News Release

Cisco Systems to Acquire Skystone Systems Corp.

Summary of Acquisitions Acquisition and Minority Investment
Jun 09, 1997

SAN JOSE, Calif. June 9, 1997 Cisco Systems, Inc. today announced it has signed a definitive agreement to acquire privately-held Skystone Systems Corp. of Ottawa, Ontario, Canada. Skystone is an innovator of high-speed Synchronous Optical Networking/Synchronous Digital Hierarchy (SONET/SDH) technology.

Under the terms of the acquisition, 1 million shares of Cisco common stock worth approximately $66.5 million (based upon Ciscos June 9 closing price of $66.50) and $22.6 million cash will be exchanged for all outstanding shares, warrants and options of Skystone. In connection with the acquisition, Cisco expects a one-time charge against after-tax earnings of between 8 and 13 cents per share in the fourth fiscal quarter of 1997. The acquisition has been approved by the Board of Directors of each company and is expected to be completed by mid-July subject to various closing conditions including Skystone shareholder approval.

Commitment to Developing New Market

Network transport of multiple types of information is rapidly becoming commonplace worldwide, for two reasons. First, the traditionally disparate communication channels of voice, video, and data are converging. And second, these channels are being integrated using the standard Internet protocol (IP). The acquisition of Skystone underscores Ciscos commitment to this new market with the ability to offer users a cost-effective SONET/SDH capability. SONET/SDH is the emerging transport technology used for carrying information in very-high-capacity backbone networks, such as those operated by telecommunications carriers and large InternetService Providers. Cisco intends to leverage Skystone development efforts on new SONET/SDH transport technologies for integration within next-generation Cisco products.

The approximately 40 employees and managers of Skystone will remain in Ottawa, and will become part of Ciscos Service Provider line of business.

About Skystone Systems

Skystone Systems, founded in 1994, develops a family of semiconductor products for integrating several telecommunications functions for use in advanced fiber-optic networks. News and information areavailable at

About Cisco Systems

Cisco Systems, Inc. (NASDAQ: CSCO) is theworldwide leader in networking for the Internet. at

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Cisco, Cisco Systems, and the Cisco Systems logo are registered trademarks of Cisco Systems, Inc. in the U.S. and certain other countries. All other trademarks mentioned in this document are the property of their respective owners.

This release may contain forward-looking statements that involve risks and uncertainties. These statements may differ materially from actual future events or results. Readers are referred to the documents filed by Cisco with the SEC, specifically the most recent reports on Form 10-K and 10-Q, which identify important risk factors that could cause actual results to differ from those contained in the forward-looking statements, including potential fluctuations in quarterly results, dependence on new product development, rapid technological and market change, acquisition strategy, manufacturing risks, risks associated with the Internet infrastructure, volatility of stock price, financial risk management and future growth subject to risks.