Cisco Systems, Inc.

Historical Financials Income Statements (In millions, except per-share amounts)

Notes (1) (2) Notes (1) (2) Notes (1) (2) Notes (1) (2) Notes (1) (2) Notes (1) (2) Notes (1) (2) Notes (1) (2) Notes (1) (2) Notes (1) (2)

GAAP FY2009 Qtr Ending 10/25/2008 NET SALES: Product Service Total net sales COST OF SALES: Product (a),(d),(f) Service (a) (f) Total cost of sales (a),(d),(f) GROSS MARGIN (a),(d),(f) OPERATING EXPENSES: Research and development (a),(b),(e),(f) Sales and marketing (a),(b),(e),(f) General and administrative (a),(b),(e),(f) Amortization of purchased intangible assets (d) In-process research and development (c) Total operating expenses (a)-(f) OPERATING INCOME (a) - (f) Interest income (expense), net Other income (loss), net Interest and other income (loss), net INCOME BEFORE PROVISION FOR INCOME TAXES (a) - (f) Provision for income taxes (g)-(i) NET INCOME (a) - (i) Net income per share: Basic (a) - (i) Diluted (a) - (i) Shares used in per-share calculation: Basic Diluted $

NON-GAAP FY2009 Qtr Ending 10/25/2008

GAAP FY2009 Qtr Ending 1/24/2009

NON-GAAP FY2009 Qtr Ending 1/24/2009

GAAP FY2009 Qtr Ending 4/25/2009

NON-GAAP FY2009 Qtr Ending 4/25/2009

GAAP FY2009 Qtr Ending 7/25/2009

NON-GAAP FY2009 Qtr Ending 7/25/2009

GAAP FY2009 YTD Ending 7/25/2009

NON-GAAP FY2009 YTD Ending 7/25/2009

8,635 1,696 10,331

8,635 1,696 10,331

7,347 1,742 9,089

7,347 1,742 9,089

6,420 1,742 8,162

6,420 1,742 8,162

6,729 1,806 8,535

6,729 1,806 8,535

29,131 6,986 36,117

29,131 6,986 36,117

2,981 669 3,650 6,681

2,916 638 3,554 6,777

2,737 629 3,366 5,723

2,673 597 3,270 5,819

2,327 606 2,933 5,229

2,272 575 2,847 5,315

2,436 638 3,074 5,461

2,373 587 2,960 5,575

10,481 2,542 13,023 23,094

10,234 2,397 12,631 23,486

1,406 2,283 395 112 3 4,199 2,482 195 (72) 123 2,605 404 2,201 $

1,200 2,167 332 3,699 3,078 195 (72) 123 3,201 704 2,497 $

1,279 2,155 380 136 3,950 1,773 159 (64) 95 1,868 364 1,504 $

1,152 2,048 321 3,521 2,298 159 (64) 95 2,393 526 1,867 $

1,243 1,956 302 121 3,622 1,607 89 (9) 80 1,687 339 1,348 $

1,067 1,839 241 3,147 2,168 89 (9) 80 2,248 495 1,753 $

1,280 2,009 488 164 60 4,001 1,460 56 17 73 1,533 452 1,081 $

1,090 1,854 405 3,349 2,226 56 17 73 2,299 460 1,839 $

5,208 8,403 1,565 533 63 15,772 7,322 499 (128) 371 7,693 1,559 6,134 $

4,509 7,908 1,299 13,716 9,770 499 (128) 371 10,141 2,185 7,956

$ $

0.37 0.37

$ $

0.42 0.42

$ $

0.26 0.26

$ $

0.32 0.32

$ $

0.23 0.23

$ $

0.30 0.30

$ $

0.19 0.19

$ $

0.32 0.31

$ $

1.05 1.05

$ $

1.37 1.35

5,881 5,972

5,881 5,979

5,848 5,864

5,848 5,885

5,805 5,818

5,805 5,840

5,777 5,813

5,777 5,840

5,828 5,857

5,828 5,876

Cisco's non-GAAP measures are not in accordance with, or an alternative for, generally accepted accounting principles and may be different from non-GAAP measures used by other companies. In addition, the above non-GAAP Consolidated Statements of Operations are not based on a comprehensive set of accounting rules or principles.

Income Statement

Cisco Systems, Inc. Confidential

12/6/201310:10 AM

( In millions ) Note 1

FY2009 Qtr Ending 10/25/2008

FY2009 Qtr Ending 1/24/2009

FY2009 Qtr Ending 4/25/2009

FY2009 Qtr Ending 7/25/2009

FY2009 YTD Ending 7/25/2009

A reconciliation between net income on a GAAP basis and non-GAAP net income including items (a) - (i) is as follows: GAAP net income (a) (b) (c) (d) (e) (f) Share-based compensation expense Payroll tax on stock option exercises
(i)

2,201 304 1 3 166 122 596 (194) (106) (300)

1,504 298 190 37 525 (162) (162)

1,348 299 164 98 561 (156) (156)

1,081 330 60 203 35 138 766 (182) 174 (8)

6,134 1,231 1 63 723 292 138 2,448 (694) (106) 174 (626)

In-process research and development Amortization of acquisition-related intangible assets Other acquisition-related costs
(ii)

Enhanced early retirement benefits

Total adjustments to GAAP income before provision for income taxes (g) (h) (i) Income tax effect Effect of retroactive tax legislation
(iii) (iv)

Transfer pricing adjustment related to share-based compensation Total adjustments to GAAP provision for income taxes

Non-GAAP net income

2,497

1,867

1,753

1,839

7,956

Shares used in diluted net income per-share calculation - GAAP Effect of share-based compensation expense Shares used in diluted net income per-share calculation - Non-GAAP

5,972 7 5,979

5,864 21 5,885

5,818 22 5,840

5,813 27 5,840

5,857 19 5,876

(i) (ii)

Effective in the third quarter of fiscal 2009, Cisco no longer excludes payroll tax on stock option exercises for purposes of its non-GAAP financial measures. Other acquisition-related costs consist primarily of cash compensation expenses related to acquisitions and investments. In the first quarter of fiscal 2009, a $106 million tax benefit was included in the GAAP net income as a result of the Tax Extenders and Alternative Minimum Tax Relief Act of 2008, which reinstated the U.S. federal R&D tax credit retroactive to January 1, 2008. In the fourth quarter of fiscal 2009, the U.S. Court of Appeals for the Ninth Circuit overturned a 2005 U.S. Tax Court ruling. The decision changes the tax treatment of sharebased compensation expenses for the purpose of determining intangible development costs under a companys research and development cost sharing arrangement. While Cisco was not a named party to the case, the decision resulted in a change in Ciscos tax benefits recognized in its financial statements.

(iii) (iv)

GAAP Recon Note 1

Cisco Systems, Inc. Confidential

12/6/201310:10 AM

Note 2 Items (a), (b), (d)-(f) in note 1 are allocated as follows: Amortization of Acquisition-related Intangible General and Administrative Assets (Op. Exp.) $ $ 7 63 $ 55 1 $ 112 112 $

Items ( In millions ) Q1FY'09 (a) (b) (d) (e) Share-based compensation expense Payroll tax on stock option exercises Amortization of acquisition-related intangible assets Other acquisition-related costs Total Q2FY'09 Share-based compensation expense Payroll tax on stock option exercises Amortization of acquisition-related intangible assets Other acquisition-related costs Total Q3FY'09 Share-based compensation expense Payroll tax on stock option exercises (i) Amortization of acquisition-related intangible assets Other acquisition-related costs Total Q4FY'09 Share-based compensation expense Payroll tax on stock option exercises (i) Amortization of acquisition-related intangible assets Other acquisition-related costs Enhanced early retirement benefits Total FY'09 Share-based compensation expense Payroll tax on stock option exercises (i) Amortization of acquisition-related intangible assets Other acquisition-related costs Enhanced early retirement benefits Total
(i)

Cost of Sales Product $ 54 $ 65 11

Cost of Sales Service $ $ 31 31

Research and Development $ $ 112 206 94

Sales and Marketing $ 113 3 116

Total

304 1 166 122 593

(a) (b) (d) (e)

$ $ -

10 54 64 12 43 -

$ $ $

32 32 31

$ $

95 32 127 94 -

$ $

105 2 107 103 14 117

$ $ $

56 3 59 59

$ $

136 136 121 121

$ $

298 190 37 525 299 164 98 561

(a) (b) (d) (e)

55

31

82 176

2 61

(a) (b) (d) (e) (f)

$ -

13 39 11 63

$ $

34

$ -

99

17 51

29 62 190

120 3 32 155

$ -

64

3 16 83

164 164

330 203 35 138 706

(a) (b) (d) (e) (f)

46 190 11 247

128 17 145

382 255 62 699

441 22 32 495

234 1 15 16 266

533 533

1,231 1 723 292 138 2,385

Effective in the third quarter of fiscal 2009, Cisco no longer excludes payroll tax on stock option exercises for purposes of its non-GAAP financial measures. Cisco Systems, Inc. Confidential 12/6/201310:10 AM

GAAP Recon Note 2