Press Release

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

Already the market leader for small routers designed to tie branch offices and remote users into corporate networks, Cisco, through this acquisition, 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 internetworking vendor to now offer users a choice of all three leading technologies for remote access connectivity: standalone routers, software-only PC-based routers, and communication servers.

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

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

"Just as the Crescendo acquisition formed the nucleus of our workgroup product development, Newport technology will be at the core of our efforts 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 PC expertise, network operating system experience and open software architecture with Cisco's potent Internetworking Operating System(tm) (IOS) software functionality offers the promise of even better solutions for the remote access market going forward."

Terms of the Agreement

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

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

Newport presently has 55 employees and designs, manufactures and markets multiprotocol routing solutions for WANs and LANs. The company's LAN2LAN routers support multiple Novell and non-Novell platforms and are capable of routing IPX, AppleTalk and TCP/IP traffic. Supported WAN technologies include Frame Relay, X.25, and PPP. In the U.S., the company's products are available through Ingram Micro, Tech Data, and GBC Technologies/Vitek. Internationally, the company's products are marketed by more than 50 leading distributors.

Cisco Systems, Inc., is the leading worldwide supplier of high-performance, multimedia and multiprotocol internetworking products, including routers, bridges, workgroup systems for 10-Mbps/100-Mbps data transmission, ATM switches, communication servers and router management software. Cisco technology is used to build enterprise-wide networks linking an unlimited number of geographically dispersed LANs, WANs and IBM SNA networks. In the United States, Cisco is traded over the counter under the NASDAQ symbol CSCO.