Cisco 2014 Annual Report Download - page 118

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13. Shareholders’ Equity
(a) Cash Dividends on Shares of Common Stock
During fiscal 2014, the Company declared and paid cash dividends of $0.72 per common share, or $3.8 billion, on the
Company’s outstanding common stock. During fiscal 2013, the Company declared and paid cash dividends of $0.62 per
common share, or $3.3 billion, on the Company’s outstanding common stock.
On August 26, 2014, the Company’s Board of Directors declared a quarterly dividend of $0.19 per common share to be paid
on October 22, 2014 to all shareholders of record as of the close of business on October 2, 2014. Any future dividends will be
subject to the approval of the Company’s Board of Directors.
(b) Stock Repurchase Program
In September 2001, the Company’s Board of Directors authorized a stock repurchase program. As of July 26, 2014, the Company’s
Board of Directors had authorized an aggregate repurchase of up to $97 billion of common stock under this program, and the
remaining authorized repurchase amount was $8.6 billion, with no termination date. A summary of the stock repurchase activity under
the stock repurchase program, reported based on the trade date, is summarized as follows (in millions, except per-share amounts):
Shares
Repurchased
Weighted-
Average Price
per Share
Amount
Repurchased
Cumulative balance at July 28, 2012 ......................................... 3,740 $20.36 $76,133
Repurchase of common stock under the stock repurchase program (1) ............... 128 21.63 2,773
Cumulative balance at July 27, 2013 ....................................... 3,868 20.40 78,906
Repurchase of common stock under the stock repurchase program (1) ........... 420 22.71 9,539
Cumulative balance at July 26, 2014 ....................................... 4,288 $20.63 $88,445
(1) Includes stock repurchases of $126 million, which were pending settlement as of July 26, 2014. There were no stock
repurchases pending settlement as of July 27, 2013.
The purchase price for the shares of the Company’s stock repurchased is reflected as a reduction to shareholders’ equity. The
Company is required to allocate the purchase price of the repurchased shares as (i) a reduction to retained earnings and (ii) a
reduction of common stock and additional paid-in capital. Issuance of common stock and the tax benefit related to employee
stock incentive plans are recorded as an increase to common stock and additional paid-in capital.
(c) Restricted Stock Unit Withholdings
For the years ended July 26, 2014 and July 27, 2013, the Company repurchased approximately 18 million and 16 million
shares, or $430 million and $330 million, of common stock, respectively, in settlement of employee tax withholding
obligations due upon the vesting of restricted stock or stock units.
(d) Preferred Stock
Under the terms of the Company’s Articles of Incorporation, the Board of Directors may determine the rights, preferences, and
terms of the Company’s authorized but unissued shares of preferred stock.
14. Employee Benefit Plans
(a) Employee Stock Incentive Plans
Stock Incentive Plan Program Description As of July 26, 2014, the Company had four stock incentive plans: the 2005 Stock
Incentive Plan (the “2005 Plan”); the 1996 Stock Incentive Plan (the “1996 Plan”); the Cisco Systems, Inc. SA Acquisition Long-
Term Incentive Plan (the “SA Acquisition Plan”); and the Cisco Systems, Inc. WebEx Acquisition Long-Term Incentive Plan (the
“WebEx Acquisition Plan”). In addition, the Company has, in connection with the acquisitions of various companies, assumed the
share-based awards granted under stock incentive plans of the acquired companies or issued share-based awards in replacement
thereof. Share-based awards are designed to reward employees for their long-term contributions to the Company and provide
incentives for them to remain with the Company. The number and frequency of share-based awards are based on competitive
practices, operating results of the Company, government regulations, and other factors. Since the inception of the stock incentive
plans, the Company has granted share-based awards to a significant percentage of its employees, and the majority has been
granted to employees below the vice president level. The Company’s primary stock incentive plans are summarized as follows:
2005 Plan As of July 26, 2014, the maximum number of shares issuable under the 2005 Plan over its term was 694 million
shares, plus the number of any shares underlying awards outstanding on November 15, 2007 under the 1996 Plan, the SA
Acquisition Plan, and the WebEx Acquisition Plan that are forfeited or are terminated for any other reason before being
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