Cisco 2014 Annual Report Download - page 44

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 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 products and services related to the communications
and information technology (IT) industry. Our customers include businesses of all sizes, public institutions,
telecommunications companies, other service providers and individuals. We connect people, process, data and things with
products that transport data, voice, and video within buildings, across campuses, and around the world. We are a key strategic
partner to companies that helps them as they seek to make the most of the Internet of Everything (IoE) and connect the
unconnected.
A summary of our results is as follows (in millions, except percentages and per-share amounts):
Three Months Ended Fiscal Year Ended
July 26,
2014
July 27,
2013 Variance
July 26,
2014
July 27,
2013 Variance
Revenue ......................................... $12,357 $12,417 (0.5)% $47,142 $48,607 (3.0)%
Gross margin percentage ............................ 59.9% 59.2% 0.7pts 58.9% 60.6% (1.7)pts
Research and development .......................... $ 1,593 $ 1,517 5.0% $ 6,294 $ 5,942 5.9%
Sales and marketing ............................... $ 2,473 $ 2,360 4.8% $ 9,503 $ 9,538 (0.4)%
General and administrative .......................... $ 508 $ 590 (13.9)% $ 1,934 $ 2,264 (14.6)%
Total R&D, sales and marketing, general and
administrative .................................. $ 4,574 $ 4,467 2.4% $17,731 $17,744 (0.1)%
Total as a percentage of revenue ...................... 37.0% 36.0% 1.0pts 37.6% 36.5% 1.1pts
Amortization of purchased intangible assets ............ $68$ 66 3.0% $ 275 $ 395 (30.4)%
Restructuring and other charges ...................... $82$ — NM* $ 418 $ 105 298.1%
Operating income as a percentage of revenue ........... 21.7% 22.7% (1.0)pts 19.8% 23.0% (3.2)pts
Income tax percentage ............................. 19.1% 20.9% (1.8)pts 19.2% 11.1% 8.1pts
Net income ...................................... $ 2,247 $ 2,270 (1.0)% $ 7,853 $ 9,983 (21.3)%
Net income as a percentage of revenue ................. 18.2% 18.3% (0.1)pts 16.7% 20.5% (3.8)pts
Earnings per share—diluted ......................... $ 0.43 $ 0.42 2.4% $ 1.49 $ 1.86 (19.9)%
* Not meaningful
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