News Release

Cisco Systems to Acquire Fibex Systems and Sentient Networks

Bridging Old World Voice Networks with New World Data, Voice
Apr 08, 1999

Bridging Old World Voice Networks with New World Data, Voice and Video Services

SAN JOSE, Calif. -- April 8, 1999 -- Cisco Systems, Inc. today announced it has signed definitive agreements to acquire privately-held Fibex Systems of Petaluma, CA and Sentient Networks, Inc. of Milpitas, CA. The acquisition of both companies reaffirms Cisco's commitment to offering service providers an accelerated migration from Old World circuit-based networks to New World cell and packet-based networks.

Cisco is acquiring Fibex Systems and Sentient Networks to help service providers transition voice and data traffic to cell and packet networks while enabling them to maintain their traditional phone business using existing circuit switch infrastructure. These acquisitions underscore Cisco's commitment to ATM networks by offering service providers the capability to integrate circuit-based services onto an ATM network.

Fibex Systems is a pioneer in Integrated Access Digital Loop Carrier (IADLC) products, devices that combine traditional voice services with data services using ATM as the underlying architecture. Sentient Networks has developed the industry's highest density ATM Circuit Emulation Service (CES) Gateway, which is capable of transporting circuit-based private line services across packet-based ATM networks.

Under the terms of the acquisitions, shares of Cisco common stock with an aggregate value of approximately $445 million will be exchanged for all outstanding shares and options of Fibex Systems and Sentient Networks. Both acquisitions will be accounted for as pooling of interests, and are expected to be completed in the fourth quarter of fiscal year 1999. The acquisitions of Fibex Systems and Sentient Networks have been approved by the board of directors of each company and are subject to various closing conditions, including approval under the Hart-Scott-Rodino Antitrust Improvements Act.

By delivering technologies that allow service providers to combine their circuit-based equipment with Internet-based data, voice and video gear, both acquisitions will help service providers migrate to cell and packet-based networks. Both deals also allow service providers to take advantage of New World data, voice and video services while continuing to offer traditional voice services over existing infrastructure.

Introducing A New World of Integrated Data, Voice and Video Access for Service Providers

Cisco is acquiring Fibex Systems to help service providers manage the migration to the New World by aggregating local telephone service and data service in a single access device. Fibex Systems' IADLC manages both circuit-based voice traffic and packet-based traffic. An integrated access device also ensures that data traffic is immediately transferred to a cell and packet network, minimizing the need for service providers to invest further in circuit switch technology. In addition, Fibex Systems' products interoperate with carriers' existing Class 5 switches, data switches and customer premise equipment to ease migration to New World networks.

Migrating Carrier Private Line Services to ATM Networks

Cisco is acquiring Sentient Networks to help service providers migrate their data, voice and video services onto an integrated cell and packet switching infrastructure. Sentient Networks' high density ATM CES Gateway allows service providers to offer private line services over ATM networks. This gives Cisco a significant time-to-market advantage for transitioning the private line market to next-generation packet-based networks. In addition, the CES gateway interoperates with carriers' existing private line networks as well as standards-compliant ATM-based equipment.

Both acquisitions will become part of Cisco's Service Provider Line of Business. Fibex Systems was founded in 1997. The 100 employees led by Fibex Systems' founders V.K. Budhraja and Ken Buckland, Ph.D. will join the Digital Subscriber Line business unit (DSLBU) headed by Dave Gudmundson, vice president and general manager. Sentient Networks was founded in 1995. The 102 employees led by Sentient Networks' CEO Greg McAdoo will join the Multi-Service Switching business unit (MSSBU) headed by Brad Wurtz, vice president and general manager.

Cisco Systems

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

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This release may contain projections or other forward-looking statements regarding future events or the future financial performance of Cisco that involve risks and uncertainties. Readers are cautioned that these statements are only predictions and 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 risks associated with acquisition strategy, dependence on new product offerings, competition, patents, intellectual property and licensing, future growth, rapid technological and market change, manufacturing and sourcing risks, Internet infrastructure and regulation, volatility of stock price, financial risk management and potential volatility in operating results among others.