SAN JOSE, Calif. - Aug. 7, 2007 - Cisco®, the worldwide leader in networking that transforms how people connect, communicate and collaborate, today reported its fourth quarter and fiscal year results for the period ended July 28, 2007. Cisco reported fourth quarter net sales of $9.4 billion, net income on a generally accepted accounting principles (GAAP) basis of $1.9 billion or $0.31 per share, and non-GAAP net income of $2.3 billion or $0.36 per share.

"Cisco delivered another record quarter with great execution across the company," said John Chambers, Chairman and CEO, Cisco. "Again, the performance was based on our balanced approach across products, services, geographies and customer segments and our ability to catch and execute on key market transitions.

"As we turn our attention to the next fiscal year, we believe that we are headed into a new era in networking that we define as the second phase of the Internet. We expect that this phase will be driven by collaboration and Web 2.0 technologies and will become an increasingly influential market trend for businesses. Collaboration has already transformed almost every area of our business internally, resulting in the potential for dramatic gains in productivity and efficiency. We believe this new model will help enable Cisco to identify, target and capture market opportunities more effectively than at any other time in our history."

Scientific-Atlanta, Inc., acquired on February 24, 2006, contributed $2.8 billion to net sales for fiscal 2007, compared with $989 million for fiscal 2006.

A reconciliation between GAAP net income and non-GAAP net income is provided in the table on page 6.

Cisco will discuss fourth quarter and fiscal year 2007 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://investor.cisco.com.

Other Financial Highlights

• Cash flows from operations were $2.7 billion for the fourth quarter of fiscal 2007, compared with $2.3 billion for the fourth quarter of fiscal 2006, and compared with $2.4 billion for the third quarter of fiscal 2007. Cash flows from operations were $10.1 billion for fiscal 2007, compared with $7.9 billion for fiscal 2006.
• Cash and cash equivalents, and investments were $22.3 billion at the end of fiscal 2007, compared with $17.8 billion at the end of fiscal 2006, and compared with $22.3 billion at the end of the third quarter of fiscal 2007.
• During the fourth quarter of fiscal 2007, Cisco repurchased 54 million shares of common stock at an average price of $27.33 per share for an aggregate purchase price of $1.5 billion. During fiscal 2007, Cisco repurchased 297 million shares of common stock at an average price of $26.12 per share for an aggregate purchase price of $7.8 billion. As of July 28, 2007, Cisco had repurchased and retired 2.2 billion shares of Cisco common stock at an average price of $19.40 per share for an aggregate purchase price of approximately $43.2 billion since the inception of the stock repurchase program. On July 26, 2007, our Board of Directors had authorized the repurchase of up to an additional $5 billion of common stock under this program. The remaining authorized repurchase amount as of July 28, 2007 was $8.8 billion with no termination date.
• Days sales outstanding in accounts receivable (DSO) at the end of the fourth quarter of fiscal 2007 were 38 days, compared with 38 days at the end of the fourth quarter of fiscal 2006, and compared with 33 days at the end of the third quarter of fiscal 2007.
• Inventory turns on a GAAP basis were 10.3 in the fourth quarter of fiscal 2007, compared with 8.5 in the fourth quarter of fiscal 2006, and compared with 8.8 in the third quarter of fiscal 2007. Non-GAAP inventory turns were 10.1 in the fourth quarter of fiscal 2007, compared with 8.3 in the fourth quarter of fiscal 2006, and compared with 8.6 in the third quarter of fiscal 2007.

"We are very pleased with Cisco's financial results reflecting another record quarter of revenue and non-GAAP net income as well as a record quarter for cash flow from operations," said Dennis Powell, chief financial officer, Cisco.

"Our strategy is clearly working as we have consistently met or exceeded expectations for many years. This has resulted in Cisco's ability to increase shareholder value on an average of over 22 percent earnings per share growth, year-over-year, for the past 16 quarters."

Business Highlights

Acquisitions and Investments

• Cisco announced that it will invest $150 million to purchase an equity stake in VMware, Inc., subject to regulatory and other closing conditions. Cisco's investment is intended to strengthen intercompany collaboration toward accelerating customer adoption of VMware virtualization products for use with Cisco networking infrastructure.
• Cisco completed the acquisitions of WebEx Communications, Inc., IronPort Systems, Inc. and BroadWare Technologies, Inc.

New Products

• Cisco announced a major extension to the Cisco Unified Wireless Network, including a new wireless location solution and a new unified wireless network software release designed to mobilize assets across an enterprise environment.
• Cisco unveiled a broad array of innovative new data center products and solutions designed to help customers better utilize their data center resources, deploy more robust business continuance, build cost-effective storage area networks, and enhance data security. Cisco also outlined Data Center 3.0, its vision for the next-generation data center.
• Cisco launched the Self-Defending Network v. 3.0, an extension of Cisco's existing network security strategy that now includes wide traffic-inspection capabilities, combining the depth of network-level security with the breadth of capabilities for inspecting e-mail, Web and instant messaging traffic acquired through IronPort.
• Cisco introduced Cisco In-Store Mobility Solutions designed to help transform retail store environments by delivering highly secure, manageable and extensible mobile solutions designed to improve operations and enhance the consumer shopping experience.
• Cisco added Internet streaming media capabilities to its Content Delivery System, helping enable service providers to deploy next-generation video entertainment systems.
• Linksys® introduced enhanced entry-level Gigabit Smart Switches for small businesses and an easy-to-use, Web-based interface that helps small businesses to manage and configure their networks without a dedicated IT staff.
• Cisco and Scientific Atlanta announced the first of a new RF Gateway series of Universal Edge QAM products, providing cable operators a high level of performance, functionality, reliability and choice as they deploy expanded video on demand, switched digital video and high-speed data services.

Major Customer Announcements

• Scottrade announced implementation of a new, state-of-the-art data center that is expected to allow the company to continue to grow its business and meet the needs of its customers by being capable of processing up to one million transactions per day. A wide range of Cisco networking products powers this mission-critical data center including 50 Cisco Catalyst® 6500 Series Switches.
• NTELOS announced its deployment of the Cisco CRS-1 Carrier Routing System to support converged business and residential services including Layer 2 and Layer 3 VPNs and IPTV.
• The Government of Saskatchewan is deploying a Cisco Outdoor Wireless Network Solution to provide free Internet access to businesses, residents and visitors across the province's largest four cities. This will be Canada's largest outdoor wireless network and the first of its kind to be supported on a provincial or state level in North America.
• Airbus has completed deployment of a Cisco Unified Communications System to help improve collaboration, increase productivity and simplify its communications infrastructure, which will support 45,000 employees. The completion of the deployment marks the shipping of 12 million Cisco Unified IP Phones.
• Kabul, Afghanistan-based Aga Khan University Hospital launched telemedicine, a first-of-its-kind solution in that country to expand healthcare access and delivery across the country utilizing broadband, wireless video consultation and digital image-transfer technologies. The project is expected to provide hospitals in Afghanistan with real-time access to specialist diagnosis, treatment and training expertise from abroad.
• Bapatla Engineering College in India plans to deploy the Cisco Digital Media System to extend the classroom environment and create anywhere, anytime learning experiences through remote broadcast and viewing of lectures and on-demand video and other materials.

Key Milestones

• Combined Endeavor 2007, the world's largest multinational communications interoperability exercise, used an all-IP infrastructure powered by Cisco equipment to test and document the interoperability of vital communication systems of 42 nations for multinational forces deployed in humanitarian, peacekeeping and disaster-relief efforts.

Editor's Note:

• Q4 and FY 2007 conference call to discuss Cisco's results along with its business outlook to be held at 1:30 p.m. Pacific Time, Tuesday, August 7, 2007. Conference call number is 888-848-6507 (United States) or 212-519-0847 (international).
• Conference call replay will be available from 4:30 p.m. Pacific Time, August 7, 2007 to 4:30 p.m. Pacific Time, August 14, 2007 at 866-357-4205 (United States) or 203-369-0122 (international). The replay is also available from August 7, 2007 through October 19, 2007 on the Cisco Investor Relations Website at http://www.cisco.com/go/investors.
• Additional information regarding Cisco's financials, as well as a Webcast of the conference call with visuals designed to guide participants through the call, will be available at 1:30 p.m. Pacific Time, August 7, 2007. Text of the conference call's prepared remarks will be available within 24 hours of completion of the call. The Webcast will include both the prepared remarks and the question-and-answer session. This information, along with GAAP reconciliation information, will be available on the Cisco Investor Relations Website at http://www.cisco.com/go/investors.

A Q &A with Cisco's CEO and CFO about Q4 and FY 2007 results will be available at http://newsroom.cisco.com.

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