SAN JOSE, California - February 4, 1997 - Cisco Systems Inc., the worldwide leader in networking for the Internet, today reported its second quarter results for the period ending January 25, 1997.
Net sales for the second quarter were $1,592.4 million, compared with $918.5 million for the same period last year, an increase of 73%. Net income was $338.5 million or $0.49 per share, compared with $209.7 million or $0.31 per share for the second quarter of 1996.
On November 19, 1996, Cisco completed its purchase of NETSYS Technologies Inc., a pioneer in network infrastructure management and performance analysis software, in exchange for common stock worth approximately $79 million and took a one-time charge of $43.2 million or $0.06 per share on an after-tax basis as a write-off of in-process R&D. Additionally, the Company realized a pretax gain of $47.3 million from the sale of a portion of one minority stock investment that, on an after-tax basis, contributed $.04 per share to net income for the quarter.
Pro forma net income, excluding the write-off of NETSYS in-process R&D and the gain from the sale of the above-mentioned stock was $351.9 million or $0.51 per share, compared with $209.7 million or $0.31 per share in the same period last year, increases of 68% and 65% respectively.
Net sales for the first six months of fiscal 1997 were $3,027.2 million, compared with $1,716.8 million for the same period last year, an increase of 76%. Net income was $519.4 million or $0.76 per share, versus $391.1 million or $0.59 per share during the first six months of fiscal 1996.
Pro forma net income for the first six months was $672.7 million or $0.98 per share, excluding write-offs of in-process R&D from the NETSYS and Telebit acquisitions and the gains from sales of the minority stock investment, versus net income of $391.1 million or $0.59 per share for the same period last year, increases of 72% and 66% respectively.
The net income per share and number of shares used in per-share calculations for all periods presented reflect the two-for-one stock split that was effective February 16, 1996.
"We are pleased to report the eleventh consecutive quarter of double-digit revenue growth for Cisco," said John Chambers, president and CEO of Cisco Systems.
Cisco continued to make progress in its three key markets--Enterprise, Service Provider and Small-to-Medium Business--by providing end-to-end network systems through internal product developments, strategic alliances, minority investments and acquisitions.
In the enterprise, Cisco continued to be selected as a strategic network provider by leading customers such as USAA and Canadian-based Toronto Dominion Bank, who want end-to-end networking solutions from a single source.
Leading-edge customers are increasingly seeking both comprehensive end-to-end networking systems and computing systems from one or two strategic suppliers. To address this requirement, Cisco and Hewlett-Packard announced a unique worldwide business alliance. The two companies will offer integrated end-to-end network-computing solutions with a one-stop approach to service and support for customers.
For enterprise customers who continue to use the mainframe as a powerful server, Cisco made minority investments in Interlink and OpenConnect. Both companies offer technologies that help integrate SNA systems more tightly with open, standards-based networks.
For small-to-medium businesses, Cisco complimented its NetBeyond family with the Cisco 770 series of access products that address the needs of Small Office/Home Office (SOHO) users. This new series of products delivers simple, secure intranet and Internet access to a growing number of SOHO customers.
In the wide area networking arena, Cisco1s Tag Switching, Frame Relay and ATM technologies are being met with increasing acceptance by service providers. Additionally, to help scale the Internet, Cisco introduced a variety of enhancements and new systems for its high-end core routers that will improve performance and increase port density while reducing cost.
3During the past several quarters, we have seen leading enterprise customers move to reduce network complexity by aligning with Cisco as their strategic vendor for network systems. This trend is now beginning to emerge in the service provider area with a number of customers choosing Cisco for their end-to-end network system requirements,2 said Chambers.Cisco Systems Inc. (NASDAQ: CSCO) is the worldwide leader in networking forthe Internet. at http://www.cisco.com.
Cisco Systems
Cisco Systems (NASDAQ:CSCO) is the leading global supplier of enterprise internetworking solutions,including routers, LAN and ATM switches, dial-up access servers andnetwork management software. These products, integrated by the
This release may consist of forward-looking statements that involverisks and uncertainties. These statements may differ materially fromactual future events or results. Readers are referred to the documentsfiled by Cisco with the S.E.C., specifically the most recent reports onForm 10-K and 10-Q, which identify important risk factors that couldcause actual results to differ from those contained in theforward-looking statements.
Cisco Systems and NetBeyond are trademarks, and Ciscoand the Cisco Systems logo are registered trademarks of Cisco Systems,Inc. All other trademarks, service marks, registered trademarks orregistered service marks mentioned in this document are the property oftheir respective owners.
Cisco IOS and Cisco Systems are trademarks, and Cisco and theCisco logo are registered trademarks of Cisco Systems, Inc. All othertrademarks, service marks, registered trademarks or registered servicemarks mentioned in this document are the property of their respectiveowners.
Cisco Systems (NASDAQ: CSCO) the worldwide leaderin networking for the Internet. athttp://www.cisco.com.
Condensed Consolidated Balance Sheets
(In thousands)
| January 25, 1997 |
July 28, 1996 |
|
| Assets | ||
| Current Assets: |
|
|
| Cash and Equivalents | 332,807 $ | |
| Short-Term Investments | 774,673 $ | |
| Accounts Receivable, net | $1,024,942 | |
| Inventories, net | $ 203,721 | |
| Deferred Income Taxes | $191,268 | |
| Other Current Assets | $91,608 | |
| TotalCurrent Assets | $2,619,019 | $ 2,159,640 |
| Investments | $1,160,995 | $ 832,114 |
| Restricted Investments | $247,649 | $ 228,644 |
| Property and Equipment, net | $410,065 | $ 331,315 |
| Other Assets | $132,316 | $78,519 |
| Total Assets | $4,570,044 | $ 3,630,232 |
| Liabilities and Shareholder' Equity: | ||
| Current Liabilities: | ||
| Accounts Payable and Other Accrued Expenses | $ 599,459 | |
| Income Taxes Payable | $172,744 | |
| Total Current Liabilities | $947,759 | $ 769,353 |
| Minority Interest | $41,192 | |
| Shareholders' Equity | $3,581,093 | |
| Total Liabilities and Shareholders Equity | $4,570,044 | $ 3,630,232 |
Condensed Consolidated Statement ofOperations
1996
January 25,
1997
| Quarters Ended January 25, 1997 |
Six Months Ended January 28, 1996 |
|||
| (Unaudited) | ||||
| Net Sales | $1,592,377 | $918,510 | $3,027,203 | $ 1,716,801 |
| Cost of Sales | $552,519 | $1,053,999 | $ 580,057 | |
| Gross Margin | $1,039,858 | $ 606,195 | $1,973,204 | $ 1,136,744 |
| Operating Expenses | ||||
| Research and Development | $167,652 | $312,363 | $167,875 | |
| Sales and Marketing | $288,341 | $547,451 | $ 308,778 | |
| General and Adminstrative | $52,111 | $ 31,462 | $93,887 | $59,729 |
| Purchased R&D | $43,203 | $217,792 | $ -- | |
| Total Operating Expenses | $ 284,684 | $ 536,382 | ||
| Operating Income | $488,551 | $801,711 | $ 600,362 | |
| Realized Gain on the Sale of Investment | $ -- | $102,407 | ||
| Interest and Other Income, net | $27,064 | $ 15,646 | $48,542 | $ 28,504 |
| Income Before Provision for Income Taxes | $ 337,157 | $952,660 | ||
| Provision for Income Taxes | $224,445 | $ 127,420 | $433,258 | |
| Net Income | $338,459 | $209,737 | $519,402 | $ 391,124 |
| Net Income per Share | $.49 | $ .31 | $.76 | $ .59 |
| Number of Shares Used in Per-Share Calculation | $690,304 | $ 666,177 | $ 659,625 | |
The net income per share and number of shares used in the per-sharecalculation for all periods presented reflect the two-for-one stocksplit which was effective February 16, 1996.
Pro Forma Statement of Operations Excluding
Purchased R&D and Realized Gain
In thousands, except forper-share amounts
| Quarters Ended January 25, 1997 |
Quarters EndedJanuary 28, 1996 |
Six MonthsEnded January 25, 1997 |
SixMonths Ended January 28, 1996 |
|
| (Unaudited) | ||||
| Net Sales | $1,592,377 | $3,027,203 | ||
| Cost of Sales | $552,519 | $1,053,999 | $580,057 | |
| Gross Margin | $1,039,858 | $ 606,195 | $ 1,136,744 | |
| Operating Expenses | ||||
| Reaserch and Develpment | $167,652 | $ 89,695 | $312,363 | |
| Sales and Marketing | $288,341 | $ 163,527 | $547,451 | |
| General and Adminstrative | $52,111 | $ 31,462 | $93,887 | |
| Total Operating Expenses | $ 284,684 | $953,701 | $ 536,382 | |
| Operating Income | $531,754 | $ 321,511 | $1,019,503 | |
| Interest and Other Income, net | $27,064 | $ 15,646 | $48,542 | $ 28,504 |
| Income Before Provision for Income Taxes | $ 337,157 | $1,068,045 | $ 628,866 | |
| Provision for Income Taxes | $206,955 | $ 127,420 | $395,368 | |
| Net Income | $351,863 | $ 209,737 | $ 391,124 | |
| Net Income per Share | $ .31 | $ .59 | ||
| Number of Shares Used in Per Share Calculation | $690,304 | $ 666,177 | $ 659,625 | |
The net income per share and number of shares used in the per-sharecalculation for all periods presented reflect the two-for-one stocksplit which was effective February 16, 1996.
