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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (date of earliest event reported): MAY 9, 2000
CISCO SYSTEMS, INC.
(Exact name of registrant as specified in charter)
CALIFORNIA 0-18225 77-0059951
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
170 WEST TASMAN DRIVE, SAN JOSE, CALIFORNIA 95134-1706
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (408) 526-4000
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ITEM 5. OTHER EVENTS
On May 9, 2000 Cisco Systems, Inc. (the "Registrant") reported
its third quarter results for the period ending April 29, 2000. A copy of the
press release issued by the Registrant on May 9, 2000 concerning the foregoing
quarter results is filed herewith as Exhibit 99.1 and is incorporated herein by
reference.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Exhibits.
99.1 Press Release of Registrant, dated May 9, 2000, announcing
Registrant's release of its third quarter results for the period
ending April 29, 2000.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, the Registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
CISCO SYSTEMS, INC.
Dated: May 17, 2000 By: /s/ LARRY R. CARTER
---------------------------------------
Larry R. Carter, Senior Vice President,
Finance and Administration,
Chief Financial Officer and Secretary
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description of Document
- ------- -----------------------
<S> <C>
99.1 Press Release of Registrant, dated May 9, 2000, announcing
Registrant's release of its third quarter results for the period
ending April 29, 2000.
</TABLE>
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Exhibit 99.1
FINAL
INVESTOR CONTACT: PRESS CONTACT:
Mary Thurber Tom Galvin
(408) 526-8893 (408) 525-8530
[email protected] [email protected]
CISCO SYSTEMS REPORTS THIRD QUARTER EARNINGS
SAN JOSE, Calif. -- May 9, 2000 -- Cisco Systems, Inc., the worldwide
leader in networking for the Internet, today reported its third quarter results
for the period ending April 29, 2000.
Net sales for the third quarter of fiscal 2000 were $4.92 billion,
compared with $3.17 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 gains realized on certain minority
investments, was $1.03 billion or $0.14 per share, compared with pro forma net
income of $649 million or $0.09 per share for the third quarter of fiscal 1999,
increases of 58% and 56%, respectively.
During the third quarter of fiscal 2000, Cisco completed the
acquisitions of Aironet Wireless Communications and Pirelli Optical Systems for
a combined purchase price, including assumed liabilities, of approximately $2.85
billion and took one-time charges of $488 million, or approximately $0.06 per
share on an after-tax basis, as write-offs of purchased in-process R&D.
Additionally, Cisco completed the acquisitions of Altiga Networks, Compatible
Systems, and Growth Networks Inc., which were accounted for as poolings of
interests.
Actual net income for the third quarter of fiscal 2000 was $662 million
or $0.09 per share, compared with $636 million or $0.09 per share for the same
period last year.
Net sales for the first nine months of fiscal 2000 were $13.18 billion,
compared with $8.61 billion for the same period last year, an increase of 53%.
Pro forma net income was $2.75 billion or $0.37 per share, compared with pro
forma net income of $1.82 billion or $0.26 per share for the first nine months
of fiscal 1999, increases of 51% and 42%, respectively.
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Actual net income for the first nine months of fiscal 2000 was $1.91
billion or $0.26 per share, compared with $1.43 billion or $0.21 per share for
the first nine months of fiscal 1999.
The net income per share and number of shares used in the per-share
calculation for all periods presented reflect the two-for-one stock split that
was effective March 22, 2000.
"Globally, business and government leaders are beginning to dramatically
transform their traditional business models into Internet Economy business
models," said John Chambers, president and CEO of Cisco Systems. "These new
Internet-based models reduce costs, generate revenue in new ways, empower
employees and citizens, and provide the agility needed for the Internet
Economy's rapid pace. Customers are increasingly seeking Cisco's expertise to
help them through this transformation."
Cisco continues to advance its end-to-end Internet solutions for each of
its key markets.
In the service provider marketplace, Cisco continued to advance its
strategy for New World integrated data, voice, and video networks and made
progress in all key areas. Cisco's New World solutions continued to gain
acceptance from incumbent carriers worldwide, underscoring the trend toward the
Internet as the platform for all future telecommunications. This trend began
with Internet service providers, then moved to global interexchange carriers,
and today local interexchange carriers are rapidly adopting Cisco's Internet
solutions for all data, voice, and video communications. SBC, one of the
nation's premier providers of data communications and network integration,
announced an alliance with Cisco to accelerate the delivery of open,
standards-based New World broadband services to customers. Through this
alliance, Cisco and SBC will go to market with a complete portfolio of products
and network services to deliver New World solutions.
Cisco also continues to gain momentum in the IP + optical market
furthering its commitment to build Internet-scale, carrier-class, optical
networks. Strengthening its product portfolio, Cisco introduced the Cisco 10000
Edge Services Router (ESR), a carrier-class product for Internet service
providers (ISPs) deploying high-density dedicated-access IP services. The Cisco
10000 ESR is based on a groundbreaking technology, Parallel eXpress Forwarding
architecture, developed internally to enable networks to maintain consistent
high performance while adding advanced New World services. Cisco also continued
its investment in Internet infrastructure by announcing its intent to acquire
Pentacom, LTD., Growth Networks (closed this quarter), Atlantech Technologies,
and a subsidiary of Seagull Semiconductor, LTD. Broadening
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its portfolio in the content networking space, Cisco announced its intent to
acquire ArrowPoint Communications, Inc. on May 5, 2000 to address application
service providers (ASPs) and large-scale enterprise Web-hosting centers to
create a faster, more reliable Web experience.
In the small and medium-sized business market, Cisco reinforced its New
World strategy to deliver open, standards-based wireless solutions to mobile
business environments by introducing a family of wireless local area networking
(WLAN) products based on technology acquired from Aironet Wireless
Communications. Cisco announced its intent to acquire InfoGear Technology
Corporation to offer a comprehensive software solution to deliver and manage
data, voice, and video services to multiple types of information appliances. The
Company also extended its Cisco AVVID (Architecture for Voice, Video and
Integrated Data) solutions to enterprise branch offices and mid-sized companies
by launching its Cisco Integrated Communications System (ICS) 7750, an IP
telephony system that allows businesses to deploy integrated e-business
applications.
In the enterprise market, Cisco furthered its New World vision by
introducing 10 new products based on its Cisco AVVID solution. These new
products enhance Cisco's family of IP phones and Catalyst(R) 6000 and 6500
product series of layer 3 switches and gigabit technology. Extending its Cisco
AVVID solution to the wireless domain, Cisco announced the acquisition of
JetCell, Inc. to integrate New World IP telephony solutions with traditional
Private Branch Exchange (PBX) systems. Complementing Cisco's acquisition of
ArrowPoint in the content delivery space, Cisco announced the acquisition of
SightPath, Inc. to enable customers to deliver content and services such as
e-learning and live streaming media.
"Companies that lead in this decade will not only have the ability to
develop products internally and acquire effectively, but they'll also have the
ability to form an ecosystem of partners across a horizontal business model. For
this reason, Cisco is better positioned than ever to lead the Internet
Revolution through a combination of internal development, acquisitions, and
partnerships," 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
www.cisco.com.
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# # #
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
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, including amendments thereto, 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.
Catalyst, Cisco, Cisco Systems, and the Cisco Systems logo are
registered trademarks of Cisco Systems, Inc. and/or its affiliates in the U.S.
and certain other countries. All other trademarks mentioned in this document are
the property of their respective owners. Copyright (C) 2000 Cisco Systems, Inc.
All rights reserved.
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Cisco Systems, Inc.
- --------------------------------------------------------------------------------
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
EXCLUDING IPR&D, PAYROLL TAX ON STOCK OPTION EXERCISES, ACQUISITION-RELATED
COSTS, AMORTIZATION OF GOODWILL AND INTANGIBLE ASSETS,
AND GAINS REALIZED ON MINORITY INVESTMENTS
- --------------------------------------------------------------------------------
(In millions, except per-share amounts)
<TABLE>
<CAPTION>
Quarters Ended Nine Months Ended
------------------------- -------------------------
April 29, May 1, April 29, May 1,
2000 1999 2000 1999
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales $ 4,919 $ 3,171 $ 13,183 $ 8,614
Cost of sales 1,748 1,112 4,671 2,997
-------- -------- -------- --------
Gross margin 3,171 2,059 8,512 5,617
Operating expenses:
Research and development 709 433 1,844 1,144
Sales and marketing 1,010 656 2,747 1,752
General and administrative 144 94 372 253
-------- -------- -------- --------
Total operating expenses 1,863 1,183 4,963 3,149
-------- -------- -------- --------
Operating income 1,308 876 3,549 2,468
Interest and other income, net 157 91 379 237
-------- -------- -------- --------
Income before provision
for income taxes 1,465 967 3,928 2,705
Provision for income taxes 439 318 1,177 889
-------- -------- -------- --------
Net income $ 1,026 $ 649 $ 2,751 $ 1,816
======== ======== ======== ========
Net income per share--basic $ .15 $ .10 $ .40 $ .28
======== ======== ======== ========
Net income per share--diluted $ .14 $ .09 $ .37 $ .26
======== ======== ======== ========
Shares used in per-share
calculation--basic 6,944 6,624 6,892 6,543
======== ======== ======== ========
Shares used in per-share
calculation--diluted 7,450 7,054 7,366 6,955
======== ======== ======== ========
</TABLE>
PRO FORMA ONLY
The above pro forma amounts for the quarter ended April 29, 2000 have been
adjusted to eliminate the $488 million write-off of purchased in-process R&D,
$25 million of payroll tax on stock option exercises, $51 million of
amortization of goodwill and purchased intangible assets, and $156 million of
gains realized on certain minority investments, net of related tax benefits of
$44 million.
The above pro forma amounts for the nine months ended April 29, 2000 have been
adjusted to eliminate the $912 million write-off of purchased in-process R&D,
$25 million of payroll tax on stock option exercises, $25 million of
acquisition-related costs, $122 million of amortization of goodwill and
purchased intangible assets, and $187 million of gains realized on certain
minority investments, net of related tax benefits of $53 million.
The above pro forma amounts for the quarter and nine months ended May 1, 1999
have been adjusted to eliminate the $0 and $390 million write-off of purchased
in-process R&D, $19 and $42 million of amortization of goodwill and purchased
intangible assets, net of related tax benefits of $6 and $43 million,
respectively.
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All historical financial information has been restated to reflect the
acquisitions of StratumOne Communications, Inc. and TransMedia Communications,
Inc. in the first quarter of fiscal 2000 and Cerent Corporation and WebLine
Communications Corporation in the second quarter of fiscal 2000, which were
accounted for as poolings of interests. In addition, the historical financial
information has been restated to reflect the acquisition of Fibex Systems, which
was completed in the fourth quarter of fiscal 1999 and accounted for as a
pooling of interests.
The net income per share and number of shares used in the per-share calculation
for all periods presented reflect the two-for-one stock split effective March
22, 2000.
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Cisco Systems, Inc.
- --------------------------------------------------------------------------------
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------
(In millions, except per-share amounts)
<TABLE>
<CAPTION>
Quarters Ended Nine Months Ended
------------------------- -------------------------
April 29, May 1, April 29, May 1,
2000 1999 2000 1999
----------- ----------- ----------- -----------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Net sales $ 4,919 $ 3,171 $ 13,183 $ 8,614
Cost of sales 1,748 1,112 4,671 2,997
-------- -------- -------- --------
Gross margin 3,171 2,059 8,512 5,617
Operating expenses:
Research and development 709 433 1,844 1,144
Sales and marketing 1,010 656 2,747 1,752
General and administrative 144 94 397 253
Payroll tax on stock
option exercises 25 -- 25 --
Amortization of goodwill and
purchased intangible assets 51 19 122 42
Purchased in-process R&D 488 -- 912 390
-------- -------- -------- --------
Total operating expenses 2,427 1,202 6,047 3,581
-------- -------- -------- --------
Operating income 744 857 2,465 2,036
Interest and other income, net 313 91 566 237
-------- -------- -------- --------
Income before provision for
income taxes 1,057 948 3,031 2,273
Provision for income taxes 395 312 1,124 846
-------- -------- -------- --------
Net income $ 662 $ 636 $ 1,907 $ 1,427
======== ======== ======== ========
Net income per share--basic $ .10 $ .10 $ .28 $ .22
======== ======== ======== ========
Net income per share--diluted $ .09 $ .09 $ .26 $ .21
======== ======== ======== ========
Shares used in per-share
calculation--basic 6,944 6,624 6,892 6,543
======== ======== ======== ========
Shares used in per-share
calculation--diluted 7,450 7,054 7,366 6,955
======== ======== ======== ========
</TABLE>
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All historical financial information has been restated to reflect the
acquisitions of StratumOne Communications, Inc. and TransMedia Communications,
Inc. in the first quarter of fiscal 2000 and Cerent Corporation and WebLine
Communications Corporation in the second quarter of fiscal 2000, which were
accounted for as poolings of interests. In addition, the historical financial
information has been restated to reflect the acquisition of Fibex Systems, which
was completed in the fourth quarter of fiscal 1999 and accounted for as a
pooling of interests.
The net income per share and number of shares used in the per-share calculation
for all periods presented reflect the two-for-one stock split effective March
22, 2000.
Cisco Systems, Inc.
- --------------------------------------------------------------------------------
CONDENSED CONSOLIDATED BALANCE SHEETS
- --------------------------------------------------------------------------------
(In millions)
<TABLE>
<CAPTION>
April 29, July 31,
2000 1999
---------- --------
(Unaudited)
<S> <C> <C>
Assets
Current assets:
Cash and short-term investments $ 4,653 $ 2,075
Accounts receivable, net 1,922 1,249
Inventories, net 878 656
Deferred tax assets 905 571
Prepaid expenses and other current assets 722 170
-------- --------
Total current assets 9,080 4,721
Investments 10,419 7,032
Restricted investments 1,170 1,080
Property and equipment, net 1,153 822
Other assets 4,263 1,191
-------- --------
Total assets $ 26,085 $ 14,846
======== ========
Liabilities and shareholders' equity
Current liabilities:
Accounts payable and other
accrued expenses $ 4,158 $ 2,404
Income taxes payable 941 630
-------- --------
Total current liabilities 5,099 3,034
Deferred tax liabilities 915 --
Minority interest 45 44
Shareholders' equity 20,026 11,768
-------- --------
</TABLE>
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<TABLE>
<S> <C> <C>
Total liabilities and
shareholders' equity $ 26,085 $ 14,846
======== ========
</TABLE>
All historical financial information has been restated to reflect the
acquisitions of StratumOne Communications, Inc. and TransMedia Communications,
Inc. in the first quarter of fiscal 2000 and Cerent Corporation and WebLine
Communications Corporation in the second quarter of fiscal 2000, which were
accounted for as poolings of interests.
5
