Cisco Systems Earnings 2021-01-23

Balance Sheet	Income Statement	Cash Flow
Assets, Equity	Rev, G Profit, Net Income	Ops, Inv, Fin

csco-20210123

Table of Contents

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_____________________________________

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended January 23, 2021


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-39940

_____________________________________

CISCO SYSTEMS, INC.

(Exact name of registrant as specified in its charter)


Delaware						77-0059951
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification Number)

170 West Tasman Drive

San Jose, California 95134

(Address of principal executive office and zip code)

(408) 526-4000

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and formal fiscal year, if changed since last report.)

_____________________________________

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001 per share	CSCO	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Number of shares of the registrant’s common stock outstanding as of February 11, 2021: 4,221,785,547

____________________________________

Table of Contents

Cisco Systems, Inc.

Form 10-Q for the Quarter Ended January 23, 2021

INDEX

Page

Part I

Financial Information

Item 1.

Financial Statements (Unaudited)

Consolidated Balance Sheets at January 23, 2021 and July 25, 2020

Consolidated Statements of Operations for the Three and Six Months Ended January 23, 2021 and January 25, 2020

Consolidated Statements of Comprehensive Income for the Three and Six Months Ended January 23, 2021 and January 25, 2020

Consolidated Statements of Cash Flows for the Six Months Ended January 23, 2021 and January 25, 2020

Consolidated Statements of Equity for the Three and Six Months Ended January 23, 2021 and January 25, 2020

Notes to Consolidated Financial Statements

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Item 4.

Controls and Procedures

Part II.

Other Information

Item 1.

Legal Proceedings

Item 1A.

Risk Factors

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

Item 3.

Defaults Upon Senior Securities

Item 4.

Mine Safety Disclosures

Item 5.

Item 6.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

CISCO SYSTEMS, INC.

CONSOLIDATED BALANCE SHEETS

(in millions, except par value)

(Unaudited)


	January 23, 2021		July 25, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	11,793	$	11,809
Investments	18,795		17,610
Accounts receivable, net of allowance for doubtful accounts of $102 at January 23, 2021 and $143 at July 25, 2020	4,307		5,472
Inventories	1,436		1,282
Financing receivables, net	5,027		5,051
Other current assets	2,553		2,349
Total current assets	43,911		43,573
Property and equipment, net	2,386		2,453
Financing receivables, net	5,100		5,714
Goodwill	34,733		33,806
Purchased intangible assets, net	1,462		1,576
Deferred tax assets	4,109		3,990
Other assets	3,900		3,741
TOTAL ASSETS	$	95,601	$	94,853
LIABILITIES AND EQUITY
Current liabilities:
Short-term debt	$	5,000	$	3,005
Accounts payable	1,867		2,218
Income taxes payable	763		839
Accrued compensation	3,295		3,122
Deferred revenue	11,552		11,406
Other current liabilities	4,791		4,741
Total current liabilities	27,268		25,331
Long-term debt	9,554		11,578
Income taxes payable	8,084		8,837
Deferred revenue	9,294		9,040
Other long-term liabilities	2,280		2,147
Total liabilities	56,480		56,933
Commitments and contingencies (Note 14)
Equity:
Cisco shareholders’ equity:
Preferred stock, no par value: 5 shares authorized; none issued and outstanding	—		—
Common stock and additional paid-in capital, $0.001 par value: 20,000 shares authorized; 4,221 and 4,237 shares issued and outstanding at January 23, 2021 and July 25, 2020, respectively	41,690		41,202
Accumulated deficit	(2,351)		(2,763)
Accumulated other comprehensive loss	(218)		(519)
Total equity	39,121		37,920
TOTAL LIABILITIES AND EQUITY	$	95,601	$	94,853

See Notes to Consolidated Financial Statements.

Table of Contents

CISCO SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions, except per-share amounts)

(Unaudited)


	Three Months Ended				Six Months Ended
	January 23, 2021		January 25, 2020		January 23, 2021		January 25, 2020
REVENUE:
Product	$	8,572	$	8,671	$	17,159	$	18,549
Service	3,388		3,334		6,730		6,615
Total revenue	11,960		12,005		23,889		25,164
COST OF SALES:
Product	3,044		3,126		6,250		6,650
Service	1,132		1,115		2,274		2,286
Total cost of sales	4,176		4,241		8,524		8,936
GROSS MARGIN	7,784		7,764		15,365		16,228
OPERATING EXPENSES:
Research and development	1,527		1,570		3,139		3,236
Sales and marketing	2,277		2,279		4,494		4,759
General and administrative	484		455		1,028		974
Amortization of purchased intangible assets	39		38		75		74
Restructuring and other charges	234		42		836		226
Total operating expenses	4,561		4,384		9,572		9,269
OPERATING INCOME	3,223		3,380		5,793		6,959
Interest income	161		242		335		515
Interest expense	(113)		(158)		(225)		(336)
Other income (loss), net	(16)		70		33		82
Interest and other income (loss), net	32		154		143		261
INCOME BEFORE PROVISION FOR INCOME TAXES	3,255		3,534		5,936		7,220
Provision for income taxes	710		656		1,217		1,416
NET INCOME	$	2,545	$	2,878	$	4,719	$	5,804

Net income per share:
Basic	$	0.60	$	0.68	$	1.12	$	1.37
Diluted	$	0.60	$	0.68	$	1.11	$	1.36
Shares used in per-share calculation:
Basic	4,223		4,242		4,227		4,244
Diluted	4,234		4,260		4,239		4,265

See Notes to Consolidated Financial Statements.

Table of Contents

CISCO SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in millions)

(Unaudited)


	Three Months Ended				Six Months Ended
	January 23, 2021		January 25, 2020		January 23, 2021		January 25, 2020
Net income	$	2,545	$	2,878	$	4,719	$	5,804
Available-for-sale investments:
Change in net unrealized gains and losses, net of tax benefit (expense) of $0 and $17 for the second quarter and first six months of fiscal 2021, respectively, and $(15) and $(29) for the corresponding periods of fiscal 2020, respectively	6		66		(18)		139
Net (gains) losses reclassified into earnings, net of tax (benefit) expense of $2 and $7 for the second quarter and first six months of fiscal 2021, respectively and $7 and $12 for the corresponding periods of fiscal 2020, respectively	(7)		(4)		(17)		(9)
	(1)		62		(35)		130
Cash flow hedging instruments:
Change in unrealized gains and losses, net of tax benefit (expense) of $1 for each of the second quarter and first six months of fiscal 2021, and $0 and $1 for the corresponding periods of fiscal 2020, respectively	(2)		1		(4)		1
Net (gains) losses reclassified into earnings, net of tax (benefit) expense of $0 and $1 for the second quarter and first six months of fiscal 2021, respectively, and $0 for each of the corresponding periods of fiscal 2020	(3)		2		(4)		2
	(5)		3		(8)		3
Net change in cumulative translation adjustment and actuarial gains and losses net of tax benefit (expense) of $(2) and $(3) for the second quarter and first six months of fiscal 2021, respectively, and $(1) for each of the corresponding periods of fiscal 2020	235		50		344		(41)
Other comprehensive income	229		115		301		92
Comprehensive income	$	2,774	$	2,993	$	5,020	$	5,896

See Notes to Consolidated Financial Statements.

Table of Contents

CISCO SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

(Unaudited)


	Six Months Ended
	January 23, 2021		January 25, 2020
Cash flows from operating activities:
Net income	$	4,719	$	5,804
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization, and other	887		918
Share-based compensation expense	874		779
Provision (benefit) for receivables	(10)		46
Deferred income taxes	(91)		128
(Gains) losses on divestitures, investments and other, net	(86)		(162)
Change in operating assets and liabilities, net of effects of acquisitions and divestitures:
Accounts receivable	1,245		1,084
Inventories	(145)		25
Financing receivables	748		408
Other assets	(212)		130
Accounts payable	(358)		(126)
Income taxes, net	(836)		(1,007)
Accrued compensation	125		(521)
Deferred revenue	226		236
Other liabilities	(16)		(355)
Net cash provided by operating activities	7,070		7,387
Cash flows from investing activities:
Purchases of investments	(6,025)		(4,250)
Proceeds from sales of investments	1,374		3,410
Proceeds from maturities of investments	3,373		4,044
Acquisitions and divestitures	(860)		(163)
Purchases of investments in privately held companies	(95)		(97)
Return of investments in privately held companies	58		91
Acquisition of property and equipment	(358)		(391)
Proceeds from sales of property and equipment	9		131
Other	(4)		(10)
Net cash (used in) provided by investing activities	(2,528)		2,765
Cash flows from financing activities:
Issuances of common stock	306		334
Repurchases of common stock—repurchase program	(1,569)		(1,648)
Shares repurchased for tax withholdings on vesting of restricted stock units	(317)		(437)
Short-term borrowings, original maturities of 90 days or less, net	—		(3,470)
Repayments of debt	—		(5,220)
Dividends paid	(3,041)		(2,972)
Other	70		(12)
Net cash used in financing activities	(4,551)		(13,425)
Net decrease in cash, cash equivalents, and restricted cash	(9)		(3,273)
Cash, cash equivalents, and restricted cash, beginning of period	11,812		11,772
Cash, cash equivalents, and restricted cash, end of period	$	11,803	$	8,499

Supplemental cash flow information:
Cash paid for interest	$	220	$	349
Cash paid for income taxes, net	$	2,142	$	2,295

See Notes to Consolidated Financial Statements.

Table of Contents

CISCO SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF EQUITY

(in millions, except per-share amounts)

(Unaudited)


Three Months Ended January 23, 2021	Shares of Common Stock	Common Stock and Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Equity
Balance at October 24, 2020	4,222	$	41,360	$	(2,756)	(447)		$	38,157
Net income				2,545				2,545
Other comprehensive income						229		229
Issuance of common stock	24	305						305
Repurchase of common stock	(19)	(183)		(618)				(801)
Shares repurchased for tax withholdings on vesting of restricted stock units	(6)	(228)						(228)
Cash dividends declared ($0.36 per common share)				(1,522)				(1,522)
Share-based compensation		436						436
Balance at January 23, 2021	4,221	$	41,690	$	(2,351)	$	(218)	$	39,121


Six Months Ended January 23, 2021	Shares of Common Stock	Common Stock and Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Equity
Balance at July 25, 2020	4,237	$	41,202	$	(2,763)	$	(519)	$	37,920
Net income				$	4,719			4,719
Other comprehensive income						301		301
Issuance of common stock	31	306						306
Repurchase of common stock	(39)	(375)		(1,226)				(1,601)
Shares repurchased for tax withholdings on vesting of restricted stock units	(8)	(317)						(317)
Cash dividends declared ($0.72 per common share)				(3,043)				(3,043)
Effect of adoption of accounting standard				(38)				(38)
Share-based compensation		874						874
Balance at January 23, 2021	4,221	$	41,690	$	(2,351)	$	(218)	$	39,121

Table of Contents

CISCO SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF EQUITY

(in millions, except per-share amounts)

(Unaudited)


Three Months Ended January 25, 2020	Shares of Common Stock	Common Stock and Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Equity
Balance at October 26, 2019	4,241	$	40,321	$	(5,083)	$	(815)	$	34,423
Net income				2,878				2,878
Other comprehensive income						115		115
Issuance of common stock	23	332						332
Repurchase of common stock	(18)	(177)		(693)				(870)
Shares repurchased for tax withholdings on vesting of restricted stock units	(5)	(243)						(243)
Cash dividends declared ($0.35 per common share)				(1,486)				(1,486)
Share-based compensation		384						384
Balance at January 25, 2020	4,241	$	40,617	$	(4,384)	$	(700)	$	35,533


Six Months Ended January 25, 2020	Shares of Common Stock	Common Stock and Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Equity
Balance at July 27, 2019	4,250	$	40,266	$	(5,903)	$	(792)	$	33,571
Net income				5,804				5,804
Other comprehensive income						92		92
Issuance of common stock	34	334						334
Repurchase of common stock	(34)	(325)		(1,313)				(1,638)
Shares repurchased for tax withholdings on vesting of restricted stock units	(9)	(437)						(437)
Cash dividends declared ($0.70 per common share)				(2,972)				(2,972)
Share-based compensation		779						779
Balance at January 25, 2020	4,241	$	40,617	$	(

Price	49.42	EPS	3
Shares	4,273	P/E	19
MCap	211,172	P/FCF	18
Net Debt	9,887	EBIT	15,413
TEV	221,059	TEV/EBIT	14
TTM 2019-10-26, in MM, except price, ratios

10-Q	2021-01-23	Filed 2021-02-16
10-Q	2020-10-24	Filed 2020-11-17
10-K	2020-07-25	Filed 2020-09-03
10-Q	2020-04-25	Filed 2020-05-18
10-Q	2020-01-25	Filed 2020-02-18
10-Q	2019-10-26	Filed 2019-11-19
10-K	2019-07-27	Filed 2019-09-05
10-Q	2019-04-27	Filed 2019-05-21
10-Q	2019-01-26	Filed 2019-02-19
10-Q	2018-10-27	Filed 2018-11-20
10-K	2018-07-28	Filed 2018-09-06
10-Q	2018-04-28	Filed 2018-05-22
10-Q	2018-01-27	Filed 2018-02-20
10-Q	2017-10-28	Filed 2017-11-21
10-K	2017-07-29	Filed 2017-09-07
10-Q	2017-04-29	Filed 2017-05-23
10-Q	2017-01-28	Filed 2017-02-21
10-Q	2016-10-29	Filed 2016-11-22
10-K	2016-07-30	Filed 2016-09-08
10-Q	2016-04-30	Filed 2016-05-24
10-Q	2016-01-23	Filed 2016-02-18
10-Q	2015-10-24	Filed 2015-11-19
10-K	2015-07-25	Filed 2015-09-08
10-Q	2015-04-25	Filed 2015-05-20
10-Q	2015-01-24	Filed 2015-02-18
10-Q	2014-10-25	Filed 2014-11-20
10-K	2014-07-26	Filed 2014-09-09
10-Q	2014-04-26	Filed 2014-05-22
10-Q	2014-01-25	Filed 2014-02-20
10-Q	2013-10-26	Filed 2013-11-22
10-K	2013-07-27	Filed 2013-09-10
10-Q	2013-04-27	Filed 2013-05-21
10-Q	2013-01-26	Filed 2013-02-19
10-Q	2012-10-27	Filed 2012-11-20
10-K	2012-07-28	Filed 2012-09-12
10-Q	2012-04-28	Filed 2012-05-23
10-Q	2012-01-28	Filed 2012-02-21
10-Q	2011-10-29	Filed 2011-11-22
10-K	2011-07-30	Filed 2011-09-14
10-Q	2011-04-30	Filed 2011-05-25
10-Q	2011-01-29	Filed 2011-02-23
10-Q	2010-10-30	Filed 2010-11-23
10-K	2010-07-31	Filed 2010-09-21
10-Q	2010-05-01	Filed 2010-05-26
10-Q	2010-01-23	Filed 2010-02-17

8-K	2021-02-09	Earnings, Exhibits
8-K	2021-01-07	Officers
8-K	2020-12-11	Officers, Other Events
8-K	2020-12-10	Officers, Shareholder Vote, Exhibits
8-K	2020-11-27
8-K	2020-11-12
8-K	2020-11-11
8-K	2020-10-07
8-K	2020-09-18
8-K	2020-08-12
8-K	2020-08-12
8-K	2020-06-17
8-K	2020-05-13
8-K	2020-03-11
8-K	2020-03-04
8-K	2020-02-12
8-K	2020-01-24
8-K	2019-12-20
8-K	2019-12-10
8-K	2019-12-06
8-K	2019-11-28
8-K	2019-11-13
8-K	2019-08-19
8-K	2019-08-14
8-K	2019-07-08
8-K	2019-06-13
8-K	2019-05-30
8-K	2019-05-21
8-K	2019-05-15
8-K	2019-03-04
8-K	2019-02-13
8-K	2018-12-12
8-K	2018-11-14
8-K	2018-10-15
8-K	2018-09-07
8-K	2018-08-15
8-K	2018-08-06
8-K	2018-06-19
8-K	2018-06-01
8-K	2018-05-16
8-K	2018-05-01
8-K	2018-04-12
8-K	2018-02-14

EX-4.1	exh41supplementalindenture.htm
EX-4.2	exh42supplementalindenture.htm
EX-4.3	exh43supplementalindenture.htm
EX-10.3	exh103firstamendmenttocred.htm
EX-10.5	exh105ciscosip2005q221.htm
EX-10.6	exh106dcpasamendedq221.htm
EX-10.7	exh107esppq221.htm
EX-31.1	exh311-q2fy21.htm
EX-31.2	exh312-q2fy21.htm
EX-32.1	exh321-q2fy21.htm
EX-32.2	exh322-q2fy21.htm

CSCO 10Q Quarterly Report

Cisco Systems Earnings 2021-01-23