Cisco 2005 Annual Report Download - page 25

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28
For purchase acquisitions completed to date, the development of these technologies remains a significant risk due to the remaining
efforts to achieve technical viability, rapidly changing customer markets, uncertain standards for new products, and significant
competitive threats. The nature of the efforts to develop these technologies into commercially viable products consists primarily of
planning, designing, experimenting, and testing activities necessary to determine that the technologies can meet market expectations,
including functionality and technical requirements. Failure to bring these products to market in a timely manner could result in a loss
of market share or a lost opportunity to capitalize on emerging markets and could have a material adverse impact on our business
and operating results.
The following table summarizes the key assumptions underlying the valuation for our purchase acquisitions completed in fiscal
2005 and fiscal 2004, for which in-process R&D was recorded (in millions, except percentages):









FISCAL 2005
Actona Technologies, Inc. $ 4 $ 1 24.0%
Airespace, Inc. 3 1 22.0%
dynamicsoft, Inc. 2 1 23.0%
FineGround Networks, Inc. 1 1 20.0%
P-Cube Inc. 6 2 24.0%
Perfigo, Inc. 2 1 22.0%
Protego Networks, Inc. 3 1 22.0%
Sipura Technology, Inc. 1 1 23.0%
Topspin Communications, Inc. 4 2 21.0%
Total $ 26 $ 11
FISCAL 2004
    
   
   
The key assumptions primarily consist of an expected completion date for the in-process projects; estimated costs to complete the
projects; revenue and expense projections, assuming the products have entered the market; and discount rates based on the risks
associated with the development lifecycle of the in-process technology acquired. Failure to achieve the expected levels of revenue
and net income from these products will negatively impact the return on investment expected at the time that the acquisitions were
completed and may result in impairment charges. Actual results from the purchase acquisitions to date did not have a material adverse
impact on our business and operating results.
Interest Income
The increase in interest income was primarily due to higher average interest rates on our portfolio of cash and cash equivalents and
fixed income securities, partially offset by a decrease in the portfolio balance.
Other Income (Loss), Net
The components of other income (loss), net, are as follows (in millions):
 July 30, 2005 
 $ 88  
 (5)  
 51   
 (39)  
 95  
 (27)   
 $ 68  
Management’s Discussion and Analysis of Financial Condition and Results of Operations