately held
   companies                                               (89)       (101)
  Other                                                    (39)        (17)
                                                    ----------  ----------

Net cash used in investing activities                   (9,959)     (4,193)
                                                    ----------  ----------
Cash flows from financing activities:
  Issuance of common stock                                 863       3,117
  Repurchase of common stock                            (3,611)    (10,441)
  Issuance of long-term debt                             3,991          --
  Repayment of long-term debt                             (500)         --
  Settlement of interest rate derivatives
   related to long-term debt                               (42)        432
  Excess tax benefits from share-based
   compensation                                             22         413
  Other                                                   (134)         46
                                                    ----------  ----------
Net cash provided by (used in) financing
 activities                                                589      (6,433)
                                                    ----------  ----------

Net increase in cash and cash equivalents                  527       1,463
Cash and cash equivalents, beginning of
 fiscal year                                             5,191       3,728
                                                    ----------  ----------

Cash and cash equivalents, end of fiscal year       $    5,718  $    5,191
                                                    ----------  ----------

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



                     ADDITIONAL FINANCIAL INFORMATION
                              (In millions)
                                (Unaudited)


                                                     July 25,    July 26,
                                                       2009        2008
                                                    ----------  ----------


CASH AND CASH EQUIVALENTS AND INVESTMENTS
Cash and cash equivalents                           $    5,718  $    5,191
Fixed income securities                                 28,355      19,869
Publicly traded equity securities                          928       1,175
                                                    ----------  ----------

Total                                               $   35,001  $   26,235
                                                    ----------  ----------
INVENTORIES
Raw materials                                       $      165  $      111
Work in process                                             33          53
Finished goods:
  Distributor inventory and deferred cost of sales         382         452
  Manufactured finished goods                              310         381
                                                    ----------  ----------

Total finished goods                                       692         833
Service-related spares                                     151         191
Demonstration systems                                       33          47
                                                    ----------  ----------

Total                                               $    1,074  $    1,235
                                                    ----------  ----------

PROPERTY AND EQUIPMENT, NET
Land, buildings, and leasehold improvements         $    4,618  $    4,445
Computer equipment and related software                  1,823       1,770
Production, engineering, and other equipment             5,075       4,839
Operating lease assets                                     227         209
Furniture and fixtures                                     465         439
                                                    ----------  ----------

                                                        12,208      11,702
Less accumulated depreciation and amortization          (8,165)     (7,551)
                                                    ----------  ----------

Total                                               $    4,043  $    4,151
                                                    ----------  ----------
OTHER ASSETS
Deferred tax assets                                 $    2,122  $    1,770
Investments in privately held companies                    709         706
Lease receivables, net (1)                                 966         862
Financed service contracts (2)                             676         588
Loan receivables(3)                                        537         216
Other                                                      271         261
                                                    ----------  ----------

Total                                               $    5,281  $    4,403
                                                    ----------  ----------
DEFERRED REVENUE
Service                                             $    6,496  $    6,133
Product
  Unrecognized revenue on product shipments and
   other deferred revenue                                2,490       2,152
  Cash receipts related to unrecognized revenue
   from two-tier distributors                              407         575
                                                    ----------  ----------

Total product deferred revenue                           2,897       2,727
                                                    ----------  ----------

Total                                               $    9,393  $    8,860
                                                    ----------  ----------

Reported as:
Current                                             $    6,438  $    6,197
Noncurrent                                               2,955       2,663
                                                    ----------  ----------

Total                                               $    9,393  $    8,860
                                                    ----------  ----------

Note:
(1) The current portion of lease receivables, net, which was $626 million
    and $554 million as of July 25, 2009 and July 26, 2008, respectively,
    is recorded in prepaid expenses and other current assets.
(2) The current portion of financed service contracts, which was
    $940 million and $730 million as of July 25, 2009 and July 26, 2008,
    respectively, is recorded in prepaid expenses and other current assets.
    These financed service contracts primarily relate to technical support
    services, and the associated revenue is deferred and recognized ratably
    over the period during which the services are to be performed, which is
    typically from one to three years.
(3) The current portion of loan receivables which was $236 million and
    $263 million as of July 25, 2009 and July 26, 2008, respectively, is
    recorded in prepaid expenses and other current assets.



            SUMMARY OF EMPLOYEE SHARE-BASED COMPENSATION EXPENSE
                              (In millions)


                              Three Months Ended     Twelve Months Ended
                            ----------------------  ----------------------
                             July 25,    July 26,    July 25,    July 26,
                               2009        2008        2009        2008
                            ----------  ----------  ----------  ----------

Cost of sales -- product    $       13  $       10  $       46  $       40
Cost of sales -- service            34          28         128         108
                            ----------  ----------  ----------  ----------

Employee share-based
 compensation expense
 in cost of sales                   47          38         174         148
                            ----------  ----------  ----------  ----------

Research and development            85          71         333         295
Sales and marketing                120         110         440         434
General and administrative          53          39         193         148
                            ----------  ----------  ----------  ----------

Employee share-based
 compensation expense
 in operating expenses             258         220         966         877
                            ----------  ----------  ----------  ----------

Total employee share-based
 compensation expense       $      305  $      258  $    1,140  $    1,025
                            ----------  ----------  ----------  ----------

The income tax benefit for employee share-based compensation expense was
$74 million and $298 million for the fourth quarter and for fiscal 2009,
respectively, and $83 million and $330 million for the fourth quarter and
for fiscal 2008, respectively.



          RECONCILIATION OF SHARES USED IN THE GAAP AND NON-GAAP
                 DILUTED NET INCOME PER SHARE CALCULATION
                              (In millions)


                              Three Months Ended     Twelve Months Ended
                            ----------------------  ----------------------
                             July 25,    July 26,    July 25,    July 26,
                               2009        2008        2009        2008
                            ----------  ----------  ----------  ----------

Shares used in diluted
 net income per share
 calculation -- GAAP             5,813       6,034       5,857       6,163
Effect of SFAS 123(R)               27         (16)         19         (10)
                            ----------  ----------  ----------  ----------
Shares used in diluted
 net income per share
 calculation -- Non-GAAP         5,840       6,018       5,876       6,153
                            ----------  ----------  ----------  ----------



             RECONCILIATION OF GAAP TO NON-GAAP COST OF SALES
                          USED IN INVENTORY TURNS
                              (In millions)


                                                Three Months Ended
                                        ----------------------------------
                                         July 25,    April 25,   July 26,
                                           2009        2009        2008
                                        ----------  ----------  ----------
GAAP cost of sales                      $    3,074  $    2,933  $    3,733
  Employee share-based compensation
   expense                                     (47)        (43)        (38)
  Amortization of acquisition-related
   intangible assets                           (39)        (43)        (54)
  Enhanced early retirement benefits           (28)         --          --
                                        ----------  ----------  ----------

Non-GAAP cost of sales                  $    2,960  $    2,847  $    3,641
                                        ----------  ----------  ----------

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Cisco
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Cisco
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