. Q2 Net Sales: $9.8 billion (increase of 8% year over year)
. Q2 Net Income: $1.9 billion GAAP; $2.3 billion non-GAAP
. Q2 Earnings per Share: $0.32 GAAP (increase of 23% year over year); $0.40 non-GAAP (increase of 25% year over year)
SAN JOSE, Calif. – February 3, 2010 – Cisco, the worldwide leader in networking that transforms how people connect, communicate and collaborate, today reported its second quarter results for the period ended January 23, 2010. Cisco reported second quarter net sales of $9.8 billion, net income on a generally accepted accounting principles (GAAP) basis of $1.9 billion or $0.32 per share, and non-GAAP net income of $2.3 billion or $0.40 per share.

"Our outstanding Q2 results exceeded our expectations and we believe they provide a clear indication that we are entering the second phase of the economic recovery. During the quarter we saw dramatic across the board acceleration and sequential improvement in our business in almost all areas," said John Chambers, chairman and chief executive officer, Cisco.

"We are confident that our aggressive strategy of investing in the business during the downturn and our focus on innovation, operational excellence, and productivity are driving our momentum and growth in the market. We believe that we are extremely well-positioned—by geography, in our customer segments, and in our key product categories—as economies around the world continue to improve and our customers increase their technology investments."

GAAP Results
Q2 2010 Q2 2009 Vs. Q2 2009
Net Sales $9.8 billion $9.1 billion 8.0%
Net Income $1.9 billion $1.5 billion 23.2%
Earnings per Share $0.32 $0.26 23.1%

Non-GAAP Results

Q2 2010 Q2 2009 Vs. Q2 2009
Net Income $2.3 billion $1.9 billion 25.3%
Earnings per Share $0.40 $0.32 25.0%

Net sales for the first six months of fiscal 2010 were $18.8 billion, compared with $19.4 billion for the first six months of fiscal 2009. Net income for the first six months of fiscal 2010, on a GAAP basis, was $3.6 billion or $0.62 per share, compared with $3.7 billion or $0.63 per share for the first six months of fiscal 2009. Non-GAAP net income for the first six months of fiscal 2010 was $4.5 billion or $0.76 per share, compared with $4.4 billion or $0.74 per share for the first six months of fiscal 2009.

Other Financial Highlights


Cash flows from operations were $2.5 billion for the second quarter of fiscal 2010, compared with $1.5 billion for the first quarter of fiscal 2010, and compared with $3.2 billion for the second quarter of fiscal 2009.
Cash and cash equivalents and investments were $39.6 billion at the end of the second quarter of fiscal 2010, compared with $35.0 billion at the end of fiscal 2009, and compared with $35.4 billion at the end of the first quarter of fiscal 2010.
During the second quarter of fiscal 2010, Cisco repurchased 63 million shares of common stock at an average price of $23.96 per share for an aggregate purchase price of $1.5 billion. As of January 23, 2010, Cisco had repurchased and retired 2.9 billion shares of Cisco common stock at an average price of $20.55 per share for an aggregate purchase price of approximately $60.4 billion since the inception of the stock repurchase program. The remaining authorized repurchase amount as of January 23, 2010 was $11.6 billion with no termination date.
Days sales outstanding in accounts receivable (DSO) at the end of the second quarter of fiscal 2010 were 39 days, compared with 32 days at the end of the first quarter of fiscal 2010, and compared with 29 days at the end of the second quarter of fiscal 2009.
Inventory turns on a GAAP basis were 12.1 in the second quarter of fiscal 2010, compared with 11.6 in both the first quarter of fiscal 2010 and the second quarter of fiscal 2009. Non-GAAP inventory turns were 11.7 in the second quarter of fiscal 2010, compared with 11.3 in both the first quarter of fiscal 2010 and the second quarter of fiscal 2009.

"From a financial standpoint, Q2 was an outstanding quarter. Our performance with an eight percent year-over-year increase in Q2 revenue represents our third sequential quarter of positive growth and was well above the strong guidance we outlined during our first quarter conference call," said Frank Calderoni, chief financial officer, Cisco. "We delivered strong gross margins and added $2.5 billion in cash from operations during our second quarter, bringing our total of cash and investments to $39.6 billion. We believe that these results demonstrate the strong foundation from which we can continue to focus on growing and capturing market transitions in our industry."

Select Global Business Highlights

Cisco, EMC Corp., and VMware, Inc., announced the formation of a Virtual Computing Environment coalition designed to accelerate pervasive data center virtualization and private cloud infrastructure development.
Cisco marked its 25th anniversary with a challenge to every Cisco employee to volunteer four hours of service in his or her local community.
Acquisitions and Investments

Cisco completed its purchase of ScanSafe, Inc., a market leader of software-as-a-service (SaaS) web security solutions for organizations ranging from global enterprises to small businesses.
Cisco completed the acquisition of Starent Networks, Corp., a leading supplier of IP-based mobile infrastructure solutions targeting mobile and converged carriers.
Cisco Innovation

At its Collaboration Summit, Cisco introduced new products in Cisco TelePresenceTM, unified communications, enterprise social software, and hosted email technologies to facilitate fundamental changes to how organizations communicate and collaborate.
At the 2010 International Consumer Electronics Show, Cisco showcased its vision to enable consumers to live a connected life through its momentum in home networking and consumer video products, new partnerships with media and entertainment companies, and plans to drive a new class of consumer video communication experiences.

A reconciliation between net income on a GAAP basis and non-GAAP net income is provided in the table on page 6. Cisco will discuss second quarter results and business outlook on a conference call and webcast at 1:30 p.m. Pacific Time today. Call information and related charts are available at http://www.cisco.com/go/investors. A Q&A with Cisco's Chairman and CEO John Chambers and CFO Frank Calderoni will also be available at http://newsroom.cisco.com. To view a video of Cisco's CFO discussing second quarter results, visit http://blogs.cisco.com