Here is the earnings:
Cisco Systems Reports Third Quarter Earnings and Two-For-One Stock Split
SAN JOSE, Calif.--(BUSINESS WIRE)--May 11, 1999--Cisco Systems, Inc., the worldwide leader in networking for the Internet, today reported its third quarter results for the period ending May 1, 1999.
Net sales for the third quarter were $3.15 billion, compared with $2.18 billion for the same period last year, an increase of 44%. Net income was $646 million or $0.38 per share, compared with pro forma net income of $484 million or $0.30 per share for the third quarter of 1998, increases of 33% and 27%, respectively.
Net sales for the first nine months of 1999 were $8.56 billion compared with $6.07 billion for the same period last year, an increase of 41%. Pro forma net income was $1.81 billion or $1.08 per share, compared with pro forma net income of $1.36 billion or $0.85 per share for the first nine months of 1998, increases of 33% and 27%, respectively.
Actual net income for the first nine months of 1999 was $1.45 billion or $0.86 per share, compared with $859 million or $0.54 per share in 1998.
The company's board of directors authorized the splitting of Cisco's common stock on a two-for-one basis for shareholders of record on May 24, 1999. Shares resulting from the split are expected to be distributed by the transfer agent on June 21, 1999. This action will be the eighth time that Cisco's stock has been split since the company's initial public offering in February 1990. Two-for-one stock splits occurred in 1991, 1992, 1993, 1994 and 1996; and a three-for-two split occurred in 1997 and 1998.
"The Internet Economy continues to create unprecedented growth opportunities for people, companies, and countries on a global basis," said John Chambers, president and CEO of Cisco Systems. "The New World of integrated data, voice, and video communications is at the center of these opportunities."
Cisco continues to advance its end-to-end Internet solutions in each of its key markets.
Cisco expanded its New World technology offerings into messaging and call center solutions for both enterprise and service provider customers, underscoring its commitment to unify voice and Internet communications. In support of this strategy to enable open platforms for third-party application developers, Cisco announced it will acquire GeoTel Communications and Amteva Technologies. Both acquisitions bring advanced voice technologies to New World networks and broaden Cisco's technology portfolio for partners.
In the enterprise space, Cisco continued to increase acceptance of its Internet solutions and advance its market leadership in local-area network (LAN) switching. Cisco furthered its Gigabit Ethernet strategy with the introduction of the Catalyst(R) 4900 series switch, which allows customers to deploy end-to-end gigabit solutions. Strengthening its enterprise position, Cisco significantly increased its market leadership in Layer 3 switching due to broad acceptance of the Catalyst 8500, 6000, and 5000 families of switches.
In the service provider marketplace there continues to be increased acceptance of the New World strategy. Reinforcing its commitment to IP+ATM networks, Cisco began volume shipments of the MGX(TM) 8800 wide-area switch and announced the acquisition of Sentient Networks. To broaden its access portfolio, Cisco announced the acquisition of Fibex Systems and introduced the ISR 3303 access platform from the PipeLinks acquisition. Both solutions allow service providers to take advantage of the New World architecture while continuing to offer traditional voice services over existing infrastructure. Motorola and Cisco announced a strategic alliance to deliver a New World framework for Internet-based wireless networks.
In the small and medium-sized marketplace, Cisco, along with two dozen partners launched the Cisco Hosted Applications Initiative to help small and medium-sized businesses take advantage of sophisticated applications that were previously unavailable to them. Internet- hosted applications can be rapidly deployed with minimal technical support.
Other highlights this quarter include Cisco's alliance with the United Nations Development Programme (UNDP) to use the Internet to help eradicate extreme poverty in the world's poorest nations. The NET AID initiative uses the power of the Internet as the primary communication device to educate and mobilize the world's people around this global problem. For the first time, the Internet will join forces with world-renowned producers and promoters including Harvey Goldsmith, Ken Kragen, Don Mischer and Jeff Pollack along with the world's top entertainers for three simultaneous concerts to bring awareness to this issue. The web site for NET AID is expected to receive more than 1 billion hits and will serve as the on-going information resource to help bring an end to extreme poverty.
"Cisco is helping to create a world free of borders where the Internet will provide equal opportunities for all people on a worldwide basis. The NET AID project is just one example of how the power of the Internet has the potential to accomplish the seemingly impossible and change our lives in a very positive and meaningful way," concluded Chambers. About Cisco Systems
Cisco Systems, Inc. (NASDAQ: CSCO) is the worldwide leader in networking for the Internet. News and information are available at 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.
Note to Editors: 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.
Cisco Systems, Inc.
PRO FORMA STATEMENTS OF OPERATIONS
Excluding Purchased R&D and Realized Gain
(In millions, except per-share amounts)
Quarters Ended Nine Months Ended
----------------- ------------------
May 1, April 25, May 1, April 25,
1999 1998 1999 1998
------- -------- -------- -------
(Unaudited)
Net sales $3,147 $2,184 $8,562 $6,069
Cost of sales 1,102 750 2,981 2,099
------- ------- ------- ------
Gross margin 2,045 1,434 5,581 3,970
Operating expenses:
Research and development 418 263 1,102 726
Sales and marketing 647 412 1,731 1,109
General and administrative 105 67 279 181
------- ------- ------- ------
Total operating expenses 1,170 742 3,112 2,016
------- ------- ------- ------
Operating income 875 692 2,469 1,954
Interest and other income, net 90 52 235 133
------- ------- ------- ------
Income before provision for
income taxes 965 744 2,704 2,087
Provision for income taxes 319 260 893 730
------- ------- ------- ------
Net income $ 646 $ 484 $1,811 $1,357
======= ======= ======= ======
Net income per share--basic(1) $ .40 $ .31 $ 1.14 $ .89
======= ======= ======= ======
Net income per share--diluted(1) $ .38 $ .30 $ 1.08 $ .85
======= ======= ======= ======
Shares used in per-share
calculation--basic(1) 1,601 1,541 1,585 1,526
======= ======= ======= ======
Shares used in per-share
calculation--diluted(1) 1,696 1,614 1,679 1,598
======= ======= ======= ======
PRO FORMA ONLY
The above pro-forma amounts for the nine months ended 5/1/99 have
been adjusted to eliminate the quarter one $41 million and the quarter
two $349 million charges for the write-off of purchased in-process
R&D, net of a tax benefit of $31 million.
The above pro-forma amounts for the quarter and nine months ended
4/25/98 have been adjusted to eliminate the quarter one $127 million
and the quarter three $419 million charges for the write-off of
purchased in-process R&D, and the quarter one $5 million gain from the
sale of a minority stock investment, net of a tax benefit of $43
million for the nine months ended 4/25/98.
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.
(1) Does not reflect the effect of the two-for-one stock split
effective June 1999.
Cisco Systems, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per-share amounts)
Quarters Ended Nine Months Ended
----------------- ------------------
May 1, April 25, May 1, April 25,
1999 1998 1999 1998
------- -------- -------- -------
(Unaudited)
Net sales $3,147 $2,184 $8,562 $6,069
Cost of sales 1,102 750 2,981 2,099
------- ------- ------- ------
Gross margin 2,045 1,434 5,581 3,970
Operating expenses:
Research and development 418 263 1,102 726
Sales and marketing 647 412 1,731 1,109
General and administrative 105 67 279 181
Purchased R&D -- 419 390 546
------- ------- ------- ------
Total operating expenses 1,170 1,161 3,502 2,562
------- ------- ------- ------
Operating income 875 273 2,079 1,408
Realized gain on sale of
investment -- -- -- 5
Interest and other income, net 90 52 235 133
------- ------- ------- ------
Income before provision for
income taxes 965 325 2,314 1,546
Provision for income taxes 319 260 862 687
------- ------- ------- ------
Net income $ 646 $ 65 $1,452 $ 859
======= ======= ======= ======
Net income per share--basic(1) $ .40 $ .04 $ .92 $ .56
======= ======= ======= ======
Net income per share--diluted(1) $ .38 $ .04 $ .86 $ .54
======= ======= ======= ======
Shares used in per-share
calculation--basic(1) 1,601 1,541 1,585 1,526
======= ======= ======= ======
Shares used in per-share
calculation--diluted(1) 1,696 1,614 1,679 1,598
======= ======= ======= ======
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.
(1) Does not reflect the effect of the two-for-one stock split
effective June 1999.
Cisco Systems, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
May 1, 1999 July 25, 1998
----------- -------------
(Unaudited)
Assets
Current Assets:
Cash and equivalents $ 690 $ 535
Short-term investments 1,161 1,157
Accounts receivable, net 1,275 1,298
Inventories, net 621 362
Deferred income taxes 490 345
Other current assets 89 65
------- ------
Total current assets 4,326 3,762
Investments 5,840 3,463
Restricted investments 804 554
Property and equipment, net 701 595
Other assets 1,037 543
------- ------
Total assets $12,708 $ 8,917
======= ======
Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable and other accrued
expenses $ 1,890 $ 1,357
Income taxes payable 522 410
------- ------
Total current liabilities 2,412 1,767
Minority interest 44 43
Shareholders' equity 10,252 7,107
------- ------
Total liabilities and
shareholders' equity $12,708 $ 8,917
======= ======
CONTACT: Cisco Systems, Inc.
Randi Paikoff Feigin, 408/527-1099 (IR)
rfeigin@cisco.com
Doug Wills, 408/527-9475 (PR)
dwills@cisco.com |
