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- Cisco Systems Third Quarter Earnings
- Cisco Systems Second Quarter Earnings
- Cisco Systems First Quarter Earnings
SAN JOSE, California - August 5, 1997 - Cisco Systems, Inc., the worldwideleader in networking for the Internet, today reported its fourth quarter results for the periodending July 26, 1997. Cisco closed its fiscal year with revenue of $6.44 billion, an increaseof 57% over the previous year.
Net sales for the fourth quarter were $1,765.1 million, compared with $1,292.1 million for thesame period last year, an increase of 37%. Pro forma net income, which excludes the write-offof purchased in-process R&D and the realized gain on the sale of an investment discussed below,was $383.2 million or $0.55 per share, compared with pro forma net income of $286.2 million or$0.42 per share for the fourth quarter of 1996, increases of 34% and 31%, respectively.
During July 1997, Cisco completed the acquisitions of Ardent Communications Corp., GlobalInternet Software Group, and Skystone Systems Corp. for a combined purchase price of $305.2million and took a one-time charge of $290.6 million, or $.35 per share on an after-tax basis,as a write-off of in-process R&D. The company also realized a pretax gain of $18.0 millionfrom the sale of a portion of one minority stock investment which, on an after-tax basis,contributed $0.02 per share to net income for the quarter.
Actual net income for the fourth quarter, including the above-mentioned write-off of purchasedin-process R&D and the gain from the sale of the minority stock investment, was $151.0 millionor $0.22 per share, compared with $276.6 million or $0.41 per share in the same period lastyear.
Net sales for fiscal 1997 were $6,440.2 million, compared with $4,096.0 million for the sameperiod last year, an increase of 57%. Pro forma net income, which excludes the write-offs ofin-process R&D from the Netsys, Telebit, Ardent, Global Internet Software, and Skystoneacquisitions and the gain from the sale of the minority stock investment, was $1,413.9 millionor $2.05 per share, versus pro forma net income of $923.0 million or $1.38 per share duringfiscal 1996, increases of 53% and 49%, respectively.
Actual net income for fiscal 1997 was $1,048.7 million or $1.52 per share, versus actual netincome of $913.3 million or $1.37 per share for the same period last year.
The net income per share and number of shares used in per-share calculations for all periodspresented reflect the two-for-one stock split that was effective February 16, 1996.
'We are pleased to report the 30th consecutive quarter of revenue and earnings growth. Weclosed our fiscal year with a 57% increase in revenue over the prior fiscal year and goodmarket share gains in each of our sectors,' said John Chambers, president and CEO of CiscoSystems.
Cisco continues to make strides in providing end-to-end solutions for each of its keymarkets--Enterprise, Service Provider and Small/Medium Business--through internal development,strategic alliances, minority investments and acquisitions.
Cisco emphasized its commitment to strategic alliances by broadening its Microsoft relationshipand announcing a key alliance with Alcatel. This quarter Cisco and Microsoft began additionaljoint development of security standards that will allow users to create secure virtual privatenetworks over public networks, including the Internet. The two companies also announced aco-development effort on Microsofts directory technology.
Ciscos alliance with Alcatel is aimed at offering complete networking solutions totelecommunications carriers and other Internet service providers worldwide. Alcatel willcontribute expertise in public switched networking, high-speed access and voice communications,while Cisco will provide expertise in data communications and Internet technology.
In the enterprise marketplace, Ciscos Catalyst. 5000 family of products continues to gain wideacceptance in the backbone and wiring closet. A notable achievement in this line of businesswas the announcement of the Route Switch Module (RSM) for the Catalyst 5000 series, whichbrings multiprotocol Layer 3 capabilities to the Catalyst family. The RSM allows customers tointegrate Layer 2 and Layer 3 switching while providing full Cisco IOS Software capabilities for essential network services.
Highlights in the service provider area included the announcement of AccessPath, acarrier-class dial access architecture that delivers a complete point-of-presence solution in asingle, integrated system, as well as acquisitions in synchronous optical networking (SONET),voice/data/video integration and asymmetric digital subscriber line (ADSL) technologies.Additionally, Cisco launched its Cisco Powered Network program for service providers.
Cisco continues to gain share in the growing small to medium-sized business space. Key fourthquarter announcements in this area included an acquisition in security and new software toolsdesigned specifically for small office/home office (SOHO) end users that simplify routerinstallation and configuration.
'We continue to see an increasing acceptance of end-to-end networking solutions in all of ourmarkets. Customers are realizing the enhanced productivity, cost of ownership savings andtime-to-market advantages gained through partnering with a single networking vendor and itspartners. This trend, combined with Ciscos leadership in almost all product segments,positions us well as the preferred end-to-end network provider,' concluded Chambers.
Cisco Systems, Inc. (NASDAQ: CSCO) is the worldwide leader in networking for the Internet. Newsand information are available at http://www.cisco.com.
This release may contain forward-looking statements that involve risks and uncertainties. These statements may differ materially from actual future events or results. Readers arereferred to the documents filed by Cisco with the SEC, specifically the most recent reports onForm 10-K and 10-Q, which identify important risk factors that could cause actual results todiffer from those contained in the forward-looking statements, including potential fluctuationsin quarterly results, dependence on new product development, rapid technological and marketchange, acquisition strategy, manufacturing risks, risks associated with the Internetinfrastructure, volatility of stock price, financial risk management and future growth subjectto risks.
AccessPath and Cisco IOS are trademarks, and Catalyst, Cisco, Cisco Systems, the Cisco Systemslogo and StrataCom are registered trademarks of Cisco Systems, Inc. in the U.S. and certainother countries. All other trademarks mentioned in this document are the property of theirrespective owners.
Pro Forma Statement of Operations Excluding
Purchased R&D, RealizedGain and Merger Related Costs
In thousands, except for per-share amounts
| Quarters Ended July 26, 1997 |
Quarters Ended July 28, 1996 |
Years Ended July 26, 1997 |
Years Ended July 28, 1996 |
|
| (Unaudited) | ||||
| Net sales | $ 1,765,097 | $ 1,292,150 | $ 6,440,171 | $ 4,096,007 |
| Cost of sales | 616,040 | 452,651 | 2,241,378 | 1,409,862 |
| Gross margin | 1,149,057 | 4,198,793 | 2,686,145 | |
| Operating expenses | ||||
| Research and development | 202,095 | 124,184 | 698,172 | 399,291 |
| Sales and marketing | 313,479 | 229,550 | 1,160,269 | 726,278 |
| General and administrative | 56,425 | 46,393 | 204,661 | 144,270 |
| Total operating expenses | 571,999 | 400,127 | 2,063,102 | |
| Operating income | 577,058 | 439,372 | 2,135,691 | 1,416,306 |
| Interest and other income, net | 31,254 | 108,889 | 64,019 | |
| Income before provision for income taxes | 608,312 | 2,244,580 | 1,480,325 | |
| Provision for income taxes | 225,075 | 171,999 | 830,687 | 557,336 |
| Net income | $ 383,237 | $ 1,413,893 | $ 922,989 | |
| Net income per-share | $ .55 | $ .42 | $ 2.05 | $1.38 |
| Shares used in per-share calculations | 676,138 | 689,319 | 666,586 | |
| PRO FORMA ONLY | ||||
1 The above pro-forma amounts for the quarter and twelve months ended 7/26/97 have been adjusted to eliminate the quarter one $174,589, the quarter two $43,203 and the quarter four $290,605 charges for the write off of purchased in-process R&D, and the quarter one $55,108, the quarter two $47,299, the quarter three $32,288 and the quarter four $17,994 gain from the sale of a minority stock investment, net of incometax expense (benefit) of $20,390, $17,500, $11,947, and ($40,331) respectively. The pro-forma amounts for the quarter and twelve months ended 7/28/96 exclude $15,500 in merger related costs from the acquisition of StrataCom, Inc.
Condensed Consolidated Statement of Operations
| Quarters Ended July 26, 1997 |
Quarters Ended July 28, 1996 July 26, 1997 |
Years Ended July 28, 1996 |
||
| (Unaudited) | ||||
| Net Sales | $ 1,765,097 | $ 1,292,150 | $ 6,440,171 | $ 4,096,007 |
| Cost of Sales | 616,040 | 452,651 | 2,241,378 | 1,409,862 |
| Gross Margin | 1,149,057 | 839,499 | 4,198,793 | |
| Operating expenses | ||||
| Research and development | 202,095 | 124,184 | 698,172 | 399,291 |
| Sales and marketing | 313,479 | 229,550 | 1,160,269 | 726,278 |
| General and administrative | 56,425 | 46,393 | 204,661 | 144,270 |
| Merger related costs | $ | 15,500 | $ | 15,500 |
| Purchased R and D | 290,605 | |||
| Total operating expenses | 862,604 | 415,627 | 2,571,499 | 1,285,339 |
| Operating income | 286,453 | 423,872 | 1,627,294 | 1,400,806 |
| Realized gain on sale of investment | 17,994 | 152,689 | ||
| Interest and other income, net | 31,254 | 108,889 | 64,019 | |
| Income before provision for income taxes | 335,701 | 1,888,872 | 1,464,825 | |
| Provision for income taxes | 184,744 | 166,164 | 840,193 | 551,501 |
| Net income | 150,957 | $1,048,679 | $913,324 | |
| Net income per-share | $ .22 | $ 1.52 | $1.37 | |
| Shares used in per-share calculations | 695,475 | 676,138 | 689,319 | 666,586 |
The net income per share and number of shares used in the per-share calculation for allperiods presented reflect the two-for-one stock split which was effective February 16, 1996.
Condensed Consolidated Balance Sheets
(In thousands)
| July 26, 1997 |
July 28, 1996 |
|
| Assets | ||
| CurrentAssets: |
|
|
| Cash and equivalents | $ 269,608 | $279,695 |
| Short-term investments | 1,005,977 | 758,489 |
| Accounts receivable, net | 1,170,401 | 622,859 |
| Inventories, net | 254,677 | 301,188 |
| Deferred income taxes | 312,132 | 101,827 |
| Other current assets | 88,471 | 95,582 |
| Total current assets | 3,101,266 | 2,159,640 |
| Investments | 1,267,174 | 832,114 |
| Restricted investments | 363,216 | 228,644 |
| Property and equipment, net | 466,352 | 331,315 |
| Other assets | 253,976 | 78,519 |
| Total assets | $ 5,451,984 | |
| Liabilities and Shareholder's Equity: | ||
| Current Liabilities: | ||
| Accounts payable and other accrued expenses | $ 863,885 | $ 599,459 |
| Income taxes payable | 256,224 | 169,894 |
| Total current liabilities | 1,120,109 | 769,353 |
| Minority interest | 42,253 | 41,257 |
| Shareholder's equity | 4,289,622 | 2,819,622 |
| Total liabilities and shareholder's equity | $ 5,451,984 | $ 3,630,232 |
Cisco IOS is a trademark, and Cisco, Cisco Systems, and the Cisco Systems logo areregistered trademarks of Cisco Systems, Inc. in the U.S. and certain other countries. All othertrademarks mentioned in this document are the property of their respective owners.
