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Exhibit 99.1
FINAL
INVESTOR CONTACT: PRESS CONTACT:
Blair Christie Tom Galvin
(408) 525-4856 (408) 525-8530
[email protected] [email protected]
CISCO SYSTEMS REPORTS FOURTH QUARTER EARNINGS
SAN JOSE, Calif. -- August 8, 2000 -- Cisco Systems, Inc., the worldwide
leader in networking for the Internet, today reported its fourth quarter results
for the period ending July 29, 2000.
Net sales for the fourth quarter of fiscal 2000 were $5.72 billion,
compared with $3.56 billion for the same period last year, an increase of 61%.
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 $1.20 billion or $0.16 per share for the fourth quarter of fiscal 2000,
compared with pro forma net income of $710 million or $0.10 per share for the
fourth quarter of fiscal 1999, increases of 69% and 60%, respectively.
During the fourth quarter of fiscal 2000, Cisco completed the acquisitions
of Atlantech Technologies, Ltd., JetCell, Inc., PentaCom Ltd., Qeyton Systems,
and Seagull Semiconductor, Ltd. for a combined purchase price, including assumed
liabilities, of approximately $1.39 billion and took one-time charges of $461
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
ArrowPoint Communications, Inc., InfoGear Technology Corp., and SightPath, Inc.
which were accounted for as poolings of interests.
Actual net income for the fourth quarter of fiscal 2000 was $796 million or
$0.11 per share, compared with $605 million or $0.08 per share for the same
period last year.
Net sales for fiscal 2000 were $18.93 billion, compared with $12.17 billion
for fiscal 1999, an increase of 55%. Pro forma net income was $3.91 billion or
$0.53 per share for fiscal 2000, compared with pro forma net income of $2.52
billion or $0.36 per share for fiscal 1999, increases of 56% and 47%,
respectively.
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Actual net income for fiscal 2000 was $2.67 billion or $0.36 per share,
compared with $2.02 billion or $0.29 per share for 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.
"We predicted five years ago that we were in the midst of a second
Industrial Revolution that would determine the prosperity of companies,
countries, and individuals. Today, the Internet continues to drive the strongest
U.S. economy in history," said John Chambers, president and CEO of Cisco
Systems. "The second Industrial Revolution is just beginning and businesses and
governments are turning to Cisco, the Internet expert, to assist them in
transforming their companies and countries. We were very pleased with the
balance of our business across all key geographies, products, and lines of
business."
In the service provider marketplace, Cisco continued to advance its
strategy for New World integrated data, voice, and video networks and made
progress in each of its key areas including optical networking, wireless
solutions, and voice-transition technology. In the optical market, Cisco
expanded its portfolio of Internet-scale, carrier-class solutions by announcing
the acquisition of Qeyton Systems, a developer of metropolitan dense wave
division multiplexing (MDWDM) technology. Increasing its broadband offering,
Cisco announced its intent to acquire IPmobile to help service providers build
the next-generation IP-based wireless infrastructure known as "3G" to create a
broad array of new and innovative wireless data and voice services. Underscoring
Cisco's strategy to provide service providers with a smooth transition path to
New World networks, Cisco announced its intent to acquire Komodo Technology,
Inc. and HyNEX, Ltd. Komodo's voice-over-IP (VoIP) devices allow analog
telephones to place calls over IP-based networks. HyNEX's products strengthen
Cisco's solution in international markets by accelerating the deployment of
IP+ATM networks to enable service providers to deliver an expanded range of
data, voice, and video services.
In the enterprise market, Cisco strengthened its storage area networking
strategy by entering into a technology agreement with Brocade Communication
Systems and announcing its intent to acquire NuSpeed Internet Systems. Both
transactions will enable companies to store, retrieve, and back-up data more
efficiently by seamlessly interconnecting storage area networks over a single
IP-based infrastructure. Cisco also introduced a range of gigabit and 10-gigabit
solutions for its Catalyst(R) 6000, 4000, and 2900 series XL switching families
to deliver gigabit bandwidth and intelligent network services across traditional
enterprises and service provider environments. Cisco also expanded its
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portfolio of content networking solutions by announcing its intent to acquire
Netiverse, Inc., a leading provider of content acceleration technology that
enhances the performance and functionality of networking devices.
In the small and medium-sized business market, Cisco joined with GE
Industrial Systems to form a new company, GE Cisco Industrial Networks, to help
small and medium-sized businesses increase factory-to-office communications
through Internet-based solutions. GE Cisco Industrial Networks will assess,
design, and build network infrastructures for manufacturing plant floor and
industrial environments that will enable company-wide Internet-based
communication.
"We see no indications in the marketplace that the radical Internet
business transformation in practices like customer service, supply-chain
management, employee training, empowerment, and e-commerce that is taking place
around the world today is slowing -- in fact, we believe it is accelerating
globally. We would like to thank our shareholders, customers, employees,
partners, and suppliers for their continued commitment and confidence in our
ability to execute in the future as we have in the past," 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.
# # #
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 NET GAINS REALIZED ON MINORITY
INVESTMENTS
--------------------------------------------------------------------------------
(In millions, except per-share amounts)
<TABLE>
<CAPTION>
Quarters Ended Fiscal Years Ended
--------------------------- ---------------------
July 29, July 31, July 29, July 31,
2000 1999 2000 1999
(Unaudited) (Unaudited)
----------- ----------- ------- -------
<S> <C> <C> <C> <C>
Net sales $5,720 $3,558 $18,928 $12,173
Cost of sales 2,058 1,261 6,746 4,259
------ ------ ------- -------
Gross margin 3,662 2,297 12,182 7,914
Operating expenses:
Research and development 825 509 2,685 1,663
Sales and marketing 1,142 709 3,917 2,465
General and administrative 180 110 568 365
------ ------ ------- -------
Total operating expenses 2,147 1,328 7,170 4,493
------ ------ ------- -------
Operating income 1,515 969 5,012 3,421
Interest and other income, net 197 93 577 330
------ ------ ------- -------
Income before provision
for income taxes 1,712 1,062 5,589 3,751
Provision for income taxes 514 352 1,675 1,234
------ ------ ------- -------
Net income $1,198 $ 710 $ 3,914 $ 2,517
====== ====== ======= =======
Net income per share--basic $ .17 $ .10 $ .57 $ .38
====== ====== ======= =======
Net income per share--diluted $ .16 $ .10 $ .53 $ .36
====== ====== ======= =======
Shares used in per-share
calculation--basic 7,042 6,765 6,917 6,646
====== ====== ======= =======
Shares used in per-share
calculation--diluted 7,556 7,201 7,438 7,062
====== ====== ======= =======
</TABLE>
PRO FORMA ONLY
The above pro forma amounts for the quarter ended July 29, 2000 have been
adjusted to eliminate the $461 million write-off of purchased in-process R&D,
$26 million of payroll tax on stock option exercises, $37 million of acquisition
related costs, $169 million of amortization of goodwill and purchased intangible
assets, and $344 million of net gains realized on minority investments, net of
related tax of $53 million.
The above pro forma amounts for fiscal 2000 have been adjusted to eliminate
the $1.37 billion write-off of purchased in-process R&D, $51 million of payroll
tax on stock option exercises, $62 million of acquisition-related costs, $291
million of amortization of goodwill and purchased intangible assets, and $531
million of net gains realized on minority investments, net of related tax of $0
million.
The above pro forma amounts for the quarter and year ended July 31, 1999
have been adjusted to eliminate the $81 and $471 million write-off of purchased
in-process R&D, $16 and $16 million of acquisition-related costs, $19 and $61
million of amortization of goodwill and purchased intangible assets, net of
related tax benefits of $11 and $54 million, respectively.
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, and ArrowPoint
Communications, Inc., InfoGear Techonologly, Corp., and SightPath, Inc. in the
fourth 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 Fiscal Years Ended
------------------------- ---------------------
July 29, July 31, July 29, July 31,
2000 1999 2000 1999
(Unaudited) (Unaudited)
----------- ----------- ------- -------
<S> <C> <C> <C> <C>
Net sales $5,720 $3,558 $18,928 $12,173
Cost of sales 2,058 1,261 6,746 4,259
------ ------ ------- -------
Gross margin 3,662 2,297 12,182 7,914
Operating expenses:
Research and development 825 509 2,685 1,663
Sales and marketing 1,142 709 3,917 2,465
General and administrative 217 126 630 381
Payroll tax on stock option
exercises 26 -- 51 --
Amortization of goodwill and purchased
intangible assets 169 19 291 61
Purchased in-process R&D 461 81 1,373 471
------ ------ ------- -------
Total operating expenses 2,840 1,444 8,947 5,041
------ ------ ------- -------
Operating income 822 853 3,235 2,873
Net gains realized on minority
investments 344 -- 531 --
Interest and other income, net 197 93 577 330
------ ------ ------- -------
Income before provision for
income taxes 1,363 946 4,343 3,203
Provision for income taxes 567 341 1,675 1,180
------ ------ ------- -------
Net income $ 796 $ 605 $ 2,668 $ 2,023
====== ====== ======= =======
Net income per share--basic $ .11 $ .09 $ .39 $ .30
====== ====== ======= =======
Net income per share--diluted $ .11 $ .08 $ .36 $ .29
====== ====== ======= =======
Shares used in per-share
calculation--basic 7,042 6,765 6,917 6,646
====== ====== ======= =======
Shares used in per-share
calculation--diluted 7,556 7,201 7,438 7,062
====== ====== ======= =======
</TABLE>
All historical financial information has been restated to reflect the
acquisitions of StratumOne Communications, Inc. and TransMedia Communications,
Inc. in
<PAGE> 6
the first quarter of fiscal 2000 and Cerent Corporation and WebLine
Communications Corporation in the second quarter of fiscal 2000, and ArrowPoint
Communications, Inc., InfoGear Techonologly, Corp., and SightPath, Inc. in the
fourth 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>
July 29, 2000 July 31, 1999
------------- -------------
<S> <C> <C>
Assets
Current assets:
Cash and short-term investments $ 5,525 $ 2,102
Accounts receivable, net 2,299 1,250
Inventories, net 1,232 658
Deferred tax assets 1,091 580
Prepaid expenses and other current assets 963 171
------- -------
Total current assets $11,110 $ 4,761
Investments 13,688 7,032
Restricted investments 1,286 1,080
Property and equipment, net 1,426 825
Other assets 5,360 1,195
------- -------
Total assets $32,870 $14,893
======= =======
Liabilities and shareholders' equity
Current liabilities:
Accounts payable and other
accrued expenses $ 4,963 $ 2,408
Income taxes payable 233 630
------- -------
Total current liabilities 5,196 3,038
Deferred tax liabilities 1,132 --
Minority interest 45 44
Shareholders' equity 26,497 11,811
------- -------
Total liabilities and
shareholders' equity $32,870 $14,893
======== =======
</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, and ArrowPoint
Communications, Inc., InfoGear Technology, Corp., and SightPath, Inc. in the
fourth quarter of fiscal 2000 which were accounted for as poolings of interests.
