Summary
Cisco Systems, Inc. (CSCO) filed an 8-K on August 12, 2015, to report its financial results for the fourth quarter and full fiscal year 2015, ending July 25, 2015. The report primarily directs investors to an accompanying press release (Exhibit 99.1) for detailed financial figures. A key aspect of this filing is Cisco's extensive use and explanation of non-GAAP financial measures. The company emphasizes that these non-GAAP figures, which exclude items like share-based compensation, acquisition-related costs, and other one-time or non-recurring charges, are provided alongside GAAP measures to offer investors a clearer view of ongoing business trends and operational performance.
Key Highlights
- 1Cisco Systems reported its Q4 and full fiscal year 2015 earnings, with detailed results provided in an accompanying press release (Exhibit 99.1).
- 2The filing emphasizes Cisco's significant use of non-GAAP financial measures, including non-GAAP net income, gross margins, operating expenses, and earnings per share.
- 3The company provides a detailed explanation of the specific items excluded from GAAP to arrive at their non-GAAP figures, such as share-based compensation and amortization of acquisition-related intangibles.
- 4Cisco states its belief that non-GAAP measures, when presented with GAAP results, offer useful insights into financial and business trends, as well as historical and projected operational results.
- 5The report highlights the calculation and importance of non-GAAP inventory turns and free cash flow, with free cash flow defined as operating cash flow less capital expenditures.
- 6Cisco management uses these non-GAAP measures for internal budgeting and reviewing financial results, noting that exclusions may change over time.
- 7The filing serves as a notification of the earnings release and does not incorporate the press release information into SEC filings for liability purposes under Section 18 of the Exchange Act or Sections 11/12 of the Securities Act.
Frequently Asked Questions
Cisco provides non-GAAP financial measures because they believe these metrics, when presented alongside GAAP results, offer a more useful view of ongoing operational performance and business trends. They exclude items such as share-based compensation and acquisition-related costs, which are considered non-cash or not directly reflective of the core, ongoing business operations.
Cisco typically excludes expenses such as share-based compensation, 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 related income tax effects and significant tax matters.
Cisco defines free cash flow as net cash provided by operating activities less cash used to acquire property and equipment. They consider it a key liquidity measure because it represents cash available for strategic investments, acquisitions, stock repurchases, and dividends, reflecting their intent to return a stated percentage of free cash flow to shareholders.
No, the information in the accompanying press release is furnished as an exhibit and is not considered 'filed' for purposes of Section 18 of the Securities Exchange Act of 1934 or sections 11 and 12(a)(2) of the Securities Act of 1933. This means the company generally avoids liability under these specific sections for the content of the furnished press release.