• Q4 Results:
Cisco today reported fourth quarter and fiscal year results for the
period ended July 28, 2018. Cisco reported fourth quarter
revenue of $12.8 billion, net income on a generally accepted
accounting principles (GAAP) basis of $3.8 billion or $0.81 per
share, and non-GAAP net income of $3.3 billion or $0.70 per share.
“We had a very strong finish to a great year and generated our
highest quarterly revenue of $12.8 billion,” said Chuck Robbins,
Chairman and CEO of Cisco. “Our results demonstrate a combination
of strong customer adoption of our latest innovations, the ongoing
value customers see in our software and subscription offerings, and
excellent execution across our customer segments and geographies.
Our strategy is working and we believe that are well-positioned to
capture growth across our portfolio with our pipeline of
innovation.”
Q4 GAAP Results
|
|
Q4 FY 2018 |
|
Q4 FY 2017 |
|
Vs. Q4 FY 2017 |
Revenue |
|
$ |
12.8 |
billion |
|
$ |
12.1 |
billion |
|
6 |
% |
Net Income |
|
$ |
3.8 |
billion |
|
$ |
2.4 |
billion |
|
57 |
% |
DilutedEarningsperShare(EPS) |
|
$ |
0.81 |
|
|
$ |
0.48 |
|
|
69 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Q4 GAAP results include an $863 million benefit related to the
Tax Cuts and Jobs Act. Non-GAAP results exclude this benefit.
Q4 Non-GAAP
Results
|
|
Q4 FY 2018 |
|
Q4 FY 2017 |
|
Vs. Q4 FY 2017 |
Net Income |
|
$ |
3.3 |
billion |
|
$ |
3.1 |
billion |
|
8 |
% |
EPS |
|
$ |
0.70 |
|
|
$ |
0.61 |
|
|
15 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year GAAP Results
|
|
FY 2018 |
|
FY 2017 |
|
Vs. FY
2017 |
Revenue |
|
$ |
49.3 |
billion |
|
$ |
48.0 |
billion |
|
3 |
% |
Net Income |
|
$ |
0.1 |
billion |
|
$ |
9.6 |
billion |
|
(99 |
)% |
EPS |
|
$ |
0.02 |
|
|
$ |
1.90 |
|
|
(99 |
)% |
Fiscal year GAAP results include a $10.4 billion charge related
to the enactment of the Tax Cuts and Jobs Act comprised of $8.1
billion for the U.S. transition tax, $1.2 billion for foreign
withholding tax and $1.1 billion for the re-measurement of net
deferred tax assets.
Fiscal Year
Non-GAAP Results
|
|
FY 2018 |
|
FY 2017 |
|
Vs. FY
2017 |
Net Income |
|
$ |
12.7 |
billion |
|
$ |
12.1 |
billion |
|
5% |
EPS |
|
$ |
2.60 |
|
|
$ |
2.39 |
|
|
9% |
Reconciliations between net income, EPS, and other measures on a
GAAP and non-GAAP basis are provided in the tables located in the
section entitled "Reconciliations of GAAP to non-GAAP
Measures."
“Q4 was another quarter of broad-based strength across our
portfolio reflecting our strong execution and momentum. We
delivered record quarterly revenue, up 6%, and non-GAAP EPS, up
15%,” said Kelly Kramer, CFO of Cisco. “We are seeing solid demand
for our products and solutions while continuing to make progress in
transforming our business model and driving long-term shareholder
value.”
Financial SummaryAll comparative percentages
are on a year-over-year basis unless otherwise noted.
Q4 FY 2018 Highlights
Revenue -- Total revenue was $12.8 billion, up
6%, with product revenue up 7% and service revenue up 3%. Recurring
revenue as a percentage of total revenue was 32%, up 1 point year
over year. Revenue by geographic segment was: Americas up 5%, EMEA
up 8%, and APJC up 6%. Product revenue performance was generally
broad based with growth in Security, up 12%, Applications, up 10%,
and Infrastructure Platforms, up 7%.
Gross Margin -- On a GAAP basis, total gross
margin, product gross margin, and service gross margin were 61.7%,
60.2%, and 66.0%, respectively, as compared with 62.2%, 60.3%, and
67.8%, respectively, in the fourth quarter of 2017.
On a non-GAAP basis, total gross margin, product gross margin,
and service gross margin were 62.9%, 61.5%, and 67.1%,
respectively, as compared with 63.7%, 61.9%, and 68.8%,
respectively, in the fourth quarter of 2017.
Total gross margins by geographic segment were: 64.1% for the
Americas, 63.7% for EMEA and 57.7% for APJC.
Operating Expenses -- On a GAAP basis,
operating expenses were $4.6 billion, up 1%. Non-GAAP operating
expenses were $4.1 billion, up 5%, and were 32.0% of revenue.
Operating Income -- GAAP operating income was
$3.3 billion, up 10%, with GAAP operating margin of 26.1%. Non-GAAP
operating income was $4.0 billion, up 4%, with non-GAAP operating
margin at 30.9%.
Provision for (benefit from) Income Taxes --
The GAAP tax provision rate was (5.9)%, which includes an $863
million benefit related to the Tax Cuts and Jobs Act. The non-GAAP
tax provision rate was 21.2%.
Net Income and EPS -- On a GAAP basis, net
income was $3.8 billion and EPS was $0.81. On a non-GAAP basis, net
income was $3.3 billion, an increase of 8%, and EPS was $0.70, an
increase of 15%.
Cash Flow from Operating Activities -- $4.1
billion for the fourth quarter of fiscal 2018, an increase of 2%
compared with $4.0 billion for the fourth quarter of fiscal
2017.
FY 2018 Highlights
Revenue -- Total revenue was $49.3 billion, an
increase of 3%.
Net Income and EPS -- On a GAAP basis, net
income was $0.1 billion and EPS was $0.02. GAAP net income includes
a $10.4 billion charge related to the enactment of the Tax Cuts and
Jobs Act comprised of $8.1 billion for the U.S. transition tax,
$1.2 billion for foreign withholding tax and $1.1 billion for the
re-measurement of net deferred tax assets.
On a non-GAAP basis, net income was $12.7 billion, up 5%
compared to fiscal 2017, and EPS was $2.60, an increase of 9%.
Cash Flow from Operating Activities -- $13.7
billion for fiscal 2018, compared with $13.9 billion for fiscal
2017, a decrease of 2%. Operating cash flow for fiscal 2018
includes the payments of $1.4 billion of one-time foreign taxes as
related to the Tax Cuts and Jobs Act. Operating cash flow increased
8%, normalized for these tax payments.
Balance Sheet and Other Financial
Highlights
Cash and Cash Equivalents and Investments --
$46.5 billion at the end of the fourth quarter of fiscal 2018,
compared with $54.4 billion at the end of the third quarter of
fiscal 2018, and compared with $70.5 billion at the end of fiscal
2017. The total cash and cash equivalents and investments available
in the United States at the end of the fourth quarter of fiscal
2018 were $40.4 billion.
Deferred Revenue -- $19.7 billion, up 6% in
total, with deferred product revenue up 15%, driven largely by
subscription-based and software offers, and deferred service
revenue was up 1%. The portion of deferred product revenue related
to recurring software and subscription offers increased 23%.
Product Backlog -- $6.6 billion at the end of
fiscal 2018, an increase of 38% compared with the balance at the
end of fiscal 2017.
Capital Allocation -- For the fourth quarter of
fiscal 2018, Cisco returned $7.5 billion to shareholders through
share buybacks and dividends. Cisco declared and paid a cash
dividend of $0.33 per common share, or $1.5 billion. Cisco
repurchased approximately 138 million shares of common stock under
its stock repurchase program at an average price of $43.58 per
share for an aggregate purchase price of $6.0 billion.
For the full fiscal year, Cisco returned $23.6 billion to
shareholders through share buybacks and dividends. Cisco declared
and paid cash dividends of $1.24 per common share, or $6.0 billion.
Cisco repurchased approximately 432 million shares of common stock
under its stock repurchase program at an average price of $40.88
per share for an aggregate purchase price of $17.7 billion. The
remaining authorized amount for stock repurchases under the program
is approximately $19.0 billion with no termination date.
Acquisitions and Divestitures
In the fourth quarter of fiscal 2018, we closed the acquisition
of Accompany, a privately held company that provides an AI-driven
relationship intelligence platform. We also announced our intent to
acquire July Systems, Inc., a privately held company that provides
enterprise-grade location platform through cloud-based subscription
offerings. This acquisition closed in the first quarter of fiscal
2019. In the fourth quarter of fiscal 2018, we announced an
agreement to sell our Service Provider Video Software Solutions
(SPVSS) business. We expect this transaction to close in the first
half of fiscal 2019 subject to customary closing conditions and
regulatory approvals.
On August 2, 2018, we announced our intent to acquire Duo
Security, a privately held company that provides unified access
security and multi-factor authentication delivered through the
cloud. The acquisition is expected to close in the first quarter of
fiscal 2019, subject to customary closing conditions and regulatory
approvals.
Guidance for Q1 FY 2019
Cisco expects to achieve the following results
for the first quarter of fiscal 2019:
|
|
|
Q1 FY
2019 |
|
|
Revenue |
|
5% to
7% growth Y/Y |
Non-GAAP gross margin
rate |
|
63% -
64% |
Non-GAAP operating
margin rate |
|
30% -
31% |
Non-GAAP tax provision
rate |
|
19% |
Non-GAAP EPS |
|
$0.70
- $0.72 |
|
|
|
The guidance includes our SPVSS business that we recently agreed
to sell and excludes the Duo Security acquisition since both
transactions have not closed. We expect the SPVSS transaction to
close in the first half of fiscal 2019 subject to customary closing
conditions and regulatory approvals.
At the beginning of fiscal 2019, Cisco adopted the Financial
Accounting Standards Board new standard on revenue recognition (ASC
606) using the modified retrospective method. The revenue guidance
in the preceding table includes the impact of ASC 606 which we
estimate to be a benefit of about 1% year over year.
Cisco estimates that GAAP EPS will be $0.69 to $0.74 in the
first quarter of fiscal 2019.
A reconciliation between the Guidance for Q1 FY 2019 on a GAAP
and non-GAAP basis is provided in the table entitled "GAAP to
non-GAAP Guidance for Q1 FY 2019" located in the section entitled
"Reconciliations of GAAP to non-GAAP Measures."
Editor's Notes:
- Q4 fiscal year 2018 conference call to discuss Cisco's results
along with its guidance will be held on Wednesday, August 15,
2018 at 1:30 p.m. Pacific Time. Conference call number is
1-888-848-6507 (United States) or 1-212-519-0847
(international)
- Conference call replay will be available from 4:00 p.m. Pacific
Time, August 15, 2018 to 4:00 p.m. Pacific Time,
August 22, 2018 at 1-866-417-5767 (United States) or
1-203-369-0735 (international). The replay will also be available
via webcast on the Cisco Investor Relations website at
https://investor.cisco.com.
- 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, August 15, 2018. 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 the
GAAP to non-GAAP reconciliation information, will be available on
the Cisco Investor Relations website at
https://investor.cisco.com.
CISCO SYSTEMS,
INC.CONSOLIDATED STATEMENTS OF
OPERATIONS(In millions, except per-share
amounts)(Unaudited)
|
Three Months Ended |
|
Fiscal Year Ended |
|
July 28, 2018 |
|
July 29, 2017 |
|
July 28, 2018 |
|
July 29, 2017 |
REVENUE: |
|
|
|
|
|
|
|
Product |
$ |
9,642 |
|
|
$ |
9,027 |
|
|
$ |
36,709 |
|
|
$ |
35,705 |
|
Service |
3,202 |
|
|
3,106 |
|
|
12,621 |
|
|
12,300 |
|
Total
revenue |
12,844 |
|
|
12,133 |
|
|
49,330 |
|
|
48,005 |
|
COST OF SALES: |
|
|
|
|
|
|
|
Product |
3,833 |
|
|
3,586 |
|
|
14,427 |
|
|
13,699 |
|
Service |
1,089 |
|
|
1,001 |
|
|
4,297 |
|
|
4,082 |
|
Total
cost of sales |
4,922 |
|
|
4,587 |
|
|
18,724 |
|
|
17,781 |
|
GROSS MARGIN |
7,922 |
|
|
7,546 |
|
|
30,606 |
|
|
30,224 |
|
OPERATING
EXPENSES: |
|
|
|
|
|
|
|
Research
and development |
1,626 |
|
|
1,499 |
|
|
6,332 |
|
|
6,059 |
|
Sales and
marketing |
2,348 |
|
|
2,318 |
|
|
9,242 |
|
|
9,184 |
|
General
and administrative |
543 |
|
|
495 |
|
|
2,144 |
|
|
1,993 |
|
Amortization of purchased intangible assets |
33 |
|
|
58 |
|
|
221 |
|
|
259 |
|
Restructuring and other charges |
26 |
|
|
142 |
|
|
358 |
|
|
756 |
|
Total
operating expenses |
4,576 |
|
|
4,512 |
|
|
18,297 |
|
|
18,251 |
|
OPERATING INCOME |
3,346 |
|
|
3,034 |
|
|
12,309 |
|
|
11,973 |
|
Interest
income |
353 |
|
|
360 |
|
|
1,508 |
|
|
1,338 |
|
Interest
expense |
(224 |
) |
|
(222 |
) |
|
(943 |
) |
|
(861 |
) |
Other
income (loss), net |
117 |
|
|
8 |
|
|
165 |
|
|
(163 |
) |
Interest
and other income (loss), net |
246 |
|
|
146 |
|
|
730 |
|
|
314 |
|
INCOME BEFORE PROVISION
FOR (BENEFIT FROM) INCOME TAXES |
3,592 |
|
|
3,180 |
|
|
13,039 |
|
|
12,287 |
|
Provision for (benefit
from) income taxes (1) |
(211 |
) |
|
756 |
|
|
12,929 |
|
|
2,678 |
|
NET INCOME |
$ |
3,803 |
|
|
$ |
2,424 |
|
|
$ |
110 |
|
|
$ |
9,609 |
|
|
|
|
|
|
|
|
|
Net income per
share: |
|
|
|
|
|
|
|
Basic |
$ |
0.81 |
|
|
$ |
0.49 |
|
|
$ |
0.02 |
|
|
$ |
1.92 |
|
Diluted |
$ |
0.81 |
|
|
$ |
0.48 |
|
|
$ |
0.02 |
|
|
$ |
1.90 |
|
Shares used in
per-share calculation: |
|
|
|
|
|
|
|
Basic |
4,672 |
|
|
4,993 |
|
|
4,837 |
|
|
5,010 |
|
Diluted |
4,722 |
|
|
5,027 |
|
|
4,881 |
|
|
5,049 |
|
|
|
|
|
|
|
|
|
Cash dividends declared
per common share |
$ |
0.33 |
|
|
$ |
0.29 |
|
|
$ |
1.24 |
|
|
$ |
1.10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) For the three months ended July 28, 2018, the provision for
(benefit from) income taxes includes an $863 million benefit as
related to the Tax Cuts and Jobs Act. For fiscal year ended 2018,
the provision for income taxes includes a $10.4 billion charge as
related to the enactment of the Tax Cuts and Jobs Act.
CISCO SYSTEMS,
INC.REVENUE BY SEGMENT(In
millions, except percentages)
|
|
July 28, 2018 |
|
|
Three Months Ended |
|
Fiscal Year Ended |
|
|
Amount |
|
Y/Y % |
|
Amount |
|
Y/Y % |
Revenue: |
|
|
|
|
|
|
|
|
Americas |
|
$ |
7,555 |
|
|
5 |
% |
|
$ |
29,070 |
|
|
3 |
% |
EMEA |
|
3,174 |
|
|
8 |
% |
|
12,425 |
|
|
4 |
% |
APJC |
|
2,116 |
|
|
6 |
% |
|
7,834 |
|
|
2 |
% |
Total |
|
$ |
12,844 |
|
|
6 |
% |
|
$ |
49,330 |
|
|
3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts may not sum and percentages may not recalculate due to
rounding.
CISCO SYSTEMS, INC.GROSS
MARGIN PERCENTAGE BY SEGMENT(In
percentages)
|
|
July 28, 2018 |
|
|
Three Months Ended |
|
Fiscal Year Ended |
Gross Margin
Percentage: |
|
|
|
|
Americas |
|
64.1 |
% |
|
64.6 |
% |
EMEA |
|
63.7 |
% |
|
63.9 |
% |
APJC |
|
57.7 |
% |
|
60.3 |
% |
|
|
|
|
|
|
|
CISCO SYSTEMS,
INC.REVENUE FOR GROUPS OF SIMILAR PRODUCTS AND
SERVICES(In millions, except
percentages)
|
|
July 28, 2018 |
|
|
Three Months Ended |
|
Fiscal Year Ended |
|
|
Amount |
|
Y/Y % |
|
Amount |
|
Y/Y % |
Revenue: |
|
|
|
|
|
|
|
|
Infrastructure Platforms |
|
$ |
7,443 |
|
|
7 |
% |
|
$ |
28,270 |
|
|
2 |
% |
Applications |
|
1,339 |
|
|
10 |
% |
|
5,035 |
|
|
10 |
% |
Security |
|
627 |
|
|
12 |
% |
|
2,353 |
|
|
9 |
% |
Other
Products |
|
232 |
|
|
(18 |
)% |
|
1,050 |
|
|
(13 |
)% |
Total
Product |
|
9,642 |
|
|
7 |
% |
|
36,709 |
|
|
3 |
% |
Services |
|
3,202 |
|
|
3 |
% |
|
12,621 |
|
|
3 |
% |
Total |
|
$ |
12,844 |
|
|
6 |
% |
|
$ |
49,330 |
|
|
3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts may not sum and percentages may not recalculate due to
rounding.
CISCO SYSTEMS,
INC.CONDENSED CONSOLIDATED BALANCE
SHEETS(In
millions)(Unaudited)
|
July 28, 2018 |
|
July 29, 2017 |
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and
cash equivalents |
$ |
8,934 |
|
|
$ |
11,708 |
|
Investments |
37,614 |
|
|
58,784 |
|
Accounts
receivable, net of allowance for doubtful accounts of $129 at
July 28, 2018 and $211 at July 29, 2017 |
5,554 |
|
|
5,146 |
|
Inventories |
1,846 |
|
|
1,616 |
|
Financing
receivables, net |
4,949 |
|
|
4,856 |
|
Other
current assets |
2,940 |
|
|
1,593 |
|
Total
current assets |
61,837 |
|
|
83,703 |
|
Property and equipment,
net |
3,006 |
|
|
3,322 |
|
Financing receivables,
net |
4,882 |
|
|
4,738 |
|
Goodwill |
31,706 |
|
|
29,766 |
|
Purchased intangible
assets, net |
2,552 |
|
|
2,539 |
|
Deferred tax
assets |
3,219 |
|
|
4,239 |
|
Other assets |
1,582 |
|
|
1,511 |
|
TOTAL ASSETS |
$ |
108,784 |
|
|
$ |
129,818 |
|
LIABILITIES AND
EQUITY |
|
|
|
Current
liabilities: |
|
|
|
Short-term debt |
$ |
5,238 |
|
|
$ |
7,992 |
|
Accounts
payable |
1,904 |
|
|
1,385 |
|
Income
taxes payable |
1,004 |
|
|
98 |
|
Accrued
compensation |
2,986 |
|
|
2,895 |
|
Deferred
revenue |
11,490 |
|
|
10,821 |
|
Other
current liabilities |
4,413 |
|
|
4,392 |
|
Total
current liabilities |
27,035 |
|
|
27,583 |
|
Long-term debt |
20,331 |
|
|
25,725 |
|
Income taxes
payable |
8,585 |
|
|
1,250 |
|
Deferred revenue |
8,195 |
|
|
7,673 |
|
Other long-term
liabilities |
1,434 |
|
|
1,450 |
|
Total
liabilities |
65,580 |
|
|
63,681 |
|
Total equity |
43,204 |
|
|
66,137 |
|
TOTAL LIABILITIES AND EQUITY |
$ |
108,784 |
|
|
$ |
129,818 |
|
|
|
|
|
|
|
|
|
CISCO SYSTEMS,
INC.CONSOLIDATED STATEMENTS OF CASH
FLOWS(In
millions)(Unaudited)
|
Fiscal Year Ended |
|
July 28, 2018 |
|
July 29, 2017 |
Cash flows from
operating activities: |
|
|
|
Net
income |
$ |
110 |
|
|
$ |
9,609 |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
Depreciation, amortization, and other |
2,192 |
|
|
2,286 |
|
Share-based compensation expense |
1,576 |
|
|
1,526 |
|
Provision
for receivables |
(134 |
) |
|
(8 |
) |
Deferred
income taxes |
900 |
|
|
(124 |
) |
Excess
tax benefits from share-based compensation |
— |
|
|
(153 |
) |
(Gains)
losses on divestitures, investments and other, net |
(322 |
) |
|
154 |
|
Change in
operating assets and liabilities, net of effects of acquisitions
and divestitures: |
|
|
|
Accounts
receivable |
(269 |
) |
|
756 |
|
Inventories |
(244 |
) |
|
(394 |
) |
Financing
receivables |
(219 |
) |
|
(1,038 |
) |
Other
assets |
66 |
|
|
15 |
|
Accounts
payable |
504 |
|
|
311 |
|
Income
taxes, net |
8,118 |
|
|
60 |
|
Accrued
compensation |
100 |
|
|
(110 |
) |
Deferred
revenue |
1,205 |
|
|
1,683 |
|
Other
liabilities |
83 |
|
|
(697 |
) |
Net cash
provided by operating activities |
13,666 |
|
|
13,876 |
|
Cash flows from
investing activities: |
|
|
|
Purchases
of investments |
(14,285 |
) |
|
(42,702 |
) |
Proceeds
from sales of investments |
17,706 |
|
|
28,827 |
|
Proceeds
from maturities of investments |
15,769 |
|
|
12,143 |
|
Acquisition of businesses, net of cash and cash equivalents
acquired |
(3,006 |
) |
|
(3,324 |
) |
Proceeds
from business divestitures |
27 |
|
|
— |
|
Purchases
of investments in privately held companies |
(267 |
) |
|
(222 |
) |
Return of
investments in privately held companies |
168 |
|
|
203 |
|
Acquisition of property and equipment |
(834 |
) |
|
(964 |
) |
Proceeds
from sales of property and equipment |
59 |
|
|
7 |
|
Other |
(13 |
) |
|
39 |
|
Net cash
provided by (used in) investing activities |
15,324 |
|
|
(5,993 |
) |
Cash flows from
financing activities: |
|
|
|
Issuances
of common stock |
623 |
|
|
708 |
|
Repurchases of common stock - repurchase program |
(17,547 |
) |
|
(3,685 |
) |
Shares
repurchased for tax withholdings on vesting of restricted stock
units |
(703 |
) |
|
(619 |
) |
Short-term borrowings, original maturities of 90 days or less,
net |
(2,502 |
) |
|
2,497 |
|
Issuances
of debt |
6,877 |
|
|
6,980 |
|
Repayments of debt |
(12,375 |
) |
|
(4,151 |
) |
Excess
tax benefits from share-based compensation |
— |
|
|
153 |
|
Dividends
paid |
(5,968 |
) |
|
(5,511 |
) |
Other |
(169 |
) |
|
(178 |
) |
Net cash
used in financing activities |
(31,764 |
) |
|
(3,806 |
) |
Net (decrease) increase
in cash and cash equivalents |
(2,774 |
) |
|
4,077 |
|
Cash and cash
equivalents, beginning of fiscal year |
11,708 |
|
|
7,631 |
|
Cash and cash
equivalents, end of fiscal year |
$ |
8,934 |
|
|
$ |
11,708 |
|
|
|
|
|
Supplemental cash flow
information: |
|
|
|
Cash paid for
interest |
$ |
910 |
|
|
$ |
897 |
|
Cash paid for income
taxes, net |
$ |
3,911 |
|
|
$ |
2,742 |
|
|
|
|
|
|
|
|
|
CISCO SYSTEMS,
INC.DEFERRED REVENUE(In
millions)
|
July 28, 2018 |
|
April 28, 2018 |
|
July 29, 2017 |
Deferred revenue: |
|
|
|
|
|
Service |
$ |
11,431 |
|
|
$ |
10,960 |
|
|
$ |
11,302 |
|
Product: |
|
|
|
|
|
Deferred
revenue related to recurring software and subscription offers |
6,120 |
|
|
5,635 |
|
|
4,971 |
|
Other
product deferred revenue |
2,134 |
|
|
2,358 |
|
|
2,221 |
|
Total
product deferred revenue |
8,254 |
|
|
7,993 |
|
|
7,192 |
|
Total |
$ |
19,685 |
|
|
$ |
18,953 |
|
|
$ |
18,494 |
|
Reported as: |
|
|
|
|
|
Current |
$ |
11,490 |
|
|
$ |
11,301 |
|
|
$ |
10,821 |
|
Noncurrent |
8,195 |
|
|
7,652 |
|
|
7,673 |
|
Total |
$ |
19,685 |
|
|
$ |
18,953 |
|
|
$ |
18,494 |
|
|
|
|
|
|
|
|
|
|
|
|
|
CISCO SYSTEMS,
INC.DIVIDENDS PAID AND REPURCHASES OF COMMON
STOCK(In millions, except per-share
amounts)
|
|
DIVIDENDS |
|
STOCK REPURCHASE PROGRAM |
|
TOTAL |
Quarter Ended |
|
Per Share |
|
Amount |
|
Shares |
|
Weighted-Average Price per Share |
|
Amount |
|
Amount |
Fiscal 2018 |
|
|
|
|
|
|
|
|
|
|
|
|
July 28,
2018 |
|
$ |
0.33 |
|
|
$ |
1,535 |
|
|
138 |
|
|
$ |
43.58 |
|
|
$ |
6,015 |
|
|
$ |
7,550 |
|
April 28,
2018 |
|
$ |
0.33 |
|
|
$ |
1,572 |
|
|
140 |
|
|
$ |
42.83 |
|
|
$ |
6,015 |
|
|
$ |
7,587 |
|
January
27, 2018 |
|
$ |
0.29 |
|
|
$ |
1,425 |
|
|
103 |
|
|
$ |
39.07 |
|
|
$ |
4,011 |
|
|
$ |
5,436 |
|
October
28, 2017 |
|
$ |
0.29 |
|
|
$ |
1,436 |
|
|
51 |
|
|
$ |
31.80 |
|
|
$ |
1,620 |
|
|
$ |
3,056 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2017 |
|
|
|
|
|
|
|
|
|
|
|
|
July 29,
2017 |
|
$ |
0.29 |
|
|
$ |
1,448 |
|
|
38 |
|
|
$ |
31.61 |
|
|
$ |
1,201 |
|
|
$ |
2,649 |
|
April 29,
2017 |
|
$ |
0.29 |
|
|
$ |
1,451 |
|
|
15 |
|
|
$ |
33.71 |
|
|
$ |
503 |
|
|
$ |
1,954 |
|
January
28, 2017 |
|
$ |
0.26 |
|
|
$ |
1,304 |
|
|
33 |
|
|
$ |
30.33 |
|
|
$ |
1,001 |
|
|
$ |
2,305 |
|
October
29, 2016 |
|
$ |
0.26 |
|
|
$ |
1,308 |
|
|
32 |
|
|
$ |
31.12 |
|
|
$ |
1,001 |
|
|
$ |
2,309 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CISCO SYSTEMS,
INC.RECONCILIATIONS OF GAAP TO NON-GAAP
MEASURES
GAAP TO NON-GAAP NET
INCOME(In millions, except per-share
amounts)
|
Three Months Ended |
|
Fiscal Year Ended |
|
July 28, 2018 |
|
July 29, 2017 |
|
July 28, 2018 |
|
July 29, 2017 |
GAAP net income |
$ |
3,803 |
|
|
$ |
2,424 |
|
|
$ |
110 |
|
|
$ |
9,609 |
|
Adjustments to cost of sales: |
|
|
|
|
|
|
|
Share-based compensation expense |
59 |
|
|
56 |
|
|
227 |
|
|
219 |
|
Amortization of acquisition-related intangible assets |
134 |
|
|
140 |
|
|
578 |
|
|
483 |
|
Supplier
component remediation charge (adjustment), net |
(36 |
) |
|
(18 |
) |
|
(77 |
) |
|
(47 |
) |
Acquisition-related/divestiture costs |
3 |
|
|
— |
|
|
7 |
|
|
1 |
|
Legal and
indemnification settlements |
— |
|
|
— |
|
|
122 |
|
|
— |
|
Total
adjustments to GAAP cost of sales |
160 |
|
|
178 |
|
|
857 |
|
|
656 |
|
Adjustments to operating expenses: |
|
|
|
|
|
|
|
Share-based compensation expense |
329 |
|
|
344 |
|
|
1,339 |
|
|
|
1,307 |
|
Amortization of acquisition-related intangible assets |
33 |
|
|
58 |
|
|
221 |
|
|
259 |
|
Acquisition-related/divestiture costs |
79 |
|
|
62 |
|
|
274 |
|
|
219 |
|
Significant asset impairments and restructurings |
26 |
|
|
142 |
|
|
358 |
|
|
756 |
|
Total
adjustments to GAAP operating expenses |
467 |
|
|
606 |
|
|
2,192 |
|
|
2,541 |
|
Total
adjustments to GAAP income before provision for income taxes |
627 |
|
|
784 |
|
|
3,049 |
|
|
3,197 |
|
Income
tax effect of non-GAAP adjustments |
(253 |
) |
|
(235 |
) |
|
(866 |
) |
|
(847 |
) |
Significant tax matters (1) |
(851 |
) |
|
108 |
|
|
10,410 |
|
|
108 |
|
Total
adjustments to GAAP provision for income taxes |
(1,104 |
) |
|
(127 |
) |
|
9,544 |
|
|
(739 |
) |
Non-GAAP net
income |
$ |
3,326 |
|
|
$ |
3,081 |
|
|
$ |
12,703 |
|
|
$ |
12,067 |
|
|
|
|
|
|
|
|
|
Diluted net income per
share: |
|
|
|
|
|
|
|
GAAP |
$ |
0.81 |
|
|
$ |
0.48 |
|
|
$ |
0.02 |
|
|
$ |
1.90 |
|
Non-GAAP |
$ |
0.70 |
|
|
$ |
0.61 |
|
|
$ |
2.60 |
|
|
$ |
2.39 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) In the fourth quarter of fiscal 2018, Cisco recorded
adjustments to the provisional amounts related to the U.S.
transition tax on accumulated earnings of foreign subsidiaries and
re-measurement of net deferred tax assets. These adjustments
include an $863 million benefit to the U.S. transition tax
provisional amount related to the U.S. taxation of deemed foreign
dividends after the date of enactment in the transition fiscal
year.
For fiscal year 2018, Cisco recorded charges relating to
significant tax matters that were excluded from non-GAAP net
income. $10.4 billion of these charges were provisional amounts
related to the enactment of the Tax Cuts and Jobs Act comprised of
$8.1 billion related to the U.S. transition tax, $1.2 billion
related to foreign withholding tax and $1.1 billion related to the
re-measurement of net deferred tax assets. The amounts are
provisional based on Securities and Exchange Commission Staff
Accounting Bulletin No. 118.
CISCO SYSTEMS,
INC.RECONCILIATIONS OF GAAP TO NON-GAAP
MEASURES
GROSS MARGINS, OPERATING EXPENSES,
OPERATING MARGINS, AND NET INCOME(In millions,
except percentages)
|
Three Months Ended |
|
July 28, 2018 |
|
Product Gross Margin |
|
Service Gross Margin |
|
Total Gross Margin |
|
Operating Expenses |
|
Y/Y |
|
Operating Income |
|
Y/Y |
|
Net Income |
|
Y/Y |
GAAP amount |
$ |
5,809 |
|
|
$ |
2,113 |
|
|
$ |
7,922 |
|
|
$ |
4,576 |
|
|
1 |
% |
|
$ |
3,346 |
|
|
10 |
% |
|
$ |
3,803 |
|
|
57 |
% |
% of revenue |
60.2 |
% |
|
66.0 |
% |
|
61.7 |
% |
|
35.6 |
% |
|
|
|
26.1 |
% |
|
|
|
29.6 |
% |
|
|
Adjustments to GAAP
amounts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation expense |
24 |
|
|
35 |
|
|
59 |
|
|
329 |
|
|
|
|
388 |
|
|
|
|
388 |
|
|
|
Amortization of acquisition-related intangible assets |
134 |
|
|
— |
|
|
134 |
|
|
33 |
|
|
|
|
167 |
|
|
|
|
167 |
|
|
|
Supplier
component remediation charge (adjustment), net |
(36 |
) |
|
— |
|
|
(36 |
) |
|
— |
|
|
|
|
(36 |
) |
|
|
|
(36 |
) |
|
|
Acquisition/divestiture-related costs |
2 |
|
|
1 |
|
|
3 |
|
|
79 |
|
|
|
|
82 |
|
|
|
|
82 |
|
|
|
Significant asset impairments and restructurings |
— |
|
|
— |
|
|
— |
|
|
26 |
|
|
|
|
26 |
|
|
|
|
26 |
|
|
|
Income
tax effect/significant tax matters (1) |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
— |
|
|
|
|
(1,104 |
) |
|
|
Non-GAAP amount |
$ |
5,933 |
|
|
$ |
2,149 |
|
|
$ |
8,082 |
|
|
$ |
4,109 |
|
|
5 |
% |
|
$ |
3,973 |
|
|
4 |
% |
|
$ |
3,326 |
|
|
8 |
% |
% of revenue |
61.5 |
% |
|
67.1 |
% |
|
62.9 |
% |
|
32.0 |
% |
|
|
|
30.9 |
% |
|
|
|
25.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Includes an $863 million benefit as related to the Tax Cuts
and Jobs Act.
|
|
|
Three Months Ended |
|
July 29, 2017 |
|
Product Gross Margin |
|
Service Gross Margin |
|
Total Gross Margin |
|
Operating Expenses |
|
Y/Y |
|
OperatingIncome |
|
Y/Y |
|
NetIncome |
|
Y/Y |
GAAP amount |
$ |
5,441 |
|
|
$ |
2,105 |
|
|
$ |
7,546 |
|
|
$ |
4,512 |
|
|
(3 |
)% |
|
$ |
3,034 |
|
|
(8 |
)% |
|
$ |
2,424 |
|
|
(14 |
)% |
% of revenue |
60.3 |
% |
|
67.8 |
% |
|
62.2 |
% |
|
37.2 |
% |
|
|
|
25.0 |
% |
|
|
|
20.0 |
% |
|
|
Adjustments to GAAP
amounts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation expense |
23 |
|
|
33 |
|
|
56 |
|
|
344 |
|
|
|
|
400 |
|
|
|
|
400 |
|
|
|
Amortization of acquisition-related intangible assets |
140 |
|
|
— |
|
|
140 |
|
|
58 |
|
|
|
|
198 |
|
|
|
|
198 |
|
|
|
Supplier
component remediation charge (adjustment), net |
(18 |
) |
|
— |
|
|
(18 |
) |
|
— |
|
|
|
|
(18 |
) |
|
|
|
(18 |
) |
|
|
Acquisition/divestiture-related costs |
— |
|
|
— |
|
|
— |
|
|
62 |
|
|
|
|
62 |
|
|
|
|
62 |
|
|
|
Significant asset impairments and restructurings |
— |
|
|
— |
|
|
— |
|
|
142 |
|
|
|
|
142 |
|
|
|
|
142 |
|
|
|
Income
tax effect/significant tax matters |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
— |
|
|
|
|
(127 |
) |
|
|
Non-GAAP amount |
$ |
5,586 |
|
|
$ |
2,138 |
|
|
$ |
7,724 |
|
|
$ |
3,906 |
|
|
(7 |
)% |
|
$ |
3,818 |
|
|
(4 |
)% |
|
$ |
3,081 |
|
|
(3 |
)% |
% of revenue |
61.9 |
% |
|
68.8 |
% |
|
63.7 |
% |
|
32.2 |
% |
|
|
|
31.5 |
% |
|
|
|
25.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CISCO SYSTEMS,
INC.RECONCILIATIONS OF GAAP TO NON-GAAP
MEASURES
GROSS MARGINS, OPERATING EXPENSES,
OPERATING MARGINS, AND NET INCOME(In millions,
except percentages)
|
Fiscal Year Ended |
|
July 28, 2018 |
|
Product Gross Margin |
|
Service Gross Margin |
|
Total Gross Margin |
|
Operating Expenses |
|
Y/Y |
|
Operating Income |
|
Y/Y |
|
Net Income |
|
Y/Y |
GAAP amount |
$ |
22,282 |
|
|
$ |
8,324 |
|
|
$ |
30,606 |
|
|
$ |
18,297 |
|
|
— |
% |
|
$ |
12,309 |
|
|
3 |
% |
|
$ |
110 |
|
|
(99 |
)% |
% of revenue |
60.7 |
% |
|
66.0 |
% |
|
62.0 |
% |
|
37.1 |
% |
|
|
|
25.0 |
% |
|
|
|
0.2 |
% |
|
|
Adjustments to GAAP
amounts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation expense |
94 |
|
|
133 |
|
|
227 |
|
|
1,339 |
|
|
|
|
1,566 |
|
|
|
|
1,566 |
|
|
|
Amortization of acquisition-related intangible assets |
578 |
|
|
— |
|
|
578 |
|
|
221 |
|
|
|
|
799 |
|
|
|
|
799 |
|
|
|
Supplier
component remediation charge (adjustment), net |
(77 |
) |
|
— |
|
|
(77 |
) |
|
— |
|
|
|
|
(77 |
) |
|
|
|
(77 |
) |
|
|
Legal and
indemnification settlements |
122 |
|
|
— |
|
|
122 |
|
|
— |
|
|
|
|
122 |
|
|
|
|
122 |
|
|
|
Acquisition/divestiture-related costs |
3 |
|
|
4 |
|
|
7 |
|
|
274 |
|
|
|
|
281 |
|
|
|
|
281 |
|
|
|
Significant asset impairments and restructurings |
— |
|
|
— |
|
|
— |
|
|
358 |
|
|
|
|
358 |
|
|
|
|
358 |
|
|
|
Income
tax effect/significant tax matters (1) |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
— |
|
|
|
|
9,544 |
|
(1 |
) |
|
Non-GAAP amount |
$ |
23,002 |
|
|
$ |
8,461 |
|
|
$ |
31,463 |
|
|
$ |
16,105 |
|
|
3 |
% |
|
$ |
15,358 |
|
|
1 |
% |
|
$ |
12,703 |
|
|
5 |
% |
% of revenue |
62.7 |
% |
|
67.0 |
% |
|
63.8 |
% |
|
32.6 |
% |
|
|
|
31.1 |
% |
|
|
|
25.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Includes a $10.4 billion charge as related to the enactment
of the Tax Cuts and Jobs Act.
|
Fiscal Year Ended |
|
July 29, 2017 |
|
Product Gross Margin |
|
Service Gross Margin |
|
Total Gross Margin |
|
Operating Expenses |
|
Y/Y |
|
OperatingIncome |
|
Y/Y |
|
NetIncome |
|
Y/Y |
GAAP amount |
$ |
22,006 |
|
|
$ |
8,218 |
|
|
$ |
30,224 |
|
|
$ |
18,251 |
|
|
— |
% |
|
$ |
11,973 |
|
|
(5 |
)% |
|
$ |
9,609 |
|
|
(11 |
)% |
% of revenue |
61.6 |
% |
|
66.8 |
% |
|
63.0 |
% |
|
38.0 |
% |
|
|
|
24.9 |
% |
|
|
|
20.0 |
% |
|
|
Adjustments to GAAP
amounts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation expense |
85 |
|
|
134 |
|
|
219 |
|
|
1,307 |
|
|
|
|
1,526 |
|
|
|
|
1,526 |
|
|
|
Amortization of acquisition-related intangible assets |
483 |
|
|
— |
|
|
483 |
|
|
259 |
|
|
|
|
742 |
|
|
|
|
742 |
|
|
|
Supplier
component remediation charge (adjustment), net |
(47 |
) |
|
— |
|
|
(47 |
) |
|
— |
|
|
|
|
(47 |
) |
|
|
|
(47 |
) |
|
|
Acquisition/divestiture-related costs |
— |
|
|
1 |
|
|
1 |
|
|
219 |
|
|
|
|
220 |
|
|
|
|
220 |
|
|
|
Significant asset impairments and restructurings |
— |
|
|
— |
|
|
— |
|
|
756 |
|
|
|
|
756 |
|
|
|
|
756 |
|
|
|
Income
tax effect/significant tax matters |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
— |
|
|
|
|
(739 |
) |
|
|
Non-GAAP amount |
$ |
22,527 |
|
|
$ |
8,353 |
|
|
$ |
30,880 |
|
|
$ |
15,710 |
|
|
(4 |
)% |
|
$ |
15,170 |
|
|
— |
% |
|
$ |
12,067 |
|
|
— |
% |
% of revenue |
63.1 |
% |
|
67.9 |
% |
|
64.3 |
% |
|
32.7 |
% |
|
|
|
31.6 |
% |
|
|
|
25.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CISCO SYSTEMS,
INC.RECONCILIATIONS OF GAAP TO NON-GAAP
MEASURES
EFFECTIVE TAX RATE(In
percentages)
|
|
|
|
|
Three Months Ended |
|
Fiscal Year Ended |
|
July 28, 2018 |
|
July 29, 2017 |
|
July 28, 2018 |
|
July 29, 2017 |
GAAP effective tax rate
(1) |
(5.9)% |
|
|
23.8% |
|
|
99.2% |
|
|
21.8% |
|
Total
adjustments to GAAP provision for income taxes |
27.1% |
|
|
(1.5)% |
|
|
(78.2)% |
|
|
0.3% |
|
Non-GAAP effective tax
rate |
21.2% |
|
|
22.3% |
|
|
21.0% |
|
|
22.1% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) The three months ended July 28, 2018 includes an $863
million benefit as related to the Tax Cuts and Jobs Act. The fiscal
year ended July 28, 2018 includes a $10.4 billion charge as related
to the enactment of the Tax Cuts and Jobs Act.
GAAP TO NON-GAAP GUIDANCE FOR Q1 FY
2019
|
|
|
|
|
|
|
|
|
Q1 FY 2019 |
|
Gross Margin Rate |
|
Operating Margin Rate |
|
Tax Provision Rate |
|
Earnings per Share (4) |
GAAP |
|
61.5% - 62.5% |
|
27.5% - 28.5% |
|
9% |
|
$0.69 - $0.74 |
Estimated adjustments
for: |
|
|
|
|
|
|
|
|
Share-based
compensation expense |
|
0.5 |
% |
|
3.0 |
% |
|
|
|
$0.04 - $0.05 |
Amortization of
purchased intangible assets and other
acquisition-related/divestiture costs |
|
1.0 |
% |
|
2.0 |
% |
|
|
|
$0.04 - $0.05 |
Restructuring and other
charges (1) |
|
— |
|
|
0.5 |
% |
|
|
|
$0.01 |
Legal settlements
(2) |
|
— |
|
|
(3.0 |
)% |
|
|
|
|
($0.07) |
Significant tax matters
(3) |
|
|
|
|
|
|
|
|
|
($0.03) - ($0.04) |
Income tax effect of
non-GAAP adjustments |
|
|
|
|
|
|
|
10% |
|
|
Non-GAAP |
|
63% - 64% |
|
30% - 31% |
|
19% |
|
$0.70 - $0.72 |
|
|
|
|
|
|
|
|
|
(1) In the third quarter of fiscal 2018, we initiated a
restructuring plan in order to realign the organization and enable
further investment in key priority areas. The total pretax cash
charges to the GAAP financial results is estimated to be
approximately $300 million consisting of severance and other
one-time benefits, and other associated costs. During fiscal 2018,
we have recognized pretax charges of approximately $108 million to
our GAAP financial results in relation to this restructuring plan.
We expect to recognize up to $70 million of these charges in the
first quarter of fiscal 2019 with the remaining amount to be
recognized during the rest of the fiscal year.
(2) In the first quarter of fiscal 2019, we entered into a
binding term sheet with Arista Networks, settling most of the
outstanding litigation between the companies, which will result in
a payment to Cisco of $400 million. We will recognize this benefit
in our GAAP financial results in the first quarter of fiscal 2019.
The remaining litigation will not have a financial impact on
Cisco.
(3) We will recognize net indirect benefits to our GAAP
provision for income taxes related to intercompany adjustments upon
adoption of ASC 606.
(4) Estimated adjustments to GAAP earnings per share are shown
after income tax effects.
The guidance includes our SPVSS business that we recently agreed
to sell and excludes the Duo Security acquisition since both
transactions have not closed. We expect the SPVSS transaction to
close in the first half of fiscal 2019 subject to customary closing
conditions and regulatory approvals.
At the beginning of fiscal 2019, we adopted the Financial
Accounting Standards Board new standard on revenue recognition (ASC
606) using the modified retrospective method. The revenue guidance
in the preceding table includes the impact of ASC 606 which we
estimate to be a benefit of about 1% year over year.
Except as noted above, this guidance does not include the
effects of any future acquisitions/divestitures, asset impairments,
restructurings and significant tax matters or other events, which
may or may not be significant unless specifically stated.
Forward Looking Statements, Non-GAAP Information and
Additional Information
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 execution on our strategy, the
ability to grow across our portfolio with our pipeline of
innovation, continued customer adoption of our innovations and
continued solid demand for our products and solutions, continued
progress in transforming our business model and the ongoing value
customers see in our software and subscription offerings, execution
across our customer segments and geographies, continued broad-based
strength across our portfolio, continued strong execution and
momentum, and our ability to deliver profitable growth and drive
long-term shareholder value) and the future financial
performance of Cisco (including the guidance for Q1 FY 2019) 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 priorities, key growth areas, and in certain
geographical locations, as well as maintaining leadership in
routing, switching and services; 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; our ability to achieve expected benefits of our
partnerships; increased competition in our product and service
markets, including the data center market; 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; our ability to achieve
the benefits of the announced restructuring and possible changes in
the size and timing of the related charges; man-made problems such
as cyber-attacks, data protection breaches, computer viruses or
terrorism; natural catastrophic events; a pandemic or epidemic; our
ability to achieve the benefits anticipated from our investments in
sales, engineering, service, marketing and manufacturing
activities; our ability to recruit and retain key personnel; our
ability to manage financial risk, and to manage expenses during
economic downturns; risks related to the global nature of our
operations, including our operations in emerging markets; currency
fluctuations and other international factors; changes in provision
for income taxes, including changes in tax laws and regulations or
adverse outcomes resulting from examinations of our income tax
returns; potential volatility in operating results; and other
factors listed in Cisco's most recent reports on Forms 10-Q and
10-K filed on May 22, 2018 and September 7, 2017,
respectively. 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 Forms 10-Q and 10-K as each may be amended from time to
time. Cisco's results of operations for the three months and the
year ended July 28, 2018 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 gross
margins, non-GAAP operating expenses, non-GAAP operating income and
margin, non-GAAP effective tax rates, and non-GAAP net income per
share data for the periods presented. It also includes future
estimated ranges for gross margin, operating margin, tax provision
rate and EPS on a non-GAAP basis.
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 measures 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 its
historical and projected results of operations.
For its internal budgeting process, Cisco's management uses
financial statements that do not include, when applicable,
share-based compensation expense, amortization of
acquisition-related intangible assets,
acquisition-related/divestiture costs, significant asset
impairments and restructurings, significant litigation settlements
and other contingencies, significant gains and losses on
investments, the income tax effects of the foregoing and
significant tax matters. 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. 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.
About Cisco
Cisco (NASDAQ: CSCO) is the worldwide technology leader that has
been making the Internet work since 1984. Our people, products and
partners help society securely connect and seize tomorrow's digital
opportunity today. Discover more at thenetwork.cisco.com and follow
us on Twitter at @Cisco.
Copyright © 2018 Cisco and/or its affiliates. All rights
reserved. Cisco and the Cisco logo are trademarks or registered
trademarks of Cisco and/or its affiliates in the U.S. and other
countries. To view a list of Cisco trademarks, go to:
www.cisco.com/go/trademarks. Third-party trademarks mentioned in
this document 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. This document is Cisco Public
Information.
|
|
|
Press
Contact: |
|
Investor
Relations Contact: |
Robyn Blum |
|
Marilyn Mora |
Cisco |
|
Cisco |
1 (408) 853-9848 |
|
1 (408) 527-7452 |
rojenkin@cisco.com |
|
marilmor@cisco.com |
|
|
|
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