During FY07 Cisco continued to plan for the end-of-life management of our products by supporting recovery, reuse, and recycling programs. Our initiatives include:

• Offering a convenient channel for our customers to recycle Cisco products
• Addressing the global environmental and health problems caused by the improper disposal of electronics
• Taking advantage of revenue opportunities offered by the recovery of equipment and precious materials
• Protecting our brand integrity by minimizing unauthorized resale of Cisco equipment
• Complying with worldwide product lifecycle regulations and meeting customer requirements
• Minimizing future compliance costs

Cisco offers a range of programs to facilitate the flow of products from our customers to a controlled end-of-life process. We also apply these same processes to electronic products used within our operations and by our employees at home. These programs now make a positive revenue contribution to the company.

Sustainable Design

A key element of our product lifecycle management strategy is to design products so they can be easily recycled or reused. By designing for upgradeability and extension of product lifespan, Cisco produces high-quality networking products that are:

• Modular and scalable, so the product can be upgraded instead of replaced
• Compatible with previous and future versions of Cisco processing cards, so obsolescence is minimized
• Complementary with standard chassis dimensions, so customers can use their existing equipment racks

Products based on these design principles conserve materials and save costs when compared to designs that require customers to replace an entire system when they want to significantly increase network or product performance, functionality, or the number of users supported.

Recovery Programs

Cisco has a World Wide Reverse Logistics (WWRL) team that is charged with:

• Managing product recovery, reuse, and recycling programs
• Serving as a central clearinghouse for recovered products
• Determining how to maximize product reuse and minimize impact on the environment
• Collaborating with other Cisco departments to promote our programs
• Coordinating with our recycling partners
• Working with regulators to develop and comply with requirements

Equipment Upgrades

The Cisco Technology Migration Program enables customers to trade in Cisco or a competitor’s networking products in exchange for a credit toward the purchase of new Cisco products. This global program includes most major products offered by Cisco. The Cisco Exceptional Pick-Up Program facilitates the return of products that are not eligible for the Cisco Technology Migration Program.

Service and Warranty Returns

Cisco equipment is covered by warranties that enable customers to return nonfunctioning parts for reuse, recycling, or disposal. We refurbish returned products whenever possible and make them available to new customers, philanthropic programs, or internal Cisco groups.

Equipment Take-Backs

Product take-back and recycling, now available in most of Cisco’s major markets worldwide, allow customers to return Cisco equipment for environmentally responsible reuse, recycling, or disposal. When requested, Cisco also works with customers to handle the recovery and disposal of other brands of electronic equipment.

Recovering Materials

Cisco supports public-sector regulations, private-sector standards, and our own voluntary initiatives to reduce the quantity of electronic materials that end up in landfills. During FY07 we consolidated our worldwide recycling operations to four contractors, all of whom are certified to ISO 14001 environmental management system standards. The WWRL team meets regularly with recycling contractors to evaluate performance and further improve business processes. Our efforts during FY07 resulted in a 20-percent increase in the recovery of all materials.

Recycling Electronic Equipment

We encourage employees to reuse, reduce, and recycle unneeded personal and work-related electronics whenever possible. All Cisco campuses are equipped with conveniently located bins for recycling various types of electronic devices. Products that are no longer functional are disassembled into components and recycled. Those that can be refurbished are donated to nonprofit agencies and schools.

During our 2007 Earth Day celebration, 16 Cisco sites worldwide collected nearly 200 metric tons of unwanted personal and work-related electronic equipment, a 40 percent increase compared to FY06.

Reusing Products

The WWRL team serves as a central clearinghouse for returned products, assessing them to determine how best to reuse or recycle equipment and components. The WWRL also collaborates with internal users of equipment, such as Cisco service centers, engineering and testing laboratories, and demonstration laboratories. A portion of this recovered equipment goes to nonprofits and other worthy organizations.

Compliance Programs

Cisco has dedicated resources to help ensure successful implementation of programs that meet the requirements of the European Union (EU) Waste Electrical and Electronic Equipment (WEEE) Directive. Moreover, we have acted to extend our programs beyond basic compliance:

• While not legally obligated to do so, Cisco plans to recycle its products in all EU countries, as well as in Switzerland and Norway, at the levels required of “producers” under the EU directives.
• Where applicable, Cisco is pursuing the registration of the Linksys division and Scientific Atlanta subsidiary under the EU directives.
• We have created a database that enables detailed reporting of product lifecycle management systems.

Cisco is also working with the European Commission on upcoming WEEE Directive revisions, and taking an active role in key organizations such as the U.N.’s Solving the E-waste Problem (StEP), the Global e-Sustainability Initiative (GeSI), and the European Information & Communications Technology Industry Association (EICTA).

Progress and Future Plans

During FY07, Cisco recycled more than 7102 metric tons of electronic equipment globally. This represents a 75 percent increase over FY06.

In FY08 we plan to improve and expand WWRL’s programs globally. Focus areas include:

• Expanding our recovery and recycling presence in emerging markets
• Improving our programs and systems to accelerate recovery and reuse
• Increasing reuse of returned products by 20 percent