Cisco 2012 Annual Report Download - page 48

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
This Annual Report on Form 10-K, including this Management’s Discussion and Analysis of Financial Condition
and Results of Operations, contains forward-looking statements regarding future events and our future results
that are subject to the safe harbors created under the Securities Act of 1933 (the “Securities Act”) and the
Securities Exchange Act of 1934 (the “Exchange Act”). All statements other than statements of historical facts
are statements that could be deemed forward-looking statements. These statements are based on current
expectations, estimates, forecasts, and projections about the industries in which we operate and the beliefs and
assumptions of our management. Words such as “expects,” “anticipates,” “targets,” “goals,” “projects,”
“intends,” “plans,” “believes,” “seeks,” “estimates,” “continues,” “endeavors,” “strives,” “may,” variations of
such words and similar expressions are intended to identify such forward-looking statements. In addition, any
statements that refer to projections of our future financial performance, our anticipated growth and trends in our
businesses, and other characterizations of future events or circumstances are forward-looking statements. Readers
are cautioned that these forward-looking statements are only predictions and are subject to risks, uncertainties,
and assumptions that are difficult to predict, including those identified below, under “Part I, Item 1A. Risk
Factors,” and elsewhere herein. Therefore, actual results may differ materially and adversely from those
expressed in any forward-looking statements. We undertake no obligation to revise or update any forward-
looking statements for any reason.
OVERVIEW
We design, manufacture, and sell Internet Protocol (“IP”) based networking and other products related to the
communications and information technology (“IT”) industry and provide services associated with these products
and their use. We provide a broad line of products for transporting data, voice, and video within buildings, across
campuses, and around the world. Our products are designed to transform how people connect, communicate, and
collaborate. Our products are installed at enterprise businesses, public institutions, telecommunications
companies and other service providers, commercial businesses, and personal residences.
A summary of our results is as follows, for further details see our Results of Operations on page 50 (in millions,
except percentages and per-share amounts):
Three Months Ended Fiscal Year Ended
July 28,
2012
July 30,
2011 Variance
July 28,
2012
July 30,
2011 Variance
Net sales ............................... $11,690 $11,195 4.4% $46,061 $43,218 6.6%
Gross margin percentage ................... 60.6% 61.3% (0.7)pts 61.2% 61.4% (0.2)pts
Research and development ................. $ 1,416 $ 1,484 (4.6)% $ 5,488 $ 5,823 (5.8)%
Sales and marketing ....................... $ 2,417 $ 2,520 (4.1)% $ 9,647 $ 9,812 (1.7)%
General and administrative ................. $ 711 $ 532 33.6% $ 2,322 $ 1,908 21.7%
Total R&D, sales and marketing, general and
administrative ......................... $ 4,544 $ 4,536 0.2% $17,457 $17,543 (0.5)%
Total as a percentage of revenue ............. 38.9% 40.5% (1.6)pts 37.9% 40.6% (2.7)pts
Amortization of purchased intangible assets .... $ 91 $ 101 (9.9)% $ 383 $ 520 (26.3)%
Restructuring and other charges ............. $ 79 $ 768 (89.7)% $ 304 $ 799 (62.0)%
Operating income as a percentage of revenue . . . 20.3% 13.0% 7.3 pts 21.9% 17.8% 4.1 pts
Income tax percentage ..................... 19.7% 16.0% 3.7 pts 20.8% 17.1% 3.7 pts
Net income ............................. $ 1,917 $ 1,232 55.6% $ 8,041 $ 6,490 23.9%
Net income as a percentage of revenue ........ 16.4% 11.0% 5.4 pts 17.5% 15.0% 2.5 pts
Earnings per share-diluted .................. $ 0.36 $ 0.22 63.6% $ 1.49 $ 1.17 27.4%
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