News Release

Cisco Systems to Acquire WheelGroup Corporation

Cisco Extends Leadership in End-To End Network Security Products
Feb 18, 1998

SAN JOSE, Calif. -- February 18, 1998 -- Cisco Systems, Inc. today announced it has signed a definitive agreement to acquire privately-held WheelGroup Corporation of San Antonio, Texas. WheelGroup is an innovator in network security software products.

Under the terms of the acquisition, between 1.8 and 2.0 million shares of Cisco common stock will be exchanged for the outstanding shares and options of WheelGroup. Based upon Ciscos February 18 closing price of $65.50 the stock exchanged would have a value of approximately $124 million. In connection with the acquisition, Cisco expects a one-time charge against after-tax earnings of between $.08 and $.13 cents per share for purchased-in-process research and development expenses in the third quarter of fiscal 1998. The acquisition has been approved by the board of directors of each company and is expected to be completed by mid-March subject to various closing conditions.

Cisco Increases Leadership in End-to-End Network Security Solutions

WheelGroups software technology will extend Ciscos leadership in end-to-end networksecurity solutions and help create a more secure environment for Cisco customers to do business on the Internet.

WheelGroup is a leader in intrusion detection and security scanning software products. Its technology delivers a 'radar-like' intrusion detection system that operates with network routers and switches as real-time 'sensors' to identify and respond to unauthorized intrusions and hackers. WheelGroups scanning technology identifies network security gaps throughout the enterprise and offers solutions for closing them. Cisco will refer to this new class of detection and scanning technology as "active audit".

"Active audit" is the third element of Ciscos multi-phase security architecture. The first two phases, announced last year, focused on "identity" and "integrity" of the network.

WheelGroup was founded in 1995. The majority of the companys 75 employees will remain in their current offices in San Antonio, TX.

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