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EXHIBIT 99.1
FINAL
INVESTOR CONTACT: PRESS CONTACT:
Blair Christie Claudia Ceniceros
(408) 525-4856 (408) 525- 4700
[email protected] [email protected]
CISCO SYSTEMS REPORTS FIRST QUARTER EARNINGS
SAN JOSE, California -- November 6, 2000 -- Cisco Systems, Inc., the
worldwide leader in networking for the Internet, today reported its first
quarter results for the period ending October 28, 2000.
Net sales for the first quarter of fiscal 2001 were $6.52 billion, compared
with $3.92 billion for the same period last year, an increase of 66%. 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
$1.36 billion or $0.18 per share for the first quarter of fiscal 2001, compared
with pro forma net income of $814 million or $0.11 per share for the first
quarter of fiscal 2000, increases of 67% and 64%, respectively.
During the first quarter of fiscal 2001, Cisco completed the acquisitions
of HyNEX Ltd., IPmobile, Inc., Komodo Technology, Inc., Netiverse, Inc., and
NuSpeed, Inc. for a combined purchase price, including assumed liabilities, of
approximately $1.37 billion and took a one-time charge of $509 million, or
approximately $0.07 per share on an after-tax basis, as a write-off of
in-process R&D.
Actual net income for the first quarter of fiscal 2001 was $798 million or
$0.11 per share, compared with $415 million or $0.06 per share for the same
period last year.
"Five years ago the Internet was a phenomenon that was primarily understood
by "techies." Today, the combination of Internet infrastructure and applications
has created a new phenomenon -- the `Network Effect'-- and it is fueling new
productivity, competition, and growth," said John Chambers, president and CEO of
Cisco Systems. "Business and government leaders alike increasingly understand
the one-to-one correlation between the effective use of the Internet and future
prosperity. The Internet has taken center stage as a key tool in opening up new
economic opportunity and transforming businesses and societies on a global
basis."
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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 IP-based solutions that will drive new revenue opportunities. The
company gained momentum for its next-generation optical solutions. Demonstrating
growing acceptance of the Cisco IP+optical networking strategy with carriers
worldwide, BellSouth selected Cisco as a primary vendor to build out the first
IP+optical exchange, and Cambrian announced the first Cisco end-to-end
IP+optical network. Underscoring its commitment to Internet-scale, carrier-class
optical networks, Cisco opened the New England Manufacturing Center in Salem,
New Hampshire, to serve as a hub for all optical manufacturing. Cisco continued
to expand its portfolio of broadband solutions, announcing the acquisitions of
Vovida, IPCell, and PixStream to enable service providers to accelerate
deployment of new data, voice, and video services. The company secured a
contract with Telstra Corporation to migrate the carrier's high-speed cable
modem services to the Data over Cable Service Interface Specification (DOCSIS)
industry standard.
In the enterprise market, Cisco continued to expand the reach of its
end-to-end IP telephony solutions and advanced its New World services. The
company announced the Cisco e-services application engine that advances on the
Cisco AVVID (Architecture for Voice, Video, and Integrated Data) by enhancing
the scalability and flexibility for enterprise voice solutions. The IP-based
communications solutions enhance employee productivity, lower cost of ownership,
and provide better customer care. Benefiting service providers and enterprises
alike, the company announced the Cisco Content Delivery Network (CDN) system
enabling service providers to deploy innovative content-delivery services for
new profit opportunities and enterprises to accelerate deployment of advanced
e-business applications. In addition, a new security strategy, Cisco SAFE for
the Cisco AVVID architecture will enable organizations reliably and
cost-effectively engage in e-business.
In the small and medium-sized market, Cisco continued its commitment to
helping small and medium-sized businesses achieve their full potential through
use of the Internet. Completing its business digital subscriber line (DSL)
customer premises equipment (CPE) portfolio, the company introduced the Cisco
SOHO 77 ADSL Router, providing small office/home office users with affordable,
multiuser, secure Internet access over a single DSL line and ADSL WAN interface
card extending business DSL from the small and medium-sized business to the
enterprise branch office. Cisco also announced the acquisition of CAIS Software
Solutions furthering Cisco's strategy of offering complete broadband
connectivity solutions for service providers addressing the multiunit building
market. Cisco partnered with the city of San Jose, The Small Business
Administration, and other sponsors to create a one-stop resource center in
Silicon Valley for small business owners.
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"We are very pleased with the solid balance across our major geographies,
lines of business, and product families. And, while we're proud of our
accomplishments over the last decade, we are even more optimistic about the
opportunities for Cisco in the next decade. I want to thank our shareholders,
employees, partners, and suppliers for their continued commitment and confidence
in our ability to execute. Together, we are only beginning to explore all that's
possible on the Internet," concluded Chambers.
Cisco will be discussing its first quarter results, along with its outlook
for the second quarter and the remainder of fiscal year 2001, on a conference
call today, beginning at 1:45 PM PST. A Webcast of the conference call will be
available to all interested parties on Cisco's Website 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 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, 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, 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.
Cisco, Cisco Systems, 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 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 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
(In millions, except per-share amounts)
<TABLE>
<CAPTION>
Quarters Ended
--------------------------
October 28, October 30,
2000 1999
----------- -----------
(Unaudited) (Unaudited)
<S> <C> <C>
NET SALES ........................................................ $ 6,519 $ 3,918
Cost of sales .................................................... 2,378 1,388
------- -------
GROSS MARGIN .................................................. 4,141 2,530
Operating expenses:
Research and development ...................................... 934 541
Sales and marketing ........................................... 1,350 818
General and administrative .................................... 193 112
------- -------
Total operating expenses ................................... 2,477 1,471
------- -------
OPERATING INCOME ................................................. 1,664 1,059
Interest and other income, net ................................... 230 102
------- -------
INCOME BEFORE PROVISION FOR INCOME TAXES ......................... 1,894 1,161
Provision for income taxes ....................................... 531 347
------- -------
NET INCOME .................................................... $ 1,363 $ 814
======= =======
Net income per share--basic ...................................... $ 0.19 $ 0.12
======= =======
Net income per share--diluted .................................... $ 0.18 $ 0.11
======= =======
Shares used in per-share calculation--basic ...................... 7,093 6,833
======= =======
Shares used in per-share calculation--diluted .................... 7,580 7,288
======= =======
The above pro forma amounts have been adjusted to
exclude the following items:
In-process research and development .............................. $ 509 $ 381
Amortization of goodwill and other acquisition-related charges ... 231 24
Payroll tax on stock option exercises ............................ 22 --
Net gains realized on minority investments ....................... (190) --
Income tax effect ................................................ (7) (6)
------- -------
Net effect of pro forma adjustments ........................... $ 565 $ 399
======= =======
</TABLE>
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Cisco Systems, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per-share amounts)
<TABLE>
<CAPTION>
Quarters Ended
-------------------------
October 28, October 30,
2000 1999
----------- -----------
(Unaudited) (Unaudited)
<S> <C> <C>
NET SALES .......................................................... $6,519 $3,918
Cost of sales ...................................................... 2,378 1,388
------ ------
GROSS MARGIN .................................................... 4,141 2,530
Operating expenses:
Research and development ........................................ 934 541
Sales and marketing ............................................. 1,350 818
General and administrative ...................................... 193 112
Payroll tax on stock option exercises ........................... 22 --
Amortization of goodwill and other acquisition-related charges .. 231 24
In-process research and development ............................. 509 381
------ ------
Total operating expenses ..................................... 3,239 1,876
------ ------
OPERATING INCOME ................................................... 902 654
Net gains realized on minority investments ......................... 190 --
Interest and other income, net ..................................... 230 102
------ ------
INCOME BEFORE PROVISION FOR INCOME TAXES ........................... 1,322 756
Provision for income taxes ......................................... 524 341
------ ------
NET INCOME ...................................................... $ 798 $ 415
====== ======
Net income per share--basic ........................................ $ 0.11 $ 0.06
====== ======
Net income per share--diluted ...................................... $ 0.11 $ 0.06
====== ======
Shares used in per-share calculation--basic ........................ 7,093 6,833
====== ======
Shares used in per-share calculation--diluted ...................... 7,580 7,288
====== ======
</TABLE>
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Cisco Systems, Inc.
CONSOLIDATED BALANCE SHEETS
(In millions)
<TABLE>
<CAPTION>
October 28, July 29,
2000 2000
------- -------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents .................................... $ 5,538 $ 4,234
Short-term investments ....................................... 853 1,291
Accounts receivable, net of allowance for doubtful accounts
of $57 at October 28, 2000 and $43 at July 29, 2000 ........ 2,887 2,299
Inventories, net ............................................. 1,956 1,232
Deferred tax assets .......................................... 642 1,091
Lease receivables ............................................ 459 588
Prepaid expenses and other current assets .................... 724 375
------- -------
Total current assets ...................................... 13,059 11,110
Investments ..................................................... 11,808 13,688
Restricted investments .......................................... 1,386 1,286
Property and equipment, net ..................................... 1,769 1,426
Goodwill and purchased intangible assets, net ................... 4,427 4,087
Lease receivables ............................................... 550 527
Other assets .................................................... 1,153 746
------- -------
TOTAL ASSETS .............................................. $34,152 $32,870
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable ............................................. $ 999 $ 739
Income taxes payable ......................................... 256 233
Accrued compensation ......................................... 1,083 1,317
Deferred revenue ............................................. 1,697 1,386
Other accrued liabilities .................................... 1,767 1,521
------- -------
Total current liabilities ................................. 5,802 5,196
Deferred tax liabilities ........................................ 664 1,132
Minority interest ............................................... 45 45
Shareholders' equity ............................................ 27,641 26,497
------- -------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ................ $34,152 $32,870
======= =======
</TABLE>
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