• Q4 Revenues: $4.7 Billion
• Q4 Operating Cash Flow: $1.55 Billion
• Q4 Earnings Per Share: $0.14 GAAP (40% increase year over year); $0.15 Pro Forma

SAN JOSE, Calif., August 5, 2003 - Cisco Systems, Inc., the worldwide leader in networking for the Internet, today reported its fourth quarter and fiscal year results for the periods ended July 26, 2003. .

Net sales for the fourth quarter of fiscal 2003 were $4.7 billion, compared with $4.8 billion for the fourth quarter of fiscal 2002, a decrease of 2.6 percent, and compared with $4.6 billion for the third quarter of fiscal 2003.

Net income for the fourth quarter of fiscal 2003, on a generally accepted accounting principles (GAAP) basis, was $982 million or $0.14 per share, compared with $772 million or $0.10 per share for the fourth quarter of fiscal 2002, and compared with $987 million or $0.14 per share for the third quarter of fiscal 2003. Pro forma net income for the fourth quarter of fiscal 2003 was $1.1 billion or $0.15 per share, compared with pro forma net income of $1.0 billion or $0.14 per share for the fourth quarter of fiscal 2002, and compared with $1.1 billion or $0.15 per share for the third quarter of fiscal 2003. A reconciliation between net income on a GAAP basis and pro forma net income is provided in a table immediately following the Pro Forma Consolidated Statements of Operations.

Net sales for fiscal 2003 were $18.9 billion, compared with $18.9 billion for fiscal 2002.

Net income for fiscal 2003, on a GAAP basis, was $3.6 billion or $0.50 per share, compared with $1.9 billion or $0.25 per share for fiscal 2002. Pro forma net income for fiscal 2003 was $4.3 billion or $0.59 per share, compared with pro forma net income of $2.9 billion or $0.39 per share for fiscal 2002.

During the fourth quarter of fiscal 2003, CiscoR completed the acquisition of SignalWorks, Inc. for a purchase price of approximately $16 million and completed the acquisition of the business of The Linksys Group, Inc. for a purchase price of approximately $480 million.

"We are pleased to report another solid quarter in a challenging market,"said John Chambers, President and CEO, Cisco Systems. "We continue to achieve some of the best financial measurements in our company's history, with solid momentum spanning net income, gross margins, profitable market share gains, focus on profit contribution, geographic balance and advanced technology results."

Chambers continued, "The investments and strategies of the past three years are paying off. This is particularly true in high-end routing and switching, where we saw solid sequential growth. Advanced technologies in total exceeded 20 percent sequential growth, with IP telephony, storage and optical growing the fastest in terms of orders."

Cisco will discuss fourth quarter and fiscal year 2003 results and business outlook on a conference call and Webcast at 1:30 p.m. PT today. Call information and related charts are available at http://investor.cisco.com.

Financial Highlights

• Cash flows from operations were $1.55 billion for the fourth quarter of fiscal 2003, compared with $1.61 billion for the fourth quarter of fiscal 2002, and compared with $1.26 billion for the third quarter of fiscal 2003. Cash flows from operations were $5.24 billion for fiscal 2003, compared with $6.59 billion for fiscal 2002.
• Cash and cash equivalents and total investments were $20.7 billion at the end of fiscal 2003, compared with $21.5 billion at the end of fiscal year 2002, and compared with $20.3 billion at the end of the third quarter of fiscal 2003.
• During the fourth quarter of fiscal 2003, Cisco repurchased 83 million shares of common stock for an aggregate purchase price of $1.4 billion. For fiscal 2003, Cisco repurchased 424 million shares of common stock for an aggregate purchase price of $6.0 billion.
• Days sales outstanding (DSO) in accounts receivable at the end of the fourth quarter of fiscal 2003 were 26 days, compared with 21 days at the end of the fourth quarter of fiscal 2002, and compared with 23 days at the end of the third quarter of fiscal 2003.
• Inventory turns were 6.8 for the fourth quarter of fiscal 2003, compared with 7.1 for the fourth quarter of fiscal 2002, and compared with 7.0 for the third quarter of fiscal 2003.

"Cisco's solid financial performance reflects our ongoing focus on operational excellence," said Dennis Powell, Chief Financial Officer, Cisco Systems. "For over a year, our quarterly pro forma net income has consistently exceeded $1 billion and profit has exceeded 20 percent of revenue. Cash flows from operations were also particularly strong and we continued to actively engage in our stock repurchase program while maintaining over $20 billion in cash and investments."

Business Highlights

• Cisco and service provider BellSouthR expanded their relationship with an agreement to team to implement the infrastructure for BellSouth to deliver advanced voice- and data-managed services to businesses throughout BellSouth's nine-state region. BellSouth also selected the Cisco ONS 15454 SONET Multiservice Provisioning Platform (MSPP) as part of BellSouth's plans to upgrade its traditional Synchronous Optical Network (SONET) network to an advanced optical network infrastructure.
• Cisco introduced the Structured Wireless-Aware Network, an integrated secure wired and wireless framework that extends local area networking (LAN) infrastructure capabilities to the wireless LAN.
• IdleAire Technologies Corporation announced it is offering wireless Internet connectivity, based on Cisco AironetR 1200 Series access points, to long-haul truck drivers and other business professionals along the nation's highways.
• Cisco shipped its 2 millionth Internet Protocol (IP) telephone.
• Time Warner Cable announced plans to deliver the industry's first voice-over-IP (VoIP) cable primary-line residential telephone service, based on the Cisco IP voice solution, across its existing multiservice network to customers in Portland, Maine.
• In the storage and data-center networking arena, IBM will be the first vendor to offer the Cisco MDS 9000 IP Storage Services Module. Cisco also announced new storage area networking customers AXA Technology and the IT division of Euronext.liffe.
• DACOM, one of the leading communications providers in Korea, is deploying 10-gigabits-per-second (Gbps) Cisco 12406, 12410 and 12416 routers for the expansion of its BORANet backbone network.
• Cisco introduced 14 new integrated security solutions and services, providing security management, virtual private network (VPN) technology and advanced threat protection.
• The government of Jordan, together with Cisco and other World Economic Forum member organizations, announced The Jordan Education Initiative to improve education through the use of technology and the delivery of effective e-learning to Jordan citizens.

Editors Note:

• Q4 and FY'03 conference call to discuss Cisco results along with its outlook for Q1 FY'04 to be held at 1:30 p.m. PT on Tuesday, August 5, 2003. Conference call number is 800-779-9573 (United States); 210-234-8039 (international).
• Conference call replay available from 4:30 p.m. PT on August 5, 2003 to 4:30 p.m. PT on August 12, 2003 at 888-568-0916 (United States); 402-998-1588 (international).
• Additional information regarding Cisco's financials and corresponding Webcast with visuals designed to guide participants through the call is also available at 1:30 p.m. PT. Prepared remarks will be available approximately 24 hours after completion of the call. The Webcast will include both the prepared remarks, as well as the question-and-answer session. This information, along with GAAP reconciliation information, will be available at http://www.cisco.com under "About Cisco" in the Investor Relations section.

Additional information regarding Cisco's Q4 and FY'03 results will be available at http://newsroom.cisco.com