CISCO SYSTEMS, INC. - FORM 8-K - EX-99.1 - PRESS RELEASE

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8-K - CURRENT REPORT ON FORM 8-K - CISCO SYSTEMS, INC.	d8k.htm

Exhibit 99.1


Press Contact:		Investor Relations Contact:
Marc Musgrove		Melissa Selcher
Cisco		Cisco
+1 (408) 525-6320		+1 408 424-1335
mmusgrov@cisco.com		mselcher@cisco.com

CISCO REPORTS FOURTH QUARTER AND FISCAL YEAR 2011 EARNINGS

•

Q4 Net Sales: $11.2 billion

•

Q4 Net Income: $1.2 billion GAAP; $2.2 billion non-GAAP

•

Q4 Earnings per Share: $0.22 GAAP; $0.40 non-GAAP

•

FY 2011 Net Sales: $43.2 billion

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FY 2011 Net Income: $6.5 billion GAAP; $9.0 billion non-GAAP

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FY 2011 Earnings per Share: $1.17 GAAP; $1.62 non-GAAP

SAN JOSE, Calif. – August 10, 2011 – Cisco, the worldwide leader in networking that transforms how people connect, communicate and collaborate, today reported its fourth quarter and fiscal year results for the period ended July 30, 2011. Cisco reported fourth quarter net sales of $11.2 billion, net income on a generally accepted accounting principles (GAAP) basis of $1.2 billion or $0.22 per share, and non-GAAP net income of $2.2 billion or $0.40 per share.

“We’ve made significant progress on our comprehensive action plan to position ourselves for our next stage of growth and profitability, while delivering solid financial results in Q4,” said John Chambers, chairman and CEO, Cisco. “As we start our next fiscal year, you will see a very focused, agile, lean and aggressive company, that is laser focused on helping our customers use intelligent networks to transform their businesses.”

Q4 GAAP Results


	Q4 2011		Q4 2010		Vs. Q4 2010
Net Sales	$	11.2 billion	$	10.8 billion		3.3	%
Net Income	$	1.2 billion	$	1.9 billion		(36.3	)%
Earnings per Share	$	0.22	$	0.33		(33.3	)%

Q4 Non-GAAP Results

	Q4 2011		Q4 2010		Vs. Q4 2010
Net Income	$	2.2 billion	$	2.5 billion		(12.4	)%
Earnings per Share	$	0.40	$	0.43		(7.0	)%

Fiscal Year GAAP Results

	FY 2011		FY 2010		Vs. FY 2010
Net Sales	$	43.2 billion	$	40.0 billion		7.9	%
Net Income	$	6.5 billion	$	7.8 billion		(16.4	)%
Earnings per Share	$	1.17	$	1.33		(12.0	)%

Fiscal Year Non-GAAP Results

	FY 2011		FY 2010		Vs. FY 2010
Net Income	$	9.0 billion	$	9.4 billion		(4.3	)%
Earnings per Share	$	1.62	$	1.61		0.6	%

GAAP net income for the fourth quarter and fiscal year 2011 included pretax charges of $772 million and $923 million, respectively, related to restructuring and other charges. A reconciliation between net income on a GAAP basis and non-GAAP net income is provided in the table on page 7.

Cisco will discuss fourth quarter and fiscal year 2011 results and business outlook on a conference call and webcast at 1:30 p.m. Pacific Time today. Call information and related charts are available at http://investor.cisco.com.

Other Financial Highlights

•

Cash flows from operations were $2.8 billion for the fourth quarter of fiscal 2011, compared with $3.0 billion for the third quarter of fiscal 2011, and compared with $3.2 billion for the fourth quarter of fiscal 2010. Cash flows from operations were $10.1 billion for fiscal 2011, compared with $10.2 billion for fiscal 2010.

•

Cash and cash equivalents and investments were $44.6 billion at the end of fiscal 2011, compared with $43.4 billion at the end of the third quarter of fiscal 2011, and compared with $39.9 billion at the end of fiscal 2010.

•

During the fourth quarter of fiscal 2011, Cisco repurchased 95 million shares of common stock under the stock repurchase program at an average price of $15.85 per share for an aggregate purchase price of $1.5 billion. During fiscal 2011, Cisco repurchased 351 million shares of common stock at an average price of $19.36 per share for an aggregate purchase price of $6.8 billion. As of July 30, 2011, Cisco had repurchased and retired 3.5 billion shares of Cisco common stock at an average price of $20.64 per share for an aggregate purchase price of approximately $71.8 billion since the inception of the stock repurchase program. The remaining authorized amount for stock repurchases under this program as of July 30, 2011 was approximately $10.2 billion with no termination date.

•

Days sales outstanding in accounts receivable (DSO) at the end of the fourth quarter of fiscal 2011 were 38 days, compared with 37 days at the end of the third quarter of fiscal 2011, and compared with 41 days at the end of the fourth quarter of fiscal 2010.

•

Inventory turns on a GAAP basis were 11.8 in the fourth quarter of fiscal 2011, compared with 11.1 in the third quarter of fiscal 2011, and compared with 12.6 in the fourth quarter of fiscal 2010. Non-GAAP inventory turns were 11.4 in the fourth quarter of fiscal 2011, compared with 10.3 in the third quarter of fiscal 2011, and compared with 12.1 in the fourth quarter of fiscal 2010.

Select Global Business Highlights

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Xerox and Cisco announced that they intend to form an alliance to simplify IT management by delivering cloud-based services and technology solutions that combine network intelligence and print.

Cisco Innovation

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Cisco introduced multiple innovations for its flagship Catalyst^® 6500 Series Switches, providing customers with the capability to evolve their network infrastructure for the coming decade’s proliferation of connected devices, growth of video traffic, cloud computing business models and increasingly mobile workforces.

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Cisco introduced AppHQ™, an application ecosystem built specifically for Cisco Cius™ that provides new ways to create, manage and rapidly deploy tablet applications in the enterprise.

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Cisco announced the industry’s first 60-watt Power over Ethernet capability for one of the most widely deployed enterprise-class switches in the industry, the Catalyst 4500E Switch.

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Cisco introduced new technology to increase the efficiency and security of cloud-based networks so that information can be delivered instantly, with industry-leading security to more people, on more devices, in more locations.

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Cisco introduced a number of new telepresence products and enhancements designed to give customers new ways to simply, quickly and cost effectively scale telepresence throughout their organizations.

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Cisco introduced new solutions to help sports and entertainment venues and service providers enhance wireless bandwidth and performance in high-density areas while monetizing the delivery of personalized mobile experiences.

Select Customer Announcements

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NASDAQ OMX PHLX, the Philadelphia-based, high-performance options trading exchange, deployed Cisco Nexus^® 5000 Series Switches and the Cisco Nexus 2000 Series Fabric Extender (FEX), which provides scalability and a simplified, single point of management capability.

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Comcast, Tata Communications, and China Telecom selected the Cisco ASR 9000 Series Aggregation Services Routers to support the delivery of advanced services to their respective customers.

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Travelport selected Cisco Unified Computing System™ and Cisco Nexus Switches to increase business efficiency and scalability.

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Cisco and New Songdo International City Development in Korea joined forces to create what is anticipated to become one of the most technologically advanced Cisco Smart+Connected Communities™ in the world.

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Cisco Cius and Nervecentre Software are helping Nottingham University Hospitals NHS Trust redirect 8,000 hours of annual nursing time into hands-on patient care.

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Polish Telecom boosted its network with Cisco CRS-3 Carrier Routing System and Cisco ASR 9000 Series Aggregation Services Routers to help build out video, mobile and cloud computing services.

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Law firm Minter Ellison selected Cisco technology to connect industry and government clients in Australia, Hong Kong, the People’s Republic of China, New Zealand and the United Kingdom.

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Russian mobile operator SkyLink completed the modernization of its Packet Data Serving Node (PDSN) and migrated data traffic to an intelligent platform based on the Cisco ASR 5000 Series Aggregation Services Router.

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Argentinean bank Banco Supervielle adopted Cisco Borderless Network Architecture to accelerate processes, improve productivity and reduce operational costs.

Editor’s Note:

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Q4 and fiscal year 2011 conference call to discuss Cisco’s results along with its business outlook will be held at 1:30 p.m. Pacific Time, Wednesday, August 10, 2011. Conference call number is 888-848-6507 (United States) or 212-519-0847 (international).

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Conference call replay will be available from 4:30 p.m. Pacific Time, August 10, 2011 to 4:30 p.m. Pacific Time, August 17, 2011 at 866-357-4205 (United States) or 203-369-0122 (international). The replay also will be available via webcast from August 10, 2011 through October 21, 2011 on the Cisco Investor Relations website at http://investor.cisco.com.

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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, August 10, 2011. 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 GAAP reconciliation information, will be available on the Cisco Investor Relations website at http://investor.cisco.com.

About Cisco

Cisco (NASDAQ: CSCO) is the worldwide leader in networking that transforms how people connect, communicate and collaborate. Information about Cisco can be found at http://www.cisco.com. For ongoing news, please go to http://newsroom.cisco.com.

# # #

This release may be deemed to contain forward-looking statements, which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, among other things, statements regarding future events (such as statements regarding Cisco’s next stage of growth and profitability and its future strategy and plans) and 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 due to a variety of factors, including: business and economic conditions and growth trends in the networking industry, our customer markets and various geographic regions; global economic conditions and uncertainties in the geopolitical environment; overall information technology spending; the growth and evolution of the Internet and levels of capital spending on Internet-based systems; variations in customer demand for products and services, including sales to the service provider market and other customer markets; the return on our investments in certain market adjacencies and geographical locations; 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 and to successfully integrate and operate these acquired businesses and technologies; increased competition in our product and service markets, including the data center; dependence on the introduction and market acceptance of new product offerings and standards; rapid technological and market change; manufacturing and sourcing risks; product defects and returns; litigation involving patents, intellectual property, antitrust, shareholder and other matters, and governmental investigations; natural catastrophic events; a pandemic or epidemic; our ability to achieve the benefits anticipated from our investments in sales and engineering activities; our ability to recruit and retain key personnel; our ability to manage financial risk, and to manage expenses during economic downturns; risks related to the global nature of our operations, including our operations in emerging markets; currency fluctuations and other international factors; changes in provision for income taxes, including changes in tax laws and regulations or adverse outcomes resulting from examinations of our income tax returns; potential volatility in operating results; and other factors listed in Cisco’s most recent reports on Forms 10-K and 10-Q, filed on September 21, 2010 and May 25, 2011, respectively. 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 report on Form 10-Q and report on Form 8-K filed on March 9, 2011, as each may be amended from time to time. Cisco’s results of operations for the three and twelve months ended July 30, 2011 are not necessarily indicative of Cisco’s operating results for any future periods. Any projections in this release are based on limited information currently available to Cisco, which is subject to change. Although any such projections and the factors influencing them will likely change, Cisco will not necessarily update the information, since Cisco 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 net income per share data and non-GAAP inventory turns.

These non-GAAP measures are not in accordance with, or an alternative for, measures prepared in accordance with generally accepted accounting principles and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. Cisco believes that non-GAAP measures have limitations in that they do not reflect all of the amounts associated with Cisco’s results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate Cisco’s results of operations in conjunction with the corresponding GAAP measures.

Cisco believes that the presentation of non-GAAP net income and non-GAAP net income per share data when shown in conjunction with the corresponding GAAP measures, provides useful information to investors and management regarding financial and business trends relating to its financial condition and results of operations. In addition, Cisco believes that the presentation of non-GAAP inventory turns provides useful information to investors and management regarding financial and business trends relating to inventory management based on the operating activities of the period presented.

For its internal budgeting process, Cisco’s management uses financial statements that do not include, when applicable, share-based compensation expense, amortization of acquisition-related intangible assets, other acquisition-related costs, significant asset impairments and restructurings, the income tax effects of the foregoing, and significant tax matters. Cisco’s management also uses the foregoing non-GAAP measures, in addition to the corresponding GAAP measures, in reviewing the financial results of Cisco. In prior periods, Cisco has excluded other items that it no longer excludes for purposes of its non-GAAP financial measures. From time to time in the future, there may be other items, such as significant gains or losses from contingencies, that Cisco may exclude for purposes of its internal budgeting process and in reviewing its financial results.

For additional information on the items excluded by Cisco from one or more of its non-GAAP financial measures, refer to the Form 8-K regarding this release furnished today to the Securities and Exchange Commission.

Copyright ^© 2011 Cisco Systems, Inc. and or its affiliates. All rights reserved. Cisco, the Cisco logo, Cisco Systems, AppHQ, Catalyst, Cisco Cius, Cisco Nexus, Cisco Smart+Connected Communities, and Cisco Unified Computing System are registered trademarks or trademarks of Cisco and/or its affiliates in the United States and other countries. Third party trademarks mentioned in this document are the property of their respective owners. The use of the word partner does not imply a partnership relationship between Cisco and any other company. This document is Cisco Public Information.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per-share amounts)

(Unaudited)


	Three Months Ended						Twelve Months Ended
	July 30, 2011			July 31, 2010			July 30, 2011			July 31, 2010
NET SALES:
Product	$	8,921		$	8,808		$	34,526		$	32,420
Service		2,274			2,028			8,692			7,620

Total net sales		11,195			10,836			43,218			40,040


COST OF SALES:
Product		3,579			3,309			13,647			11,620
Service		755			734			3,035			2,777

Total cost of sales		4,334			4,043			16,682			14,397

GROSS MARGIN		6,861			6,793			26,536			25,643

OPERATING EXPENSES:
Research and development		1,484			1,391			5,823			5,273
Sales and marketing		2,520			2,368			9,812			8,782
General and administrative		532			578			1,908			1,933
Amortization of purchased intangible assets		101			131			520			491
Restructuring and other charges		768			—			799			—

Total operating expenses		5,405			4,468			18,862			16,479

OPERATING INCOME		1,456			2,325			7,674			9,164
Interest income		164			154			641			635
Interest expense		(148	)		(169	)		(628	)		(623	)
Other income (loss), net		(5	)		108			138			239

Interest and other income, net		11			93			151			251

INCOME BEFORE PROVISION FOR INCOME TAXES		1,467			2,418			7,825			9,415
Provision for income taxes		235			483			1,335			1,648

NET INCOME	$	1,232		$	1,935		$	6,490		$	7,767


Net income per share:
Basic	$	0.22		$	0.34		$	1.17		$	1.36

Diluted	$	0.22		$	0.33		$	1.17		$	1.33


Shares used in per-share calculation:
Basic		5,478			5,688			5,529			5,732

Diluted		5,496			5,795			5,563			5,848


Cash dividends declared per common share	$	0.06		$	—		$	0.12		$	—

Certain reclassifications have been made to prior period amounts to conform to the current period’s presentation.

RECONCILIATION OF GAAP TO NON-GAAP NET INCOME

(In millions, except per-share amounts)


	Three Months Ended						Twelve Months Ended
	July 30, 2011			July 31, 2010			July 30, 2011			July 31, 2010
GAAP net income	$	1,232		$	1,935		$	6,490		$	7,767
Adjustments to cost of sales:
Share-based compensation expense		56			57			238			221
Amortization of acquisition-related intangible assets⁽¹⁾		96			93			463			255
Significant asset impairments and restructurings⁽²⁾		4			—			124			—

Total adjustments to GAAP cost of sales		156			150			825			476


Adjustments to operating expenses:
Share-based compensation expense		327			334			1,382			1,296
Amortization of acquisition-related intangible assets⁽¹⁾		101			131			520			491
Other acquisition-related costs		8			43			131			161
Significant asset impairments and restructurings⁽²⁾		768			120			799			120

Total adjustments to GAAP operating expenses		1,204			628			2,832			2,068

Adjustments to other income, net:
Other acquisition-related costs		—			(2	)		—			8

Total adjustments to GAAP income before provision for income taxes		1,360			776			3,657			2,552

Income tax effect		(397	)		(204	)		(1,049	)		(723	)
Significant tax matters ⁽³⁾⁽⁴⁾		—			—			(65	)		(158	)

Total adjustments to GAAP provision for income taxes		(397	)		(204	)		(1,114	)		(881	)


Non-GAAP net income	$	2,195		$	2,507		$	9,033		$	9,438


Diluted net income per share:
GAAP	$	0.22		$	0.33		$	1.17		$	1.33


Non-GAAP	$	0.40		$	0.43		$	1.62		$	1.61

⁽¹⁾	Amortization of acquisition-related intangible assets for fiscal 2011 includes impairment charges of approximately $155 million, with $63 million recorded in product cost of sales and $92 million in operating expenses.

⁽²⁾

Significant asset impairments and restructurings for the three months ended July 30, 2011 consist of $453 million in charges for a voluntary early retirement program, $214 million for employee severance, $61 million related to the planned sale of our Juarez, Mexico manufacturing facility, and $44 million of residual costs related to exiting, realigning and restructuring certain aspects of our consumer business announced in the third quarter of fiscal 2011 ($4 million of which is included in cost of sales). For fiscal 2011 significant asset impairments and restructurings totaled $923 million ($124 million of which is included in cost of sales) which includes $151 million of charges taken in the third quarter of fiscal 2011 primarily related to exiting, realigning and restructuring certain aspects of our consumer business.

⁽³⁾

In the second quarter of fiscal 2011, the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 reinstated the U.S. federal R&D tax credit, retroactive to January 1, 2010. GAAP net income for fiscal 2011 included a $65 million tax benefit related to fiscal 2010 R&D expenses. Non-GAAP net income for fiscal 2011 excluded the $65 million tax benefit related to fiscal 2010 R&D expenses.

⁽⁴⁾

In the third quarter of fiscal 2010, the U.S. Court of Appeals for the Ninth Circuit affirmed a 2005 U.S. Tax Court ruling in Xilinx, Inc. v. Commissioner. The decision affirmed the tax treatment of share-based compensation expenses for the purpose of determining intangible development costs under a company’s research and development cost sharing arrangement. While Cisco was not a party to the case, as a result of this ruling, the Company recorded a tax benefit of $158 million as a reduction to the provision for income taxes during fiscal 2010.

Additional reconciliations between GAAP and non-GAAP financial measures are provided in the tables that follow on page 11.

CONSOLIDATED BALANCE SHEETS

(In millions)

(Unaudited)


	July 30, 2011		July 31, 2010
ASSETS
Current assets:
Cash and cash equivalents	$	7,662	$	4,581
Investments		36,923		35,280
Accounts receivable, net of allowance for doubtful accounts of $204 at July 30, 2011 and $235 at July 31, 2010		4,698		4,929
Inventories		1,486		1,327
Financing receivables, net		3,111		2,303
Deferred tax assets		2,410		2,126
Other current assets		941		875

Total current assets		57,231		51,421
Property and equipment, net		3,916		3,941
Financing receivables, net		3,488		2,614
Goodwill		16,818		16,674
Purchased intangible assets, net		2,541		3,274
Other assets		3,101		3,206

TOTAL ASSETS	$	87,095	$	81,130


LIABILITIES AND EQUITY
Current liabilities:
Short-term debt	$	588	$	3,096
Accounts payable		876		895
Income taxes payable		120		90
Accrued compensation		3,163		3,129
Deferred revenue		8,025		7,664
Other current liabilities		4,734		4,359

Total current liabilities		17,506		19,233
Long-term debt		16,234		12,188
Income taxes payable		1,191		1,353
Deferred revenue		4,182		3,419
Other long-term liabilities		723		652

Total liabilities		39,836		36,845
Total equity		47,259		44,285

TOTAL LIABILITIES AND EQUITY	$	87,095	$	81,130

Certain reclassifications have been made to prior period amounts to conform to the current period’s presentation.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)


	Twelve Months Ended
	July 30, 2011			July 31, 2010
Cash flows from operating activities:
Net income	$	6,490		$	7,767
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization, and other		2,486			2,030
Share-based compensation expense		1,620			1,517
Provision for doubtful accounts		7			44
Deferred income taxes		(157	)		(477	)
Excess tax benefits from share-based compensation		(71	)		(211	)
Net gains on investments		(213	)		(223	)
Change in operating assets and liabilities, net of effects of acquisitions and divestitures:
Accounts receivable		298			(1,528	)
Inventories		(147	)		(158	)
Financing receivables, net		(1,534	)		(928	)
Other assets		275			(98	)
Accounts payable		(28	)		139
Income taxes payable		(156	)		55
Accrued compensation		(64	)		565
Deferred revenue		1,028			1,531
Other liabilities		245			148

Net cash provided by operating activities		10,079			10,173


Cash flows from investing activities:
Purchases of investments		(37,130	)		(48,690	)
Proceeds from sales of investments		17,538			19,300
Proceeds from maturities of investments		18,117			23,697
Acquisition of property and equipment		(1,174	)		(1,008	)
Acquisition of businesses, net of cash and cash equivalents acquired		(266	)		(5,279	)
Change in investments in privately held companies		(41	)		(79	)
Other		22			128

Net cash used in investing activities		(2,934	)		(11,931	)


Cash flows from financing activities:
Issuances of common stock		1,831			3,278
Repurchases of common stock		(6,896	)		(7,864	)
Short-term borrowings, maturities less than 90 days, net		512			41
Issuances of debt, maturities greater than 90 days		4,109			4,944
Repayments of debt, maturities greater than 90 days		(3,113	)		—
Excess tax benefits from share-based compensation		71			211
Dividends paid		(658	)		—
Other		80			11

Net cash (used in) provided by financing activities		(4,064	)		621

Net increase (decrease) in cash and cash equivalents		3,081			(1,137	)
Cash and cash equivalents, beginning of fiscal year		4,581			5,718

Cash and cash equivalents, end of fiscal year	$	7,662		$	4,581

Certain reclassifications have been made to prior period amounts to conform to the current period’s presentation.

ADDITIONAL FINANCIAL INFORMATION

(In millions)

(Unaudited)


	July 30, 2011			July 31, 2010
CASH AND CASH EQUIVALENTS AND INVESTMENTS
Cash and cash equivalents	$	7,662		$	4,581
Fixed income securities		35,562			34,029
Publicly traded equity securities		1,361			1,251

Total	$	44,585		$	39,861


INVENTORIES
Raw materials	$	219		$	217
Work in process		52			50
Finished goods:
Distributor inventory and deferred cost of sales		631			587
Manufactured finished goods		331			260

Total finished goods		962			847
Service-related spares		182			161
Demonstration systems		71			52

Total	$	1,486		$	1,327


PROPERTY AND EQUIPMENT, NET
Land, buildings, and building & leasehold improvements	$	4,760		$	4,470
Computer equipment and related software		1,429			1,405
Production, engineering, and other equipment		5,093			4,702
Operating lease assets		293			255
Furniture and fixtures		491			476

		12,066			11,308
Less accumulated depreciation and amortization		(8,150	)		(7,367	)

Total	$	3,916		$	3,941


OTHER ASSETS
Deferred tax assets	$	1,864		$	2,079
Investments in privately held companies		796			756
Other		441			371

Total	$	3,101		$	3,206


DEFERRED REVENUE
Service	$	8,521		$	7,428
Product:
Unrecognized revenue on product shipments and other deferred revenue		3,003			2,788
Cash receipts related to unrecognized revenue from two-tier distributors		683			867

Total product deferred revenue		3,686			3,655

Total	$	12,207		$	11,083


Reported as:
Current	$	8,025		$	7,664
Noncurrent		4,182			3,419

Total	$	12,207		$	11,083

SUMMARY OF SHARE-BASED COMPENSATION EXPENSE

(In millions)

The following table summarizes share-based compensation expense (in millions):


	Three Months Ended				Twelve Months Ended
	July 30, 2011		July 31, 2010		July 30, 2011		July 31, 2010
Cost of sales—product	$	14	$	14	$	61	$	57
Cost of sales—service		42		43		177		164

Share-based compensation expense in cost of sales		56		57		238		221

Research and development		108		114		481		450
Sales and marketing		160		158		651		602
General and administrative		59		62		250		244

Share-based compensation expense in operating expenses		327		334		1,382		1,296

Total share-based compensation expense	$	383	$	391	$	1,620	$	1,517

Certain reclassifications have been made to prior period amounts to conform to the current period’s presentation.

The income tax benefit for share-based compensation expense was $109 million and $444 million for the three and twelve months ended July 30, 2011, respectively, and $111 million and $415 million for the three and twelve months ended July 31, 2010, respectively.

RECONCILIATION OF GAAP TO NON-GAAP

COST OF SALES USED IN INVENTORY TURNS

(In millions)


	Three Months Ended
	July 30, 2011			April 30, 2011			July 31, 2010
GAAP cost of sales	$	4,334		$	4,207		$	4,043

Share-based compensation expense		(56	)		(60	)		(57	)
Amortization of acquisition-related intangible assets		(96	)		(102	)		(93	)
Significant asset impairments and restructurings		(4	)		(120	)		—

Non-GAAP cost of sales	$	4,178		$	3,925		$	3,893

CISCO SYSTEMS, INC. - FORM 8-K - EX-99.1 - PRESS RELEASE - August 10, 2011

Attached files

CISCO SYSTEMS, INC. Reports