HEALTH

SAN JOSE, CA -- Cisco Systems, Inc., a worldwide leader in networking for the Internet, today reported its first quarter results for the period ending October 27, 2001. Net sales for the first quarter of fiscal 2002 were $4.4 billion, a sequential increase of 3% from the $4.3 billion in net sales for the fourth quarter of fiscal 2001. This compares to $6.5 billion in net sales for the same period last year, a decrease of 32%. Pro forma net income, which excludes the effects of acquisition charges, payroll tax on stock option exercises, net gains (losses) on investments, and an excess inventory benefit, was $332 million or $0.04 per share for the first quarter of fiscal 2002, compared with pro forma net income of $163 million or $0.02 per share for the fourth quarter of fiscal 2001, and $1.4 billion or $0.18 per share for the first quarter of fiscal 2001. During the first quarter of fiscal 2002, Cisco recorded a non-cash $858 million impairment charge on certain publicly held securities in its investment portfolio. Similar to the reporting treatment of realized gains in the past, Cisco has excluded the impairment charge, and the related tax benefit, from pro forma earnings. Cisco reflects publicly held securities at current market value on its balance sheet, and as such, the economic loss of the current impairment charge was previously recorded in earlier quarters on the balance sheet as an unrealized loss. Accounting rules require that once a decline in value is other than temporary, the company must record a charge to income. Cisco also completed the acquisitions of Allegro Systems, Inc. and AuroraNetics, Inc. The initial total combined purchase price recorded during the quarter, including assumed liabilities, was approximately $189 million. In addition, Cisco took a one-time charge of $37 million, or approximately $0.01 per share on an after-tax basis, as a write-off of in-process R&D. Actual net loss for the first quarter of fiscal 2002 was $268 million or $0.04 per share, compared with actual net income of $7 million or $0.00 per share for the fourth quarter of fiscal 2001, and $798 million or $0.11 per share for the same quarter last year. "Given the very challenging economic and capital spending environment, we were pleased to deliver a solid quarter with good order linearity, sequential revenue growth and profitable market share gains," said John Chambers, President and CEO of Cisco Systems. "We were especially pleased with the size of the market share gains when compared to our industry peers who on average reported sequential revenue decreases in the high teens." Cisco continues to deliver best-of-breed products across an end-to-end architecture that spans each of its key markets and technology. As a result of its recent reorganization, Cisco is accelerating its innovation and speeding time-to-market by streamlining its marketing and engineering organizations and enabling greater customer satisfaction with its technology solutions For more information visit www.cisco.com