Cisco Reports Fourth Quarter and Fiscal Year 2012 Earnings

SAN JOSE, CA - August 15, 2012 - Cisco (NASDAQ: CSCO)

• Q4 Net Sales: $11.7 billion (increase of 4% year over year)
   
• Q4 Net Income: $1.9 billion GAAP (increase of 56% year over year); $2.5 billion non-GAAP (increase of 15% year over year)
   
• Q4 Earnings per Share: $0.36 GAAP (increase of 64% year over year); $0.47 non-GAAP (increase of 18% year over year)
   
• FY 2012 Net Sales $46.1 billion (increase of 7% year over year)
   
• FY 2012 Net Income: $8.0 billion GAAP (increase of 24% year over year); $10.0 billion non-GAAP (increase of 11% year over year)
   
• FY 2012 Earnings per Share: $1.49 GAAP (increase of 27% year over year); $1.85 non-GAAP (increase of 14% year over year)

Cisco, the worldwide leader in networking that transforms how people connect, communicate and collaborate, today reported its fourth quarter and fiscal year results for the period ended July 28, 2012. Cisco reported fourth quarter net sales of $11.7 billion, net income on a generally accepted accounting principles (GAAP) basis of $1.9 billion or $0.36 per share, and non-GAAP net income of $2.5 billion or $0.47 per share.

"As a result of our strong performance, continued execution on our plan to deliver profitable growth, and commitment to shareholders, for the full fiscal year, we delivered revenue growth of 7% as well as a record year in revenue and earnings per share," stated Cisco Chairman and CEO John Chambers.

"Our strategy -- delivering intelligent networks and technology architectures, built on integrated products, services and software platforms, to fuel our customers' businesses -- is proving the right long-term strategy for our success. There is no question that our industry and our world are evolving quickly and Cisco is squarely at the center of major technology market transitions -- cloud, mobile, visual, virtual and social."

A reconciliation between net income on a GAAP basis and non-GAAP net income is provided in the table on page 6.

Cisco will discuss fourth quarter and fiscal year 2012 results and business outlook on a conference call and webcast at 1:30 p.m. Pacific Time today. Call information and related charts are available at http://investor.cisco.com/.

Cash and Cash Equivalents and Investments

• Cash flows from operations were $3.1 billion for the fourth quarter of fiscal 2012, compared with $3.0 billion for the third quarter of fiscal 2012, and compared with $2.8 billion for the fourth quarter of fiscal 2011. Cash flows from operations were $11.5 billion for fiscal 2012, compared with $10.1 billion for fiscal 2011.
   
• Cash and cash equivalents and investments were $48.7 billion at the end of the fourth quarter of fiscal 2012, compared with $48.4 billion at the end of the third quarter of fiscal 2012, and compared with $44.6 billion at the end of the fourth quarter of fiscal 2011.
   

Stock Repurchase Program and Dividends

• During the fourth quarter of fiscal 2012, Cisco repurchased 108 million shares of common stock under the stock repurchase program at an average price of $16.62 per share for an aggregate purchase price of $1.8 billion. During fiscal 2012, Cisco repurchased 262 million shares of common stock at an average price of $16.64 per share for an aggregate purchase price of $4.4 billion. As of July 28, 2012, Cisco had repurchased and retired 3.7 billion shares of Cisco common stock at an average price of $20.36 per share for an aggregate purchase price of approximately $76.1 billion since the inception of the stock repurchase program. The remaining authorized amount for stock repurchases under this program is approximately $5.9 billion with no termination date.
   
• During the fourth quarter of fiscal 2012, Cisco paid a cash dividend of $0.08 per common share, or $425 million. For fiscal 2012, Cisco paid cash dividends of $0.28 per common share, or $1.5 billion.
   

Select Global Business Highlights

• Cisco completed the acquisition of privately held ClearAccess. ClearAccess provides TR-069 standards-based software to service providers for the provisioning and management of residential and mobile devices. Cisco's acquisition of ClearAccess will help service providers to better deliver, manage and monetize their services, while helping to improve operational efficiencies and customer experiences.
• Cisco completed the acquisition of privately held Truviso. The acquisition of Truviso reinforces Cisco's commitment to intelligent networking by providing differentiated solutions with streaming real-time analytics for the core, data center, virtualization, collaboration, and video.
• Cisco and Citrix launched a new partner accelerator initiative that enables the two companies to simplify go-to-market activities, build channel partner competencies, elevate partner differentiation, and drive partner profitability.

Cisco Innovation

• Cisco delivered the foundation for a next-generation mobile internet: the Cisco® Aggregation Services Router (ASR) 5500 -- a platform capable of improving performance over the previous Cisco ASR 5000 Series systems by up to 10 times and providing the industry's first elastic solution for mobile networks.
• Cisco announced the Cisco Cloud Connected Solution, a new product solution that delivers cloud-enabled routing and wide area network (WAN) optimization platforms, along with Cloud Connector software and services, enabling users to connect to cloud services with industry leading security.
• Cisco introduced a versatile and broad approach to network programmability -- Cisco Open Network Environment -- aimed at helping customers drive the next wave of business innovation through trends such as cloud, mobility, social networking, and video.
• Cisco introduced Cisco WebEx® Social, bringing social collaboration to mobile devices, email and business productivity applications, and extending WebEx beyond web conferencing to include social and telepresence.
• Cisco announced Cisco Unified Communications (UC) Release 9.0 which will give users access to premium collaboration tools from a variety of places and more devices. The update to the platform, which is at the core of Cisco's collaboration portfolio, enables third-party endpoints to join the Cisco UC environment.
• Cisco announced the first Linksys® Smart Wi-Fi Router and Universal Media Connector powered by the industry's next-generation wireless technology (802.11ac) -- designed to deliver approximately three times faster wireless speeds that can now be extended to Smart TVs and game consoles.
• Cisco launched its carrier-grade IPv6 solution, an advanced solution designed to help accelerate migration to IPv6, manage the proliferation of IP devices, and prepare networks for service expansion.

Select Customer Announcements

• Cisco and Nilesat, the leading satellite operator in the Middle East and North Africa (MENA) region, announced that Nilesat has successfully installed Cisco Digital Media solutions for its contribution network.
• Essar Group deployed the Cisco Unified Computing System™ (UCS) to support the implementation of SAP HANA (High Performance Analytic Appliance) across the organization in phases over the next 12-to-18 months.
• Bright House Networks announced a collaboration with Cisco to offer world class managed security services, a partnership that has achieved early success by supporting the nation's tenth largest school district.
• Oriental Cable Network, one of China's largest cable operators, chose Cisco Videoscape™ for new multiscreen video experiences in Shanghai, China.
• Frontier Communications Corporation deployed the Cisco ASR 9000 Series as part of its next-generation network to deliver enhanced high-speed mobile backhaul services to wireless carriers in up to 20 markets in the United States.
• Nexica has chosen the Cisco UCS® platform and Cisco Nexus® switches to power one of the first cloud services in Spain, offering businesses a complete range of infrastructure services -- such as infrastructure as a service (IaaS) and platform as a service (PaaS) -- designed to provide benefits such as decreased operational costs, lower risk, increased reliability and improved management of resources.
• Russia's largest car manufacturer, AvtoVAZ, chose Cisco to enhance effective collaboration. As many as 500 AvtoVAZ employees use Cisco TelePresence® on a weekly basis.
• Pac-12 Enterprises collaborated with Cisco to power the Pac-12 Networks from start to finish using Cisco Videoscape technology. Cisco's video distribution technology will be able to deliver live events from each campus to fans at home by providing the servers that support the delivery networks at all 12 universities, the data routing and switching capabilities in the Pac-12 Studios in San Francisco, California, and the encoding and transcoding equipment.

Editor's Note:

• Q4 and fiscal year 2012 conference call to discuss Cisco's results along with its business outlook will be held at 1:30 p.m. Pacific Time, Wednesday, August 15, 2012. 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 15, 2012 to 4:30 p.m. Pacific Time, August 22, 2012 at 866-493-8039 (United States) or 203-369-1749 (international). The replay also will be available via webcast from August 15, 2012 through October 19, 2012 on the Cisco Investor Relations website at http://investor.cisco.com/.
   
• Additional information regarding Cisco's financials, as well as a webcast of the conference call with visuals designed to guide participants through the call, will be available at 1:30 p.m. Pacific Time, August 15, 2012. Text of the conference call's prepared remarks will be available within 24 hours of completion of the call. The webcast will include both the prepared remarks and the question-and-answer session. This information, along with GAAP reconciliation information, will be available on the Cisco Investor Relations website at http://investor.cisco.com/.

About Cisco

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

This release may be deemed to contain forward-looking statements, which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, among other things, statements regarding future events (such as statements regarding our strategy, the evolution of our industry, major technology market transitions and our position with respect to such transitions) and the future financial performance of Cisco that involve risks and uncertainties. Readers are cautioned that these forward-looking statements are only predictions and may differ materially from actual future events or results due to a variety of factors, including: business and economic conditions and growth trends in the networking industry, our customer markets and various geographic regions; global economic conditions and uncertainties in the geopolitical environment; overall information technology spending; the growth and evolution of the Internet and levels of capital spending on Internet-based systems; variations in customer demand for products and services, including sales to the service provider market and other customer markets; the return on our investments in certain priorities, including our foundational priorities, and in certain geographical locations; the timing of orders and manufacturing and customer lead times; changes in customer order patterns or customer mix; insufficient, excess or obsolete inventory; variability of component costs; variations in sales channels, product costs or mix of products sold; our ability to successfully acquire businesses and technologies and to successfully integrate and operate these acquired businesses and technologies; increased competition in our product and service markets, including the data center; dependence on the introduction and market acceptance of new product offerings and standards; rapid technological and market change; manufacturing and sourcing risks; product defects and returns; litigation involving patents, intellectual property, antitrust, shareholder and other matters, and governmental investigations; natural catastrophic events; a pandemic or epidemic; our ability to achieve the benefits anticipated from our investments in sales, engineering, service, marketing and manufacturing activities; our ability to recruit and retain key personnel; our ability to manage financial risk, and to manage expenses during economic downturns; risks related to the global nature of our operations, including our operations in emerging markets; currency fluctuations and other international factors; changes in provision for income taxes, including changes in tax laws and regulations or adverse outcomes resulting from examinations of our income tax returns; potential volatility in operating results; and other factors listed in Cisco's most recent reports on Form 10-K and 10-Q filed on September 14, 2011 and May 23, 2012, respectively. The financial information contained in this release should be read in conjunction with the consolidated financial statements and notes thereto included in Cisco's most recent reports on Form 10-K and 10-Q, as each may be amended from time to time. Cisco's results of operations for the three months and the year ended July 28, 2012 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 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 and non-GAAP net income per share data, when shown in conjunction with the corresponding GAAP measures, provides useful information to investors and management regarding financial and business trends relating to its financial condition and results of operations. In addition, Cisco believes that the presentation of non-GAAP inventory turns provides useful information to investors and management regarding financial and business trends relating to inventory management based on the operating activities of the period presented.

For its internal budgeting process, Cisco's management uses financial statements that do not include, when applicable, share-based compensation expense, amortization of acquisition-related intangible assets, other acquisition-related costs, significant asset impairments and restructurings, the income tax effects of the foregoing, and significant tax matters. Cisco's management also uses the foregoing non-GAAP measures, in addition to the corresponding GAAP measures, in reviewing the financial results of Cisco. In prior periods, Cisco has excluded other items that it no longer excludes for purposes of its non-GAAP financial measures. From time to time in the future, there may be other items, such as significant gains or losses from contingencies and impacts to cost of sales from purchase accounting adjustments to inventory, 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 ^© 2012 Cisco and/or its affiliates. All rights reserved. Cisco, the Cisco logo, Cisco Systems, Cisco Cius, Cisco CloudVerse, Cisco TelePresence, Cisco UCS, Cisco Unified Computing System, Cisco Videoscape, and Linksys are trademarks or registered trademarks of Cisco and/or its affiliates in the U.S. and other countries. To view a list of Cisco trademarks, go to this URL: www.cisco.com/go/trademarks. Third party trademarks mentioned in this document are the property of their respective owners. The use of the word partner does not imply a partnership relationship between Cisco and any other company. This document is Cisco Public Information.

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

The income tax benefit for share-based compensation expense was $64 million and $335 million for the three and twelve months ended July 28, 2012, respectively, and $109 million and $444 million for the three and twelve months ended July 30, 2011, respectively.