ARISTA NETWORKS, INC. (NYSE:ANET) Files An 8-K Entry into a Material Definitive Agreement
Item 2.02

Entry into a Material Definitive Agreement.

On August6, 2018, Arista Networks, Inc. (the “Company”) entered into a binding term sheet with Cisco Systems, Inc. (“Cisco”) which, upon execution of a final agreement, will result in the dismissal of all pending district court and ITC litigation between the parties. Under the binding term sheet, the Company will pay Cisco $400 million by August 20, 2018. Cisco will grant the Company a release for all claims of infringement with respect to the patent infringement allegations against the Company in the pending litigation. The Company will grant Cisco a release from all past antitrust claims. These mutual releases will extend to the Company’s and Cisco’s customers, contract manufacturers, and partners. The parties have further agreed to a five-year stand-down period as to any utility patent infringement claims either may have against features currently implemented in the other party’s products and services, with some carve-outs for products stemming from acquired companies. The parties further agreed to a three-year dispute resolution process for allegations by either party against new and/or modified features in the other party’s products. The Company also agreed to make certain modifications to its Command Line Interface (“CLI”). In light of the binding term sheet, the parties are planning to seek a continuance and/or stay of their jury trial in Arista Networks, Inc. v. Cisco Systems Inc., Case No. 5:16-cv-00923-BLF, which is set to commence on August 6, 2018.

Adjustment to Second Quarter 2018 GAAP Financial Results

As a result of the agreement described in Item 2.02 above, the Company will revise its second quarter 2018 GAAP financial results reported on Form 8-K dated August 2, 2018. The Company will record a legal settlement charge of $405 million to operating expenses, which includes legal fees associated with the settlement, and a reduction of $99 million to its provision for income taxes, resulting in a revised GAAP net loss for the quarter of$155.3 million. In addition, the Company will record an increase of $405 million in total current liabilities, an increase of $85 million in prepaid expenses and other current assets, and an increase of $14 million in deferred tax assets. These adjustments do not impact the Company’s non-GAAP financial results, given the Company’s practice of excluding costs related to the Cisco and OptumSoft, Inc. lawsuits from its non-GAAP results.

The information set forth in this Item 2.02, “Results of Operations and Financial Condition” of Form 8-K shall not be deemed “filed” for purposes of Section18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

The information set forth in Item 2.02 above relating to the settlement of the Cisco litigation matters and the binding term sheet is hereby incorporated by reference into this Item 2.02.

About ARISTA NETWORKS, INC. (NYSE:ANET)

Arista Networks, Inc. is a supplier of cloud networking solutions that address the needs of Internet companies, cloud service providers and next-generation data centers for enterprises. The Company’s cloud networking solutions consist of its Extensible Operating System (EOS), which is a set of network applications and its 10/25/40/50/100 Gigabit Ethernet switches. EOS is purpose-built to be programmable and modular. The programmability of EOS allows it to create a set of software applications that address the requirements of cloud networking, including workflow automation, network visibility and analytics, and allows it to integrate with a range of third-party applications for virtualization, management, automation, orchestration and network services. It offers a product line of data center 10/25/40/50/100 Gigabit Ethernet switches comprising its 7050X Series, 7060X Series, 7150 Series, 7260 Series, 7280 leaf switches, 7300X Series Spline switches and its 7500E Series spine switches.