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- Cisco Systems 1998 AnnualReport
- Cisco Systems Second Quarter Earnings
- Cisco Systems Third Quarter Earnings
- Cisco Systems Fourth Quarter Earnings
SAN JOSE, California -- November 4, 1998 -- Cisco Systems, Inc., the worldwide leader in networking for the Internet, today reported its first quarter results for the period ending October 24, 1998.
Net sales for the first quarter were $2.59 billion, compared with $1.87 billion for the same period last year, an increase of 38%. Pro forma net income, which excludes the write-off of purchased in-process R&D discussed below, was $559 million or $0.34 per share, compared with pro forma net income of $416 million or $0.26 per share for the first quarter of 1998, increases of 34% and 31% respectively.
On September 30, 1998, Cisco completed its purchase of American Internet Corporation ("AIC"), a developer of high-performance Internet infrastructure software, for approximately $56 million and took a one-time charge of $41 million, or approximately $0.03 per share on an after-tax basis as a write-off of purchased in-process R&D.
Actual net income for the first quarter, including the above-mentioned write-off of purchased in-process R&D, was $518 million or $0.31 per share, compared with $337 million or $0.21 per share for the first quarter of 1998.
The net income per share and number of shares used in the per-share calculation for all periods presented reflect the three-for-two stock split that was effective September 15, 1998.
"We are pleased to report the 35th consecutive quarter of revenue and earnings growth," said John Chambers, president and CEO of Cisco Systems. "We have seen a dramatic increase in the awareness of the Internet's strategic value from business and government leaders worldwide. More and more, the Internet is being accepted as a key economic driver that will level the playing field for businesses, countries, and individuals in the Internet Economy."
Cisco continues to advance its end-to-end Internet solutions for each of its key markets.
In the service provider marketplace, there is strong acceptance that traditional voice networks will convert into New World, packet-based data networks. Leading customers across all service provider categories are beginning to deploy these integrated networks. Hewlett-Packard and Bellcore announced plans to team with Cisco to deliver these end-to-end, packet-based networks. This move is indicative of the role that strategic alliances will play in delivering New World, open, standards-based infrastructures.
Cisco also continues to expand its New World technology offerings with solutions in broadband access and network management through the acquisitions of Clarity Systems (which closed in the second quarter of fiscal 1999) and AIC respectively. In the area of optical networking, Sprint announced plans to deploy their Internet backbone based on the Cisco 12000 series router with optical interfaces.
In the small and medium-sized business space, Cisco continues to expand its lead in the two-tier distribution of network systems. Extending its market presence, Cisco announced a key alliance with AT&T to distribute integrated, end-to-end Internet solutions to small businesses. Other highlights include the expansion of the Cisco 1700 family of access routers that enable secure business transactions over the Internet.
In the enterprise marketplace, Cisco continued to gain market leadership in local area network (LAN) switching and acceptance of its end-to-end Internet solutions. Cisco strengthened its integrated data, voice, and video offerings by introducing the IGX 8400 series of wide-area network (WAN) switches. Other milestones in the quarter include the launch of the fourth phase of Cisco's five-phase data, voice, and video strategy. Phase four builds, in part, on the technology from the pending acquisition of Selsius Systems, which is intended to accelerate the transition from circuit-switched to network-based PBX systems.
"The Internet will have a similar impact on the global economy as the industrial revolution did. As leading customers deploy integrated, New World communications infrastructures, Cisco and its partners are well positioned to provide end-to-end networking solutions for the Internet generation," concluded Chambers.
Cisco Systems
Cisco Systems, Inc. (NASDAQ: CSCO) is the worldwide leader in networking for the Internet. News and information are available at http://www.cisco.com.This release may contain projections or other forward-looking statements regarding future events or the future financial performance of the Company that involve risks and uncertainties. Readers are cautioned that these statements are only predictions and may differ materially from actual future events or results. Readers are referred to the documents filed by Cisco with the SEC, specifically the most recent reports on Form 10-K and 10-Q, which identify important risk factors that could cause actual results to differ from those contained in the forward-looking statements, including risks associated with acquisition strategy, dependence on new product offerings, competition, patents, intellectual property and licensing, future growth, rapid technological and market change, manufacturing and sourcing risks, Internet infrastructure and regulation, international operations, volatility of stock price, financial risk management and potential volatility in operating results, among others.
IGX is a trademark, and Cisco, Cisco Systems, and the Cisco Systems logo are registered trademarks of Cisco Systems, Inc. in the U.S. and certain other countries. All other trademarks mentioned in this document are the property of their respective owners.
| PRO FORMA STATEMENTS OF OPERATIONS Excluding Purchased R&D and Realized Gain |
| Quarters Ended | |||
| October 24, 1998 |
October 25, 1997 |
||
| (Unaudited) | |||
| Net sales | $ 2,588 | $ 1,869 | |
| Cost of sales | 894 | 652 | |
| Gross margin | 1,694 | ||
| Operating expenses | |||
| Research and development | 327 | 224 | |
| Sales and marketing | 514 | 334 | |
| General and adminstrative | 84 | 56 | |
| Total operating expenses | 925 | ||
| Operating income | 769 | 603 | |
| Interest and other income, net | 65 | 37 | |
| Income before provision for income taxes | 834 | ||
| Provision for income taxes | 275 | 224 | |
| Net income | $ 559 | ||
| Net income per share--basic | $ .36 | ||
| Net income per share--diluted | $ .34 | ||
| Shares used in per-share calculation--basic | 1,569 | ||
| Shares used in per-share calculation--diluted | 1,652 | ||
| PRO FORMA ONLY | |||
The above pro forma amounts for the quarter ended October 24, 1998 have been adjusted to eliminate the $41 million write-off of purchased in-process R&D.
The above pro forma amounts for the quarter ended October 25, 1997 have been adjusted to eliminate the $127 million write-off of purchased in-process R&D, and the $5 million gain from the sale of a minority stock investment, net of income tax benefit of $43 million.
The net income per share and number of shares used in the per-share calculation for all periods presented reflect the three-for-two stock split that was effective September 15, 1998.
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
| Quarters Ended | |||
| October 24, 1998 |
October 25, 1997 |
||
| (Unaudited) | |||
| Net sales | $ 2,588 | $ 1,869 | |
| Cost of sales | 894 | 652 | |
| Gross margin | 1,694 | ||
| Operating expenses | |||
| Research and development | 327 | 224 | |
| Sales and marketing | 514 | 334 | |
| General and adminstrative | 84 | 56 | |
| Purchased R and D | 41 | 127 | |
| Total operating expenses | 966 | 741 | |
| Operating income | 728 | 476 | |
| Realized gain on sale of investment | - | 5 | |
| Interest and other income, net | 65 | 37 | |
| Income before provision for income taxes | 793 | ||
| Provision for income taxes | 275 | 181 | |
| Net income | $ 518 | $ 337 | |
| Net income per share--basic | $ .33 | ||
| Net income per share--diluted | $ .31 | ||
| Shares used in per-share calculation--basic | 1,569 | 1,514 | |
| Shares used in per-share calculation--diluted | 1,652 | 1,585 | |
The net income per share and number of shares used in the per-share calculation for all periods presented reflect the three-for-two stock split that was effective September 15, 1998.
| CONDENSED CONSOLIDATED BALANCE SHEETS |
| October24, 1998 | July 25, 1998 | |
| (Unaudited) | ||
| Assets | ||
|
|
|
|
| Cash and equivalents | $ 961 | $ 535 |
| Short-term investments | 920 | 1,157 |
| Accounts receivable, net | 1,333 | 1,298 |
| Inventories, net | 375 | 362 |
| Deferred income taxes | 315 | 345 |
| Other current assets | 94 | 65 |
| Total current assets | 3,998 | |
| Investments | 4,009 | 3,463 |
| Restricted investments | 640 | 554 |
| Property and equipment, net | 621 | 595 |
| Other assets | 597 | 543 |
| Total assets | $ 9,865 | |
| Liabilities and Shareholder's Equity: | ||
| Current Liabilities: | ||
| Accounts payable and other accrued expenses | $ 1,464 | |
| Income taxes payable | 405 | 410 |
| Total current liabilities | 1,869 | 1,767 |
| Minority interest | 43 | 43 |
| Shareholder's equity | 7,953 | 7,107 |
| Total liabilities and shareholder's equity | $ 9,865 | $ 8,917 |
Cisco Systems
Cisco Systems, Inc. (NASDAQ:CSCO) is the worldwide leader in networking for the Internet. News and information areavailable at http://www.cisco.com.For more information visit Cisco PR Contacts
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