Cisco 2015 Annual Report Download - page 39

IF WE DO NOT SUCCESSFULLY MANAGE OUR STRATEGIC ALLIANCES, WE MAY NOT REALIZE THE
EXPECTED BENEFITS FROM SUCH ALLIANCES AND WE MAY EXPERIENCE INCREASED COMPETITION
OR DELAYS IN PRODUCT DEVELOPMENT
We have several strategic alliances with large and complex organizations and other companies with which we work to offer
complementary products and services and have established a joint venture to market services associated with our Cisco Unified
Computing System products. These arrangements are generally limited to specific projects, the goal of which is generally to
facilitate product compatibility and adoption of industry standards. There can be no assurance we will realize the expected
benefits from these strategic alliances or from the joint venture. If successful, these relationships may be mutually beneficial and
result in industry growth. However, alliances carry an element of risk because, in most cases, we must compete in some business
areas with a company with which we have a strategic alliance and, at the same time, cooperate with that company in other
business areas. Also, if these companies fail to perform or if these relationships fail to materialize as expected, we could suffer
delays in product development or other operational difficulties. Joint ventures can be difficult to manage, given the potentially
different interests of joint venture partners.
OUR STOCK PRICE MAY BE VOLATILE
Historically, our common stock has experienced substantial price volatility, particularly as a result of variations between our
actual financial results and the published expectations of analysts and as a result of announcements by our competitors and us.
Furthermore, speculation in the press or investment community about our strategic position, financial condition, results of
operations, business, security of our products, or significant transactions can cause changes in our stock price. In addition, the
stock market has experienced extreme price and volume fluctuations that have affected the market price of many technology
companies, in particular, and that have often been unrelated to the operating performance of these companies. These factors, as
well as general economic and political conditions and the announcement of proposed and completed acquisitions or other
significant transactions, or any difficulties associated with such transactions, by us or our current or potential competitors, may
materially adversely affect the market price of our common stock in the future. Additionally, volatility, lack of positive
performance in our stock price or changes to our overall compensation program, including our stock incentive program, may
adversely affect our ability to retain key employees, virtually all of whom are compensated, in part, based on the performance of
our stock price.
THERE CAN BE NO ASSURANCE THAT OUR OPERATING RESULTS AND FINANCIAL CONDITION WILL NOT
BE ADVERSELY AFFECTED BY OUR INCURRENCE OF DEBT
We had senior unsecured notes outstanding in an aggregate principal amount of $25.3 billion as of July 25, 2015 that mature at
specific dates from calendar year 2015 through 2040. We have also established a commercial paper program under which we may
issue short-term, unsecured commercial paper notes on a private placement basis up to a maximum aggregate amount outstanding
at any time of $3.0 billion, and we had no commercial paper notes outstanding under this program as of July 25, 2015. The
outstanding senior unsecured notes bear fixed-rate interest payable semiannually, except $3.25 billion of the notes which bears
interest at a floating rate payable quarterly. The fair value of the long-term debt is subject to market interest rate volatility. The
instruments governing the senior unsecured notes contain certain covenants applicable to us and our wholly-owned subsidiaries
that may adversely affect our ability to incur certain liens or engage in certain types of sale and leaseback transactions. In
addition, we will be required to have available in the United States sufficient cash to service the interest on our debt and repay all
of our notes on maturity. There can be no assurance that our incurrence of this debt or any future debt will be a better means of
providing liquidity to us than would our use of our existing cash resources, including cash currently held offshore. Further, we
cannot be assured that our maintenance of this indebtedness or incurrence of future indebtedness will not adversely affect our
operating results or financial condition. In addition, changes by any rating agency to our credit rating can negatively impact the
value and liquidity of both our debt and equity securities, as well as the terms upon which we may borrow under our commercial
paper program or future debt issuances.
Item 1B. Unresolved Staff Comments
Not applicable.
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