8-KOther Events

CISCO SYSTEMS, INC. 8-K Report, Corporate Update (Jun 7, 2013)

Filed June 7, 2013For Securities:CSCO

Summary

Cisco Systems, Inc. (CSCO) has filed an 8-K report detailing a significant patent litigation settlement with TiVo Inc., along with ARRIS Group, Inc. and Google Inc. The core of the agreement involves Cisco paying TiVo a one-time lump sum of $294 million to settle all outstanding patent infringement claims and to secure a perpetual license to certain patents. This settlement is designed to resolve current disputes and provide a clearer future licensing landscape for Cisco in the video technology space. For investors, the immediate financial impact is a charge expected to reduce GAAP earnings per share by approximately $0.03 in Cisco's fourth quarter of fiscal 2013. Importantly, this charge will not affect non-GAAP earnings per share, which is a key metric many investors focus on for operational performance. Cisco anticipates the remaining balance of the settlement charges will be recognized as future licensing fees and does not expect them to materially impact future operations, cash flows, or financial position.

Key Highlights

  • 1Cisco entered into a settlement agreement with TiVo Inc. on June 6, 2013, to resolve all outstanding patent litigation.
  • 2Cisco will pay TiVo a one-time lump sum of $294 million as part of the settlement.
  • 3The agreement grants Cisco a perpetual license to certain patents from TiVo.
  • 4A limited cross-license for the video field and cross-covenants not to sue are also included.
  • 5The settlement is expected to reduce Cisco's GAAP earnings per share by approximately $0.03 in Q4 fiscal 2013.
  • 6The settlement charges will not impact Cisco's non-GAAP earnings per share.
  • 7Cisco does not anticipate material future impacts on its results of operations, cash flows, or financial position from this settlement.

Frequently Asked Questions

This filing announces a significant settlement agreement between Cisco Systems, Inc. and TiVo Inc. to resolve all ongoing patent litigation between them. Other parties involved in the broader agreement include ARRIS Group, Inc. and Google Inc.

Cisco will pay TiVo a single lump sum of $294 million upon the execution of the settlement agreement, which occurred around June 6, 2013.

Cisco receives a perpetual license to specific patents that were part of the dispute. The agreement also includes a limited cross-license for the video field and mutual agreements not to sue each other on certain patents for five years.

Cisco expects to recognize charges impacting its GAAP earnings per share by approximately $0.03 in the fourth quarter of fiscal year 2013. However, these charges will not affect its non-GAAP earnings per share. Cisco believes the remaining settlement costs recognized as future licensing fees will not materially impact its future financial performance.