Cisco 2004 Annual Report Download - page 32

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Stock Repurchase Program
In September 2001, our Board of Directors authorized a stock repurchase program. As of July 31, 2004, our Board of Directors has
authorized the repurchase of up to $25 billion of common stock under this program. During fiscal 2004, we repurchased and retired
408 million shares of our common stock at an average price of $22.30 per share for an aggregate purchase price of $9.1 billion. As of
July 31, 2004, we have repurchased and retired 956 million shares of our common stock at an average price of $17.70 per share for an
aggregate purchase price of $16.9 billion since inception of the stock repurchase program, and the remaining authorized amount for
stock repurchases under this program was $8.1 billion with no termination date.
The purchase price for the shares of our common stock repurchased was reflected as a reduction to shareholders’ equity. In
accordance with Accounting Principles Board Opinion No. 6, “Status of Accounting Research Bulletins,” we are required to allocate
the purchase price of the repurchased shares as a reduction to retained earnings and common stock and additional paid-in capital.
Issuance of common stock and the tax benefit related to employee stock option plans are recorded as an increase to common stock
and additional paid-in capital. As a result of future repurchases, we may be required to report an accumulated deficit included in
shareholders’ equity in our Consolidated Balance Sheets.
Liquidity and Capital Resource Requirements
Based on past performance and current expectations, we believe our cash and cash equivalents, short-term investments, and cash
generated from operations will satisfy our working capital needs, capital expenditures, investment requirements, stock repurchases,
contractual obligations, commitments (see Note 8 to the Consolidated Financial Statements), future customer financings, and other
liquidity requirements associated with our operations through at least the next 12 months. We believe that the most strategic uses of
our cash resources include repurchase of shares, strategic investments to gain access to new technologies, acquisitions, financing activities,
and working capital. There are no transactions, arrangements, and other relationships with unconsolidated entities or other persons
that are reasonably likely to materially affect liquidity or the availability of our requirements for capital resources.
2004 ANNUAL REPORT 35
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS