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Mi, 15. November 2017 / 22:05 Uhr

DGAP-News: Cisco Reports First Quarter Earnings



DGAP-News: Cisco / Key word(s): Interim Report
Cisco Reports First Quarter Earnings
15.11.2017 / 22:05
The issuer is solely responsible for the content of this announcement.

SAN JOSE, CA -- (Marketwired) -- 11/15/17 -- Cisco (NASDAQ: CSCO)-- Q1 Revenue: $12.1 billion -- Decrease of (2)% year over year -- Recurring revenue was 32% of total revenue, up over 3 points year over year-- Q1 Earnings per Share: $0.48 GAAP; $0.61 non-GAAP-- Q2 FY 2018 Outlook: -- Revenue: 1% to 3% growth year over year -- Earnings per Share: GAAP $0.46 to $0.51; Non-GAAP: $0.58 to $0.60Cisco today reported first quarter results for the period ended October28, 2017. Cisco reported first quarter revenue of $12.1 billion, netincome on a generally accepted accounting principles (GAAP) basis of$2.4 billion or $0.48 per share, and non-GAAP net income of $3.0billion or $0.61 per share. 'Our results in Q1 demonstrate the continued progress we're making onour strategy,' said Chuck Robbins, CEO of Cisco. 'The network hasnever been more critical to business success. Cisco is deliveringmore insights and intelligence as we help our customers build highlysecure, intelligent platforms for digital business.' GAAP Results Q1 FY 2018 Q1 FY 2017 Vs. Q1 FY 2017 --------------- --------------- ----------------Revenue $ 12.1 billion $ 12.4 billion (2)% Net Income $ 2.4 billion $ 2.3 billion 3% Diluted Earnings per Share (EPS) $ 0.48 $ 0.46 4% Non-GAAP Results Q1 FY 2018 Q1 FY 2017 Vs. Q1 FY 2017 --------------- --------------- ----------------Net Income $ 3.0 billion $ 3.1 billion (2)% EPS $ 0.61 $ 0.61 --% Reconciliations between net income, EPS, and other measures on a GAAPand non-GAAP basis are provided in the tables located in the sectionentitled 'Reconciliations of GAAP to non-GAAP Measures.''We delivered a solid Q1 and executed well as we focus on strategicpriorities and maintaining rigorous discipline on profitability andcash generation,' said Kelly Kramer, CFO of Cisco. 'We deliveredstrong growth in operating and free cash flow, focused investments onlong term profitable growth, and returned $3.1 billion toshareholders through repurchases and quarterly dividends.'Financial SummaryAll comparative percentages are on a year-over-year basis unlessotherwise noted.Q1 FY 2018 HighlightsRevenue -- Total revenue was $12.1 billion, down 2%, with productrevenue down 3% and service revenue up 1%. 32% of total revenue wasfrom recurring offers, up over 3 percentage points from the firstquarter of fiscal 2017. Revenue by geographic segment was: Americasdown 1%, EMEA down 3%, and APJC down 1%. Product revenue performancewas led by Security and Applications, which increased by 8% and 6%,respectively. Infrastructure Platforms revenue decreased by 4%. Gross Margin -- On a GAAP basis, total gross margin and product grossmargin were 61.2% and 60.1%, respectively. The decrease in theproduct gross margin compared with 63.4% in the first quarter offiscal 2017 was primarily due to pricing, legal and indemnificationsettlements, and lower productivity benefits.Non-GAAP total gross margin and product gross margin were 63.7% and63.0%, respectively. The decrease in non-GAAP product gross margincompared with 64.8% in the first quarter of fiscal 2017 was primarilydue to pricing and lower productivity benefits. While productivitywas positive, the benefit was lower than in the prior year asproductivity improvements continued to be adversely impacted by anincrease in the cost of certain memory components, consistent withour expectations.GAAP service gross margin was 64.5% and non-GAAP service gross marginwas 65.6%. Total gross margins by geographic segment were: 64.2% for theAmericas, 63.2% for EMEA and 62.1% for APJC.Operating Expenses -- On a GAAP basis, operating expenses were $4.7billion, down 7%. Non-GAAP operating expenses were $4.0 billion, down3%, and were 33.3% of revenue.Operating Income -- GAAP operating income was $2.8 billion, down 4%,with GAAP operating margin of 22.7%. Non-GAAP operating income was$3.7 billion, down 5%, with non-GAAP operating margin of 30.4%. Provision for Income Taxes -- The GAAP tax provision rate was 19.2%.The non-GAAP tax provision rate was 22.0%.Net Income and EPS -- On a GAAP basis, net income was $2.4 billionand EPS was $0.48. On a non-GAAP basis, net income was $3.0 billion,a decrease of 2%, and EPS was flat at $0.61.Cash Flow from Operating Activities -- was $3.1 billion, an increaseof 13% compared with $2.7 billion for the first quarter of fiscal2017. Balance Sheet and Other Financial HighlightsCash and Cash Equivalents and Investments -- were $71.6 billion atthe end of the first quarter of fiscal 2018, compared with $70.5billion at the end of fiscal 2017. The total cash and cashequivalents and investments available in the United States at the endof the first quarter of fiscal 2018 were $2.5 billion.Deferred Revenue -- was $18.6 billion, up 10% in total, with deferredproduct revenue up 16%, driven largely by subscription-based andsoftware offers, and deferred service revenue was up 5%. The portionof product deferred revenue related to recurring software andsubscription offers increased 37%. Capital Allocation -- In the first quarter of fiscal 2018, Ciscodeclared and paid a cash dividend of $0.29 per common share, or $1.4billion. For the first quarter of fiscal 2018, Cisco repurchasedapproximately 51 million shares of common stock under its stockrepurchase program at an average price of $31.80 per share for anaggregate purchase price of $1.6 billion. As of October 28, 2017, Cisco had repurchased and retired 4.8 billionshares of Cisco common stock at an average price of $21.41 per sharefor an aggregate purchase price of approximately $101.9 billion sincethe inception of the stock repurchase program. The remainingauthorized amount for stock repurchases under this program isapproximately $10.1 billion with no termination date. AcquisitionsIn the first quarter of fiscal 2018, we announced the acquisitions ofprivately held Springpath, Inc. and privately held Perspica, Inc. TheSpringpath acquisition is designed to enhance our ability to delivernext-generation data center innovation to customers throughhyperconvergence software. The Springpath acquisition closed in thefirst quarter of fiscal 2018. The Perspica acquisition providesmachine learning and data processing technology which enablescustomers to analyze large amounts of application-related data, inreal-time and with business context. The Perspica acquisition closedin the second quarter of fiscal 2018.We also closed our acquisitions of Viptela, Inc., a privately heldcompany that provides software-defined wide area networking products,and Observable Networks, Inc., a privately held company that offerscloud-native network forensics security applications delivered as aservice.On October 23, 2017, we announced a definitive agreement to acquireBroadSoft, Inc., a publicly held company that offers cloud callingand contact center solutions. The acquisition is expected to closeafter completion of customary regulatory reviews.Business Outlook for Q2 FY 2018 Cisco expects to achieve the following results for the second quarterof fiscal 2018:Q2 FY 2018 Revenue 1% to 3% growth Y/Y Non-GAAP gross margin rate 62.5% - 63.5% Non-GAAP operating margin rate 29.5% - 30.5% Non-GAAP tax provision rate 22% Non-GAAP EPS $0.58 - $0.60 Our Q2 FY2018 business outlook does not reflect any impact from thepending acquisition of BroadSoft.Cisco estimates that GAAP EPS will be $0.46 to $0.51 in the secondquarter of fiscal 2018.A reconciliation between the Business Outlook for Q2 FY 2018 on aGAAP and non-GAAP basis is provided in the table entitled 'GAAP tonon-GAAP Business Outlook for Q2 FY 2018' located in the sectionentitled 'Reconciliations of GAAP to non-GAAP Measures.'Editor's Notes:-- Q1 fiscal year 2018 conference call to discuss Cisco's results along with its business outlook will be held on Wednesday, November 15, 2017 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, November 15, 2017 to 4:00 p.m. Pacific Time, November 22, 2017 at 1-866-421-0447 (United States) or 1-203-369-0803 (international). The replay will also be available via webcast on the Cisco Investor Relations website at 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, November 15, 2017. 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 investor.cisco.com. CISCO SYSTEMS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In millions, except per-share amounts) (Unaudited) Three Months Ended ---------------------------- October 28, October 29, 2017 2016 ------------- ------------- REVENUE: Product $ 9,054 $ 9,302 Service 3,082 3,050 ------------- ------------- Total revenue 12,136 12,352 ------------- ------------- COST OF SALES: Product 3,615 3,403 Service 1,094 1,065 ------------- ------------- Total cost of sales 4,709 4,468 ------------- ------------- GROSS MARGIN 7,427 7,884 OPERATING EXPENSES: Research and development 1,567 1,545 Sales and marketing 2,334 2,418 General and administrative 557 555 Amortization of purchased intangible assets 61 78 Restructuring and other charges 152 411 ------------- ------------- Total operating expenses 4,671 5,007 ------------- ------------- OPERATING INCOME 2,756 2,877 Interest income 379 295 Interest expense (235) (198) Other income (loss), net 62 (21) ------------- ------------- Interest and other income (loss), net 206 76 ------------- ------------- INCOME BEFORE PROVISION FOR INCOME TAXES 2,962 2,953 Provision for income taxes 568 631 ------------- ------------- NET INCOME $ 2,394 $ 2,322 ============= ============= Net income per share: Basic $ 0.48 $ 0.46 ============= ============= Diluted $ 0.48 $ 0.46 ============= ============= Shares used in per-share calculation: Basic 4,959 5,027 ============= ============= Diluted 4,994 5,066 ============= ============= Cash dividends declared per common share $ 0.29 $ 0.26 ============= ============= CISCO SYSTEMS, INC. REVENUE BY SEGMENT (In millions, except percentages) Three Months Ended October 28, 2017 ------------------------------ Amount Y/Y % -------------- ---------------Revenue: Americas $ 7,350 (1)% EMEA 2,909 (3)% APJC 1,877 (1)% -------------- Total $ 12,136 (2)% ============== CISCO SYSTEMS, INC. GROSS MARGIN PERCENTAGE BY SEGMENT (In percentages) Three Months Ended October 28, 2017 -------------------Gross Margin Percentage: Americas 64.2% EMEA 63.2% APJC 62.1% CISCO SYSTEMS, INC. REVENUE FOR GROUPS OF SIMILAR PRODUCTS AND SERVICES (In millions, except percentages) Three Months Ended October 28, 2017 ---------------------------- Amount Y/Y % ------------- --------------Revenue: Infrastructure Platforms $ 6,970 (4)% Applications 1,203 6% Security 585 8% Other Products 296 (16)% ------------- Total Product 9,054 (3)% Services 3,082 1% ------------- Total $ 12,136 (2)% ============= Effective Q1 FY 2018, we began reporting our product and servicerevenue in the following five categories: Infrastructure Platforms,Applications, Security, Other Products and Services. The changebetter aligns our product categories with our evolving businessmodel. Our segments will continue to be based on geographies whichconsist of the Americas, EMEA, and APJC. This change only impacts howwe report revenue by product category. The reclassified productcategory revenue by quarter is available on Cisco's InvestorRelations website atinvestor.cisco.com/investor-relations/financial-information/Financial-Results/default.aspx. CISCO SYSTEMS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In millions) (Unaudited) October 28, 2017 July 29, 2017 ---------------- ----------------ASSETS Current assets: Cash and cash equivalents $ 11,043 $ 11,708 Investments 60,545 58,784 Accounts receivable, net of allowance for doubtful accounts of $193 at October 28, 2017 and $211 at July 29, 2017 4,206 5,146 Inventories 1,693 1,616 Financing receivables, net 5,038 4,856 Other current assets 1,555 1,593 ---------------- ---------------- Total current assets 84,080 83,703Property and equipment, net 3,202 3,322Financing receivables, net 4,876 4,738Goodwill 30,233 29,766Purchased intangible assets, net 2,677 2,539Deferred tax assets 4,006 4,239Other assets 1,448 1,511 ---------------- ---------------- TOTAL ASSETS $ 130,522 $ 129,818 ================ ================LIABILITIES AND EQUITY Current liabilities: Short-term debt $ 10,239 $ 7,992 Accounts payable 1,155 1,385 Income taxes payable 86 98 Accrued compensation 2,684 2,895 Deferred revenue 10,920 10,821 Other current liabilities 4,200 4,392 ---------------- ---------------- Total current liabilities 29,284 27,583 Long-term debt 25,684 25,725 Income taxes payable 883 1,250 Deferred revenue 7,645 7,673 Other long-term liabilities 1,476 1,450 ---------------- ---------------- Total liabilities 64,972 63,681 ---------------- ----------------Total equity 65,550 66,137 ---------------- ---------------- TOTAL LIABILITIES AND EQUITY $ 130,522 $ 129,818 ================ ================ CISCO SYSTEMS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions) (Unaudited) Three Months Ended ------------------------------ October 28, October 29, 2017 2016 -------------- -------------- Cash flows from operating activities: Net income $ 2,394 $ 2,322 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, amortization, and other 566 599 Share-based compensation expense 392 372 Provision for receivables (17) 15 Deferred income taxes 178 158 Excess tax benefits from share-based compensation -- (91) (Gains) losses on divestitures, investments and other, net (56) 32 Change in operating assets and liabilities, net of effects of acquisitions and divestitures: Accounts receivable 957 1,049 Inventories (80) 44 Financing receivables (333) (900) Other assets 8 191 Accounts payable (235) (63) Income taxes, net (419) (440) Accrued compensation (215) (333) Deferred revenue 77 462 Other liabilities (137) (687) -------------- -------------- Net cash provided by operating activities 3,080 2,730 -------------- -------------- Cash flows from investing activities: Purchases of investments (8,275) (18,667) Proceeds from sales of investments 2,682 11,337 Proceeds from maturities of investments 3,929 2,449 Acquisition of businesses, net of cash and cash equivalents acquired (725) (251) Purchases of investments in privately held companies (20) (38) Return of investments in privately held companies 81 24 Acquisition of property and equipment (168) (275) Proceeds from sales of property and equipment 1 2 Other -- 23 -------------- -------------- Net cash used in investing activities (2,495) (5,396) -------------- -------------- Cash flows from financing activities: Issuances of common stock 9 88 Repurchases of common stock - repurchase program (1,686) (1,023) Shares repurchased for tax withholdings on vesting of restricted stock units (342) (401) Short-term borrowings, original maturities of 90 days or less, net (2,498) -- Issuances of debt 5,482 6,232 Repayments of debt (748) (1) Excess tax benefits from share-based compensation -- 91 Dividends paid (1,436) (1,308) Other (31) (60) -------------- -------------- Net cash provided by (used in) financing activities (1,250) 3,618 -------------- -------------- Net increase (decrease) in cash and cash equivalents (665) 952 Cash and cash equivalents, beginning of period 11,708 7,631 -------------- -------------- Cash and cash equivalents, end of period $ 11,043 $ 8,583 ============== ============== Supplemental cash flow information: Cash paid for interest $ 283 $ 248 Cash paid for income taxes, net $ 810 $ 913 CISCO SYSTEMS, INC. DEFERRED REVENUE (In millions) October 28, July 29, October 29, 2017 2017 2016 ------------ ------------ ------------Deferred revenue: Service $ 10,991 $ 11,302 $ 10,424 Product: Deferred revenue related to recurring software and subscription offers 5,213 4,971 3,801 Other product deferred revenue 2,361 2,221 2,726 ------------ ------------ ------------ Total product deferred revenue 7,574 7,192 6,527 ------------ ------------ ------------ Total $ 18,565 $ 18,494 $ 16,951 ============ ============ ============Reported as: Current $ 10,920 $ 10,821 $ 10,215 Noncurrent 7,645 7,673 6,736 ------------ ------------ ------------ Total $ 18,565 $ 18,494 $ 16,951 ============ ============ ============ CISCO SYSTEMS, INC. DIVIDENDS PAID AND REPURCHASES OF COMMON STOCK (In millions, except per-share amounts) DIVIDENDS STOCK REPURCHASE PROGRAM TOTAL ----------------- ------------------------- -------- Weighted -Average Price Per per Quarter Ended Share Amount Shares Share Amount Amount -------- -------- ------- -------- -------- --------Fiscal 2018 October 28, 2017 $ 0.29 $ 1,436 51 $ 31.80 $ 1,620 $ 3,056Fiscal 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 -------- -------- ------- -------- -------- Total $ 1.10 $ 5,511 118 $ 31.38 $ 3,706 $ 9,217 ======== ======== ======= ======== ======== 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 ------------------------ October 28, October 29, 2017 2016 ------------- ------------GAAP net income $ 2,394 $ 2,322 Adjustments to cost of sales: Share-based compensation expense 57 54 Amortization of acquisition-related intangible assets 139 112 Supplier component remediation charge (adjustment), net (19) -- Legal and indemnification settlements 122 -- ----------- ----------- Total adjustments to GAAP cost of sales 299 166 ----------- ----------- Adjustments to operating expenses: Share-based compensation expense 335 315 Amortization of acquisition-related intangible assets 61 78 Acquisition-related/divestiture costs 83 53 Significant asset impairments and restructurings 152 411 ----------- ----------- Total adjustments to GAAP operating expenses 631 857 ----------- ----------- Total adjustments to GAAP income before provision for income taxes 930 1,023 ----------- ----------- Income tax effect of non-GAAP adjustments (288) (244) ----------- ----------- Non-GAAP net income $ 3,036 $ 3,101 =========== =========== Diluted net income per share: GAAP $ 0.48 $ 0.46 ----------- ----------- Non-GAAP $ 0.61 $ 0.61 ----------- ----------- 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 October 28, 2017 ------------------------------------- Product Service Total Gross Gross Gross Operating Margin Margin Margin Expenses ------- ------- ------ --------- GAAP amount $ 5,439 $ 1,988 $7,427 $ 4,671 % of revenue 60.1% 64.5% 61.2% 38.5% Adjustments to GAAP amounts: Share-based compensation expense 23 34 57 335 Amortization of acquisition-related intangible assets 139 -- 139 61 Supplier component remediation charge (adjustment), net (19) -- (19) -- Legal and indemnification settlements 122 -- 122 -- Acquisition/divestiture-related costs -- -- -- 83 Significant asset impairments and restructurings -- -- -- 152 Income tax effect -- -- -- -- ------- ------- ------ --------- Non-GAAP amount $ 5,704 $ 2,022 $7,726 $ 4,040 ======= ======= ====== ========= % of revenue 63.0% 65.6% 63.7% 33.3% Three Months Ended October 28, 2017 ------------------------------------ Operating Net Y/Y Income Y/Y Income Y/Y --- --------- --- -------- --- GAAP amount (7)% $ 2,756 (4)% $ 2,394 3% % of revenue 22.7% 19.7% Adjustments to GAAP amounts: Share-based compensation expense 392 392 Amortization of acquisition-related intangible assets 200 200 Supplier component remediation charge (adjustment), net (19) (19) Legal and indemnification settlements 122 122 Acquisition/divestiture-related costs 83 83 Significant asset impairments and restructurings 152 152 Income tax effect -- (288) --------- Non-GAAP amount (3)% $ 3,686 (5)% $ 3,036 (2)% ========= ======== % of revenue 30.4% 25.0% Three Months Ended October 29, 2016 ------------------------------------------------------ Product Service Total Gross Gross Gross Operating Operating Net Margin Margin Margin Expenses Income Income ------- ------- ------ --------- --------- ------ GAAP amount $ 5,899 $ 1,985 $7,884 $ 5,007 $ 2,877 $2,322 % of revenue 63.4% 65.1% 63.8% 40.5% 23.3% 18.8%Adjustments to GAAP amounts: Share-based compensation expense 21 33 54 315 369 369 Amortization of acquisition- related intangible assets 112 -- 112 78 190 190 Acquisition/divesti ture-related costs -- -- -- 53 53 53 Significant asset impairments and restructurings -- -- -- 411 411 411 Income tax effect -- -- -- -- -- (244) ------- ------- ------ --------- --------- ------ Non-GAAP amount $ 6,032 $ 2,018 $8,050 $ 4,150 $ 3,900 $3,101 ======= ======= ====== ========= ========= ====== % of revenue 64.8% 66.2% 65.2% 33.6% 31.6% 25.1% CISCO SYSTEMS, INC. RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES EFFECTIVE TAX RATE (In percentages) Three Months Ended -------------------------------- October 28, October 29, 2017 2016 --------------- --------------- GAAP effective tax rate 19.2% 21.4% Total adjustments to GAAP provision for income taxes 2.8% 0.6% --------------- --------------- Non-GAAP effective tax rate 22.0% 22.0% =============== =============== GAAP TO NON-GAAP BUSINESS OUTLOOK FOR Q2 FY 2018 Operating Tax Gross Margin Margin Provision Earnings per Q2 FY 2018 Rate Rate Rate Share (2) ------------- ------------- ------------ --------------GAAP 61.0% - 62.0% 23.0% - 24.0% 18% $0.46 - $0.51Estimated adjustments for: Share-based compensation expense 0.5% 3.5% -- $0.05 - $0.06Amortization of purchased intangible assets and other acquisition- related/divestiture costs 1.0% 2.0% -- $0.03 - $0.04Restructuring and other charges (1) -- 1.0% -- $0.01 - $0.02Income tax effect of non-GAAP adjustments -- -- 4% ------------- ------------- ------------ --------------Non-GAAP 62.5% - 63.5% 29.5% - 30.5% 22% $0.58 - $0.60 ============= ============= ============ ==============(1) In August 2016, we began taking action under a restructuring planin order to reinvest in our key priority areas with estimated pretaxcharges of approximately $850 million. In the first quarter of fiscal2018, we extended the restructuring plan to include an additional$150 million of estimated additional pretax charges. We haverecognized pretax charges of $908 million to our GAAP financialresults in relation to this restructuring plan since its inception.We expect to recognize the remaining charges under this planprimarily in the second quarter of fiscal 2018.(2) Estimated adjustments to GAAP earnings per share are shown afterincome tax effects. Our Q2 FY2018 business outlook does not reflect any impact from thepending acquisition of BroadSoft. Except as noted above, this business outlook does not include theeffects of any future acquisitions/divestitures, asset impairments,restructurings and significant tax matters or other events, which mayor may not be significant unless specifically stated.Forward Looking Statements, Non-GAAP Information and AdditionalInformation This release may be deemed to contain forward-looking statements,which are subject to the safe harbor provisions of the PrivateSecurities Litigation Reform Act of 1995. These forward-lookingstatements include, among other things, statements regarding futureevents (such as continued execution on our strategy, the continuedcriticality of the network to business success, our ability todeliver more insights and intelligence as we help our customers buildhighly secure, intelligent platforms for digital business, and ourability to continue to execute well and return value to ourshareholders) and the future financial performance of Cisco(including the business outlook for Q2 FY 2018) that involve risksand uncertainties. Readers are cautioned that these forward-lookingstatements are only predictions and may differ materially from actualfuture events or results due to a variety of factors, including:business and economic conditions and growth trends in the networkingindustry, our customer markets and various geographic regions; globaleconomic conditions and uncertainties in the geopoliticalenvironment; overall information technology spending; the growth andevolution of the Internet and levels of capital spending onInternet-based systems; variations in customer demand for productsand services, including sales to the service provider market andother customer markets; the return on our investments in certainpriorities, 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 andto successfully integrate and operate these acquired businesses andtechnologies; our ability to achieve expected benefits of ourpartnerships; increased competition in our product and servicemarkets, including the data center market; dependence on theintroduction and market acceptance of new product offerings andstandards; rapid technological and market change; manufacturing andsourcing risks; product defects and returns; litigation involvingpatents, intellectual property, antitrust, shareholder and othermatters, and governmental investigations; our ability to achieve thebenefits of the announced restructuring and possible changes in thesize and timing of the related charges; man-made problems such ascyber-attacks, data protection breaches, computer viruses orterrorism; natural catastrophic events; a pandemic or epidemic; ourability to achieve the benefits anticipated from our investments insales, engineering, service, marketing and manufacturing activities;our ability to recruit and retain key personnel; our ability tomanage financial risk, and to manage expenses during economicdownturns; risks related to the global nature of our operations,including our operations in emerging markets; currency fluctuationsand other international factors; changes in provision for incometaxes, including changes in tax laws and regulations or adverseoutcomes resulting from examinations of our income tax returns;potential volatility in operating results; and other factors listedin Cisco's most recent report on Form 10-K filed on September 7,2017. The financial information contained in this release should beread in conjunction with the consolidated financial statements andnotes thereto included in Cisco's most recent report on Form 10-K asit may be amended from time to time. Cisco's results of operationsfor the three months ended October 28, 2017 are not necessarilyindicative of Cisco's operating results for any future periods. Anyprojections in this release are based on limited informationcurrently available to Cisco, which is subject to change. Althoughany such projections and the factors influencing them will likelychange, Cisco will not necessarily update the information, sinceCisco 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 datafor the periods presented. It also includes future estimated rangesfor gross margin, operating margin, tax provision rate and EPS on anon-GAAP basis.These non-GAAP measures are not in accordance with, or an alternativefor, measures prepared in accordance with generally acceptedaccounting principles and may be different from non-GAAP measuresused by other companies. In addition, these non-GAAP measures are notbased on any comprehensive set of accounting rules or principles.Cisco believes that non-GAAP measures have limitations in that theydo not reflect all of the amounts associated with Cisco's results ofoperations as determined in accordance with GAAP and that thesemeasures should only be used to evaluate Cisco's results ofoperations in conjunction with the corresponding GAAP measures.Cisco believes that the presentation of non-GAAP measures when shownin conjunction with the corresponding GAAP measures, provides usefulinformation to investors and management regarding financial andbusiness trends relating to its financial condition and itshistorical and projected results of operations.For its internal budgeting process, Cisco's management uses financialstatements that do not include, when applicable, share-basedcompensation expense, amortization of acquisition-related intangibleassets, acquisition-related/divestiture costs, significant assetimpairments and restructurings, significant litigation settlementsand 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, inaddition to the corresponding GAAP measures, in reviewing thefinancial results of Cisco. In prior periods, Cisco has excludedother items that it no longer excludes for purposes of its non-GAAPfinancial measures. From time to time in the future there may beother items that Cisco may exclude for purposes of its internalbudgeting process and in reviewing its financial results. Foradditional information on the items excluded by Cisco from one ormore of its non-GAAP financial measures, refer to the Form 8-Kregarding this release furnished today to the Securities and ExchangeCommission.About CiscoCisco (NASDAQ: CSCO) is the worldwide technology leader that has beenmaking the Internet work since 1984. Our people, products andpartners help society securely connect and seize tomorrow's digitalopportunity today. Discover more at thenetwork.cisco.com and followus on Twitter at @Cisco.Copyright Copyright 2017 Cisco and/or its affiliates. All rightsreserved. Cisco and the Cisco logo are trademarks or registeredtrademarks of Cisco and/or its affiliates in the U.S. and othercountries. To view a list of Cisco trademarks, go to:www.cisco.com/go/trademarks. Third-party trademarks mentioned in thisdocument are the property of their respective owners. The use of theword partner does not imply a partnership relationship between Ciscoand any other company. This document is Cisco Public Information.



15.11.2017 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG.The issuer is solely responsible for the content of this announcement.The DGAP Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases. Archive at www.dgap.de













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