8-KEarnings & Results

CISCO SYSTEMS, INC. 8-K Report, Financial Results (May 14, 2014)

Filed May 14, 2014For Securities:CSCO

Summary

Cisco Systems, Inc. (CSCO) filed a Form 8-K on May 14, 2014, to report its financial results for the fiscal third quarter ended April 26, 2014. The filing primarily contains a press release detailing these results, along with extensive explanations of the non-GAAP financial measures the company uses. These non-GAAP metrics, which exclude items like share-based compensation, acquisition-related costs, and significant litigation, are presented alongside GAAP measures to provide what Cisco believes is a more insightful view of operational trends and financial performance. Investors should note that this report does not incorporate the press release information by reference into other SEC filings and that the non-GAAP information is not intended to replace GAAP reporting. The company emphasizes that these non-GAAP measures are used internally for budgeting and performance review, and are intended to offer a clearer perspective on core business operations, inventory management (inventory turns), and liquidity (free cash flow), particularly in relation to returning capital to shareholders.

Key Highlights

  • 1Cisco Systems reported its fiscal third quarter 2014 results on May 14, 2014.
  • 2The 8-K filing includes a press release (Exhibit 99.1) detailing the company's financial and operational performance for the quarter ended April 26, 2014.
  • 3The report extensively discusses Cisco's use of non-GAAP financial measures, explaining the adjustments made to GAAP figures.
  • 4Key non-GAAP adjustments include the exclusion of share-based compensation expense and amortization of acquisition-related intangible assets.
  • 5Other excluded items from non-GAAP measures are purchase accounting adjustments to inventory, acquisition/divestiture costs, significant asset impairments/restructurings, and significant litigation/contingencies.
  • 6Cisco emphasizes that these non-GAAP measures are used in conjunction with GAAP measures for a more comprehensive understanding of business trends.
  • 7The company views free cash flow (defined as operating cash flow less capital expenditures) as a key liquidity measure for returning capital to shareholders via dividends and buybacks.

Frequently Asked Questions

The primary purpose of this 8-K filing is to report Cisco Systems' financial results for its fiscal third quarter ended April 26, 2014. It includes a press release that details these results and provides further context on the company's financial performance.

Non-GAAP financial measures are financial metrics that exclude certain items from the generally accepted accounting principles (GAAP) figures. Cisco uses these measures, such as non-GAAP net income and free cash flow, to provide investors with what it believes is a more useful view of ongoing operational trends and financial performance by excluding items like share-based compensation, acquisition-related costs, and significant one-time events that may not be reflective of the core business.

Cisco excludes several items from its non-GAAP measures, including share-based compensation expense, amortization of acquisition-related intangible assets, impact to cost of sales from purchase accounting adjustments to inventory, acquisition-related/divestiture costs, significant asset impairments and restructurings, significant litigation and other contingencies, and the income tax effects of these items, as well as significant tax matters.

This 8-K filing itself announces the reporting of the results but does not contain the specific financial figures. The actual detailed results for the fiscal third quarter ended April 26, 2014, are provided in the press release (Exhibit 99.1) that is furnished with this report.