01—Abstract
Summary
Summary of the 10-K filed September 10, 2013. Cited figures are marked; the original filing is the authoritative source.
For the fiscal year ended July 27, 2013, Cisco Systems, Inc. (CSCO) reported a 5.5% increase in total revenue to $48.6 billiona, 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 billionb, 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%c of its global workforce) in August 2013 to rebalance resources and invest in growth areas.
02—Key points
Key Highlights
- Total revenue increased by 5.5% to $48.6 billion in fiscal year 2013.
- Net income rose significantly by 24.2% to $9.98 billion.
- A substantial tax benefit of $1 billion positively impacted net income.
- Product revenue grew by 5%, and service revenue increased by 9%.
- Data Center and Wireless product categories showed particularly strong growth.
- Acquisitions of NDS Group Limited and Meraki, Inc. were completed to strengthen strategic focus areas.
- A workforce reduction of approximately 4,000 employees was announced to rebalance resources.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2013, Cisco Systems, Inc. kept $0.21.
- Revenue$48.61B100.0%
- Cost of revenue−$19.17B39.4%
- Gross profit$29.44B60.6%
- Operating costs−$18.24B37.5%
- Operating income$11.20B23.0%
- Interest, other & tax−$1.21B2.5%
- Net income$9.98B20.5%
Where FY2013 revenue went
$48.61B- Cost of revenue: $19.17B, 39% of revenue
- Other operating costs: $12.30B, 25% of revenue
- Net income: $9.98B, 21% of revenue
- R&D: $5.94B, 12% of revenue
- Interest, other & tax: $1.21B, 2.5% of revenue
Kept 21% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2013filed September 10, 2013Financial Statements
FY2013 against FY2012
| Line item | FY2013FY2012 | Change |
|---|---|---|
| Revenue | $48.61B$46.06B | +5.5% |
| Cost of Revenue | $19.17B$17.85B | +7.4% |
| Gross Profit | $29.44B$28.21B | +4.4% |
| R&D Expenses | $5.94B$5.49B | +8.3% |
| Operating Expenses | $18.24B$18.14B | +0.6% |
| Operating Income | $11.20B$10.06B | +11.2% |
| Interest Expense | $583.00M$596.00M | −2.2% |
| Net Income | $9.98B$8.04B | +24.2% |
| EPS (Basic) | $1.87$1.50 | +24.7% |
| EPS (Diluted) | $1.86$1.49 | +24.8% |
| Shares Outstanding (Basic) | 5.33B5.37B | −0.8% |
| Shares Outstanding (Diluted) | 5.38B5.40B | −0.4% |
05—Questions
Frequently Asked Questions
What were the main drivers of Cisco's revenue growth in fiscal year 2013?
Cisco's revenue growth was driven by a 5% increase in product revenue and a 9% increase in service revenue. Specific product categories like Data Center and Wireless experienced strong demand, and the acquisition of NDS Group Limited contributed significantly to the Service Provider Video segment.
How did Cisco manage its expenses and profitability in fiscal year 2013?
Cisco effectively managed its expenses, leading to a decrease in R&D, Sales & Marketing, and G&A as a percentage of revenue. This, combined with revenue growth and lower restructuring charges, resulted in an 11% increase in operating income and an improvement in operating income as a percentage of revenue.
What significant strategic moves did Cisco make during fiscal year 2013?
Cisco focused on its five foundational priorities and made key acquisitions, including NDS Group Limited (for video solutions) and Meraki, Inc. (for cloud networking). Additionally, the company announced a workforce reduction plan impacting approximately 4,000 employees to reallocate resources towards growth areas.
Were there any significant legal matters or risks disclosed in the filing?
The filing mentions a substantial legal proceeding with Brazilian authorities concerning alleged tax evasion, with total asserted claims aggregating approximately $3.1 billion. Cisco believes these claims are without merit and is defending vigorously. Additionally, a patent litigation settlement with TiVo resulted in a $294 million payment and a perpetual license.
06—Continue