Cisco 2002 Annual Report Download - page 5

Our positive cash flow from operations continues to average
between $300 million and $500 million per month. And while
this will vary from quarter to quarter based on large cash
outlays such as tax payments and end-of-year compensation
payments, we were pleased with our average positive cash
flow for the year from operations of $1.5 billion per quarter.
Our total cash and investment position has improved from
$18.5 billion in last fiscal year’s Q4 to $21.5 billion in Q4
this year. In terms of quarterly profit improvement for the
same time period, pro forma net income grew from $163
million to $1.039 billion, making Q4 fiscal 2002 the fourth
best quarter in company history. As a percentage of revenue,
it increased from 3.8 percent in Q4 2001 to 21.5 percent in
Q4 2002, the best we’ve done since 1998.
Our productivity, as measured by annualized revenue
per employee, has moved from $442,000 per employee
in last fiscal year’s Q4 to $540,000 per employee in Q4
this year. This productivity increase of 22 percent has
helped Cisco achieve a $1.9 billion productivity benefit
for the company this year.
We were especially pleased with our pro forma gross margins,
which improved from 52.3 percent in last fiscal year’s Q4 to
67.7 percent in Q4 this year, overachieving our target goal
of 60 percent gross margin. And for the same time period,
inventory turns improved from 4.6 to 7.1, in line with our
targeted goal of seven to eight turns.
Another area in which we have consistently overachieved
our goals has been in our yearly global customer satisfaction
survey. And this year, despite the challenges in the market-
place, is no different. In fiscal 2002, we achieved our highest
global customer satisfaction rating ever, 4.63, as measured
on a five-point scale. Customers are obviously satisfied with
the service and support that Cisco provides and are now
clearly seeing the productivity benefits associated with
Internet business solutions.
Cisco Systems, Inc. 3
Productivity
When people ask why we believe in the future of our
company and our industry, the answer is not based on
technology alone, but on what we hear from business
and government leaders around the world. They clearly
understand the productivity opportunities and the
associated standard of living implications that Internet
business solutions provide. In fact, they are now truly
associating Cisco, and our solutions, with productivity.
There are two reasons for this: first, because of how
we use the network ourselves to gain productivity, and
second, because we help our partners and customers
utilize the network and its associated Internet business
solutions to increase their own productivity.
In a recent study designed by top economists at the
University of California, Berkeley and the Brookings
Institution, U.S. companies indicated that almost half of
their expected productivity increases would come through
Internet business solutions. In short, it’s the productivity
gains—including increasing operational efficiencies and
cutting costs—that are allowing companies to drive profits
in this challenging economy.
For fiscal 2002 we showed consistent quarterly improvement in
almost all categories of our operational and financial results.