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Cisco to Acquire Newport Systems Solutions

San Jose, Calif., July 12, 1994 -- Cisco Systems, Inc. and NewportSystems Solutions today jointly announced a definitive agreement whereinCisco will acquire privately held Newport. As a leading supplier ofsoftware-based routers for connecting computer networks, Newport has aninstalled base of over 20,000 routers in one of the fastest growingsegments in remote access: small- and medium-sized businesses.

Already the market leader for small routers designed to tie branchoffices and remote users into corporate networks, Cisco, through thisacquisition, has added new technologies to its portfolio -- specifically,software-based routers for Intel-based PCs and network operating systems.

With the acquisition of Newport, Cisco becomes the only internetworkingvendor to now offer users a choice of all three leading technologies forremote access connectivity:standalonerouters, software-only PC-based routers, and communicationservers.

"A key to Cisco's success has been to anticipate market trends andreact quickly," said John Chambers, executive vice president of Cisco. "Inthe last two years we have introduced over a dozen new internally developedaccess routers. Looking forward, it was clear to us that software-onlyrouters are also going to be an increasingly popular choice for remoteaccess, not exclusively for Fortune 1000 customers, but for customers andnetworks of all sizes.

"With the success of our customers in mind, Newport was the obviouschoice for us to acquire," said Chambers. "In our opinion, they are theclear market and technology leader for access products insmall-to-medium-sized networks, and are the type of company that cansubstantially enhance our market position. Cisco's acquisition strategy isto seek out technologically innovative and nimble companies, with strongdistribution channels, that can quickly complement our existing offerings.

"Just as the Crescendoacquisition formed the nucleus ofour workgroup product development, Newport technology will be at the core of ourefforts to ultimately expand Cisco technology to the desktop."

"We feel that this acquisition was a natural step for both companies,"said Larry Stephenson, president and CEO of Newport. "Combining our PCexpertise, network operating system experience and open softwarearchitecture with Cisco's potent InternetworkingOperating System(tm) (IOS)software functionality offers the promise of even better solutions for theremote access market going forward."

Terms of the Agreement

Under terms of the agreement, Cisco has agreed to acquire all of theoutstanding stock and assume all the outstanding employee stock options andwarrants of Newport in exchange for 4,175,824 shares of Cisco common stock.The transaction, approved by the board of directors of both Cisco andNewport, is subject to several conditions, including approval of Newportshareholders and receipt of an opinion that the transaction will beaccounted for as a pooling of interest.

Newport will become a wholly owned subsidiary of Cisco Systems and willcontinue to be based in Newport Beach, California. Larry Stephenson,currently president and CEO of Newport, will become a vice president ofCisco and general manager of Newport.

Newport presently has 55 employees and designs, manufactures andmarkets multiprotocol routing solutions for WANs and LANs. The company'sLAN2LAN routers support multiple Novell and non-Novell platforms and arecapable of routing IPX, AppleTalk and TCP/IP traffic. Supported WANtechnologies include Frame Relay, X.25, and PPP. In the U.S., the company'sproducts are available through Ingram Micro, Tech Data, and GBCTechnologies/Vitek. Internationally, the company's products are marketed bymore than 50 leading distributors.

Cisco Systems, Inc., is the leading worldwide supplier ofhigh-performance, multimedia and multiprotocol internetworking products,including routers, bridges, workgroup systems for 10-Mbps/100-Mbps datatransmission, ATM switches, communication servers and router managementsoftware. Cisco technology is used to build enterprise-wide networkslinking an unlimited number of geographically dispersed LANs, WANs and IBMSNA networks. In the United States, Cisco is traded over the counter underthe NASDAQ symbol CSCO.

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