(BSNS WIRE) Cisco Systems Reports Third Quarter=1
Cisco Systems Reports Third Quarter=1
Business Editors
SAN JOSE, Calif.--(BUSINESS WIRE)--May 7, 2002--
Pro Forma Net Income Increased 26 Percent Quarter-over-Quarter;
Pro Forma Net Income Increased 264 Percent Year-over-Year
Cisco Systems, Inc., the worldwide leader in networking for the
Internet, today reported its third quarter results for the period
ending April 27, 2002.
Net sales for the third quarter of fiscal 2002 were $4.8 billion,
compared to $4.7 billion in net sales for the third quarter of fiscal
2001, an increase of 2%, and compared to $4.8 billion for the second
quarter of fiscal 2002. Net income on a generally accepted accounting
principles (GAAP) basis for the third quarter of fiscal 2002 was $729
million or $0.10 per share, compared with a net loss of $2.7 billion
or $0.37 per share for the third quarter of fiscal 2001 and net income
of $660 million or $0.09 per share for the second quarter of fiscal
2002.
Pro forma net income, which excludes the effects of acquisition
charges, payroll tax on employee stock option exercises, and certain
nonrecurring items, was $838 million or $0.11 per share for the third
quarter of fiscal 2002, compared with pro forma net income of $230
million or $0.03 per share for the third quarter of fiscal 2001 and
$664 million or $0.09 per share for the second quarter of fiscal 2002.
Net sales for the first nine months of fiscal 2002 were $14.1
billion, compared with $18.0 billion for the first nine months of
fiscal 2001, a decrease of 22%. Net income on a GAAP basis for the
first nine months of fiscal 2002 was $1.1 billion or $0.15 per share,
compared with a net loss of $1.0 billion or $0.14 per share for the
first nine months of fiscal 2001. Pro forma net income was $1.8
billion or $0.25 per share for the first nine months of fiscal 2002
compared with $2.9 billion or $0.39 per share for the same period of
fiscal 2001.
"We are very pleased with this quarter's performance, especially
our year-to-year profit increase of 264% and quarter-to-quarter
increase of 26%," said John Chambers, president and CEO of Cisco
Systems. "The combination of our strong market position and solid
execution by our team produced results that clearly indicate that
Cisco is well positioned when the economy rebounds. Last year was a
classic downturn. We took the critical steps to position ourselves for
the upturn, and we are beginning to see the very positive results."
Further commenting on Cisco's execution, Chambers added, "From an
operational perspective, this quarter was a home run. Our strong
results led to gross margins of 63.1%, cash flows of $1.6 billion and
inventory turns of 7.5 times, which exceeded our goals. We continue to
take market share from our top-ten competitors, with revenue growth of
2% year-over-year versus a drop of 43% for these competitors."
Throughout the quarter, Cisco continued its emphasis on achieving
profitable market-share gains, with a focus on growing ten percent
faster than ten selected North American competitors. Cisco's
market-share momentum included leadership in key market segments such
as all areas of routing, LAN switching, security, voice over IP, IP
telephony, and enterprise wireless LANs and virtual private networks
(VPNs). Cisco also experienced growth in Layer 3 fixed and modular
switching, where customers are transitioning wiring closets to more
intelligent packet processing to enable quality of service (QoS) and
higher levels of security. Cisco attributes these ongoing market-share
gains to its continued focus on providing customers with networking
technologies and solutions that increase both productivity and
profitability, while delivering a solid return on investment.
Enterprise Segment
In the enterprise market, Cisco provides the framework for
enterprise businesses to deploy networking solutions that help enable
business resilience, increase employee productivity, and mitigate
network security threats. Cisco enterprise customers continue to
invest in core switching and routing platforms, as well as key
networking technologies including IP telephony, security, and
mobility.
During the third quarter, Cisco introduced a new Layer 3 switching
module for its Catalyst 4000 product line, which delivers a higher
level of quality of service (QoS) and security. Cisco announced
significant enhancements to and improved performance capabilities of
its industry-leading router portfolio including the Cisco 7200, 7300,
7400, 7500 and 7600 series of midrange routers. Cisco also announced
new advanced software capabilities for its industry-leading Cisco
PIX(R) firewall family with the Cisco PIX 506E and 515 platforms. In
the enterprise voice market, Cisco added new features and functions to
the Cisco IP Contact Center solution including new agent and
supervisor desktops.
New enterprise customers deploying Cisco's next-generation
10-Gigabit Ethernet solutions included Curtin University of Technology
in Australia, Kyoto University in Japan, and Arkansas State University
in the United States. Cisco also announced new enterprise voice
solution customers including Research Triangle Institute (RTI) and the
Village at Squaw Valley, USA. New enterprise customers deploying Cisco
security solutions included Lockwood Green and Centex Mortgage.
Service Provider Segment
Cisco service provider customers remain focused on decreasing
operating expenses and increasing top line revenue through the
convergence of disparate networks, services and operational support
systems (OSS). During the quarter, Cisco continued to work with
service providers to identify and market new business network services
such as VPNs, metropolitan area access, and managed IP telephony and
security. For example, Case Western Reserve University signed a
multi-million dollar agreement with Sprint, which will use Cisco
infrastructure, to build one of the fastest LANs in the world.
New customers that selected Multiprotocol Label Switching (MPLS)
solutions based on Cisco software and hardware technologies include
more than 100 leading service providers such as Bell Canada, BT
Ignite, France Telecom, Equant, Infonet Services, KDDI, Japan Telecom,
and NTT Communications. MPLS is key to enabling converged networking
infrastructures for the delivery of new IP services. In addition, AT&T
announced deployment of Cisco optical solutions for its nationwide
intelligent optical network, further underscoring Cisco's leadership
in the metro optical segment. Finally, Cisco experienced continued
interest in its metro optical strategy with new deployments such as
Grange Net in Australia, and Government of Alberta's SuperNet project
and CANARIE in Canada, which adopted the Cisco ONS 15454 platform.
During the quarter, Cisco enhanced its leadership in the service
provider cable marketplace. The Cisco uBR10012 Cable Modem Termination
System (CMTS) and uBR7246VXR Universal Broadband Router received
qualification for Data-Over-Cable Service Interface Specification
(DOCSIS) 1.1, making Cisco the only company currently with multiple
Layer 3 DOCSIS 1.1 qualified CMTS systems. The Cisco uBR7246VXR is
also the only CMTS currently included in the advanced interoperability
test network, which consists of vendors with the most advanced
implementations of PacketCable specifications and is used for system
interoperability testing. Cisco also introduced new Session Initiation
Protocol (SIP)-enabled voice-over-IP solutions.
Commercial Segment
Cisco continued to meet the unique requirements of small and
medium-sized business customers (SMBs) during the quarter with
expanded programs to help educate and build demand for the value of
networking technology and by delivering innovative new networking
solutions including wireless access products, switches, and integrated
communication systems.
Cisco introduced 14 new access routers designed to extend network
intelligence including security, availability, and QoS to the
enterprise branch office and remote worker. Cisco also announced the
Cisco Aironet(R) 1200 Series dual radio wireless LAN access point
supporting both IEEE 802.11b and the 5-GHz IEEE 802.11a radios as they
become available.
The Cisco Internet Business Roadmap initiative has been made
available to thousands of resellers of Cisco products, helping them
establish networking relevance for e-business applications. In
addition, the Cisco Mobile Office initiative added several new
customer venues offering high-speed access to their customers
including Airpath Wireless (WLAN at AirTran Airways boarding gates);
Minneapolis/St. Paul Airport (WLAN throughout the Lindbergh Terminal),
Gaylord Entertainment (high-speed access throughout its Gaylord Palms
Resort and Convention Center in Kissimmee, St. Cloud, Florida); and
Lufthansa Airlines (enabling high-speed, Ethernet access to passenger
seats on airplanes).
"Today's announcement of an 8.6% productivity gain for the United
States in the first quarter underscores our strong belief that our
customers will invest in those technologies that deliver productivity
results," continued John Chambers. "We've grown our productivity by 20
percent over the last four quarters, with about half of it coming from
our use of Internet business solutions, and we believe that the
Internet will be a prime factor in gains of 5 to 10% a year for
companies and 3 to 5% a year for countries."
Editors Note:
-- Q3 conference call to be held at 1:45 p.m. PDT on Tuesday, May
7; conference call number is 800-779-9040 (domestic) and
712-257-3767 (international)
-- For additional information regarding Cisco's financials and to
participate in Cisco's conference call at 1:45 p.m. PDT,
please visit our investor relations site at
cisco.com
-- Conference call replay available from 5/7/02 at 4:30 p.m.
through 5/14/02 at 800-876-4361 for domestic callers and
402-280-9920 for international callers.
-- Additional information regarding Cisco's Q3 earnings is
available at newsroom.cisco.com
About Cisco Systems
Cisco Systems, Inc., (NASDAQ: CSCO) is the worldwide leader in
networking for the Internet. News and information are available at
www.cisco.com.
This release contains projections and other forward-looking
statements regarding future events 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.
Readers are referred to the documents filed by Cisco with the SEC,
specifically the most recent reports on Form 10-K, 10-Q and 8-K, each
as it may be amended from time to time, which identify important risk
factors that could cause actual results to differ from those contained
in the forward-looking statements. In addition to these risk factors,
other factors that could cause actual results to differ materially
include the following: business and economic conditions and growth
trends in the networking industry in various geographic regions;
global economic conditions; overall information technology spending;
the growth 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; the ability
to successfully restructure existing businesses; the timing of orders
and manufacturing lead times; changes in customer order patterns;
insufficient, excess or obsolete inventory; variations in sales
channels, product costs, or mix of products sold; the ability to
successfully reduce overhead and manage expenses; the ability to
successfully acquire businesses and technologies and to successfully
integrate and operate these acquired businesses and technologies;
increased competition in the networking industry; dependence on the
introduction and market acceptance of new product offerings and
standards; rapid technological and market change; the trend towards
sales of integrated network solutions; manufacturing and sourcing
risks; Internet infrastructure problems and government regulation of
the Internet; international operations; the timing and amount of
employer payroll tax to be paid on employees' gains on stock options
exercised; litigation involving patents, intellectual property,
antitrust, stockholder and other matters; possible disruption in
commercial activities occasioned by terrorist activity and armed
conflict, such as changes in logistics and security arrangements, and
reduced end-user purchases relative to expectations; exposure to
credit risks relating to certain customers and credit exposures in
weakened markets; the ability to recruit and retain key personnel;
stock price volatility; financial risk management; and potential
volatility in operating results, among others. 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, each as it
may be amended from time to time. Cisco's results of operations for
the three and nine months ended April 27, 2002 are not necessarily
indicative of Cisco's operating results for the full fiscal year or
any future periods.
Cisco provides pro forma net income and pro forma net income per
share data as additional information for its operating results. These
measures are not in accordance with, or an alternative for, generally
accepted accounting principles and may be different from pro forma
measures used by other companies.
Aironet, Catalyst, Cisco, Cisco IOS, Cisco Systems, and the Cisco
Systems logo are registered trademarks of Cisco Systems, Inc. and/or
its affiliates in the U.S. and certain other countries. All other
trademarks mentioned in this document or Web site 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.
-0-
*T
Cisco Systems, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per-share amounts)
(Unaudited)
Three Months Ended Nine Months Ended
--------------------- ---------------------
April 27, April 28, April 27, April 28,
2002 2001 2002 2001
-------- -------- -------- --------
NET SALES:
Product $ 3,993 $ 4,007 $ 11,671 $ 15,982
Service 829 721 2,415 2,013
-------- -------- -------- --------
Total net sales 4,822 4,728 14,086 17,995
-------- -------- -------- --------
COST OF SALES:
Product 1,515 4,131 4,608 8,563
Service 239 269 748 796
-------- -------- -------- --------
Total cost
of sales 1,754 4,400 5,356 9,359
-------- -------- -------- --------
GROSS MARGIN 3,068 328 8,730 8,636
OPERATING EXPENSES:
Research and
development 807 970 2,504 2,885
Sales and marketing 1,057 1,333 3,207 4,102
General and
administrative 163 191 459 578
Restructuring costs
and other special
charges -- 1,170 -- 1,170
Payroll tax on
stock option exercises 1 10 7 50
Amortization of deferred
stock-based compensation 37 70 133 106
Amortization of goodwill -- 181 -- 494
Amortization of purchased
intangible assets 129 95 411 263
In-process research
and development -- 109 37 855
-------- -------- -------- --------
Total operating
expenses 2,194 4,129 6,758 10,503
-------- -------- -------- --------
OPERATING
INCOME (LOSS) 874 (3,801) 1,972 (1,867)
Net gains (losses)
on investments -- -- (858) 190
Interest and other
income, net 150 236 499 741
-------- -------- -------- --------
INCOME (LOSS) BEFORE
PROVISION FOR
(BENEFIT FROM)
INCOME TAXES 1,024 (3,565) 1,613 (936)
Provision for
(benefit from)
income taxes 295 (872) 492 85
-------- -------- -------- --------
NET INCOME (LOSS) $ 729 $ (2,693) $ 1,121 $ (1,021)
======== ======== ======== ========
Net income (loss)
per share--basic $ 0.10 $ (0.37) $ 0.15 $ (0.14)
======== ======== ======== ========
Net income (loss)
per share--diluted (1) $ 0.10 $ (0.37) $ 0.15 $ (0.14)
======== ======== ======== ========
Shares used in
per-share
calculation--basic 7,306 7,251 7,310 7,170
======== ======== ======== ========
Shares used in
per-share
calculation--
diluted (1) 7,454 7,251 7,473 7,170
======== ======== ======== ========
Note 1: Diluted net loss per share for the three and nine months ended
April 28, 2001 is computed using the weighted-average number of common
shares outstanding during the period and excludes common-equivalent
shares, as their effect is anti-dilutive.
Cisco Systems, Inc.
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
(See pro forma adjustments listed in table below)
(In millions, except per-share amounts)
(Unaudited)
Three Months Ended Nine Months Ended
--------------------- ---------------------
April 27, April 28, April 27, April 28,
2002 2001 2002 2001
-------- -------- -------- --------
NET SALES:
Product $ 3,993 $ 4,007 $ 11,671 $ 15,982
Service 829 721 2,415 2,013
-------- -------- -------- --------
Total net sales 4,822 4,728 14,086 17,995
-------- -------- -------- --------
COST OF SALES:
Product 1,542 1,882 5,120 6,314
Service 239 269 748 796
-------- -------- -------- --------
Total cost
of sales 1,781 2,151 5,868 7,110
-------- -------- -------- --------
GROSS MARGIN 3,041 2,577 8,218 10,885
OPERATING EXPENSES:
Research and
development 807 970 2,504 2,885
Sales and marketing 1,057 1,333 3,207 4,102
General and
administrative 163 191 459 578
-------- -------- -------- --------
Total operating
expenses 2,027 2,494 6,170 7,565
-------- -------- -------- --------
OPERATING INCOME 1,014 83 2,048 3,320
Interest and other
income, net 150 236 499 741
-------- -------- -------- --------
INCOME BEFORE PROVISION
FOR INCOME TAXES 1,164 319 2,547 4,061
Provision for
income taxes 326 89 713 1,138
-------- -------- -------- --------
NET INCOME $ 838 $ 230 $ 1,834 $ 2,923
======== ======== ======== ========
Net income per
share--basic $ 0.11 $ 0.03 $ 0.25 $ 0.41
======== ======== ======== ========
Net income per
share--diluted $ 0.11 $ 0.03 $ 0.25 $ 0.39
======== ======== ======== ========
Shares used in
per-share
calculation--basic 7,306 7,251 7,310 7,170
======== ======== ======== ========
Shares used in
per-share
calculation--diluted 7,454 7,486 7,473 7,552
======== ======== ======== ========
The above pro forma
amounts have been
adjusted to exclude
the following items:
In-process research
and development $ -- $ 109 $ 37 $ 855
Payroll tax on
employee stock
option exercises 1 10 7 50
Amortization of
deferred stock-based
compensation 37 70 133 106
Amortization of goodwill -- 181 -- 494
Amortization of purchased
intangible assets 129 95 411 263
Net (gains) losses
on investments -- -- 858 (190)
Restructuring costs
and other special charges -- 1,170 -- 1,170
Excess inventory
(benefit) charge (27) 2,249 (512) 2,249
Income tax effect (31) (961) (221) (1,053)
-------- -------- -------- --------
$ 109 $ 2,923 $ 713 $ 3,944
======== ======== ======== ========
Cisco Systems, Inc.
CONSOLIDATED BALANCE SHEETS
(In millions)
(Unaudited)
April 27, July 28,
2002 2001
-------- --------
ASSETS
Current assets:
Cash and cash equivalents $ 6,493 $ 4,873
Short-term investments 2,478 2,034
Accounts receivable, net of allowance
for doubtful accounts of $346
at April 27, 2002 and $288 at
July 28, 2001 990 1,466
Inventories, net 869 1,684
Deferred tax assets 2,010 1,809
Lease receivables, net 272 405
Prepaid expenses and other
current assets 498 564
-------- --------
Total current assets 13,610 12,835
Investments 12,090 10,346
Restricted investments -- 1,264
Property and equipment, net 4,002 2,591
Goodwill 3,350 3,189
Purchased intangible assets, net 1,090 1,470
Lease receivables, net 42 253
Other assets 2,942 3,290
-------- --------
TOTAL ASSETS $ 37,126 $ 35,238
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 436 $ 644
Income taxes payable 292 241
Accrued compensation 1,266 1,058
Deferred revenue 3,122 2,470
Other accrued liabilities 2,523 2,553
Restructuring liabilities 341 386
-------- --------
Total current liabilities 7,980 7,352
Deferred revenue 711 744
-------- --------
Total liabilities 8,691 8,096
Minority interest 16 22
Shareholders' equity 28,419 27,120
-------- --------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 37,126 $ 35,238
======== ========
Cisco Systems, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
Nine Months Ended
-----------------------
April 27, April 28,
2002 2001
-------- --------
Cash flows from operating activities:
Net income (loss) $ 1,121 $ (1,021)
Adjustments to reconcile net
income (loss) to net cash provided
by operating activities:
Depreciation and amortization 1,353 1,615
Provision for doubtful accounts 91 123
Provision for inventory 109 2,697
(BSNS WIRE) Cisco Systems Reports Third Quarter=2
Cisco Systems Reports Third Quarter=2
Deferred income taxes (373) (1,431)
Tax benefits from employee
stock option plans 51 705
In-process research and development 25 739
Net (gains) losses on investments and
provision for losses 1,076 43
Restructuring costs and
other special charges -- 501
Change in operating assets
and liabilities:
Accounts receivable 385 197
Inventories 665 (1,730)
Prepaid expenses and other
current assets (20) (66)
Accounts payable (208) (85)
Income taxes payable 51 786
Accrued compensation 208 (108)
Deferred revenue 619 1,000
Other accrued liabilities (130) 74
Restructuring liabilities (45) 668
-------- --------
Net cash provided by
operating activities 4,978 4,707
-------- --------
Cash flows from investing activities:
Purchases of short-term investments (4,166) (2,870)
Proceeds from sales and maturities of
short-term investments 4,702 3,459
Purchases of investments (13,600) (14,613)
Proceeds from sales and
maturities of investments 10,658 12,732
Purchases of restricted investments (291) (758)
Proceeds from sales and maturities of
restricted investments 1,471 941
Acquisition of property and equipment (2,243) (1,814)
Acquisition of businesses, net of
cash and cash equivalents 14 (13)
Change in lease receivables, net 344 224
Purchases of investments in privately
held companies (52) (960)
Lease deposits 320 (320)
Purchase of minority interest of
Cisco Systems, K.K. (Japan) (91) (365)
Other 98 (573)
-------- --------
Net cash used in investing
activities (2,836) (4,930)
-------- --------
Cash flows from financing activities:
Issuance of common stock 431 1,106
Repurchase of common stock (952) --
Other (1) (15)
-------- --------
Net cash (used in) provided
by financing activities (522) 1,091
-------- --------
Net increase in cash and
cash equivalents 1,620 868
Cash and cash equivalents,
beginning of period 4,873 4,234
-------- --------
Cash and cash equivalents, end of period $ 6,493 $ 5,102
======== ========
*T
--30--mr/sf* eb/sf
CONTACT: Cisco Systems, Inc., San Jose
Press Contact:
Abby Smith, 408/525-8548
absmith@cisco.com
Investor Contact:
Blair Christie, 408/525-4856
blchrist@cisco.com
KEYWORD: afxeu CALIFORNIA INTERNATIONAL ASIA PACIFIC TRACK
INDUSTRY KEYWORD: COMPUTERS/ELECTRONICS HARDWARE NETWORKING
TELECOMMUNICATIONS EARNINGS
SOURCE: Cisco Systems, Inc.
Today's News On The Net - Business Wire's full file on the Internet
with Hyperlinks to your home page.
URL: businesswire.com
*** end of story *** |
