Cisco 2003 Annual Report Download - page 2

Cisco Systems, Inc. is the worldwide leader in networking for the
Internet. Cisco hardware, software, and service offerings are used
to create Internet solutions so that individuals, companies, and
countries have easy access to information–regardless of differences
in time and place. In addition, the company is recognized as a pioneer
in using the Internet for its own business practices, offering consulting
services to help other organizations around the world. Today, net-
works are an essential part of business, education, government, and
home communications.
Cisco was founded in 1984 by a small group of computer scientists
from Stanford University. Since the company’s inception, Cisco
engineers have been prominent in the development of Internet
Protocol (IP)-based networking technologies. This tradition of IP
innovation continues with industry-leading products in the core
areas of routing and switching, along with advanced technologies
in areas such as optical, network security, IP telephony, wireless
LAN, storage networking, and home networking. In addition to its
products, Cisco provides a broad range of service offerings, including
technical support services and advanced services. Cisco sells its prod-
ucts and services, both directly through its own sales force and
indirectly through channel partners, to large enterprises, commercial
businesses, service providers, and consumers.
As a company, Cisco operates on core values of customer focus
and corporate citizenship. We express these values through global
involvement in educational, community, and philanthropic efforts.
We invite you to learn more about Cisco at www.cisco.com.
TABLE OF CONTENTS
FINANCIAL HIGHLIGHTS 1
LETTER TO SHAREHOLDERS 2
THIS IS THE POWER OF THE NETWORK. NOW. 6
STATEMENT OF RESPONSIBILITY 16
SELECTED FINANCIAL DATA 17
MANAGEMENT’S DISCUSSION AND ANALYSIS OF 18
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
QUANTITATIVE AND QUALITATIVE DISCLOSURES 33
ABOUT MARKET RISK
CONSOLIDATED STATEMENTS OF OPERATIONS 35
CONSOLIDATED BALANCE SHEETS 36
CONSOLIDATED STATEMENTS OF CASH FLOWS 37
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY 38
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 39
REPORT OF INDEPENDENT AUDITORS 62
SUPPLEMENTARY FINANCIAL DATA AND 63
STOCK MARKET INFORMATION
SHAREHOLDER INFORMATION 64
PROFILE
This Annual Report may be deemed to contain forward-looking statements, which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Words such as "expects," "anticipates,"
"targets," "goals," "projects," "intends," "plans," "believes," "seeks," "estimates," variations of such words, and similar expressions are intended to identify such forward-looking statements. In addition, statements
that refer to projections of our future financial performance, anticipated growth and trends in our key markets, including future revenues from Advanced Technologies, return to shareholders, benefits of taking busi-
ness risks, future financial condition and market leadership, and other characterizations of future events or circumstances, are forward-looking statements. Readers are cautioned that these forward-looking state-
ments are only predictions and may differ materially from actual future events or results. Readers are urged to read the documents filed by Cisco with the SEC, specifically the most recent reports on Form 10-K, 10-Q,
and 8-K, which identify risk factors that could cause actual results to differ materially from the forward-looking statements. These risk factors include, among others: business and economic conditions and growth
trends in the networking industry and in various geographic regions; global economic conditions and uncertainties in the geopolitical environment; overall information technology spending; the growth of the
Internet and levels of capital spending on Internet-based systems; variations in customer demand for products and services, including sales to the service provider market; the timing of orders and manufacturing lead
times; changes in customer order patterns or customer mix; insufficient, excess, or obsolete inventory; variability of component costs; increased price competition; variations in sales channels, product costs, or
mix of products sold; the ability to successfully acquire businesses and technologies and to successfully integrate and operate these acquired businesses and technologies; increased competition in the networking indus-
try; dependence on the introduction and market acceptance of new product offerings and standards; rapid technological and market change; manufacturing and sourcing risks; product defects and returns; litiga-
tion involving patents, intellectual property, antitrust, stockholder, and other matters; the ability to recruit and retain key personnel; financial risk management; currency fluctuations and other international
factors; and potential volatility in operating results. The financial information contained in this Annual Report should be read in conjunction with the Consolidated Financial Statements and notes thereto that are included
in this report. We undertake no obligation to revise or update any forward-looking statements for any reason.