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Cisco Reports Third Quarter Earnings
Q3 Net Sales: $8.2 Billion (Decrease of 17% Year Over Year)
Q3 Net Income: $1.3 Billion GAAP; $1.8 Billion Non-GAAP
Q3 Earnings per Share: $0.23 GAAP (Decrease of 21% Year Over Year); $0.30 Non-GAAP (Decrease of 21% Year Over Year)
Q3 Cash Flows From Operations: $2.0 Billion
Total Cash, Cash Equivalents and Investments: $33.6 Billion
SAN JOSE, CA, May 06, 2009 (MARKETWIRE via COMTEX News Network) -- Cisco (NASDAQ: CSCO) , the worldwide leader in networking that transforms how people connect, communicate and collaborate, today reported its third quarter results for the period ended April 25, 2009. Cisco reported third quarter net sales of $8.2 billion, net income on a generally accepted accounting principles (GAAP) basis of $1.3 billion or $0.23 per share, and non-GAAP net income of $1.8 billion or $0.30 per share.
"Cisco delivered solid financial performance despite a challenging global economy and period of evolving market dynamics," said John Chambers, chairman and chief executive officer, Cisco. "These results demonstrate our ability to drive operational excellence and manage profitability across varying economic cycles. We will use this period of market transition to align and optimize resources, make strategic investments, move into market adjacencies and enhance relationships with our customers. As we exit the quarter with a compelling financial position and an innovation engine from both a products and business model perspective, we believe we are well-positioned for the eventual economic recovery."
GAAP Results
------------
Q3 2009 Q3 2008 Vs. Q3 2008
------- ------- -----------
Net Sales $8.2 billion $9.8 billion -16.6%
Net Income $1.3 billion $1.8 billion -24.0%
Earnings per Share $0.23 $0.29 -20.7%
Non-GAAP Results
----------------
Q3 2009 Q3 2008 Vs. Q3 2008
------- ------- -----------
Net Income $1.8 billion $2.3 billion -24.1%
Earnings per Share $0.30 $0.38 -21.1%
Net sales for the first nine months of fiscal 2009 were $27.6 billion, compared with $29.2 billion for the first nine months of fiscal 2008. Net income for the first nine months of fiscal 2009, on a GAAP basis, was $5.1 billion or $0.86 per share, compared with $6.0 billion or $0.97 per share for the first nine months of fiscal 2008. Non-GAAP net income for the first nine months of fiscal 2009 was $6.1 billion or $1.04 per share, compared with $7.2 billion or $1.16 per share for the first nine months of fiscal 2008.
A reconciliation between net income on a GAAP basis and non-GAAP net income is provided in the table on page 6.
Cisco will discuss third quarter results and business outlook on a conference call and webcast at 1:30 p.m. Pacific Time today. Call information and related charts are available at http://www.cisco.com/go/investors.
Other Financial Highlights
Cash flows from operations were $2.0 billion for the third quarter of fiscal 2009, compared with $3.0 billion for the third quarter of fiscal 2008, and compared with $3.2 billion for the second quarter of fiscal 2009.
Cash and cash equivalents and investments were $33.6 billion at the end of the third quarter of fiscal 2009, compared with $26.2 billion at the end of fiscal 2008, and compared with $29.5 billion at the end of the second quarter of fiscal 2009.
Deferred revenue was $8.8 billion at the end of the third quarter of fiscal 2009, compared with $8.9 billion at the end of fiscal 2008, and compared with $9.3 billion at the end of the second quarter of fiscal 2009.
During the third quarter of fiscal 2009, Cisco repurchased 77 million shares of common stock at an average price of $15.57 per share for an aggregate purchase price of $1.2 billion. As of April 25, 2009, Cisco had repurchased and retired 2.8 billion shares of Cisco common stock at an average price of $20.43 per share for an aggregate purchase price of approximately $56.4 billion since the inception of the stock repurchase program. The remaining authorized repurchase amount as of April 25, 2009, was $5.6 billion with no termination date.
Days sales outstanding in accounts receivable (DSO) at the end of the third quarter of fiscal 2009 were 27 days, compared with 34 days at the end of the fourth quarter of fiscal 2008, and compared with 29 days at the end of the second quarter of fiscal 2009.
Inventory turns on a GAAP basis were 11.0 in the third quarter of fiscal 2009, compared with 11.9 in the fourth quarter of fiscal 2008, and compared with 11.6 in the second quarter of fiscal 2009. Non-GAAP inventory turns were 10.7 in the third quarter of fiscal 2009, compared with 11.6 in the fourth quarter of fiscal 2008, and compared with 11.3 in the second quarter of fiscal 2009.
During the third quarter of fiscal 2009, Cisco completed its debt offering of senior unsecured notes in an aggregate principal amount of $4.0 billion.
"Cisco has demonstrated the ability to effectively manage profitability in both good and challenging economic times," said Frank Calderoni, chief financial officer, Cisco. "With over $33 billion in cash and investments, our strong financial position provides a solid and flexible foundation that allows us to sustain our investment in innovation, drive operational excellence in the business and forge stronger customer relationships."
Select Global Business Highlights
Cisco and the Mexican Federal Government outlined collaborative approaches to education, digital government and rural connectivity to drive further socio-economic development in Mexico.
Cisco announced an initiative to increase productivity and foster innovation in Korea as part of its global intelligent urbanisation initiative, which aims to help cities around the world use the network as the platform for integrated city management, a better quality of life for citizens, and economic development.
Miami Mayor Manny Diaz launched 'Energy Smart Miami' in collaboration with Florida Power and Light, GE, Cisco and Silver Spring Networks. The project represents a model electricity system for American cities and has the potential to be the most extensive and holistic smart grid implementation in the country.
Acquisitions
Cisco announced its intent to acquire Pure Digital Technologies, Inc., creator of the Flip Video brand, as a key part of Cisco's strategy to expand its momentum in the media-enabled home and to capture the consumer market transition to visual networking.
Cisco completed the acquisition of Richards-Zeta Building Intelligence, Inc., a leading provider of intelligent middleware technology that helps integrate building infrastructure and information technology (IT) applications over a common Internet Protocol (IP) network.
Cisco announced its intent to acquire Tidal Software, Inc., a creator of intelligent application management and automation solutions which are expected to advance Cisco's data center strategy by enhancing product and service delivery offerings.
Cisco Innovation
Cisco announced the Cisco Unified Computing System™ to unite computing, network, storage access and virtualization resources in a single energy-efficient system designed to reduce IT infrastructure costs and complexity, help extend capital assets and improve business agility well into the future.
Cisco introduced the Cisco TelePresence™ System 1300 Series to extend user collaboration capabilities beyond meetings to new users, applications and markets.
Cisco expanded mobile business collaboration to a broader range of devices and users with the WebEx® Meeting Center for smart phones.
In terms of innovation in the underlying business model, Cisco has embraced a collaborative operating model that is helping to provide the speed, scale and replication as Cisco realigns resources to now address 29 cross-functional priorities and market adjacencies while also, in the third quarter, reducing expenses.
Select Customer Announcements
AT&T and Cisco announced that a BAE Systems operating group is aiming to enable closer collaboration across global and regional teams using Cisco TelePresence systems, which is expected to help accelerate decision-making processes and problem-solving for high-priority projects.
The National Basketball Association (NBA) and ESPN utilized Cisco TelePresence technology to create an immersive 'in-person' experience to bring NBA players and legends closer to fans at the NBA All-Star Jam Session in Phoenix.
Yahoo! Japan adopted the Cisco Nexus™ 7000 Series as the core switch for its new data center in response to increased consumer demand for Yahoo! Japan services.
In India, the government of the state of Karnataka and Cisco announced that they will work to develop a road map for an intelligent and sustainable Bangalore city with a focus on public safety and security, health care, and energy.
Kazakh service provider, AsiaBell, introduced mobile WiMAX services to citizens in central Kazakhstan based on the Cisco Broadband Wireless Solution with innovative adaptive beamforming technologies.
Editor's Note:
Q3 FY09 conference call to discuss Cisco's results along with its business outlook will be held at 1:30 p.m. Pacific Time, Wednesday, May 6, 2009. Conference call number is 888-848-6507 (United States) or 212-519-0847 (international).
Conference call replay will be available from 4:30 p.m. Pacific Time, May 6, 2009, to 4:30 p.m. Pacific Time, May 13, 2009, at 866-357-4205 (United States) or 203-369-0122 (international). The replay also will be available via webcast from May 6, 2009, through July 17, 2009, on the Cisco Investor Relations website at http://www.cisco.com/go/investors.
Additional information regarding Cisco's financials, as well as a webcast of the conference call with visuals designed to guide participants through the call, will be available at 1:30 p.m. Pacific Time, May 6, 2009. Text of the conference call's prepared remarks will be available within 24 hours of completion of the call. The webcast will include both the prepared remarks and the question-and-answer session. This information, along with GAAP reconciliation information, will be available on the Cisco Investor Relations website at http://www.cisco.com/go/investors.
A Q&A with Cisco's Chairman and CEO John Chambers and CFO Frank Calderoni about Q3 FY09 results will be available at http://newsroom.cisco.com.
About Cisco
Cisco (NASDAQ: CSCO) is the worldwide leader in networking that transforms how people connect, communicate and collaborate. Information about Cisco can be found at http://www.cisco.com. For ongoing news, visit http://newsroom.cisco.com.
This release may be deemed to contain forward-looking statements, which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, among other things, statements regarding future events (such as our alignment and optimization of resources, strategic investments, movement into market adjacencies, enhancement of relationships with our customers, investment innovation, and positioning for the eventual economic recovery) 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 due to a variety of factors, including: business and economic conditions and growth trends in the networking industry, our customer markets and various geographic regions; global economic conditions and uncertainties in the geopolitical environment; overall information technology spending; the growth and evolution 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 and other customer markets; the return on our investments in certain market adjacencies and geographical locations during the current economic downturn; the timing of orders and manufacturing and customer lead times; changes in customer order patterns or customer mix; insufficient, excess or obsolete inventory; variability of component costs; variations in sales channels, product costs or mix of products sold; our ability to successfully acquire businesses and technologies and to successfully integrate and operate these acquired businesses and technologies; increased competition in our product and service markets, including the data center; dependence on the introduction and market acceptance of new product offerings and standards; rapid technological and market change; manufacturing and sourcing risks; product defects and returns; litigation involving patents, intellectual property, antitrust, shareholder and other matters, and governmental investigations; natural catastrophic events; a pandemic or epidemic; our ability to achieve the benefits anticipated from our investments in sales and engineering activities; our ability to recruit and retain key personnel; our ability to manage financial risk, and to manage expenses during the current economic downturn; risks related to the global nature of our operations, including our operations in emerging markets; currency fluctuations and other international factors; potential volatility in operating results; and other factors listed in Cisco's most recent reports on Form 10-K and Form 10-Q. 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, as each may be amended from time to time. Cisco's results of operations for the three and nine months ended April 25, 2009, are not necessarily indicative of Cisco's operating results for any future periods. Any projections in this release are based on limited information currently available to Cisco, which is subject to change. Although any such projections and the factors influencing them will likely change, Cisco will not necessarily update the information, since Cisco will only provide guidance at certain points during the year. Such information speaks only as of the date of this release.
This release includes non-GAAP net income, non-GAAP net income per share data, shares used in non-GAAP net income per share calculation, and non-GAAP inventory turns.
These non-GAAP measures are not in accordance with, or an alternative for measures prepared in accordance with, generally accepted accounting principles and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. Cisco believes that non-GAAP measures have limitations in that they do not reflect all of the amounts associated with Cisco's results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate Cisco's results of operations in conjunction with the corresponding GAAP measures.
Cisco believes that the presentation of non-GAAP net income, non-GAAP net income per share data and shares used in non-GAAP net income per share calculation, when shown in conjunction with the corresponding GAAP measures, provides useful information to investors and management regarding financial and business trends relating to its financial condition and results of operations. In addition, Cisco believes that the presentation of non-GAAP inventory turns provides useful information to investors and management regarding financial and business trends relating to inventory management based on the operating activities of the period presented.
For its internal budgeting process, Cisco's management uses financial statements that do not include employee share-based compensation expense, compensation expense related to acquisitions and investments, in-process research and development, amortization of acquisition-related intangible assets, the income tax effects of the foregoing, and significant effects of retroactive tax legislation. Cisco's management also uses the foregoing non-GAAP measures, in addition to the corresponding GAAP measures, in reviewing the financial results of Cisco. In prior periods, Cisco has excluded other items that it no longer excludes for purposes of its non-GAAP financial measures; for example, effective in the third quarter of fiscal 2009, Cisco no longer excludes payroll tax on stock option exercises. From time to time in the future, there may be other items that Cisco may exclude for purposes of its internal budgeting process and in reviewing its financial results.
For additional information on the items excluded by Cisco from one or more of its non-GAAP financial measures, refer to the Form 8-K regarding this release furnished today to the Securities and Exchange Commission.
Copyright Copyright2009 Cisco Systems, Inc. All rights reserved. Cisco, the Cisco logo, Cisco Systems, Cisco Nexus, Cisco TelePresence, Cisco Unified Computing System, Cisco WebEx, WebEx, and WebEx Meeting Center are registered trademarks or trademarks of Cisco Systems, Inc. and/or its affiliates in the United States and certain other countries. All other trademarks mentioned in this document are the property of their respective owners. This document is Cisco Public Information.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per-share amounts)
(Unaudited)
Three Months Ended Nine Months Ended
------------------ ------------------
April 25, April 26, April 25, April 26,
2009 2008 2009 2008
-------- -------- -------- --------
NET SALES:
Product $ 6,420 $ 8,199 $ 22,402 $ 24,459
Service 1,742 1,592 5,180 4,717
-------- -------- -------- --------
Total net sales 8,162 9,791 27,582 29,176
-------- -------- -------- --------
COST OF SALES:
Product 2,327 2,872 8,045 8,592
Service 606 649 1,904 1,869
-------- -------- -------- --------
Total cost of sales 2,933 3,521 9,949 10,461
-------- -------- -------- --------
GROSS MARGIN 5,229 6,270 17,633 18,715
OPERATING EXPENSES:
Research and development 1,243 1,483 3,928 3,975
Sales and marketing 1,956 2,205 6,394 6,441
General and administrative 302 324 1,077 1,033
Amortization of purchased
intangible assets 121 117 369 350
In-process research and development -- -- 3 3
-------- -------- -------- --------
Total operating expenses 3,622 4,129 11,771 11,802
-------- -------- -------- --------
OPERATING INCOME 1,607 2,141 5,862 6,913
Interest income, net 89 201 443 636
Other income (loss), net (9) (33) (145) 20
-------- -------- -------- --------
Interest and other income
(loss), net 80 168 298 656
-------- -------- -------- --------
INCOME BEFORE PROVISION FOR
INCOME TAXES 1,687 2,309 6,160 7,569
Provision for income taxes 339 536 1,107 1,531
-------- -------- -------- --------
NET INCOME $ 1,348 $ 1,773 $ 5,053 $ 6,038
-------- -------- -------- --------
Net income per share:
Basic $ 0.23 $ 0.30 $ 0.86 $ 1.00
-------- -------- -------- --------
Diluted $ 0.23 $ 0.29 $ 0.86 $ 0.97
-------- -------- -------- --------
Shares used in per-share
calculation:
Basic 5,805 5,942 5,844 6,014
-------- -------- -------- --------
Diluted 5,818 6,069 5,871 6,202
-------- -------- -------- --------
Certain reclassifications have been made to prior period amounts to conform
to the current period's presentation.
RECONCILIATION OF GAAP TO NON-GAAP NET INCOME
(In millions, except per-share amounts)
Three Months Ended Nine Months Ended
------------------ ------------------
April 25, April 26, April 25, April 26,
2009 2008 2009 2008
-------- -------- -------- --------
GAAP net income $ 1,348 $ 1,773 $ 5,053 $ 6,038
Employee share-based
compensation expense 277 268 835 767
Payroll tax on stock option
exercises(1) -- 1 1 20
Compensation expense related to
acquisitions and investments 120 286 323 359
In-process research and
development -- -- 3 3
Amortization of acquisition-
related intangible assets 164 174 520 529
-------- -------- -------- --------
Total adjustments to GAAP
income before provision for
income taxes 561 729 1,682 1,678
-------- -------- -------- --------
Income tax effect (156) (193) (512) (526)
Effect of retroactive tax
legislation(2) -- -- (106) --
-------- -------- -------- --------
Total adjustments to GAAP
provision for income taxes (156) (193) (618) (526)
-------- -------- -------- --------
Non-GAAP net income $ 1,753 $ 2,309 $ 6,117 $ 7,190
-------- -------- -------- --------
Diluted net income per share:
GAAP $ 0.23 $ 0.29 $ 0.86 $ 0.97
-------- -------- -------- --------
Non-GAAP $ 0.30 $ 0.38 $ 1.04 $ 1.16
-------- -------- -------- --------
Shares used in diluted net
income per share calculation:
GAAP 5,818 6,069 5,871 6,202
-------- -------- -------- --------
Non-GAAP 5,840 6,052 5,888 6,192
-------- -------- -------- --------
(1) Effective in the third quarter of fiscal 2009, Cisco no longer excludes
payroll tax on stock option exercises for purposes of its non-GAAP
financial measures.
(2) In the first quarter of fiscal 2009, the Tax Extenders and Alternative
Minimum Tax Relief Act of 2008 reinstated the U.S. federal R&D tax
credit, retroactive to January 1, 2008. GAAP net income for the first
nine months of fiscal 2009 included a $106 million tax benefit related
to fiscal 2008 R&D expenses. Non-GAAP net income for the first nine
months of fiscal 2009 excluded the $106 million tax benefit related to
fiscal 2008 R&D expenses.
Additional reconciliations between GAAP and non-GAAP financial measures
are provided in the tables that follow on page 10.
CONSOLIDATED BALANCE SHEETS
(In millions)
(Unaudited)
April 25, July 26,
2009 2008
-------- --------
ASSETS
Current assets:
Cash and cash equivalents $ 7,359 $ 5,191
Investments 26,192 21,044
Accounts receivable, net of allowance for doubtful
accounts of $203 at April 25, 2009 and $177 at
July 26, 2008 2,392 3,821
Inventories 1,023 1,235
Deferred tax assets 2,050 2,075
Prepaid expenses and other current assets 2,320 2,333
-------- --------
Total current assets 41,336 35,699
Property and equipment, net 4,089 4,151
Goodwill 12,569 12,392
Purchased intangible assets, net 1,656 2,089
Other assets 5,016 4,403
-------- --------
TOTAL ASSETS $ 64,666 $ 58,734
-------- --------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ -- $ 500
Accounts payable 653 869
Income taxes payable 83 107
Accrued compensation 2,413 2,428
Deferred revenue 6,110 6,197
Other current liabilities 3,602 3,757
-------- --------
Total current liabilities 12,861 13,858
Long-term debt 10,317 6,393
Income taxes payable 1,038 749
Deferred revenue 2,663 2,663
Other long-term liabilities 504 669
-------- --------
Total liabilities 27,383 24,332
-------- --------
Minority interest 27 49
Shareholders' equity 37,256 34,353
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 64,666 $ 58,734
-------- --------
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
Nine Months Ended
------------------
April 25, April 26,
2009 2008
-------- --------
Cash flows from operating activities:
Net income $ 5,053 $ 6,038
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 1,244 1,314
Employee share-based compensation expense 835 767
Share-based compensation expense related to
acquisitions and investments 66 67
Provision for doubtful accounts 36 34
Deferred income taxes (166) (876)
Excess tax benefits from share-based compensation (25) (375)
In-process research and development 3 3
Net losses (gains) on investments 113 (109)
Change in operating assets and liabilities, net of
effects of acquisitions:
Accounts receivable 1,337 (219)
Inventories 199 54
Lease receivables, net (127) (320)
Accounts payable (198) 12
Income taxes payable and receivable 274 405
Accrued compensation 120 301
Deferred revenue 9 1,553
Other assets (618) (357)
Other liabilities (243) 268
-------- --------
Net cash provided by operating activities 7,912 8,560
-------- --------
Cash flows from investing activities:
Purchases of investments (31,865) (14,093)
Proceeds from sales of investments 17,291 13,043
Proceeds from maturities of investments 9,088 1,718
Acquisition of property and equipment (794) (908)
Acquisition of businesses, net of cash and cash
equivalents acquired (338) (385)
Change in investments in privately held companies (78) (63)
Other (54) 6
-------- --------
Net cash used in investing activities (6,750) (682)
-------- --------
Cash flows from financing activities:
Issuance of common stock 486 2,501
Repurchase of common stock (2,807) (8,982)
Issuance of long-term debt 3,991 --
Repayment of long-term debt (500) --
Settlement of interest rate derivatives related to
long-term debt (42) 432
Excess tax benefits from share-based compensation 25 375
Other (147) 222
-------- --------
Net cash provided by (used in) financing activities 1,006 (5,452)
-------- --------
Net increase in cash and cash equivalents 2,168 2,426
Cash and cash equivalents, beginning of period 5,191 3,728
-------- --------
Cash and cash equivalents, end of period $ 7,359 $ 6,154
-------- --------
Certain reclassifications have been made to prior period amounts to conform
to the current period's presentation.
ADDITIONAL FINANCIAL INFORMATION
(In millions)
(Unaudited)
April 25, July 26,
2009 2008
-------- --------
CASH AND CASH EQUIVALENTS AND INVESTMENTS
Cash and cash equivalents $ 7,359 $ 5,191
Fixed income securities 25,392 19,869
Publicly traded equity securities 800 1,175
-------- --------
Total $ 33,551 $ 26,235
-------- --------
INVENTORIES
Raw materials $ 159 $ 111
Work in process 39 53
Finished goods:
Distributor inventory and deferred cost of sales 361 452
Manufactured finished goods 273 381
-------- --------
Total finished goods 634 833
Service-related spares 156 191
Demonstration systems 35 47
-------- --------
Total $ 1,023 $ 1,235
-------- --------
PROPERTY AND EQUIPMENT, NET
Land, buildings, and leasehold improvements $ 4,534 $ 4,445
Computer equipment and related software 1,822 1,770
Production, engineering, and other equipment 5,087 4,839
Operating lease assets 224 209
Furniture and fixtures 458 439
-------- --------
12,125 11,702
Less accumulated depreciation and amortization (8,036) (7,551)
-------- --------
Total $ 4,089 $ 4,151
-------- --------
OTHER ASSETS
Deferred tax assets $ 2,091 $ 1,770
Investments in privately held companies 725 706
Lease receivables, net (1) 882 862
Financed service contracts (2) 695 588
Other 623 477
-------- --------
Total $ 5,016 $ 4,403
-------- --------
DEFERRED REVENUE
Service $ 6,068 $ 6,133
Product
Unrecognized revenue on product shipments and other
deferred revenue 2,233 2,152
Cash receipts related to unrecognized revenue from
two-tier distributors 472 575
-------- --------
Total product deferred revenue 2,705 2,727
-------- --------
Total $ 8,773 $ 8,860
-------- --------
Reported as:
Current $ 6,110 $ 6,197
Noncurrent 2,663 2,663
-------- --------
Total $ 8,773 $ 8,860
-------- --------
Note:
(1) The current portion of lease receivables, net, which was $566 million
and $554 million as of April 25, 2009 and July 26, 2008, respectively,
is recorded in prepaid expenses and other current assets.
(2) The current portion of financed service contracts, which was $868
million and $730 million as of April 25, 2009 and July 26, 2008,
respectively, is recorded in prepaid expenses and other current assets.
These financed service contracts primarily relate to technical support
services, and the associated revenue is deferred and recognized ratably
over the period during which the services are to be performed, which is
typically from one to three years.
SUMMARY OF EMPLOYEE SHARE-BASED COMPENSATION EXPENSE
(In millions)
Three Months Ended Nine Months Ended
------------------ ------------------
April 25, April 26, April 25, April 26,
2009 2008 2009 2008
-------- -------- -------- --------
Cost of sales--product $ 12 $ 10 $ 33 $ 30
Cost of sales--service 31 27 94 80
-------- -------- -------- --------
Employee share-based compensation
expense in cost of sales 43 37 127 110
-------- -------- -------- --------
Research and development 82 78 248 224
Sales and marketing 103 114 320 324
General and administrative 49 39 140 109
-------- -------- -------- --------
Employee share-based compensation
expense in operating expenses 234 231 708 657
-------- -------- -------- --------
Total employee share-based
compensation expense $ 277 $ 268 $ 835 $ 767
-------- -------- -------- --------
The income tax benefit for employee share-based compensation expense was
$74 million and $224 million for the third quarter and first nine months of
fiscal 2009, respectively, and $87 million and $247 million for the third
quarter and first nine months of fiscal 2008, respectively.
RECONCILIATION OF SHARES USED IN THE GAAP AND NON-GAAP
DILUTED NET INCOME PER SHARE CALCULATION
(In millions)
Three Months Ended Nine Months Ended
------------------ ------------------
April 25, April 26, April 25, April 26,
2009 2008 2009 2008
-------- -------- -------- --------
Shares used in diluted net income
per share calculation -- GAAP 5,818 6,069 5,871 6,202
Effect of SFAS 123(R) 22 (17) 17 (10)
-------- -------- -------- --------
Shares used in diluted net income
per share calculation -- Non-GAAP 5,840 6,052 5,888 6,192
-------- -------- -------- --------
RECONCILIATION OF GAAP TO NON-GAAP COST OF SALES
USED IN INVENTORY TURNS
(In millions)
Three Months Ended
---------------------------------------
April 25, January 24, July 26, April 26,
2009 2009 2008 2008
-------- -------- -------- --------
GAAP cost of sales $ 2,933 $ 3,366 $ 3,733 $ 3,521
Employee share-based
compensation expense (43) (42) (38) (37)
Amortization of acquisition-
related intangible assets (43) (54) (54) (57)
-------- -------- -------- --------
Non-GAAP cost of sales $ 2,847 $ 3,270 $ 3,641 $ 3,427
-------- -------- -------- --------
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Press Contact: Marc Musgrove Cisco +1 (408) 525-6320 mmusgrov@cisco.com Investor Relations Contact: Laura Graves Cisco +1 (408) 526-6521 lagraves@cisco.com
SOURCE: Cisco
mailto:mmusgrov@cisco.com mailto:lagraves@cisco.com
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