-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, M92xXmzZblLGm7Ty7RzZh+0x8apRqrah5UKzltVPoVDzqfa6TcNHEHH4ndudHdtd uA5C6D4oKDn07nxGHO9yXw== 0000950149-96-000218.txt : 19960314 0000950149-96-000218.hdr.sgml : 19960314 ACCESSION NUMBER: 0000950149-96-000218 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19960128 FILED AS OF DATE: 19960313 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: CISCO SYSTEMS INC CENTRAL INDEX KEY: 0000858877 STANDARD INDUSTRIAL CLASSIFICATION: COMPUTER PERIPHERAL EQUIPMENT, NEC [3577] IRS NUMBER: 770059951 STATE OF INCORPORATION: CA FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-18225 FILM NUMBER: 96534128 BUSINESS ADDRESS: STREET 1: 170 W TASMAN DR CITY: SAN JOSE STATE: CA ZIP: 95134 BUSINESS PHONE: 4085264000 MAIL ADDRESS: STREET 1: 170 WEST TASMAN DRIVE CITY: SAN JOSE STATE: CA ZIP: 95134-1706 10-Q 1 CISCO SYSTEMS FORM 10-Q 1 FORM 10-Q (Mark one) [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended JANUARY 28, 1996 OR [ ] 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 0-18225 CISCO SYSTEMS, INC. (Exact name of registrant as specified in its charter) California 77-0059951 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) 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) 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 filing requirements for the past 90 days. YES X NO ------- ------- As of March 4, 1996 565,495,276 shares of the Registrant's common stock were outstanding. 2 CISCO SYSTEMS, INC. FORM 10-Q FOR THE QUARTER ENDED JANUARY 28, 1996 INDEX
Page Facing sheet 1 Index 2 Part I. Financial information Item 1. a) Consolidated balance sheets at January 28, 1996 and July 30, 1995 3 b) Consolidated statements of operations for the three and six month periods ended January 28, 1996 and January 29, 1995 4 c) Consolidated statements of cash flows for the six month periods ended January 28, 1996 and January 29, 1995 5 d) Notes to consolidated financial statements 6 Item 2. Management's discussion and analysis of financial condition and results of operations 8 Part II. Other information 13 Signature 14 Exhibits Exhibit 3.01, Restated Articles of Incorporation Exhibit 11.01, Computation of net income per share 15
2 3 ITEM 1. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA CISCO SYSTEMS, INC. CONSOLIDATED BALANCE SHEETS (In thousands)
January 28, July 30, 1996 1995 ----------- ---------- (Unaudited) ASSETS Current assets: Cash and equivalents $ 123,823 $ 204,846 Short-term investments 356,482 234,681 Accounts receivable, net of allowance for doubtful accounts of $15,887 at January 28, 1996 and $13,305 at July 30, 1995 491,223 384,242 Inventories 221,579 71,160 Deferred income taxes 90,450 75,297 Prepaid expenses and other current assets 52,141 25,743 ---------- ---------- Total current assets 1,335,698 995,969 Investments 601,215 403,855 Restricted investments 189,473 173,073 Property and equipment, net 184,601 136,635 Other assets 54,845 47,747 ---------- ---------- Total assets $2,365,832 $1,757,279 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 117,513 $ 45,205 Income taxes payable 97,181 71,583 Accrued payroll and related expenses 113,354 84,695 Other accrued liabilities and deferred revenue 185,523 136,273 ---------- ---------- Total current liabilities 513,571 337,756 Minority interest 40,933 40,792 Shareholders' equity: Preferred stock, no par value, 5,000 shares authorized: none issued or outstanding at January 28, 1996 and July 30, 1995 Common stock, no par value, 1,200,000 shares authorized: 563,713 shares issued and outstanding at January 28, 1996 and 544,492 at July 30, 1995 517,454 362,292 Retained earnings 1,189,618 959,657 Unrealized gains on marketable securities 107,831 50,933 Cumulative translation adjustments (3,575) 5,849 ---------- ---------- Total shareholders' equity 1,811,328 1,378,731 ---------- ---------- Total liabilities and shareholders' equity $2,365,832 $1,757,279 ========== ==========
The accompanying notes are an integral part of these financial statements. 3 4 CISCO SYSTEMS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands except per-share amounts)
Three Months Ended Six Month Ended --------------------------------------------------- Jan. 28, Jan. 29, Jan. 28, Jan. 29, 1996 1995 1996 1995 --------------------------------------------------- (Unaudited) Net sales $826,482 $454,897 $1,536,673 $847,822 Cost of sales 277,597 148,204 512,000 276,173 -------- -------- ---------- -------- Gross margin 548,885 306,693 1,024,673 571,649 Operating expenses: Research and development 73,262 38,118 136,127 68,166 Sales and marketing 146,895 78,454 275,906 146,776 General and administrative 28,826 16,045 54,562 30,960 Purchased research and development 95,760 95,760 -------- -------- ---------- -------- Total operating expenses 248,983 228,377 466,595 341,662 -------- -------- ---------- -------- Operating income 299,902 78,316 558,078 229,987 Interest and other income, net 14,258 7,950 26,077 15,586 -------- -------- ---------- -------- Income before provision for income taxes 314,160 86,266 584,155 245,573 Provision for income taxes 117,810 32,781 219,058 93,318 -------- -------- ---------- -------- Net income $196,350 $ 53,485 $ 365,097 $152,255 ======== ======== ========== ======== Net income per share $ .34 $ .10 $ .63 $ .28 ======== ======== ========== ======== Shares used in per-share calculation 585,293 557,245 579,137 548,284 ======== ======== ========== ========
The accompanying notes are an integral part of these financial statements. 4 5 CISCO SYSTEMS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)
Six Months Ended ------------------------------ January 28, January 29, 1996 1995 ------------- ------------- (Unaudited) Cash flows from operating activities: Net income $ 365,097 $ 152,255 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 37,127 25,733 Deferred income taxes (18,692) (45,991) Change in operating assets and liabilities: Accounts receivable (106,949) (55,531) Inventories (150,419) (26,973) Prepaid expenses and other current assets (26,398) (123) Income taxes payable 102,519 16,803 Accounts payable 72,210 36,110 Accrued payroll and related expenses 28,546 9,304 Other accrued liabilities 30,482 20,076 --------- --------- Total adjustments (31,574) (20,592) --------- --------- Net cash provided by operating activities 333,523 131,663 --------- --------- Cash flows from investing activities: Purchases of short-term investments (312,084) (157,052) Proceeds from sales of short-term investments 105,620 55,738 Maturities of short-term investments 136,355 76,006 Purchases of investments (291,709) (138,019) Proceeds from sales of investments 130,404 104,575 Purchases of restricted investments (72,348) Proceeds from sales of restricted investments 42,564 Maturities of restricted investments 15,601 Acquisition of property and equipment (82,049) (55,484) Acquisition of business, net of cash acquired and purchased research and development (17,920) Other (9,437) 18,509 --------- --------- Net cash used by investing activities (337,083) (113,647) --------- --------- Cash flows from financing activities: Issuance of common stock 44,695 12,995 Repurchase of common stock (112,734) (30,547) Proceeds from sale of subsidiary stock 40,548 Other (9,424) (338) --------- --------- Net cash (used in) provided by financing activities (77,463) 22,658 --------- --------- Net (decrease) increase in cash and equivalents (81,023) 40,674 Cash and equivalents, beginning of period 204,846 53,567 --------- --------- Cash and equivalents, end of period $ 123,823 $ 94,241 ========= =========
The accompanying notes are an integral part of these financial statements. 5 6 CISCO SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Fiscal Year The Company's fiscal year is the 52 or 53 weeks ending on the last Sunday in July. Fiscal years 1996 and 1995 are both 52 week years. Basis of Presentation The consolidated balance sheet as of January 28, 1996, and the consolidated statements of operations and cash flows for the periods ended January 28, 1996 and January 29, 1995, have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. However, the Company believes that the disclosures are adequate to make the information presented not misleading. These consolidated financial statements should be read in conjunction with the financial statements and the notes thereto included in the Company's Annual Report on Form 10-K for the year ended July 30, 1995. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows for the three and six month periods ended January 28, 1996 and January 29, 1995, have been made. The results of operations for the period ended January 28, 1996 are not necessarily indicative of the operating results for the full year. The July 30, 1995 balance sheet was derived from audited financial statements, but does not include all disclosures required by generally accepted accounting principles. Computation of Net Income Per Share Net income per common share is computed using the weighted average number of common and dilutive common equivalent shares outstanding during the period. Dilutive common equivalent shares consist of stock options. Recent Accounting Pronouncements During October 1995, the Financial Accounting Standards Board issued Statement No. 123 (SFAS No. 123), "Accounting for Stock-Based Compensation." This standard, which establishes a fair value based method of accounting for stock-based compensation plans, also permits an election to continue following the requirements of APB Opinion No. 25, "Accounting for Stock Issued to Employees" with disclosures of pro forma net income and earnings per share under the new method. The Company is reviewing the implications of SFAS No. 123 and evaluating the effect, if any, on the financial condition and results of operations of the Company. SFAS No. 123 will be effective for the Company's fiscal year 1997. 6 7 2. BUSINESS COMBINATIONS In September 1995, the Company acquired Combinet Inc. ("Combinet"), a privately held manufacturer of remote access networking products. The Company issued approximately 3,500,000 shares of common stock for all the outstanding stock of Combinet in a transaction accounted for as a pooling of interests. In addition, the Company assumed options and warrants to purchase Combinet stock that remain outstanding as options to purchase approximately 407,000 shares of the Company's common stock. The historical operations of Combinet are not material to the Company's consolidated operations and financial position individually and when aggregated with previous acquisitions, therefore the Company's financial statements have not been restated. Additionally, in September 1995, the Company acquired Internet Junction, Inc., a developer of Internet gateway software that connects desktop users with the Internet. The Company issued 162,000 shares of stock for the net assets of Internet Junction in a transaction accounted for as a purchase. Accordingly, the results of operations of the acquired business and the fair market values of the acquired assets and liabilities were included in the Company's financial statements as of the acquisition date. Amounts allocated to goodwill will be amortized on a straight-line basis over a four year period. A pro forma summary is not presented as the historical operations of Internet Junction are not material to the Company's consolidated operations and financial position. In November 1995, the Company acquired Grand Junction Networks, Inc. ("Grand Junction") a privately held manufacturer of Fast Ethernet (100BaseT) and Ethernet desktop switching products. Under the terms of the agreement, the Company issued approximately 9,180,000 shares of common stock for all the outstanding stock of Grand Junction in a transaction accounted for as a pooling of interests. The Company also assumed options to purchase Grand Junction stock that remain outstanding as options to purchase approximately 737,000 shares of the Company's common stock. The historical operations of Grand Junction are not material to the Company's consolidated operations and financial position. In December 1995, the Company acquired Network Translation, Inc. ("NTI") in a transaction accounted for as a pooling of interests. NTI develops and sells address translation and firewall products for use in accessing the Internet. Financial terms of the transaction are not material to the Company's consolidated operations and financial position. The historical operations of NTI are not material to the Company's consolidated operations and financial position individually and when aggregated with previous acquisitions, therefore the Company's financial statements have not been restated. On January 23, 1996, the Company announced the signing of an agreement to acquire TGV Software Inc ("TGV"). Under the terms of the agreement, two (2) shares of the Company's common stock will be exchanged for every five (5) outstanding shares of TGV common stock in a transaction to be accounted for as a pooling of interests. The agreement is subject to receipt of certain government approvals and approval by TGV shareholders and is expected to be consummated in March 1996. 7 8 3. SHAREHOLDER'S EQUITY A two-for-one stock split of the Company's common stock was approved by the Board of Directors on January 23, 1996 payable to shareholders of record on February 2, 1996 and was effective February 16, 1996. Share and per-share data for all periods presented have been adjusted to give effect to the two-for-one stock split. 4. BALANCE SHEET DETAIL (In thousands)
Inventories: January 28, July 30, 1996 1995 ----------- -------- (Unaudited) Raw materials $123,271 $33,555 Work in process 56,136 16,913 Finished goods 25,233 9,373 Demonstration systems 16,939 11,319 -------- ------- $221,579 $71,160 ======== =======
5. INCOME TAXES The Company paid income taxes of $135.3 million for the six months ended January 28, 1996 and $ 122.9 million for the six months ended January 29, 1995. The Company's income taxes currently payable for both federal and state purposes have been reduced by the tax benefit from stock option transactions. This benefit totaled $76.9 million in the first six months of 1996, and was credited directly to shareholders' equity. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Net sales grew from $454.9 million in the second quarter of 1995 to $826.5 million in the second quarter of 1996. Net sales for the first half of 1995 were $847.8 million, compared to $1,536.7 million in the first half of 1996. The 81.7% increase in net sales between the two three month periods and the 81.2% increase in net sales between the two six month periods was primarily the result of increasing unit sales of the Cisco 2500 product family, the Cisco 4500, and also reflects the market acceptance of new LAN switching products such as the Catalyst 5000 and also high end routers, primarily the Cisco 7500 product family. These increases were partially offset by decreasing unit sales of the Company's older product lines, consisting of the AGS+ and Cisco 4000, as well as lower average selling prices for the Cisco 7000. Sales to international customers increased from 42.8% of net sales in the second quarter of 1995, to 51.6% for the second quarter of 1996. International sales in the first six months of 1996 were 49.9% of net sales compared with 41.0% of net sales for the same period in 1995. These increases reflect the Company's continued expansion into new geographic markets and growth in existing European and Asian markets. Sales growth between the first and second quarters of fiscal 1996 in Asia exceeded the growth in other international areas. Gross margins decreased from 67.4% in both the second quarter and the first six months of 1995 to 66.4% and 66.7% for the second quarter and the first six months of 1996, respectively. Gross margins were 8 9 affected by several factors, including higher material costs as a result of certain component shortages and the continued shift in revenue mix to the Company's lower margin products consisting primarily of products in the Company's Access and Workgroup business units. The Company expects this trend of decreasing gross margins to continue in the future, although quarterly fluctuations may occur due to certain factors such as component availability, mix of products sold, manufacturing efficiencies, software content, and warranty costs. Research and development expenses increased $35.1 million from the second quarter of 1995 to the second quarter of 1996, and increased $68.0 million between the first six months of 1995 and the first six months of 1996. This represents an increase from 8.4% to 8.9% of net sales in the quarter to quarter period and from 8.0% to 8.9% of net sales for the first six months of each fiscal year. The increase reflects the Company's continued commitment to develop new technologies internally, including the further development of its CiscoFusion architecture; as well as the acquisition of technologies to bring a broad range of innovative products to market in a timely fashion. A significant portion of the increase was due to the addition of new personnel, primarily from hiring and to a lesser extent through acquisitions, as well as higher material costs for prototypes and depreciation on new equipment. All of the Company's research and development costs are expensed as incurred. Sales and marketing expenses increased $68.4 million between the second quarters of 1995 and 1996, and $129.1 million from the first six months of 1995 to the same period of 1996. This represents increases from 17.2% to 17.8% of net sales in the quarter to quarter period and from 17.3% to 18.0% of net sales for the first six months of each fiscal year. The increases in these expenses resulted from an increase in the size of the Company's direct sales force and related commissions, additional marketing programs to support the launch of new products, the entry into new markets, both domestic and international, and expanding distribution channels. General and administrative expenses rose $12.8 million between the second quarters of 1995 and 1996, but remained at 3.5% of net sales for each period. These expenses increased $23.6 million from the first half of 1995 to the first half of 1996, representing a slight decrease from 3.7% to 3.6% of net sales for the comparable six month periods. The dollar increase in these expenses was due primarily to increased personnel costs, costs associated with the structuring and integration of the Company's various acquisitions (see note 2), as well as to the amortization of goodwill associated with the acquisition of LightStream Corporation in fiscal year 1995. During October 1995, the Financial Accounting Standards Board issued Statement No. 123 (SFAS No. 123), "Accounting for Stock-Based Compensation." This standard, which establishes a fair value based method of accounting for stock-based compensation plans, also permits an election to continue following the requirements of APB Opinion No. 25, "Accounting for Stock Issued to Employees" with disclosures of pro forma net income and earnings per share under the new method. The Company is reviewing the implications of SFAS No. 123 and evaluating the effect, if any, on the financial condition and results of operations of the Company. SFAS No. 123 will be effective for the Company's fiscal year 1997. 9 10 Future Growth Subject to Risks The Company's operating performance each quarter is subject to various risks and uncertainties as discussed in the Company's Annual Report on Form 10-K for 1995. This Report on Form 10-Q should be read in conjunction with such Annual Report, particularly "Other Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained therein. The Company's growth is dependent upon market growth and its ability to enhance its existing products and introduce new products on a timely basis. The Company must also maintain its ability to manage any such growth effectively. Failure to manage growth effectively could materially and adversely affect the Company's business and operating results. The Company's growth and ability to meet customer demand also depend, in part, on its ability to obtain timely supplies of parts from its vendors. While lead times for commodity components have improved recently, some components, particularly proprietary ASIC's and other networking specific components, continue to be in short supply. An inability to obtain these items at reasonable prices could have a material and adverse effect on the Company's growth. Each year with the exception of fiscal year 1995 and fiscal year 1996 to date, the Company generally has had one quarter of a fiscal year when backlog has been reduced. Traditionally, it has been the third quarter. While such a reduction did not occur in the past 18 months, such reductions are extremely difficult to predict and may occur in the future. In addition, in response to customer demand, the Company has, from time to time, reduced its product manufacturing lead times and its backlog of orders. To the extent that backlog is reduced during any particular period, it would result in more variability and less predictability in the Company's quarter-to-quarter net sales and operating results. Recently, however, the Company's backlog has been increasing. Resulting lead times for certain parts of its business have seen a corresponding increase. In particular, in the quarter ended January 28, 1996, backlog of orders increased. If manufacturing lead times are not reduced, the Company's customers may cancel, or not place, orders if shorter lead times are available from other manufacturers. The Company expects that gross margins may be adversely affected by increases in material or labor costs, heightened price competition, changes in channels of distribution or in the mix of products sold. In particular, the Company broadened its product line by introducing its first network access product in August 1992. Since that time, sales of these products, which are generally lower-priced and carry lower gross margins than the Company's core products, have increased more rapidly than the sales of the core products. The introduction of the CiscoPro product line during the first quarter of fiscal year 1996, as well as the increasing growth rates experienced in the switching markets, may accelerate this trend. The Company also expects that its operating margins may decrease as it continues to hire additional personnel and increases other operating expenses to support its business. The results of operations for the first six months of 1996 are not necessarily indicative of results to be expected in future periods, and the Company's operating results may be subject to quarterly fluctuations as a result of a number of factors. These factors include the integration of people, operations, and products from acquired businesses and technologies; increased competition, which the Company expects; the introduction and market acceptance of new products, including high-speed switching and ATM 10 11 technologies; variations in sales channels, product costs, or mix of products sold; the timing of orders and manufacturing lead times; and changes in general economic conditions, any of which could have an adverse impact on operations and financial results. Volatility of Stock Price The Company's Common Stock has experienced substantial price volatility, particularly as a result of variations between the Company's actual or anticipated financial results and the published expectations of analysts and as a result of announcements by the Company and its competitors. In addition, the stock market has experienced extreme price and volume fluctuations that have affected the market price of many technology companies in particular and that have often been unrelated to the operating performance of these companies. These broad market fluctuations, as well as general economic and political conditions, may adversely affect the market price of the Company's Common Stock. LIQUIDITY AND CAPITAL RESOURCES Cash, short-term investments, and investments increased by $238.1 million from July 30, 1995 to January 28, 1996, primarily as a result of cash generated by operations and to a lesser extent through the exercise of employee stock options. This increase was partially offset by capital expenditures of approximately $82.0 million and by the repurchase of $112.7 million of common stock during this time. Accounts receivable increased 27.8% from July 30, 1995 to January 28, 1996, primarily as a result of higher sales levels. Days sales outstanding in receivables improved from 56 days at July 30, 1995 to 54 days at January 28, 1996. Inventories increased 211.4% between July 30, 1995 and January 28, 1996 which was a planned investment necessary to support the higher sales volumes and desired manufacturing lead times. Additionally, strategic purchases of certain components in short supply contributed to the increase. As a result, inventory turnover on an annualized basis decreased from 11.7 turns at July 30, 1995 to 7.0 turns at January 28, 1996. Accounts payable increased 160.0% from July 30, 1995 to January 28, 1996 because of increases in capital expenditures, operating expenses, and material purchases to support the growth in net sales. The 33.8% increase in accrued payroll and related expenses can be attributed to an increase in personnel during the six month period. Other accrued liabilities increased by 36.1%, primarily due to increases in deferred service contracts. At January 28, 1996, the Company had a line of credit totaling $100.0 million, which expires April 1998. There have been no borrowings under this agreement. The Company has entered into certain lease arrangements in San Jose, California, and Research Triangle Park, North Carolina, where it has established its headquarters operations and certain research and development and customer support activities, respectively. In connection with these transactions, the Company pledged $189.5 million of its investments as collateral for certain obligations of the leases. The restricted investments balance will continue to increase as the Company phases in operations at these lease sites. 11 12 Under the Company's ongoing stock repurchase program, shares are purchased periodically to meet employee stock plan requirements. During the six months ended January 28, 1996, the Company purchased and retired approximately 3.0 million shares for an aggregate price of $112.7 million. As of January 28, 1996, the Company was authorized to repurchase up to an additional 6.8 million shares of its common stock in the open market or through privately negotiated transactions. The Company's ability to repurchase shares has been restricted, and is expected to continue to be restricted from time to time by virtue of business combinations and limitations imposed under pooling-of-interests accounting. The Company's management believes that its current cash and equivalents, short-term investments, line of credit, and cash generated from operations will satisfy its expected working capital and capital expenditure requirements through 1996. 12 13 PART II. OTHER INFORMATION ITEM 2. CHANGES IN SECURITIES A two-for-one stock split of the Company's common stock was approved by the Board of Directors on January 23, 1996 payable to shareholders of record on February 2, 1996 and declared effective February 16, 1996. Share and per-share data for all periods presented have been adjusted to give effect to the two-for-one stock split. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The Company's annual meeting of shareholders was held on November 14, 1995. The following actions were taken at this meeting:
Affirmative Negative Votes Broker Votes Votes Withheld Non-Votes ----- ----- -------- --------- a. Election of Directors John T. Chambers 485,616,808 - 851,212 - Michael S. Frankel 485,694,760 - 773,260 - James F. Gibbons 485,654,666 - 813,354 - John P. Morgridge 485,679,768 - 788,252 - Robert L. Puette 485,637,432 - 830,588 - Masayoshi Son 485,626,530 - 841,490 - Donald T. Valentine 485,599,588 - 868,432 - b. Amendment to the 1987 stock option plan. 375,774,922 47,167,788 2,097,862 61,427,448 c. Ratification of Coopers & Lybrand L.L.P. as auditors. 485,476,444 500,696 490,880 - d. Amendment to the Company's Restated Articles of Incorporation 463,522,528 21,998,284 947,208
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 3.01 The Company's Restated Articles of Incorporation as currently in effect 11.01 Computation of net income per share 27 Financial Data Schedule (b) Reports on Form 8-K The Company filed two reports on Form 8-K during the quarter ended January 28, 1996. Both of the filings were on December 6, 1995. The items reported on were the acquisitions of Combinet, Inc. and Grand Junction Networks, Inc. 13 14 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Cisco Systems, Inc. Date: March 11, 1996 By /s/ LARRY R. CARTER -------------------------------- Larry R. Carter, Vice President Finance, and Chief Financial Officer (Principal Financial and Accounting Officer) 14 EX-3.01 2 CERTIFICATE OF AMENDMENT OF RESTATED ARTICLES 1 EXHIBIT 3.01 CERTIFICATE OF AMENDMENT OF THE RESTATED ARTICLES OF INCORPORATION OF CISCO SYSTEMS, INC. I. The undersigned, Larry R. Carter, hereby certifies that he is and at all times herein mentioned has been, the duly elected and acting Vice President and Secretary of Cisco Systems, Inc., a California corporation (the "Corporation"), and further certifies that: II. Article IV (A) of the Restated Articles of Incorporation of the Corporation ("the Restated Articles") is hereby amended to read in its entirety as follows: "(A) CLASSES OF STOCK. This corporation is authorized to issue two classes of stock to be designated, respectively, "Common Stock" and "Preferred Stock." The total number of shares that the corporation is authorized to issue is One Billion Two Hundred Five Million (1,205,000,000) shares. One Billion Two Hundred Million (1,200,000,000) shares shall be Common Stock and Five Million (5,000,000) shares shall be Preferred Stock. As of February 2, 1996, each share of Common Stock outstanding is split into two (2) shares of Common Stock." III. The foregoing Certificate of Amendment has been duly approved by the Board of Directors of the Corporation. 2 IV. The foregoing Certificate of Amendment of the Restated Articles of Incorporation does not require shareholder approval pursuant to Section 902(c) of the General Corporation Law of the State of California. No shares of Preferred Stock are outstanding. IN WITNESS WHEREOF, the undersigned has executed this Certificate of Amendment on January 31, 1996. ------------------------------ Larry R. Carter Vice President and Secretary The undersigned certifies under penalty of perjury that he has read the foregoing Certificate of Amendment and knows the contents thereof, and that the statements therein are true. Executed at San Jose, California, on January 31, 1996 ------------------------------ Larry R. Carter EX-11.01 3 COMPUTATION OF NET INCOME 1 EXHIBIT 11.01 COMPUTATION OF NET INCOME PER SHARE IN ACCORDANCE WITH INTERPRETIVE RELEASE NO. 34-9083 (In thousands, except per-share amounts)
Three Months Six Months Ended Ended ----------------------- ----------------------- Jan. 28, Jan. 29, Jan. 28, Jan. 29, 1996 1995 1996 1995 ---------- ---------- ---------- ---------- (Unaudited) PRIMARY EARNINGS PER SHARE Actual weighted average common shares outstanding for the period 563,128 537,093 556,844 529,683 Weighted average shares assuming exercise of employee stock options using average market price 22,165 20,152 22,293 18,601 -------- -------- -------- -------- Shares used in per-share calculations 585,293 557,245 579,137 548,284 ======== ======== ======== ======== Net income applicable to primary income per share $196,350 $ 53,485 $365,097 $152,255 ======== ======== ======== ======== Net income per share based on SEC Interpretive Release No. 34-9083 $ .34 $ .10 $ .63 $ .28 ======== ======== ======== ======== FULLY DILUTED EARNINGS PER SHARE Actual weighted average common shares outstanding for the period 563,128 537,093 556,844 529,683 Weighted average shares assuming exercise of employee stock options using the greater of ending or average market price 22,738 20,290 23,807 19,579 -------- -------- -------- -------- Shares used in per-share calculations 585,866 557,383 580,651 549,262 ======== ======== ======== ======== Net income applicable to fully diluted income per share $196,350 $ 53,485 $365,097 $152,255 ======== ======== ======== ======== Net income per share based on SEC Interpretive Release No. 34-9083 $ .34 $ .10 $ .63 $ .28 ======== ======== ======== ========
These calculations are submitted in accordance with Securities Exchange Act of 1934 Release No. 34-9083 EX-27 4 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEET, CONSOLIDATED STATEMENT OF OPERATIONS AND CONSOLIDATED STATEMENT OF CASH FLOWS INCLUDED IN THE COMPANY'S FORM 10-Q FOR THE PERIOD ENDING JANUARY 28, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS JUL-28-1996 JUL-31-1995 JAN-28-1996 123,823 1,147,470 507,110 15,887 221,579 1,335,698 324,979 140,378 2,365,832 513,571 0 0 0 517,454 1,293,874 2,365,832 1,536,673 1,536,673 512,000 978,595 0 0 0 584,155 219,058 365,097 0 0 0 365,097 .63 .00
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