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CSCO · CISCO SYSTEMS, INC.

32 filings

10-K

CSCO 10-K Annual Reports

CISCO SYSTEMS, INC. - 32 annual reports

Filing record · 2016–202610-K1110-Q328-K146

2026
CISCO SYSTEMS, INC. Annual Report, Year Ended Jul 25, 2026
Cisco Systems, Inc. reported a strong fiscal year 2026, demonstrating robust revenue growth and improved profitability. Total revenue increased by 12% to $63.3 billion, driven by a significant 16% rise in product revenue, with services revenue remaining flat. The company highlighted strong demand for AI infrastructure solutions from hyperscale customers, which contributed approximately 6% of total revenue, a substantial increase from less than 2% in the prior year. This demand is expected to remain a key growth driver in fiscal 2027. Despite a slight decrease in gross margin percentage due to product mix and higher memory costs, Cisco's operating income as a percentage of revenue saw a notable increase of 3.5 percentage points, largely attributed to revenue growth and disciplined expense management. The company continued to invest in key priority areas like AI, silicon, optics, and security, reflecting its strategic focus on securely connecting everything to enable customer outcomes. Cisco also returned significant capital to shareholders through dividends and stock repurchases, underscoring its commitment to shareholder value.
Sep 2, 2026
2025
CISCO SYSTEMS, INC. Annual Report, Year Ended Jul 26, 2025
Cisco Systems, Inc. (CSCO) reported fiscal year 2025 results characterized by overall revenue growth and solid margins, despite a decrease in operating income as a percentage of revenue. The company saw a 5% increase in total revenue year-over-year, driven by a 6% rise in product revenue and a 3% increase in services revenue. Notably, the acquisition of Splunk significantly boosted the Security and Observability segments, with Security revenue surging by 59% and Observability by 26%. Networking revenue experienced a 3% decline, attributed to normalized product shipments after a period of elevated levels. Geographically, all segments demonstrated revenue growth, with the Americas leading the increase. While Cisco continues to invest heavily in AI and key growth areas, the company faced headwinds including increased amortization of purchased intangible assets and share-based compensation expenses, contributing to a 1.8 percentage point decrease in operating income as a percentage of revenue. A legal dispute settlement also impacted the product cost of sales. Despite these factors, Cisco returned significant capital to shareholders through dividends and stock repurchases, maintaining a strong liquidity position with substantial cash and investments. The company remains focused on its strategy to securely connect everything, integrating AI across its portfolio to drive future growth.
Sep 3, 2025
2024
CISCO SYSTEMS, INC. Annual Report, Year Ended Jul 27, 2024
Cisco Systems, Inc. (CSCO) reported its fiscal year 2024 results, showcasing a challenging period marked by a decline in total revenue of 6% year-over-year, primarily driven by a 9% decrease in product revenue. This decline is attributed to customers taking longer to implement product shipments received in prior quarters and ongoing macroeconomic uncertainty. The company did see a 5% increase in services revenue and a notable 9% growth in total software revenue, significantly boosted by the acquisition of Splunk Inc. in the third quarter of fiscal 2024, which contributed $1.4 billion to revenue. Despite the revenue headwinds, Cisco demonstrated improved gross margins, up by 2.0 percentage points, driven by favorable product mix and productivity benefits. However, operating income as a percentage of revenue decreased due to increased operating expenses, particularly from the Splunk acquisition, higher restructuring charges, and amortization of intangible assets. Looking ahead, Cisco remains focused on its strategic priorities of modernizing infrastructure, improving cybersecurity, and harnessing the power of AI and data. The company is integrating AI across its product portfolios and sees significant demand for network connectivity to support AI workloads. While the fiscal year presented revenue declines, the company's acquisition of Splunk is expected to strengthen its security and observability offerings. Cisco continues to return capital to shareholders through dividends and stock repurchases, maintaining a strong balance sheet despite significant investments and debt associated with the Splunk acquisition.
Sep 5, 2024
2023
CISCO SYSTEMS, INC. Annual Report, Year Ended Jul 29, 2023
Cisco Systems, Inc. (CSCO) reported solid performance in its fiscal year ending July 28, 2023, with total revenue increasing by 11% year-over-year to $56.998 billion. This growth was driven by a 13% increase in product revenue, reaching $43.142 billion, and a 2% increase in service revenue, totaling $13.856 billion. The company highlighted an improvement in supply constraints during fiscal 2023, allowing for increased product deliveries and positively impacting revenue. Cisco continues its strategic shift towards software and subscription-based offerings, with total software revenue growing 12% and subscription revenue increasing by 16%. The company emphasized its commitment to innovation across its technology portfolio, focusing on key customer priorities such as transforming infrastructure, securing enterprises, powering hybrid work, reimagining applications, and driving sustainability. Cisco's strategy revolves around securely connecting everything and delivering a trusted customer experience. The report also detailed significant investments in research and development, sales, and marketing, alongside efforts to manage costs and operational efficiencies. Despite a challenging macroeconomic environment and intense competition, Cisco demonstrated resilience and continued investment in growth areas.
Sep 7, 2023
2022
CISCO SYSTEMS, INC. Annual Report, Year Ended Jul 30, 2022
Cisco Systems, Inc. (CSCO) reported its fiscal year 2022 results, characterized by a 3% increase in total revenue to $51.6 billion. This growth was driven by a 6% rise in product revenue, particularly in "Secure, Agile Networks," "Internet for the Future," "End-to-End Security," and "Optimized Application Experiences," which offset a 5% decline in "Collaboration" product revenue. The company experienced challenges from ongoing industry-wide supply constraints, leading to higher component and logistics costs, which impacted gross margins, causing them to decrease by 1.5 percentage points to 62.5%. Despite these pressures, Cisco demonstrated strong profitability, with operating income increasing by 9% and diluted earnings per share (EPS) growing by 13% to $2.82. The company is actively transforming its business model by increasing software and subscription-based offerings, aiming for greater customer flexibility and recurring revenue. Cisco also returned significant capital to shareholders through $7.7 billion in stock repurchases and $6.2 billion in dividends, reflecting its commitment to shareholder returns. The company continues to invest in R&D and strategic priorities like security and hybrid work solutions to drive future growth in a dynamic and competitive market.
Sep 8, 2022
2021
CISCO SYSTEMS, INC. Annual Report, Year Ended Jul 31, 2021
Cisco Systems, Inc. (CSCO) reported its annual results for the fiscal year ended July 31, 2021. The company experienced a modest 1% increase in total revenue compared to the previous fiscal year, reaching $49.8 billion. This growth was driven by a 4% increase in service revenue, while product revenue remained flat. Geographically, revenue saw growth in EMEA and APJC segments, while the Americas remained flat. The company's strategic priorities include reimagining applications, powering hybrid work, transforming infrastructure, and securing the enterprise. Cisco continues its business model transformation, with software and subscription-based offerings showing growth, indicating a strategic shift towards recurring revenue streams. The company faced a challenging macroeconomic environment, further impacted by the COVID-19 pandemic, which led to supply chain constraints and cost pressures that affected product gross margins. Despite these challenges, Cisco demonstrated resilience, maintaining strong cash flow from operations and returning significant capital to shareholders through dividends and stock repurchases. The company ended the fiscal year with a robust cash position, underscoring its financial stability. Cisco also highlighted ongoing investments in research and development to drive future innovation and maintain its competitive edge in the evolving technology landscape.
Sep 9, 2021
2020
CISCO SYSTEMS, INC. Annual Report, Year Ended Jul 25, 2020
Cisco Systems, Inc. (CSCO) reported its annual results for the fiscal year ended July 24, 2020. The company experienced a 5% year-over-year decline in total revenue to $49.3 billion, primarily driven by an 8% decrease in product revenue, impacted by global macroeconomic weakness and the COVID-19 pandemic. Despite the revenue decline, Cisco demonstrated resilience by improving its gross margin by 1.4 percentage points to 64.3%, attributed to productivity benefits and favorable product mix, partially offset by pricing pressures. Diluted earnings per share saw a modest 1% increase to $2.64, supported by share buybacks and a slight improvement in operating income as a percentage of revenue. The company continues its strategic transformation towards software and subscription-based offerings, with service revenue showing a 3% increase. Security products showed robust growth with a 12% increase in revenue. Cisco's focus remains on innovation, particularly in intent-based networking, security, collaboration, and cloud technologies, aiming to provide a highly secure, intelligent platform for its customers. The company also highlighted its ongoing commitment to returning capital to shareholders through dividends and share repurchases, maintaining a strong liquidity position despite the challenging global economic environment. Key risks highlighted include the ongoing impact of the COVID-19 pandemic on supply chains, demand, and operations, as well as competitive pressures, the need for continuous product innovation, and macroeconomic uncertainties. Management expressed confidence in its strategy and ability to navigate these challenges while investing in priority growth areas.
Sep 3, 2020
2019
CISCO SYSTEMS, INC. Annual Report, Year Ended Jul 27, 2019
Cisco Systems, Inc. (CSCO) reported a solid fiscal year ending July 27, 2019, with total revenue increasing by 5% to $51.9 billion. The company demonstrated growth across its key product categories, with Infrastructure Platforms up 7%, Applications up 15%, and Security up 16%. This growth was supported by strategic priorities focused on accelerating innovation, increasing the value of the network through intent-based networking technologies, and transforming its business model towards software and subscription offerings. Despite a challenging and competitive market environment, Cisco showed improved profitability, with operating income increasing by 16% and operating income as a percentage of revenue improving to 27.4%. The company returned significant capital to shareholders through stock repurchases and dividends, underscoring a commitment to shareholder value. While the service provider market presented ongoing uncertainty, Cisco's diversified revenue streams and strategic investments in growth areas position it for continued resilience and future growth.
Sep 5, 2019
2018
CISCO SYSTEMS, INC. Annual Report, Year Ended Jul 28, 2018
Cisco Systems, Inc. (CSCO) filed its 10-K for the fiscal year ended July 28, 2018, reporting a 3% increase in total revenue to $49.3 billion, driven by growth across its Infrastructure Platforms, Applications, and Security segments. Despite revenue growth, net income saw a significant decline of 99% primarily due to a substantial provisional tax expense of $10.4 billion related to the Tax Cuts and Jobs Act. The company continues its strategic shift towards software and subscription-based offerings, aiming to enhance network automation, security, and intelligence. Cisco demonstrated strong cash flow from operations, returning significant capital to shareholders through share repurchases and dividends. The company's strategic priorities include accelerating innovation with its "intent-based networking" technology, exemplified by the Catalyst 9000 series switches, increasing the value of its network through data insights and security, and transforming its business model towards recurring revenue. While the service provider market showed weakness, growth in commercial and enterprise sectors provided a counterbalance. Management highlighted investments in key growth areas like security and applications as crucial for future success, while acknowledging the competitive landscape and the ongoing transformation of the IT industry.
Sep 6, 2018
2017
CISCO SYSTEMS, INC. Annual Report, Year Ended Jul 29, 2017
Cisco Systems, Inc. (CSCO) reported its fiscal year 2017 results, concluding July 29, 2017. The company experienced a revenue decline of 2.5% year-over-year to $48.0 billion, largely driven by weaker performance in its Switching and NGN Routing segments, as well as a slowdown in the service provider market and emerging countries. Despite the top-line pressure, Cisco demonstrated resilience in its profitability, with operating income as a percentage of revenue largely stable and a strong focus on operational efficiencies and cost management, including restructuring efforts. Key strategic initiatives for fiscal year 2017 included accelerating innovation in areas like intent-based networking with the launch of the Catalyst 9000 series, strengthening its security portfolio, and shifting towards software and subscription-based offerings. The company continued to invest in growth areas such as Security and Wireless, which showed positive revenue growth. Cisco also maintained a strong liquidity position, generating substantial operating cash flow and returning significant capital to shareholders through dividends and stock repurchases.
Sep 7, 2017
2016
CISCO SYSTEMS, INC. Annual Report, Year Ended Jul 30, 2016
Cisco Systems, Inc. reported flat revenue for fiscal year 2016 compared to fiscal year 2015, with a 0.2% increase to $49.25 billion. This was driven by a 5.1% increase in service revenue, which offset a 1.3% decrease in product revenue. The company completed the sale of its Service Provider Video CPE Business in fiscal 2016, impacting comparable revenue figures. Profitability improved significantly, with net income increasing by 19.6% to $10.74 billion, and diluted earnings per share rising by 20.6% to $2.11, reflecting strong operational execution, productivity improvements, and a favorable tax settlement. Cisco continued to invest in priority growth areas like security and collaboration, with the security segment seeing a 12.7% revenue increase. The company also repurchased $3.9 billion in stock and paid $4.8 billion in dividends, underscoring a commitment to returning capital to shareholders.
Sep 8, 2016
2015
CISCO SYSTEMS, INC. Annual Report, Year Ended Jul 25, 2015
Cisco Systems, Inc.'s 2015 10-K report highlights a year of solid revenue growth (4.3%) reaching $49.2 billion, driven by increases in product and service revenues, and a notable improvement in operating income as a percentage of revenue (21.9%). The company's strategy continues to focus on digital transitions and providing secure, automated, and intelligent solutions, with key growth areas including Data Center and Security products, which saw significant year-over-year revenue increases of 22% and 12% respectively. Financially, Cisco demonstrated strong operating cash flow and continued its commitment to shareholder returns through significant stock repurchases ($4.2 billion) and dividends ($4.1 billion). The company also maintained a robust cash position, exceeding $60 billion in cash and investments. Despite challenges in the service provider market and certain emerging countries, Cisco's strategic investments in R&D and its product portfolio, particularly in security and cloud, position it for future growth.
Sep 8, 2015
2014
CISCO SYSTEMS, INC. Annual Report, Year Ended Jul 26, 2014
Cisco Systems, Inc.'s 2014 10-K filing reveals a challenging fiscal year marked by a 3% revenue decline to $47.1 billion, primarily driven by a 5% drop in product revenue. This downturn was influenced by reduced IT spending from service providers, weakness in emerging markets, and the impact of product transitions. The company also incurred a significant $655 million charge related to memory component remediation in certain older products. Despite these headwinds, Cisco continued to invest in growth areas like data center, security, and cloud, with Data Center product revenue showing a robust 27% increase. The company announced a significant restructuring plan impacting up to 6,000 employees (approximately 8% of its global workforce) to reinvest savings into key growth initiatives. Management anticipates that challenges in emerging markets, the service provider segment, and specific product transitions will persist into the near future. Cisco ended the fiscal year with a strong cash and investments position of $52.1 billion and generated $12.3 billion in operating cash flow, while also executing a substantial stock repurchase program of $9.5 billion.
Sep 9, 2014
2013
CISCO SYSTEMS, INC. Annual Report, Year Ended Jul 27, 2013
For the fiscal year ended July 27, 2013, Cisco Systems, Inc. (CSCO) reported a 5.5% increase in total revenue to $48.6 billion, driven by growth in both product (5%) and service (9%) revenues. The company experienced a notable 24.2% increase in net income to $9.98 billion, partly due to a significant tax benefit of $1 billion from a settlement with the IRS and the reinstatement of the R&D tax credit. Geographically, the Americas segment led revenue growth, while Data Center and Wireless products saw strong performance. Despite a challenging macroeconomic environment, Cisco demonstrated effective expense management, leading to an improvement in operating income margin. The company also continued its commitment to shareholder returns through dividends and stock repurchases, aligning with its free cash flow targets. Strategically, Cisco remains focused on its five foundational priorities, including leadership in core routing and switching, collaboration, data center virtualization and cloud, video, and architectures for business transformation. The company made significant acquisitions in fiscal 2013, notably NDS Group Limited, to bolster its Service Provider Video offerings, and Meraki, Inc. to strengthen its cloud-managed networking solutions. Cisco also announced plans for a workforce reduction of approximately 4,000 employees (5% of its global workforce) in August 2013 to rebalance resources and invest in growth areas.
Sep 10, 2013
2012
CISCO SYSTEMS, INC. Annual Report, Year Ended Jul 28, 2012
Cisco Systems, Inc.'s 10-K filing for the fiscal year ended July 27, 2012, reveals a company experiencing solid growth despite a challenging global economic environment. Net sales increased by 7% to $46.1 billion, driven by a 5% rise in product revenue and a significant 12% increase in service revenue. This growth was observed across all geographic segments, with particular strength in the Americas and Asia Pacific, Japan, and China (APJC). The company's strategic focus on five key priorities—leadership in core business, collaboration, data center virtualization and cloud, video, and architectures for business transformation—appears to be driving performance, especially in the rapidly growing Data Center segment, which saw an 87% increase in sales. Profitability also improved, with net income up 24% to $8.04 billion and diluted earnings per share increasing by 27% to $1.49. This was supported by effective expense management, leading to lower operating expenses as a percentage of revenue, and a decrease in restructuring charges. Cisco's strong financial position is further evidenced by its substantial cash and investments, which increased to $48.7 billion, enabling continued investment in innovation, strategic acquisitions (notably NDS Group Limited for $5 billion), and shareholder returns through repurchases and dividends.
Sep 12, 2012
2011
CISCO SYSTEMS, INC. Annual Report, Year Ended Jul 30, 2011
Cisco Systems, Inc. (CSCO) reported strong top-line growth in its fiscal year ended July 30, 2011, with total net sales increasing by 7.9% to $43.2 billion. This growth was driven by a 6.5% increase in product revenue and a robust 14.1% rise in service revenue, indicating a growing reliance on its service offerings. Geographically, all segments saw net sales increases, with Emerging Markets and Asia Pacific Markets demonstrating particularly strong growth. However, the company experienced a decline in gross margin by 2.6 percentage points, primarily due to increased sales discounts, unfavorable product pricing, and a shift in product mix. This was coupled with a significant increase in operating expenses, including substantial restructuring and other charges of $799 million, which led to a 16.4% decrease in net income and a 12.0% drop in diluted earnings per share. The company highlighted strategic investments in five foundational priorities: core routing and switching, collaboration, data center virtualization and cloud, video, and architectures for business transformation, while also initiating significant cost-cutting measures, including a workforce reduction, to align its operations with market transitions.
Sep 14, 2011
2010
CISCO SYSTEMS, INC. Annual Report, Year Ended Jul 31, 2010
Cisco Systems' fiscal 2010 Form 10-K (fiscal year ended July 31, 2010, a 53-week year) shows a return to growth after the fiscal 2009 downturn. Net sales rose about 10.9% to $40.0 billion, with growth in every geographic theater (U.S. and Canada +12%, Asia Pacific +17%, Japan +11%, Emerging Markets +9%, European Markets +5%). Net income increased about 27% to $7.8 billion and diluted EPS rose to $1.33 from $1.05, aided by a slightly higher gross margin (64.0%), lower operating expenses as a percentage of revenue, and a lower effective tax rate of 17.5%. Management noted the extra week added roughly 1% to revenue growth. The balance sheet remained strong, with cash and investments of $39.9 billion against $15.3 billion of debt, after $5.0 billion of new senior notes, $5.3 billion of acquisitions (including Starent, Tandberg and ScanSafe), $7.8 billion of buybacks and $1.0 billion of capex. Operating cash flow was $10.2 billion. Product backlog grew to $4.1 billion, and purchase commitments with contract manufacturers rose to $4.3 billion from $2.0 billion, reflecting supply-chain flexibility but adding potential excess-inventory risk if demand weakens. Management said it intends to begin paying a cash dividend in fiscal 2011, a notable shift for the company. The filing also flags material risks for investors: management describes the macro environment as uncertain, expects a new class of large, well-funded competitors in enterprise data centers, is making costly investments in market adjacencies (video, collaboration, virtualization/cloud, mobility), and faces a Brazilian tax claim of roughly $1.9 billion including interest and penalties, which the company considers without merit and has not reserved for.
Sep 21, 2010
2009
CISCO SYSTEMS, INC. Annual Report, Year Ended Jul 25, 2009
Cisco's fiscal 2009 10-K (fiscal year ended July 25, 2009) shows a year of deliberate contraction under macroeconomic stress. Net sales fell 8.7% to $36.1 billion from $39.5 billion, with product sales down 12.0% and service revenue up 8.5% to $7.0 billion. Net income declined 24% to $6.1 billion and diluted EPS fell 20% to $1.05. Gross margin held reasonably steady at 63.9% versus 64.1%, and operating expenses fell 1.5% in absolute dollars, though they rose as a share of revenue. Management reduced costs through an enhanced early retirement program and workforce reductions of just over 2,000 employees, and headcount fell by 584. Balance-sheet strength is a central investor point. Cash, cash equivalents and investments rose to $35.0 billion from $26.2 billion, helped by $4.0 billion of new senior notes issued in February 2009. Operating cash flow was $9.9 billion, down from $12.1 billion. Cisco repurchased 202 million shares for $3.6 billion, and $4.8 billion remained under its $62 billion authorization. Long-term debt rose to $10.3 billion. Roughly $29.1 billion of the cash and investments sits offshore, which creates a repatriation tax consideration. The filing also flags several risks. Service provider capital spending slowed, and high-end router sales fell about $1.1 billion. A $174 million tax charge followed a Ninth Circuit ruling (Xilinx), and a $550 million reduction to additional paid-in capital was recorded. Brazilian authorities have asserted import-tax claims with potential joint liability, and no loss range can be estimated. Management says the U.S. and select emerging countries will benefit from investment in market adjacencies such as the enterprise data center, collaboration and video, and it notes that backlog fell to $3.9 billion from $4.8 billion, which is a leading indicator to watch.
Sep 11, 2009
2008
CISCO SYSTEMS, INC. Annual Report, Year Ended Jul 26, 2008
Cisco Systems closed fiscal 2008 (year ended July 26, 2008) with record results: net sales rose 13.2% to $39.5 billion, net income increased 10% to $8.05 billion, and diluted EPS grew 12% to $1.31. Growth was broad-based across all five geographic theaters and all customer markets, with Emerging Markets (+40%) and Asia Pacific (+17%) leading, while the United States and Canada grew 10% but slowed in the second half, particularly in U.S. service provider sales. Gross margin expanded to 64.5% from 64.0%, driven by lower manufacturing costs and higher volume, partly offset by price pressure, while operating expenses rose 17.5% on headcount growth, with R&D at $5.2 billion. Advanced technologies (unified communications, video, security, wireless) grew 21% to $9.7 billion and now exceed routing as a share of product revenue. Cash generation remained strong, with operating cash flow of $12.1 billion and cash plus investments of $26.2 billion, though $24.4 billion of that is held offshore. Cisco repurchased 372 million shares for $10.4 billion and retained $8.4 billion of remaining buyback authorization. Backlog grew to $4.8 billion from $3.9 billion and deferred revenue rose to $8.9 billion, supporting visibility into future revenue. Management flagged risks that bear on forward performance: uncertain U.S. market conditions that could spread internationally, a slowdown in capital spending by some service provider customers with possible broader weakness ahead, dependence on a few contract manufacturers and a single Juarez, Mexico facility, price-focused competition from Asia (especially China), and an open Brazilian import-tax investigation. The company also disclosed a $6.5 billion senior note load, of which $6.0 billion principal is fixed rate and now exposed to interest-rate-driven fair value changes after swap terminations.
Sep 15, 2008
2007
CISCO SYSTEMS, INC. Annual Report, Year Ended Jul 28, 2007
Cisco's fiscal 2007 10-K (fiscal year ended July 28, 2007) reported record results: net sales rose 22.6% to $34.9 billion, net income rose 31% to $7.3 billion, and diluted EPS reached $1.17 versus $0.89. Growth was broad-based across the four largest theaters and product families. Acquisitions, especially Scientific-Atlanta (full-year contribution of $2.8 billion in sales) and WebEx, drove much of the top-line expansion, and advanced technologies grew about 44% to $8.1 billion. Emerging Markets was the fastest-growing theater at 39% growth, and service revenue grew about 20%. Profitability showed a mixed picture. Gross margin percentage fell to 64.0% from 65.8%, mainly because Scientific-Atlanta carries a lower-margin model, along with higher sales discounts and rebates. Operating expenses grew 17.4% to $13.2 billion, though they declined as a percentage of revenue. Share-based compensation under SFAS 123(R) remained a drag at roughly $965 million total. The effective tax rate dropped to 22.5% from 26.9%, which helped net income. Cash generation was strong, with operating cash flow of $10.1 billion and cash and investments of $22.3 billion. The company repurchased 297 million shares for $7.8 billion, leaving $8.8 billion authorized, while spending $3.3 billion on acquisitions. Key risks flagged in the filing include lumpy service provider demand, price competition from Asian rivals (especially China), component supply constraints, reliance on a single Juarez, Mexico facility for Scientific-Atlanta products, and the integration risk from acquisitions. The company also disclosed that CFO Dennis Powell will retire around February 2008, with Frank Calderoni named as successor, and it took on $6.5 billion of senior notes in 2006 to fund the Scientific-Atlanta deal.
Sep 18, 2007
2006
CISCO SYSTEMS, INC. Annual Report, Year Ended Jul 29, 2006
Cisco Systems' fiscal 2006 10-K (fiscal year ended July 29, 2006) shows a company in the middle of a major strategic expansion. Net sales rose 14.9% to $28.5 billion, and net income was essentially flat at $5.58 billion versus $5.74 billion, held back by $836 million of after-tax stock-based compensation expense recognized for the first time under SFAS 123(R). Diluted EPS was $0.89 versus $0.87. Growth was driven by advanced technologies (up 34% to $6.2 billion), switching and routing (each up roughly 9% or more), and the February 2006 acquisition of Scientific-Atlanta for about $7.1 billion, which contributed $989 million of sales in five months but compressed gross margin to 65.8% from 67.2%. Balance sheet and cash flow changes are notable. Cisco issued $6.5 billion of senior notes to fund the Scientific-Atlanta deal, leaving $6.3 billion of long-term debt, and it repurchased $8.3 billion of stock during the year. Operating cash flow was a strong $7.9 billion, and cash and investments totaled $17.8 billion. Goodwill rose to $9.2 billion and purchased intangibles to $2.2 billion, so future amortization and impairment risk is higher. Backlog grew to about $3.0 billion from $2.0 billion. Management also flagged risks including price-focused competition from Asia (especially China), volatility in service provider demand, customer financing exposure, and the pending settlement of a $91.75 million securities class action. For investors, the key takeaways are that the top line and balance sheet remain strong, while margin pressure from the Scientific-Atlanta integration and the new stock-compensation expense weighed on earnings growth. The company's ability to execute on its video, service provider, and advanced technology strategy, and to manage the lower-margin mix, will determine whether the investments translate into durable profit growth.
Sep 18, 2006
2005
CISCO SYSTEMS, INC. Annual Report, Year Ended Jul 30, 2005
Cisco Systems' fiscal 2005 10-K (fiscal year ended July 30, 2005) reported a strong year of top-line and earnings growth. Net sales rose 12.5% to $24.8 billion from $22.0 billion, and net income increased about 30% to $5.7 billion, or $0.87 diluted EPS versus $0.62 in fiscal 2004 (fiscal 2004 included a $567 million non-cash cumulative accounting charge). Growth was broad-based across theaters, led by switches (up 12.5%) and advanced technologies (up 32.1%), while routers grew only 1.7%. Operating income rose to $7.4 billion, and operating cash flow reached $7.6 billion. Margins moved in the wrong direction. Gross margin fell to 67.2% from 68.6%, with product gross margin down 1.3 points on lower-margin switching and home networking mix and pricing pressure, and service gross margin down 1.8 points due to investment in advanced services. Management also flagged price-focused competitors from Asia, particularly China, and sales in China and Japan were weak. Operating expenses declined as a share of revenue (36.3% versus 39.0%), which supported profitability despite the margin pressure. Capital allocation was dominated by buybacks: Cisco repurchased $10.2 billion (540 million shares) in fiscal 2005, bringing cumulative repurchases to $27.2 billion, with $7.8 billion remaining under a $35 billion authorization. Cash and investments fell to $16.1 billion from $19.3 billion as a result. The filing also highlights risks, including dependence on service provider spending, which the company calls volatile, inventory and channel complexity, component supply constraints, and pending accounting changes (SFAS 123(R) expensing of stock options beginning fiscal 2006, expected to reduce diluted EPS by about $0.12 to $0.14).
Sep 19, 2005
2004
CISCO SYSTEMS, INC. Annual Report, Year Ended Jul 31, 2004
Cisco Systems' fiscal 2004 (year ended July 31, 2004) showed a strong recovery from the prior year's downturn. Net sales rose 16.8% to $22.0 billion from $18.9 billion, and net income climbed 23% to $4.4 billion, or $0.62 per diluted share. Growth was broad-based across all four geographic theaters (Americas, EMEA, Asia Pacific, Japan), driven by a gradual recovery in enterprise and service provider IT capital spending. Gross margin, however, compressed to 68.6% from 70.1%, reflecting product mix shifts toward lower-margin home networking products acquired with Linksys, along with pricing pressure. Operating expenses fell as a share of sales to 39.0% from 42.1%, which supported operating income growth of about 29% to $6.3 billion. Fiscal 2004 also included a one-time $567 million non-cash charge from the consolidation of Andiamo Systems under FIN 46(R), and it was a 53-week year. The balance sheet remains very strong. Cash and investments totaled $19.3 billion, and operating cash flow reached $7.1 billion. Cisco returned capital aggressively, repurchasing 408 million shares for $9.1 billion during the year, with $8.1 billion of authorization remaining. Shareholders' equity declined to $25.8 billion because buybacks exceeded earnings retention, and retained earnings fell to $3.2 billion, which management warned could lead to an accumulated deficit if repurchases continue. Advanced Technologies, which include security, IP telephony, storage networking, wireless, optical, and home networking, grew 71% to $3.4 billion and now make up 18.5% of product sales, signaling a meaningful diversification beyond core routing and switching. Key risks for investors include the cyclical and volatile service provider market, dependence on contract manufacturers and single-source components, rising inventory levels, competition from Asian entrants and large telecom equipment vendors, and the unresolved shareholder class action and derivative litigation stemming from 2001. Management described its Intelligent Information Network strategy as a long-term bet that could be of limited value if the networking market evolves differently than anticipated.
Sep 20, 2004
2003
CISCO SYSTEMS, INC. Annual Report, Year Ended Jul 26, 2003
Cisco's fiscal 2003 10-K (fiscal year ended July 26, 2003) shows a company that stabilized revenue after a difficult two years while sharply improving profitability. Net sales were $18.9 billion, essentially flat versus $18.9 billion in fiscal 2002 (down 0.2%), with product sales down 0.7% and service revenue up 2.1% to $3.3 billion. Net income rose 89% to $3.6 billion ($0.50 diluted EPS vs. $0.25), helped by a 6.6-point expansion in gross margin to 70.1%, driven mainly by lower manufacturing and inventory-related costs, lower standard component costs, and the absence of the prior-year inventory charges that depressed fiscal 2002. Operating expenses fell 8% as R&D, sales and marketing spending declined, and the company also took smaller investment impairment charges than in the prior year ($520 million in net losses and impairments versus $1.1 billion). The balance sheet remains very strong, with $20.7 billion in cash and investments, although that figure fell $804 million as Cisco repurchased $6.0 billion of its own stock during the year. Operating cash flow was $5.2 billion, down from $6.6 billion, and capital expenditures dropped sharply to $717 million from $2.6 billion. Management's risk factors are notably cautious: they state they do not expect the trend of lower service provider capital spending to reverse in the near term, and they flag gross margin sustainability, inventory management, the pending Andiamo acquisition (which will require a roughly $400 million non-cash charge on adoption of FIN 46 and ongoing variable stock compensation adjustments), and an ongoing securities class action. For investors, the key question is whether the margin recovery and buybacks can be sustained without a meaningful revenue rebound. Demand from service providers remains weak, product revenue declined in the Americas and Japan, and growth came mainly from security, IP telephony, and the Linksys consumer acquisition, while routers fell 11.4%. The filing portrays a company that has restored earnings power through cost control and margin management, but top-line growth remains the unresolved issue.
Sep 10, 2003
2002-A
CISCO SYSTEMS, INC. Annual Report (Amendment), Year Ended Jul 27, 2002
This Form 10-K/A is a narrow amendment to Cisco Systems' annual report, filed solely to correct clerical errors in the Equity Compensation Plan Information table and related footnotes (4) and (5) in Item 12. It contains no new financial statements, operating results, or business discussion. The amendment states that it does not reflect events after the original Form 10-K and does not otherwise modify the original disclosures. The corrected Note 10 data in the original filing (pages 41-44 of the Annual Report to Shareholders) is the reference point for the figures. As of July 27, 2002, the corrected table shows 1,175,637,039 shares issuable upon exercise of outstanding options under shareholder-approved plans at a weighted average exercise price of $27.57, with 745,197,399 shares remaining available for future issuance. Plans not approved by shareholders (the 1997 Supplemental Stock Incentive Plan) had 2,728,273 options outstanding at $34.89 and 6,186,799 shares available. In total, 1,178,365,312 options were outstanding at a weighted average price of $27.59, with 751,384,198 shares available for future grants. The table excludes 27,922,526 shares issuable under options assumed through acquisitions, at a weighted average exercise price of $9.57, on which no new grants may be made. For investors, the key takeaway is the scale of potential equity dilution from employee compensation plans, which the corrected figures quantify more accurately than the original Item 12 table. Because the amendment changes only disclosure tables, it does not alter Cisco's reported revenue, earnings, or balance sheet. Readers should refer to the original 10-K and the financial statements for those.
Nov 21, 2002
2002
CISCO SYSTEMS, INC. Annual Report, Year Ended Jul 27, 2002
Cisco Systems' fiscal 2002 10-K (fiscal year ended July 27, 2002) shows a company under significant strain from the telecom and IT capital spending downturn, but with a healthier profit profile than the prior year. Net sales fell 15.2% to $18.9 billion from $22.3 billion, driven mainly by weak service provider demand in the Americas and EMEA. Net income swung to $1.9 billion (diluted EPS $0.25) from a $1.0 billion loss in fiscal 2001, which had been depressed by a $2.2 billion excess inventory charge and $1.2 billion in restructuring costs. Fiscal 2002 results also included an $858 million pre-tax impairment on publicly traded equity investments and $699 million in amortization of purchased intangibles. Beneath the headline numbers, operating quality improved meaningfully. Product gross margin rose to 62.3% from 47.9%, though much of that reflects the absence of the prior-year inventory charge; excluding it, product margin was roughly 58.9% versus 58.4%. Operating expenses fell sharply, with R&D down 12.1%, sales and marketing down 19.5%, and G&A down 20.6%. Cash and investments grew to $21.5 billion, operating cash flow was $6.6 billion, and inventory was cut nearly in half to $880 million. Service revenue grew 18.7% to $3.2 billion and carries higher margins, which is a meaningful shift in the revenue mix. Management also repurchased about $1.9 billion of stock and raised the buyback authorization to $8 billion. Investors should weigh the cautionary signals in the filing. Management stated it does not expect the trend of lower service provider capital spending to reverse in the near term, and the company warned that revenue is hard to predict and that acquisitions, including the pending Andiamo transaction with a potential purchase price of up to $2.5 billion in stock, carry integration and valuation risk. Securities class action and derivative lawsuits from 2001 remain pending. The filing also notes that the company has never paid cash dividends.
Sep 18, 2002
2001
CISCO SYSTEMS, INC. Annual Report, Year Ended Jul 28, 2001
Cisco's fiscal 2001 10-K (fiscal year ended July 28, 2001) shows a sharp downturn after a period of rapid growth. Net sales rose 17.8% to $22.29 billion, but the company posted a net loss of $1.01 billion, or $(0.14) per share, compared with net income of $2.67 billion in fiscal 2000. The loss was driven by a $2.77 billion provision for excess inventory and purchase commitments (including a $2.25 billion third-quarter charge, partly offset by a $187 million fourth-quarter benefit), $1.17 billion in restructuring costs and special charges, $1.06 billion of goodwill and intangible amortization, and $855 million of in-process R&D. Gross margin fell to 49.7% from 64.4%, and the second half of the year saw a steep decline in demand, with quarterly sales falling from $6.75 billion in the second quarter to $4.30 billion in the fourth. On a pro forma basis, which excludes these one-time and non-cash items, Cisco reported net income of $3.09 billion, or $0.41 per diluted share, though this non-GAAP measure is not a substitute for GAAP results. Management responded with an April 2001 restructuring program targeting about $1 billion in annualized pretax savings, the elimination of roughly 6,000 positions (about 4,700 terminated to date), and facility consolidation. Balance sheet strength remains significant: cash and investments totaled $18.52 billion, operating cash flow was $6.39 billion, and the company carries no debt drawn on its $500 million credit line. Investors should weigh several risks. Cisco's publicly held equity investments lost $5.76 billion in unrealized gains during the year, the company has $1.68 billion of remaining excess inventory reserve, and management expects economic and capital spending weakness to persist. Backlog fell to $2.03 billion from $3.40 billion a year earlier, and a securities class action and related derivative suits were filed in April 2001 alleging misleading statements between August 1999 and April 2001. The company also faces potential SEC scrutiny of in-process R&D valuations, and SFAS 142 will change goodwill accounting starting in fiscal 2002.
Sep 24, 2001
2000
CISCO SYSTEMS, INC. Annual Report, Year Ended Jul 29, 2000
Cisco Systems, Inc. (CSCO) presented a strong financial performance for the fiscal year ending July 29, 2000, characterized by robust revenue growth and significant expansion. The company solidified its position as a leader in Internet networking solutions, offering a comprehensive suite of hardware, software, and services. This growth was fueled by increasing demand across its core product lines, including routers and switches, and supported by strategic acquisitions and alliances aimed at broadening its end-to-end capabilities. Cisco's extensive global sales force and a multi-channel distribution approach effectively reached diverse customer segments, from large enterprises and service providers to small and medium-sized businesses. The company demonstrated significant investment in research and development to maintain its competitive edge in a rapidly evolving technological landscape, while also managing the complexities of global operations and a dynamic market. Financially, Cisco reported substantial increases in net sales and maintained healthy profitability, despite increased operating expenses related to growth initiatives and R&D investments. The company's balance sheet showed a significant increase in assets, driven by acquisitions and strong operating cash flow, leading to a substantial cash and investment position. While the company highlighted various risk factors, including intense competition, reliance on component supply, and the inherent risks of acquisitions, its strategic focus on Internet infrastructure and continuous innovation positioned it for continued growth in the digital economy. Investors should note the company's aggressive acquisition strategy and the significant expenditure on R&D as key indicators of its forward-looking approach.
Sep 29, 2000
1998
CISCO SYSTEMS, INC. Annual Report, Year Ended Jul 25, 1998
Cisco Systems' fiscal 1998 10-K (year ended July 25, 1998) shows a company at peak growth momentum. Net sales rose 31.3% to $8.46 billion from $6.44 billion, and net income grew 28.7% to $1.35 billion. Diluted EPS was $0.84 (adjusted for the September 1998 three-for-two split), up from $0.68. Excluding nonrecurring purchased R&D charges of $594 million and a $5 million investment gain, pro forma diluted EPS would have been $1.17. Gross margin held steady at 65.5%, and operating cash flow more than doubled to $2.88 billion. Cash, short-term investments and investments totaled $5.2 billion, and shareholders' equity reached $7.1 billion. The filing also flags several headwinds. Sales growth in Japan and much of Asia slowed, and international sales fell to 40.9% of total from 43.5%. Management expects gross margins to decline over time as lower-margin access and switching products for small and medium businesses grow faster than its high-margin router business. R&D expense is expected to grow faster than sales, and management warned that quarterly results will be hard to predict. Other risks include a Lucent patent infringement suit covering eight patents, growing competition from large telecom equipment vendors such as Lucent, Nortel and Ericsson, dependence on a few single-source component suppliers, and concentration of headquarters and manufacturing in Silicon Valley, which is exposed to earthquakes. For investors, the central question is whether Cisco can keep growing revenue at a high rate while holding margins as it moves into lower-priced access products and into the telecom carrier market. The filing supports strong near-term profitability and a large cash position, but it also signals that growth and margins may become harder to sustain.
Sep 25, 1998
1997
CISCO SYSTEMS, INC. Annual Report, Year Ended Jul 26, 1997
Cisco Systems' fiscal 1997 10-K (year ended July 26, 1997) shows a company growing rapidly but with signs of a slowing growth rate. Net sales rose 57.2% to $6.44 billion from $4.10 billion, and net income climbed 14.8% to $1.05 billion, or $1.52 per share. Those reported figures were depressed by $508.4 million of purchased research and development charges from acquisitions, while a $152.7 million realized gain on the sale of a minority stock investment partially offset them. Excluding these nonrecurring items, pro forma net income would have been about $1.41 billion, or $2.05 per share, per the filing's selected financial data. The filing also flags several warning signs. Gross margin edged down to 65.2% from 65.6%, driven by a shift toward lower-margin access and switching products for small and medium-sized businesses, and management expects further margin compression. Sales growth slowed in Japan, France, and Germany, and the international share of sales fell to 43.5% from 48.2%. Days sales outstanding rose to 60 from 44, and accounts receivable grew 87.9% against 57.2% sales growth. Management also noted that sales tend to cluster in the last month of each quarter, which makes quarterly results hard to predict. Balance sheet strength remains a clear positive. Cash, short-term investments, and long-term investments totaled $2.5 billion, shareholders' equity reached $4.29 billion, and the company carries no borrowings under its $500 million credit line. Management believes existing resources will cover working capital and capital expenditure needs through fiscal 1998. Risk factors highlighted by the company include competition from larger telecom equipment makers such as Lucent, Ericsson, and Nortel, industry consolidation, Year 2000 spending diversion, and dependence on acquisitions to fill product gaps.
Oct 22, 1997
1996
CISCO SYSTEMS, INC. Annual Report, Year Ended Jul 28, 1996
Cisco Systems' fiscal 1996 10-K (year ended July 28, 1996) shows a company in hyper-growth. Net sales rose 83.5% to $4.10 billion from $2.23 billion, and net income more than doubled to $913.3 million, or $1.37 per share, up from $0.72. Operating income reached $1.40 billion, and operating margins held near 34%, with gross margin at 65.6%, down modestly from 66.7% as lower-margin Access and Workgroup products gained share. Management explicitly warned that gross margins will keep declining and that sales growth will slow, so investors should expect the pace of 1996 to be hard to repeat. The balance sheet is strong. Cash, short-term investments and investments totaled $1.87 billion, there are no borrowings under a $100 million credit line, and shareholders' equity grew to $2.82 billion. Results are inflated by the pooling-of-interests accounting used for the July 1996 StrataCom merger, which issued about 76.4 million shares and restated prior periods. Several acquisitions are pending, including a $200 million cash purchase of Telebit's MICA assets and an approximately $79 million stock deal for Netsys. Management flagged that the Telebit charge for purchased R&D could depress net income in the following quarter. The main risks cited are customer concentration risk, component shortages (particularly ASICs), integration of StrataCom, the outcome of litigation over the San Jose land purchase, and Proposition 211 on California's November 1996 ballot, which could increase securities-fraud lawsuits against the company. Cisco's share price ranged from $26 to $59 during fiscal 1996, and the company pays no dividends.
Oct 25, 1996
1995
CISCO SYSTEMS, INC. Annual Report, Year Ended Oct 26, 1995
Cisco Systems' fiscal 1995 10-K (year ended July 30, 1995) shows a company in hypergrowth with strong profitability. Net sales rose 59.2% to $1.979 billion from $1.243 billion, and net income grew 33.7% to $421.0 million, or $1.52 per share. Gross margin held at a high 67.4%, operating income reached $642.9 million, and the company ended the year with $1.38 billion in shareholders' equity and $1.76 billion in total assets. Growth came from routers, the Cisco 7000 and 2500 families, and early traction in high-speed switching and ATM. Investors should weigh several caveats. Management explicitly guided that revenue growth would slow in future periods, that gross margins would decline as lower-margin remote access and switching products grow faster than core routers, and that R&D and sales spending as a share of sales would rise. Fiscal 1995 also included a one-time $95.8 million purchased R&D charge from the LightStream ATM acquisition, which depressed the second quarter's earnings. Quarterly results have shown volatility, and the company flagged that its operating results depend heavily on timely new product introductions and on semiconductor supply, which has been tight. Balance-sheet strength is a clear positive. Cash, short-term investments, and long-term investments together grew substantially, the company has no borrowings against a $100 million credit line, and it repurchased about 2.1 million shares during the year. Pending acquisitions of Grand Junction Networks (pooling of interests, about 5.0 million shares) and Combinet (about 2.0 million shares) would expand its Fast Ethernet and remote access offerings. The stock is volatile and has never paid a cash dividend.
Oct 26, 1995