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<TYPE>EX-99.1
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<FILENAME>f69297ex99-1.txt
<DESCRIPTION>EXHIBIT 99.1
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INVESTOR CONTACT: PRESS CONTACT:
Blair Christie Claudia Ceniceros
(408) 525-4856 (408) 525-4700
blchrist@cisco.com ccenicer@cisco.com
------------------ ------------------
CISCO SYSTEMS REPORTS SECOND QUARTER EARNINGS
SAN JOSE, California -- February 6, 2001 -- Cisco Systems, Inc., the
worldwide leader in networking for the Internet, today reported its second
quarter results for the period ending January 27, 2001.
Net sales for the second quarter of fiscal 2001 were $6.75 billion,
compared with $4.36 billion for the same period last year, an increase of 55%.
Pro forma net income, which excludes the effects of acquisition charges, payroll
tax on stock option exercises, and net gains realized on minority investments,
was $1.33 billion or $0.18 per share for the second quarter of fiscal 2001,
compared with pro forma net income of $897 million or $0.12 per share for the
second quarter of fiscal 2000, increases of 48% and 50%, respectively.
During the second quarter of fiscal 2001, Cisco completed the acquisitions
of IPCell Technologies, Inc., PixStream Incorporated, Vovida Networks, Inc., and
the broadband subscriber management software business of CAIS Software
Solutions, Inc. for a combined purchase price, including assumed liabilities, of
approximately $883 million and took a one-time charge of $237 million, or
approximately $0.03 per share on an after-tax basis, as a write-off of
in-process R&D.
Actual net income for the second quarter of fiscal 2001 was $874 million or
$0.12 per share, compared with $816 million or $0.11 per share for the same
period last year.
Net sales for the first six months of fiscal 2001 were $13.27 billion,
compared with $8.27 billion for the first six months of fiscal 2000, an increase
of 60%. Pro forma net income was $2.69 billion or $0.36 per share for the first
six months of fiscal 2001, compared with pro forma net income of $1.71 billion
or $0.23 per share for the first six months of fiscal 2000, increases of 57% and
57%, respectively.
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Actual net income for the first six months of fiscal 2001 was $1.67 billion
or $0.22 per share, compared with $1.23 billion or $0.17 per share for the first
six months of fiscal 2000.
"We remain confident about the market opportunity ahead of us over the next
three to five years. This confidence is based on the continued impact of the
Internet on productivity, and just how much more work needs to be done before
every company is an e-company and a majority of the world's countries are
e-countries," said John Chambers, President and CEO of Cisco Systems. "It is the
productivity and standard-of-living opportunities, combined with business
inflection points, that are driving our continued confidence in our breakaway
opportunity, if we execute well."
Cisco continues to advance its end-to-end Internet solutions for each of
its key markets.
In the service provider marketplace, Cisco advanced its leadership and
expertise in IP services and end-to-end solutions, accelerating service provider
adoption of data services that drive new revenue opportunities. Building on
Cisco's leadership in the IP+Optical market, the company introduced the newest
of its industry-leading, high-performance router line, the Cisco 12410 and Cisco
12416 Internet Routers with a line-rate 10-Gbps OC-192 line card. Cisco also
introduced the Cisco ONS 15327 Optical Metro Edge Router. Cisco was chosen to
build out optical networks for GNG Networks, Telecom New Zealand, Crosswave
Communications, and Bell South, among others. In the voice market, several new
Cisco customers are deploying voice-over-IP (VoIP) services, including China
Unicom, which, when complete, will have the world's largest VoIP network.
Building on Cisco's existing wireless technology, Cisco announced its intent to
acquire ExiO Communications, Inc. In broadband, Cisco introduced the Cisco
WT-2750 Multipoint Broadband Wireless System, enabling service providers to
deploy services in areas where cable or digital subscriber line (DSL) are not
available or cost-effective. Cisco also introduced the next-generation cable
platform, the Cisco uBR10012.
In the enterprise market, Cisco expanded the reach of its intelligent
end-to-end IP solutions through Cisco AVVID (Architecture for Voice, Video and
Integrated Data), which provides a technical framework for e-business. In
converged voice and video markets, Cisco introduced nine new products, including
a midrange IP phone and an IP conference station and a
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suite of applications that deliver on the promise of Cisco AVVID IP telephony.
Cisco has also demonstrated the agility and scalability of its IP telephony
solution with the successful implementation of 20,000 IP phones on the Cisco
campuses and a commercial deployment of more than 8,000 IP phones across 200
locations throughout New Zealand. Cisco also won a contract through EDS to
reconfigure Dow Chemical's network architecture, basing it on Cisco AVVID. The
deal includes over 40,000 IP telephones. Cisco continues to work on other large
deployments at leading organizations such as Ariba Inc., City of Dallas, First
Union Bank, Florida International University, and the U.S. Census Bureau. Cisco
also announced the acquisition of Active Voice Corporation, a leading provider
of IP-based unified messaging solutions for the enterprise.
In the commercial space, Cisco continued its commitment to helping small
and medium-sized businesses achieve their full potential through use of the
Internet. Cisco launched the Cisco Internet Mobile Office Initiative that
provides mobile business professionals with secure, high-speed network access to
their corporate resources and network from public facilities. Cisco announced
the Cisco Aironet (R) 350 Series, the first wireless networking family offering
enterprise-level security, performance, and manageability. Cisco collaborated
with Microsoft, the largest Cisco wireless LAN deployment to date, on this
standards-based, enterprise-class security architecture for wireless LANs. The
University of North Carolina at Chapel Hill is using the Cisco Aironet 340
Solution to provide students with high-speed wireless access to the Internet all
over campus. Expanding Cisco's leadership in next-generation wireless
networking, the company announced during the quarter and subsequently completed
the acquisition of Radiata, Inc., a leading supplier of next-generation chipsets
for high-speed wireless networks. And, in support of its Cisco AVVID
initiatives, the company began shipping the Cisco ICS 7750 family of fully
integrated, IP-based telephony solutions in January.
"While we remain cautious about the implications of a brief pause in the
current 10-year expansion of the U.S. economy, we believe that Cisco has never
been better positioned to help our customers solve their two most important
business issues: Increasing productivity and creating new sources of revenue,"
concluded Chambers.
Cisco will be discussing its second quarter results, along with its outlook
for the third quarter and the remainder of fiscal year 2001, on a conference
call today, beginning at 1:45 p.m.
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PST. A Webcast of the conference call will be available to all interested
parties on the Cisco Web site at www.cisco.com under the "Investor Relations"
section.
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 may contain projections or other forward-looking statements
regarding future events or 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, 8-K, and
10-Q, 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, including risks associated with acquisition strategy
and integration, dependence on new product offerings, customer demand for
products and services, 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. 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 six months ended January 27, 2001 are
not necessarily indicative of Cisco's operating results for the full fiscal year
or any future periods.
PIX is a trademark, and Cisco, Cisco Systems, Aironet, and the Cisco Systems
logo are registered trademarks of Cisco Systems, Inc. or its affiliates in the
U.S. and certain other countries. All other brands, names, or trademarks
mentioned in this document or Web site are the property of their respective
owners. Copyright(C)2001 Cisco Systems, Inc. All rights reserved.
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Cisco Systems, Inc.
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PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
EXCLUDING IPR&D, AMORTIZATION OF GOODWILL AND OTHER ACQUISITION-RELATED CHARGES,
PAYROLL TAX ON STOCK OPTION EXERCISES, AND NET GAINS REALIZED
ON MINORITY INVESTMENTS
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(In millions, except per-share amounts)
<TABLE>
<CAPTION>
Quarters Ended Six Months Ended
-------------------------- --------------------------
January 27, January 29, January 27, January 29,
2001 2000 2001 2000
----------- ----------- ----------- -----------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
NET SALES $ 6,748 $ 4,357 $ 13,267 $ 8,275
Cost of sales 2,581 1,539 4,959 2,927
-------- -------- -------- --------
GROSS MARGIN 4,167 2,818 8,308 5,348
Operating expenses:
Research and development 981 602 1,915 1,143
Sales and marketing 1,419 933 2,769 1,751
General and administrative 194 122 387 234
-------- -------- -------- --------
Total operating expenses 2,594 1,657 5,071 3,128
-------- -------- -------- --------
OPERATING INCOME 1,573 1,161 3,237 2,220
Interest and other income, net 275 120 505 222
-------- -------- -------- --------
INCOME BEFORE PROVISION
FOR INCOME TAXES 1,848 1,281 3,742 2,442
Provision for income taxes 518 384 1,049 731
-------- -------- -------- --------
NET INCOME $ 1,330 $ 897 $ 2,693 $ 1,711
======== ======== ======== ========
Net income per share--basic $ 0.19 $ 0.13 $ 0.38 $ 0.25
======== ======== ======== ========
Net income per share--diluted $ 0.18 $ 0.12 $ 0.36 $ 0.23
======== ======== ======== ========
Shares used in per-share calculation--basic 7,144 6,911 7,121 6,872
======== ======== ======== ========
Shares used in per-share calculation--diluted 7,556 7,387 7,567 7,338
======== ======== ======== ========
THE ABOVE PRO FORMA ADJUSTMENTS HAVE BEEN
ADJUSTED TO EXCLUDE THE FOLLOWING ITEMS:
In-process R&D $ 237 $ 43 $ 746 $ 424
Payroll tax on stock option exercises 18 -- 40 --
Acquisition-related costs -- 25 -- 25
Amortization of goodwill and
other acquisition-related charges 286 47 517 71
Net gains realized on minority investments -- (31) (190) (31)
Income tax effect (85) (3) (92) (9)
-------- -------- -------- --------
$ 456 $ 81 $ 1,021 $ 480
======== ======== ======== ========
</TABLE>
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Cisco Systems, Inc.
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CONSOLIDATED STATEMENTS OF OPERATIONS
--------------------------------------------------------------------------------
(In millions, except per-share amounts)
<TABLE>
<CAPTION>
Quarters Ended Six Months Ended
------------------------ ------------------------
January 27, January 29, January 27, January 29,
2001 2000 2001 2000
----------- ----------- ----------- -----------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
NET SALES $ 6,748 $ 4,357 $13,267 $ 8,275
Cost of sales 2,581 1,539 4,959 2,927
------- ------- ------- -------
GROSS MARGIN 4,167 2,818 8,308 5,348
Operating expenses:
Research and development 981 602 1,915 1,143
Sales and marketing 1,419 933 2,769 1,751
General and administrative 194 147 387 259
Payroll tax on stock option exercises 18 -- 40 --
Amortization of goodwill and
other acquisition-related charges 286 47 517 71
In-process research and development 237 43 746 424
------- ------- ------- -------
Total operating expenses 3,135 1,772 6,374 3,648
------- ------- ------- -------
OPERATING INCOME 1,032 1,046 1,934 1,700
Net gains realized on minority investments -- 31 190 31
Interest and other income, net 275 120 505 222
------- ------- ------- -------
INCOME BEFORE PROVISION
FOR INCOME TAXES 1,307 1,197 2,629 1,953
Provision for income taxes 433 381 957 722
------- ------- ------- -------
NET INCOME $ 874 $ 816 $ 1,672 $ 1,231
======= ======= ======= =======
Net income per share--basic $ 0.12 $ 0.12 $ 0.23 $ 0.18
======= ======= ======= =======
Net income per share--diluted $ 0.12 $ 0.11 $ 0.22 $ 0.17
======= ======= ======= =======
Shares used in per-share calculation--basic 7,144 6,911 7,121 6,872
======= ======= ======= =======
Shares used in per-share calculation--diluted 7,556 7,387 7,567 7,338
======= ======= ======= =======
</TABLE>
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Cisco Systems, Inc.
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CONSOLIDATED BALANCE SHEETS
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(In millions)
<TABLE>
<CAPTION>
January 27, July 29,
2001 2000
----------- -------
(unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 3,994 $ 4,234
Short-term investments 788 1,291
Accounts receivable, net of allowance for doubtful accounts
of $89 at January 27, 2001 and $43 at July 29, 2000 3,512 2,299
Inventories, net 2,533 1,232
Deferred tax assets 1,162 1,091
Lease receivables 454 588
Prepaid expenses and other current assets 469 375
------- -------
Total current assets 12,912 11,110
Investments 12,007 13,688
Restricted investments 1,162 1,286
Property and equipment, net 2,211 1,426
Goodwill and purchased intangible assets, net 4,696 4,087
Lease receivables 516 527
Other assets 2,377 746
------- -------
TOTAL ASSETS $35,881 $32,870
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 942 $ 739
Income taxes payable 287 233
Accrued compensation 1,312 1,317
Deferred revenue 1,994 1,386
Other accrued liabilities 1,800 1,521
------- -------
Total current liabilities 6,335 5,196
Deferred tax liabilities -- 1,132
Minority interest 48 45
Shareholders' equity 29,498 26,497
------- -------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $35,881 $32,870
======= =======
</TABLE>
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