10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_____________________________________

FORM 10-Q

(Mark one)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended January 24, 2015

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 0-18225 

_____________________________________

CISCO SYSTEMS, INC.

(Exact name of Registrant as specified in its charter)

California	77-0059951
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

170 West Tasman Drive

San Jose, California 95134

(Address of principal executive office and zip code)

(408) 526-4000

(Registrant’s telephone number, including area code)

_____________________________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes x   No  o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes x    No  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	x		Accelerated filer	o
Non-accelerated filer	o	(Do not check if a smaller reporting company)	Smaller reporting company	o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes¨Nox

Number of shares of the registrant’s common stock outstanding as of February 13, 2015: 5,104,738,671

____________________________________ 

1

Cisco Systems, Inc.

Form 10-Q for the Quarter Ended January 24, 2015

INDEX

		Page
Part I	Financial Information	3
Item 1.	Financial Statements (Unaudited)	3
	Consolidated Balance Sheets at January 24, 2015 and July 26, 2014	3
	Consolidated Statements of Operations for the Three and Six Months Ended January 24, 2015 and January 25, 2014	4
	Consolidated Statements of Comprehensive Income for the Three and Six Months Ended January 24, 2015 and January 25, 2014	5
	Consolidated Statements of Cash Flows for the Six Months Ended January 24, 2015 and January 25, 2014	6
	Consolidated Statements of Equity for the Six Months Ended January 24, 2015 and January 25, 2014	7
	Notes to Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	42
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	72
Item 4.	Controls and Procedures	74
Part II.	Other Information	74
Item 1.	Legal Proceedings	74
Item 1A.	Risk Factors	75
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	91
Item 3.	Defaults Upon Senior Securities	92
Item 4.	Mine Safety Disclosures	92
Item 5.	Other Information	92
Item 6.	Exhibits	92
	Signature	93

2

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

CISCO SYSTEMS, INC.

CONSOLIDATED BALANCE SHEETS

(in millions, except par value)

(Unaudited)

	January 24, 2015		July 26, 2014
ASSETS
Current assets:
Cash and cash equivalents	$	4,797	$	6,726
Investments	48,225		45,348
Accounts receivable, net of allowance for doubtful accounts of $270 at January 24, 2015 and $265 at July 26, 2014	4,541		5,157
Inventories	1,890		1,591
Financing receivables, net	4,210		4,153
Deferred tax assets	2,654		2,808
Other current assets	1,565		1,331
Total current assets	67,882		67,114
Property and equipment, net	3,212		3,252
Financing receivables, net	3,549		3,918
Goodwill	24,382		24,239
Purchased intangible assets, net	2,755		3,280
Other assets	3,142		3,331
TOTAL ASSETS	$	104,922	$	105,134
LIABILITIES AND EQUITY
Current liabilities:
Short-term debt	$	855	$	508
Accounts payable	988		1,032
Income taxes payable	—		159
Accrued compensation	2,694		3,181
Deferred revenue	9,369		9,478
Other current liabilities	6,128		5,451
Total current liabilities	20,034		19,809
Long-term debt	19,667		20,401
Income taxes payable	1,433		1,851
Deferred revenue	4,652		4,664
Other long-term liabilities	1,403		1,748
Total liabilities	47,189		48,473
Commitments and contingencies (Note 12)
Equity:
Cisco shareholders’ equity:
Preferred stock, no par value: 5 shares authorized; none issued and outstanding	—		—
Common stock and additional paid-in capital, $0.001 par value: 20,000 shares authorized; 5,107 shares issued and outstanding at each of January 24, 2015 and July 26, 2014	42,685		41,884
Retained earnings	14,847		14,093
Accumulated other comprehensive income	186		677
Total Cisco shareholders’ equity	57,718		56,654
Noncontrolling interests	15		7
Total equity	57,733		56,661
TOTAL LIABILITIES AND EQUITY	$	104,922	$	105,134

See Notes to Consolidated Financial Statements.

3

CISCO SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions, except per-share amounts)

(Unaudited) 

	Three Months Ended						Six Months Ended
	January 24, 2015			January 25, 2014			January 24, 2015			January 25, 2014
REVENUE:
Product	$	9,078		$	8,423		$	18,513		$	17,820
Service	2,858			2,732			5,668			5,420
Total revenue	11,936			11,155			24,181			23,240
COST OF SALES:
Product	3,806			4,323			7,725			8,070
Service	1,040			881			2,033			1,812
Total cost of sales	4,846			5,204			9,758			9,882
GROSS MARGIN	7,090			5,951			14,423			13,358
OPERATING EXPENSES:
Research and development	1,529			1,412			3,112			3,136
Sales and marketing	2,308			2,277			4,823			4,688
General and administrative	490			451			994			966
Amortization of purchased intangible assets	72			71			143			136
Restructuring and other charges	69			73			387			310
Total operating expenses	4,468			4,284			9,459			9,236
OPERATING INCOME	2,622			1,667			4,964			4,122
Interest income	189			169			368			338
Interest expense	(139		)	(136		)	(278		)	(276		)
Other income (loss), net	201			55			179			111
Interest and other income (loss), net	251			88			269			173
INCOME BEFORE PROVISION FOR INCOME TAXES	2,873			1,755			5,233			4,295
Provision for income taxes	476			326			1,008			870
NET INCOME	$	2,397		$	1,429		$	4,225		$	3,425
Net income per share:
Basic	$	0.47		$	0.27		$	0.83		$	0.64
Diluted	$	0.46		$	0.27		$	0.82		$	0.64
Shares used in per-share calculation:
Basic	5,117			5,294			5,115			5,336
Diluted	5,160			5,327			5,159			5,383
Cash dividends declared per common share	$	0.19		$	0.17		$	0.38		$	0.34

See Notes to Consolidated Financial Statements.

4

CISCO SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in millions)

(Unaudited)

	Three Months Ended						Six Months Ended
	January 24, 2015			January 25, 2014			January 24, 2015			January 25, 2014
Net income	$	2,397		$	1,429		$	4,225		$	3,425
Available-for-sale investments:
Change in net unrealized gains, net of tax benefit (expense) of $9 and $23 for the three and six months ended January 24, 2015, respectively, and $(69) and $(122) for the corresponding periods of fiscal 2014, respectively	30			96			8			217
Net gains reclassified into earnings, net of tax expense of $24 and $26 for the three and six months ended January 24, 2015, respectively, and $31 and $62 for the corresponding periods of fiscal 2014, respectively	(45		)	(51		)	(50		)	(103		)
	(15		)	45			(42		)	114
Cash flow hedging instruments:
Change in unrealized gains and losses, net of tax benefit (expense) of $0 and $3 for the three and six months ended January 24, 2015, respectively, and $1 and $(2) for the corresponding periods of fiscal 2014, respectively	(75		)	(4		)	(128		)	31
Net (gains) losses reclassified into earnings	26			(19		)	30			(28		)
	(49		)	(23		)	(98		)	3
Net change in cumulative translation adjustment and actuarial gains and losses net of tax benefit (expense) of $26 and $36 for the three and six months ended January 24, 2015, respectively, and $2 and $(1) for the corresponding periods of fiscal 2014, respectively	(193		)	(88		)	(343		)	(15		)
Other comprehensive income (loss)	(257		)	(66		)	(483		)	102
Comprehensive income	2,140			1,363			3,742			3,527
Comprehensive (income) loss attributable to noncontrolling interests	(8		)	(3		)	(8		)	(7		)
Comprehensive income attributable to Cisco Systems, Inc.	$	2,132		$	1,360		$	3,734		$	3,520

See Notes to Consolidated Financial Statements.

5

CISCO SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

(Unaudited)

	Six Months Ended
	January 24, 2015			January 25, 2014
Cash flows from operating activities:
Net income	$	4,225		$	3,425
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization, and other	1,224			1,203
Share-based compensation expense	677			656
Provision for receivables	62			56
Deferred income taxes	385			(26		)
Excess tax benefits from share-based compensation	(83		)	(73		)
(Gains) losses on investments and other, net	(182		)	(163		)
Change in operating assets and liabilities, net of effects of acquisitions and divestitures:
Accounts receivable	501			1,134
Inventories	(340		)	(77		)
Financing receivables	74			245
Other assets	(218		)	179
Accounts payable	(32		)	(161		)
Income taxes, net	(528		)	(444		)
Accrued compensation	(390		)	(804		)
Deferred revenue	26			(205		)
Other liabilities	(27		)	577
Net cash provided by operating activities	5,374			5,522
Cash flows from investing activities:
Purchases of investments	(20,061		)	(15,874		)
Proceeds from sales of investments	9,948			9,081
Proceeds from maturities of investments	7,212			7,988
Acquisition of businesses, net of cash and cash equivalents acquired	(217		)	(2,784		)
Purchases of investments in privately held companies	(91		)	(263		)
Return of investments in privately held companies	227			81
Acquisition of property and equipment	(550		)	(577		)
Proceeds from sales of property and equipment	5			164
Other	(109		)	(6		)
Net cash used in investing activities	(3,636		)	(2,190		)
Cash flows from financing activities:
Issuances of common stock	1,162			837
Repurchases of common stock—repurchase program	(2,196		)	(5,680		)
Shares repurchased for tax withholdings on vesting of restricted stock units	(369		)	(309		)
Short-term borrowings, original maturities less than 90 days, net	(4		)	998
Issuances of debt	—			4
Repayments of debt	(506		)	(22		)
Excess tax benefits from share-based compensation	83			73
Dividends paid	(1,947		)	(1,810		)
Other	110			(9		)
Net cash used in financing activities	(3,667		)	(5,918		)
Net decreasein cash and cash equivalents	(1,929		)	(2,586		)
Cash and cash equivalents, beginning of period	6,726			7,925
Cash and cash equivalents, end of period	$	4,797		$	5,339
Supplemental cash flow information:
Cash paid for interest	$	383		$	340
Cash paid for income taxes, net	$	1,152		$	1,340

See Notes to Consolidated Financial Statements.

6

CISCO SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF EQUITY

(in millions, except per-share amounts)

(Unaudited)

Six Months Ended January 24, 2015	Shares of Common Stock		Common Stock and Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Income			Total Cisco Shareholders’ Equity			Non-controlling Interests		Total  Equity
BALANCE AT JULY 26, 2014	5,107		$	41,884		$	14,093		$	677		$	56,654		$	7	$	56,661
Net income						4,225						4,225					4,225
Other comprehensive income (loss)									(491		)	(491		)	8		(483		)
Issuance of common stock	100		1,162									1,162					1,162
Repurchase of common stock	(85	)	(697		)	(1,524		)				(2,221		)			(2,221		)
Shares repurchased for tax withholdings on vesting of restricted stock units	(15	)	(369		)							(369		)			(369		)
Cash dividends declared ($0.38 per common share)						(1,947		)				(1,947		)			(1,947		)
Tax effects from employee stock incentive plans			25									25					25
Share-based compensation expense			677									677					677
Purchase acquisitions and other			3									3					3
BALANCE AT JANUARY 24, 2015	5,107		$	42,685		$	14,847		$	186		$	57,718		$	15	$	57,733

Six Months Ended January 25, 2014	Shares of Common Stock		Common Stock and Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Income		Total Cisco Shareholders’ Equity			Non-controlling Interests		Total  Equity
BALANCE AT JULY 27, 2013	5,389		$	42,297		$	16,215		$	608	$	59,120		$	8	$	59,128
Net income						3,425					3,425					3,425
Other comprehensive income (loss)									95		95			7		102
Issuance of common stock	84		837								837					837
Repurchase of common stock	(269	)	(2,118		)	(3,902		)			(6,020		)			(6,020		)
Shares repurchased for tax withholdings on vesting of restricted stock units	(13	)	(309		)						(309		)			(309		)
Cash dividends declared ($0.34 per common share)						(1,810		)			(1,810		)			(1,810		)
Tax effects from employee stock incentive plans			29								29					29
Share-based compensation expense			656								656					656
Purchase acquisitions and other			46								46					46
BALANCE AT JANUARY 25, 2014	5,191		$	41,438		$	13,928		$	703	$	56,069		$	15	$	56,084

Supplemental Information

In September 2001, the Company’s Board of Directors authorized a stock repurchase program. As of January 24, 2015, the Company’s Board of Directors had authorized an aggregate repurchase of up to $97 billion of common stock under this program with no termination date. The stock repurchases since the inception of this program and the related impacts on Cisco shareholders’ equity are summarized in the following table (in millions): 

	Shares of Common Stock	Common Stock and Additional Paid-In Capital		Retained Earnings		Total Cisco Shareholders’ Equity
Repurchases of common stock under the repurchase program	4,373	$	22,021	$	68,645	$	90,666

See Notes to Consolidated Financial Statements.

7

CISCO SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Basis of Presentation

The fiscal year for Cisco Systems, Inc. (the “Company” or “Cisco”) is the 52 or 53 weeks ending on the last Saturday in July. Fiscal 2015 and fiscal 2014 are each 52-week fiscal years. The Consolidated Financial Statements include the accounts of Cisco and its subsidiaries. All intercompany accounts and transactions have been eliminated. The Company conducts business globally and is primarily managed on a geographic basis in the following three geographic segments: the Americas; Europe, Middle East, and Africa (EMEA); and Asia Pacific, Japan, and China (APJC).

The accompanying financial data as of January 24, 2015 and for the three and six months ended January 24, 2015 and January 25, 2014 has been prepared by the Company, without audit, pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (SEC). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States (GAAP) have been condensed or omitted pursuant to such rules and regulations. The July 26, 2014 Consolidated Balance Sheet was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States. However, the Company believes that the disclosures are adequate to make the information presented not misleading. These Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended July 26, 2014.

The Company consolidates its investments in a venture fund managed by SOFTBANK Corp. and its affiliates (“SOFTBANK”) as this is a variable interest entity and the Company is the primary beneficiary. The noncontrolling interests attributed to SOFTBANK are presented as a separate component from the Company’s equity in the equity section of the Consolidated Balance Sheets. SOFTBANK’s share of the earnings in the venture fund are not presented separately in the Consolidated Statements of Operations as these amounts are not material for any of the fiscal periods presented.

In the opinion of management, all adjustments (which include normal recurring adjustments, except as disclosed herein) necessary to present fairly the consolidated balance sheet as of January 24, 2015; the results of operations and statements of comprehensive income for the three and six months ended January 24, 2015 and January 25, 2014; and the statements of cash flows and equity for the six months ended January 24, 2015 and January 25, 2014, as applicable, have been made. The results of operations for the three and six months ended January 24, 2015 are not necessarily indicative of the operating results for the full fiscal year or any future periods.

Certain reclassifications have been made to the amounts in prior periods in order to conform to the current period’s presentation. The Company has evaluated subsequent events through the date that the financial statements were issued.

2. Recent Accounting Pronouncements

(a) New Accounting Updates Recently Adopted

In March 2013, the FASB issued an accounting standard update requiring an entity to release into net income the entire amount of a cumulative translation adjustment related to its investment in a foreign entity when as a parent it sells either a part or all of its investment in the foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets within the foreign entity. This accounting standard update became effective for the Company beginning in the first quarter of fiscal 2015. The application of this accounting standard update did not have any impact to the Company's Consolidated Financial Statements.

In July 2013, the FASB issued an accounting standard update that provides explicit guidance on the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward or a tax credit carryforward exists. Under the new standard update, an unrecognized tax benefit, or a portion of an unrecognized tax benefit, is to be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward or a tax credit carryforward. This accounting standard update became effective for the Company beginning in the first quarter of fiscal 2015 and applied prospectively. The application of this accounting standard update did not have a material impact to the Company's Consolidated Financial Statements.

In April 2014, the FASB issued an accounting standard update that changes the criteria for reporting discontinued operations. This accounting standard update raises the threshold for a disposal transaction to qualify as a discontinued operation and requires additional disclosures about discontinued operations and disposals of individually significant components that do not qualify as discontinued operations. The Company adopted this accounting standard update in the second quarter of fiscal 2015, and it did not have any impact upon adoption.

8

CISCO SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(b) Recent Accounting Standards or Updates Not Yet Effective

In May 2014, the FASB issued an accounting standard update related to revenue from contracts with customers, which will supersede nearly all current U.S. GAAP guidance on this topic and eliminate industry-specific guidance. The underlying principle is to recognize revenue when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. This accounting standard update will be effective for the Company beginning in the first quarter of fiscal 2018. The new revenue standard may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of adoption.  Early adoption is not permitted.  The Company is currently evaluating the impact of this accounting standard update on its Consolidated Financial Statements.

3. Business Combinations

The Company completed three business combinations during the six months ended January 24, 2015. A summary of the allocation of the total purchase consideration is presented as follows (in millions):

	Purchase Consideration		Net Liabilities Assumed			Purchased Intangible Assets		Goodwill
Metacloud, Inc.	$	149	$	(7	)	$	29	$	127
All others (two in total)	71		(10		)	40		41
Total acquisitions	$	220	$	(17	)	$	69	$	168

On September 29, 2014, the Company completed its acquisition of Metacloud, Inc. ("Metacloud"), a provider of private clouds for global organizations. With its acquisition of Metacloud, the Company aims to advance its Intercloud strategy to deliver a globally distributed, highly secure cloud platform capable of meeting customer demands. Revenue from the Metacloud acquisition has been included in the Company's Service category.

The total purchase consideration related to the Company’s business combinations completed during the six months ended January 24, 2015 consisted of cash consideration and vested share-based awards assumed. The total cash and cash equivalents acquired from these business combinations was approximately $4 million. Total transaction costs related to the Company’s business combination activities were $5 million and $6 millionfor the six months ended January 24, 2015 and January 25, 2014, respectively. These transaction costs were expensed as incurred in general and administrative (G&A) expenses in the Consolidated Statements of Operations.

The Company’s purchase price allocation for business combinations completed during recent periods is preliminary and subject to revision as additional information about fair value of assets and liabilities becomes available. Additional information, that existed as of the acquisition date but at that time was unknown to the Company may become known to the Company during the remainder of the measurement period, a period not to exceed 12 months from the acquisition date. Adjustments in the purchase price allocation may require a recasting of the amounts allocated to goodwill retroactive to the period in which the acquisition occurred.

The goodwill generated from the Company’s business combinations completed during the six months ended January 24, 2015 is primarily related to expected synergies. The goodwill is generally not deductible for income tax purposes.

The Consolidated Financial Statements include the operating results of each business combination from the date of acquisition. Pro forma results of operations for the acquisitions completed during the six months ended January 24, 2015 have not been presented because the effects of the acquisitions, individually and in the aggregate, were not material to the Company’s financial results.

9

CISCO SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

4. Goodwill and Purchased Intangible Assets

(a) Goodwill

The following table presents the goodwill allocated to the Company’s reportable segments as of and during the six months ended January 24, 2015 (in millions):

	Balance at July 26, 2014		Acquisitions		Other			Balance at January 24, 2015
Americas	$	15,080	$	89	$	(13	)	$	15,156
EMEA	5,715		63		(7		)	5,771
APJC	3,444		16		(5		)	3,455
Total	$	24,239	$	168	$	(25	)	$	24,382

The column entitled “Other” primarily includes purchase accounting adjustments.

(b) Purchased Intangible Assets

The following table presents details of the Company’s intangible assets acquired through business combinations completed during the six months ended January 24, 2015 (in millions, except years):

	FINITE LIVES						INDEFINITE LIVES		TOTAL
	TECHNOLOGY			CUSTOMER RELATIONSHIPS			IPR&D
	Weighted- Average Useful Life (in Years)	Amount		Weighted- Average Useful Life (in Years)	Amount		Amount		Amount
Metacloud, Inc.	3.0	$	24	5.0	$	3	$	2	$	29
All others (two in total)	5.0	25		8.1	11		4		40
Total		$	49		$	14	$	6	$	69

The following tables present details of the Company’s purchased intangible assets (in millions):

January 24, 2015	Gross		Accumulated Amortization			Net
Purchased intangible assets with finite lives:
Technology	$	4,020	$	(2,270	)	$	1,750
Customer relationships	1,709		(847		)	862
Other	51		(19		)	32
Total purchased intangible assets with finite lives	5,780		(3,136		)	2,644
In-process research and development, with indefinite lives	111		—			111
Total	$	5,891	$	(3,136	)	$	2,755

July 26, 2014	Gross		Accumulated Amortization			Net
Purchased intangible assets with finite lives:
Technology	$	4,100	$	(1,976	)	$	2,124
Customer relationships	1,706		(720		)	986
Other	51		(13		)	38
Total purchased intangible assets with finite lives	5,857		(2,709		)	3,148
In-process research and development, with indefinite lives	132		—			132
Total	$	5,989	$	(2,709	)	$	3,280

Purchased intangible assets include intangible assets acquired through business combinations as well as through direct purchases or licenses.

10

CISCO SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

The following table presents the amortization of purchased intangible assets (in millions):

	Three Months Ended				Six Months Ended
	January 24, 2015		January 25, 2014		January 24, 2015		January 25, 2014
Amortization of purchased intangible assets:
Cost of sales	$	242	$	189	$	431	$	363
Operating expenses	72		71		143		136
Total	$	314	$	260	$	574	$	499

Amortization of purchased intangible assets for the three and six months ended January 24, 2015 included impairment charges of approximately $56 million. The impairment was primarily due to reductions in expected future cash flows related to certain of the Company's technology intangible assets and was recorded as amortization of purchased intangible assets. There were no impairment charges related to purchased intangible assets during the three and six months ended January 25, 2014.

The estimated future amortization expense of purchased intangible assets with finite lives as of January 24, 2015 is as follows (in millions):

Fiscal Year	Amount
2015 (remaining six months)	$	462
2016	734
2017	561
2018	420
2019	317
Thereafter	150
Total	$	2,644

5. Restructuring and Other Charges

Fiscal 2015 Plan

In connection with a restructuring action announced in August 2014 ("Fiscal 2015 Plan"), the Company incurred cumulative charges of $69 million and $387 million for the three and six months ended January 24, 2015, respectively. The Company estimates that it will recognize aggregate pre-tax charges pursuant to the restructuring action in an amount not expected to exceed $600 million, consisting of severance and other one-time termination benefits and other associated costs. These charges are primarily cash-based and the Company expects the remaining amount to be recognized during the remainder of fiscal 2015.

Fiscal 2014 Plan

In connection with a restructuring action announced in August 2013 ("Fiscal 2014 Plan"), the Company incurred cumulative charges of approximately $418 million, of which $73 million and $310 million were incurred during the three and six months ended January 25, 2014, respectively. The Company completed the Fiscal 2014 Plan at the end of fiscal 2014.

The following table summarizes the activities related to the restructuring and other charges as discussed above (in millions):

	Fiscal 2014 and Prior Plans						Fiscal 2015 Plan
	Employee Severance			Other			Employee Severance			Other			Total
Liability as of July 26, 2014	$	40		$	29		$	—		$	—		$	69
Gross charges in fiscal 2015	—			—			386			1			387
Cash payments	(18		)	—			(347		)	(3		)	(368		)
Non-cash items	—			(8		)	—			2			(6		)
Liability as of January 24, 2015	$	22		$	21		$	39		$	—		$	82

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(Unaudited)

6. Balance Sheet Details

The following tables provide details of selected balance sheet items (in millions):

	January 24, 2015		July 26, 2014
Inventories:
Raw materials	$	265	$	77
Work in process	2		5
Finished goods:
Distributor inventory and deferred cost of sales	733		595
Manufactured finished goods	577		606
Total finished goods	1,310		1,201
Service-related spares	274		273
Demonstration systems	39		35
Total	$	1,890	$	1,591

Property and equipment, net:
Land, buildings, and building and leasehold improvements	$	4,457		$	4,468
Computer equipment and related software	1,417			1,425
Production, engineering, and other equipment	5,745			5,756
Operating lease assets	343			362
Furniture and fixtures	498			509
	12,460			12,520
Less accumulated depreciation and amortization	(9,248		)	(9,268		)
Total	$	3,212		$	3,252

Other assets:
Deferred tax assets	$	1,448	$	1,700
Investments in privately held companies	857		899
Other	837		732
Total	$	3,142	$	3,331

Deferred revenue:
Service	$	9,020	$	9,640
Product:
Unrecognized revenue on product shipments and other deferred revenue	4,276		3,924
Cash receipts related to unrecognized revenue from two-tier distributors	725		578
Total product deferred revenue	5,001		4,502
Total	$	14,021	$	14,142
Reported as:
Current	$	9,369	$	9,478
Noncurrent	4,652		4,664
Total	$	14,021	$	14,142

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CISCO SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

7. Financing Receivables and Operating Leases

(a) Financing Receivables

Financing receivables primarily consist of lease receivables, loan receivables, and financed service contracts and other. Lease receivables represent sales-type and direct-financing leases resulting from the sale of the Company’s and complementary third-party products and are typically collateralized by a security interest in the underlying assets. Loan receivables represent financing arrangements related to the sale of the Company’s products and services, which may include additional funding for other costs associated with network installation and integration of the Company’s products and services. Lease receivables consist of arrangements with terms of four years on average, while loan receivables generally have terms of up to three years. The financed service contracts and other category includes financing receivables related to technical support and advanced services, as well as receivables related to financing of certain indirect costs associated with leases. Revenue related to the technical support services is typically deferred and included in deferred service revenue and is recognized ratably over the period during which the related services are to be performed, which typically ranges from one to three years.

A summary of the Company's financing receivables is presented as follows (in millions):

January 24, 2015	Lease Receivables			Loan Receivables			Financed Service Contracts and Other			Total
Gross	$	3,369		$	1,674		$	3,069		$	8,112
Residual value	228			—			—			228
Unearned income	(206		)	—			—			(206		)
Allowance for credit loss	(250		)	(85		)	(40		)	(375		)
Total, net	$	3,141		$	1,589		$	3,029		$	7,759
Reported as:
Current	$	1,462		$	782		$	1,966		$	4,210
Noncurrent	1,679			807			1,063			3,549
Total, net	$	3,141		$	1,589		$	3,029		$	7,759

July 26, 2014	Lease Receivables			Loan Receivables			Financed Service Contracts and Other			Total
Gross	$	3,532		$	1,683		$	3,210		$	8,425
Residual value	233			—			—			233
Unearned income	(238		)	—			—			(238		)
Allowance for credit loss	(233		)	(98		)	(18		)	(349		)
Total, net	$	3,294		$	1,585		$	3,192		$	8,071
Reported as:
Current	$	1,476		$	728		$	1,949		$	4,153
Noncurrent	1,818			857			1,243			3,918
Total, net	$	3,294		$	1,585		$	3,192		$	8,071

As of January 24, 2015 and July 26, 2014, the deferred service revenue related to "Financed Service Contracts and Other" was $1,530 million and $1,843 million, respectively.

Future minimum lease payments at January 24, 2015 are summarized as follows (in millions):

Fiscal Year	Amount
2015 (remaining six months)	$	883
2016	1,281
2017	753
2018	327
2019	115
Thereafter	10
Total	$	3,369

Actual cash collections may differ from the contractual maturities due to early customer buyouts, refinancings, or defaults.

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(Unaudited)

(b) Credit Quality of Financing Receivables

Gross receivables less unearned income categorized by the Company’s internal credit risk rating as of January 24, 2015 and July 26, 2014 are summarized as follows (in millions):

	INTERNAL CREDIT RISK RATING
January 24, 2015	1 to 4		5 to 6		7 and Higher		Total
Lease receivables	$	1,632	$	1,386	$	145	$	3,163
Loan receivables	717		803		154		1,674
Financed service contracts and other	1,647		1,342		80		3,069
Total	$	3,996	$	3,531	$	379	$	7,906

	INTERNAL CREDIT RISK RATING
July 26, 2014	1 to 4		5 to 6		7 and Higher		Total
Lease receivables	$	1,615	$	1,538	$	141	$	3,294
Loan receivables	953		593		137		1,683
Financed service contracts and other	1,744		1,367		99		3,210
Total	$	4,312	$	3,498	$	377	$	8,187

The Company determines the adequacy of its allowance for credit loss by assessing the risks and losses inherent in its financing receivables by portfolio segment. The portfolio segment is based on the types of financing offered by the Company to its customers, which consist of the following: lease receivables, loan receivables, and financed service contracts and other.

The Company’s internal credit risk ratings of 1 through 4 correspond to investment-grade ratings, while credit risk ratings of 5 and 6 correspond to non-investment grade ratings. Credit risk ratings of 7 and higher correspond to substandard ratings.

In circumstances when collectibility is not deemed reasonably assured, the associated revenue is deferred in accordance with the Company’s revenue recognition policies, and the related allowance for credit loss, if any, is included in deferred revenue. The Company also records deferred revenue associated with financing receivables when there are remaining performance obligations, as it does for financed service contracts. Total allowances for credit loss and deferred revenue as of January 24, 2015 and July 26, 2014 were $1,928 million and $2,220 million, respectively, and they were associated with total financing receivables before allowance for credit loss of $8,134 million and $8,420 million as of their respective period ends.

The following tables present the aging analysis of gross receivables less unearned income as of January 24, 2015 and July 26, 2014 (in millions):

	DAYS PAST DUE (INCLUDES BILLED AND UNBILLED)
January 24, 2015	31-60		61-90		91+		Total Past Due		Current		Total		Nonaccrual Financing Receivables		Impaired Financing Receivables
Lease receivables	$	171	$	63	$	224	$	458	$	2,705	$	3,163	$	53	$	48
Loan receivables	30		42		177		249		1,425		1,674		33		33
Financed service contracts and other	144		135		385		664		2,405		3,069		30		8
Total	$	345	$	240	$	786	$	1,371	$	6,535	$	7,906	$	116	$	89

	DAYS PAST DUE (INCLUDES BILLED AND UNBILLED)
July 26, 2014	31-60		61-90		91+		Total Past Due		Current		Total		Nonaccrual Financing Receivables		Impaired Financing Receivables
Lease receivables	$	63	$	48	$	203	$	314	$	2,980	$	3,294	$	48	$	41
Loan receivables	7		21		28		56		1,627		1,683		19		19
Financed service contracts and other	268		238		221		727		2,483		3,210		12		9
Total	$	338	$	307	$	452	$	1,097	$	7,090	$	8,187	$	79	$	69

Past due financing receivables are those that are 31 days or more past due according to their contractual payment terms. The data in the preceding tables is presented by contract, and the aging classification of each contract is based on the oldest outstanding receivable, and therefore past due amounts also include unbilled and current receivables within the same contract. The balances

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

of either unbilled or current financing receivables included in the category of 91 days plus past due for financing receivables were $542 million and $334 million as of January 24, 2015 and July 26, 2014, respectively.

As of January 24, 2015, the Company had financing receivables of $217 million, net of unbilled or current receivables from the same contract, that were in the category of 91 days plus past due but remained on accrual status. Such balance was $78 million as of July 26, 2014. A financing receivable may be placed on nonaccrual status earlier if, in management’s opinion, a timely collection of the full principal and interest becomes uncertain.

(c) Allowance for Credit Loss Rollforward

The allowances for credit loss and the related financing receivables are summarized as follows (in millions):

	CREDIT LOSS ALLOWANCES
Three Months Ended January 24, 2015	Lease Receivables			Loan Receivables			Financed Service Contracts and Other		Total
Allowance for credit loss as of October 25, 2014	$	248		$	84		$	36	$	368
Provisions	7			3			4		14
Recoveries (write-offs), net	(1		)	—			—		(1		)
Foreign exchange and other	(4		)	(2		)	—		(6		)
Allowance for credit loss as of January 24, 2015	$	250		$	85		$	40	$	375
Financing receivables as of January 24, 2015 (1)	$	3,391		$	1,674		$	3,069	$	8,134

	CREDIT LOSS ALLOWANCES
Six Months Ended January 24, 2015	Lease Receivables			Loan Receivables			Financed Service Contracts and Other			Total
Allowance for credit loss as of July 26, 2014	$	233		$	98		$	18		$	349
Provisions	29			(10		)	23			42
Recoveries (write-offs), net	(5		)	1			—			(4		)
Foreign exchange and other	(7		)	(4		)	(1		)	(12		)
Allowance for credit loss as of January 24, 2015	$	250		$	85		$	40		$	375

	CREDIT LOSS ALLOWANCES
Three Months Ended January 25, 2014	Lease Receivables			Loan Receivables			Financed Service Contracts and Other		Total
Allowance for credit loss as of October 26, 2013	$	237		$	93		$	20	$	350
Provisions	18			9			2		29
Recoveries (write-offs), net	1			—			—		1
Foreign exchange and other	(2		)	(4		)	—		(6		)
Allowance for credit loss as of January 25, 2014	$	254		$	98		$	22	$	374
Financing receivables as of January 25, 2014 (1)	$	3,551		$	1,660		$	2,807	$	8,018

	CREDIT LOSS ALLOWANCES
Six Months Ended January 25, 2014	Lease Receivables		Loan Receivables			Financed Service Contracts and Other		Total
Allowance for credit loss as of July 27, 2013	$	238	$	86		$	20	$	344
Provisions	15		15			2		32
Recoveries (write-offs), net	1		—			—		1
Foreign exchange and other	—		(3		)	—		(3		)
Allowance for credit loss as of January 25, 2014	$	254	$	98		$	22	$	374

⁽¹⁾ Total financing receivables before allowance for credit loss.

The Company assesses the allowance for credit loss related to financing receivables on either an individual or a collective basis. The Company considers various factors in evaluating lease and loan receivables and the earned portion of financed service contracts for possible impairment on an individual basis. These factors include the Company’s historical experience, credit quality and age

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CISCO SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

of the receivable balances, and economic conditions that may affect a customer’s ability to pay. When the evaluation indicates that it is probable that all amounts due pursuant to the contractual terms of the financing agreement, including scheduled interest payments, are unable to be collected, the financing receivable is considered impaired. All such outstanding amounts, including any accrued interest, will be assessed and fully reserved at the customer level. The Company’s internal credit risk ratings are categorized as 1 through 10, with the lowest credit risk rating representing the highest quality financing receivables.

Typically, the Company also considers receivables with a risk rating of 8 or higher to be impaired and will include them in the individual assessment for allowance. These balances, as of January 24, 2015 and July 26, 2014, are presented under “(b) Credit Quality of Financing Receivables” above.

The Company evaluates the remainder of its financing receivables portfolio for impairment on a collective basis and records an allowance for credit loss at the portfolio segment level. When evaluating the financing receivables on a collective basis, the Company uses expected default frequency rates published by a major third-party credit-rating agency as well as its own historical loss rate in the event of default, while also systematically giving effect to economic conditions, concentration of risk, and correlation.

(d) Operating Leases

The Company provides financing of certain equipment through operating leases, and the amounts are included in property and equipment in the Consolidated Balance Sheets. Amounts relating to equipment on operating lease assets and the associated accumulated depreciation are summarized as follows (in millions):

	January 24, 2015			July 26, 2014
Operating lease assets	$	343		$	362
Accumulated depreciation	(195		)	(202		)
Operating lease assets, net	$	148		$	160

Minimum future rentals on noncancelable operating leases at January 24, 2015 were approximately $0.1 billion for the remaining six months of fiscal 2015, $0.2 billion for fiscal 2016, and less than $0.1 billion per year for each of fiscal 2017 through fiscal 2019.

8. Investments

(a) Summary of Available-for-Sale Investments

The following tables summarize the Company’s available-for-sale investments (in millions):

January 24, 2015	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Fixed income securities:
U.S. government securities	$	30,302	$	53	$	(1	)	$	30,354
U.S. government agency securities	2,324		3		(1		)	2,326
Non-U.S. government and agency securities	1,108		1		—			1,109
Corporate debt securities	11,180		61		(28		)	11,213
U.S. agency mortgage-backed securities	1,360		15		—			1,375
Total fixed income securities	46,274		133		(30		)	46,377
Publicly traded equity securities	1,296		562		(10		)	1,848
Total	$	47,570	$	695	$	(40	)	$	48,225

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

July 26, 2014	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Fixed income securities:
U.S. government securities	$	31,717	$	29	$	(12	)	$	31,734
U.S. government agency securities	1,062		1		—			1,063
Non-U.S. government and agency securities	860		2		(1		)	861
Corporate debt securities	9,092		74		(7		)	9,159
U.S. agency mortgage-backed securities	574		5		—			579
Total fixed income securities	43,305		111		(20		)	43,396
Publicly traded equity securities	1,314		648		(10		)	1,952
Total	$	44,619	$	759	$	(30	)	$	45,348

Non-U.S. government and agency securities include agency and corporate debt securities that are guaranteed by non-U.S. governments.

(b) Gains and Losses on Available-for-Sale Investments

The following table presents the gross realized gains and gross realized losses related to the Company’s available-for-sale investments (in millions):

	Three Months Ended						Six Months Ended
	January 24, 2015			January 25, 2014			January 24, 2015			January 25, 2014
Gross realized gains	$	92		$	97		$	113		$	192
Gross realized losses	(23		)	(15		)	(37		)	(27		)
Total	$	69		$	82		$	76		$	165

The following table presents the realized net gains (losses) related to the Company’s available-for-sale investments by security type (in millions):

	Three Months Ended				Six Months Ended
	January 24, 2015		January 25, 2014		January 24, 2015		January 25, 2014
Net gains (losses) on investments in publicly traded equity securities	$	60	$	69	$	56	$	144
Net gains on investments in fixed income securities	9		13		20		21
Total	$	69	$	82	$	76	$	165

There were no impairment charges on available-for-sale investments for the three and six months ended January 24, 2015. For the three and six months ended January 25, 2014, the realized gains related to the Company's available-for-sale investments included impairment charges of $11 million for publicly traded equity securities, which were due to a decline in the fair value of those securities below their cost basis that were determined to be other than temporary.

The following tables present the breakdown of the available-for-sale investments with gross unrealized losses and the duration that those losses had been unrealized at January 24, 2015 and July 26, 2014 (in millions):

	UNREALIZED LOSSES LESS THAN 12 MONTHS					UNREALIZED LOSSES 12 MONTHS OR GREATER					TOTAL
January 24, 2015	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross  Unrealized  Losses
Fixed income securities:
U.S. government securities	$	4,558	$	(1	)	$	—	$	—		$	4,558	$	(1	)
U.S. government agency securities	854		(1		)	—		—			854		(1		)
Corporate debt securities	3,952		(25		)	363		(3		)	4,315		(28		)
Total fixed income securities	9,364		(27		)	363		(3		)	9,727		(30		)
Publicly traded equity securities	119		(10		)	1		—			120		(10		)
Total	$	9,483	$	(37	)	$	364	$	(3	)	$	9,847	$	(40	)

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

	UNREALIZED LOSSES LESS THAN 12 MONTHS					UNREALIZED LOSSES 12 MONTHS OR GREATER					TOTAL
July 26, 2014	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross  Unrealized  Losses
Fixed income securities:
U.S. government securities	$	7,676	$	(12	)	$	45	$	—		$	7,721	$	(12	)
Non-U.S. government and agency securities	361		(1		)	22		—			383		(1		)
Corporate debt securities	1,875		(3		)	491		(4		)	2,366		(7		)
Total fixed income securities	9,912		(16		)	558		(4		)	10,470		(20		)
Publicly traded equity securities	132		(10		)	—		—			132		(10		)
Total	$	10,044	$	(26	)	$	558	$	(4	)	$	10,602	$	(30	)

As of January 24, 2015, for fixed income securities that were in unrealized loss positions, the Company has determined that (i) it does not have the intent to sell any of these investments and (ii) it is not more likely than not that it will be required to sell any of these investments before recovery of the entire amortized cost basis. In addition, as of January 24, 2015, the Company anticipates that it will recover the entire amortized cost basis of such fixed income securities and has determined that no other-than-temporary impairments associated with credit losses were required to be recognized during the six months ended January 24, 2015.

The Company has evaluated its publicly traded equity securities as of January 24, 2015 and has determined that there was no indication of other-than-temporary impairments in the respective categories of unrealized losses. This determination was based on several factors, which include the length of time and extent to which fair value has been less than the cost basis, the financial condition and near-term prospects of the issuer, and the Company’s intent and ability to hold the publicly traded equity securities for a period of time sufficient to allow for any anticipated recovery in market value.

(c) Maturities of Fixed Income Securities

The following table summarizes the maturities of the Company’s fixed income securities at January 24, 2015 (in millions):

	Amortized Cost		Fair Value
Less than 1 year	$	15,355	$	15,362
Due in 1 to 2 years	14,963		14,995
Due in 2 to 5 years	14,383		14,431
Due after 5 years	1,573		1,589
Total	$	46,274	$	46,377

Actual maturities may differ from the contractual maturities because borrowers may have the right to call or prepay certain obligations. The remaining contractual principal maturities for mortgage-backed securities were allocated assuming no prepayments.

(d) Securities Lending

The Company periodically engages in securities lending activities with certain of its available-for-sale investments. These transactions are accounted for as a secured lending of the securities, and the securities are typically loaned only on an overnight basis. The average daily balance of securities lending for the six months ended January 24, 2015 and January 25, 2014 was $0.6 billion and $0.9 billion, respectively. The Company requires collateral equal to at least 102% of the fair market value of the loaned security and that the collateral be in the form of cash or liquid, high-quality assets. The Company engages in these secured lending transactions only with highly creditworthy counterparties, and the associated portfolio custodian has agreed to indemnify the Company against collateral losses. The Company did not experience any losses in connection with the secured lending of securities during the periods presented. As of January 24, 2015 and July 26, 2014, the Company had no outstanding securities lending transactions.

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(Unaudited)

(e) Investments in Privately Held Companies

The carrying value of the Company’s investments in privately held companies was included in other assets. For such investments that were accounted for under the equity and cost method as of January 24, 2015 and July 26, 2014, the amounts are summarized in the following table (in millions):

	January 24, 2015		July 26, 2014
Equity method investments	$	541	$	630
Cost method investments	316		269
Total	$	857	$	899

Variable Interest Entities

VCE Joint Venture VCE is a joint venture formed in fiscal 2010 between the Company and EMC Corporation (“EMC”), with investments from VMware, Inc. (“VMware”) and Intel Capital Corporation ("Intel"). In October 2014, the Company, EMC, VMware, and Intel agreed to restructure VCE, and this transaction was completed in the second quarter of fiscal 2015. Prior to the restructuring, the Company’s cumulative gross investment in VCE was approximately $716 million inclusive of convertible notes and accrued interest on convertible notes. The Company recorded cumulative losses from VCE under the equity method of $691 million since inception. The Company ceased accounting for the VCE investment under the equity method in October 2014 and recorded no losses during the three months ended January 24, 2015, compared with losses of $58 million recorded for the three months ended January 25, 2014, and losses of $47 million and $111 million were recorded for the six months ended January 24, 2015 and January 25, 2014, respectively. Under the terms of the restructuring, VCE paid $152 million to the Company for a portion of the outstanding principal balance of the convertible notes held by it and accrued interest on such notes, and the remaining principal balance of other such notes, and the accrued interest thereon, was cancelled. Pursuant to the restructuring, VCE also redeemed a portion of the Company’s equity interest in VCE, reducing the Company’s ownership interest in VCE from 35% prior to the restructuring to 10%.  In connection with this transaction, the Company has written this investment down to a book value of zero and has recognized a gain of $126 million for the three and six months ended January 24, 2015.

Other Variable Interest EntitiesIn the ordinary course of business, the Company has investments in other privately held companies and provides financing to certain customers. These other privately held companies and customers may be considered to be variable interest entities. The Company evaluates on an ongoing basis its investments in these other privately held companies and its customer financings and has determined that as of January 24, 2015 there were no other variable interest entities required to be consolidated in the Company’s Consolidated Financial Statements.

9. Fair Value

Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be either recorded or disclosed at fair value, the Company considers the principal or most advantageous market in which it would transact, and it also considers assumptions that market participants would use when pricing the asset or liability.

(a) Fair Value Hierarchy

The accounting guidance for fair value measurement requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is as follows:

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability, such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

19

CISCO SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(b) Assets and Liabilities Measured at Fair Value on a Recurring Basis

Assets and liabilities measured at fair value on a recurring basis as of January 24, 2015 and July 26, 2014 were as follows (in millions):

	JANUARY 24, 2015 FAIR VALUE MEASUREMENTS								JULY 26, 2014 FAIR VALUE MEASUREMENTS
	Level 1		Level 2		Level 3		Total Balance		Level 1		Level 2		Level 3		Total Balance
Assets:
Cash equivalents:
Money market funds	$	2,977	$	—	$	—	$	2,977	$	4,935	$	—	$	—	$	4,935
Corporate debt securities	—		67		—		67		—		—		—		—
Available-for-sale investments:
U.S. government securities	—		30,354		—		30,354		—		31,734		—		31,734
U.S. government agency securities	—		2,326		—		2,326		—		1,063		—		1,063
Non-U.S. government and agency securities	—		1,109		—		1,109		—		861		—		861
Corporate debt securities	—		11,213		—		11,213		—		9,159		—		9,159
U.S. agency mortgage-backed securities	—		1,375		—		1,375		—		579		—		579
Publicly traded equity securities	1,848		—		—		1,848		1,952		—		—		1,952
Derivative assets	—		288		—		288		—		158		2		160
Total	$	4,825	$	46,732	$	—	$	51,557	$	6,887	$	43,554	$	2	$	50,443
Liabilities:
Derivative liabilities	$	—	$	162	$	—	$	162	$	—	$	67	$	—	$	67
Total	$	—	$	162	$	—	$	162	$	—	$	67	$	—	$	67

Level 1 publicly traded equity securities are determined by using quoted prices in active markets for identical assets. Level 2 fixed income securities are priced using quoted market prices for similar instruments or nonbinding market prices that are corroborated by observable market data. The Company uses inputs such as actual trade data, benchmark yields, broker/dealer quotes, and other similar data, which are obtained from quoted market prices, independent pricing vendors, or other sources, to determine the ultimate fair value of these assets and liabilities. The Company uses such pricing data as the primary input to make its assessments and determinations as to the ultimate valuation of its investment portfolio and has not made, during the periods presented, any material adjustments to such inputs. The Company is ultimately responsible for the financial statements and underlying estimates. The Company’s derivative instruments are primarily classified as Level 2, as they are not actively traded and are valued using pricing models that use observable market inputs. The Company did not have any transfers between Level 1 and Level 2 fair value measurements during the periods presented.

Level 3 assets include certain derivative instruments, the values of which are determined based on discounted cash flow models using inputs that the Company could not corroborate with market data.

(c) Assets Measured at Fair Value on a Nonrecurring Basis

The Company recognized $2 million and $3 million of losses related to the impairment of privately held investments for the three and six months ended January 24, 2015, respectively, and $9 million and $10 million for the three and six months ended January 25, 2014, respectively. The Company recognized $56 million of losses related to the impairment of purchased intangible assets for the three and six months ended January 24, 2015. There were no impairment charges of purchased intangible assets for the corresponding periods in fiscal 2014. These assets were measured at fair value due to events or circumstances the Company identified as having significant impact on their fair value during the respective periods. To arrive at the valuation of these assets, the Company considers any significant changes in the financial metrics and economic variables and also uses third-party valuation reports to assist in the valuation as necessary.

The fair value measurement of the impaired investments was classified as Level 3 because significant unobservable inputs were used in the valuation due to the absence of quoted market prices and inherent lack of liquidity. Significant unobservable inputs, which included financial metrics of comparable private and public companies, financial condition and near-term prospects of the investees, recent financing activities of the investees, and the investees’ capital structure as well as other economic variables, reflected the assumptions

20

CISCO SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

market participants would use in pricing these assets. The impairment charges, representing the difference between the net book value and the fair value as a result of the evaluation, were recorded to other income (loss), net.

The fair value for purchased intangibles for which the carrying amount was not deemed to be recoverable was determined using the future discounted cash flows that the assets are expected to generate. The difference between the estimated fair value and the carrying value of the assets was recorded as an impairment charge, which was included in product cost of sales and operating expenses as applicable. See Note 4.

(d) Other Fair Value Disclosures

The carrying value of the Company’s investments in privately held companies that were accounted for under the cost method was $316 million and $269 million as of January 24, 2015 and July 26, 2014, respectively. It was not practicable to estimate the fair value of this portfolio.

The fair value of the Company’s short-term loan receivables and financed service contracts approximates their carrying value due to their short duration. The aggregate carrying value of the Company’s long-term loan receivables and financed service contracts and other as of January 24, 2015 and July 26, 2014 was $1.9 billion and $2.1 billion, respectively. The estimated fair value of the Company’s long-term loan receivables and financed service contracts and other approximates their carrying value. The Company uses significant unobservable inputs in determining discounted cash flows to estimate the fair value of its long-term loan receivables and financed service contracts, and therefore they are categorized as Level 3.

As of January 24, 2015, the estimated fair value of the short-term debt approximates its carrying value due to the short maturities. As of January 24, 2015, the fair value of the Company’s senior notes and other long-term debt was $22.3 billion with a carrying amount of $20.5 billion. This compares to a fair value of $22.4 billion and a carrying amount of $20.9 billion as of July 26, 2014. The fair value of the senior notes and other long-term debt was determined based on observable market prices in a less active market and was categorized as Level 2 in the fair value hierarchy.

10. Borrowings

(a) Short-Term Debt

The following table summarizes the Company’s short-term debt (in millions, except percentages):

	January 24, 2015				July 26, 2014
	Amount		Effective Rate		Amount		Effective Rate
Current portion of long-term debt	$	850	0.36	%	$	500	3.11	%
Other short-term debt	5		2.73	%	8		2.67	%
Total short-term debt	$	855			$	508

In fiscal 2011, the Company established a short-term debt financing program of up to $3.0 billion through the issuance of commercial paper notes. The Company uses the proceeds from the issuance of commercial paper notes for general corporate purposes. The Company had no commercial paper notes outstanding as of each of January 24, 2015 and July 26, 2014.

The effective interest rate on the current portion of long-term debt includes the impact of interest rate swaps, as discussed further in "(b) Long-Term Debt." Other notes and borrowings consist of the short-term portion of secured borrowings associated with customer financing arrangements. These notes and credit facilities were subject to various terms and foreign currency market interest rates pursuant to individual financial arrangements between the financing institution and the applicable foreign subsidiary.

On November 17, 2014, upon the maturity of the Company’s 2014 Fixed-Rate Notes (2.90%), the Company repaid an aggregate principal amount of $500 million.

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CISCO SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(b) Long-Term Debt

The following table summarizes the Company’s long-term debt (in millions, except percentages):

		January 24, 2015				July 26, 2014
	Maturity Date	Amount			Effective Rate	Amount			Effective Rate
Senior notes:
Floating-rate notes:
Three-month LIBOR plus 0.05%	September 3, 2015	$	850		0.36%	$	850		0.35%
Three-month LIBOR plus 0.28%	March 3, 2017	1,000			0.57%	1,000			0.56%
Three-month LIBOR plus 0.50%	March 1, 2019	500			0.79%	500			0.78%
Fixed-rate notes:
2.90%	November 17, 2014	—			—	500			3.11%
5.50%	February 22, 2016	3,000			3.05%	3,000			3.04%
1.10%	March 3, 2017	2,400			0.57%	2,400			0.56%
3.15%	March 14, 2017	750			0.80%	750			0.79%
4.95%	February 15, 2019	2,000			4.69%	2,000			4.69%
2.125%	March 1, 2019	1,750			0.78%	1,750			0.77%
4.45%	January 15, 2020	2,500			2.99%	2,500			2.98%
2.90%	March 4, 2021	500			0.94%	500			0.93%
3.625%	March 4, 2024	1,000			1.06%	1,000			1.05%
5.90%	February 15, 2039	2,000			6.11%	2,000			6.11%
5.50%	January 15, 2040	2,000			5.67%	2,000			5.67%
Other long-term debt		2			2.08%	4			2.39%
Total		20,252				20,754
Unaccreted discount		(61		)		(63		)
Hedge accounting fair value adjustments		326				210
Total		$	20,517			$	20,901
Reported as:
Current portion of long-term debt		$	850			$	500
Long-term debt		19,667				20,401
Total		$	20,517			$	20,901

To achieve its interest rate risk management objectives, the Company entered into interest rate swaps in prior periods with an aggregate notional amount of $10.4 billion designated as fair value hedges of certain of its fixed-rate senior notes. In effect, these swaps convert the fixed interest rates of the fixed-rate notes to floating interest rates based on the London InterBank Offered Rate (LIBOR). The gains and losses related to changes in the fair value of the interest rate swaps substantially offset changes in the fair value of the hedged portion of the underlying debt that are attributable to the changes in market interest rates. For additional information, see Note 11.

The effective rates for the fixed-rate debt include the interest on the notes, the accretion of the discount, and, if applicable, adjustments related to hedging. Interest is payable semiannually on each class of the senior fixed-rate notes and payable quarterly on the floating-rate notes. Each of the senior fixed-rate notes is redeemable by the Company at any time, subject to a make-whole premium. 

The senior notes rank at par with the commercial paper notes that may be issued in the future pursuant to the Company’s short-term debt financing program, as discussed above under “(a) Short-Term Debt.” As of January 24, 2015, the Company was in compliance with all debt covenants.

22

CISCO SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

As of January 24, 2015, future principal payments for long-term debt, including the current portion, are summarized as follows (in millions):

Fiscal Year	Amount
2015 (remaining six months)	$	—
2016	3,851
2017	4,151
2018	—
2019	4,250
Thereafter	8,000
Total	$	20,252

(c) Credit Facility

On February 17, 2012, the Company entered into a credit agreement with certain institutional lenders that provides for a $3.0 billion unsecured revolving credit facility that is scheduled to expire on February 17, 2017. Any advances under the credit agreement will accrue interest at rates that are equal to, based on certain conditions, either (i) the higher of the Federal Funds rate plus 0.50%, Bank of America’s “prime rate” as announced from time to time, or one-month LIBOR plus 1.00% or (ii) LIBOR plus a margin that is based on the Company’s senior debt credit ratings as published by Standard & Poor’s Financial Services, LLC and Moody’s Investors Service, Inc. The credit agreement requires the Company to comply with certain covenants, including that it maintain an interest coverage ratio as defined in the agreement. As of January 24, 2015, the Company wasin compliance with the required interest coverage ratio and the other covenants, and the Company had not borrowed any funds under the credit facility.

The Company may also, upon the agreement of either the existing lenders or additional lenders not currently parties to the agreement, increase the commitments under the credit facility by up to an additional $2.0 billion and/or extend the expiration date of the credit facility by up to two additional years, or up to February 17, 2019.

11. Derivative Instruments

(a) Summary of Derivative Instruments

The Company uses derivative instruments primarily to manage exposures to foreign currency exchange rate, interest rate, and equity price risks. The Company’s primary objective in holding derivatives is to reduce the volatility of earnings and cash flows associated with changes in foreign currency exchange rates, interest rates, and equity prices. The Company’s derivatives expose it to credit risk to the extent that the counterparties may be unable to meet the terms of the agreement. The Company does, however, seek to mitigate such risks by limiting its counterparties to major financial institutions. In addition, the potential risk of loss with any one counterparty resulting from this type of credit risk is monitored. Management does not expect material losses as a result of defaults by counterparties.

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CISCO SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

The fair values of the Company’s derivative instruments and the line items on the Consolidated Balance Sheets to which they were recorded are summarized as follows (in millions):

	DERIVATIVE ASSETS					DERIVATIVE LIABILITIES
	Balance Sheet  Line Item	January 24, 2015		July 26, 2014		Balance Sheet Line Item	January 24, 2015		July 26, 2014
Derivatives designated as hedging instruments:
Foreign currency derivatives	Other current assets	$	4	$	7	Other current liabilities	$	88	$	6
Interest rate derivatives	Other assets	279		148		Other long-term liabilities	—		3
Equity derivatives	Other current assets	—		—		Other current liabilities	68		56
Total		283		155			156		65
Derivatives not designated as hedging instruments:
Foreign currency derivatives	Other current assets	5		3		Other current liabilities	6		2
Equity derivatives	Other assets	—		2		Other long-term liabilities	—		—
Total		5		5			6		2
Total		$	288	$	160		$	162	$	67

The effects of the Company’s cash flow and net investment hedging instruments on other comprehensive income (OCI) and the Consolidated Statements of Operations are summarized as follows (in millions):

GAINS (LOSSES) RECOGNIZED IN OCI ON DERIVATIVES FOR THE THREE MONTHS ENDED (EFFECTIVE PORTION)							GAINS (LOSSES) RECLASSIFIED FROM AOCI INTO INCOME FOR THE THREE MONTHS ENDED (EFFECTIVE PORTION)
	January 24, 2015			January 25, 2014			Line Item in Statements of Operations	January 24, 2015			January 25, 2014
Derivatives designated as cash flow hedging instruments:
Foreign currency derivatives	$	(75	)	$	(4	)	Operating expenses	$	(21	)	$	16
							Cost of sales—service	(5		)	3
Total	$	(75	)	$	(4	)		$	(26	)	$	19
Derivatives designated as net investment hedging instruments:
Foreign currency derivatives	$	24		$	16		Other income (loss), net	$	—		$	—

GAINS (LOSSES) RECOGNIZED IN OCI ON DERIVATIVES FOR THE SIX MONTHS ENDED (EFFECTIVE PORTION)							GAINS (LOSSES) RECLASSIFIED FROM AOCI INTO INCOME FOR THE SIX MONTHS ENDED (EFFECTIVE PORTION)
	January 24, 2015			January 25, 2014			Line Item in Statements of Operations	January 24, 2015			January 25, 2014
Derivatives designated as cash flow hedging instruments:
Foreign currency derivatives	$	(131	)	$	34		Operating expenses	$	(24	)	$	23
							Cost of sales—service	(6		)	5
Total	$	(131	)	$	34			$	(30	)	$	28
Derivatives designated as net investment hedging instruments:
Foreign currency derivatives	$	44		$	(3	)	Other income (loss), net	$	—		$	—

As of January 24, 2015, the Company estimates that approximately $102 million of net derivative losses related to its cash flow hedges included in accumulated other comprehensive income (AOCI) will be reclassified into earnings within the next 12 months when the underlying hedged item impacts earnings.

24

CISCO SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

The effect on the Consolidated Statements of Operations of derivative instruments designated as fair value hedges and the underlying hedged items is summarized as follows (in millions):

		GAINS (LOSSES) ON DERIVATIVE INSTRUMENTS FOR THE THREE MONTHS ENDED						GAINS (LOSSES) RELATED TO HEDGED ITEMS FOR THE THREE MONTHS ENDED
Derivatives Designated as Fair Value Hedging Instruments	Line Item in Statements of Operations	January 24, 2015			January 25, 2014			January 24, 2015			January 25, 2014
Equity derivatives	Other income (loss), net	$	(18	)	$	(12	)	$	18		$	12
Interest rate derivatives	Interest expense	61			(53		)	(61		)	54
Total		$	43		$	(65	)	$	(43	)	$	66

		GAINS (LOSSES) ON DERIVATIVE INSTRUMENTS FOR THE SIX MONTHS ENDED						GAINS (LOSSES) RELATED TO HEDGED ITEMS FOR THE SIX MONTHS ENDED
Derivatives Designated as Fair Value Hedging Instruments	Line Item in Statements of Operations	January 24, 2015			January 25, 2014			January 24, 2015			January 25, 2014
Equity derivatives	Other income (loss), net	$	(12	)	$	(47	)	$	12		$	47
Interest rate derivatives	Interest expense	131			(35		)	(134		)	34
Total		$	119		$	(82	)	$	(122	)	$	81

The effect on the Consolidated Statements of Operations of derivative instruments not designated as hedges is summarized as follows (in millions):

		GAINS (LOSSES) FOR THE THREE MONTHS ENDED						GAINS (LOSSES) FOR THE SIX MONTHS ENDED
Derivatives Not Designated as Hedging Instruments	Line Item in Statements of Operations	January 24, 2015			January 25, 2014			January 24, 2015			January 25, 2014
Foreign currency derivatives	Other income (loss), net	$	(51	)	$	(63	)	$	(109	)	$	(20	)
Total return swaps—deferred compensation	Operating expenses	13			12			—			29
Equity derivatives	Other income (loss), net	8			13			4			24
Total		$	(30	)	$	(38	)	$	(105	)	$	33

The notional amounts of the Company’s outstanding derivatives are summarized as follows (in millions):

	January 24, 2015		July 26, 2014
Derivatives designated as hedging instruments:
Foreign currency derivatives—cash flow hedges	$	1,641	$	1,618
Interest rate derivatives	10,400		10,400
Net investment hedging instruments	216		345
Equity derivatives	238		238
Derivatives not designated as hedging instruments:
Foreign currency derivatives	1,969		2,528
Total return swaps—deferred compensation	449		428
Total	$	14,913	$	15,557

25

CISCO SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(b) Offsetting of Derivative Instruments

The Company presents its derivative instruments at gross fair values in the Consolidated Balance Sheets. However, the Company’s master netting and other similar arrangements with the respective counterparties allow for net settlement under certain conditions, which are designed to reduce credit risk by permitting net settlement with the same counterparty. To further limit credit risk, the Company also enters into collateral security arrangements related to certain derivative instruments whereby cash is posted as collateral between the counterparties based on the fair market value of the derivative instrument. Information related to these offsetting arrangements is summarized as follows (in millions):

	OFFSETTING OF DERIVATIVE ASSETS
	Gross Amounts Offset in Consolidated Balance Sheets						Gross Amounts Not Offset in the Consolidated Balance Sheets, but with Legal Rights to Offset
January 24, 2015	Gross Amount of Recognized Assets		Gross Amounts Offset in Consolidated Balance Sheets		Net Amount Presented on Consolidated Balance Sheets		Gross Derivative Amounts with Legal Rights to Offset			Cash Collateral Received			Net Amount
Derivatives	$	288	$	—	$	288	$	(58	)	$	(186	)	$	44

	OFFSETTING OF DERIVATIVE LIABILITIES
	Gross Amounts Offset in Consolidated Balance Sheets						Gross Amounts Not Offset in the Consolidated Balance Sheets, but with Legal Rights to Offset
January 24, 2015	Gross Amount of Recognized Liabilities		Gross Amounts Offset in Consolidated Balance Sheets		Net Amount Presented on Consolidated Balance Sheets		Gross Derivative Amounts with Legal Rights to Offset			Cash Collateral Pledged		Net Amount
Derivatives	$	162	$	—	$	162	$	(58	)	$	—	$	104

	OFFSETTING OF DERIVATIVE ASSETS
	Gross Amounts Offset in Consolidated Balance Sheets						Gross Amounts Not Offset in the Consolidated Balance Sheets, but with Legal Rights to Offset
July 26, 2014	Gross Amount of Recognized Assets		Gross Amounts Offset in Consolidated Balance Sheets		Net Amount Presented on Consolidated Balance Sheets		Gross Derivative Amounts with Legal Rights to Offset			Cash Collateral Received			Net Amount
Derivatives	$	160	$	—	$	160	$	(39	)	$	(60	)	$	61

	OFFSETTING OF DERIVATIVE LIABILITIES
	Gross Amounts Offset in Consolidated Balance Sheets						Gross Amounts Not Offset in the Consolidated Balance Sheets, but with Legal Rights to Offset
July 26, 2014	Gross Amount of Recognized Liabilities		Gross Amounts Offset in Consolidated Balance Sheets		Net Amount Presented on Consolidated Balance Sheets		Gross Derivative Amounts with Legal Rights to Offset			Cash Collateral Pledged			Net Amount
Derivatives	$	67	$	—	$	67	$	(39	)	$	(1	)	$	27

(c) Foreign Currency Exchange Risk

The Company conducts business globally in numerous currencies. Therefore, it is exposed to adverse movements in foreign currency exchange rates. To limit the exposure related to foreign currency changes, the Company enters into foreign currency contracts. The Company does not enter into such contracts for trading purposes.

The Company hedges forecasted foreign currency transactions related to certain operating expenses and service cost of sales with currency options and forward contracts. These currency options and forward contracts, designated as cash flow hedges, generally have maturities of less than 18 months. The Company assesses effectiveness based on changes in total fair value of the derivatives. The effective portion of the derivative instrument’s gain or loss is initially reported as a component of AOCI and subsequently reclassified into earnings when the hedged exposure affects earnings. The ineffective portion, if any, of the gain or loss is reported in earnings immediately. During the periods presented, the Company did not discontinue any cash flow hedges for which it was probable that a forecasted transaction would not occur.

26

CISCO SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

The Company enters into foreign exchange forward and option contracts to reduce the short-term effects of foreign currency fluctuations on assets and liabilities such as foreign currency receivables, including long-term customer financings, investments, and payables. These derivatives are not designated as hedging instruments. Gains and losses on the contracts are included in other income (loss), net, and substantially offset foreign exchange gains and losses from the remeasurement of intercompany balances or other current assets, investments, or liabilities denominated in currencies other than the functional currency of the reporting entity.

The Company hedges certain net investments in its foreign operations with forward contracts to reduce the effects of foreign currency fluctuations on the Company’s net investment in those foreign subsidiaries. These derivative instruments generally have maturities of up to six months.

(d) Interest Rate Risk

Interest Rate Derivatives, Investments   The Company’s primary objective for holding fixed income securities is to achieve an appropriate investment return consistent with preserving principal and managing risk. To realize these objectives, the Company may utilize interest rate swaps or other derivatives designated as fair value or cash flow hedges. As of January 24, 2015 and July 26, 2014, the Company did not have any outstanding interest rate derivatives related to its fixed income securities.

Interest Rate Derivatives Designated as Fair Value Hedge, Long-Term DebtIn fiscal 2014 and 2013, the Company entered into interest rate swaps designated as fair value hedges related to fixed-rate senior notes that are due on various dates from 2017 through 2024. In the periods prior to fiscal 2013, the Company entered into interest rate swaps designated as fair value hedges related to fixed-rate senior notes that are due in 2016 and 2017. Under these interest rate swaps, the Company receives fixed-rate interest payments and makes interest payments based on LIBOR plus a fixed number of basis points. The effect of such swaps is to convert the fixed interest rates of the senior fixed-rate notes to floating interest rates based on LIBOR. The gains and losses related to changes in the fair value of the interest rate swaps are included in interest expense and substantially offset changes in the fair value of the hedged portion of the underlying debt that are attributable to the changes in market interest rates. The fair value of the interest rate swaps was reflected in other assets and other long-term liabilities.

(e) Equity Price Risk

The Company may hold equity securities for strategic purposes or to diversify its overall investment portfolio. The publicly traded equity securities in the Company’s portfolio are subject to price risk. To manage its exposure to changes in the fair value of certain equity securities, the Company has entered into equity derivatives that are designated as fair value hedges. The changes in the value of the hedging instruments are included in other income (loss), net, and offset the change in the fair value of the underlying hedged investment. In addition, the Company periodically enters into equity derivatives that are not designated as accounting hedges. The changes in the fair value of these derivatives are also included in other income (loss), net.

The Company is also exposed to variability in compensation charges related to certain deferred compensation obligations to employees. Although not designated as accounting hedges, the Company utilizes derivatives such as total return swaps to economically hedge this exposure.

(f) Hedge Effectiveness

For the periods presented, amounts excluded from the assessment of hedge effectiveness were not material for fair value, cash flow, and net investment hedges. In addition, hedge ineffectiveness for fair value, cash flow, and net investment hedges was not material for any of the periods presented.

(g) Collateral and Credit-Risk-Related Contingent Features

For certain derivative instruments, the Company and its counterparties have entered into arrangements requiring the party that is in a liability position from a mark-to-market standpoint to post cash collateral to the other party. See further discussion under “(b) Offsetting of Derivative Instruments” above.

In addition, certain derivative instruments are executed under agreements that have provisions requiring the Company and the counterparty to maintain a specified credit rating from certain credit-rating agencies. Under such agreements, if the Company’s or the counterparty’s credit rating falls below a specified credit rating, either party has the right to request collateral on the derivatives’ net liability position. No such derivatives were in a net liability position as of January 24, 2015. The fair market value of such derivatives was $3 million as of July 26, 2014.

27

CISCO SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

12. Commitments and Contingencies

(a) Operating Leases

The Company leases office space in many U.S. locations. Outside the United States, larger leased sites include sites in Belgium, Canada, China, France, Germany, India, Israel, Japan, Norway, and the United Kingdom. The Company also leases equipment and vehicles. Future minimum lease payments under all noncancelable operating leases with an initial term in excess of one year as of January 24, 2015 are as follows (in millions):

Fiscal Year	Amount
2015 (remaining six months)	$	195
2016	287
2017	196
2018	139
2019	72
Thereafter	209
Total	$	1,098

(b) Purchase Commitments with Contract Manufacturers and Suppliers

The Company purchases components from a variety of suppliers and uses several contract manufacturers to provide manufacturing services for its products. During the normal course of business, in order to manage manufacturing lead times and help ensure adequate component supply, the Company enters into agreements with contract manufacturers and suppliers that allow them to either procure inventory based upon criteria as defined by the Company or establish the parameters defining the Company’s requirements. A significant portion of the Company’s reported purchase commitments arising from these agreements consists of firm, noncancelable, and unconditional commitments. In certain instances, these agreements allow the Company the option to cancel, reschedule, and adjust the Company’s requirements based on its business needs prior to firm orders being placed. As of January 24, 2015 and July 26, 2014, the Company had total purchase commitments for inventory of $4,257 million and $4,169 million, respectively.

The Company records a liability for firm, noncancelable, and unconditional purchase commitments for quantities in excess of its future demand forecasts consistent with the valuation of the Company’s excess and obsolete inventory. As of January 24, 2015 and July 26, 2014, the liability for these purchase commitments was $165 million and $162 million, respectively, and was included in other current liabilities.

(c) Other Commitments

In connection with the Company’s business combinations, the Company has agreed to pay certain additional amounts contingent upon the achievement of certain agreed-upon technology, development, product, or other milestones or upon the continued employment with the Company of certain employees of the acquired entities.

The following table summarizes the compensation expense related to acquisitions (in millions):

	Three Months Ended				Six Months Ended
	January 24, 2015		January 25, 2014		January 24, 2015		January 25, 2014
Compensation expense related to acquisitions	$	94	$	106	$	192	$	410

As of January 24, 2015, the Company estimated that future cash compensation expense of up to $428 million may be required to be recognized pursuant to the applicable business combination agreements, which included the remaining potential compensation expense related to Insieme Networks, Inc., as more fully discussed immediately below.

Insieme Networks, Inc.In the third quarter of fiscal 2012, the Company made an investment in Insieme Networks, Inc. ("Insieme"), an early stage company focused on research and development in the data center market. As set forth in the agreement between the Company and Insieme, this investment included $100 million of funding and a license to certain of the Company’s technology. Immediately prior to the call option exercise and acquisition described below, the Company owned approximately 83% of Insieme as a result of these investments and consolidated the results of Insieme in its Consolidated Financial Statements. In connection with this investment, the Company and Insieme entered into a put/call option agreement that provided the Company with the right

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(Unaudited)

to purchase the remaining interests in Insieme. In addition, the noncontrolling interest holders could require the Company to purchase their shares upon the occurrence of certain events.

During the first quarter of fiscal 2014, the Company exercised its call option and entered into an agreement to purchase the remaining interests in Insieme. The acquisition closed in the second quarter of fiscal 2014, at which time the former noncontrolling interest holders became eligible to receive up to two milestone payments, which will be determined using agreed-upon formulas based primarily on revenue for certain of Insieme’s products. The Company recorded compensation expense of $51 million and $54 million during the three months ended January 24, 2015 and January 25, 2014, respectively, and $104 million and $311 million during the six months ended January 24, 2015 and January 25, 2014, respectively, related to the fair value of the vested portion of amounts that are expected to be earned by the former noncontrolling interest holders. Continued vesting and changes to the fair value of the amounts probable of being earned will result in adjustments to the recorded compensation expense in future periods. Based on the terms of the agreement, the Company has determined that the maximum amount that could be recorded as compensation expense by the Company is approximately $845 million (which includes the $520 million that has been expensed to date), net of forfeitures. The milestone payments, if earned, are expected to be paid primarily during fiscal 2016 and fiscal 2017.

The Company also has certain funding commitments, primarily related to its investments in privately held companies and venture funds, some of which are based on the achievement of certain agreed-upon milestones, and some of which are required to be funded on demand. The funding commitments were $230 million and $255 million as of January 24, 2015 and July 26, 2014, respectively.

(d) Product Warranties

The following table summarizes the activity related to the product warranty liability (in millions):

	Six Months Ended
	January 24, 2015			January 25, 2014
Balance at beginning of period	$	446		$	402
Provision for warranties issued	355			356
Payments	(327		)	(333		)
Balance at end of period	$	474		$	425

The Company accrues for warranty costs as part of its cost of sales based on associated material product costs, labor costs for technical support staff, and associated overhead. The Company’s products are generally covered by a warranty for periods ranging from 90 days to five years, and for some products the Company provides a limited lifetime warranty.

(e) Financing and Other Guarantees

In the ordinary course of business, the Company provides financing guarantees for various third-party financing arrangements extended to channel partners and end-user customers. Payments under these financing guarantee arrangements were not material for the periods presented.

Channel Partner Financing Guarantees   The Company facilitates arrangements for third-party financing extended to channel partners, consisting of revolving short-term financing, generally with payment terms ranging from 60 to 90 days. These financing arrangements facilitate the working capital requirements of the channel partners, and, in some cases, the Company guarantees a portion of these arrangements. The volume of channel partner financing was $6.2 billion and $5.9 billion for the three months ended January 24, 2015 and January 25, 2014, respectively. The volume of channel partner financing was $12.5 billion and $12.2 billion for the six months ended January 24, 2015 and January 25, 2014, respectively. The balance of the channel partner financing subject to guarantees was $1.3 billion and $1.2 billion as of January 24, 2015 and July 26, 2014, respectively.

End-User Financing Guarantees   The Company also provides financing guarantees for third-party financing arrangements extended to end-user customers related to leases and loans, which typically have terms of up to three years. The volume of financing provided by third parties for leases and loans as to which the Company had provided guarantees was $39 million and $20 million for the three months ended January 24, 2015 and January 25, 2014, respectively, and was $65 million and $45 million for the six months ended January 24, 2015 and January 25, 2014, respectively.

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(Unaudited)

Financing Guarantee Summary   The aggregate amounts of financing guarantees outstanding at January 24, 2015 and July 26, 2014, representing the total maximum potential future payments under financing arrangements with third parties along with the related deferred revenue, are summarized in the following table (in millions):

	January 24, 2015			July 26, 2014
Maximum potential future payments relating to financing guarantees:
Channel partner	$	316		$	263
End user	155			202
Total	$	471		$	465
Deferred revenue associated with financing guarantees:
Channel partner	$	(148	)	$	(127	)
End user	(121		)	(166		)
Total	$	(269	)	$	(293	)
Maximum potential future payments relating to financing guarantees, net of associated deferred revenue	$	202		$	172

Other Guarantees The Company’s other guarantee arrangements as of January 24, 2015 and July 26, 2014 that were subject to recognition and disclosure requirements werenot material.

(f) Supplier Component Remediation Liability

The Company has recorded in other current liabilities a liability for the expected remediation cost for certain products sold in prior fiscal years containing memory components manufactured by a single supplier between 2005 and 2010. These components are widely used across the industry and are included in a number of the Company's products. Defects in some of these components have caused products to fail after a power cycle event.  Defect rates due to this issue have been and are expected to be low. However, the Company has seen a small number of its customers experience a growing number of failures in their networks as a result of this component problem. Although the majority of these products are beyond the Company's warranty terms, the Company is proactively working with customers on mitigation. Prior to the second quarter of fiscal 2014, the Company had a liability of $63 million related to this issue for expected remediation costs based on the intended approach at that time. In February 2014, on the basis of the growing number of failures described above, the Company decided to expand its approach, which resulted in an additional charge to product cost of sales of $655 million being recorded for the second quarter of fiscal 2014. The remaining supplier component remediation liability as of January 24, 2015 and July 26, 2014 was $613 million and $670 million, respectively.

(g) Indemnifications

In the normal course of business, the Company indemnifies other parties, including customers, lessors, and parties to other transactions with the Company, with respect to certain matters. The Company has agreed to hold such parties harmless against losses arising from a breach of representations or covenants or out of intellectual property infringement or other claims made against certain parties. These agreements may limit the time within which an indemnification claim can be made and the amount of the claim.

The Company has an obligation to indemnify certain expenses pursuant to such an agreement in, among other cases, a case involving certain of the Company’s service provider customers that are subject to patent infringement claims asserted by Sprint Communications Company, L.P. (“Sprint”) in the U.S. District Court for the District of Kansas filed on December 19, 2011 (including one case that was later transferred to the District of Delaware). Sprint alleges that the service providers infringe Sprint’s patents by offering Voice over Internet Protocol-based telephone services utilizing products provided by the Company and other manufacturers. Sprint is seeking monetary damages. Trial dates have been set for the first half of calendar year 2016 in the case proceeding in the District of Kansas. Trial in Delaware is scheduled for February 2017. The parties conducted mediations, and the Company participated through a mediation involving a service provider customer. Those particular mediations did not resolve the parties’ disputes, but the parties plan to engage in additional dispute resolution efforts, including participation by the Company. The Company believes that the service providers have strong defenses and that its products do not infringe the patents subject to the claims and/or that the patents are invalid. Due to the uncertainty surrounding the litigation process, which involves numerous defendants, the Company is unable to reasonably estimate the ultimate outcome of this litigation at this time. Should the plaintiff prevail in litigation, mediation, or settlement, the Company, in accordance with its agreement, may have an obligation to indemnify its service provider customers for damages, mediation awards, or settlement amounts arising from their use of Cisco products.

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(Unaudited)

In addition, the Company has entered into indemnification agreements with its officers and directors, and the Company’s Amended and Restated Bylaws contain similar indemnification obligations to the Company’s agents.

It is not possible to determine the maximum potential amount under these indemnification agreements due to the Company’s limited history with prior indemnification claims and the unique facts and circumstances involved in each particular agreement. Historically, payments made by the Company under these agreements have not had a material effect on the Company’s operating results, financial position, or cash flows.

(h) Legal Proceedings

BrazilBrazilian authorities have investigated the Company’s Brazilian subsidiary and certain of its current and former employees, as well as a Brazilian importer of the Company’s products, and its affiliates and employees, relating to alleged evasion of import taxes and alleged improper transactions involving the subsidiary and the importer. Brazilian tax authorities have assessed claims against the Company’s Brazilian subsidiary based on a theory of joint liability with the Brazilian importer for import taxes, interest, and penalties. In addition to claims asserted by the Brazilian federal tax authorities in prior fiscal years, tax authorities from the Brazilian state of Sao Paulo have asserted similar claims on the same legal basis in prior fiscal years. In the first quarter of fiscal 2013, the Brazilian federal tax authorities asserted an additional claim against the Company’s Brazilian subsidiary based on a theory of joint liability with respect to an alleged underpayment of income taxes, social taxes, interest, and penalties by a Brazilian distributor.

The asserted claims by Brazilian federal tax authorities are for calendar years 2003 through 2008, and the asserted claims by the tax authorities from the state of Sao Paulo are for calendar years 2005 through 2007. The total asserted claims by Brazilian state and federal tax authorities aggregate to approximately $335 million for the alleged evasion of import and other taxes, approximately $1.3 billion for interest, and approximately $1.5 billion for various penalties, all determined using an exchange rate as of January 24, 2015. The Company has completed a thorough review of the matters and believes the asserted claims against the Company’s Brazilian subsidiary are without merit, and the Company is defending the claims vigorously. While the Company believes there is no legal basis for the alleged liability, due to the complexities and uncertainty surrounding the judicial process in Brazil and the nature of the claims asserting joint liability with the importer, the Company is unable to determine the likelihood of an unfavorable outcome against its Brazilian subsidiary and is unable to reasonably estimate a range of loss, if any. The Company does not expect a final judicial determination for several years.

Russia and the Commonwealth of Independent StatesAt the request of the U.S. Securities and Exchange Commission (SEC) and the U.S. Department of Justice, the Company is conducting an investigation into allegations which the Company and those agencies received regarding possible violations of the U.S. Foreign Corrupt Practices Act involving business activities of the Company's operations in Russia and certain of the Commonwealth of Independent States, and by certain resellers of the Company’s products in those countries.  The Company takes any such allegations very seriously and is fully cooperating with and sharing the results of its investigation with the SEC and the Department of Justice.  While the outcome of the Company's investigation is currently not determinable, the Company does not expect that it will have a material adverse effect on its consolidated financial position, results of operations, or cash flows. The countries that are the subject of the investigation collectively comprise less than 2% of the Company’s revenues.

RockstarThe Company and some of its service provider customers were subject to patent claims asserted in December 2013 in the Eastern District of Texas and the District of Delaware by subsidiaries of the Rockstar Consortium (“Rockstar”). Rockstar, whose members include Apple, Microsoft, LM Ericsson, Sony, and Blackberry, had purchased a portfolio of patents out of the Nortel Networks’ bankruptcy proceedings (the “Nortel Portfolio”). In connection with this matter, during the first quarter of fiscal 2015 the Company recorded a charge to product cost of sales of $188 million.

In December 2014, RPX Corporation (“RPX”) and Rockstar entered into an agreement, which closed on January 28, 2015, resulting in over 30 technology companies, including the Company and the various service provider customers described above, obtaining a license to the patents owned by Rockstar. The Company paid approximately $300 million in connection with this transaction, with the payment recorded against the amount previously reserved and as an intangible asset to be amortized over its estimated useful life. In connection with the closing of the transaction, Rockstar dismissed all litigation it had brought against the participating companies.

In addition, the Company is subject to legal proceedings, claims, and litigation arising in the ordinary course of business, including intellectual property litigation. While the outcome of these matters is currently not determinable, the Company does not expect that the ultimate costs to resolve these matters will have a material adverse effect on its consolidated financial position, results of operations, or cash flows.

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(Unaudited)

13. Shareholders’ Equity

(a) Cash Dividends on Shares of Common Stock

During the six months ended January 24, 2015, the Company declared and paid cash dividends of $0.38 per common share, or $1.9 billion, on the Company’s outstanding common stock. During the six months ended January 25, 2014, the Company declared and paid cash dividends of $0.34 per common share, or $1.8 billion, on the Company’s outstanding common stock.

On February 11, 2015, the Company’s Board of Directors declared a quarterly dividend of $0.21 per common share to be paid on April 22, 2015 to all shareholders of record as of the close of business on April 2, 2015. Any future dividends will be subject to the approval of the Company’s Board of Directors.

(b) Stock Repurchase Program

In September 2001, the Company’s Board of Directors authorized a stock repurchase program. As of January 24, 2015, the Company’s Board of Directors had authorized an aggregate repurchase of up to $97 billion of common stock under this program, and the remaining authorized repurchase amount was $6.3 billion, with no termination date. A summary of the stock repurchase activity under the stock repurchase program, reported based on the trade date, is summarized as follows (in millions, except per-share amounts):

	Shares Repurchased	Weighted- Average Price per Share		Amount Repurchased
Cumulative balance at July 26, 2014	4,288	$	20.63	$	88,445
Repurchase of common stock under the stock repurchase program (1)	85	26.15		2,221
Cumulative balance at January 24, 2015	4,373	$	20.73	$	90,666

⁽¹⁾ Includes stock repurchases of $150 million, which were pending settlement as of January 24, 2015. There were $126 million of stock repurchases that were pending settlement as of July 26, 2014.

The purchase price for the shares of the Company’s stock repurchased is reflected as a reduction to shareholders’ equity. The Company is required to allocate the purchase price of the repurchased shares as (i) a reduction to retained earnings and (ii) a reduction of common stock and additional paid-in capital. Issuance of common stock and the tax benefit related to employee stock incentive plans are recorded as an increase to common stock and additional paid-in capital.

(c) Restricted Stock Unit Withholdings

For the six months ended January 24, 2015 and January 25, 2014, the Company repurchased approximately 15 million and 13 million shares, or $369 million and $309 million, of common stock, respectively, in settlement of employee tax withholding obligations due upon the vesting of restricted stock or stock units.

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(Unaudited)

14. Employee Benefit Plans

(a) Employee Stock Incentive Plans

Stock Incentive Plan Program Description    As of January 24, 2015, the Company had four stock incentive plans: the 2005 Stock Incentive Plan (the “2005 Plan”); the 1996 Stock Incentive Plan (the “1996 Plan”); the Cisco Systems, Inc. SA Acquisition Long-Term Incentive Plan (the “SA Acquisition Plan”); and the Cisco Systems, Inc. WebEx Acquisition Long-Term Incentive Plan (the “WebEx Acquisition Plan”). In addition, the Company has, in connection with the acquisitions of various companies, assumed the share-based awards granted under stock incentive plans of the acquired companies or issued share-based awards in replacement thereof. Share-based awards are designed to reward employees for their long-term contributions to the Company and provide incentives for them to remain with the Company. The number and frequency of share-based awards are based on competitive practices, operating results of the Company, government regulations, and other factors. Since the inception of the stock incentive plans, the Company has granted share-based awards to a significant percentage of its employees, and the majority has been granted to employees below the vice president level. The Company’s primary stock incentive plans are summarized as follows:

2005 Plan As of January 24, 2015, the maximum number of shares issuable under the 2005 Plan over its term was 694 million shares, plus the number of any shares underlying awards outstanding on November 15, 2007 under the 1996 Plan, the SA Acquisition Plan, and the WebEx Acquisition Plan that are forfeited or are terminated for any other reason before being exercised or settled. If any awards granted under the 2005 Plan are forfeited or are terminated for any other reason before being exercised or settled, the unexercised or unsettled shares underlying the awards will again be available under the 2005 Plan. Starting November 19, 2013, shares withheld by the Company from an award other than a stock option or stock appreciation right to satisfy withholding tax liabilities resulting from such award will again be available for issuance, based on the fungible share ratio in effect on the date of grant.

Pursuant to an amendment approved by the Company’s shareholders on November 12, 2009, the number of shares available for issuance under the 2005 Plan is reduced by 1.5 shares for each share awarded as a stock grant or a stock unit, and any shares underlying awards outstanding under the 1996 Plan, the SA Acquisition Plan, and the WebEx Acquisition Plan that expire unexercised at the end of their maximum terms become available for reissuance under the 2005 Plan. The 2005 Plan permits the granting of stock options, restricted stock, and restricted stock units (RSUs), the vesting of which may be performance-based or market-based along with the requisite service requirement, and stock appreciation rights to employees (including employee directors and officers), consultants of the Company and its subsidiaries and affiliates, and non-employee directors of the Company. Stock options and stock appreciation rights granted under the 2005 Plan have an exercise price of at least 100% of the fair market value of the underlying stock on the grant date and prior to November 12, 2009 have an expiration date no later than nine years from the grant date. The expiration date for stock options and stock appreciation rights granted subsequent to the amendment approved on November 12, 2009 shall be no later than 10 years from the grant date.

The stock options will generally become exercisable for 20% or 25% of the option shares one year from the date of grant and then ratably over the following 48 months or 36 months, respectively. Time-based stock grants and time-based RSUs will generally vest with respect to 20% or 25% of the shares or share units covered by the grant on each of the first through fifth or fourth anniversaries of the date of the grant, respectively. The majority of the performance-based and market-based RSUs vest at the end of the three-year requisite service period or earlier if the award recipient meets certain retirement eligibility conditions. Other performance-based RSUs, that are based on the achievement of financial and/or non-financial operating goals, typically vest upon the achievement of milestones (and may require subsequent service periods), with overall vesting ranging from six months to three years. The Compensation and Management Development Committee of the Board of Directors has the discretion to use different vesting schedules. Stock appreciation rights may be awarded in combination with stock options or stock grants, and such awards shall provide that the stock appreciation rights will not be exercisable unless the related stock options or stock grants are forfeited. Stock grants may be awarded in combination with non-statutory stock options, and such awards may provide that the stock grants will be forfeited in the event that the related non-statutory stock options are exercised.

1996 Plan   The 1996 Plan expired on December 31, 2006, and the Company can no longer make equity awards under the 1996 Plan. The maximum number of shares issuable over the term of the 1996 Plan was 2.5 billion shares. Stock options granted under the 1996 Plan have an exercise price of at least 100% of the fair market value of the underlying stock on the grant date and expire no later than nine years from the grant date. The stock options generally became exercisable for 20% or 25% of the option shares one year from the date of grant and then ratably over the following 48 months or 36 months, respectively. Certain other grants utilized a 60-month ratable vesting schedule. In addition, the Board of Directors, or other committees administering the 1996 Plan, had the discretion to use a different vesting schedule and did so from time to time.

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(Unaudited)

Acquisition Plans In connection with the Company’s acquisitions of Scientific-Atlanta, Inc. (“Scientific-Atlanta”) and WebEx Communications, Inc. (“WebEx”), the Company adopted the SA Acquisition Plan and the WebEx Acquisition Plan, respectively, each effective upon completion of the applicable acquisition. These plans constitute assumptions, amendments, restatements, and renamings of the 2003 Long-Term Incentive Plan of Scientific-Atlanta and the WebEx Communications, Inc. Amended and Restated 2000 Stock Incentive Plan, respectively. The plans permit the grant of stock options, stock, stock units, and stock appreciation rights to certain employees of the Company and its subsidiaries and affiliates who had been employed by Scientific-Atlanta or its subsidiaries or WebEx or its subsidiaries, as applicable. As a result of the shareholder approval of the amendment and extension of the 2005 Plan, as of November 15, 2007, the Company will no longer make stock option grants or direct share issuances under either the SA Acquisition Plan or the WebEx Acquisition Plan.

(b) Employee Stock Purchase Plan

The Company has an Employee Stock Purchase Plan, which includes its subplan named the International Employee Stock Purchase Plan (together, the “Purchase Plan”), under which 621.4 million shares of the Company’s common stock have been reserved for issuance as of January 24, 2015. Eligible employees are offered shares through a 24-month offering period, which consists of four consecutive 6-month purchase periods. Employees may purchase a limited number of shares of the Company’s stock at a discount of up to 15% of the lesser of the market value at the beginning of the offering period or the end of each 6-month purchase period. The Purchase Plan is scheduled to terminate on January 3, 2020. The Company issued 14 million shares under the Purchase Plan during each of the six months ended January 24, 2015 and January 25, 2014. As of January 24, 2015, 161 million shares were available for issuance under the Purchase Plan.

(c) Summary of Share-Based Compensation Expense

Share-based compensation expense consists primarily of expenses for stock options, stock purchase rights, restricted stock, and restricted stock units granted to employees. The following table summarizes share-based compensation expense (in millions):

	Three Months Ended					Six Months Ended
	January 24, 2015		January 25, 2014			January 24, 2015			January 25, 2014
Cost of sales—product	$	11	$	12		$	22		$	22
Cost of sales—service	34		40			71			73
Share-based compensation expense in cost of sales	45		52			93			95
Research and development	105		108			224			200
Sales and marketing	114		141			261			264
General and administrative	42		47			101			101
Restructuring and other charges	2		(1		)	(2		)	(4		)
Share-based compensation expense in operating expenses	263		295			584			561
Total share-based compensation expense	$	308	$	347		$	677		$	656
Income tax benefit for share-based compensation	$	85	$	82		$	179		$	160

As of January 24, 2015, the total compensation cost related to unvested share-based awards not yet recognized was $2.0 billion, which is expected to be recognized over approximately 2.3 years on a weighted-average basis.

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(Unaudited)

(d) Share-Based Awards Available for Grant

A summary of share-based awards available for grant is as follows (in millions):

	Share-Based Awards Available for Grant
BALANCE AT JULY 27, 2013	228
Restricted stock, stock units, and other share-based awards granted	(98	)
Share-based awards canceled/forfeited/expired	36
Additional shares reserved	135
Shares withheld for taxes and not issued	6
Other	3
BALANCE AT JULY 26, 2014	310
Restricted stock, stock units, and other share-based awards granted	(28	)
Share-based awards canceled/forfeited/expired	27
Shares withheld for taxes and not issued	21
Other	(2	)
BALANCE AT JANUARY 24, 2015	328

As reflected in the preceding table, for each share awarded as restricted stock or subject to a restricted stock unit award under the 2005 Plan, an equivalent of 1.5 shares was deducted from the available share-based award balance. For restricted stock units that were awarded with vesting contingent upon the achievement of future financial performance or market-based metrics, the maximum awards that can be achieved upon full vesting of such awards were reflected in the preceding table.

(e) Restricted Stock and Stock Unit Awards

A summary of the restricted stock and stock unit activity, which includes time-based and performance-based or market-based restricted stock units, is as follows (in millions, except per-share amounts):

	Restricted Stock/ Stock Units		Weighted-Average Grant Date Fair Value per Share		Aggregated Fair Market Value
UNVESTED BALANCE AT JULY 27, 2013	143		$	18.80
Granted and assumed	72		20.85
Vested	(53	)	19.55		$	1,229
Canceled/forfeited	(13	)	18.61
UNVESTED BALANCE AT JULY 26, 2014	149		19.54
Granted and assumed	18		23.47
Vested	(41	)	19.47		$	1,053
Canceled/forfeited	(11	)	19.70
UNVESTED BALANCE AT JANUARY 24, 2015	115		$	20.18

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(Unaudited)

(f) Stock Option Awards

A summary of the stock option activity is as follows (in millions, except per-share amounts):

	STOCK OPTIONS OUTSTANDING
	Number Outstanding		Weighted-Average Exercise Price per Share
BALANCE AT JULY 27, 2013	276		$	24.44
Assumed from acquisitions	6		3.60
Exercised	(78	)	18.30
Canceled/forfeited/expired	(17	)	27.53
BALANCE AT JULY 26, 2014	187		26.03
Assumed from acquisitions	1		2.72
Exercised	(45	)	20.49
Canceled/forfeited/expired	(10	)	29.48
BALANCE AT JANUARY 24, 2015	133		$	27.45

The following table summarizes significant ranges of outstanding and exercisable stock options as of January 24, 2015 (in millions, except years and share prices):

	STOCK OPTIONS OUTSTANDING						STOCK OPTIONS EXERCISABLE
Range of Exercise Prices	Number Outstanding	Weighted- Average Remaining Contractual Life (in Years)	Weighted- Average Exercise Price per Share		Aggregate Intrinsic Value		Number Exercisable	Weighted- Average Exercise Price per Share		Aggregate Intrinsic Value
$  0.01 – 15.00	5	5.4	$	4.17	$	135	3	$	5.66	$	69
15.01 – 18.00	1	2.0	16.91		3		1	16.91		3
18.01 – 20.00	1	0.3	19.69		9		1	19.69		9
20.01 – 25.00	37	0.8	22.90		198		37	22.90		198
25.01 – 30.00	20	1.5	26.72		32		20	26.72		32
30.01 – 35.00	69	1.5	32.16		—		69	32.16		—
Total	133	1.5	$	27.45	$	377	131	$	27.94	$	311

The aggregate intrinsic value in the preceding table represents the total pretax intrinsic value, based on the Company’s closing stock price of $28.21 as of January 23, 2015, that would have been received by the option holders had those option holders exercised their stock options as of that date. The total number of in-the-money stock options exercisable as of January 24, 2015 was 59 million. As of July 26, 2014, 183 million outstanding stock options were exercisable, and the weighted-average exercise price was $26.50.

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(Unaudited)

(g) Valuation of Employee Share-Based Awards

Time-based restricted stock units and performance-based restricted stock units (PRSUs) that are based on the Company’s financial performance metrics or non-financial operating goals are valued using the market value of the Company’s common stock on the date of grant, discounted for the present value of expected dividends. On the date of grant, the Company estimated the fair value of the total shareholder return (TSR) component of the PRSUs using a Monte Carlo simulation model. The assumptions for the valuation of time-based RSUs and PRSUs are summarized as follows:

	RESTRICTED STOCK UNITS						PERFORMANCE RESTRICTED STOCK UNITS
Three Months Ended	January 24, 2015			January 25, 2014			January 24, 2015			January 25, 2014
Number of shares granted (in millions)	1			37			1			—
Grant date fair value per share	$	25.07		$	19.90		$	25.39		N/A
Weighted-average assumptions/inputs:
Expected dividend yield	2.8		%	3.2		%	2.8		%	N/A
Range of risk-free interest rates	0.0% – 1.6%			0.1% – 1.4%			0.0% – 1.6%			N/A
Range of expected volatilities for index	N/A			N/A			14.4% – 63.7%			N/A

	RESTRICTED STOCK UNITS						PERFORMANCE RESTRICTED STOCK UNITS
Six Months Ended	January 24, 2015			January 25, 2014			January 24, 2015			January 25, 2014
Number of shares granted (in millions)	11			47			7			4
Grant date fair value per share	$	23.34		$	20.57		$	23.70		$	22.70
Weighted-average assumptions/inputs:
Expected dividend yield	3.0		%	3.1		%	3.0		%	2.3		%
Range of risk-free interest rates	0.0% – 1.8%			0.0% – 1.4%			0.0% – 1.8%			0.0% – 1.4%
Range of expected volatilities for index	N/A			N/A			14.4% – 70.0%			17.4% – 70.5%

The PRSUs granted during the first two quarters of fiscal 2015 and the first quarter of fiscal 2014 are contingent on the achievement of the Company’s financial performance metrics, its comparative market-based returns, or the achievement of financial and non-financial operating goals. For the awards based on financial performance metrics or comparative market-based returns, generally 50% of the PRSUs are earned based on the average of annual operating cash flow and earnings per share goals established at the beginning of each fiscal year over a three-year performance period. Generally, the remaining 50% of the PRSUs are earned based on the Company’s TSR measured against the benchmark TSR of a peer group over the same period. Each PRSU recipient could vest in 0% to 150% of the target shares granted contingent on the achievement of the Company's financial performance metrics or its comparative market-based returns and 0% to 100% of the target shares granted contingent on the achievement of non-financial operating goals.

37

CISCO SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

15. Comprehensive Income

The components of AOCI, net of tax, and the other comprehensive income (loss), excluding noncontrolling interest, for the six months ended January 24, 2015 and January 25, 2014 are summarized as follows (in millions):

January 24, 2015	Net Unrealized Gains on Investments			Net Unrealized Gains (Losses) Cash Flow Hedging Instruments			Cumulative Translation Adjustment and Actuarial Gains (Losses)			Accumulated Other Comprehensive Income
BALANCE AT JULY 26, 2014	$	424		$	(12	)	$	265		$	677
Other comprehensive income (loss) before reclassifications attributable to Cisco Systems, Inc.	(23		)	(131		)	(379		)	(533		)
(Gains) losses reclassified out of other comprehensive income	(76		)	30			—			(46		)
Tax benefit (expense)	49			3			36			88
BALANCE AT JANUARY 24, 2015	$	374		$	(110	)	$	(78	)	$	186

January 25, 2014	Net Unrealized Gains on Investments			Net Unrealized Gains (Losses) Cash Flow Hedging Instruments			Cumulative Translation Adjustment and Actuarial Gains (Losses)			Accumulated Other Comprehensive Income
BALANCE AT JULY 27, 2013	$	379		$	8		$	221		$	608
Other comprehensive income (loss) before reclassifications attributable to Cisco Systems, Inc.	332			33			(14		)	351
(Gains) losses reclassified out of other comprehensive income	(165		)	(28		)	—			(193		)
Tax benefit (expense)	(60		)	(2		)	(1		)	(63		)
BALANCE AT JANUARY 25, 2014	$	486		$	11		$	206		$	703

The net gains (losses) reclassified out of other comprehensive income into the Consolidated Statements of Operations, with line item location, during each period were as follows (in millions):

	Three Months Ended					Six Months Ended
	January 24, 2015			January 25, 2014		January 24, 2015			January 25, 2014
Comprehensive Income Components	Income Before Taxes					Income Before Taxes					Line Item in Statements of Operations
Net unrealized gains on available-for-sale investments
	$	69		$	82	$	76		$	165	Other income (loss), net
Net unrealized gains and (losses) on cash flow hedging instruments:
Foreign currency derivatives	(21		)	16		(24		)	23		Operating expenses
Foreign currency derivatives	(5		)	3		(6		)	5		Cost of sales—service
	(26		)	19		(30		)	28
Total amounts reclassified out of other comprehensive income	$	43		$	101	$	46		$	193

38

CISCO SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

16. Income Taxes

The following table provides details of income taxes (in millions, except percentages):

	Three Months Ended						Six Months Ended
	January 24, 2015			January 25, 2014			January 24, 2015			January 25, 2014
Income before provision for income taxes	$	2,873		$	1,755		$	5,233		$	4,295
Provision for income taxes	$	476		$	326		$	1,008		$	870
Effective tax rate	16.6		%	18.6		%	19.3		%	20.3		%

During the three months ended January 24, 2015, the Tax Increase Prevention Act of 2014 reinstated the U.S. federal R&D tax credit for calendar year 2014 R&D expenses.  As a result, the effective tax rate for the three and six months ended January 24, 2015 reflected tax benefits related to fiscal 2015 R&D expenses and a tax benefit of $91 million related to fiscal 2014 R&D expenses.

As of January 24, 2015, the Company had $2.0 billion of unrecognized tax benefits, of which $1.8 billion, if recognized, would favorably impact the effective tax rate. The Company regularly engages in discussions and negotiations with tax authorities regarding tax matters in various jurisdictions. The Company believes it is reasonably possible that certain federal, foreign, and state tax matters may be concluded in the next 12 months. Specific positions that may be resolved include issues involving transfer pricing and various other matters. Accordingly, the Company estimates that it is reasonably possible that the unrecognized tax benefits at January 24, 2015 could be reduced by $300 million in the next 12 months.

17. Segment Information and Major Customers

(a) Revenue and Gross Margin by Segment

The Company conducts business globally and is primarily managed on a geographic basis consisting of three segments: the Americas, EMEA, and APJC. The Company’s management makes financial decisions and allocates resources based on the information it receives from its internal management system. Sales are attributed to a segment based on the ordering location of the customer. The Company does not allocate research and development, sales and marketing, or general and administrative expenses to its segments in this internal management system because management does not include the information in its measurement of the performance of the operating segments. In addition, the Company does not allocate amortization and impairment of acquisition-related intangible assets, share-based compensation expense, significant litigation and other contingencies, impacts to cost of sales from purchase accounting adjustments to inventory, charges related to asset impairments and restructurings, and certain other charges to the gross margin for each segment because management does not include this information in its measurement of the performance of the operating segments.

39

CISCO SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Summarized financial information by segment for the three and six months ended January 24, 2015 andJanuary 25, 2014, based on the Company’s internal management system and as utilized by the Company’s Chief Operating Decision Maker ("CODM"), is as follows (in millions):

	Three Months Ended						Six Months Ended
	January 24, 2015			January 25, 2014			January 24, 2015			January 25, 2014
Revenue:
Americas	$	7,101		$	6,460		$	14,602		$	13,776
EMEA	3,091			2,896			6,093			5,829
APJC	1,744			1,799			3,486			3,635
Total	$	11,936		$	11,155		$	24,181		$	23,240
Gross margin:
Americas	$	4,406		$	3,977		$	9,216		$	8,627
EMEA	1,910			1,870			3,825			3,758
APJC	1,052			993			2,077			2,072
Segment total	7,368			6,840			15,118			14,457
Unallocated corporate items	(278		)	(889		)	(695		)	(1,099		)
Total	$	7,090		$	5,951		$	14,423		$	13,358

Revenue in the United States was $6.1 billionand$5.6 billion for the three months ended January 24, 2015 and January 25, 2014, respectively, and was $12.7 billion and $12.0 billion for the six months ended January 24, 2015 and January 25, 2014, respectively.

(b) Revenue for Groups of Similar Products and Services

The Company designs, manufactures, and sells Internet Protocol (IP)-based networking and other products related to the communications and IT industry and provides services associated with these products and their use. The Company groups its products and technologies into the following categories: Switching, NGN Routing, Collaboration, Service Provider Video, Data Center, Wireless, Security, and Other Products. These products, primarily integrated by Cisco IOS Software, link geographically dispersed local-area networks (LANs), metropolitan-area networks (MANs), and wide-area networks (WANs).

The following table presents revenue for groups of similar products and services (in millions):

	Three Months Ended				Six Months Ended
	January 24, 2015		January 25, 2014		January 24, 2015		January 25, 2014
Revenue:
Switching	$	3,616	$	3,258	$	7,462	$	6,998
NGN Routing	1,764		1,730		3,713		3,756
Collaboration	990		899		1,939		1,950
Service Provider Video	776		957		1,647		1,944
Data Center	846		605		1,539		1,206
Wireless	611		517		1,216		1,064
Security	416		393		871		758
Other	59		64		126		144
Product	9,078		8,423		18,513		17,820
Service	2,858		2,732		5,668		5,420
Total	$	11,936	$	11,155	$	24,181	$	23,240

The Company has made certain reclassifications to the product revenue amounts for prior periods to conform to the current period’s presentation.

40

CISCO SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(c) Additional Segment Information

The majority of the Company’s assets, excluding cash and cash equivalents and investments, as of January 24, 2015 and July 26, 2014 were attributable to its U.S. operations. The Company’s total cash and cash equivalents and investments held by various foreign subsidiaries were $49.8 billion and $47.4 billion as of January 24, 2015 and July 26, 2014, respectively, and the remaining $3.2 billion and $4.7 billion at the respective period ends were available in the United States.

Property and equipment information is based on the physical location of the assets. The following table presents property and equipment information for geographic areas (in millions):

	January 24, 2015		July 26, 2014
Property and equipment, net:
United States	$	2,668	$	2,697
International	544		555
Total	$	3,212	$	3,252

18.     Net Income per Share

The following table presents the calculation of basic and diluted net income per share (in millions, except per-share amounts):

	Three Months Ended				Six Months Ended
	January 24, 2015		January 25, 2014		January 24, 2015		January 25, 2014
Net income	$	2,397	$	1,429	$	4,225	$	3,425
Weighted-average shares—basic	5,117		5,294		5,115		5,336
Effect of dilutive potential common shares	43		33		44		47
Weighted-average shares—diluted	5,160		5,327		5,159		5,383
Net income per share—basic	$	0.47	$	0.27	$	0.83	$	0.64
Net income per share—diluted	$	0.46	$	0.27	$	0.82	$	0.64
Antidilutive employee share-based awards, excluded	83		278		156		252

Employee equity share options, unvested shares, and similar equity instruments granted by the Company are treated as potential common shares outstanding in computing diluted earnings per share. Diluted shares outstanding include the dilutive effect of in-the-money options, unvested restricted stock, and restricted stock units. The dilutive effect of such equity awards is calculated based on the average share price for each fiscal period using the treasury stock method. Under the treasury stock method, the amount the employee must pay for exercising stock options, the amount of compensation cost for future service that the Company has not yet recognized, and the amount of tax benefits that would be recorded in additional paid-in capital when the award becomes deductible are collectively assumed to be used to repurchase shares.

41

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

This Quarterly Report on Form 10-Q, including this Management’s Discussion and Analysis of Financial Condition and Results of Operations, contains forward-looking statements regarding future events and our future results that are subject to the safe harbors created under the Securities Act of 1933 (the “Securities Act”) and the Securities Exchange Act of 1934 (the “Exchange Act”). All statements other than statements of historical facts are statements that could be deemed forward-looking statements. These statements are based on current expectations, estimates, forecasts, and projections about the industries in which we operate and the beliefs and assumptions of our management. Words such as “expects,” “anticipates,” “targets,” “goals,” “projects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “continues,” “endeavors,” “strives,” “may,” variations of such words, and similar expressions are intended to identify such forward-looking statements. In addition, any statements that refer to projections of our future financial performance, our anticipated growth and trends in our businesses, and other characterizations of future events or circumstances are forward-looking statements. Readers are cautioned that these forward-looking statements are only predictions and are subject to risks, uncertainties, and assumptions that are difficult to predict, including those identified below, under “Part II, Item 1A. Risk Factors,” and elsewhere herein. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. We undertake no obligation to revise or update any forward-looking statements for any reason.

OVERVIEW

We design, manufacture, and sell Internet Protocol (IP) based networking products and services related to the communications and information technology (IT) industry. Our customers include businesses of all sizes, public institutions, telecommunications companies, other service providers and individuals. We connect people, process, data and things with products that transport data, voice, and video within buildings, across campuses, and around the world. We are a key strategic partner to companies that helps them as they seek to make the most of the Internet of Everything (IoE) and connect the unconnected.

A summary of our results is as follows (in millions, except percentages and per-share amounts):

	Three Months Ended									Six Months Ended
	January 24, 2015			January 25, 2014			Variance			January 24, 2015			January 25, 2014			Variance
Revenue	$	11,936		$	11,155		7.0	%		$	24,181		$	23,240		4.0	%
Gross margin percentage	59.4		%	53.3		%	6.1		pts	59.6		%	57.5		%	2.1		pts
Research and development	$	1,529		$	1,412		8.3	%		$	3,112		$	3,136		(0.8	)%
Sales and marketing	$	2,308		$	2,277		1.4	%		$	4,823		$	4,688		2.9	%
General and administrative	$	490		$	451		8.6	%		$	994		$	966		2.9	%
Total R&D, sales and marketing, general and administrative	$	4,327		$	4,140		4.5	%		$	8,929		$	8,790		1.6	%
Total as a percentage of revenue	36.3		%	37.1		%	(0.8	)	pts	36.9		%	37.8		%	(0.9	)	pts
Amortization of purchased intangible assets included in operating expenses	$	72		$	71		1.4	%		$	143		$	136		5.1	%
Restructuring and other charges	$	69		$	73		(5.5	)%		$	387		$	310		24.8	%
Operating income as a percentage of revenue	22.0		%	14.9		%	7.1		pts	20.5		%	17.7		%	2.8		pts
Income tax percentage	16.6		%	18.6		%	(2.0	)	pts	19.3		%	20.3		%	(1.0	)	pts
Net income	$	2,397		$	1,429		67.7	%		$	4,225		$	3,425		23.4	%
Net income as a percentage of revenue	20.1		%	12.8		%	7.3		pts	17.5		%	14.7		%	2.8		pts
Earnings per share—diluted	$	0.46		$	0.27		70.4	%		$	0.82		$	0.64		28.1	%

42

CISCO SYSTEMS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Three Months Ended January 24, 2015 Compared with Three Months Ended January 25, 2014

In the second quarter of fiscal 2015, revenue increased by 7% as compared with the second quarter of fiscal 2014. Within the total revenue change, product revenue increased 8% while service revenue increased 5%. Total gross margin increased by 6.1 percentage points, primarily as a result of the $655 million charge to product cost of sales recorded in the second quarter of fiscal 2014 for which there was no corresponding charge in fiscal 2015. As a percentage of revenue, research and development, sales and marketing, and general and administrative expenses, collectively, decreased by 0.8 percentage points. Operating income as a percentage of revenue increased by 7.1 percentage points. Diluted earnings per share increased by 70% from the prior year, driven by a 68% increase in net income, with the net income increase driven by the factors discussed above, as well as higher other income driven by higher net gains on investments, and a lower effective tax rate driven by the retroactive reinstatement of the U.S. federal R&D tax credit for calendar year 2014.

In the second quarter of fiscal 2015, total revenue increased by $0.8 billion as compared with the second quarter of fiscal 2014. Revenue for the Americas increased by $0.6 billion, driven in large part by higher product revenue in the United States. EMEA revenue increased by $0.2 billion, led by higher product revenue in the United Kingdom. Revenue in our APJC segment decreased by $0.1 billion, led by a product revenue decline in China. The challenges we encountered in certain emerging countries in the previous quarters continued in the second quarter of fiscal 2015. We experienced increased product revenue in the emerging countries of Brazil, India, and Mexico and decreased revenue in China and Russia, as the “BRICM” countries experienced, in the aggregate, product revenue growth of 2%. We believe that the limited growth we experienced in various emerging countries reflected the impact of economic and geopolitical challenges in these countries.

From a customer market standpoint, in the second quarter of fiscal 2015, while the service provider market continued to experience a decline in product revenue, we had solid product revenue growth in the public sector, enterprise and commercial markets. The product revenue increase in the public sector market was led by higher spending from the U.S. federal government.

From a product category perspective, the product revenue increase of 8% year-over-year was driven by product revenue growth in our core Switching and NGN Routing products which grew 11% and 2%, respectively.We also experienced 40% revenue growth from Data Center products due to continued strong customer demand. Our other major product categories experienced revenue changes ranging from an 18% increase in Wireless products to a 19% decrease in Service Provider Video. Service revenue increased by 5% year over year.

In summary, during the second quarter of fiscal 2015, we achieved solid and profitable growth despite encountering several of the challenges we have experienced in recent quarters, including reduced spending by our service provider customers and challenges in certain emerging countries. While we believe we are well positioned for an upturn in these areas, we are not expecting the challenges in service provider and certain emerging countries to improve for at least a few quarters.

Six Months Ended January 24, 2015 Compared with Six Months Ended January 25, 2014

Diluted earnings per share increased by 28% from the prior year, a result of both a 23% increase in net income and a decrease in diluted share count by 224 million shares. Revenue increased 4%, with product revenue increasing 4% and service revenue increasing 5%. Total gross margin increased by 2.1 percentage points driven in part by the $655 million supplier component remediation charge recorded in the second quarter of fiscal 2014 partially offset by the unfavorable impact of the Rockstar patent portfolio charge of $188 million (or 0.8 percentage points). As a percentage of revenue, research and development, sales and marketing, and general and administrative expenses collectively decreased by 0.9 percentage points. Operating income as a percentage of revenue increased by 2.8 percentage points.

43

CISCO SYSTEMS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Strategy and Focus Areas

Our strategy is to deliver the integrated architectures, solutions, and outcomes to help our customers grow, manage costs, and mitigate risk. We see our customers, in almost every industry, becoming increasingly reliant on technology—and specifically the network—to meet their business objectives and compete successfully in the market.

Our focus continues to be on capitalizing on market transitions to maintain leadership in our core markets and to enter new markets where the network is foundational. We believe this focus best positions us to become a more relevant and trusted partner to our customers and to expand our share of our customers’ IT spending. We are focused on driving the innovation, speed, agility, and efficiencies in our company required to deliver leading technology solutions for our customers and shareholder value for our investors.

Over the last few years, we have been working to transform our business to move from selling individual products and services to selling products and services integrated into architectures and solutions, as well as to meet customers' business outcomes. As a part of this transformation, we are making changes to how we are organized and how we deliver our technology. We believe these changes enable us to better meet our customers’ requirements and help them stay ahead of market transitions.

For a full discussion of our strategy and focus areas, see Item 1. Business in our Annual Report on Form 10-K for the year ended July 26, 2014.

Other Key Financial Measures

The following is a summary of our other key financial measures for the second quarter and first six months of fiscal 2015 (in millions, except days sales outstanding in accounts receivable (DSO) and annualized inventory turns):

	January 24, 2015		July 26, 2014
Cash and cash equivalents and investments	$	53,022	$	52,074
Deferred revenue	$	14,021	$	14,142
DSO	35 days		38 days
Inventories	$	1,890	$	1,591
Annualized inventory turns	10.9		12.7

	Six Months Ended
	January 24, 2015		January 25, 2014
Cash provided by operating activities	$	5,374	$	5,522
Repurchases of common stock—stock repurchase program	$	2,221	$	6,020
Dividends	$	1,947	$	1,810

44

CISCO SYSTEMS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

CRITICAL ACCOUNTING ESTIMATES

The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States requires us to make judgments, assumptions, and estimates that affect the amounts reported in the Consolidated Financial Statements and accompanying notes. Note 2 to the Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended July 26, 2014, as updated as applicable in Note 2 to the Consolidated Financial Statements herein, describes the significant accounting policies and methods used in the preparation of the Consolidated Financial Statements. The accounting policies described below are significantly affected by critical accounting estimates. Such accounting policies require significant judgments, assumptions, and estimates used in the preparation of the Consolidated Financial Statements, and actual results could differ materially from the amounts reported based on these policies.

Revenue Recognition

Revenue is recognized when all of the following criteria have been met:

• Persuasive evidence of an arrangement exists. Contracts, Internet commerce agreements, and customer purchase orders are generally used to determine the existence of an arrangement.

• Delivery has occurred. Shipping documents and customer acceptance, when applicable, are used to verify delivery.

• The fee is fixed or determinable. We assess whether the fee is fixed or determinable based on the payment terms associated with the transaction and whether the sales price is subject to refund or adjustment.

• Collectibility is reasonably assured. We assess collectibility based primarily on the creditworthiness of the customer as determined by credit checks and analysis, as well as the customer’s payment history.

In instances where final acceptance of the product, system, or solution is specified by the customer, revenue is deferred until all acceptance criteria have been met. When a sale involves multiple deliverables, such as sales of products that include services, the multiple deliverables are evaluated to determine the unit of accounting, and the entire fee from the arrangement is allocated to each unit of accounting based on the relative selling price. Revenue is recognized when the revenue recognition criteria for each unit of accounting are met. For hosting arrangements, we recognize subscription revenue ratably over the subscription period, while usage revenue is recognized based on utilization. Software subscription revenue is deferred and recognized ratably over the subscription term upon delivery of the first product and commencement of the term.

The amount of product and service revenue recognized in a given period is affected by our judgment as to whether an arrangement includes multiple deliverables and, if so, our valuation of the units of accounting for multiple deliverables. According to the accounting guidance prescribed in Accounting Standards Codification (ASC) 605, Revenue Recognition, we use vendor-specific objective evidence of selling price (VSOE) for each of those units, when available. We determine VSOE based on our normal pricing and discounting practices for the specific product or service when sold separately. In determining VSOE, we require that a substantial majority of the historical standalone transactions have the selling prices for a product or service fall within a reasonably narrow pricing range, generally evidenced by approximately 80% of such historical standalone transactions falling within plus or minus 15% of the median rates. When VSOE does not exist, we apply the selling price hierarchy to applicable multiple-deliverable arrangements. Under the selling price hierarchy, third-party evidence of selling price (TPE) will be considered if VSOE does not exist, and estimated selling price (ESP) will be used if neither VSOE nor TPE is available. Generally, we are not able to determine TPE because our go-to-market strategy differs from that of others in our markets, and the extent of our proprietary technology varies among comparable products or services from those of our peers. In determining ESP, we apply significant judgment as we weigh a variety of factors, based on the facts and circumstances of the arrangement. We typically arrive at an ESP for a product or service that is not sold separately by considering company-specific factors such as geographies, competitive landscape, internal costs, profitability objectives, pricing practices used to establish bundled pricing, and existing portfolio pricing and discounting.

Some of our sales arrangements have multiple deliverables containing software and related software support components. Such sales arrangements are subject to the accounting guidance in ASC 985-605, Software-Revenue Recognition.

As our business and offerings evolve over time, our pricing practices may be required to be modified accordingly, which could result in changes in selling prices, including both VSOE and ESP, in subsequent periods. There were no material impacts during the first six months of fiscal 2015, nor do we currently expect a material impact in the next 12 months on our revenue recognition due to any changes in our VSOE, TPE, or ESP.

45

CISCO SYSTEMS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Revenue deferrals relate to the timing of revenue recognition for specific transactions based on financing arrangements, service, support, and other factors. Financing arrangements may include sales-type, direct-financing, and operating leases, loans, and guarantees of third-party financing. Our deferred revenue for products was $5.0 billion and $4.5 billion as of January 24, 2015 and July 26, 2014, respectively. Technical support services revenue is deferred and recognized ratably over the period during which the services are to be performed, which typically is from one to three years. Advanced services revenue is recognized upon delivery or completion of performance. Our deferred revenue for services was $9.0 billion and $9.6 billion as of January 24, 2015 and July 26, 2014, respectively.

We make sales to distributors which we refer to as two-tier systems of sales to the end customer. Revenue from distributors is recognized based on a sell-through method using information provided by them. Our distributors participate in various cooperative marketing and other programs, and we maintain estimated accruals and allowances for these programs. If actual credits received by our distributors under these programs were to deviate significantly from our estimates, which are based on historical experience, our revenue could be adversely affected.

Allowances for Receivables and Sales Returns

The allowances for receivables were as follows (in millions, except percentages):

	January 24, 2015			July 26, 2014
Allowance for doubtful accounts	$	270		$	265
Percentage of gross accounts receivable	5.6		%	4.9		%
Allowance for credit loss—lease receivables	$	250		$	233
Percentage of gross lease receivables(1)	7.0		%	6.2		%
Allowance for credit loss—loan receivables	$	85		$	98
Percentage of gross loan receivables	5.1		%	5.8		%

⁽¹⁾Calculated as allowance for credit loss on lease receivables as a percentage of gross lease receivables before unearned income.

The allowance for doubtful accounts is based on our assessment of the collectibility of customer accounts. We regularly review the adequacy of these allowances by considering internal factors such as historical experience, credit quality and age of the receivable balances as well as external factors such as economic conditions that may affect a customer’s ability to pay and expected default frequency rates, which are published by major third-party credit-rating agencies and are generally updated on a quarterly basis. We also consider the concentration of receivables outstanding with a particular customer in assessing the adequacy of our allowances for doubtful accounts. If a major customer’s creditworthiness deteriorates, if actual defaults are higher than our historical experience, or if other circumstances arise, our estimates of the recoverability of amounts due to us could be overstated, and additional allowances could be required, which could have an adverse impact on our operating results.

The allowance for credit loss on financing receivables is also based on the assessment of collectibility of customer accounts. We regularly review the adequacy of the credit allowances determined either on an individual or a collective basis. When evaluating the financing receivables on an individual basis, we consider historical experience, credit quality and age of receivable balances, and economic conditions that may affect a customer’s ability to pay. When evaluating financing receivables on a collective basis, we use expected default frequency rates published by a major third-party credit-rating agency as well as our own historical loss rate in the event of default, while also systematically giving effect to economic conditions, concentration of risk and correlation. Determining expected default frequency rates and loss factors associated with internal credit risk ratings, as well as assessing factors such as economic conditions, concentration of risk, and correlation, are complex and subjective. Our ongoing consideration of all these factors could result in an increase in our allowance for credit loss in the future, which could adversely affect our operating results. Both accounts receivable and financing receivables are charged off at the point when they are considered uncollectible.

A reserve for future sales returns is established based on historical trends in product return rates. The reserve for future sales returns as of January 24, 2015 and July 26, 2014 was $90 million and $135 million, respectively, and was recorded as a reduction of our accounts receivable. If the actual future returns were to deviate from the historical data on which the reserve had been established, our revenue could be adversely affected.

46

CISCO SYSTEMS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Inventory Valuation and Liability for Purchase Commitments with Contract Manufacturers and Suppliers

Our inventory balance was $1.9 billion and $1.6 billion as of January 24, 2015 and July 26, 2014, respectively. Inventory is written down based on excess and obsolete inventories, determined primarily by future demand forecasts. Inventory write-downs are measured as the difference between the cost of the inventory and market, based upon assumptions about future demand, and are charged to the provision for inventory, which is a component of our cost of sales. At the point of the loss recognition, a new, lower cost basis for that inventory is established, and subsequent changes in facts and circumstances do not result in the restoration or increase in that newly established cost basis.

We record a liability for firm, noncancelable, and unconditional purchase commitments with contract manufacturers and suppliers for quantities in excess of our future demand forecasts consistent with the valuation of our excess and obsolete inventory. As of January 24, 2015, the liability for these purchase commitments was $165 million, compared with $162 million as of July 26, 2014, and was included in other current liabilities.

Our provision for inventory was $21 million and $35 million for the first six months of fiscal 2015 and 2014, respectively. The provision for the liability related to purchase commitments with contract manufacturers and suppliers was $59 million and $78 million for the first six months of fiscal 2015 and 2014, respectively. If there were to be a sudden and significant decrease in demand for our products, or if there were a higher incidence of inventory obsolescence because of rapidly changing technology and customer requirements, we could be required to increase our inventory write-downs, and our liability for purchase commitments with contract manufacturers and suppliers, and accordingly our profitability, could be adversely affected. We regularly evaluate our exposure for inventory write-downs and the adequacy of our liability for purchase commitments. Inventory and supply chain management remain areas of focus as we balance the need to maintain supply chain flexibility to help ensure competitive lead times with the risk of inventory obsolescence, particularly in light of current macroeconomic uncertainties and conditions and the resulting potential for changes in future demand forecast.

Loss Contingencies and Product Warranties

We are subject to the possibility of various losses arising in the ordinary course of business. We consider the likelihood of impairment of an asset or the incurrence of a liability, as well as our ability to reasonably estimate the amount of loss, in determining loss contingencies. An estimated loss contingency is accrued when it is probable that an asset has been impaired or a liability has been incurred and the amount of loss can be reasonably estimated. We regularly evaluate information available to us to determine whether such accruals should be made or adjusted and whether new accruals are required.

Third parties, including customers, have in the past and may in the future assert claims or initiate litigation related to exclusive patent, copyright, trademark, and other intellectual property rights to technologies and related standards that are relevant to us. These assertions have increased over time as a result of our growth and the general increase in the pace of patent claims assertions, particularly in the United States. If any infringement or other intellectual property claim made against us by any third party is successful, or if we fail to develop non-infringing technology or license the proprietary rights on commercially reasonable terms and conditions, our business, operating results, and financial condition could be materially and adversely affected.

We have recorded a liability for the expected remediation cost for certain products sold in prior fiscal years containing memory components manufactured by a single supplier between 2005 and 2010. In February 2014, on the basis of the growing number of failures as described in Note 12 (f) to the Consolidated Financial Statements, we decided to expand our approach, which resulted in an additional charge to product cost of sales of $655 million being recorded for the second quarter of fiscal 2014. Estimating this liability is complex and subjective, and if we experience changes in a number of underlying assumptions and estimates such as a change in claims compared with our expectations, or if the cost of servicing these claims is different than expected, our estimated liability may be impacted.

Our liability for product warranties, included in other current liabilities, was $474 million as of January 24, 2015, compared with $446 million as of July 26, 2014. Our products are generally covered by a warranty for periods ranging from 90 days to five years, and for some products we provide a limited lifetime warranty. We accrue for warranty costs as part of our cost of sales based on associated material costs, technical support labor costs, and associated overhead. Material cost is estimated based primarily upon historical trends in the volume of product returns within the warranty period and the cost to repair or replace the equipment. Technical support labor cost is estimated based primarily upon historical trends in the rate of customer cases and the cost to support the customer cases within the warranty period. Overhead cost is applied based on estimated time to support warranty activities.

The provision for product warranties during the first six months of fiscal 2015 and 2014 was $355 million and $356 million, respectively. If we experience an increase in warranty claims compared with our historical experience, or if the cost of servicing warranty claims is greater than expected, our profitability could be adversely affected.

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CISCO SYSTEMS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Fair Value Measurements

Our fixed income and publicly traded equity securities, collectively, are reflected in the Consolidated Balance Sheets at a fair value of $48.2 billion as of January 24, 2015, compared with $45.3 billion as of July 26, 2014. Our fixed income investment portfolio as of January 24, 2015 consisted primarily of high quality investment-grade securities. See Note 8 to the Consolidated Financial Statements.

As described more fully in Note 9 to the Consolidated Financial Statements, a valuation hierarchy is based on the level of independent, objective evidence available regarding the value of the investments. It encompasses three classes of investments: Level 1 consists of securities for which there are quoted prices in active markets for identical securities; Level 2 consists of securities for which observable inputs other than Level 1 inputs are used, such as quoted prices for similar securities in active markets or quoted prices for identical securities in less active markets and model-derived valuations for which the variables are derived from, or corroborated by, observable market data; and Level 3 consists of securities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value.

Our Level 2 securities are valued using quoted market prices for similar instruments or nonbinding market prices that are corroborated by observable market data. We use inputs such as actual trade data, benchmark yields, broker/dealer quotes, and other similar data, which are obtained from independent pricing vendors, quoted market prices, or other sources to determine the ultimate fair value of our assets and liabilities. We use such pricing data as the primary input, to which we have not made any material adjustments during the periods presented, to make our assessments and determinations as to the ultimate valuation of our investment portfolio. We are ultimately responsible for the financial statements and underlying estimates.

The inputs and fair value are reviewed for reasonableness, may be further validated by comparison to publicly available information, and could be adjusted based on market indices or other information that management deems material to its estimate of fair value. The assessment of fair value can be difficult and subjective. However, given the relative reliability of the inputs we use to value our investment portfolio, and because substantially all of our valuation inputs are obtained using quoted market prices for similar or identical assets, we do not believe that the nature of estimates and assumptions affected by levels of subjectivity and judgment was material to the valuation of the investment portfolio as of January 24, 2015. We had no Level 3 assets measured at fair value on a recurring basis as of January 24, 2015.

Other-than-Temporary Impairments

We recognize an impairment charge when the declines in the fair values of our fixed income or publicly traded equity securities below their cost basis are judged to be other than temporary. The ultimate value realized on these securities, to the extent unhedged, is subject to market price volatility until they are sold.

If the fair value of a debt security is less than its amortized cost, we assess whether the impairment is other than temporary. An impairment is considered other than temporary if (i) we have the intent to sell the security, (ii) it is more likely than not that we will be required to sell the security before recovery of its entire amortized cost basis, or (iii) we do not expect to recover the entire amortized cost of the security. If an impairment is considered other than temporary based on (i) or (ii) described in the prior sentence, the entire difference between the amortized cost and the fair value of the security is recognized in earnings. If an impairment is considered other than temporary based on condition (iii), the amount representing credit loss, defined as the difference between the present value of the cash flows expected to be collected and the amortized cost basis of the debt security, will be recognized in earnings, and the amount relating to all other factors will be recognized in other comprehensive income (OCI). In estimating the amount and timing of cash flows expected to be collected, we consider all available information, including past events, current conditions, the remaining payment terms of the security, the financial condition of the issuer, expected defaults, and the value of underlying collateral.

For publicly traded equity securities, we consider various factors in determining whether we should recognize an impairment charge, including the length of time and extent to which the fair value has been less than our cost basis, the financial condition and near-term prospects of the issuer, and our intent and ability to hold the investment for a period of time sufficient to allow for any anticipated recovery in market value.

There were no impairment charges on our investments in publicly traded equity securities in the first six months of fiscal 2015, while $11 million of such impairment charges were recognized in earnings for the first six months of fiscal 2014. There were no impairment charges on our investments in fixed income securities in the first six months of fiscal 2015 and 2014. Our ongoing consideration of all the factors described previously could result in additional impairment charges in the future, which could adversely affect our net income.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

We also have investments in privately held companies, some of which are in the startup or development stages. Our investments in privately held companies as of January 24, 2015 were $857 million, compared with $899 million as of July 26, 2014, and were included in other assets. We monitor these investments for events or circumstances indicative of potential impairment, and we make appropriate reductions in carrying values if we determine that an impairment charge is required, based primarily on the financial condition and near-term prospects of these companies. These investments are inherently risky because the markets for the technologies or products these companies are developing are typically in the early stages and may never materialize. Our impairment charges on investments in privately held companies were $3 million and $10 million for the first six months of fiscal 2015 and 2014, respectively.

Goodwill and Purchased Intangible Asset Impairments

Our methodology for allocating the purchase price relating to purchase acquisitions is determined through established valuation techniques. Goodwill represents a residual value as of the acquisition date, which in most cases results in measuring goodwill as an excess of the purchase consideration transferred plus the fair value of any noncontrolling interest in the acquired company over the fair value of net assets acquired, including contingent consideration. We perform goodwill impairment tests on an annual basis in the fourth fiscal quarter and between annual tests in certain circumstances for each reporting unit. The assessment of fair value for goodwill and purchased intangible assets is based on factors that market participants would use in an orderly transaction in accordance with the new accounting guidance for the fair value measurement of nonfinancial assets.

The goodwill recorded in the Consolidated Balance Sheets as of January 24, 2015 and July 26, 2014 was $24.4 billion and $24.2 billion, respectively. In response to changes in industry and market conditions, we could be required to strategically realign our resources and consider restructuring, disposing of, or otherwise exiting businesses, which could result in an impairment of goodwill. There was no impairment of goodwill in the first six months of fiscal 2015 and 2014.

We make judgments about the recoverability of purchased intangible assets with finite lives whenever events or changes in circumstances indicate that an impairment may exist. Recoverability of purchased intangible assets with finite lives is measured by comparing the carrying amount of the asset to the future undiscounted cash flows the asset is expected to generate. We review indefinite-lived intangible assets for impairment annually or whenever events or changes in circumstances indicate that the asset might be impaired. If the asset is considered to be impaired, the amount of any impairment is measured as the difference between the carrying value and the fair value of the impaired asset. Assumptions and estimates about future values and remaining useful lives of our purchased intangible assets are complex and subjective. They can be affected by a variety of factors, including external factors such as industry and economic trends, and internal factors such as changes in our business strategy and our internal forecasts. For the first six months of fiscal 2015, impairment charges of $56 millionon purchased intangible assets were recognized in earnings, while there were no such impairment charges in the first six months of fiscal 2014. Our ongoing consideration of all the factors described previously could result in additional impairment charges in the future, which could adversely affect our net income. 

Income Taxes

We are subject to income taxes in the United States and numerous foreign jurisdictions. Our effective tax rates differ from the statutory rate, primarily due to the tax impact of state taxes, foreign operations, R&D tax credits, domestic manufacturing deductions, tax audit settlements, nondeductible compensation, international realignments, and transfer pricing adjustments. Our effective tax rate was 16.6% and18.6%in the second quarter of fiscal 2015 and 2014, respectively. Our effective tax rate was 19.3% and20.3%in the first six months of fiscal 2015 and 2014, respectively.

Significant judgment is required in evaluating our uncertain tax positions and determining our provision for income taxes. Although we believe our reserves are reasonable, no assurance can be given that the final tax outcome of these matters will not be different from that which is reflected in our historical income tax provisions and accruals. We adjust these reserves in light of changing facts and circumstances, such as the closing of a tax audit or the refinement of an estimate. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will impact the provision for income taxes in the period in which such determination is made. The provision for income taxes includes the impact of reserve provisions and changes to reserves that are considered appropriate, as well as the related net interest and penalties.

Significant judgment is also required in determining any valuation allowance recorded against deferred tax assets. In assessing the need for a valuation allowance, we consider all available evidence, including past operating results, estimates of future taxable income, and the feasibility of tax planning strategies. In the event that we change our determination as to the amount of deferred tax assets that can be realized, we will adjust our valuation allowance with a corresponding impact to the provision for income taxes in the period in which such determination is made.

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CISCO SYSTEMS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Our provision for income taxes is subject to volatility and could be adversely impacted by earnings being lower than anticipated in countries that have lower tax rates and higher than anticipated in countries that have higher tax rates; by changes in the valuation of our deferred tax assets and liabilities; by expiration of or lapses in the R&D tax credit or domestic manufacturing deduction laws; by expiration of or lapses in tax incentives; by transfer pricing adjustments, including the effect of acquisitions on our intercompany R&D cost-sharing arrangement and legal structure; by tax effects of nondeductible compensation; by tax costs related to intercompany realignments; by changes in accounting principles; or by changes in tax laws and regulations, treaties, or interpretations thereof, including possible changes to the taxation of earnings of our foreign subsidiaries, the deductibility of expenses attributable to foreign income, or the foreign tax credit rules. Significant judgment is required to determine the recognition and measurement attributes prescribed in the accounting guidance for uncertainty in income taxes. The Organisation for Economic Co-operation and Development (OECD), an international association comprised of 34 countries, including the United States, is contemplating changes to numerous long-standing tax principles. These contemplated changes, if finalized and adopted by countries, will increase tax uncertainty and may adversely affect our provision for income taxes. As a result of certain of our ongoing employment and capital investment actions and commitments, our income in certain countries is subject to reduced tax rates and in some cases is wholly exempt from tax. Our failure to meet these commitments could adversely impact our provision for income taxes. In addition, we are subject to the continuous examination of our income tax returns by the Internal Revenue Service (IRS) and other tax authorities. We regularly assess the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of our provision for income taxes. There can be no assurance that the outcomes from these continuous examinations will not have an adverse impact on our operating results and financial condition.

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CISCO SYSTEMS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

RESULTS OF OPERATIONS

Revenue

The following table presents the breakdown of revenue between product and service (in millions, except percentages):

	Three Months Ended										Six Months Ended
	January 24, 2015			January 25, 2014			Variance in Dollars		Variance in Percent		January 24, 2015			January 25, 2014			Variance in Dollars		Variance in Percent
Revenue:
Product	$	9,078		$	8,423		$	655	7.8	%	$	18,513		$	17,820		$	693	3.9	%
Percentage of revenue	76.1		%	75.5		%					76.6		%	76.7		%
Service	2,858			2,732			126		4.6	%	5,668			5,420			248		4.6	%
Percentage of revenue	23.9		%	24.5		%					23.4		%	23.3		%
Total	$	11,936		$	11,155		$	781	7.0	%	$	24,181		$	23,240		$	941	4.0	%

We manage our business primarily on a geographic basis, organized into three geographic segments. Our revenue, which includes product and service for each segment, is summarized in the following table (in millions, except percentages):

	Three Months Ended											Six Months Ended
	January 24, 2015			January 25, 2014			Variance in Dollars			Variance in Percent		January 24, 2015			January 25, 2014			Variance in Dollars			Variance in Percent
Revenue:
Americas	$	7,101		$	6,460		$	641		9.9	%	$	14,602		$	13,776		$	826		6.0	%
Percentage of revenue	59.5		%	57.9		%						60.4		%	59.3		%
EMEA	3,091			2,896			195			6.7	%	6,093			5,829			264			4.5	%
Percentage of revenue	25.9		%	26.0		%						25.2		%	25.1		%
APJC	1,744			1,799			(55		)	(3.1	)%	3,486			3,635			(149		)	(4.1	)%
Percentage of revenue	14.6		%	16.1		%						14.4		%	15.6		%
Total	$	11,936		$	11,155		$	781		7.0	%	$	24,181		$	23,240		$	941		4.0	%

Three Months Ended January 24, 2015 Compared with Three Months Ended January 25, 2014

For the second quarter of fiscal 2015, as compared with the second quarter of fiscal 2014, total revenue increased by 7%. Product revenue increased by 8%, while service revenue increased by 5%. Our total revenue reflected growth in our Americas and EMEA geographic segments, while revenue declined in the APJC segment. The emerging countries of BRICM, in the aggregate, experienced a slower product revenue growth of 2%, with growth in Brazil, India, and Mexico, partially offset by decreases in the other two countries.

We conduct business globally in numerous currencies. The direct effect of foreign currency fluctuations on revenue has not been material because our revenue is primarily denominated in U.S. dollars. However, if the U.S. dollar strengthens relative to other currencies, such strengthening could have an indirect effect on our revenue to the extent it raises the cost of our products to non-U.S. customers and thereby reduces demand. A weaker U.S. dollar could have the opposite effect. However, the precise indirect effect of currency fluctuations is difficult to measure or predict because our revenue is influenced by many factors in addition to the impact of such currency fluctuations. It is possible that our revenue in the second quarter of fiscal 2015 may have been adversely affected by the depreciation of the local currency relative to the U.S. dollar, although as noted above, such indirect effects are difficult to measure.

In addition to the impact of macroeconomic factors, revenue by segment in a particular period may be significantly impacted by several factors related to revenue recognition, including the complexity of transactions such as multiple-element arrangements; the mix of financing arrangements provided to our channel partners and customers; and final acceptance of the product, system, or solution, among other factors. In addition, certain customers tend to make large and sporadic purchases, and the revenue related to these transactions may also be affected by the timing of revenue recognition, which in turn would impact the revenue of the relevant segment. As has been the case in certain of our emerging countries from time to time, customers require greater levels of financing arrangements, service, and support, and these activities may occur in future periods, which may also impact the timing of the recognition of revenue.

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CISCO SYSTEMS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Six Months Ended January 24, 2015 Compared with Six Months Ended January 25, 2014

For the first six months of fiscal 2015, as compared with the first six months of fiscal 2014, total revenue increased by 4%. Product revenue increased 4%, while service revenue increased by 5%. Our total revenue reflected growth in our Americas and EMEA geographic segments, while revenue declined in the APJC segment. The emerging countries of BRICM, in the aggregate, experienced a 3% product revenue decline, with declines in China and Russia, partially offset by increases in the other three countries.

Product Revenue by Segment

The following table presents the breakdown of product revenue by segment (in millions, except percentages):

	Three Months Ended											Six Months Ended
	January 24, 2015			January 25, 2014			Variance in Dollars			Variance in Percent		January 24, 2015			January 25, 2014			Variance in Dollars			Variance in Percent
Product revenue:
Americas	$	5,243		$	4,676		$	567		12.1	%	$	10,927		$	10,209		$	718		7.0	%
Percentage of product revenue	57.8		%	55.6		%						59.1		%	57.3		%
EMEA	2,480			2,328			152			6.5	%	4,876			4,709			167			3.5	%
Percentage of product revenue	27.3		%	27.6		%						26.3		%	26.4		%
APJC	1,355			1,419			(64		)	(4.5	)%	2,710			2,902			(192		)	(6.6	)%
Percentage of product revenue	14.9		%	16.8		%						14.6		%	16.3		%
Total	$	9,078		$	8,423		$	655		7.8	%	$	18,513		$	17,820		$	693		3.9	%

Americas

Three Months Ended January 24, 2015 Compared with Three Months Ended January 25, 2014

Product revenue in the Americas segment increased by 12%, led by strong growth in the public sector market and solid growth in the enterprise and commercial markets. Product revenue increased in the U.S. public sector market, led by higher sales to the U.S. federal government and, to a lesser extent, higher sales to state and local governments. Within the Americas segment, we continued to experience a product revenue decline in the service provider market. From a country perspective, product revenue increased by 12% in the United States, 44% in Brazil, 26% in Mexico and 1% in Canada.

Six Months Ended January 24, 2015 Compared with Six Months Ended January 25, 2014

The increase in product revenue in the Americas segment of 7% was led by solid growth in the public sector, enterprise and commercial markets. The product revenue growth in the public sector market was due primarily to higher sales to the U.S. federal government and, to a lesser extent, higher sales to state and local governments. Product revenue decreased in the service provider market. From a country perspective, product revenue increased by 7% in the United States, 24% in Brazil, 19% in Mexico and 1% in Canada.

EMEA

Three Months Ended January 24, 2015 Compared with Three Months Ended January 25, 2014

Product revenue in the EMEA segment increased by 7%, led by growth in the enterprise and commercial markets, and to a lesser extent, growth in the service provider market. We experienced a slight product revenue decline in the public sector market. Product revenue from emerging countries within EMEA increased by 2% and product revenue for the remainder of EMEA, which primarily consists of countries in Western Europe, grew by 8%.

Six Months Ended January 24, 2015 Compared with Six Months Ended January 25, 2014

Product revenue in the EMEA segment increased by 4%, driven by growth in the commercial market and, to a lesser degree, in the enterprise and service provider markets. We experienced a slight product revenue decline in the public sector market. Product revenue from emerging countries within EMEA decreased by 2%, led by a 20% decrease in Russia. Product revenue for the remainder of EMEA grew by 6%.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

APJC

Three Months Ended January 24, 2015 Compared with Three Months Ended January 25, 2014

The decrease in product revenue in the APJC segment of 5% was led by a significant decline in the service provider market and, to a lesser extent, in the public sector market. These decreases were partially offset by solid growth in the commercial and enterprise markets. From a country perspective, we experienced year-over-year product revenue declines of 20% in China and 10% in Japan. These decreases were partially offset by product revenue growth of 21% in India and 3% in Australia.

Six Months Ended January 24, 2015 Compared with Six Months Ended January 25, 2014

Product revenue in the APJC segment decreased by 7%. The product revenue decline was led by a significant decline in the service provider market and, to a lesser degree, in the public sector market. These decreases were partially offset by slow growth in the commercial and enterprise markets. From a country perspective, product revenue decreased by 22% in China, 7% in Japan and 5% in Australia. We experienced product revenue growth of 25% in India.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Product Revenue by Groups of Similar Products

In addition to the primary view on a geographic basis, we also prepare financial information related to groups of similar products and customer markets for various purposes. Our product categories consist of the following categories (with subcategories in parentheses): Switching (fixed switching, modular switching, and storage); NGN Routing (high-end routers, mid-range and low-end routers, and other NGN Routing products); Collaboration (unified communications, Cisco TelePresence, and conferencing); Service Provider Video (infrastructure, video software, and solutions and cable access); Data Center; Wireless; Security; and Other Products. The Other Products category consists primarily ofemerging technology products and other networking products.

The following table presents revenue for groups of similar products (in millions, except percentages):

	Three Months Ended											Six Months Ended
	January 24, 2015			January 25, 2014			Variance in Dollars			Variance in Percent		January 24, 2015			January 25, 2014			Variance in Dollars			Variance in Percent
Product revenue:
Switching	$	3,616		$	3,258		$	358		11.0	%	$	7,462		$	6,998		$	464		6.6	%
Percentage of product revenue	39.8		%	38.7		%						40.3		%	39.3		%
NGN Routing	1,764			1,730			34			2.0	%	3,713			3,756			(43		)	(1.1	)%
Percentage of product revenue	19.4		%	20.5		%						20.1		%	21.1		%
Collaboration	990			899			91			10.1	%	1,939			1,950			(11		)	(0.6	)%
Percentage of product revenue	10.9		%	10.7		%						10.5		%	10.9		%
Service Provider Video	776			957			(181		)	(18.9	)%	1,647			1,944			(297		)	(15.3	)%
Percentage of product revenue	8.5		%	11.4		%						8.9		%	10.9		%
Data Center	846			605			241			39.8	%	1,539			1,206			333			27.6	%
Percentage of product revenue	9.3		%	7.2		%						8.3		%	6.8		%
Wireless	611			517			94			18.2	%	1,216			1,064			152			14.3	%
Percentage of product revenue	6.7		%	6.1		%						6.6		%	6.0		%
Security	416			393			23			5.9	%	871			758			113			14.9	%
Percentage of product revenue	4.6		%	4.7		%						4.7		%	4.3		%
Other	59			64			(5		)	(7.8	)%	126			144			(18		)	(12.5	)%
Percentage of product revenue	0.8		%	0.7		%						0.6		%	0.7		%
Total	$	9,078		$	8,423		$	655		7.8	%	$	18,513		$	17,820		$	693		3.9	%

Certain reclassifications have been made to the prior period amounts to conform to the current period’s presentation.

Switching

Three Months Ended January 24, 2015 Compared with Three Months Ended January 25, 2014

Revenue in our Switching product category increased by 11%, or $358 million, driven by a 17%, or $337 million, increase in revenue from our LAN fixed-configuration switches. Revenue from our LAN fixed-configuration switches increased due to the continued adoption of Cisco Catalyst 3650 Series Switches and Cisco Catalyst 3850 Series Switches. Higher revenue from fixed-configuration Cisco Nexus Series Switches also contributed to the increase. We also experienced a 31%, or $36 million, increase in sales of storage products within this category. Partially offsetting these increases was a decrease in revenue from our modular switches of 1%, or $15 million, driven by lower sales of Cisco Nexus 7000 Series Switches and Cisco Catalyst 6500-E Series Switches.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Six Months Ended January 24, 2015 Compared with Six Months Ended January 25, 2014

The increase in revenue in our Switching product category of 7%, or $464 million, was driven by a 12%, or $507 million, increase in revenue from our LAN fixed-configuration switches and, to a lesser extent, a 45%, or $96 million, increase in sales of storage products. Revenue from LAN fixed-configuration switches increased due to higher sales of most of our Cisco Nexus Series Switches and Cisco Catalyst Series Switches within this category. We experienced a decrease in revenue from our modular switches of 6%, or $139 million, driven by lower sales of Cisco Catalyst 6500-E Series Switches and Cisco Nexus 7000 Series Switches.

NGN Routing

Three Months Ended January 24, 2015 Compared with Three Months Ended January 25, 2014

The increase in revenue in our NGN Routing product category of 2%, or $34 million, was driven by a 5%, or $53 million, increase in revenue from our high-end router products and a 3%, or $19 million, increase in revenue from our midrange and low-end router products. These increases were partially offset by a 28%, or $38 million, decrease in revenue from what we categorize as other NGN Routing products. Within the high-end router product category, we experienced increased sales of most of our products within our Cisco Aggregation Services Routers category and the adoption of our Cisco Network Convergence System platform partially offset by lower sales of Cisco Carrier Routing System products and our legacy high-end router products. The increase in revenue from our midrange and low-end router products was due to higher sales of our Cisco Integrated Services Routers products. Revenue from other NGN Routing products decreased due to lower sales of certain optical networking products.

Six Months Ended January 24, 2015 Compared with Six Months Ended January 25, 2014

Revenue in our NGN Routing product category decreased by 1%, or $43 million, driven by a 34%, or $108 million, decrease in revenue from other NGN Routing products and a 2%, or $31 million, decrease in revenue from our midrange and low-end router products. These decreases were partially offset by a 4%, or $96 million, increase in revenue from our high-end router products. Revenue from other NGN Routing products decreased due to lower sales of certain optical networking products. The decrease in revenue from our midrange and low-end router products was due tolower sales of certain of our access products,partially offset by higher sales of our Cisco Integrated Services Routers products. Revenue from high-end router product increased due to an increase in revenue from most of our products within our Cisco Aggregation Services Routers category and the adoption of our Cisco Network Convergence System platform, partially offset by lower sales of Cisco Carrier Routing System products and our legacy high-end router products.

Collaboration

Three Months Ended January 24, 2015 Compared with Three Months Ended January 25, 2014

Overall, revenue in our Collaboration product category increased by 10%, or $91 million, primarily due to increased revenue from our Unified Communications and Cisco TelePresence products, driven by higher revenue in endpoint products as a result of new product introductions. These increases were partially offset by decreased revenue from our conferencing products. We continue to increase the amount of deferred revenue related to our Collaboration product category.

Six Months Ended January 24, 2015 Compared with Six Months Ended January 25, 2014

Revenue in our Collaboration product category decreased by 1%, or $11 million, primarily due to decreased revenue from our Cisco TelePresence products and, to a lesser extent, a slight decrease in revenue from our conferencing products, partially offset by increased revenue from our Unified Communications products.

Service Provider Video

Three Months Ended January 24, 2015 Compared with Three Months Ended January 25, 2014

Revenue in our Service Provider Video product category decreased by 19%, or $181 million, driven by a decrease in sales of our Service Provider Video infrastructure products. The revenue decline in Service Provider Video infrastructure products was due primarily to lower sales of set-top boxes.

Six Months Ended January 24, 2015 Compared with Six Months Ended January 25, 2014

The decrease in revenue from our Service Provider Video product category of 15%, or $297 million, was driven by a 25%, or $269 million, decrease in sales of our Service Provider Video infrastructure products, due primarily to lower sales of set-top boxes. We also experienced a decrease in revenue from cable access products within this product category.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Data Center

Three Months Ended January 24, 2015 Compared with Three Months Ended January 25, 2014

We continued to experience solid growth in our Data Center product category, which grew by 40%, or $241 million, with sales growth of our Cisco Unified Computing System products occurring across all geographic segments and customer markets. The increase was due in large part to the continued momentum we are experiencing in both data center and cloud environments, as current customers increase their data center build-outs and as new customers deploy these offerings.

Six Months Ended January 24, 2015 Compared with Six Months Ended January 25, 2014

We experienced solid growth in our Data Center product category, which grew by 28%, or $333 million, with sales growth of our Cisco Unified Computing System products occurring across all geographic segments and customer markets. The increase in this product category was driven by similar factors as discussed in the three month period immediately above.

Wireless

Three Months Ended January 24, 2015 Compared with Three Months Ended January 25, 2014

Revenue in our Wireless product category increased by 18%, or $94 million, driven by continued growth in Meraki combined with continued strength in our 802.11ac portfolio. We continue to increase the proportion of recurring revenue in our Wireless product category.

Six Months Ended January 24, 2015 Compared with Six Months Ended January 25, 2014

Revenue in our Wireless product category increased by 14%, or $152 million, due primarily to higher sales of Meraki products and 802.11ac products.

Security

Three Months Ended January 24, 2015 Compared with Three Months Ended January 25, 2014

Revenue in our Security product category experienced growth of 6%, or $23 million, driven by higher Network Security sales as a result of product integration with Sourcefire, which we acquired in the first quarter of fiscal 2014. This increase was partially offset by decrease in revenue from our Content Security products due to lower sales of Web and E-mail security products. Our software and subscription sales continue to drive an increase in the proportion of recurring revenue in our Security product category.

Six Months Ended January 24, 2015 Compared with Six Months Ended January 25, 2014

Revenue in our Security product category was up 15%, or $113 million, driven primarily by sales of Sourcefire products and, to a lesser extent, by higher sales of our high-end Firewall products within our Network Security product portfolio.

Other Products

We experienced a year-over-year decrease in revenue in our Other Products category for the second quarter and first six months of fiscal 2015 due in large part to the decrease in sales of our other networking products.

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CISCO SYSTEMS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Service Revenue by Segment

The following table presents the breakdown of service revenue by segment (in millions, except percentages):

	Three Months Ended										Six Months Ended
	January 24, 2015			January 25, 2014			Variance in Dollars		Variance in Percent		January 24, 2015			January 25, 2014			Variance in Dollars		Variance in Percent
Service revenue:
Americas	$	1,858		$	1,784		$	74	4.1	%	$	3,675		$	3,567		$	108	3.0	%
Percentage of service revenue	65.0		%	65.3		%					64.8		%	65.8		%
EMEA	611			568			43		7.6	%	1,217			1,120			97		8.7	%
Percentage of service revenue	21.4		%	20.8		%					21.5		%	20.7		%
APJC	389			380			9		2.4	%	776			733			43		5.9	%
Percentage of service revenue	13.6		%	13.9		%					13.7		%	13.5		%
Total	$	2,858		$	2,732		$	126	4.6	%	$	5,668		$	5,420		$	248	4.6	%

Three Months Ended January 24, 2015 Compared with Three Months Ended January 25, 2014

Service revenue increased across all of our geographic segments. Worldwide technical support services revenue increased by 4% and worldwide advanced services revenue increased by 6%, driven by growth in subscription revenues. Technical support service revenue experienced growth across all geographic segments, led by growth in our EMEA segment. Renewals and technical support service contract initiations associated with product sales provided an installed base of equipment being serviced which, in concert with new service offerings, were the primary factors driving the revenue increases. Advanced services revenue, which relates to consulting support services for specific customer network needs, grew across all geographic segments, led by solid growth in our EMEA segment.

Six Months Ended January 24, 2015 Compared with Six Months Ended January 25, 2014

Service revenue grew by 5%, with growth across all of our geographic segments. Worldwide technical support services revenue increased by 5% and worldwide advanced services experienced 4% revenue growth. Technical support services revenue grew across all geographic segments, led by growth in our EMEA segment. Advanced services revenue also grew across all geographic segments, led by solid growth in our EMEA segment.

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CISCO SYSTEMS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Gross Margin

The following table presents the gross margin for products and services (in millions, except percentages):

	Three Months Ended								Six Months Ended
	AMOUNT				PERCENTAGE				AMOUNT				PERCENTAGE
	January 24, 2015		January 25, 2014		January 24, 2015		January 25, 2014		January 24, 2015		January 25, 2014		January 24, 2015		January 25, 2014
Gross margin:
Product	$	5,272	$	4,100	58.1	%	48.7	%	$	10,788	$	9,750	58.3	%	54.7	%
Service	1,818		1,851		63.6	%	67.8	%	3,635		3,608		64.1	%	66.6	%
Total	$	7,090	$	5,951	59.4	%	53.3	%	$	14,423	$	13,358	59.6	%	57.5	%

Product Gross Margin

The following table summarizes the key factors that contributed to the change in product gross margin percentage for the second quarter and first six months of fiscal 2015 as compared with the corresponding prior year periods:

	Product Gross Margin Percentage
	Three Months Ended		Six Months Ended
Fiscal 2014	48.7	%	54.7	%
Supplier component remediation charge	7.8	%	3.7	%
Productivity (1)	3.6	%	2.8	%
Mix of products sold	1.4	%	1.1	%
Product pricing	(3.0	)%	(2.7	)%
Amortization of purchased intangible assets	(0.4	)%	(0.3	)%
Rockstar patent portfolio charge	—	%	(1.0	)%
Fiscal 2015	58.1	%	58.3	%

⁽¹⁾Productivity includes overall manufacturing-related costs, such as component costs, warranty expense, provisions for inventory, freight, logistics, shipment volume, and other items not categorized elsewhere.

Three Months Ended January 24, 2015 Compared with Three Months Ended January 25, 2014

Product gross margin increased by 9.4 percentage points as compared with the second quarter of fiscal 2014.

The increase in product gross margin was primarily a result of the $655 million charge to product cost of sales recorded in the second quarter fiscal 2014 related to the expected cost of remediation of issues with memory components in certain products sold in prior fiscal years, for which there was no corresponding charge in fiscal 2015. Benefits from productivity and the mix of products sold also contributed to the increase. The productivity benefits we experienced in the second quarter of fiscal 2015 were driven by value engineering efforts; favorable component pricing; and continued operational efficiency in manufacturing operations. Value engineering is the process by which production costs are reduced through component redesign, board configuration, test processes, and transformation processes. The mix of products sold was favorable primarily as a result of a revenue decrease from our relatively lower margin Service Provider Video products, partially offset by a revenue increase in our relatively lower margin Cisco Unified Computing System products.

The various factors contributing to the product gross margin increase were partially offset by unfavorable impacts from product pricing, which were driven by typical market factors and impacted each of our geographic segments and customer markets. Our product gross margin for the second quarter of fiscal 2015 was also negatively impacted by impairment charges related to acquisition-related intangible assets.

Our future gross margins could be impacted by our product mix and could be adversely affected by further growth in sales of products that have lower gross margins, such as Cisco Unified Computing System products. Our gross margins may also be impacted by the geographic mix of our revenue and may be adversely affected by product pricing attributable to competitive factors. Additionally, our manufacturing-related costs may be negatively impacted by constraints in our supply chain, which in turn could negatively affect gross margin. If any of the preceding factors that in the past have negatively impacted our gross margins arise in future periods, our gross margins could continue to decline.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Six Months Ended January 24, 2015 Compared with Six Months Ended January 25, 2014

Product gross margin increased by 3.6 percentage points as compared with the first six months of fiscal 2014. The increase was driven by the $655 million charge to product cost of sales for the second quarter of fiscal 2014 related to the expected cost of remediation of issues with memory components in certain products sold in prior fiscal years. Additionally, gross margin increased due to benefits from productivity improvements driven by similar factors as discussed in the three-month period immediately above and the mix of products sold. The shift in the mix of products sold was primarily a result of revenue decreases from our relatively lower margin Service Provider Video products, partially offset by increased in revenue from our relatively lower margin Cisco Unified Computing System products. These factors were partially offset by unfavorable impacts from product pricing, the unfavorable impact of the $188 million charge to product cost of sales recorded in the first quarter fiscal 2015 related to the Rockstar patent portfolio, and impairment charges related to acquisition-related intangible assets.

Service Gross Margin

Three Months Ended January 24, 2015 Compared with Three Months Ended January 25, 2014

Our service gross margin percentage decreased by 4.2 percentage points compared with the second quarter of fiscal 2014 due to increased costs such as headcount-related costs associated with higher investments in security and cloud managed services and higher variable compensation expense. Higher partner delivery costs also contributed to increased costs. These cost impacts were partially offset by the resulting benefit to gross margin of higher sales volume in both advanced services and technical support services.

Our service gross margin normally experiences some fluctuations due to various factors such as the timing of contract initiations and our renewals, our strategic investments in headcount, and the resources we deploy to support the overall service business. Other factors include the mix of service offerings, as the gross margin from our advanced services is typically lower than the gross margin from technical support services.

Six Months Ended January 24, 2015 Compared with Six Months Ended January 25, 2014

Service gross margin percentage decreased by 2.5 percentage points as compared with the first six months of fiscal 2014, driven by increased cost impacts such as headcount-related costs and partner delivery costs. These cost impacts were partially offset by the resulting benefit to gross margin of higher sales volume in both advanced services and technical support services.

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CISCO SYSTEMS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Gross Margin by Segment

The following table presents the total gross margin for each segment (in millions, except percentages):

	Three Months Ended										Six Months Ended
	AMOUNT						PERCENTAGE				AMOUNT						PERCENTAGE
	January 24, 2015			January 25, 2014			January 24, 2015		January 25, 2014		January 24, 2015			January 25, 2014			January 24, 2015		January 25, 2014
Gross margin:
Americas	$	4,406		$	3,977		62.0	%	61.6	%	$	9,216		$	8,627		63.1	%	62.6	%
EMEA	1,910			1,870			61.8	%	64.6	%	3,825			3,758			62.8	%	64.5	%
APJC	1,052			993			60.3	%	55.2	%	2,077			2,072			59.6	%	57.0	%
Segment total	7,368			6,840			61.7	%	61.3	%	15,118			14,457			62.5	%	62.2	%
Unallocated corporate items (1)	(278		)	(889		)					(695		)	(1,099		)
Total	$	7,090		$	5,951		59.4	%	53.3	%	$	14,423		$	13,358		59.6	%	57.5	%

⁽¹⁾The unallocated corporate items for the periods presented include the effects of amortization and impairments of acquisition-related intangible assets, share-based compensation expense, significant litigation and other contingencies, and certain other charges. We do not allocate these items to the gross margin for each segment because management does not include such information in measuring the performance of the operating segments.

Three Months Ended January 24, 2015 Compared with Three Months Ended January 25, 2014

The Americas segment experienced a gross margin percentage increase due to productivity improvements from lower overall manufacturing costs and, to a lesser extent, a favorable mix impact. The favorable mix impact in this geographic segment was driven by lower sales of our relatively lower margin Service Provider Video products, partially offset by an increase in revenue from our relatively lower margin Cisco Unified Computing System products. Partially offsetting these favorable impacts to gross margin were negative impacts from pricing.

The gross margin percentage decrease in our EMEA segment was due primarily to lower productivity and unfavorable impacts from pricing, partially offset by a favorable mix impact. The favorable mix impact was driven by an increase in revenue from certain of our higher margin core products. Lower service gross margin also contributed to the decrease in gross margin in this segment.

Our APJC segment gross margin percentage increased due to productivity improvements and a favorable mix impact, partially offset by unfavorable impacts from pricing and lower service gross margin.The favorable mix impact was driven by a decrease in revenue from our relatively lower margin Service Provider Video products and an increase in revenue from certain of our higher margin core products.

The gross margin percentage for a particular segment may fluctuate, and period-to-period changes in such percentages may or may not be indicative of a trend for that segment. Our product and service gross margins may be impacted by economic downturns or uncertain economic conditions as well as our movement into new market opportunities, and could decline if any of the factors that impact our gross margins are adversely affected in future periods.

Six Months Ended January 24, 2015 Compared with Six Months Ended January 25, 2014

We experienced a gross margin percentage increase in our Americas segment due to productivity improvements and a favorable mix impact, partially offset by unfavorable impacts from pricing. The favorable mix impact in this geographic segment was driven by lower sales of our relatively lower margin Service Provider Video products, partially offset by an increase in revenue from our relatively lower margin Cisco Unified Computing System products.

The gross margin percentage decrease in our EMEA segment was primarily due to negative impacts from pricing within this segment and, to a lesser extent, lower productivity. These factors were partially offset by a slightly favorable mix impact. The favorable mix impact was driven by an increase in revenue from certain of our higher margin core products.

The APJC segment gross margin percentage increased due to productivity improvements and a favorable mix impact, partially offset by unfavorable impacts from pricing.The favorable mix impact was driven by a decrease in revenue from our relatively lower margin Service Provider Video products and an increase in revenue from certain of our higher margin core products.

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CISCO SYSTEMS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Factors That May Impact Revenue and Gross Margin

Product revenue may continue to be affected by factors, including global economic downturns and related market uncertainty, that have resulted in reduced IT-related capital spending in certain segments within our enterprise, service provider, public sector, and commercial markets; changes in the geopolitical environment and global economic conditions; competition, including price-focused competitors from Asia, especially from China; new product introductions; sales cycles and product implementation cycles; changes in the mix of our customers between service provider and enterprise markets; changes in the mix of direct sales and indirect sales; variations in sales channels; and final acceptance criteria of the product, system, or solution as specified by the customer. Sales to the service provider market have been and may be in the future characterized by large and sporadic purchases, especially relating to our router sales and sales of certain products within our Collaboration, Data Center, and Service Provider Video product categories. In addition, service provider customers typically have longer implementation cycles; require a broader range of services, including network design services; and often have acceptance provisions that can lead to a delay in revenue recognition. Certain of our customers in certain emerging countries also tend to make large and sporadic purchases, and the revenue related to these transactions may similarly be affected by the timing of revenue recognition. As we focus on new market opportunities, customers may require greater levels of financing arrangements, service, and support, especially in certain emerging countries, which in turn may result in a delay in the timing of revenue recognition. To improve customer satisfaction, we continue to focus on managing our manufacturing lead-time performance, which may result in corresponding reductions in order backlog. A decline in backlog levels could result in more variability and less predictability in our quarter-to-quarter revenue and operating results.

Product revenue may also be adversely affected by fluctuations in demand for our products, especially with respect to telecommunications service providers and Internet businesses, whether or not driven by any slowdown in capital expenditures in the service provider market; price and product competition in the communications and information technology industry; introduction and market acceptance of new technologies and products; adoption of new networking standards; and financial difficulties experienced by our customers. We may, from time to time, experience manufacturing issues that create a delay in our suppliers’ ability to provide specific components, resulting in delayed shipments. To the extent that manufacturing issues and any related component shortages result in delayed shipments in the future, and particularly in periods when we and our suppliers are operating at higher levels of capacity, it is possible that revenue for a quarter could be adversely affected if such matters are not remediated within the same quarter. For additional factors that may impact product revenue, see “Part II, Item 1A. Risk Factors.”

Our distributors participate in various cooperative marketing and other programs. Increased sales to our distributors generally result in greater difficulty in forecasting the mix of our products and, to a certain degree, the timing of orders from our customers. We recognize revenue for sales to our distributors generally based on a sell-through method using information provided by them, and we maintain estimated accruals and allowances for all cooperative marketing and other programs.

Product gross margin may be adversely affected in the future by changes in the mix of products sold, including periods of increased growth of some of our lower margin products; introduction of new products, including products with price-performance advantages and new business models for our offerings such as other-as-a-service (“XaaS”); our ability to reduce production costs; entry into new markets, including markets with different pricing structures and cost structures, as a result of internal development or through acquisitions; changes in distribution channels; price competition, including competitors from Asia, especially those from China; changes in geographic mix of our product revenue; the timing of revenue recognition and revenue deferrals; sales discounts; increases in material or labor costs, including share-based compensation expense; excess inventory and obsolescence charges; warranty costs; changes in shipment volume; loss of cost savings due to changes in component pricing; effects of value engineering; inventory holding charges; and the extent to which we successfully execute on our strategy and operating plans. Additionally, our manufacturing-related costs may be negatively impacted by constraints in our supply chain. Service gross margin may be impacted by various factors such as the change in mix between technical support services and advanced services; the timing of technical support service contract initiations and renewals; share-based compensation expense; and the timing of our strategic investments in headcount and resources to support this business.

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CISCO SYSTEMS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Research and Development (“R&D”), Sales and Marketing, and General and Administrative (“G&A”) Expenses

R&D, sales and marketing, and G&A expenses are summarized in the following table (in millions, except percentages):

	Three Months Ended										Six Months Ended
	January 24, 2015			January 25, 2014			Variance in Dollars		Variance in Percent		January 24, 2015			January 25, 2014			Variance in Dollars			Variance in Percent
Research and development	$	1,529		$	1,412		$	117	8.3	%	$	3,112		$	3,136		$	(24	)	(0.8	)%
Percentage of revenue	12.8		%	12.7		%					12.9		%	13.5		%
Sales and marketing	2,308			2,277			31		1.4	%	4,823			4,688			135			2.9	%
Percentage of revenue	19.3		%	20.4		%					19.9		%	20.2		%
General and administrative	490			451			39		8.6	%	994			966			28			2.9	%
Percentage of revenue	4.1		%	4.0		%					4.1		%	4.2		%
Total	$	4,327		$	4,140		$	187	4.5	%	$	8,929		$	8,790		$	139		1.6	%
Percentage of revenue	36.3		%	37.1		%					36.9		%	37.8		%

R&D Expenses

R&D expenses increased for the second quarter of fiscal 2015, as compared with the second quarter of fiscal 2014,primarily due to higher headcount-related expenses driven by increased variable compensation expense as a result of our financial performance. Higher discretionary spending and higher contracted services, to a lesser extent, also contributed to the increase.

The decrease in R&D expenses for the first six months of fiscal 2015, as compared with the first six months of fiscal 2014, was primarily due to higher compensation expense recorded in the first six months of fiscal 2014 in connection with our acquisition of the remaining interest in Insieme partially offset by higher headcount-related expenses and higher contracted services. The higher headcount-related expenses were due to increased variable compensation expense partially offset by efficiencies related to our restructuring actions.

We continue to invest in R&D in order to bring a broad range of products to market in a timely fashion. If we believe that we are unable to enter a particular market in a timely manner with internally developed products, we may purchase or license technology from other businesses, or we may partner with or acquire businesses as an alternative to internal R&D.

Sales and Marketing Expenses

Sales and marketing expenses increased for the second quarter of fiscal 2015, as compared with the second quarter of fiscal 2014, due to higher headcount-related expenses and, to a lesser extent, higher contracted services, partially offset by lower share-based compensation expense. Higher headcount-related expenses were due to increased variable compensation expense as a result of our financial performance.

Sales and marketing expenses increased for the first six months of fiscal 2015, as compared with the first six months of fiscal 2014, due to higher headcount-related expenses, driven by increased variable compensation expense, and higher discretionary spending.

G&A Expenses

G&A expenses increased in the second quarter of fiscal 2015, as compared with the second quarter of fiscal 2014, primarily due to increased variable compensation expense as a result of our financial performance and timing of corporate-level expenses, which tend to vary from period to period.

G&A expenses increased in the first six months of fiscal 2015, as compared with the corresponding period in fiscal 2014, primarily due to increased variable compensation expense as a result of our financial performance and timing of corporate-level expenses, which tend to vary from period to period, partially offset by higher compensation expense recorded in the first six months of fiscal 2014 in connection with our acquisition of the remaining interest in Insieme.

Effect of Foreign Currency

In the second quarter of fiscal 2015, foreign currency fluctuations, net of hedging, decreased the combined R&D, sales and marketing, and G&A expenses by $60 million, or approximately 1.5%, compared with the second quarter of fiscal 2014.

In the first six months of fiscal 2015, foreign currency fluctuations, net of hedging, decreased the combined R&D, sales and marketing, and G&A expenses by $56 million, or approximately 0.6%, compared with the first six months of fiscal 2014.  

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Headcount

Our headcount decreased by approximately 2,135 employees in the second quarter of fiscal 2015 and decreased by approximately 3,930 in the first six months of fiscal 2015, as compared with the total headcount at the end of fiscal 2014. The decrease was due to headcount reductions from our workforce reduction under the Fiscal 2015 Plan. These headcount reductions were partially offset by headcount additions from targeted hiring in engineering, services and sales, and also by headcount additions from our recent acquisitions.

Share-Based Compensation Expense

The following table presents share-based compensation expense (in millions):

	Three Months Ended					Six Months Ended
	January 24, 2015		January 25, 2014			January 24, 2015			January 25, 2014
Cost of sales—product	$	11	$	12		$	22		$	22
Cost of sales—service	34		40			71			73
Share-based compensation expense in cost of sales	45		52			93			95
Research and development	105		108			224			200
Sales and marketing	114		141			261			264
General and administrative	42		47			101			101
Restructuring and other charges	2		(1		)	(2		)	(4		)
Share-based compensation expense in operating expenses	263		295			584			561
Total share-based compensation expense	$	308	$	347		$	677		$	656

The decrease in share-based compensation expense for the second quarter of fiscal 2015, as compared with the second quarter of fiscal 2014, was due primarily to the timing of annual RSU grants partially offset by higher expense associated with PRSUs.

The increase in share-based compensation expense for the first six months of fiscal 2015, as compared with the corresponding period in fiscal 2014, was due primarily to higher expense associated with the PRSUs and equity awards assumed with respect to our recent acquisitions, partially offset by the timing of annual RSU grants.

Amortization of Purchased Intangible Assets

The following table presents the amortization of purchased intangible assets (in millions):

	Three Months Ended				Six Months Ended
	January 24, 2015		January 25, 2014		January 24, 2015		January 25, 2014
Amortization of purchased intangible assets:
Cost of sales	$	242	$	189	$	431	$	363
Operating expenses	72		71		143		136
Total	$	314	$	260	$	574	$	499

Amortization of purchased intangible assets increased for the second quarter and first six months of fiscal 2015, as compared with the corresponding periods of fiscal 2014, due to the impairment charges of approximately $56 million recorded in the second quarter of fiscal 2015. The impairment charges were primarily due to reductions in expected future cash flows related to certain of our technology intangible assets.

The fair value of acquired technology and patents, as well as acquired technology under development, is determined at acquisition date primarily using the income approach, which discounts expected future cash flows to present value. The discount rates used in the present value calculations are typically derived from a weighted-average cost of capital analysis and then adjusted to reflect risks inherent in the development lifecycle as appropriate. We consider the pricing model for products related to these acquisitions to be standard within the high-technology communications industry, and the applicable discount rates represent the rates that market participants would use for valuation of such intangible assets.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Restructuring and Other Charges

In the second quarter and first six months of fiscal 2015, we incurred within operating expenses restructuring and other charges of approximately $69 million and $387 million, respectively, which were related primarily to employee severance charges for employees impacted by our workforce reduction under the Fiscal 2015 Plan. We expect the remaining charges under this plan to be incurred within the remainder of fiscal 2015. We plan to reinvest substantially all of the cost savings from the restructuring actions in key growth areas of our business such as data center, software, security, and cloud. The overall cost savings from these restructuring actions were not material for the periods presented and are not expected to be material for future periods.

In the second quarter and first six months of fiscal 2014, we incurred within operating expenses net restructuring and other charges of $73 million and $310 million, respectively, which were related primarily to employee severance charges for employees impacted by our workforce reduction under the Fiscal 2014 Plan. See Note 5 to the Consolidated Financial Statements.

Operating Income

The following table presents our operating income and our operating income as a percentage of revenue (in millions, except percentages):

	Three Months Ended						Six Months Ended
	January 24, 2015			January 25, 2014			January 24, 2015			January 25, 2014
Operating income	$	2,622		$	1,667		$	4,964		$	4,122
Operating income as a percentage of revenue	22.0		%	14.9		%	20.5		%	17.7		%

For the second quarter of fiscal 2015, as compared with the second quarter of fiscal 2014, operating income increased by 57%, and as a percentage of revenue operating income increased by 7.1 percentage points. The increase resulted from an increase in revenue and a gross margin percentage increase, with the gross margin increase driven in large part by the $655 million supplier component remediation charge (or 5.9 percentage points) recorded in the second quarter of fiscal 2014 for which there was no corresponding charge in fiscal 2015.

In the first six months of fiscal 2015, as compared with the first six months of fiscal 2014, operating income increased by 20%, and as a percentage of revenue operating income increased by 2.8 percentage points. The increase resulted from the following: an increase in revenue; a gross margin percentage increase, driven in part by the $655 million supplier component remediation charge (or 2.8 percentage points) recorded in the second quarter of fiscal 2014 partially offset by the unfavorable impact of the Rockstar patent portfolio charge of $188 million (or 0.8 percentage points); and higher compensation expense recorded in the first six months of fiscal 2014 in connection with our acquisition of the remaining interest in Insieme.

Interest and Other Income (Loss), Net

Interest Income (Expense), Net   The following table summarizes interest income and interest expense (in millions):

	Three Months Ended									Six Months Ended
	January 24, 2015			January 25, 2014			Variance in Dollars			January 24, 2015			January 25, 2014			Variance in Dollars
Interest income	$	189		$	169		$	20		$	368		$	338		$	30
Interest expense	(139		)	(136		)	(3		)	(278		)	(276		)	(2		)
Interest income (expense), net	$	50		$	33		$	17		$	90		$	62		$	28

For the second quarter and first six months of fiscal 2015, interest income increased by 12% and 9%, respectively, compared with the corresponding periods in fiscal 2014, driven by an increase in our portfolio of cash, cash equivalents, and fixed income investments. Interest expense in the second quarter and first six months of fiscal 2015, compared with the corresponding periods in fiscal 2014, was higher driven by higher average debt balance. 

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Other Income (Loss), Net The components of other income (loss), net, are summarized as follows (in millions):

	Three Months Ended									Six Months Ended
	January 24, 2015			January 25, 2014			Variance in Dollars			January 24, 2015		January 25, 2014			Variance in Dollars
Gains (losses) on investments, net:
Publicly traded equity securities	$	60		$	69		$	(9	)	$	56	$	144		$	(88	)
Fixed income securities	9			13			(4		)	20		21			(1		)
Total available-for-sale investments	69			82			(13		)	76		165			(89		)
Privately held companies	134			(35		)	169			101		(66		)	167
Net gains (losses) on investments	203			47			156			177		99			78
Other gains (losses), net	(2		)	8			(10		)	2		12			(10		)
Other income (loss), net	$	201		$	55		$	146		$	179	$	111		$	68

The decrease in total net gains on available-for-sale investments in the second quarter and first six months of fiscal 2015, as compared with the corresponding periods in fiscal 2014, was primarily attributable to lower gains on publicly traded equity securities in the current periods as a result of market conditions and the timing of sales of these securities.

The change in net gains (losses) on investments in privately held companies for the second quarter and first six months of fiscal 2015, as compared with the corresponding periods in fiscal 2014, was primarily due to a gain of $126 million related to the reorganization of our investment in VCE and the absence of losses from VCE for the second quarter of fiscal 2015 and lower losses for the first six months of fiscal 2015 related to this investment under the equity method. We ceased accounting for VCE under the equity method in October 2014.

The change in other gains (losses), net in the second quarter and first six months of fiscal 2015, as compared with the corresponding periods in fiscal 2014, was driven by lower gains from equity derivative instruments, and for the six month period this impact was partially offset by net favorable foreign exchange impacts.

Provision for Income Taxes

Our provision for income taxes is subject to volatility and could be adversely impacted by earnings being lower than anticipated in countries that have lower tax rates, higher than anticipated in countries that have higher tax rates, and expiration of or lapses in tax incentives. Our provision for income taxes does not include provisions for U.S. income taxes and foreign withholding taxes associated with the repatriation of undistributed earnings of certain foreign subsidiaries that we intend to reinvest indefinitely in our foreign subsidiaries. If these earnings were distributed from the foreign subsidiaries to the United States in the form of dividends or otherwise, or if the shares of the relevant foreign subsidiaries were sold or otherwise transferred, we would be subject to additional U.S. income taxes (subject to an adjustment for foreign tax credits) and foreign withholding taxes. Further, as a result of certain of our ongoing employment and capital investment actions and commitments, our income in certain countries is subject to reduced tax rates and in some cases is wholly exempt from tax. Our failure to meet these commitments could adversely impact our provision for income taxes.

The provision for income taxes resulted in an effective tax rate of 16.6% for the second quarter of fiscal 2015, compared with 18.6% for the second quarter of fiscal 2014, which resulted in a net 2.0 percentage point decrease in the effective tax rate for the second quarter of fiscal 2015 as compared with the second quarter of fiscal 2014. The provision for income taxes resulted in an effective tax rate of 19.3% for the first six months of fiscal 2015, as compared with an effective tax rate of 20.3% for the first six months of fiscal 2014, which resulted in a net 1.0 percentage point decrease in the effective tax rate for the first six months of fiscal 2015 as compared with the first six months of fiscal 2014. The decrease in the effective tax rates for both the second quarter and first six months of fiscal 2015, as compared with the second quarter and first six months of fiscal 2014, was primarily due to the retroactive reinstatement of the U.S. federal R&D tax credit for calendar year 2014 in the second quarter of fiscal 2015.

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LIQUIDITY AND CAPITAL RESOURCES

The following sections discuss the effects of changes in our balance sheet, our capital allocation strategy including stock repurchase program and dividends, our contractual obligations, and certain other commitments and activities on our liquidity and capital resources.

Balance Sheet and Cash Flows

Cash and Cash Equivalents and Investments  The following table summarizes our cash and cash equivalents and investments (in millions):

	January 24, 2015		July 26, 2014		Increase (Decrease)
Cash and cash equivalents	$	4,797	$	6,726	$	(1,929	)
Fixed income securities	46,377		43,396		2,981
Publicly traded equity securities	1,848		1,952		(104		)
Total	$	53,022	$	52,074	$	948

The net increase in cash and cash equivalents and investments in the first six months of fiscal 2015 was primarily the result of cash provided by operating activities of $5.4 billion and proceeds from the issuance of common stock of $1.2 billion pursuant to employee stock incentive plans. These sources of cash were partially offset by the repurchase of common stock of $2.2 billion under the stock repurchase program, cash dividends paid of $1.9 billion, capital expenditures of $0.6 billion, repayment of debt of $0.5 billion and net cash paid for acquisitions of $0.2 billion.

Our total in cash and cash equivalents and investments held by various foreign subsidiaries was $49.8 billion and $47.4 billion as of January 24, 2015 and July 26, 2014, respectively. Under current tax laws and regulations, if these assets were to be distributed from the foreign subsidiaries to the United States in the form of dividends or otherwise, we would be subject to additional U.S. income taxes (subject to an adjustment for foreign tax credits) and foreign withholding taxes. The balance of cash and cash equivalents and investments available in the United States as of January 24, 2015 and July 26, 2014 was $3.2 billion and $4.7 billion, respectively.

We maintain an investment portfolio of various holdings, types, and maturities. We classify our investments as short-term investments based on their nature and their availability for use in current operations. We believe the overall credit quality of our portfolio is strong, with our cash equivalents and our fixed income investment portfolio consisting primarily of high quality investment-grade securities. We believe that our strong cash and cash equivalents and investments position allows us to use our cash resources for strategic investments to gain access to new technologies, for acquisitions, for customer financing activities, for working capital needs, and for the repurchase of shares of common stock and payment of dividends as discussed below.

Free Cash Flow and Capital Allocation As part of our capital allocation strategy, we intend to return a minimum of 50% of our free cash flow annually to our shareholders through cash dividends and repurchases of common stock.

We define free cash flow as net cash provided by operating activities less cash used to acquire property and equipment. The following table reconciles our net cash provided by operating activities to free cash flow (in millions):

	Six Months Ended
	January 24, 2015			January 25, 2014
Net cash provided by operating activities	$	5,374		$	5,522
Acquisition of property and equipment	(550		)	(577		)
Free cash flow	$	4,824		$	4,945

We expect that cash provided by operating activities may fluctuate in future periods as a result of a number of factors, including fluctuations in our operating results, the rate at which products are shipped during the quarter (which we refer to as shipment linearity), the timing and collection of accounts receivable and financing receivables, inventory and supply chain management, deferred revenue, excess tax benefits resulting from share-based compensation, and the timing and amount of tax and other payments. For additional discussion, see “Part II, Item 1A. Risk Factors” in this report.

We consider free cash flow to be a liquidity measure that provides useful information to management and investors because of our intent to return a stated percentage of free cash flow to shareholders in the form of dividends and stock repurchases. We further

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regard free cash flow as a useful measure because it reflects cash that can be used to, among other things, invest in our business, make strategic acquisitions, repurchase common stock, and pay dividends on our common stock, after deducting capital investments. A limitation of the utility of free cash flow as a measure of financial performance and liquidity is that the free cash flow does not represent the total increase or decrease in our cash balance for the period.  In addition, we have other required uses of cash, including repaying the principal of our outstanding indebtedness. Free cash flow is not a measure calculated in accordance with U.S. generally accepted accounting principles and should not be regarded in isolation or as an alternative for net income provided by operating activities or any other measure calculated in accordance with such principles, and other companies may calculate free cash flow in a different manner than we do.

The following table summarizes the dividends paid and stock repurchases (in millions, except per-share amounts):

	DIVIDENDS				STOCK REPURCHASE PROGRAM
Quarter Ended	Per Share		Amount		Shares	Weighted-Average Price per Share		Amount		TOTAL
Fiscal 2015
January 24, 2015	$	0.19	$	974	44	$	27.63	$	1,208	$	2,182
October 25, 2014	$	0.19	$	973	41	$	24.58	$	1,013	$	1,986
Fiscal 2014
July 26, 2014	$	0.19	$	974	61	$	25.11	$	1,514	$	2,488
April 26, 2014	$	0.19	$	974	90	$	22.24	$	2,005	$	2,979
January 25, 2014	$	0.17	$	896	185	$	21.73	$	4,020	$	4,916
October 26, 2013	$	0.17	$	914	84	$	23.65	$	2,000	$	2,914

On February 11, 2015, our Board of Directors declared a quarterly dividend of $0.21 per common share to be paid on April 22, 2015 to all shareholders of record as of the close of business on April 2, 2015. Any future dividends will be subject to the approval of our Board of Directors.

Accounts Receivable, Net The following table summarizes our accounts receivable, net (in millions), and DSO:

	January 24, 2015		July 26, 2014		Increase (Decrease)
Accounts receivable, net	$	4,541	$	5,157	$	(616	)
DSO	35		38		(3		)

Our accounts receivable net, as of January 24, 2015 decreased by approximately 12% compared with the end of fiscal 2014. Our DSO as of January 24, 2015 was lower by 3 days compared with the end of fiscal 2014, primarily due to product billings being more linear in the second quarter of fiscal 2015 compared with the fourth quarter of fiscal 2014.

Inventory Supply Chain  The following table summarizes our inventories and purchase commitments with contract manufacturers and suppliers (in millions, except annualized inventory turns):

	January 24, 2015		July 26, 2014		Increase (Decrease)
Inventories	$	1,890	$	1,591	$	299
Annualized inventory turns	10.9		12.7		(1.8		)
Purchase commitments with contract manufacturers and suppliers	$	4,257	$	4,169	$	88

Inventory as of January 24, 2015 increased by 19% from our inventory balance at the end of fiscal 2014, and for the same period purchase commitments with contract manufacturers and suppliers increased by approximately 2%. On a combined basis, inventories and purchase commitments with contract manufacturers and suppliers increased by 7% compared with the end of fiscal 2014.

The inventory increase was primarily due to higher levels of raw materials primarily from insourcing of certain memory components. We believe our inventory and purchase commitments levels are in line with our current demand forecasts.

Our finished goods consist of distributor inventory and deferred cost of sales and manufactured finished goods. Distributor inventory and deferred cost of sales are related to unrecognized revenue on shipments to distributors and retail partners as well as shipments to customers. Manufactured finished goods consist primarily of build-to-order and build-to-stock products.

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We purchase components from a variety of suppliers and use several contract manufacturers to provide manufacturing services for our products. During the normal course of business, in order to manage manufacturing lead times and help ensure adequate component supply, we enter into agreements with contract manufacturers and suppliers that allow them to procure inventory based upon criteria as defined by us or that establish the parameters defining our requirements and our commitment to securing manufacturing capacity. A significant portion of our reported purchase commitments arising from these agreements are firm, noncancelable, and unconditional commitments. In certain instances, these agreements allow us the option to cancel, reschedule, and adjust our requirements based on our business needs prior to firm orders being placed. Our purchase commitments are for short-term product manufacturing requirements as well as for commitments to suppliers to secure manufacturing capacity.

We record a liability, included in other current liabilities, for firm, noncancelable, and unconditional purchase commitments for quantities in excess of our future demand forecasts consistent with the valuation of our excess and obsolete inventory. The purchase commitments for inventory are expected to be primarily fulfilled within one year.

Inventory and supply chain management remain areas of focus as we balance the need to maintain supply chain flexibility to help ensure competitive lead times with the risk of inventory obsolescence because of rapidly changing technology and customer requirements. We believe the amount of our inventory and purchase commitments is appropriate for our revenue levels.

Financing Receivables and Guarantees We measure our net balance sheet exposure position related to our financing receivables and financing guarantees by reducing the total of gross financing receivables and financing guarantees by the associated allowances for credit loss and deferred revenue. As of January 24, 2015, our net balance sheet exposure position related to financing receivables and financing guarantees was as follows (in millions):

	FINANCING RECEIVABLES												FINANCING GUARANTEES
January 24, 2015	Lease Receivables			Loan Receivables			Financed Service Contracts and Other			Total			Channel Partner			End-User Customers			Total			TOTAL
Financing receivables less unearned income	$	3,391		$	1,674		$	3,069		$	8,134		$	316		$	155		$	471		$	8,605
Allowance for credit loss	(250		)	(85		)	(40		)	(375		)	—			—			—			(375		)
Deferred revenue	(10		)	(13		)	(1,530		)	(1,553		)	(148		)	(121		)	(269		)	(1,822		)
Net balance sheet exposure	$	3,131		$	1,576		$	1,499		$	6,206		$	168		$	34		$	202		$	6,408

Financing ReceivablesFinancing receivables less unearned income decreased by 3% compared with the end of fiscal 2014. The change was primarily due to a 4% decrease in both lease receivables and financed service contracts and other, as well as a 1% decrease in loan receivables. We provide financing to certain end-user customers and channel partners to enable sales of our products, services, and networking solutions. These financing arrangements include leases, financed service contracts, and loans. Arrangements related to leases are generally collateralized by a security interest in the underlying assets. Lease receivables include sales-type and direct-financing leases. We also provide certain qualified customers financing for long-term service contracts, which primarily relate to technical support services and advanced services. Our loan financing arrangements may include not only financing the acquisition of our products and services but also providing additional funds for other costs associated with network installation and integration of our products and services. We expect to continue to expand the use of our financing programs in the near term.

Financing GuaranteesIn the normal course of business, third parties may provide financing arrangements to our customers and channel partners under financing programs. The financing arrangements to customers provided by third parties are related to leases and loans and typically have terms of up to three years. In some cases, we provide guarantees to third parties for these lease and loan arrangements. The financing arrangements to channel partners consist of revolving short-term financing provided by third parties, generally with payment terms ranging from 60 to 90 days. In certain instances, these financing arrangements result in a transfer of our receivables to the third party. The receivables are derecognized upon transfer, as these transfers qualify as true sales, and we receive payments for the receivables from the third party based on our standard payment terms. These financing arrangements facilitate the working capital requirements of the channel partners, and in some cases, we guarantee a portion of these arrangements. We could be called upon to make payments under these guarantees in the event of nonpayment by the channel partners or end-user customers. Historically, our payments under these arrangements have been immaterial. Where we provide a guarantee, we defer the revenue associated with the channel partner and end-user financing arrangement in accordance with revenue recognition policies, or we record a liability for the fair value of the guarantees. In either case, the deferred revenue is recognized as revenue when the guarantee is removed.

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Deferred Revenue Related to Financing Receivables and GuaranteesThe majority of the deferred revenue in the preceding table is related to financed service contracts. The majority of the revenue related to financed service contracts, which primarily relates to technical support services, is deferred as the revenue related to financed service contracts is recognized ratably over the period during which the related services are to be performed. A portion of the revenue related to lease and loan receivables is also deferred and included in deferred product revenue based on revenue recognition criteria not currently having been met.

Borrowings

Senior NotesThe following table summarizes the principal amount of our senior notes (in millions):

	Maturity Date	January 24, 2015		July 26, 2014
Senior notes:
Floating-rate notes:
Three-month LIBOR plus 0.05%	September 3, 2015	$	850	$	850
Three-month LIBOR plus 0.28%	March 3, 2017	1,000		1,000
Three-month LIBOR plus 0.50%	March 1, 2019	500		500
Fixed-rate notes:
2.90%	November 17, 2014	—		500
5.50%	February 22, 2016	3,000		3,000
1.10%	March 3, 2017	2,400		2,400
3.15%	March 14, 2017	750		750
4.95%	February 15, 2019	2,000		2,000
2.125%	March 1, 2019	1,750		1,750
4.45%	January 15, 2020	2,500		2,500
2.90%	March 4, 2021	500		500
3.625%	March 4, 2024	1,000		1,000
5.90%	February 15, 2039	2,000		2,000
5.50%	January 15, 2040	2,000		2,000
Total		$	20,250	$	20,750

Interest is payable semiannually on each class of the senior fixed-rate notes, each of which is redeemable by us at any time, subject to a make-whole premium. Interest is payable quarterly on the floating-rate notes. We were in compliance with all debt covenants as of January 24, 2015.

On November 17, 2014, upon the maturity of our 2014 Fixed-Rate Notes (2.90%), we repaid an aggregate principal amount of $500 million.

Other Debt Other debt as of January 24, 2015 and July 26, 2014 included secured borrowings associated with customer financing arrangements. The amount of borrowings outstanding under these arrangements was $7 millionand $12 million as of January 24, 2015 and July 26, 2014, respectively.

Commercial Paper In fiscal 2011, we established a short-term debt financing program of up to $3.0 billion through the issuance of commercial paper notes. We use the proceeds from the issuance of commercial paper notes for general corporate purposes. We had no commercial paper notes outstanding as of each of January 24, 2015 and July 26, 2014.

Credit Facility On February 17, 2012, we entered into a credit agreement with certain institutional lenders that provides for a $3.0 billion unsecured revolving credit facility that is scheduled to expire on February 17, 2017. Any advances under the credit agreement will accrue interest at rates that are equal to, based on certain conditions, either (i) the higher of the Federal Funds rate plus 0.50%, Bank of America’s “prime rate” as announced from time to time, or one-month LIBOR plus 1.00% or (ii) LIBOR plus a margin that is based on our senior debt credit ratings as published by Standard & Poor’s Financial Services, LLC and Moody’s Investors Service, Inc. The credit agreement requires that we comply with certain covenants, including that we maintain an interest coverage ratio as defined in the agreement. As of January 24, 2015, we were in compliance with the required interest coverage ratio and the other covenants, and we had not borrowed any funds under the credit facility.

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We may also, upon the agreement of either the existing lenders or additional lenders not currently parties to the agreement, increase the commitments under the credit facility by up to an additional $2.0 billion and/or extend the expiration date of the credit facility by up to two additional years, or up to February 17, 2019.

Deferred Revenue   The following table presents the breakdown of deferred revenue (in millions):

	January 24, 2015		July 26, 2014		Increase (Decrease)
Service	$	9,020	$	9,640	$	(620	)
Product	5,001		4,502		499
Total	$	14,021	$	14,142	$	(121	)
Reported as:
Current	$	9,369	$	9,478	$	(109	)
Noncurrent	4,652		4,664		(12		)
Total	$	14,021	$	14,142	$	(121	)

The 6% decrease in deferred service revenue was driven by the timing of multiyear arrangements, an increase in customers paying technical support service contracts over time and the impact of ongoing amortization of deferred service revenue. The 11% increase in deferred product revenue was primarily due to increased deferrals related to subscription revenue arrangements and also was due, to a lesser extent, to an increase in shipments not having met revenue recognition criteria as of January 24, 2015.

Contractual Obligations

Operating Leases

We lease office space in many U.S. locations. Outside the United States, larger leased sites include sites in Belgium, Canada, China, France, Germany, India, Israel, Japan, Norway, and the United Kingdom. We also lease equipment and vehicles. The future minimum lease payments under all of our noncancelable operating leases with an initial term in excess of one year as of January 24, 2015 were $1.1 billion.

Other Commitments

In connection with our business combinations and asset purchases, we have agreed to pay certain additional amounts contingent upon the achievement of certain agreed-upon technology, development, product, or other milestones or the continued employment with us of certain employees of the acquired entities. See Note 12 to the Consolidated Financial Statements.

Insieme Networks, Inc.In the third quarter of fiscal 2012, we made an investment in Insieme, an early stage company focused on research and development in the data center market. As set forth in the agreement between Cisco and Insieme, this investment included $100 million of funding and a license to certain of our technology. Immediately prior to the call option exercise and acquisition described below, we owned approximately 83% of Insieme as a result of these investments and have consolidated the results of Insieme in our Consolidated Financial Statements. In connection with this investment, we entered into a put/call option agreement that provided us with the right to purchase the remaining interests in Insieme. In addition, the noncontrolling interest holders could require us to purchase their shares upon the occurrence of certain events.

During the first quarter of fiscal 2014, we exercised our call option and entered into an agreement to purchase the remaining interests in Insieme. The acquisition closed in the second quarter of fiscal 2014, at which time the former noncontrolling interest holders became eligible to receive up to two milestone payments, which will be determined using agreed-upon formulas based primarily on revenue for certain of Insieme’s products. During the six months endedJanuary 24, 2015 and January 25, 2014, we recorded compensation expense of $104 million and $311 million, respectively, related to the fair value of the vested portion of amounts that are expected to be earned by the former noncontrolling interest holders. Continued vesting and changes to the fair value of the amounts probable of being earned will result in adjustments to the recorded compensation expense in future periods. Based on the terms of the agreement, we have determined that the maximum amount that could be recorded as compensation expense by us is approximately $845 million (which includes the $520 million that has been expensed to date), net of forfeitures. The milestone payments, if earned, are expected to be paid primarily during fiscal 2016 and fiscal 2017.

Other Funding Commitments We also have certain funding commitments primarily related to our investments in privately held companies and venture funds, some of which are based on the achievement of certain agreed-upon milestones, and some of which are required to be funded on demand. The funding commitments were $230 million as of January 24, 2015, compared with $255 million as of July 26, 2014.

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Off-Balance Sheet Arrangements

We consider our investments in unconsolidated variable interest entities to be off-balance sheet arrangements. In the ordinary course of business, we have investments in privately held companies and provide financing to certain customers. These privately held companies and customers may be considered to be variable interest entities. We evaluate on an ongoing basis our investments in these privately held companies and customer financings, and we have determined that as of January 24, 2015 there were no material unconsolidated variable interest entities.

On an ongoing basis, we reassess our investments in privately held companies and customer financings to determine if they are variable interest entities and if we would be regarded as the primary beneficiary pursuant to the applicable accounting guidance. As a result of this ongoing assessment, we may be required to make additional disclosures or consolidate these entities. Because we may not control these entities, we may not have the ability to influence these events.

We provide financing guarantees, which are generally for various third-party financing arrangements extended to our channel partners and end-user customers. We could be called upon to make payments under these guarantees in the event of nonpayment by the channel partners or end-user customers. See the previous discussion of these financing guarantees under “Financing Receivables and Guarantees.”

Securities Lending

We periodically engage in securities lending activities with certain of our available-for-sale investments. These transactions are accounted for as a secured lending of the securities, and the securities are typically loaned only on an overnight basis. The average daily balance of securities lending for the six months endedJanuary 24, 2015 and January 25, 2014 was $0.6 billionand $0.9 billion, respectively. We require collateral equal to at least 102% of the fair market value of the loaned security and that the collateral be in the form of cash or liquid, high-quality assets. We engage in these secured lending transactions only with highly creditworthy counterparties, and the associated portfolio custodian has agreed to indemnify us against collateral losses. As of January 24, 2015 and July 26, 2014, we had no outstanding securities lending transactions. We believe these arrangements do not present a material risk or impact to our liquidity requirements.

Liquidity and Capital Resource Requirements

Based on past performance and current expectations, we believe our cash and cash equivalents, investments, cash generated from operations, and ability to access capital markets and committed credit lines will satisfy, through at least the next 12 months, our liquidity requirements, both in total and domestically, including the following: working capital needs, capital expenditures, investment requirements, stock repurchases, cash dividends, contractual obligations, commitments, principal and interest payments on debt, future customer financings, and other liquidity requirements associated with our operations. There are no other transactions, arrangements, or relationships with unconsolidated entities or other persons that are reasonably likely to materially affect the liquidity and the availability of, as well as our requirements for, capital resources.  

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

Our financial position is exposed to a variety of risks, including interest rate risk, equity price risk, and foreign currency exchange risk.

Interest Rate Risk

Fixed Income Securities We maintain an investment portfolio of various holdings, types, and maturities. Our primary objective for holding fixed income securities is to achieve an appropriate investment return consistent with preserving principal and managing risk. At any time, a sharp rise in market interest rates could have a material adverse impact on the fair value of our fixed income investment portfolio. Conversely, declines in interest rates, including the impact from lower credit spreads, could have a material adverse impact on interest income for our investment portfolio. We may utilize derivative instruments designated as hedging instruments to achieve our investment objectives. We had no outstanding hedging instruments for our fixed income securities as of January 24, 2015. Our fixed income investments are held for purposes other than trading. Our fixed income investments are not leveraged as of January 24, 2015. We monitor our interest rate and credit risks, including our credit exposures to specific rating categories and to individual issuers. As of January 24, 2015, approximately 70% of our fixed income securities balance consisted of U.S. government and U.S. government agency securities. We believe the overall credit quality of our portfolio is strong.

Financing Receivables As of January 24, 2015, our financing receivables had a carrying value of $7.8 billion, compared with $8.1 billion as of July 26, 2014. As of January 24, 2015, a hypothetical 50 basis points (“BPS”) increase or decrease in market interest rates would change the fair value of our financing receivables by a decrease or increase of approximately $0.1 billion, respectively.

Debt As of January 24, 2015, we had $20.3 billion in principal amount of senior notes outstanding, which consisted of $2.4 billion floating-rate notes and $17.9 billion fixed-rate notes. The carrying amount of the senior notes was $20.5 billion, and the related fair value based on market prices was $22.3 billion. As of January 24, 2015, a hypothetical 50 BPS increase or decrease in market interest rates would change the fair value of the fixed-rate debt, excluding the $10.4 billion of hedged debt, by a decrease or increase of approximately $0.4 billion, respectively. However, this hypothetical change in interest rates would not impact the interest expense on the fixed-rate debt that is not hedged.

Equity Price Risk

The fair value of our equity investments in publicly traded companies is subject to market price volatility. We may hold equity securities for strategic purposes or to diversify our overall investment portfolio. Our equity portfolio consists of securities with characteristics that most closely match the Standard & Poor’s 500 Index or NASDAQ Composite Index. These equity securities are held for purposes other than trading. To manage our exposure to changes in the fair value of certain equity securities, we may enter into equity derivatives designated as hedging instruments.

Publicly Traded Equity Securities The following tables present the hypothetical fair values of publicly traded equity securities as a result of selected potential decreases and increases in the price of each equity security in the portfolio, excluding hedged equity securities, if any. Potential fluctuations in the price of each equity security in the portfolio of plus or minus 10%, 20%, and 30% were selected based on potential near-term changes in those security prices. The hypothetical fair values as of January 24, 2015 and July 26, 2014 are as follows (in millions):

	VALUATION OF SECURITIES GIVEN AN X% DECREASE IN EACH STOCK’S PRICE						FAIR VALUE AS OF JANUARY 24, 2015		VALUATION OF SECURITIES GIVEN AN X% INCREASE IN EACH STOCK’S PRICE
	(30)%		(20)%		(10)%				10%		20%		30%
Publicly traded equity securities	$	1,063	$	1,215	$	1,367	$	1,519	$	1,671	$	1,823	$	1,975

	VALUATION OF SECURITIES GIVEN AN X% DECREASE IN EACH STOCK’S PRICE						FAIR VALUE AS OF JULY 26, 2014		VALUATION OF SECURITIES GIVEN AN X% INCREASE IN EACH STOCK’S PRICE
	(30)%		(20)%		(10)%				10%		20%		30%
Publicly traded equity securities	$	1,144	$	1,307	$	1,471	$	1,634	$	1,797	$	1,961	$	2,124

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Investments in Privately Held Companies We have also invested in privately held companies. These investments are recorded in other assets in our Consolidated Balance Sheets and are accounted for using primarily either the cost or the equity method. As of January 24, 2015, the total carrying amount of our investments in privately held companies was $857 million, compared with $899 million at July 26, 2014. Some of the privately held companies in which we invested are in the startup or development stages. These investments are inherently risky because the markets for the technologies or products these companies are developing are typically in the early stages and may never materialize. We could lose our entire investment in these companies. Our evaluation of investments in privately held companies is based on the fundamentals of the businesses invested in, including, among other factors, the nature of their technologies and potential for financial return.

Foreign Currency Exchange Risk

Our foreign exchange forward and option contracts outstanding as of respective period-ends are summarized in U.S. dollar equivalents as follows (in millions):

	January 24, 2015					July 26, 2014
	Notional Amount		Fair Value			Notional Amount		Fair Value
Forward contracts:
Purchased	$	2,038	$	(41	)	$	2,635	$	(3	)
Sold	$	563	$	4		$	896	$	2
Option contracts:
Purchased	$	671	$	—		$	494	$	5
Sold	$	554	$	(48	)	$	466	$	(2	)

We conduct business globally in numerous currencies. The direct effect of foreign currency fluctuations on revenue has not been material because our sales are primarily denominated in U.S. dollars. However, if the U.S. dollar strengthens relative to other currencies, such strengthening could have an indirect effect on our revenue to the extent it raises the cost of our products to non-U.S. customers and thereby reduces demand. A weaker U.S. dollar could have the opposite effect. However, the precise indirect effect of currency fluctuations is difficult to measure or predict because our sales are influenced by many factors in addition to the impact of such currency fluctuations.

Approximately 65% of our operating expenses are U.S.-dollar denominated. In the first six months of fiscal 2015, foreign currency fluctuations, net of hedging, decreased our combined R&D, sales and marketing, and G&A expenses by $56 million, or approximately 0.6%, compared with the first six months of fiscal 2014. To reduce variability in operating expenses and service cost of sales caused by non-U.S.-dollar denominated operating expenses and costs, we hedge certain forecasted foreign currency transactions with currency options and forward contracts. These hedging programs are not designed to provide foreign currency protection over long time horizons. In designing a specific hedging approach, we consider several factors, including offsetting exposures, significance of exposures, costs associated with entering into a particular hedge instrument, and potential effectiveness of the hedge. The gains and losses on foreign exchange contracts mitigate the effect of currency movements on our operating expenses and service cost of sales.

We also enter into foreign exchange forward and option contracts to reduce the short-term effects of foreign currency fluctuations on receivables and payables that are denominated in currencies other than the functional currencies of the entities. The market risks associated with these foreign currency receivables, investments, and payables relate primarily to variances from our forecasted foreign currency transactions and balances. Our forward and option contracts generally have the following maturities:

	Maturities
Forward and option contracts—forecasted transactions related to operating expenses and service cost of sales	Up to 18 months
Forward contracts—current assets and liabilities	Up to 3 months
Forward contracts—net investments in foreign subsidiaries	Up to 6 months
Forward contracts—long-term customer financings	Up to 2 years

We do not enter into foreign exchange forward or option contracts for trading purposes.

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Item 4. Controls and Procedures

Evaluation of disclosure controls and procedures. Based on our management’s evaluation (with the participation of our principal executive officer and principal financial officer), as of the end of the period covered by this report, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, (the “Exchange Act”)) are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms and is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in internal control over financial reporting. There was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during our second quarter of fiscal 2015 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

BrazilBrazilian authorities have investigated our Brazilian subsidiary and certain of its current and former employees, as well as a Brazilian importer of our products, and its affiliates and employees, relating to alleged evasion of import taxes and alleged improper transactions involving the subsidiary and the importer. Brazilian tax authorities have assessed claims against our Brazilian subsidiary based on a theory of joint liability with the Brazilian importer for import taxes, interest, and penalties. In addition to claims asserted by the Brazilian federal tax authorities in prior fiscal years, tax authorities from the Brazilian state of Sao Paulo have asserted similar claims on the same legal basis in prior fiscal years. In the first quarter of fiscal 2013, the Brazilian federal tax authorities asserted an additional claim against our Brazilian subsidiary based on a theory of joint liability with respect to an alleged underpayment of income taxes, social taxes, interest, and penalties by a Brazilian distributor.

The asserted claims by Brazilian federal tax authorities are for calendar years 2003 through 2008, and the asserted claims by the tax authorities from the state of Sao Paulo are for calendar years 2005 through 2007. The total asserted claims by Brazilian state and federal tax authorities aggregate to approximately $335 million for the alleged evasion of import and other taxes, approximately $1.3 billion for interest, and approximately $1.5 billion for various penalties, all determined using an exchange rate as of January 24, 2015. We have completed a thorough review of the matters and believe the asserted claims against our Brazilian subsidiary are without merit, and we are defending the claims vigorously. While we believe there is no legal basis for the alleged liability, due to the complexities and uncertainty surrounding the judicial process in Brazil and the nature of the claims asserting joint liability with the importer, we are unable to determine the likelihood of an unfavorable outcome against our Brazilian subsidiary and are unable to reasonably estimate a range of loss, if any. We do not expect a final judicial determination for several years.

Russia and the Commonwealth of Independent StatesAt the request of the U.S. Securities and Exchange Commission (SEC)and the U.S. Department of Justice, we are conducting an investigation into allegations which we and those agencies received regarding possible violations of the U.S. Foreign Corrupt Practices Act involving business activities of Cisco's operations in Russia and certain of the Commonwealth of Independent States, and by certain resellers of our products in those countries.  We take any such allegations very seriously and are fully cooperating with and sharing the results of our investigation with the SEC and the Department of Justice.  While the outcome of our investigation is currently not determinable, we do not expect that it will have a material adverse effect on our consolidated financial position, results of operations, or cash flows. The countries that are the subject of the investigation collectively comprise less than 2% of our revenues.

RockstarWeand some of our service provider customers were subject to patent claims asserted in December 2013 in the Eastern District of Texas and the District of Delaware by subsidiaries of the Rockstar Consortium (“Rockstar”). Rockstar, whose members include Apple, Microsoft, LM Ericsson, Sony, and Blackberry, had purchased a portfolio of patents out of the Nortel Networks’ bankruptcy proceedings (the “Nortel Portfolio”). In connection with this matter, during the first quarter of fiscal 2015 we recorded a charge to product cost of sales of $188 million.

In December 2014, RPX Corporation (“RPX”) and Rockstar entered into an agreement, which closed on January 28, 2015, resulting in over 30 technology companies, including Cisco and the various service provider customers described above, obtaining a license to the patents owned by Rockstar. We paid approximately $300 million in connection with this transaction, with the payment recorded against the amount previously reserved and as an intangible asset to be amortized over its estimated useful life. In connection with the closing of the transaction, Rockstar dismissed all litigation it had brought against the participating companies.

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In addition, we are subject to legal proceedings, claims, and litigation arising in the ordinary course of business, including intellectual property litigation. While the outcome of these matters is currently not determinable, we do not expect that the ultimate costs to resolve these matters will have a material adverse effect on our consolidated financial position, results of operations, or cash flows. For additional information regarding intellectual property litigation, see “Part II, Item 1A. Risk Factors-We may be found to infringe on intellectual property rights of others” herein.

Item 1A. Risk Factors

Set forth below and elsewhere in this report and in other documents we file with the SEC are descriptions of the risks and uncertainties that could cause our actual results to differ materially from the results contemplated by the forward-looking statements contained in this report. The descriptions below include any material changes to and supersede the description of the risk factors affecting our business previously disclosed in “Part I, Item 1A. Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended July 26, 2014.

OUR OPERATING RESULTS MAY FLUCTUATE IN FUTURE PERIODS, WHICH MAY ADVERSELY AFFECT OUR STOCK PRICE

Our operating results have been in the past, and will continue to be, subject to quarterly and annual fluctuations as a result of numerous factors, some of which may contribute to more pronounced fluctuations in an uncertain global economic environment. These factors include:

• Fluctuations in demand for our products and services, especially with respect to telecommunications service providers and Internet businesses, in part due to changes in the global economic environment

• Changes in sales and implementation cycles for our products and reduced visibility into our customers’ spending plans and associated revenue

• Our ability to maintain appropriate inventory levels and purchase commitments

• Price and product competition in the communications and networking industries, which can change rapidly due to technological innovation and different business models from various geographic regions

• The overall movement toward industry consolidation among both our competitors and our customers

• The introduction and market acceptance of new technologies and products and our success in new and evolving markets, including in our newer product categories such as data center and collaboration and in emerging technologies, as well as the adoption of new standards

• New business models for our offerings, such as XaaS, where costs are borne up front  while revenue is recognized over time

• Variations in sales channels, product costs, or mix of products sold

• The timing, size, and mix of orders from customers

• Manufacturing and customer lead times

• Fluctuations in our gross margins, and the factors that contribute to such fluctuations, as described below

• The ability of our customers, channel partners, contract manufacturers and suppliers to obtain financing or to fund capital expenditures, especially during a period of global credit market disruption or in the event of customer, channel partner, contract manufacturer or supplier financial problems

• Share-based compensation expense

• Actual events, circumstances, outcomes, and amounts differing from judgments, assumptions, and estimates used in determining the values of certain assets (including the amounts of related valuation allowances), liabilities, and other items reflected in our Consolidated Financial Statements

• How well we execute on our strategy and operating plans and the impact of changes in our business model that could result in significant restructuring charges

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• Our ability to achieve targeted cost reductions

• Benefits anticipated from our investments in engineering, sales, service, and marketing

• Changes in tax laws or accounting rules, or interpretations thereof

As a consequence, operating results for a particular future period are difficult to predict, and, therefore, prior results are not necessarily indicative of results to be expected in future periods. Any of the foregoing factors, or any other factors discussed elsewhere herein, could have a material adverse effect on our business, results of operations, and financial condition that could adversely affect our stock price.

OUR OPERATING RESULTS MAY BE ADVERSELY AFFECTED BY UNFAVORABLE ECONOMIC AND MARKET CONDITIONS AND THE UNCERTAIN GEOPOLITICAL ENVIRONMENT

Challenging economic conditions worldwide have from time to time contributed, and may continue to contribute, to slowdowns in the communications and networking industries at large, as well as in specific segments and markets in which we operate, resulting in:

• Reduced demand for our products as a result of continued constraints on IT-related capital spending by our customers, particularly service providers, and other customer markets as well

• Increased price competition for our products, not only from our competitors but also as a consequence of customers disposing of unutilized products

• Risk of excess and obsolete inventories

• Risk of supply constraints

• Risk of excess facilities and manufacturing capacity

• Higher overhead costs as a percentage of revenue and higher interest expense

The global macroeconomic environment has been challenging and inconsistent. Instability in the global credit markets, the impact of uncertainty regarding the U.S. federal budget including the effect of the sequestration beginning in 2013, global central bank monetary policy, the instability in the geopolitical environment in many parts of the world and other disruptions may continue to put pressure on global economic conditions. If global economic and market conditions, or economic conditions in key markets, remain uncertain or deteriorate further, we may experience material impacts on our business, operating results, and financial condition.

Our operating results in one or more segments may also be affected by uncertain or changing economic conditions particularly germane to that segment or to particular customer markets within that segment. For example, sales in several of our emerging countries decreased in recent periods, including the first half of fiscal 2015, and we expect that this weakness will continue for at least a few quarters.

In addition, reports of certain intelligence gathering methods of the U.S. government could affect customers’ perception of the products of IT companies which design and manufacture products in the United States. Trust and confidence in us as an IT supplier is critical to the development and growth of our markets. Impairment of that trust, or foreign regulatory actions taken in response to reports of certain intelligence gathering methods of the U.S. government, could affect the demand for our products from customers outside of the United States and could have an adverse effect on our operating results.

WE HAVE BEEN INVESTING AND EXPECT TO CONTINUE TO INVEST IN KEY GROWTH AREAS AS WELL AS MAINTAINING LEADERSHIP IN ROUTING, SWITCHING AND SERVICES, AND IF THE RETURN ON THESE INVESTMENTS IS LOWER OR DEVELOPS MORE SLOWLY THAN WE EXPECT, OUR OPERATING RESULTS MAY BE HARMED

We expect to realign and dedicate resources into key growth areas, such as data center virtualization, software, security, and cloud, while also focusing on maintaining leadership in routing, switching and services. However, the return on our investments may be lower, or may develop more slowly, than we expect. If we do not achieve the benefits anticipated from these investments (including if our selection of areas for investment does not play out as we expect), or if the achievement of these benefits is delayed, our operating results may be adversely affected.

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OUR REVENUE FOR A PARTICULAR PERIOD IS DIFFICULT TO PREDICT, AND A SHORTFALL IN REVENUE MAY HARM OUR OPERATING RESULTS

As a result of a variety of factors discussed in this report, our revenue for a particular quarter is difficult to predict, especially in light of a challenging and inconsistent global macroeconomic environment and related market uncertainty.

Our revenue may grow at a slower rate than in past periods, or decline as it did in fiscal 2014 on a year-over-year basis. Our ability to meet financial expectations could also be adversely affected if the nonlinear sales pattern seen in some of our past quarters recurs in future periods. We have experienced periods of time during which shipments have exceeded net bookings or manufacturing issues have delayed shipments, leading to nonlinearity in shipping patterns. In addition to making it difficult to predict revenue for a particular period, nonlinearity in shipping can increase costs, because irregular shipment patterns result in periods of underutilized capacity and periods in which overtime expenses may be incurred, as well as in potential additional inventory management-related costs. In addition, to the extent that manufacturing issues and any related component shortages result in delayed shipments in the future, and particularly in periods in which our contract manufacturers are operating at higher levels of capacity, it is possible that revenue for a quarter could be adversely affected if such matters occur and are not remediated within the same quarter.

The timing of large orders can also have a significant effect on our business and operating results from quarter to quarter, primarily in the United States and in emerging countries. From time to time, we receive large orders that have a significant effect on our operating results in the period in which the order is recognized as revenue. The timing of such orders is difficult to predict, and the timing of revenue recognition from such orders may affect period to period changes in revenue. As a result, our operating results could vary materially from quarter to quarter based on the receipt of such orders and their ultimate recognition as revenue.

Inventory management remains an area of focus. We have experienced longer than normal manufacturing lead times in the past which have caused some customers to place the same order multiple times within our various sales channels and to cancel the duplicative orders upon receipt of the product, or to place orders with other vendors with shorter manufacturing lead times. Such multiple ordering (along with other factors) or risk of order cancellation may cause difficulty in predicting our revenue and, as a result, could impair our ability to manage parts inventory effectively. In addition, our efforts to improve manufacturing lead-time performance may result in corresponding reductions in order backlog. A decline in backlog levels could result in more variability and less predictability in our quarter-to-quarter revenue and operating results. In addition, when facing component supply-related challenges, we have increased our efforts in procuring components in order to meet customer expectations which in turn contribute to an increase in purchase commitments. Increases in our purchase commitments to shorten lead times could also lead to excess and obsolete inventory charges if the demand for our products is less than our expectations.

We plan our operating expense levels based primarily on forecasted revenue levels. These expenses and the impact of long-term commitments are relatively fixed in the short term. A shortfall in revenue could lead to operating results being below expectations because we may not be able to quickly reduce these fixed expenses in response to short-term business changes.

Any of the above factors could have a material adverse impact on our operations and financial results.

WE EXPECT GROSS MARGIN TO VARY OVER TIME, AND OUR LEVEL OF PRODUCT GROSS MARGIN MAY NOT BE SUSTAINABLE

Our level of product gross margins declined in recent periods and may continue to decline and be adversely affected by numerous factors, including:

• Changes in customer, geographic, or product mix, including mix of configurations within each product group

• Introduction of new products, including products with price-performance advantages, and new business models for our offerings such as XaaS

• Our ability to reduce production costs

• Entry into new markets or growth in lower margin markets, including markets with different pricing and cost structures, through acquisitions or internal development

• Sales discounts

• Increases in material, labor or other manufacturing-related costs, which could be significant especially during periods of supply constraints

• Excess inventory and inventory holding charges

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• Obsolescence charges

• Changes in shipment volume

• The timing of revenue recognition and revenue deferrals

• Increased cost, loss of cost savings or dilution of savings due to changes in component pricing or charges incurred due to inventory holding periods if parts ordering does not correctly anticipate product demand or if the financial health of either contract manufacturers or suppliers deteriorates

• Lower than expected benefits from value engineering

• Increased price competition, including competitors from Asia, especially from China

• Changes in distribution channels

• Increased warranty costs

• Increased amortization of purchased intangible assets, especially from acquisitions

• How well we execute on our strategy and operating plans

Changes in service gross margin may result from various factors such as changes in the mix between technical support services and advanced services, as well as the timing of technical support service contract initiations and renewals and the addition of personnel and other resources to support higher levels of service business in future periods.

SALES TO THE SERVICE PROVIDER MARKET ARE ESPECIALLY VOLATILE, AND WEAKNESS IN SALES ORDERS FROM THIS INDUSTRY MAY HARM OUR OPERATING RESULTS AND FINANCIAL CONDITION

Sales to the service provider market have been characterized by large and sporadic purchases, especially relating to our router sales and sales of certain products in our newer product categories such as Data Center, Collaboration, and Service Provider Video, in addition to longer sales cycles. At various times in the past including fiscal 2014 and the first quarter of fiscal 2015, we experienced significant weakness in sales to service providers, sometimes lasting over extended periods of time as market conditions have fluctuated. We expect that the weakness we experienced in fiscal 2014 and the first half of fiscal 2015 will continue for at least a few quarters. Sales activity in this industry depends upon the stage of completion of expanding network infrastructures; the availability of funding; and the extent to which service providers are affected by regulatory, economic, and business conditions in the country of operations. Weakness in orders from this industry, including as a result of any slowdown in capital expenditures by service providers (which may be more prevalent during a global economic downturn or periods of economic uncertainty), could have a material adverse effect on our business, operating results, and financial condition. Such slowdowns may continue or recur in future periods. Orders from this industry could decline for many reasons other than the competitiveness of our products and services within their respective markets. For example, in the past, many of our service provider customers have been materially and adversely affected by slowdowns in the general economy, by overcapacity, by changes in the service provider market, by regulatory developments, and by constraints on capital availability, resulting in business failures and substantial reductions in spending and expansion plans. These conditions have materially harmed our business and operating results in the past, and some of these or other conditions in the service provider market could affect our business and operating results in any future period. Finally, service provider customers typically have longer implementation cycles; require a broader range of services, including design services; demand that vendors take on a larger share of risks; often require acceptance provisions, which can lead to a delay in revenue recognition; and expect financing from vendors. All these factors can add further risk to business conducted with service providers.

DISRUPTION OF OR CHANGES IN OUR DISTRIBUTION MODEL COULD HARM OUR SALES AND MARGINS

If we fail to manage distribution of our products and services properly, or if our distributors’ financial condition or operations weaken, our revenue and gross margins could be adversely affected.

A substantial portion of our products and services is sold through our channel partners, and the remainder is sold through direct sales. Our channel partners include systems integrators, service providers, other resellers, and distributors. Systems integrators and service providers typically sell directly to end users and often provide system installation, technical support, professional services, and other support services in addition to network equipment sales. Systems integrators also typically integrate our products into an overall solution, and a number of service providers are also systems integrators. Distributors stock inventory and typically sell to systems integrators, service providers, and other resellers. We refer to sales through distributors as our two-tier system of

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sales to the end customer. Revenue from distributors is generally recognized based on a sell-through method using information provided by them. These distributors are generally given business terms that allow them to return a portion of inventory, receive credits for changes in selling prices, and participate in various cooperative marketing programs. If sales through indirect channels increase, this may lead to greater difficulty in forecasting the mix of our products and, to a degree, the timing of orders from our customers.

Historically, we have seen fluctuations in our gross margins based on changes in the balance of our distribution channels. Although variability to date has not been significant, there can be no assurance that changes in the balance of our distribution model in future periods would not have an adverse effect on our gross margins and profitability.

Some factors could result in disruption of or changes in our distribution model, which could harm our sales and margins, including the following:

• We compete with some of our channel partners, including through our direct sales, which may lead these channel partners to use other suppliers that do not directly sell their own products or otherwise compete with them

• Some of our channel partners may demand that we absorb a greater share of the risks that their customers may ask them to bear

• Some of our channel partners may have insufficient financial resources and may not be able to withstand changes and challenges in business conditions

• Revenue from indirect sales could suffer if our distributors’ financial condition or operations weaken

In addition, we depend on our channel partners globally to comply with applicable regulatory requirements. To the extent that they fail to do so, that could have a material adverse effect on our business, operating results, and financial condition. Further, sales of our products outside of agreed territories can result in disruption to our distribution channels.

THE MARKETS IN WHICH WE COMPETE ARE INTENSELY COMPETITIVE, WHICH COULD ADVERSELY AFFECT OUR ACHIEVEMENT OF REVENUE GROWTH

The markets in which we compete are characterized by rapid change, converging technologies, and a migration to networking and communications solutions that offer relative advantages. These market factors represent a competitive threat to us. We compete with numerous vendors in each product category. The overall number of our competitors providing niche product solutions may increase. Also, the identity and composition of competitors may change as we increase our activity in newer product categories such as data center and collaboration and in key growth areas. For example, as products related to network programmability, such as software-defined-networking products, become more prevalent, we expect to face increased competition from companies who develop networking products based on commoditized hardware, referred to as "white box" hardware, to the extent customers decide to purchase those product offerings instead of ours. In addition, the growth in demand for technology delivered as a service enables new competitors to enter the market.

As we continue to expand globally, we may see new competition in different geographic regions. In particular, we have experienced price-focused competition from competitors in Asia, especially from China, and we anticipate this will continue. Our competitors include Alcatel-Lucent; Amazon Web Services LLC; Arista Networks, Inc.; ARRIS Group, Inc.; Aruba Networks, Inc.; Avaya Inc.; Brocade Communications Systems, Inc.; Check Point Software Technologies Ltd.; Citrix Systems, Inc.; Dell Inc.; LM Ericsson Telephone Company; Extreme Networks, Inc.; F5 Networks, Inc.; FireEye, Inc.; Fortinet, Inc.; Hewlett-Packard Company; Huawei Technologies Co., Ltd.; International Business Machines Corporation; Juniper Networks, Inc.; Lenovo Group Limited; Microsoft Corporation; Palo Alto Networks, Inc.; Polycom, Inc.; Riverbed Technology, Inc.; Ruckus Wireless, Inc.; Symantec Corporation; and VMware, Inc.; among others.

Some of these companies compete across many of our product lines, while others are primarily focused in a specific product area. Barriers to entry are relatively low, and new ventures to create products that do or could compete with our products are regularly formed. In addition, some of our competitors may have greater resources, including technical and engineering resources, than we do. As we expand into new markets, we will face competition not only from our existing competitors but also from other competitors, including existing companies with strong technological, marketing, and sales positions in those markets. We also sometimes face competition from resellers and distributors of our products. Companies with whom we have strategic alliances in some areas may be competitors in other areas, and in our view this trend may increase.

For example, the enterprise data center is undergoing a fundamental transformation arising from the convergence of technologies, including computing, networking, storage, and software, that previously were segregated. Due to several factors, including the availability of highly scalable and general purpose microprocessors, application-specific integrated circuits offering advanced services, standards based protocols, cloud computing and virtualization, the convergence of technologies within the enterprise

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data center is spanning multiple, previously independent, technology segments. Also, some of our current and potential competitors for enterprise data center business have made acquisitions, or announced new strategic alliances, designed to position them to provide end-to-end technology solutions for the enterprise data center. As a result of all of these developments, we face greater competition in the development and sale of enterprise data center technologies, including competition from entities that are among our long-term strategic alliance partners. Companies that are strategic alliance partners in some areas of our business may acquire or form alliances with our competitors, thereby reducing their business with us.

The principal competitive factors in the markets in which we presently compete and may compete in the future include:

• The ability to provide a broad range of networking and communications products and services

• Product performance

• Price

• The ability to introduce new products, including products with price-performance advantages

• The ability to reduce production costs

• The ability to provide value-added features such as security, reliability, and investment protection

• Conformance to standards

• Market presence

• The ability to provide financing

• Disruptive technology shifts and new business models

We also face competition from customers to which we license or supply technology and suppliers from which we transfer technology. The inherent nature of networking requires interoperability. As such, we must cooperate and at the same time compete with many companies. Any inability to effectively manage these complicated relationships with customers, suppliers, and strategic alliance partners could have a material adverse effect on our business, operating results, and financial condition and accordingly affect our chances of success.

OUR INVENTORY MANAGEMENT RELATING TO OUR SALES TO OUR TWO-TIER DISTRIBUTION CHANNEL IS COMPLEX, AND EXCESS INVENTORY MAY HARM OUR GROSS MARGINS

We must manage our inventory relating to sales to our distributors effectively, because inventory held by them could affect our results of operations. Our distributors may increase orders during periods of product shortages, cancel orders if their inventory is too high, or delay orders in anticipation of new products. They also may adjust their orders in response to the supply of our products and the products of our competitors that are available to them, and in response to seasonal fluctuations in end-user demand. Revenue to our distributors generally is recognized based on a sell-through method using information provided by them, and they are generally given business terms that allow them to return a portion of inventory, receive credits for changes in selling price, and participate in various cooperative marketing programs. Inventory management remains an area of focus as we balance the need to maintain strategic inventory levels to ensure competitive lead times against the risk of inventory obsolescence because of rapidly changing technology and customer requirements. When facing component supply-related challenges, we have increased our efforts in procuring components in order to meet customer expectations. If we ultimately determine that we have excess inventory, we may have to reduce our prices and write down inventory, which in turn could result in lower gross margins.

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SUPPLY CHAIN ISSUES, INCLUDING FINANCIAL PROBLEMS OF CONTRACT MANUFACTURERS OR COMPONENT SUPPLIERS, OR A SHORTAGE OF ADEQUATE COMPONENT SUPPLY OR MANUFACTURING CAPACITY THAT INCREASED OUR COSTS OR CAUSED A DELAY IN OUR ABILITY TO FULFILL ORDERS, COULD HAVE AN ADVERSE IMPACT ON OUR BUSINESS AND OPERATING RESULTS, AND OUR FAILURE TO ESTIMATE CUSTOMER DEMAND PROPERLY MAY RESULT IN EXCESS OR OBSOLETE COMPONENT SUPPLY, WHICH COULD ADVERSELY AFFECT OUR GROSS MARGINS

The fact that we do not own or operate the bulk of our manufacturing facilities and that we are reliant on our extended supply chain could have an adverse impact on the supply of our products and on our business and operating results:

• Any financial problems of either contract manufacturers or component suppliers could either limit supply or increase costs

• Reservation of manufacturing capacity at our contract manufacturers by other companies, inside or outside of our industry, could either limit supply or increase costs

A reduction or interruption in supply; a significant increase in the price of one or more components; a failure to adequately authorize procurement of inventory by our contract manufacturers; a failure to appropriately cancel, reschedule, or adjust our requirements based on our business needs; or a decrease in demand for our products could materially adversely affect our business, operating results, and financial condition and could materially damage customer relationships. Furthermore, as a result of binding price or purchase commitments with suppliers, we may be obligated to purchase components at prices that are higher than those available in the current market. In the event that we become committed to purchase components at prices in excess of the current market price when the components are actually used, our gross margins could decrease. We have experienced longer than normal lead times in the past. Although we have generally secured additional supply or taken other mitigation actions when significant disruptions have occurred, if similar situations occur in the future, they could have a material adverse effect on our business, results of operations, and financial condition. See the risk factor above entitled “Our revenue for a particular period is difficult to predict, and a shortfall in revenue may harm our operating results.”

Our growth and ability to meet customer demands depend in part on our ability to obtain timely deliveries of parts from our suppliers and contract manufacturers. We have experienced component shortages in the past, including shortages caused by manufacturing process issues, that have affected our operations. We may in the future experience a shortage of certain component parts as a result of our own manufacturing issues, manufacturing issues at our suppliers or contract manufacturers, capacity problems experienced by our suppliers or contract manufacturers, or strong demand in the industry for those parts. Growth in the economy is likely to create greater pressures on us and our suppliers to accurately project overall component demand and component demands within specific product categories and to establish optimal component levels and manufacturing capacity, especially for labor-intensive components, components for which we purchase a substantial portion of the supply, or the re-ramping of manufacturing capacity for highly complex products. During periods of shortages or delays the price of components may increase, or the components may not be available at all, and we may also encounter shortages if we do not accurately anticipate our needs. We may not be able to secure enough components at reasonable prices or of acceptable quality to build new products in a timely manner in the quantities or configurations needed. Accordingly, our revenue and gross margins could suffer until other sources can be developed. Our operating results would also be adversely affected if, anticipating greater demand than actually develops, we commit to the purchase of more components than we need, which is more likely to occur in a period of demand uncertainties such as we are currently experiencing. There can be no assurance that we will not encounter these problems in the future. Although in many cases we use standard parts and components for our products, certain components are presently available only from a single source or limited sources, and a global economic downturn and related market uncertainty could negatively impact the availability of components from one or more of these sources, especially during times such as we have recently seen when there are supplier constraints based on labor and other actions taken during economic downturns. We may not be able to diversify sources in a timely manner, which could harm our ability to deliver products to customers and seriously impact present and future sales.

We believe that we may be faced with the following challenges in the future:

• New markets in which we participate may grow quickly, which may make it difficult to quickly obtain significant component capacity

• As we acquire companies and new technologies, we may be dependent, at least initially, on unfamiliar supply chains or relatively small supply partners

• We face competition for certain components that are supply-constrained, from existing competitors, and companies in other markets

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Manufacturing capacity and component supply constraints could continue to be significant issues for us. We purchase components from a variety of suppliers and use several contract manufacturers to provide manufacturing services for our products. During the normal course of business, in order to improve manufacturing lead-time performance and to help ensure adequate component supply, we enter into agreements with contract manufacturers and suppliers that either allow them to procure inventory based upon criteria as defined by us or that establish the parameters defining our requirements. In certain instances, these agreements allow us the option to cancel, reschedule, and adjust our requirements based on our business needs prior to firm orders being placed. When facing component supply-related challenges, we have increased our efforts in procuring components in order to meet customer expectations which in turn contributes to an increase in purchase commitments. Increases in our purchase commitments to shorten lead times could also lead to excess and obsolete inventory charges if the demand for our products is less than our expectations. If we fail to anticipate customer demand properly, an oversupply of parts could result in excess or obsolete components that could adversely affect our gross margins. For additional information regarding our purchase commitments with contract manufacturers and suppliers, see Note 12 to the Consolidated Financial Statements.

WE DEPEND UPON THE DEVELOPMENT OF NEW PRODUCTS AND ENHANCEMENTS TO EXISTING PRODUCTS, AND IF WE FAIL TO PREDICT AND RESPOND TO EMERGING TECHNOLOGICAL TRENDS AND CUSTOMERS’ CHANGING NEEDS, OUR OPERATING RESULTS AND MARKET SHARE MAY SUFFER

The markets for our products are characterized by rapidly changing technology, evolving industry standards, new product introductions, and evolving methods of building and operating networks. Our operating results depend on our ability to develop and introduce new products into existing and emerging markets and to reduce the production costs of existing products. Many of our strategic initiatives and investments are aimed at meeting the requirements that a network capable of multiple-party, collaborative interaction would demand, and the investments we have made and our architectural approach are designed to enable the increased use of the network as the platform for all forms of communications and IT. For example, in fiscal 2009 we launched our Cisco Unified Computing System (UCS), our next-generation enterprise data center platform architected to unite computing, network, storage access and virtualization resources in a single system, which is designed to address the fundamental transformation occurring in the enterprise data center. While our Cisco UCS offering remains a significant focus area for us, several market transitions are also shaping our strategies and investments.

One such market transition we are focusing on is the move towards more programmable, flexible and virtual networks. In our view, this evolution is in its very early stages, and we believe the successful products and solutions in this market will combine application-specific integrated circuits (ASICs), hardware and software elements together. Other examples include our focus on the IoE market transition, a potentially significant transition in the IT industry, and a transition in cloud where we have announced plans to architect the Cisco Intercloud solution.

The process of developing new technology, including technology related to more programmable, flexible and virtual networks and technology related to other market transitions, including IoE and cloud, is complex and uncertain, and if we fail to accurately predict customers’ changing needs and emerging technological trends our business could be harmed. We must commit significant resources, including the investments we have been making in our priorities to developing new products before knowing whether our investments will result in products the market will accept. In particular, if our model of the evolution of networking does not emerge as we believe it will, or if the industry does not evolve as we believe it will, or if our strategy for addressing this evolution is not successful, many of our strategic initiatives and investments may be of no or limited value. For example, if we do not introduce products related to network programmability, such as software-defined-networking products, in a timely fashion, or if product offerings in this market that ultimately succeed are based on technology, or an approach to technology, that differs from ours, such as, for example, networking products based on “white box” hardware, our business could be harmed. Similarly, our business could be harmed if we fail to develop, or fail to develop in a timely fashion, offerings to address other transitions, or if the offerings addressing these other transitions that ultimately succeed are based on technology, or an approach to technology, different from ours.

Furthermore, we may not execute successfully on our vision or strategy because of challenges with regard to product planning and timing, technical hurdles that we fail to overcome in a timely fashion, or a lack of appropriate resources. This could result in competitors, some of which may also be our strategic alliance partners, providing those solutions before we do and loss of market share, revenue, and earnings. In addition, the growth in demand for technology delivered as a service enables new competitors to enter the market. The success of new products depends on several factors, including proper new product definition, component costs, timely completion and introduction of these products, differentiation of new products from those of our competitors, and market acceptance of these products. There can be no assurance that we will successfully identify new product opportunities, develop and bring new products to market in a timely manner, or achieve market acceptance of our products or that products and technologies developed by others will not render our products or technologies obsolete or noncompetitive. The products and technologies in our other product categories and key growth areas may not prove to have the market success we anticipate, and we may not successfully identify and invest in other emerging or new products.

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CHANGES IN INDUSTRY STRUCTURE AND MARKET CONDITIONS COULD LEAD TO CHARGES RELATED TO DISCONTINUANCES OF CERTAIN OF OUR PRODUCTS OR BUSINESSES, ASSET IMPAIRMENTS AND WORKFORCE REDUCTIONS OR RESTRUCTURINGS

In response to changes in industry and market conditions, we may be required to strategically realign our resources and to consider restructuring, disposing of, or otherwise exiting businesses. Any resource realignment, or decision to limit investment in or dispose of or otherwise exit businesses, may result in the recording of special charges, such as inventory and technology-related write-offs, workforce reduction or restructuring costs, charges relating to consolidation of excess facilities, or claims from third parties who were resellers or users of discontinued products. Our estimates with respect to the useful life or ultimate recoverability of our carrying basis of assets, including purchased intangible assets, could change as a result of such assessments and decisions. Although in certain instances our supply agreements allow us the option to cancel, reschedule, and adjust our requirements based on our business needs prior to firm orders being placed, our loss contingencies may include liabilities for contracts that we cannot cancel with contract manufacturers and suppliers. Further, our estimates relating to the liabilities for excess facilities are affected by changes in real estate market conditions. Additionally, we are required to perform goodwill impairment tests on an annual basis and between annual tests in certain circumstances, and future goodwill impairment tests may result in a charge to earnings.

In August 2014, as part of our strategy of continuing to invest in growth, innovation and talent, while also managing costs and driving efficiencies, we announced a restructuring plan. We began taking action under this plan in the first quarter of fiscal 2015. The implementation of this restructuring plan may be disruptive to our business, and following completion of the restructuring plan our business may not be more efficient or effective than prior to implementation of the plan. Our restructuring activities, including any related charges and the impact of the related headcount restructurings, could have a material adverse effect on our business, operating results, and financial condition.

OVER THE LONG TERM WE INTEND TO INVEST IN ENGINEERING, SALES, SERVICE AND MARKETING ACTIVITIES, AND THESE INVESTMENTS MAY ACHIEVE DELAYED, OR LOWER THAN EXPECTED, BENEFITS WHICH COULD HARM OUR OPERATING RESULTS

While we intend to focus on managing our costs and expenses, over the long term, we also intend to invest in personnel and other resources related to our engineering, sales, service and marketing functions as we realign and dedicate resources on key growth areas, such as data center virtualization, software, security, and cloud, and we also intend to focus on maintaining leadership in routing, switching and services. We are likely to recognize the costs associated with these investments earlier than some of the anticipated benefits, and the return on these investments may be lower, or may develop more slowly, than we expect. If we do not achieve the benefits anticipated from these investments, or if the achievement of these benefits is delayed, our operating results may be adversely affected.

OUR BUSINESS SUBSTANTIALLY DEPENDS UPON THE CONTINUED GROWTH OF THE INTERNET AND INTERNET-BASED SYSTEMS

A substantial portion of our business and revenue depends on growth and evolution of the Internet, including the continued development of the Internet and the anticipated transition to IoE, and on the deployment of our products by customers who depend on such continued growth and evolution. To the extent that an economic slowdown or uncertainty and related reduction in capital spending adversely affect spending on Internet infrastructure, including spending or investment related to IoE, we could experience material harm to our business, operating results, and financial condition.

Because of the rapid introduction of new products and changing customer requirements related to matters such as cost-effectiveness and security, we believe that there could be performance problems with Internet communications in the future, which could receive a high degree of publicity and visibility. Because we are a large supplier of networking products, our business, operating results, and financial condition may be materially adversely affected, regardless of whether or not these problems are due to the performance of our own products. Such an event could also result in a material adverse effect on the market price of our common stock independent of direct effects on our business.

WE HAVE MADE AND EXPECT TO CONTINUE TO MAKE ACQUISITIONS THAT COULD DISRUPT OUR OPERATIONS AND HARM OUR OPERATING RESULTS

Our growth depends upon market growth, our ability to enhance our existing products, and our ability to introduce new products on a timely basis. We intend to continue to address the need to develop new products and enhance existing products through acquisitions of other companies, product lines, technologies, and personnel. Acquisitions involve numerous risks, including the following:

• Difficulties in integrating the operations, systems, technologies, products, and personnel of the acquired companies, particularly companies with large and widespread operations and/or complex products, such as Scientific-Atlanta, WebEx, Starent, Tandberg and NDS Group Limited

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• Diversion of management’s attention from normal daily operations of the business and the challenges of managing larger and more widespread operations resulting from acquisitions

• Potential difficulties in completing projects associated with in-process research and development intangibles

• Difficulties in entering markets in which we have no or limited direct prior experience and where competitors in such markets have stronger market positions

• Initial dependence on unfamiliar supply chains or relatively small supply partners

• Insufficient revenue to offset increased expenses associated with acquisitions

• The potential loss of key employees, customers, distributors, vendors and other business partners of the companies we acquire following and continuing after announcement of acquisition plans

Acquisitions may also cause us to:

• Issue common stock that would dilute our current shareholders’ percentage ownership

• Use a substantial portion of our cash resources, or incur debt, as we did in fiscal 2006 when we issued and sold $6.5 billion in senior unsecured notes to fund our acquisition of Scientific-Atlanta

• Significantly increase our interest expense, leverage and debt service requirements if we incur additional debt to pay for an acquisition

• Assume liabilities

• Record goodwill and intangible assets that are subject to impairment testing on a regular basis and potential periodic impairment charges

• Incur amortization expenses related to certain intangible assets

• Incur tax expenses related to the effect of acquisitions on our intercompany R&D cost sharing arrangement and legal structure

• Incur large and immediate write-offs and restructuring and other related expenses

• Become subject to intellectual property or other litigation

Mergers and acquisitions of high-technology companies are inherently risky and subject to many factors outside of our control, and no assurance can be given that our previous or future acquisitions will be successful and will not materially adversely affect our business, operating results, or financial condition. Failure to manage and successfully integrate acquisitions could materially harm our business and operating results. Prior acquisitions have resulted in a wide range of outcomes, from successful introduction of new products and technologies to a failure to do so. Even when an acquired company has already developed and marketed products, there can be no assurance that product enhancements will be made in a timely fashion or that pre-acquisition due diligence will have identified all possible issues that might arise with respect to such products.

From time to time, we have made acquisitions that resulted in charges in an individual quarter. These charges may occur in any particular quarter, resulting in variability in our quarterly earnings. In addition, our effective tax rate for future periods is uncertain and could be impacted by mergers and acquisitions. Risks related to new product development also apply to acquisitions. Please see the risk factors above, including the risk factor entitled “We depend upon the development of new products and enhancements to existing products, and if we fail to predict and respond to emerging technological trends and customers’ changing needs, our operating results and market share may suffer” for additional information.

ENTRANCE INTO NEW OR DEVELOPING MARKETS EXPOSES US TO ADDITIONAL COMPETITION AND WILL LIKELY INCREASE DEMANDS ON OUR SERVICE AND SUPPORT OPERATIONS

As we focus on new market opportunities and key growth areas, we will increasingly compete with large telecommunications equipment suppliers as well as startup companies. Several of our competitors may have greater resources, including technical and engineering resources, than we do. Additionally, as customers in these markets complete infrastructure deployments, they may require greater levels of service, support, and financing than we have provided in the past, especially in emerging countries. Demand

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for these types of service, support, or financing contracts may increase in the future. There can be no assurance that we can provide products, service, support, and financing to effectively compete for these market opportunities.

Further, provision of greater levels of services, support and financing by us may result in a delay in the timing of revenue recognition. In addition, entry into other markets has subjected and will subject us to additional risks, particularly to those markets, including the effects of general market conditions and reduced consumer confidence. For example, as we add direct selling capabilities globally to meet changing customer demands, we will face increased legal and regulatory requirements.

INDUSTRY CONSOLIDATION MAY LEAD TO INCREASED COMPETITION AND MAY HARM OUR OPERATING RESULTS

There has been a trend toward industry consolidation in our markets for several years. We expect this trend to continue as companies attempt to strengthen or hold their market positions in an evolving industry and as companies are acquired or are unable to continue operations. For example, some of our current and potential competitors for enterprise data center business have made acquisitions, or announced new strategic alliances, designed to position them with the ability to provide end-to-end technology solutions for the enterprise data center. Companies that are strategic alliance partners in some areas of our business may acquire or form alliances with our competitors, thereby reducing their business with us. We believe that industry consolidation may result in stronger competitors that are better able to compete as sole-source vendors for customers. This could lead to more variability in our operating results and could have a material adverse effect on our business, operating results, and financial condition. Furthermore, particularly in the service provider market, rapid consolidation will lead to fewer customers, with the effect that loss of a major customer could have a material impact on results not anticipated in a customer marketplace composed of more numerous participants.

PRODUCT QUALITY PROBLEMS COULD LEAD TO REDUCED REVENUE, GROSS MARGINS, AND NET INCOME

We produce highly complex products that incorporate leading-edge technology, including both hardware and software. Software typically contains bugs that can unexpectedly interfere with expected operations. There can be no assurance that our pre-shipment testing programs will be adequate to detect all defects, either ones in individual products or ones that could affect numerous shipments, which might interfere with customer satisfaction, reduce sales opportunities, or affect gross margins. From time to time, we have had to replace certain components and provide remediation in response to the discovery of defects or bugs in products that we had shipped. There can be no assurance that such remediation, depending on the product involved, would not have a material impact. An inability to cure a product defect could result in the failure of a product line, temporary or permanent withdrawal from a product or market, damage to our reputation, inventory costs, or product reengineering expenses, any of which could have a material impact on our revenue, margins, and net income. For example, in the second quarter of fiscal 2014, we recorded a pre-tax charge of $655 million related to the expected remediation costs for certain products sold in prior fiscal years containing memory components manufactured by a single supplier between 2005 and 2010.

DUE TO THE GLOBAL NATURE OF OUR OPERATIONS, POLITICAL OR ECONOMIC CHANGES OR OTHER FACTORS IN A SPECIFIC COUNTRY OR REGION COULD HARM OUR OPERATING RESULTS AND FINANCIAL CONDITION

We conduct significant sales and customer support operations in countries around the world. As such, our growth depends in part on our increasing sales into emerging countries. We also depend on non-U.S. operations of our contract manufacturers, component suppliers and distribution partners. Although sales in several of our emerging countries decreased in recent periods, including in fiscal 2014 and the first half of fiscal 2015, several of our emerging countries generally have been relatively fast growing, and we have announced plans to expand our commitments and expectations in certain of those countries. We expect that the weakness we experienced in recent periods in several emerging countries will continue for at least a few quarters. Our future results could be materially adversely affected by a variety of political, economic or other factors relating to our operations inside and outside the United States, including impacts from the U.S. federal budget including the effect of the sequestration beginning in 2013; global central bank monetary policy; issues related to the political relationship between the United States and other countries which can affect the willingness of customers in those countries to purchase products from companies headquartered in the United States; and the challenging and inconsistent global macroeconomic environment, any or all of which could have a material adverse effect on our operating results and financial condition, including, among others, the following:

• Foreign currency exchange rates

• Political or social unrest

• Economic instability or weakness or natural disasters in a specific country or region; environmental and trade protection measures and other legal and regulatory requirements, some of which may affect our ability to import our products, to export our products from, or sell our products in various countries

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• Political considerations that affect service provider and government spending patterns

• Health or similar issues, such as a pandemic or epidemic

• Difficulties in staffing and managing international operations

• Adverse tax consequences, including imposition of withholding or other taxes on our global operations

WE ARE EXPOSED TO THE CREDIT RISK OF SOME OF OUR CUSTOMERS AND TO CREDIT EXPOSURES IN WEAKENED MARKETS, WHICH COULD RESULT IN MATERIAL LOSSES

Most of our sales are on an open credit basis, with typical payment terms of 30 days in the United States and, because of local customs or conditions, longer in some markets outside the United States. We monitor individual customer payment capability in granting such open credit arrangements, seek to limit such open credit to amounts we believe the customers can pay, and maintain reserves we believe are adequate to cover exposure for doubtful accounts. Beyond our open credit arrangements, we have also experienced demands for customer financing and facilitation of leasing arrangements. We expect demand for customer financing to continue, and recently we have been experiencing an increase in this demand as the credit markets have been impacted by the challenging and inconsistent global macroeconomic environment, including increased demand from customers in certain emerging countries.

We believe customer financing is a competitive factor in obtaining business, particularly in serving customers involved in significant infrastructure projects. Our loan financing arrangements may include not only financing the acquisition of our products and services but also providing additional funds for other costs associated with network installation and integration of our products and services.

Our exposure to the credit risks relating to our financing activities described above may increase if our customers are adversely affected by a global economic downturn or periods of economic uncertainty. Although we have programs in place that are designed to monitor and mitigate the associated risk, including monitoring of particular risks in certain geographic areas, there can be no assurance that such programs will be effective in reducing our credit risks.

In the past, there have been significant bankruptcies among customers both on open credit and with loan or lease financing arrangements, particularly among Internet businesses and service providers, causing us to incur economic or financial losses. There can be no assurance that additional losses will not be incurred. Although these losses have not been material to date, future losses, if incurred, could harm our business and have a material adverse effect on our operating results and financial condition. A portion of our sales is derived through our distributors. These distributors are generally given business terms that allow them to return a portion of inventory, receive credits for changes in selling prices, and participate in various cooperative marketing programs. We maintain estimated accruals and allowances for such business terms. However, distributors tend to have more limited financial resources than other resellers and end-user customers and therefore represent potential sources of increased credit risk, because they may be more likely to lack the reserve resources to meet payment obligations. Additionally, to the degree that turmoil in the credit markets makes it more difficult for some customers to obtain financing, those customers’ ability to pay could be adversely impacted, which in turn could have a material adverse impact on our business, operating results, and financial condition.

WE ARE EXPOSED TO FLUCTUATIONS IN THE MARKET VALUES OF OUR PORTFOLIO INVESTMENTS AND IN INTEREST RATES; IMPAIRMENT OF OUR INVESTMENTS COULD HARM OUR EARNINGS

We maintain an investment portfolio of various holdings, types, and maturities. These securities are generally classified as available-for-sale and, consequently, are recorded on our Consolidated Balance Sheets at fair value with unrealized gains or losses reported as a component of accumulated other comprehensive income, net of tax. Our portfolio includes fixed income securities and equity investments in publicly traded companies, the values of which are subject to market price volatility to the extent unhedged. If such investments suffer market price declines, as we experienced with some of our investments in the past, we may recognize in earnings the decline in the fair value of our investments below their cost basis when the decline is judged to be other than temporary. For information regarding the sensitivity of and risks associated with the market value of portfolio investments and interest rates, refer to the section titled “Quantitative and Qualitative Disclosures About Market Risk.” Our investments in private companies are subject to risk of loss of investment capital. These investments are inherently risky because the markets for the technologies or products they have under development are typically in the early stages and may never materialize. We could lose our entire investment in these companies.

WE ARE EXPOSED TO FLUCTUATIONS IN CURRENCY EXCHANGE RATES THAT COULD NEGATIVELY IMPACT OUR FINANCIAL RESULTS AND CASH FLOWS

Because a significant portion of our business is conducted outside the United States, we face exposure to adverse movements in foreign currency exchange rates. These exposures may change over time as business practices evolve, and they could have a material adverse impact on our financial results and cash flows. Historically, our primary exposures have related to nondollar-

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denominated sales in Japan, Canada, and Australia and certain nondollar-denominated operating expenses and service cost of sales in Europe, Latin America, and Asia, where we sell primarily in U.S. dollars. Additionally, we have exposures to emerging market currencies, which can have extreme currency volatility. An increase in the value of the dollar could increase the real cost to our customers of our products in those markets outside the United States where we sell in dollars, and a weakened dollar could increase the cost of local operating expenses and procurement of raw materials to the extent that we must purchase components in foreign currencies.

Currently, we enter into foreign exchange forward contracts and options to reduce the short-term impact of foreign currency fluctuations on certain foreign currency receivables, investments, and payables. In addition, we periodically hedge anticipated foreign currency cash flows. Our attempts to hedge against these risks may result in an adverse impact on our net income.

OUR PROPRIETARY RIGHTS MAY PROVE DIFFICULT TO ENFORCE

We generally rely on patents, copyrights, trademarks, and trade secret laws to establish and maintain proprietary rights in our technology and products. Although we have been issued numerous patents and other patent applications are currently pending, there can be no assurance that any of these patents or other proprietary rights will not be challenged, invalidated, or circumvented or that our rights will, in fact, provide competitive advantages to us. Furthermore, many key aspects of networking technology are governed by industrywide standards, which are usable by all market entrants. In addition, there can be no assurance that patents will be issued from pending applications or that claims allowed on any patents will be sufficiently broad to protect our technology. In addition, the laws of some foreign countries may not protect our proprietary rights to the same extent as do the laws of the United States. The outcome of any actions taken in these foreign countries may be different than if such actions were determined under the laws of the United States. Although we are not dependent on any individual patents or group of patents for particular segments of the business for which we compete, if we are unable to protect our proprietary rights to the totality of the features (including aspects of products protected other than by patent rights) in a market, we may find ourselves at a competitive disadvantage to others who need not incur the substantial expense, time, and effort required to create innovative products that have enabled us to be successful.

WE MAY BE FOUND TO INFRINGE ON INTELLECTUAL PROPERTY RIGHTS OF OTHERS

Third parties, including customers, have in the past and may in the future assert claims or initiate litigation related to exclusive patent, copyright, trademark, and other intellectual property rights to technologies and related standards that are relevant to us. These assertions have increased over time as a result of our growth and the general increase in the pace of patent claims assertions, particularly in the United States. Because of the existence of a large number of patents in the networking field, the secrecy of some pending patents, and the rapid rate of issuance of new patents, it is not economically practical or even possible to determine in advance whether a product or any of its components infringes or will infringe on the patent rights of others. The asserted claims and/or initiated litigation can include claims against us or our manufacturers, suppliers, or customers, alleging infringement of their proprietary rights with respect to our existing or future products or components of those products. Regardless of the merit of these claims, they can be time-consuming, result in costly litigation and diversion of technical and management personnel, or require us to develop a non-infringing technology or enter into license agreements. Where claims are made by customers, resistance even to unmeritorious claims could damage customer relationships. There can be no assurance that licenses will be available on acceptable terms and conditions, if at all, or that our indemnification by our suppliers will be adequate to cover our costs if a claim were brought directly against us or our customers. Furthermore, because of the potential for high court awards that are not necessarily predictable, it is not unusual to find even arguably unmeritorious claims settled for significant amounts. If any infringement or other intellectual property claim made against us by any third party is successful, if we are required to indemnify a customer with respect to a claim against the customer, or if we fail to develop non-infringing technology or license the proprietary rights on commercially reasonable terms and conditions, our business, operating results, and financial condition could be materially and adversely affected. For additional information regarding our indemnification obligations, see Note 12(g) to the Consolidated Financial Statements.

Our exposure to risks associated with the use of intellectual property may be increased as a result of acquisitions, as we have a lower level of visibility into the development process with respect to such technology or the care taken to safeguard against infringement risks. Further, in the past, third parties have made infringement and similar claims after we have acquired technology that had not been asserted prior to our acquisition.

WE RELY ON THE AVAILABILITY OF THIRD-PARTY LICENSES

Many of our products are designed to include software or other intellectual property licensed from third parties. It may be necessary in the future to seek or renew licenses relating to various aspects of these products. There can be no assurance that the necessary licenses would be available on acceptable terms, if at all. The inability to obtain certain licenses or other rights or to obtain such licenses or rights on favorable terms, or the need to engage in litigation regarding these matters, could have a material adverse effect on our business, operating results, and financial condition. Moreover, the inclusion in our products of software or other

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intellectual property licensed from third parties on a nonexclusive basis could limit our ability to protect our proprietary rights in our products.

OUR OPERATING RESULTS MAY BE ADVERSELY AFFECTED AND DAMAGE TO OUR REPUTATION MAY OCCUR DUE TO PRODUCTION AND SALE OF COUNTERFEIT VERSIONS OF OUR PRODUCTS

As is the case with leading products around the world, our products are subject to efforts by third parties to produce counterfeit versions of our products. While we work diligently with law enforcement authorities in various countries to block the manufacture of counterfeit goods and to interdict their sale, and to detect counterfeit products in customer networks, and have succeeded in prosecuting counterfeiters and their distributors, resulting in fines, imprisonment and restitution to us, there can be no guarantee that such efforts will succeed.  While counterfeiters often aim their sales at customers who might not have otherwise purchased our products due to lack of verifiability of origin and service, such counterfeit sales, to the extent they replace otherwise legitimate sales, could adversely affect our operating results.

OUR OPERATING RESULTS AND FUTURE PROSPECTS COULD BE MATERIALLY HARMED BY UNCERTAINTIES OF REGULATION OF THE INTERNET

Currently, few laws or regulations apply directly to access or commerce on the Internet. We could be materially adversely affected by regulation of the Internet and Internet commerce in any country where we operate. Such regulations could include matters such as voice over the Internet or using IP, encryption technology, sales or other taxes on Internet product or service sales, and access charges for Internet service providers. The adoption of regulation of the Internet and Internet commerce could decrease demand for our products and, at the same time, increase the cost of selling our products, which could have a material adverse effect on our business, operating results, and financial condition.

CHANGES IN TELECOMMUNICATIONS REGULATION AND TARIFFS COULD HARM OUR PROSPECTS AND FUTURE SALES

Changes in telecommunications requirements, or regulatory requirements in other industries in which we operate, in the United States or other countries could affect the sales of our products. In particular, we believe that there may be future changes in U.S. telecommunications regulations that could slow the expansion of the service providers’ network infrastructures and materially adversely affect our business, operating results, and financial condition, including proposed "net neutrality" rules to the extent they impact decisions on investment in network infrastructure.

Future changes in tariffs by regulatory agencies or application of tariff requirements to currently untariffed services could affect the sales of our products for certain classes of customers. Additionally, in the United States, our products must comply with various requirements and regulations of the Federal Communications Commission and other regulatory authorities. In countries outside of the United States, our products must meet various requirements of local telecommunications and other industry authorities. Changes in tariffs or failure by us to obtain timely approval of products could have a material adverse effect on our business, operating results, and financial condition.

FAILURE TO RETAIN AND RECRUIT KEY PERSONNEL WOULD HARM OUR ABILITY TO MEET KEY OBJECTIVES

Our success has always depended in large part on our ability to attract and retain highly skilled technical, managerial, sales, and marketing personnel. Competition for these personnel is intense, especially in the Silicon Valley area of Northern California. Stock incentive plans are designed to reward employees for their long-term contributions and provide incentives for them to remain with us. Volatility or lack of positive performance in our stock price or equity incentive awards, or changes to our overall compensation program, including our stock incentive program, resulting from the management of share dilution and share-based compensation expense or otherwise, may also adversely affect our ability to retain key employees. As a result of one or more of these factors, we may increase our hiring in geographic areas outside the United States, which could subject us to additional geopolitical and exchange rate risk. The loss of services of any of our key personnel; the inability to retain and attract qualified personnel in the future; or delays in hiring required personnel, particularly engineering and sales personnel, could make it difficult to meet key objectives, such as timely and effective product introductions. In addition, companies in our industry whose employees accept positions with competitors frequently claim that competitors have engaged in improper hiring practices. We have received these claims in the past and may receive additional claims to this effect in the future.

ADVERSE RESOLUTION OF LITIGATION OR GOVERNMENTAL INVESTIGATIONS MAY HARM OUR OPERATING RESULTS OR FINANCIAL CONDITION

We are a party to lawsuits in the normal course of our business. Litigation can be expensive, lengthy, and disruptive to normal business operations. Moreover, the results of complex legal proceedings are difficult to predict. For example, Brazilian authorities have investigated our Brazilian subsidiary and certain of its current and former employees, as well as a Brazilian importer of our products, and its affiliates and employees, relating to alleged evasion of import taxes and alleged improper transactions involving

88

the subsidiary and the importer. Brazilian tax authorities have assessed claims against our Brazilian subsidiary based on a theory of joint liability with the Brazilian importer for import taxes, interest, and penalties. In the first quarter of fiscal 2013, the Brazilian federal tax authorities asserted an additional claim against our Brazilian subsidiary based on a theory of joint liability with respect to an alleged underpayment of income taxes, social taxes, interest, and penalties by a Brazilian distributor. The asserted claims by Brazilian federal tax authorities are for calendar years 2003 through 2008 and the related asserted claims by the tax authorities from the state of Sao Paulo are for calendar years 2005 through 2007. The total asserted claims by Brazilian state and federal tax authorities aggregate to approximately $335 million for the alleged evasion of import and other taxes, approximately $1.3 billion for interest, and approximately $1.5 billion for various penalties, all determined using an exchange rate as of January 24, 2015. We have completed a thorough review of the matters and believe the asserted claims against our Brazilian subsidiary are without merit, and we are defending the claims vigorously. While we believe there is no legal basis for the alleged liability, due to the complexities and uncertainty surrounding the judicial process in Brazil and the nature of the claims asserting joint liability with the importer, we are unable to determine the likelihood of an unfavorable outcome against our Brazilian subsidiary and are unable to reasonably estimate a range of loss, if any. We do not expect a final judicial determination for several years. An unfavorable resolution of lawsuits or governmental investigations could have a material adverse effect on our business, operating results, or financial condition. For additional information regarding certain of the matters in which we are involved, see Item 1, “Legal Proceedings,” contained in Part II of this report.

CHANGES IN OUR PROVISION FOR INCOME TAXES OR ADVERSE OUTCOMES RESULTING FROM EXAMINATION OF OUR INCOME TAX RETURNS COULD ADVERSELY AFFECT OUR RESULTS

Our provision for income taxes is subject to volatility and could be adversely affected by earnings being lower than anticipated in countries that have lower tax rates and higher than anticipated in countries that have higher tax rates; by changes in the valuation of our deferred tax assets and liabilities; by expiration of or lapses in the R&D tax credit or domestic manufacturing deduction laws; by expiration of or lapses in tax incentives; by transfer pricing adjustments, including the effect of acquisitions on our intercompany R&D cost sharing arrangement and legal structure; by tax effects of nondeductible compensation; by tax costs related to intercompany realignments; by changes in accounting principles; or by changes in tax laws and regulations, treaties, or interpretations thereof, including possible changes to the taxation of earnings of our foreign subsidiaries, the deductibility of expenses attributable to foreign income, or the foreign tax credit rules. Significant judgment is required to determine the recognition and measurement attribute prescribed in the accounting guidance for uncertainty in income taxes. The Organisation for Economic Co-operation and Development (OECD), an international association of 34 countries including the United States, is contemplating changes to numerous long-standing tax principles. These contemplated changes, if finalized and adopted by countries, will increase tax uncertainty and may adversely affect our provision for income taxes. Further, as a result of certain of our ongoing employment and capital investment actions and commitments, our income in certain countries is subject to reduced tax rates and in some cases is wholly exempt from tax. Our failure to meet these commitments could adversely impact our provision for income taxes. In addition, we are subject to the continuous examination of our income tax returns by the Internal Revenue Service and other tax authorities. We regularly assess the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of our provision for income taxes. There can be no assurance that the outcomes from these continuous examinations will not have an adverse effect on our operating results and financial condition.

OUR BUSINESS AND OPERATIONS ARE ESPECIALLY SUBJECT TO THE RISKS OF EARTHQUAKES, FLOODS, AND OTHER NATURAL CATASTROPHIC EVENTS

Our corporate headquarters, including certain of our research and development operations are located in the Silicon Valley area of Northern California, a region known for seismic activity. Additionally, a certain number of our facilities are located near rivers that have experienced flooding in the past. Also certain of our suppliers and logistics centers are located in regions that have or may be affected by earthquake, tsunami and flooding activity which in the past has disrupted, and in the future could disrupt, the flow of components and delivery of products. A significant natural disaster, such as an earthquake, a hurricane, volcano, or a flood, could have a material adverse impact on our business, operating results, and financial condition.

MAN-MADE PROBLEMS SUCH AS COMPUTER VIRUSES OR TERRORISM MAY DISRUPT OUR OPERATIONS AND HARM OUR OPERATING RESULTS

Despite our implementation of network security measures our servers are vulnerable to computer viruses, break-ins, and similar disruptions from unauthorized tampering with our computer systems. Any such event could have a material adverse effect on our business, operating results, and financial condition. Efforts to limit the ability of malicious third parties to disrupt the operations of the Internet or undermine our own security efforts may meet with resistance. In addition, the continued threat of terrorism and heightened security and military action in response to this threat, or any future acts of terrorism, may cause further disruptions to the economies of the United States and other countries and create further uncertainties or otherwise materially harm our business, operating results, and financial condition. Likewise, events such as widespread blackouts could have similar negative impacts. To the extent that such disruptions or uncertainties result in delays or cancellations of customer orders or the manufacture or shipment of our products, our business, operating results, and financial condition could be materially and adversely affected.

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IF WE DO NOT SUCCESSFULLY MANAGE OUR STRATEGIC ALLIANCES, WE MAY NOT REALIZE THE EXPECTED BENEFITS FROM SUCH ALLIANCES AND WE MAY EXPERIENCE INCREASED COMPETITION OR DELAYS IN PRODUCT DEVELOPMENT

We have several strategic alliances with large and complex organizations and other companies with which we work to offer complementary products and services and have established a joint venture to market services associated with our Cisco Unified Computing System products. These arrangements are generally limited to specific projects, the goal of which is generally to facilitate product compatibility and adoption of industry standards. There can be no assurance we will realize the expected benefits from these strategic alliances or from the joint venture. If successful, these relationships may be mutually beneficial and result in industry growth. However, alliances carry an element of risk because, in most cases, we must compete in some business areas with a company with which we have a strategic alliance and, at the same time, cooperate with that company in other business areas. Also, if these companies fail to perform or if these relationships fail to materialize as expected, we could suffer delays in product development or other operational difficulties. Joint ventures can be difficult to manage, given the potentially different interests of joint venture partners.

OUR STOCK PRICE MAY BE VOLATILE

Historically, our common stock has experienced substantial price volatility, particularly as a result of variations between our actual financial results and the published expectations of analysts and as a result of announcements by our competitors and us. Furthermore, speculation in the press or investment community about our strategic position, financial condition, results of operations, business, security of our products, or significant transactions can cause changes in our stock price. In addition, the stock market has experienced extreme price and volume fluctuations that have affected the market price of many technology companies, in particular, and that have often been unrelated to the operating performance of these companies. These factors, as well as general economic and political conditions and the announcement of proposed and completed acquisitions or other significant transactions, or any difficulties associated with such transactions, by us or our current or potential competitors, may materially adversely affect the market price of our common stock in the future. Additionally, volatility, lack of positive performance in our stock price or changes to our overall compensation program, including our stock incentive program, may adversely affect our ability to retain key employees, virtually all of whom are compensated, in part, based on the performance of our stock price.

THERE CAN BE NO ASSURANCE THAT OUR OPERATING RESULTS AND FINANCIAL CONDITION WILL NOT BE ADVERSELY AFFECTED BY OUR INCURRENCE OF DEBT

As of the end of the second quarter of fiscal 2015, we have senior unsecured notes outstanding in an aggregate principal amount of $20.3 billion that mature at specific dates from calendar year 2015 through 2040. We have also established a commercial paper program under which we may issue short-term, unsecured commercial paper notes on a private placement basis up to a maximum aggregate amount outstanding at any time of $3.0 billion, and we had no commercial paper notes outstanding under this program as of January 24, 2015. The outstanding senior unsecured notes bear fixed-rate interest payable semiannually, except $2.35 billion of the notes which bears interest at a floating rate payable quarterly. The fair value of the long-term debt is subject to market interest rate volatility. The instruments governing the senior unsecured notes contain certain covenants applicable to us and our wholly-owned subsidiaries that may adversely affect our ability to incur certain liens or engage in certain types of sale and leaseback transactions. In addition, we will be required to have available in the United States sufficient cash to service the interest on our debt and repay all of our notes on maturity. There can be no assurance that our incurrence of this debt or any future debt will be a better means of providing liquidity to us than would our use of our existing cash resources, including cash currently held offshore. Further, we cannot be assured that our maintenance of this indebtedness or incurrence of future indebtedness will not adversely affect our operating results or financial condition. In addition, changes by any rating agency to our credit rating can negatively impact the value and liquidity of both our debt and equity securities, as well as the terms upon which we may borrow under our commercial paper program or future debt issuances.

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(a) None.

(b) None.

(c) Issuer Purchases of Equity Securities (in millions, except per-share amounts):

Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs
October 26, 2014 to November 22, 2014	2	$	26.63	2	$	7,489
November 23, 2014 to December 20, 2014	14	$	27.20	14	$	7,116
December 21, 2014 to January 24, 2015	28	$	27.91	28	$	6,334
Total	44	$	27.63	44

On September 13, 2001, we announced that our Board of Directors had authorized a stock repurchase program. As of January 24, 2015, our Board of Directors had authorized the repurchase of up to $97 billion of common stock under this program. As of January 24, 2015, we had repurchased and retired 4.4 billion shares of our common stock at an average price of $20.73 per share for an aggregate purchase price of $90.7 billion since inception of the stock repurchase program, and the remaining authorized amount for stock repurchases under this program was $6.3 billion with no termination date.

For the majority of restricted stock units granted, the number of shares issued on the date the restricted stock units vest is net of shares withheld to meet applicable tax withholding requirements. Although these withheld shares are not issued or considered common stock repurchases under our stock repurchase program and therefore are not included in the preceding table, they are treated as common stock repurchases in our financial statements as they reduce the number of shares that would have been issued upon vesting (see Note 13 to the Consolidated Financial Statements).

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Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not Applicable.

Item 5. Other Information

None.

Item 6. Exhibits

The following documents are filed as Exhibits to this report:

31.1	Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer
31.2	Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer
32.1	Section 1350 Certification of Principal Executive Officer
32.2	Section 1350 Certification of Principal Financial Officer
10.1	Cisco Systems, Inc. Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.1 of Form 8-K (File No. 000-18225) filed November 24, 2014)
10.2	Letter Agreement by and between Cisco Systems, Inc. and Kelly A. Kramer (incorporated by reference to Exhibit 10.2 of Form 8-K (File No. 000-18225) filed November 24, 2014)
10.3	Transition and Separation Agreement by and between Cisco Systems, Inc. and Frank A. Calderoni (incorporated by reference to Exhibit 10.3 of Form 8-K (File No. 000-18225) filed November 24, 2014)
10.4	Cisco Systems, Inc. 2005 Stock Incentive Plan including related form agreements
10.5	Cisco Systems, Inc. Deferred Compensation Plan, as amended
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		Cisco Systems, Inc.
Date:	February 18, 2015	By	/s/ Kelly A. Kramer
			Kelly A. Kramer Executive Vice President and Chief Financial Officer (Principal Financial Officer and duly authorized signatory)

EXHIBIT INDEX

31.1	Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer
31.2	Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer
32.1	Section 1350 Certification of Principal Executive Officer
32.2	Section 1350 Certification of Principal Financial Officer
10.1	Cisco Systems, Inc. Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.1 of Form 8-K (File No. 000-18225) filed November 24, 2014)
10.2	Letter Agreement by and between Cisco Systems, Inc. and Kelly A. Kramer (incorporated by reference to Exhibit 10.2 of Form 8-K (File No. 000-18225) filed November 24, 2014)
10.3	Transition and Separation Agreement by and between Cisco Systems, Inc. and Frank A. Calderoni (incorporated by reference to Exhibit 10.3 of Form 8-K (File No. 000-18225) filed November 24, 2014)
10.4	Cisco Systems, Inc. 2005 Stock Incentive Plan including related form agreements
10.5	Cisco Systems, Inc. Deferred Compensation Plan, as amended
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

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EX-10.4

Exhibit 10.4

CISCO SYSTEMS, INC.

2005 STOCK INCENTIVE PLAN

AS AMENDED AND RESTATED

Effective as of November 19, 2013

SECTION 1.		INTRODUCTION	1
SECTION 2.		DEFINITIONS	1
	(a)	“Affiliate”	1
	(b)	“Award”	1
	(c)	“Board”	1
	(d)	“Cashless Exercise”	1
	(e)	“Cause”	1
	(f)	“Change In Control”	1
	(g)	“Code”	1
	(h)	“Committee”	1
	(i)	“Common Stock”	1
	(j)	“Company”	2
	(k)	“Consultant”	2
	(l)	“Corporate Transaction”	2
	(m)	“Covered Employees”	2
	(n)	“Director”	2
	(o)	“Disability”	2
	(p)	“Employee”	2
	(q)	“Exchange Act”	2

i

(r)	“Exercise Price”	2
(s)	“Fair Market Value”	2
(t)	“Fiscal Year”	2
(u)	“Grant”	2
(v)	“Incentive Stock Option” or “ISO”	2
(w)	“Key Employee”	2
(x)	“Non-Employee Director”	2
(y)	“Nonstatutory Stock Option” or “NSO”	2
(z)	“Option”	2
(aa)	“Optionee”	2
(bb)	“Parent”	2
(cc)	“Participant”	3
(dd)	“Performance Goal”	3
(ee)	“Performance Period”	3

ii

	(ff)	“Plan”	3
	(gg)	“Previous Plan Award”	3
	(hh)	“Re-Price”	3
	(ii)	“SAR Agreement”	3
	(jj)	“SEC”	3
	(kk)	“Section 16 Persons”	3
	(ll)	“Securities Act”	3
	(mm)	“Service”	3
	(nn)	“Share”	3
	(oo)	“Stock Appreciation Right” or “SAR”	3
	(pp)	“Stock Grant”	3
	(qq)	“Stock Grant Agreement”	3
	(rr)	“Stock Option Agreement”	3
	(ss)	“Stock Unit”	3
	(tt)	“Stock Unit Agreement”	3
	(uu)	“Subsidiary”	3
	(vv)	“10-Percent Shareholder”	3
SECTION 3.		ADMINISTRATION	4
	(a)	Committee Composition	4
	(b)	Authority of the Committee	4
	(c)	Indemnification	4
SECTION 4.		GENERAL	5
	(a)	General Eligibility	5

iii

	(b)	Incentive Stock Options	5
	(c)	Restrictions on Shares	5
	(d)	Beneficiaries	5
	(e)	Performance Conditions	5
	(f)	No Rights as a Shareholder	5
	(g)	Termination of Service	5
	(h)	Director Fees	5
SECTION 5.		SHARES SUBJECT TO PLAN AND SHARE LIMITS	5
	(a)	Basic Limitations	5
	(b)	Additional Shares	6
	(c)	Dividend Equivalents	6
	(d)	Share Limits	6

iv

SECTION 6.		TERMS AND CONDITIONS OF OPTIONS	6
	(a)	Stock Option Agreement	6
	(b)	Number of Shares	6
	(c)	Exercise Price	6
	(d)	Exercisability and Term	6
	(e)	Modifications or Assumption of Options	6
	(f)	Assignment or Transfer of Options	7
SECTION 7.		PAYMENT FOR OPTION SHARES	7
SECTION 8.		TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS	7
	(a)	SAR Agreement	7
	(b)	Number of Shares	7
	(c)	Exercise Price	7
	(d)	Exercisability and Term	7
	(e)	Exercise of SARs	7
	(f)	Modification or Assumption of SARs	7
	(g)	Assignment or Transfer of SARs	8
SECTION 9.		TERMS AND CONDITIONS FOR STOCK GRANTS	8
	(a)	Amount and Form of Awards	8

v

	(b)	Stock Grant Agreement	8
	(c)	Payment for Stock Grants	8
	(d)	Vesting Conditions	8
	(e)	Assignment or Transfer of Stock Grants	8
	(f)	Voting and Dividend Rights	8
	(g)	Modification or Assumption of Stock Grants	8
SECTION 10.		TERMS AND CONDITIONS OF STOCK UNITS	9
	(a)	Stock Unit Agreement	9
	(b)	Number of Shares	9
	(c)	Payment for Stock Units	9
	(d)	Vesting Conditions	9
	(e)	Voting and Dividend Rights	9
	(f)	Form and Time of Settlement of Stock Units	9
	(g)	Creditors’ Rights	9
	(h)	Modification or Assumption of Stock Units	9
	(i)	Assignment or Transfer of Stock Units	9

vi

SECTION 11.		PROTECTION AGAINST DILUTION	9
	(a)	Adjustments	9
	(b)	Participant Rights	10
	(c)	Fractional Shares	10
SECTION 12.		EFFECT OF A CORPORATE TRANSACTION	10
	(a)	Corporate Transaction	10
	(b)	Acceleration	10
	(c)	Dissolution	10
SECTION 13.		LIMITATIONS ON RIGHTS	10
	(a)	No Entitlements	10
	(b)	Shareholders’ Rights	10
	(c)	Regulatory Requirements	10
SECTION 14.		WITHHOLDING TAXES	10
	(a)	General	10
	(b)	Share Withholding	11
SECTION 15.		DURATION AND AMENDMENTS	11
	(a)	Term of the Plan	11
	(b)	Right to Amend or Terminate the Plan	11

vii

CISCO SYSTEMS, INC.

2005 STOCK INCENTIVE PLAN

AS AMENDED AND RESTATED

(Effective as of November 19, 2013)

SECTION 1.INTRODUCTION .

The Company's shareholders approved the Cisco Systems, Inc. 2005 Stock Incentive Plan, as amended and restated and effective on December 7, 2011. The Company's Board of Directors approved an amendment and restatement of the Plan; provided that, the amendment and restatement of the Plan shall become effective upon its approval by Company shareholders. If the Company's shareholders do not approve the amendment and restatement of the Plan, Awards will be made under the Plan as approved by shareholders on December 7, 2011.

The purpose of the Plan is to promote the long-term success of the Company and the creation of shareholder value by offering Key Employees an opportunity to share in such long-term success by acquiring a proprietary interest in the Company.

The Plan seeks to achieve this purpose by providing for discretionary long-term incentive Awards in the form of Options (which may constitute Incentive Stock Options or Nonstatutory Stock Options), Stock Appreciation Rights, Stock Grants, and Stock Units.

The Plan shall be governed by, and construed in accordance with, the laws of the State of California (except its choice-of-law provisions).

Capitalized terms shall have the meaning provided in Section 2 unless otherwise provided in this Plan or any related Stock Option Agreement, SAR Agreement, Stock Grant Agreement or Stock Unit Agreement.

SECTION 2.DEFINITIONS.

(a) “Affiliate” means any entity other than a Subsidiary, if the Company and/or one or more Subsidiaries own not less than 50% of such entity.

(b) “Award” means any award of an Option, SAR, Stock Grant or Stock Unit under the Plan.

(c) “Board” means the Board of Directors of the Company, as constituted from time to time.

(d) “Cashless Exercise” means, to the extent that a Stock Option Agreement so provides and as permitted by applicable law, a program approved by the Committee in which payment may be made all or in part by delivery (on a form prescribed by the Committee) of an irrevocable direction to a securities broker to sell Shares and to deliver all or part of the sale proceeds to the Company in payment of the aggregate Exercise Price and, if applicable, the amount necessary to satisfy the Company’s withholding obligations at the minimum statutory withholding rates, including, but not limited to, U.S. federal and state income taxes, payroll taxes, and foreign taxes, if applicable.

(e) “Cause” means, except as may otherwise be provided in a Participant’s employment agreement or Award agreement, a conviction of a Participant for a felony crime or the failure of a Participant to contest prosecution for a felony crime, or a Participant’s misconduct, fraud or dishonesty (as such terms are defined by the Committee in its sole discretion), or any unauthorized use or disclosure of confidential information or trade secrets, in each case as determined by the Committee, and the Committee’s determination shall be conclusive and binding.

(f) “Change In Control” except as may otherwise be provided in a Participant’s employment agreement or Award agreement, means the occurrence of any of the following:

(i) A change in the composition of the Board over a period of thirty-six consecutive months or less such that a majority of the Board members ceases, by reason of one or more contested elections for Board membership, to be comprised of individuals who either (A) have been Board members continuously since the beginning of such period or (B) have been elected or nominated for election as Board members during such period by at least a majority of the Board members described in clause (A) who were still in office at the time the Board approved such election or nomination; or

(ii) The acquisition, directly or indirectly, by any person or related group of persons (other than the Company or a person that directly or indirectly controls, is controlled by, or is under common control with, the Company) of beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act) of securities of the Company representing more than 35% of the total combined voting power of the Company’s then outstanding securities pursuant to a tender or exchange offer made directly to the Company’s shareholders which the Board does not recommend such shareholders accept.

(g) “Code” means the Internal Revenue Code of 1986, as amended, and the regulations and interpretations promulgated thereunder.

(h) “Committee” means a committee described in Section 3.

(i) “Common Stock” means the Company’s common stock.

1

(j) “Company” means Cisco Systems, Inc., a California corporation.

(k) “Consultant” means an individual who performs bona fide services to the Company, a Parent, a Subsidiary or an Affiliate, other than as an Employee or Director or Non-Employee Director.

(l) “Corporate Transaction” except as may otherwise be provided in a Participant’s employment agreement or Award agreement, means the occurrence of any of the following shareholder approved transactions:

(i) The consummation of a merger or consolidation of the Company with or into another entity or any other corporate reorganization, if more than 50% of the combined voting power of the continuing or surviving entity’s securities outstanding immediately after such merger, consolidation or other reorganization is owned by persons who were not shareholders of the Company immediately prior to such merger, consolidation or other reorganization; or

(ii) The sale, transfer or other disposition of all or substantially all of the Company’s assets.

A transaction shall not constitute a Corporate Transaction if its sole purpose is to change the state of the Company’s incorporation or to create a holding company that will be owned in substantially the same proportions by the persons who held the Company’s securities immediately before such transactions.

(m) “Covered Employees” means those persons who are subject to the limitations of Code Section 162(m).

(n) “Director” means a member of the Board who is also an Employee.

(o) “Disability” means that the Key Employee is classified as disabled under a long-term disability policy of the Company or, if no such policy applies, the Key Employee is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months.

(p) “Employee” means an individual who is a common-law employee of the Company, a Parent, a Subsidiary or an Affiliate.

(q) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

(r) “Exercise Price” means, in the case of an Option, the amount for which a Share may be purchased upon exercise of such Option, as specified in the applicable Stock Option Agreement. “Exercise Price,” in the case of a SAR, means an amount, as specified in the applicable SAR Agreement, which is subtracted from the Fair Market Value in determining the amount payable upon exercise of such SAR.

(s) “Fair Market Value” means the market price of a Share as determined in good faith by the Committee. The Fair Market Value shall be determined by the following:

(i) If the Shares were traded over-the-counter or listed with NASDAQ on the date in question, then the Fair Market Value shall be equal to the last transaction price quoted by the NASDAQ system for the date in question or (ii) if the Common Stock is listed on the New York Stock Exchange or the American Stock Exchange on the date in question, the Fair Market Value is the closing selling price for the Common Stock as such price is officially quoted in the composite tape of transactions on the exchange determined by the Committee to be the primary market for the Common Stock for the date in question; provided, however, that if there is no such reported price for the Common Stock for the date in question under (i) or (ii), then such price on the last preceding date for which such price exists shall be determinative of Fair Market Value.

If neither (i) or (ii) are applicable, then the Fair Market Value shall be determined by the Committee in good faith on such basis as it deems appropriate.

Whenever possible, the determination of Fair Market Value by the Committee shall be based on the prices reported in the Western Edition of The Wall Street Journal . Such determination shall be conclusive and binding on all persons.

(t) “Fiscal Year” means the Company’s fiscal year.

(u) “Grant” means any grant of an Award under the Plan.

(v) “Incentive Stock Option” or “ISO” means an incentive stock option described in Code Section 422.

(w) “Key Employee” means an Employee, Director, Non-Employee Director or Consultant who has been selected by the Committee to receive an Award under the Plan.

(x) “Non-Employee Director” means a member of the Board who is not an Employee.

(y) “Nonstatutory Stock Option” or “NSO” means a stock option that is not an ISO.

(z) “Option” means an ISO or NSO granted under the Plan entitling the Optionee to purchase Shares.

(aa) “Optionee” means an individual, estate or other entity that holds an Option.

(bb) “Parent” means any corporation (other than the Company) in an unbroken chain of corporations ending with the Company, if each of the corporations other than the Company owns stock possessing 50% or more of the total combined voting power of all classes of stock

2

in one of the other corporations in such chain. A corporation that attains the status of a Parent on a date after the adoption of the Plan shall be considered a Parent commencing as of such date.

(cc) “Participant” means an individual or estate or other entity that holds an Award.

(dd) “Performance Goal” means an objective formula or standard determined by the Committee with respect to each Performance Period utilizing one or more of the following factors and any objectively verifiable adjustment(s) thereto permitted and preestablished by the Committee in accordance with Code Section 162(m): (i) operating income, operating cash flow and operating expense; (ii) earnings before interest, taxes, depreciation and amortization; (iii) earnings; (iv) cash flow; (v) market share; (vi) sales; (vii) revenue; (viii) profits before interest and taxes; (ix) expenses; (x) cost of goods sold; (xi) profit/loss or profit margin; (xii) working capital; (xiii) return on capital, equity or assets; (xiv) earnings per share; (xv) economic value added; (xvi) stock price; (xvii) price/earnings ratio; (xviii) debt or debt-to-equity; (xix) accounts receivable; (xx) writeoffs; (xxi) cash; (xxii) assets; (xxiii) liquidity; (xxiv) operations; (xxv) intellectual property (e.g., patents); (xxvi) product development; (xxvii) regulatory activity; (xxviii) manufacturing, production or inventory; (xxix) mergers and acquisitions or divestitures;(xxx) financings; (xxxi) customer satisfaction; and/or (xxxii) total shareholder return, each with respect to the Company and/or one or more of its affiliates or operating units. Awards issued to persons who are not Covered Employees may take into account other factors (including subjective factors).

(ee) “Performance Period” means any period not exceeding 36 months as determined by the Committee, in its sole discretion. The Committee may establish different Performance Periods for different Participants, and the Committee may establish concurrent or overlapping Performance Periods.

(ff) “Plan” means this Cisco Systems, Inc. 2005 Stock Incentive Plan as amended and restated, and as it may be further amended from time to time.

(gg) “Previous Plan Award” means any award of an Option, SAR, Stock Grant or Stock Unit under the Cisco Systems, Inc. 1996 Stock Incentive Plan, the Cisco Systems, Inc. SA Acquisition Long-Term Incentive Plan or the Cisco Systems, Inc. WebEx Acquisition Long-Term Incentive Plan.

(hh) “Re-Price” means that the Company has lowered or reduced the Exercise Price of outstanding Options and/or outstanding SARs for any Participant(s), whether through amendment, cancellation, or replacement grants, or any other means.

(ii) “SAR Agreement” means the agreement described in Section 8 evidencing each Award of a Stock Appreciation Right.

(jj) “SEC” means the Securities and Exchange Commission.

(kk) “Section 16 Persons” means those officers, directors or other persons who are subject to Section 16 of the Exchange Act.

(ll) “Securities Act” means the Securities Act of 1933, as amended.

(mm) “Service” means service as an Employee, Director, Non-Employee Director or Consultant. A Participant’s Service does not terminate when continued service crediting is required by applicable law. However, for purposes of determining whether an Option is entitled to continuing ISO status, a common-law employee’s Service will be treated as terminating ninety (90) days after such Employee went on leave, unless such Employee’s right to return to active work is guaranteed by law or by a contract. Service terminates in any event when the approved leave ends, unless such Employee immediately returns to active work. The Committee determines which leaves count toward Service, and when Service terminates for all purposes under the Plan. Further, unless otherwise determined by the Committee, a Participant’s Service shall not be deemed to have terminated merely because of a change in the capacity in which the Participant provides service to the Company, a Parent, Subsidiary or Affiliate, or a transfer between entities (the Company or any Parent, Subsidiary, or Affiliate); provided that there is no interruption or other termination of Service.

(nn) “Share” means one share of Common Stock.

(oo) “Stock Appreciation Right” or “SAR” means a stock appreciation right awarded under the Plan.

(pp) “Stock Grant” means Shares awarded under the Plan.

(qq) “Stock Grant Agreement” means the agreement described in Section 9 evidencing each Award of a Stock Grant.

(rr) “Stock Option Agreement” means the agreement described in Section 6 evidencing each Award of an Option.

(ss) “Stock Unit” means a bookkeeping entry representing the equivalent of one Share, as awarded under the Plan.

(tt) “Stock Unit Agreement” means the agreement described in Section  10 evidencing each Award of a Stock Unit.

(uu) “Subsidiary” means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company, if each of the corporations other than the last corporation in the unbroken chain owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. A corporation that attains the status of a Subsidiary on a date after the adoption of the Plan shall be considered a Subsidiary commencing as of such date.

(vv) “10-Percent Shareholder” means an individual who owns more than 10% of the total combined voting power of all classes of outstanding stock of the Company, its Parent or any of its Subsidiaries. In determining stock ownership, the attribution rules of Section 424(d) of the Code shall be applied.

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SECTION 3.ADMINISTRATION.

(a) Committee Composition. The Board or a Committee appointed by the Board shall administer the Plan. Unless the Board provides otherwise, the Company’s Compensation & Management Development Committee shall be the Committee. Members of the Committee shall serve for such period of time as the Board may determine and shall be subject to removal by the Board at any time. The Board may also at any time terminate the functions of the Committee and reassume all powers and authority previously delegated to the Committee.

The Committee shall have membership composition which enables (i) Awards to Section 16 Persons to qualify as exempt from liability under Section 16(b) of the Exchange Act and (ii) Awards to Covered Employees to qualify as performance-based compensation as provided under Code Section 162(m).

The Board may also appoint one or more separate committees of the Board, each composed of two or more directors of the Company who need not qualify under Rule 16b-3 or Code Section 162(m), that may administer the Plan with respect to Key Employees who are not Section 16 Persons or Covered Employees, respectively, may grant Awards under the Plan to such Key Employees and may determine all terms of such Awards.

Notwithstanding the foregoing, the Board shall constitute the Committee and shall administer the Plan with respect to Non-Employee Directors, shall grant Awards under the Plan to such Non-Employee Directors, and shall determine all terms of such Awards.

(b) Authority of the Committee. Subject to the provisions of the Plan, the Committee shall have full authority and sole discretion to take any actions it deems necessary or advisable for the administration of the Plan. Such actions shall include:

(i) selecting Key Employees who are to receive Awards under the Plan;

(ii) determining the type, number, vesting requirements and other features and conditions of such Awards and amending such Awards;

(iii) correcting any defect, supplying any omission, or reconciling any inconsistency in the Plan or any Award agreement;

(iv) accelerating the vesting, or extending the post-termination exercise term, of Awards at any time and under such terms and conditions as it deems appropriate;

(v) interpreting the Plan;

(vi) making all other decisions relating to the operation of the Plan; and

(vii) adopting such plans or subplans as may be deemed necessary or appropriate to provide for the participation by Key Employees of the Company and its Subsidiaries and Affiliates who reside outside the U.S., which plans and/or subplans shall be attached hereto as Appendices.

The Committee may adopt such rules or guidelines as it deems appropriate to implement the Plan. The Committee’s determinations under the Plan shall be final and binding on all persons.

(c) Indemnification. To the maximum extent permitted by applicable law, each member of the Committee, or of the Board, shall be indemnified and held harmless by the Company against and from (i) any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by him or her in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action taken or failure to act under the Plan or any Stock Option Agreement, SAR Agreement, Stock Grant Agreement or Stock Unit Agreement, and (ii) from any and all amounts paid by him or her in settlement thereof, with the Company’s approval, or paid by him or her in satisfaction of any judgment in any such claim, action, suit, or proceeding against him or her, provided he or she shall give the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his or her own behalf. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Company’s Articles of Incorporation or Bylaws, by contract, as a matter of law, or otherwise, or under any power that the Company may have to indemnify them or hold them harmless.

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SECTION 4.GENERAL.

(a) General Eligibility. Only Employees, Directors, Non-Employee Directors and Consultants shall be eligible for designation as Key Employees by the Committee, in its sole discretion.

(b) Incentive Stock Options. Only Key Employees who are common-law employees of the Company, a Parent or a Subsidiary shall be eligible for the grant of ISOs. In addition, a Key Employee who is a 10-Percent Shareholder shall not be eligible for the grant of an ISO unless the requirements set forth in Section 422(c)(5) of the Code are satisfied.

(c) Restrictions on Shares. Any Shares issued pursuant to an Award shall be subject to such rights of repurchase, rights of first refusal and other transfer restrictions as the Committee may determine, in its sole discretion. Such restrictions shall apply in addition to any restrictions that may apply to holders of Shares generally and shall also comply to the extent necessary with applicable law. In no event shall the Company be required to issue fractional Shares under this Plan.

(d) Beneficiaries. Unless stated otherwise in an Award agreement, a Participant may designate one or more beneficiaries with respect to an Award by timely filing the prescribed form with the Company. A beneficiary designation may be changed by filing the prescribed form with the Company at any time before the Participant’s death. If no beneficiary was designated or if no designated beneficiary survives the Participant, then after a Participant’s death any vested Award(s) shall be transferred or distributed to the Participant’s estate.

(e) Performance Conditions. The Committee may, in its discretion, include performance conditions in an Award or grant an Award upon the satisfaction of performance conditions. If performance conditions are included in Awards to Covered Employees, then such Awards may be subject to the achievement of Performance Goals established by the Committee. Such Performance Goals shall be established and administered pursuant to the requirements of Code Section 162(m). Before any Shares underlying an Award or any Award payments subject to Performance Goals are released to a Covered Employee with respect to a Performance Period, the Committee shall certify in writing that the Performance Goals for such Performance Period have been satisfied. Awards with performance conditions that are granted to Key Employees who are not Covered Employees need not comply with the requirements of Code Section 162(m).

(f) No Rights as a Shareholder. A Participant, or a transferee of a Participant, shall have no rights as a shareholder with respect to any Common Stock covered by an Award until such person has satisfied all of the terms and conditions to receive such Common Stock, has satisfied any applicable withholding or tax obligations relating to the Award and the Shares have been issued (as evidenced by an appropriate entry on the books of the Company or a duly authorized transfer agent of the Company).

(g) Termination of Service. Unless the applicable Award agreement or, with respect to Participants who reside in the U.S., the applicable employment agreement provides otherwise, the following rules shall govern the vesting, exercisability and term of outstanding Awards held by a Participant in the event of termination of such Participant’s Service (in all cases subject to the expiration term of the Option or SAR as applicable): (i) upon termination of Service for any reason, all unvested portions of any outstanding Awards shall be immediately forfeited without consideration and the vested portions of any outstanding Stock Units shall be settled upon termination; (ii) if the Service of a Participant is terminated for Cause, then all unexercised Options and SARs, unvested portions of Stock Units and unvested portions of Stock Grants shall terminate and be forfeited immediately without consideration; (iii) if the Service of a Participant is terminated for any reason other than for Cause, death, or Disability, then the vested portion of his or her then-outstanding Options and/or SARs may be exercised by such Participant or his or her personal representative within three months after the date of such termination; or (iv) if the Service of a Participant is terminated due to death or Disability, the vested portion of his or her then-outstanding Options and/or SARs may be exercised within eighteen months after the date of termination of Service.

(h) Director Fees. Each Non-Employee Director may elect to receive a Stock Grant or Stock Unit under the Plan in lieu of payment of a portion of his or her regular annual retainer based on the Fair Market Value of the Shares on the date any regular annual retainer would otherwise be paid. For purposes of the Plan, a Non-Employee Director’s regular annual retainer shall not include any additional retainer paid in connection with service on any committee of the Board or paid for any other reason. Such an election may be for any dollar or percentage amount equal to at least 25% of the Non-Employee Director’s regular annual retainer (up to a limit of 100% of the Non-Employee Director’s regular annual retainer). The election must be made prior to the beginning of the annual board of directors cycle which shall be any twelve month continuous period designated by the Board. Any amount of the regular annual retainer not elected to be received as a Stock Grant or Stock Unit shall be payable in cash in accordance with the Company’s standard payment procedures. Shares granted under this Section 4(h) shall otherwise be subject to the terms of the Plan applicable to Non-Employee Directors or to Participants generally (other than provisions specifically applying only to Employees).

SECTION 5.SHARES SUBJECT TO PLAN AND SHARE LIMITS.

(a) Basic Limitations. The stock issuable under the Plan shall be authorized but unissued Shares. The aggregate number of Shares reserved for Awards under the Plan shall not exceed 694,000,000 Shares, subject to adjustment pursuant to Section 11. Shares issued as Stock Grants, pursuant to Stock Units or pursuant to the settlement of dividend equivalents will count against the Shares available for issuance under the Plan as 1.5 Shares for every 1 Share issued in connection with the Award or dividend equivalent.

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(b) Additional Shares. If Awards are forfeited or are terminated for any other reason before being exercised or settled, then the Shares underlying such Awards, plus the number of additional Shares, if any, that counted against Shares available for issuance under the Plan in respect thereof at the time of Grant, shall again become available for Awards under the Plan. If a Previous Plan Award is forfeited or is terminated for any other reason before being exercised or settled, then the Shares underlying such Previous Plan Award shall again become available for Awards under this Plan. SARs shall be counted in full against the number of Shares available for issuance under the Plan, regardless of the number of Shares issued upon settlement of the SARs. In the event that withholding tax liabilities arising from an Award other than an Option or SAR are satisfied by the withholding of Shares by the Company, then the Shares so withheld, plus the number of additional Shares, if any, that counted against Shares available for issuance under the Plan in respect thereof at the time of Grant, shall again become available for Awards under the Plan. In the event that withholding tax liabilities arising from an Option or SAR are satisfied by the withholding of Shares by the Company, then the Shares so withheld shall not be added to the Shares available for Awards under the Plan. In addition, Shares that are exchanged by a Participant or withheld by the Company as full or partial payment in connection with the exercise or settlement of an Option or SAR shall not be available for subsequent Awards under the Plan and Shares repurchased on the open market with the proceeds of an Option exercise shall not again be made available for issuance under the Plan.

(c) Dividend Equivalents. Any dividend equivalents settled in Shares under the Plan shall be applied against the number of Shares available for Awards.

(d) Share Limits.

(i) Limits on Options . Subject to adjustment pursuant to Section 11, no Key Employee shall receive Options to purchase Shares during any Fiscal Year covering in excess of 5,000,000 Shares and the aggregate maximum number of Shares that may be issued in connection with ISOs shall be 694,000,000 Shares.

(ii) Limits on SARs. Subject to adjustment pursuant to Section 11, no Key Employee shall receive Awards of SARs during any Fiscal Year covering in excess of 5,000,000 Shares and the aggregate maximum number of Shares that may be issued in connection with SARs shall be 694,000,000 Shares.

(iii) Limits on Stock Grants and Stock Units. Subject to adjustment pursuant to Section 11, no Key Employee shall receive Stock Grants or Stock Units during any Fiscal Year covering, in the aggregate, in excess of 5,000,000 Shares.

(iv) Limits on Awards to Non-Employee Directors. Subject to adjustment pursuant to Section 11, no Non-Employee Director shall receive Awards during any Fiscal Year covering, in the aggregate, in excess of 50,000 Shares; provided that any Shares received pursuant to an election under Section 4(h) shall not count against such limit.

SECTION 6.TERMS AND CONDITIONS OF OPTIONS.

(a) Stock Option Agreement. Each Grant of an Option under the Plan shall be evidenced and governed exclusively by a Stock Option Agreement between the Optionee and the Company. Such Option shall be subject to all applicable terms and conditions of the Plan and may be subject to any other terms and conditions that are not inconsistent with the Plan and that the Committee deems appropriate for inclusion in a Stock Option Agreement (including without limitation any performance conditions). The provisions of the various Stock Option Agreements entered into under the Plan need not be identical. The Stock Option Agreement shall also specify whether the Option is an ISO or an NSO.

(b) Number of Shares. Each Stock Option Agreement shall specify the number of Shares that are subject to the Option and shall be subject to adjustment of such number in accordance with Section 11.

(c) Exercise Price. An Option’s Exercise Price shall be established by the Committee and set forth in a Stock Option Agreement. The Exercise Price of an Option shall not be less than 100% of the Fair Market Value (110% for ISO grants to 10-Percent Shareholders) on the date of Grant.

(d) Exercisability and Term. Each Stock Option Agreement shall specify the date when all or any installment of the Option is to become exercisable. The Stock Option Agreement shall also specify the term of the Option; provided that the term of an Option shall in no event exceed ten years from the date of Grant. Unless the applicable Stock Option Agreement provides otherwise, each Option shall vest and become exercisable with respect to 20% of the Shares subject to the Option upon completion of one year of Service measured from the vesting commencement date, the balance of the Shares subject to the Option shall vest and become exercisable in forty-eight equal installments upon completion of each month of Service thereafter, and the term of the Option shall be ten years from the date of Grant. A Stock Option Agreement may provide for accelerated vesting in the event of the Participant’s death, Disability, or other events. Notwithstanding any other provision of the Plan, no Option can be exercised after the expiration date provided in the applicable Stock Option Agreement and no Option may provide that, upon exercise of the Option, a new Option will automatically be granted.

(e) Modifications or Assumption of Options. Within the limitations of the Plan, the Committee may modify, extend or assume outstanding options or may accept the cancellation of outstanding options (whether granted by the Company or by another issuer) in return for the grant of new Options for the same or a different number of Shares, at the same or a different Exercise Price, and with the same or different vesting provisions. Notwithstanding the preceding sentence or anything to the contrary herein, the Committee may not Re-Price outstanding Options unless there is approval by the Company shareholders and, unless a modification is necessary or desirable

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to comply with any applicable law, regulation or rule, such modification of an Option shall not, without the consent of the Optionee, impair his or her rights or obligations under such Option.

(f) Assignment or Transfer of Options. Except as otherwise provided in the applicable Stock Option Agreement and then only to the extent permitted by applicable law, no Option shall be transferable by the Optionee other than by will or by the laws of descent and distribution. Except as otherwise provided in the applicable Stock Option Agreement, an Option may be exercised during the lifetime

of the Optionee only by the Optionee or by the guardian or legal representative of the Optionee. No Option or interest therein may be assigned, pledged or hypothecated by the Optionee during his or her lifetime, whether by operation of law or otherwise, or be made subject to execution, attachment or similar process.

SECTION 7.PAYMENT FOR OPTION SHARES.

The entire Exercise Price of Shares issued upon exercise of Options shall be payable in cash at the time when such Shares are purchased, except as follows and if so provided for in an applicable Stock Option Agreement:

(i) Surrender of Stock. Payment for all or any part of the Exercise Price or Options may be made with Shares which have already been owned by the Optionee; provided that the Committee may, in its sole discretion, require that Shares tendered for payment be previously held by the Optionee for a minimum duration. Such Shares shall be valued at their Fair Market Value.

(ii) Cashless Exercise. Payment for all or any part of the Exercise Price may be made through Cashless Exercise at the Committee’s sole discretion.

(iii) Other Forms of Payment. Payment for all or any part of the Exercise Price may be made in any other form that is consistent with applicable laws, regulations and rules and approved by the Committee.

In the case of an ISO granted under the Plan, payment shall be made only pursuant to the express provisions of the applicable Stock Option Agreement. The Stock Option Agreement may specify that payment may be made in any form(s) described in this Section 7. In the case of an NSO granted under the Plan, the Committee may, in its discretion at any time, accept payment in any form(s) described in this Section 7.

SECTION 8.TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS.

(a) SAR Agreement. Each Grant of a SAR under the Plan shall be evidenced and governed exclusively by a SAR Agreement between the Participant and the Company. Such SAR shall be subject to all applicable terms and conditions of the Plan and may be subject to any other terms and conditions that are not inconsistent with the Plan and that the Committee deems appropriate for inclusion in a SAR Agreement (including without limitation any performance conditions). A SAR Agreement may provide for a maximum limit on the amount of any payout notwithstanding the Fair Market Value on the date of exercise of the SAR. The provisions of the various SAR Agreements entered into under the Plan need not be identical. SARs may be granted in consideration of a reduction in the Participant’s compensation.

(b) Number of Shares. Each SAR Agreement shall specify the number of Shares to which the SAR pertains and shall be subject to adjustment of such number in accordance with Section 11.

(c) Exercise Price. Each SAR Agreement shall specify the Exercise Price which shall be established by the Committee. The Exercise Price of a SAR shall not be less than 100% of the Fair Market Value on the date of Grant.

(d) Exercisability and Term. Each SAR Agreement shall specify the date when all or any installment of the SAR is to become exercisable. The SAR Agreement shall also specify the term of the SAR which shall not exceed ten years from the date of Grant. Unless the applicable SAR Agreement provides otherwise, each SAR shall vest and become exercisable with respect to 20% of the Shares subject to the SAR upon completion of one year of Service measured from the vesting commencement date, the balance of the Shares subject to the SAR shall vest and become exercisable in forty-eight equal installments upon completion of each month of Service thereafter, and the term of the SAR shall be ten years from the date of Grant. A SAR Agreement may provide for accelerated vesting in the event of the Participant’s death, Disability, or other events. SARs may be awarded in combination with Options or Stock Grants, and such an Award shall provide that the SARs will not be exercisable unless the related Options or Stock Grants are forfeited. A SAR may be included in an ISO only at the time of Grant but may be included in an NSO at the time of Grant or at any subsequent time, but not later than six months before the expiration of such NSO. No SAR may provide that, upon exercise of the SAR, a new SAR will automatically be granted.

(e) Exercise of SARs. If, on the date when a SAR expires, the Exercise Price under such SAR is less than the Fair Market Value on such date but any portion of such SAR has not been exercised or surrendered, then such SAR shall automatically be deemed to be exercised as of such date with respect to such portion. Upon exercise of a SAR, the Participant (or any person having the right to exercise the SAR) shall receive from the Company (i) Shares, (ii) cash or (iii) any combination of Shares and cash, as the Committee shall determine at the time of Grant of the SAR, in its sole discretion. The amount of cash and/or the Fair Market Value of Shares received upon exercise of SARs shall, in the aggregate, be equal to the amount by which the Fair Market Value (on the date of exercise) of the Shares subject to the SARs exceeds the Exercise Price of those Shares.

(f) Modification or Assumption of SARs. Within the limitations of the Plan, the Committee may modify, extend or assume outstanding stock appreciation rights or may accept the cancellation of outstanding stock appreciation rights (including stock appreciation rights

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granted by another issuer) in return for the grant of new SARs for the same or a different number of Shares, at the same or a different Exercise Price, and with the same or different vesting provisions. Notwithstanding the preceding sentence or anything to the contrary herein, the Committee may not Re-Price outstanding SARs unless there is approval by the Company shareholders and, unless a modification is necessary or desirable to comply with any applicable law, regulation or rule, such modification of a SAR shall not , without the consent of the Participant, impair his or her rights or obligations under such SAR.

(g) Assignment or Transfer of SARs. Except as otherwise provided in the applicable SAR Agreement and then only to the extent permitted by applicable law, no SAR shall be transferable by the Participant other than by will or by the laws of descent and distribution. Except as otherwise provided in the applicable SAR Agreement, a SAR may be exercised during the lifetime of the Participant only by the Participant or by the guardian or legal representative of the Participant. No SAR or interest therein may be assigned, pledged or hypothecated by the Participant during his or her lifetime, whether by operation of law or otherwise, or be made subject to execution, attachment or similar process.

SECTION 9.TERMS AND CONDITIONS FOR STOCK GRANTS.

(a) Amount and Form of Awards. Awards under this Section 9 may be granted in the form of a Stock Grant. Each Stock Grant Agreement shall specify the number of Shares to which the Stock Grant pertains and shall be subject to adjustment of such number in accordance with Section 11. A Stock Grant may also be awarded in combination with NSOs, and such an Award may provide that the Stock Grant will be forfeited in the event that the related NSOs are exercised.

(b) Stock Grant Agreement. Each Stock Grant awarded under the Plan shall be evidenced and governed exclusively by a Stock Grant Agreement between the Participant and the Company. Each Stock Grant shall be subject to all applicable terms and conditions of the Plan and may be subject to any other terms and conditions that are not inconsistent with the Plan and that the Committee deems appropriate for inclusion in the applicable Stock Grant Agreement (including without limitation any performance conditions). The provisions of the various Stock Grant Agreements entered into under the Plan need not be identical.

(c) Payment for Stock Grants. Stock Grants may be issued with or without cash consideration or any other form of legally permissible consideration approved by the Committee.

(d) Vesting Conditions. Each Stock Grant may or may not be subject to vesting. Any such vesting provision may provide that Shares shall vest based on Service over time or shall vest, in full or in installments, upon satisfaction of performance conditions specified in the Stock Grant Agreement which may include Performance Goals pursuant to Section 4(e). Unless the applicable Stock Grant Agreement provides otherwise, each Stock Grant shall vest with respect to 20% of the Shares subject to the Stock Grant upon completion of each year of Service on each of the first through fifth annual anniversaries of the vesting commencement date. A Stock Grant Agreement may provide for accelerated vesting in the event of the Participant’s death, Disability, or other events.

(e) Assignment or Transfer of Stock Grants. Except as provided in the applicable Stock Grant Agreement, and then only to the extent permitted by applicable law, a Stock Grant awarded under the Plan shall not be anticipated, assigned, attached, garnished, optioned, transferred or made subject to any creditor’s process, whether voluntarily, involuntarily or by operation of law. Any act in violation of this Section 9(e) shall be void. However, this Section 9(e) shall not preclude a Participant from designating a beneficiary who will receive any vested outstanding Stock Grant Awards in the event of the Participant’s death, nor shall it preclude a transfer of vested Stock Grant Awards by will or by the laws of descent and distribution.

(f) Voting and Dividend Rights. The holder of a Stock Grant awarded under the Plan shall have the same voting, dividend and other rights as the Company’s other shareholders. A Stock Grant Agreement, however, may require that the holder of such Stock Grant invest any cash dividends received in additional Shares subject to the Stock Grant. Such additional Shares subject to the Stock Grant shall be subject to the same conditions and restrictions as the Stock Grant with respect to which the dividends were paid. Such additional Shares subject to the Stock Grant shall not reduce the number of Shares available for issuance under Section 5.

(g) Modification or Assumption of Stock Grants. Within the limitations of the Plan, the Committee may modify or assume outstanding stock grants or may accept the cancellation of outstanding stock grants (including stock granted by another issuer) in return for the grant of new Stock Grants for the same or a different number of Shares and with the same or different vesting provisions. Notwithstanding the preceding sentence or anything to the contrary herein, the Committee may not modify an outstanding Stock Grant such that the modification shall, without the consent of the Participant, impair his or her rights or obligations under such Stock Grant, unless such modification is necessary or desirable to comply with any applicable law, regulation or rule.

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SECTION 10.TERMS AND CONDITIONS OF STOCK UNITS.

(a) Stock Unit Agreement. Each grant of Stock Units under the Plan shall be evidenced and governed exclusively by a Stock Unit Agreement between the Participant and the Company. Such Stock Units shall be subject to all applicable terms and conditions of the Plan and may be subject to any other terms and conditions that are not inconsistent with the Plan and that the Committee deems appropriate for inclusion in the applicable Stock Unit Agreement (including without limitation any performance conditions). The provisions of the various Stock Unit Agreements entered into under the Plan need not be identical. Stock Units may be granted in consideration of a reduction in the Participant’s other compensation.

(b) Number of Shares. Each Stock Unit Agreement shall specify the number of Shares to which the Stock Unit Grant pertains and shall be subject to adjustment of such number in accordance with Section 11.

(c) Payment for Stock Units. Stock Units shall be issued without consideration.

(d) Vesting Conditions. Each Award of Stock Units may or may not be subject to vesting. Any such vesting provision may provide that Shares shall vest based on Service over time or shall vest, in full or in installments, upon satisfaction of performance conditions specified in the Stock Unit Agreement which may include Performance Goals pursuant to Section 4(e). Unless the applicable Stock Unit Agreement provides otherwise, each Stock Unit shall vest with respect to 20% of the Shares subject to the Stock Unit upon completion of each year of Service on each of the first through fifth annual anniversaries of the vesting commencement date. A Stock Unit Agreement may provide for accelerated vesting in the event of the Participant’s death, Disability, or other events.

(e) Voting and Dividend Rights. The holders of Stock Units shall have no voting rights. Prior to settlement or forfeiture, any Stock Unit awarded under the Plan may, at the Committee’s discretion, carry with it a right to dividend equivalents. Such right entitles the holder to be credited with an amount equal to all cash dividends paid on one Share while the Stock Unit is outstanding. Dividend equivalents may be converted into additional Stock Units. Settlement of dividend equivalents may be made in the form of cash, in the form of Shares, or in a combination of both. Prior to distribution, any dividend equivalents shall be subject to the same conditions and restrictions as the Stock Units to which they attach and may not be paid until the applicable conditions and restrictions, including any performance conditions, are satisfied.

(f) Form and Time of Settlement of Stock Units. Settlement of vested Stock Units may be made in the form of (a) cash, (b) Shares or (c) any combination of both, as determined by the Committee at the time of the grant of the Stock Units, in its sole discretion. Methods of converting Stock Units into cash may include (without limitation) a method based on the average Fair Market Value of Shares over a series of trading days. Vested Stock Units may be settled in a lump sum or in installments. The distribution may occur or commence when the vesting conditions applicable to the Stock Units have been satisfied or have lapsed, or it may be deferred, in accordance with applicable law, to any later date. The amount of a deferred distribution may be increased by an interest factor or by dividend equivalents. Until an Award of Stock Units is settled, the number of such Stock Units shall be subject to adjustment pursuant to Section 11.

(g) Creditors’ Rights. A holder of Stock Units shall have no rights other than those of a general creditor of the Company. Stock Units represent an unfunded and unsecured obligation of the Company, subject to the terms and conditions of the applicable Stock Unit Agreement.

(h) Modification or Assumption of Stock Units. Within the limitations of the Plan, the Committee may modify or assume outstanding stock units or may accept the cancellation of outstanding stock units (including stock units granted by another issuer) in return for the grant of new Stock Units for the same or a different number of Shares and with the same or different vesting provisions. Notwithstanding the preceding sentence or anything to the contrary herein, the Committee may not modify an outstanding Stock Unit such that the modification shall, without the consent of the Participant, impair his or her rights or obligations under such Stock Unit, unless such modification is necessary or desirable to comply with any applicable law, regulation or rule.

(i) Assignment or Transfer of Stock Units. Except as provided in the applicable Stock Unit Agreement, and then only to the extent permitted by applicable law, Stock Units shall not be anticipated, assigned, attached, garnished, optioned, transferred or made subject to any creditor’s process, whether voluntarily, involuntarily or by operation of law. Any act in violation of this Section 10(i) shall be void. However, this Section 10(i) shall not preclude a Participant from designating a beneficiary who will receive any outstanding vested Stock Units in the event of the Participant’s death, nor shall it preclude a transfer of vested Stock Units by will or by the laws of descent and distribution.

SECTION 11.PROTECTION AGAINST DILUTION.

(a) Adjustments. In the event of a subdivision of the outstanding Shares, a declaration of a dividend payable in Shares, a declaration of a dividend payable in a form other than Shares in an amount that has a material effect on the price of Shares, a combination or consolidation of the outstanding Shares (by reclassification or otherwise) into a lesser number of Shares, a recapitalization, a spin-off or a similar occurrence, the Committee shall make appropriate adjustments to the following:

(i) the number of Shares and the kind of shares or securities available for future Awards under Section 5;

(ii) the limits on Awards specified in Section 5;

(iii) the number of Shares and the kind of shares or securities covered by each outstanding Award; or

(iv) the Exercise Price under each outstanding SAR or Option.

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(b) Participant Rights. Except as provided in this Section 11, a Participant shall have no rights by reason of any issue by the Company of stock of any class or securities convertible into stock of any class, any subdivision or consolidation of shares of stock of any class, the payment of any stock dividend or any other increase or decrease in the number of shares of stock of any class. If by reason of an adjustment pursuant to this Section 11 a Participant’s Award covers additional or different shares of stock or securities, then such additional or different shares and the Award in respect thereof shall be subject to all of the terms, conditions and restrictions which were applicable to the Award and the Shares subject to the Award prior to such adjustment.

(c) Fractional Shares. Any adjustment of Shares pursuant to this Section 11 shall be rounded down to the nearest whole number of Shares. Under no circumstances shall the Company be required to authorize or issue fractional shares and no consideration shall be provided as a result of any fractional shares not being issued or authorized.

SECTION 12.EFFECT OF A CORPORATE TRANSACTION.

(a) Corporate Transaction. In the event that the Company is a party to a Corporate Transaction, outstanding Awards shall be subject to the applicable agreement of merger, reorganization, or sale of assets. Such agreement may provide, without limitation, for the assumption or substitution of outstanding Options, SARs, or Stock Units by the surviving corporation or its parent, for the assumption of outstanding Stock Grant Agreements by the surviving corporation or its parent, for the replacement of outstanding Options, SARs, and Stock Units with a cash incentive program of the surviving corporation which preserves the spread existing on the unvested portions of such outstanding Awards at the time of the transaction and provides for subsequent payout in accordance with the same vesting provisions applicable to those Awards, for accelerated vesting of outstanding Awards, or for the cancellation of outstanding Options, SARs, and Stock Units, with or without consideration, in all cases without the consent of the Participant.

(b) Acceleration. The Committee may determine, at the time of grant of an Award or thereafter, that such Award shall become fully vested as to all Shares subject to such Award in the event that a Corporate Transaction or a Change in Control occurs. Unless otherwise provided in the applicable Award agreement, in the event that a Corporate Transaction occurs and any outstanding Options, SARs or Stock Units are not assumed, substituted, or replaced with a cash incentive program pursuant to Section 12(a) or any outstanding Stock Grant Agreements are not assumed pursuant to Section 12(a), then such Awards shall fully vest and be fully exercisable immediately prior to such Corporate Transaction. Immediately following the consummation of a Corporate Transaction, all outstanding Options, SARs and Stock Units shall terminate and cease to be outstanding, except to the extent that they are assumed by the surviving corporation or its parent.

(c) Dissolution. To the extent not previously exercised or settled, Options, SARs and Stock Units shall terminate immediately prior to the dissolution or liquidation of the Company.

SECTION 13.LIMITATIONS ON RIGHTS.

(a) No Entitlements. A Participant’s rights, if any, in respect of or in connection with any Award is derived solely from the discretionary decision of the Company to permit the individual to participate in the Plan and to benefit from a discretionary Award. By accepting an Award under the Plan, a Participant expressly acknowledges that there is no obligation on the part of the Company to continue the Plan and/or grant any additional Awards. Any Award granted hereunder is not intended to be compensation of a continuing or recurring nature, or part of a Participant’s normal or expected compensation, and in no way represents any portion of a Participant’s salary, compensation, or other remuneration for purposes of pension benefits, severance, redundancy, resignation or any other purpose.

Neither the Plan nor any Award granted under the Plan shall be deemed to give any individual a right to remain an employee, consultant or director of the Company, a Parent, a Subsidiary or an Affiliate. The Company and its Parents and Subsidiaries and Affiliates reserve the right to terminate the Service of any person at any time, and for any reason, subject to applicable laws, the Company’s Articles of Incorporation and Bylaws and a written employment agreement (if any), and such terminated person shall be deemed irrevocably to have waived any claim to damages or specific performance for breach of contract or dismissal, compensation for loss of office, tort or otherwise with respect to the Plan or any outstanding Award that is forfeited and/or is terminated by its terms or to any future Award.

(b) Shareholders’ Rights. A Participant shall have no dividend rights, voting rights or other rights as a shareholder with respect to any Shares covered by his or her Award prior to the issuance of such Shares (as evidenced by an appropriate entry on the books of the Company or a duly authorized transfer agent of the Company). No adjustment shall be made for cash dividends or other rights for which the record date is prior to the date when such Shares are issued, except as expressly provided in Section 11.

(c) Regulatory Requirements. Any other provision of the Plan notwithstanding, the obligation of the Company to issue Shares or other securities under the Plan shall be subject to all applicable laws, rules and regulations and such approval by any regulatory body as may be required. The Company reserves the right to restrict, in whole or in part, the delivery of Shares or other securities pursuant to any Award prior to the satisfaction of all legal requirements relating to the issuance of such Shares or other securities, totheir registration, qualification or listing or to an exemption from registration, qualification or listing.

SECTION 14.WITHHOLDING TAXES.

(a) General. A Participant shall make arrangements satisfactory to the Company for the satisfaction of any withholding tax obligations that arise in connection with his or her Award. The Company shall not be required to issue any Shares or make any cash payment under the Plan until such obligations are satisfied.

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(b) Share Withholding. If a public market for the Company’s Shares exists, the Committee may permit a Participant to satisfy all or part of his or her withholding or income tax obligations by having the Company withhold all or a portion of any Shares that otherwise would be issued to him or her or by surrendering or attesting to all or a portion of any Shares that he or she previously acquired. Such Shares shall be valued based on the value of the actual trade or, if there is none, the Fair Market Value as of the previous day. Any payment of taxes by assigning Shares to the Company may be subject to restrictions, including, but not limited to, any restrictions required by rules of the SEC. The Committee may, in its discretion, also permit a Participant to satisfy withholding or income tax obligations related to an Award through Cashless Exercise or through a sale of Shares underlying the Award.

SECTION 15.DURATION AND AMENDMENTS.

(a) Term of the Plan. The Plan shall become effective upon its approval by Company shareholders. The Plan shall terminate at the Company’s 2021 Annual Meeting of Shareholders and may be terminated on any earlier date pursuant to this Section 15.

(b) Right to Amend or Terminate the Plan. The Board may amend or terminate the Plan at any time and for any reason. The termination of the Plan, or any amendment thereof, shall not impair the rights or obligations of any Participant under any Award previously granted under the Plan without the Participant’s consent, unless such modification is necessary or desirable to comply with any applicable law, regulation or rule. No Awards shall be granted under the Plan after the Plan’s termination. An amendment of the Plan shall be subject to the approval of the Company’s shareholders only to the extent such approval is otherwise required by applicable laws, regulations or rules.

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(For Grants Prior to September 2008)

CISCO SYSTEMS, INC.

NOTICE OF GRANT OF STOCK OPTION

Notice is hereby given of the following option grant (the “Option”) made to purchase shares of Cisco Systems, Inc. (the “Company”) common stock:

Optionee:

Grant Date:

Type of Option:	Incentive Stock Option
	Nonstatutory Stock Option

Grant Number:

Number of Option Shares: shares

Exercise Price: $ per share

Vesting Commencement Date:

Expiration Date:

Exercise Schedule

The Option shall vest and become exercisable with respect to (i) twenty percent (20%) of the Option Shares upon Optionee’s completion of one (1) year of Service measured from the Vesting Commencement Date and (ii) the balance of the Option Shares in a series of forty-eight (48) successive equal monthly installments upon Optionee’s completion of each additional month of Service over the forty-eight (48)-month period measured from the first annual anniversary of the Vesting Commencement Date. In no event shall the Option vest and become exercisable for any additional Option Shares after Optionee’s cessation of Service.

Should Optionee request a reduction to his or her work commitment to less than thirty (30) hours per week, then the Committee shall have the right, to extend the period over which the Option shall thereafter vest and become exercisable for the Option Shares during the remainder of the Option term. The decision whether or not to approve Optionee’s request for any reduced work commitment shall be at the sole discretion of the Company. In no event shall any extension of the Exercise Schedule for the Option Shares result in the extension of the Expiration Date of the Option.

Optionee understands and agrees that the Option is offered subject to and in accordance with the terms of the Cisco Systems, Inc. 2005 Stock Incentive Plan (the “Plan”). Optionee further agrees to be bound by the terms of the Plan and the terms of the Option as set forth in the Stock Option Agreement attached hereto.

No Employment or Service Contract . Nothing in this Notice or in the attached Stock Option Agreement or in the Plan shall confer upon Optionee any right to continue in Service for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Company (or any Parent or Subsidiary employing or retaining Optionee) or of Optionee, which rights are hereby expressly reserved by each, to terminate Optionee’s Service at any time for any reason, with or without cause.

Definitions . All capitalized terms in this Notice shall have the meaning assigned to them in this Notice, the attached Stock Option Agreement or the Plan.

STOCK OPTION AGREEMENT

Recitals

A. The Board has adopted the Plan for the purpose of retaining the services of selected Employees, non-employee members of the Board or of the board of directors of any Parent or Subsidiary and Consultants and other independent advisors who provide services to the Company (or any Parent or Subsidiary).

B. Optionee is to render valuable services to the Company (or a Parent or Subsidiary), and this Agreement is executed pursuant to, and is intended to carry out the purposes of, the Plan in connection with the Company’s grant of an option to Optionee.

C. All capitalized terms in this Agreement shall have the meaning assigned to them in this Agreement, the attached Notice of Grant of Stock Option (the “ Notice”), or the Plan.

NOW, THEREFORE , it is hereby agreed as follows:

1.Grant of Option . The Company hereby grants to Optionee, as of the Grant Date, an option to purchase up to the number of Option Shares specified in the Notice. The Option Shares shall be purchasable from time to time during the Option term specified in Paragraph 2 at the Exercise Price specified in the Notice.

2.Option Term . This Option shall have a maximum term of nine (9) years measured from the Grant Date and shall accordingly expire at the close of business on the Expiration Date, unless sooner terminated in accordance with Paragraph 4, 5 or 6.

3.Non-Transferability . This Option shall not be anticipated, assigned, attached, garnished, optioned, transferred or made subject to any creditor’s process, whether voluntarily or involuntarily or by operation of law. Notwithstanding the foregoing, should the Optionee die while holding this Option, then this Option shall be transferred in accordance with Optionee’s will or the laws of descent and distribution.

4.Dates of Exercise . This Option shall vest and become exercisable for the Option Shares in one or more installments as specified in the Notice. As the Option becomes exercisable for such installments, those installments shall accumulate and the Option shall remain exercisable for the accumulated installments until the Expiration Date or sooner termination of the Option term under Paragraph 5 or 6. As an administrative matter, the exercisable portion of this Option may only be exercised until the close of the Nasdaq Global Select Market on the Expiration Date or the earlier termination date under Paragraph 5 or 6 or, if such date is not a trading day on the Nasdaq Global Select Market, the last trading day before such date. Any later attempt to exercise this Option will not be honored. For example, if Optionee ceases to remain in Service as provided in Paragraph 5(i) and the date three (3) months from the date of cessation is Monday, July 4 (a holiday on which the Nasdaq Global Select Market is closed), Optionee must exercise the exercisable portion of this Option by 4 pm Eastern Daylight Time on Friday, July 1.

5.Cessation of Service . The Option term specified in Paragraph 2 shall terminate (and this Option shall cease to be outstanding) prior to the Expiration Date should any of the following provisions become applicable:

(i) Should Optionee cease to remain in Service for any reason (other than death, Disability or Cause) while this Option is outstanding, then Optionee shall have a period of three (3) months (commencing with the date of such cessation of Service) during which to exercise this Option, but in no event shall this Option be exercisable at any time after the Expiration Date.

(ii) If Optionee dies while this Option is outstanding, then the personal representative of Optionee’s estate or the person or persons to whom the Option is transferred pursuant to Optionee’s will or in accordance with the laws of descent and distribution shall have the right to exercise this Option. Such right shall lapse, and this Option shall cease to be outstanding, upon the earlier of (A) the expiration of the eighteen (18)- month period measured from the date of Optionee’s death or (B) the Expiration Date.

(iii) Should Optionee cease Service by reason of Disability while this Option is outstanding, then Optionee shall have a period of eighteen (18) months (commencing with the date of such cessation of Service) during which to exercise this Option, but in no event shall this Option be exercisable at any time after the Expiration Date.

(iv) Optionee’s date of cessation of Service shall mean the date upon which Optionee ceases active performance of services for the Company following the provision of such notification of termination or resignation from Service and shall be determined solely by this Agreement and without reference to any other agreement, written or oral, including Optionee’s contract of employment, and shall not otherwise include any period of notice of termination of employment, whether expressed or implied.

(v) During the limited period of post-Service exercisability, this Option may not be exercised in the aggregate for more than the number of vested Option Shares for which the Option is exercisable at the time of Optionee’s cessation of Service. Upon the expiration of such limited exercise period or (if earlier) upon the Expiration Date, this Option shall terminate and cease to be outstanding for any vested Option Shares for which the Option has not been exercised. However, this Option shall, immediately upon Optionee’s cessation of Service for any reason, terminate and cease to be outstanding with respect to any Option Shares in which Optionee is not otherwise at that time vested or for which this Option is not otherwise at that time exercisable.

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(vi) Should Optionee’s Service be terminated for Cause or should Optionee otherwise engage in activities constituting Cause while this Option is outstanding, then this Option shall terminate immediately and cease to remain outstanding. In the event Optionee’s Service with the Company is suspended pending an investigation of whether Optionee’s Service will be terminated for Cause, all Optionee’s rights under the Option, including the right to exercise the Option, shall be suspended during the investigation period.

6.Special Acceleration of Option

(a) This Option, to the extent outstanding at the time of a Corporate Transaction but not otherwise fully vested and exercisable, shall automatically accelerate so that this Option shall, immediately prior to the effective date of the Corporate Transaction, become vested and exercisable for all of the Option Shares at the time subject to this Option and may be exercised for any or all of those Option Shares as fully-vested Shares. No such acceleration of this Option, however, shall occur if and to the extent: (i) this Option is, in connection with the Corporate Transaction, either assumed by the successor corporation (or parent thereof) or replaced with a comparable option to purchase shares of the capital stock of the successor corporation (or parent thereof) or (ii) this Option is replaced with a cash incentive program of the successor corporation which preserves the spread existing on the unvested Option Shares at the time of the Corporate Transaction (the excess of the Fair Market Value of those Option Shares over the aggregate Exercise Price payable for such Shares) and provides for subsequent pay-out in accordance with the same Exercise Schedule set forth in the Notice. The determination of option comparability under clause (i) shall be made by the Committee, and such determination shall be final, binding and conclusive.

(b) Immediately following the effective date of the Corporate Transaction, this Option shall terminate and cease to be outstanding, except to the extent assumed by the successor corporation (or parent thereof) in connection with the Corporate Transaction.

(c) If this Option is assumed in connection with a Corporate Transaction, then the Committee shall appropriately adjust the number of shares and the kind of shares or securities covered by the Option and the Exercise Price immediately after such Corporate Transaction, provided the aggregate Exercise Price shall remain the same.

(d) This Option, to the extent outstanding at the time of a Change in Control but not otherwise fully vested and exercisable, shall automatically accelerate so that this Option shall, immediately prior to the effective date of the Change in Control, become vested and exercisable for all of the Option Shares at the time subject to this Option and may be exercised for any or all of those Option Shares as fully-vested Shares. This Option shall remain so exercisable until the Expiration Date or sooner termination of the Option term.

(e) This Agreement shall not in any way affect the right of the Company to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets.

7.Adjustment in Option Shares . In the event of a subdivision of the outstanding Shares, a declaration of a dividend payable in Shares, a declaration of a dividend payable in a form other than Shares in an amount that has a material effect on the price of Shares, a combination or consolidation of the outstanding Shares (by reclassification or otherwise) into a lesser number of Shares, a recapitalization, a spin-off or a similar occurrence, appropriate adjustments shall be made to (i) the total number and/or kind of shares or securities subject to this Option and (ii) the Exercise Price in order to reflect such change and thereby preclude a dilution or enlargement of benefits hereunder.

8.Shareholder Rights . The holder of this Option shall not have any shareholder rights with respect to the Option Shares until such person shall have exercised the Option, paid the Exercise Price and become a holder of record of the purchased Shares.

9.Manner of Exercising Option .

(a) In order to exercise this Option with respect to all or any part of the Option Shares for which this Option is at the time exercisable, Optionee (or any other person or persons exercising the Option) must take the following actions:

(i) Pay the aggregate Exercise Price for the purchased Shares in one or more of the following forms:

(A) cash or check which, in the Company’s sole discretion, shall be made payable to a Company-designated brokerage firm or the Company;

(B) as permitted by applicable law, through a special sale and remittance procedure pursuant to which Optionee (or any other person or persons exercising the Option) shall concurrently provide irrevocable written instructions (I) to a Company-designated brokerage firm (or in the case of an executive officer or Board member of the Company, an Optionee-designated brokerage firm) to effect the immediate sale of the purchased Shares and remit to the Company, out of the sale proceeds available on the settlement date, sufficient funds to cover the aggregate Exercise Price payable for the purchased Shares plus, if applicable, the amount necessary to satisfy the Company’s withholding obligations at the minimum statutory withholding rates and (II) to the Company to deliver the certificates for the purchased Shares directly to such brokerage firm in order to complete the sale transaction; and

(C) a promissory note payable to the Company, but only to the extent authorized by the Committee in accordance with Paragraph 13.

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(ii) Furnish to the Company appropriate documentation that the person or persons exercising the Option (if other than Optionee) have the right to exercise this Option.

(iii) Make appropriate arrangements with the Company (or Parent or Subsidiary employing or retaining Optionee) for the satisfaction of all tax withholding requirements applicable to the Option exercise.

(b) As soon as practical after the exercise date, the Company shall issue to or on behalf of Optionee (or any other person or persons exercising this Option) the purchased Option Shares (as evidenced by an appropriate entry on the books of the Company or a duly authorized transfer agent of the Company), subject to the appropriate legends and/or stop transfer instructions.

(c) In no event may this Option be exercised for any fractional Shares.

(d) Notwithstanding any other provisions of the Plan, this Agreement or any other agreement to the contrary, if at the time this Option is exercised, Optionee is indebted to the Company (or any Parent or Subsidiary) for any reason, the following actions shall be taken, as deemed appropriate by the Committee:

(i) any Shares to be issued upon such exercise shall automatically be pledged against Optionee’s outstanding indebtedness; and

(ii) if this Option is exercised in accordance with subparagraph 9(a)(i)(B) above, the after tax proceeds of the sale of Optionee’s Shares shall automatically be applied to the outstanding balance of Optionee’s indebtedness.

10.Compliance with Laws and Regulations .

(a) The exercise of this Option and the issuance of the Option Shares upon such exercise shall be subject to compliance by the Company and Optionee with all applicable laws, regulations and rules relating thereto, including all applicable regulations of any stock exchange (or the Nasdaq Global Select Market, if applicable) on which the Shares may be listed for trading at the time of such exercise and issuance.

(b) The inability of the Company to obtain approval from any regulatory body having authority deemed by the Company to be necessary to the lawful issuance and sale of any Shares pursuant to this Option shall relieve the Company of any liability with respect to the non-issuance or sale of the Shares as to which such approval shall not have been obtained. The Company, however, shall use its best efforts to obtain all such approvals.

11.Successors and Assigns . Except to the extent otherwise provided in Paragraphs 3 and 6, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the Company and its successors and assigns and Optionee, Optionee’s assigns and the legal representatives, heirs and legatees of Optionee’s estate.

12.Notices . Any notice required or permitted under the terms of this Agreement shall be in writing and shall be deemed sufficient when delivered personally or sent by confirmed email, telegram, or fax or forty-eight (48) hours after being deposited in the U.S. mail, as certified or registered mail, with postage prepaid, and addressed to the Company at the Company’s principal corporate offices or to the Optionee at the address maintained for the Optionee in the Company’s records or, in either case, as subsequently modified by written notice to the other party.

13.Financing . The Committee may, in its absolute discretion and without any obligation to do so, permit Optionee to pay the Exercise Price for the purchased Option Shares by delivering a full-recourse promissory note payable to the Company. The terms of any such promissory note (including the interest rate, the requirements for collateral and the terms of repayment) shall be established by the Committee in its sole discretion.

14.Construction . The Notice, this Agreement, and the Option evidenced hereby (a) are made and granted pursuant to the Plan and are in all respects limited by and subject to the terms of the Plan, and (b) constitute the entire agreement between Optionee and the Company on the subject matter hereof and supercede all proposals, written or oral, and all other communications between the parties related to the subject matter. All decisions of the Committee with respect to any question or issue arising under the Notice, this Agreement or the Plan shall be conclusive and binding on all persons having an interest in this Option.

15.Governing Law . The interpretation, performance and enforcement of this Agreement shall be governed by the laws of the State of California without resort to the conflict of laws principles thereof.

16.Excess Shares . If the Option Shares covered by this Agreement exceed, as of the Grant Date, the number of Shares which may without shareholder approval be issued under the Plan, then this Option shall be void with respect to those excess shares, unless shareholder approval of an amendment sufficiently increasing the number of Shares issuable under the Plan is obtained in accordance with the provisions of the Plan and all applicable laws, regulations and rules.

17.Additional Terms Applicable to an Incentive Stock Options . In the event this Option is designated an Incentive Stock Option in the Notice, the following terms and conditions shall also apply to the Option:

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(a) This Option shall cease to qualify for favorable tax treatment as an Incentive Stock Option if (and to the extent) this Option is exercised for one or more Option Shares: (A) more than three (3) months after the date Optionee ceases to be an Employee for any reason other than death or Disability or (B) more than twelve (12) months after the date Optionee ceases to be an Employee by reason of Disability.

(b) Even if this Option is designated as an Incentive Stock Option, if the Shares subject to this Option (and all other Incentive Stock Options granted to Optionee by the Company or any Parent or Subsidiary, including under other plans of the Company) that first become exercisable in any calendar year have an aggregate Fair Market Value (determined for each Share as of the date of grant of the option covering such Share) in excess of $100,000, the Shares in excess of $100,000 shall be treated as subject to a Nonstatutory Stock Option in accordance all applicable laws, regulations and rules.

18.Leave of Absence . Unless otherwise determined by the Committee, the following provisions shall apply upon the Optionee’s commencement of an authorized leave of absence:

(a) The Exercise Schedule in effect under the Notice shall be frozen as of the first day of the authorized leave, and this Option shall not become exercisable for any additional installments of the Option Shares during the period Optionee remains on such leave.

(b) If the Option is designated as an Incentive Stock Option in the Notice and if the leave of absence continues for more than ninety (90) days, then this Option shall automatically convert to a Nonstatutory Stock Option at the end of the three (3)-month period measured from the ninety-first (91st) day of such leave, unless the Optionee’s right to return to active work is guaranteed by law or by a contract.

(c) In no event shall this Option become exercisable for any additional Option Shares or otherwise remain outstanding if Optionee does not resume Service prior to the Expiration Date of the Option term.

19.Further Instruments . The parties agree to execute such further instruments and to take such further action as may be reasonably necessary to carry out the purposes and intent of this Agreement.

20.Authorization to Release Necessary Personal Information .

(a) Optionee hereby authorizes and directs Optionee’s employer to collect, use and transfer in electronic or other form, any personal information (the “Data”) regarding Optionee’s employment, the nature and amount of Optionee’s compensation and the fact and conditions of Optionee’s participation in the Plan (including, but not limited to, Optionee’s name, home address, telephone number, date of birth, social security number (or any other social or national identification number), salary, nationality, job title, number of Shares held and the details of all options or any other entitlement to Shares awarded, cancelled, exercised, vested, unvested or outstanding) for the purpose of implementing, administering and managing Optionee’s participation in the Plan. Optionee understands that the Data may be transferred to the Company or any of its Subsidiaries, or to any third parties assisting in the implementation, administration and management of the Plan, including any requisite transfer to a broker or other third party assisting with the exercise of Options under the Plan or with whom Shares acquired upon exercise of this Option or cash from the sale of such shares may be deposited. Optionee acknowledges that recipients of the Data may be located in different countries, and those countries may have data privacy laws and protections different from those in the country of Optionee’s residence. Furthermore, Optionee acknowledges and understands that the transfer of the Data to the Company or any of its Subsidiaries, or to any third parties is necessary for Optionee’s participation in the Plan.

(b) Optionee may at any time withdraw the consents herein, by contacting Optionee’s local human resources representative in writing. Optionee further acknowledges that withdrawal of consent may affect Optionee’s ability to exercise or realize benefits from the Option, and Optionee’s ability to participate in the Plan.

21.No Entitlement or Claims for Compensation .

(a) Optionee’s rights, if any, in respect of or in connection with this Option or any other Award is derived solely from the discretionary decision of the Company to permit Optionee to participate in the Plan and to benefit from a discretionary Award. By accepting this Option, Optionee expressly acknowledges that there is no obligation on the part of the Company to continue the Plan and/or grant any additional Awards to Optionee. This Option is not intended to be compensation of a continuing or recurring nature, or part of Optionee’s normal or expected compensation, and in no way represents any portion of a Optionee’s salary, compensation, or other remuneration for purposes of pension benefits, severance, redundancy, resignation or any other purpose.

(b) Neither the Plan nor this Option or any other Award granted under the Plan shall be deemed to give Optionee a right to remain an Employee, Consultant or director of the Company, a Parent or a Subsidiary or an Affiliate. The Company and its Parents and Subsidiaries and Affiliates reserve the right to terminate the Service of Optionee at any time, with or without cause, and for any reason, subject to applicable laws, the Company’s Articles of Incorporation and Bylaws and a written employment agreement (if any), and Optionee shall be deemed irrevocably to have waived any claim to damages or specific performance for breach of contract or dismissal, compensation for loss of office, tort or otherwise with respect to the Plan, this Option or any outstanding Award that is forfeited and/or is terminated by its terms or to any future Award.

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(c) Optionee agrees that the Company may require Options granted hereunder be exercised with, and the Option Shares held by, a broker designated by the Company. In addition, Optionee agrees that his or her rights hereunder shall be subject to set-off by the Company for any valid debts the Optionee owes to the Company.

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(For Grants Beginning in September 2008)

CISCO SYSTEMS, INC.

NOTICE OF GRANT OF STOCK OPTION

Notice is hereby given of the following option grant (the “Option”) made to purchase shares of Cisco Systems, Inc. (the “Company”) common stock:

Optionee:

Grant Date:

Type of Option: U.S. Nonstatutory Stock Option

Grant Number:

Number of Option Shares: shares

Exercise Price: $ per share

First Vest Date:

Expiration Date:

Exercise Schedule . So long as Optionee’s Service continues, the Option shall vest and become exercisable with respect to (i)  percent ( %) of the option shares, as set forth above (the “Option Shares”) on the First Vest Date as set forth above and (ii) the balance of the Option Shares in installments upon Optionee’s completion of each additional of Service over the period measured from the First Vest Date. In no event shall the Option vest and become exercisable for any additional Option Shares after Optionee’s cessation of Service.

Should Optionee request a reduction to his or her work commitment to less than thirty (30) hours per week, then the Company shall have the right to extend the period over which the Option shall thereafter vest and become exercisable for the Option Shares during the remainder of the Option term to the extent permitted under local law. In no event shall any extension of the exercise schedule, as set forth above (“Exercise Schedule”) for the Option Shares result in the extension of the expiration date, as set forth above, (“Expiration Date”) of the Option.

Optionee understands and agrees that the Option is offered subject to and in accordance with the terms of the Cisco Systems, Inc. 2005 Stock Incentive Plan (the “Plan”). Optionee further agrees to be bound by the terms of the Plan and the terms of the Option as set forth in the Stock Option Agreement (the “Agreement”) attached hereto.

No Employment or Service Contract . Nothing in this Notice or in the attached Agreement or in the Plan shall confer upon Optionee any right to continue in Service for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Company (or any Parent, Subsidiary or Affiliate employing or retaining Optionee) or of Optionee, which rights are hereby expressly reserved by each, to terminate Optionee’s Service at any time for any reason, with or without cause to the extent permissible under local law.

Definitions . All capitalized terms in this Notice shall have the meaning assigned to them in this Notice, the attached Agreement or the Plan.

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STOCK OPTION AGREEMENT

Recitals

A. The Board has adopted the Plan for the purpose of retaining the services of selected Employees, non-employee members of the Board and Consultants.

B. Optionee is to render valuable services to the Company (or a Parent, Subsidiary or Affiliate), and this Agreement is executed pursuant to, and is intended to carry out the purposes of, the Plan in connection with the Company’s grant of an option to Optionee.

C. All capitalized terms in this Agreement shall have the meaning assigned to them in this Agreement, the attached Notice of Grant of Stock Option (the “Notice”), or the Plan.

NOW, THEREFORE , it is hereby agreed as follows:

1.Grant of Option . The Company hereby grants to Optionee, as of the grant date, as set forth in the Notice, (the “Grant Date”) an option to purchase up to the number of Option Shares specified in the Notice. The Option Shares shall be purchasable from time to time during the Option term specified in Paragraph 2 at the Exercise Price specified in the Notice.

2.Option Term . This Option shall have a maximum term of  years [not to exceed ten (10) years] measured from the Grant Date and shall accordingly expire at the close of business on the Expiration Date, unless sooner terminated in accordance with Paragraph 4, 5 or 6.

3.Non-Transferability . This Option shall not be anticipated, assigned, attached, garnished, optioned, transferred or made subject to any creditor’s process, whether voluntarily or involuntarily or by operation of law. Notwithstanding the foregoing, should the Optionee die while holding this Option, then this Option shall be transferred in accordance with Optionee’s will or the laws of descent and distribution.

4.Dates of Exercise . This Option shall vest and become exercisable for the Option Shares in one or more installments as specified in the Notice. As the Option becomes exercisable for such installments, those installments shall accumulate and the Option shall remain exercisable for the accumulated installments until the Expiration Date or sooner termination of the Option term under Paragraph 5 or 6. As an administrative matter, the exercisable portion of this Option may only be exercised until the close of the Nasdaq Global Select Market on the Expiration Date or the earlier termination date under Paragraph 5 or 6 or, if such date is not a trading day on the Nasdaq Global Select Market, the last trading day before such date. Any later attempt to exercise this Option will not be honored. For example, if Optionee ceases to remain in Service as provided in Paragraph 5(i) and the date three (3) months from the date of cessation is Monday, July 4 (a holiday on which the Nasdaq Global Select Market is closed), Optionee must exercise the exercisable portion of this Option by 4:00 p.m. Eastern Daylight Time on Friday, July 1.

5.Cessation of Service . The Option term specified in Paragraph 2 shall terminate (and this Option shall cease to be outstanding) prior to the Expiration Date should any of the following provisions become applicable:

(i) Should Optionee cease to remain in Service for any reason (other than death, Disability or Cause and whether or not in breach of local labor laws) while this Option is outstanding, then Optionee shall have a period of three (3) months (commencing with the date of such cessation of Service) during which to exercise this Option, but in no event shall this Option be exercisable at any time after the Expiration Date.

(ii) If Optionee dies while this Option is outstanding, then the Optionee’s designated beneficiary or, if no beneficiary was designated or properly designated or, if no designated beneficiary survives the Optionee, the Optionee’s estate (to the extent reasonably determinable) or other individual or entity entitled to receive the Option under applicable local law shall have the right to exercise this Option. Such right shall lapse, and this Option shall cease to be outstanding, upon the earlier of (A) the expiration of the eighteen (18) month period measured from the date of Optionee’s death or (B) the Expiration Date. Optionee may only make a beneficiary designation with respect to this Option if the Company has approved a process or procedure for such beneficiary designation for the local jurisdiction within which Optionee performs services for the Company or a Parent, Subsidiary or Affiliate. If no such beneficiary designation process or procedure has been approved by the Company, then, in the event of Optionee’s death, this Option may only be exercised by the Optionee’s estate (to the extent reasonably determinable) or other individual or entity entitled to receive the Option under applicable local law.

(iii) Should Optionee cease Service by reason of Disability while this Option is outstanding, then Optionee shall have a period of eighteen (18) months (commencing with the date of such cessation of Service) during which to exercise this Option, but in no event shall this Option be exercisable at any time after the Expiration Date.

(iv) During the limited period of post-Service exercisability, this Option may not be exercised in the aggregate for more than the number of vested Option Shares for which the Option is exercisable at the date the Optionee ceases to actively provide Service (not extended by any notice period mandated under local law). Upon the expiration of such limited exercise period or (if earlier) upon the Expiration Date, this Option shall terminate and cease to be outstanding for any vested Option Shares for which the Option has not been exercised. However, this Option shall, immediately as of the date the Optionee ceases to actively provide Service for any reason, terminate and cease to be outstanding with respect to any Option Shares in which Optionee is not otherwise at that time vested or for which this Option is not otherwise at that time exercisable.

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(v) Should Optionee’s Service be terminated for Cause or should Optionee otherwise engage in activities constituting Cause while this Option is outstanding, then this Option shall terminate immediately and cease to remain outstanding. In the event Optionee’s Service is suspended pending an investigation of whether Optionee’s Service will be terminated for Cause, all Optionee’s rights under the Option, including the right to exercise the Option, shall be suspended during the investigation period.

(vi) For purposes of this Paragraph 5, in the event of Optionee’s cessation of Service, Optionee’s right to receive additional options or to vest in the Option will end as of the date the Optionee is no longer actively providing Service and will not be extended by any notice period mandated under local law ( e.g ., active Service would not include any period of “garden leave” or similar period pursuant to local law); the Company shall have the exclusive discretion to determine when an Optionee is no longer actively providing Service for purposes of this Option.

6.Special Acceleration of Option.

(a) This Option, to the extent outstanding at the time of a Corporate Transaction but not otherwise fully vested and exercisable, shall automatically accelerate so that this Option shall, immediately prior to the effective date of the Corporate Transaction, become vested and exercisable for all of the Option Shares at the time subject to this Option and may be exercised for any or all of those Option Shares as fully-vested Shares. No such acceleration of this Option, however, shall occur if and to the extent: (i) this Option is, in connection with the Corporate Transaction, either assumed by the successor corporation (or parent thereof) or replaced with a comparable option to purchase shares of the capital stock of the successor corporation (or parent thereof) or (ii) this Option is replaced with a cash incentive program of the successor corporation which preserves the spread existing on the unvested Option Shares at the time of the Corporate Transaction (the excess of the Fair Market Value of those Option Shares over the aggregate Exercise Price payable for such Shares) and provides for subsequent pay-out in accordance with the same Exercise Schedule set forth in the Notice. The determination of option comparability under clause (i) shall be made by the Committee, and such determination shall be final, binding and conclusive.

(b) Immediately following the effective date of the Corporate Transaction, this Option shall terminate and cease to be outstanding, except to the extent assumed by the successor corporation (or parent thereof) in connection with the Corporate Transaction.

(c) If this Option is assumed in connection with a Corporate Transaction, then the Committee shall appropriately adjust the number of shares and the kind of shares or securities covered by the Option and the Exercise Price immediately after such Corporate Transaction, provided the aggregate Exercise Price shall remain the same.

(d) This Option, to the extent outstanding at the time of a Change in Control but not otherwise fully vested and exercisable, shall automatically accelerate so that this Option shall, immediately prior to the effective date of the Change in Control, become vested and exercisable for all of the Option Shares at the time subject to this Option and may be exercised for any or all of those Option Shares as fully-vested Shares. This Option shall remain so exercisable until the Expiration Date or sooner termination of the Option term.

(e) This Agreement shall not in any way affect the right of the Company to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets.

7.Adjustment in Option Shares . In the event of a subdivision of the outstanding Shares, a declaration of a dividend payable in Shares, a declaration of a dividend payable in a form other than Shares in an amount that has a material effect on the price of Shares, a combination or consolidation of the outstanding Shares (by reclassification or otherwise) into a lesser number of Shares, a recapitalization, a spin-off or a similar occurrence, appropriate adjustments shall be made to (i) the total number and/or kind of shares or securities subject to this Option and (ii) the Exercise Price in order to reflect such change and thereby preclude a dilution or enlargement of benefits hereunder.

8.Shareholder Rights . The holder of this Option shall not have any shareholder rights with respect to the Option Shares until such person shall have exercised the Option, paid the Exercise Price and become a holder of record of the purchased Shares.

9.Manner of Exercising Option .

(a) In order to exercise this Option with respect to all or any part of the Option Shares for which this Option is at the time exercisable, Optionee (or any other person or persons exercising the Option) must take the following actions:

(i) Pay the aggregate Exercise Price for the purchased Shares in one or more of the following forms:

(A) cash or check which, in the Company’s sole discretion, shall be made payable to a Company-designated brokerage firm or the Company; and

(B) as permitted by applicable law, through a special sale and remittance procedure pursuant to which Optionee (or any other person or persons exercising the Option) shall concurrently provide irrevocable written instructions (I) to a Company-designated brokerage firm (or in the case of an executive officer or Board member of the Company, an Optionee-designated brokerage firm) to effect the immediate sale of the purchased Shares and remit to the Company, out of the sale proceeds available on the settlement date, sufficient funds to cover the aggregate Exercise Price payable for the purchased Shares plus, if applicable, the amount necessary to satisfy the Company’s (or a Parent’s, Subsidiary’s or Affiliate’s) withholding obligations (including income tax, social taxes or insurance contributions, payroll tax, payment on account or other tax items

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related to Optionee’s participation in the Plan and legally applicable to Optionee (“Tax-Related Items”)) and (II) to the Company to deliver the purchased Shares directly to such brokerage firm in order to complete the sale transaction.

(ii) Furnish to the Company appropriate documentation that the person or persons exercising the Option (if other than Optionee) have the right to exercise this Option.

(iii) Make appropriate arrangements with the Company (or a Parent, Subsidiary or Affiliate employing or retaining Optionee) for the satisfaction of all withholding or other obligations related to Tax-Related Items applicable to the Option grant, vesting, exercise or the sale of Shares, as applicable.

(b) As soon as practical after the exercise date, the Company shall issue to or on behalf of Optionee (or any other person or persons exercising this Option) the purchased Option Shares, (as evidenced by an appropriate entry on the books of the Company or a duly authorized transfer agent of the Company), subject to the appropriate legends and/or stop transfer instructions.

(c) In no event may this Option be exercised for any fractional Shares.

(d) Notwithstanding any other provisions of the Plan, this Agreement or any other agreement to the contrary, if at the time this Option is exercised, Optionee is indebted to the Company (or any Parent, Subsidiary or Affiliate) for any reason, the following actions shall be taken, as deemed appropriate by the Committee:

(i) any Shares to be issued upon such exercise shall automatically be pledged against Optionee’s outstanding indebtedness; and

(ii) if this Option is exercised in accordance with subparagraph 9(a)(i)(B) above, the after tax proceeds of the sale of Optionee’s Shares shall automatically be applied to the outstanding balance of Optionee’s indebtedness.

10.Responsibility for Taxes .

(a) Optionee authorizes the Company and/or the Optionee’s employer (the “Employer”) or their respective agents, at their discretion, to satisfy any obligations related to Tax-Related Items by one or a combination of the following: (1) withholding all applicable Tax-Related Items from Optionee’s wages or other cash compensation paid to Optionee by the Company and/or the Employer; (2) withholding from proceeds of the sale of Shares acquired upon exercise of the Option either through a voluntary sale (specifically including where this Option is exercised in accordance with subparagraph 9(a)(i)(B) above) or through a mandatory sale arranged by the Company (on Optionee’s behalf pursuant to this authorization); or (3) withholding of Shares that would otherwise be issued upon exercise of the Option. To avoid financial accounting charges under applicable accounting guidance, the Company may withhold or account for Tax-Related Items by considering applicable minimum statutory withholding rates or may take any other action required to avoid financial accounting charges under applicable accounting guidance. Finally, Optionee must pay to the Company or the Employer any amount of Tax-Related Items that the Company or the Employer may be required to withhold or account for as a result of Optionee’s participation in the Plan or Optionee’s purchase of Shares that cannot be satisfied by the means previously described. The Company may refuse to honor the exercise and refuse to issue or deliver the Shares or the proceeds of the sale of the Shares if Optionee fails to comply with Optionee’s obligations in connection with the Tax-Related Items as described in this Paragraph.

(b) Regardless of any action the Company or the Employer takes with respect to any or all Tax-Related Items, Optionee acknowledges that the ultimate liability for all Tax-Related Items is and remains Optionee’s responsibility and may exceed the amount actually withheld by the Company or the Employer. Optionee further acknowledges that the Company and/or the Employer (1) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Option, including the grant, vesting or exercise of the Option, the subsequent sale of Shares acquired pursuant to such exercise and the receipt of any dividends; and (2) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the Option to reduce or eliminate Optionee’s liability for Tax-Related Items or achieve any particular tax result. Further, if Optionee becomes subject to taxation in more than one jurisdiction between the Grant Date and the date of any relevant taxable event, Optionee acknowledges that the Company and/or the Employer (or former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.

11.Compliance with Laws and Regulations .

(a) The exercise of this Option and the issuance of the Option Shares upon such exercise shall be subject to compliance by the Company and Optionee with all applicable laws, regulations and rules relating thereto, including all applicable regulations of any stock exchange (or the Nasdaq Global Select Market, if applicable) on which the Shares may be listed for trading at the time of such exercise and issuance and all applicable foreign laws.

(b) The inability of the Company to obtain approval from any regulatory body having authority deemed by the Company to be necessary to the lawful issuance and sale of any Shares pursuant to this Option shall relieve the Company of any liability with respect to the non-issuance or sale of the Shares as to which such approval shall not have been obtained.

12.Successors and Assigns . Except to the extent otherwise provided in Paragraphs 3, 5 and 6, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the Company and its successors and assigns and Optionee, Optionee’s assigns and the legal representatives, heirs and legatees of Optionee’s estate.

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13.Notices . Any notice required or permitted under the terms of this Agreement shall be in writing and shall be deemed sufficient when delivered personally or sent by confirmed email, telegram, or fax or forty-eight (48) hours after being deposited in the mail, as certified or registered mail, with postage prepaid, and addressed to the Company at the Company’s principal corporate offices or to the Optionee at the address maintained for the Optionee in the Company’s records or, in either case, as subsequently modified by written notice to the other party.

14.Construction . The Notice, this Agreement, and the Option evidenced hereby (a) are made and granted pursuant to the Plan and are in all respects limited by and subject to the terms of the Plan, and (b) constitute the entire agreement between Optionee and the Company on the subject matter hereof and supercede all proposals, written or oral, and all other communications between the parties related to the subject matter. All decisions of the Committee with respect to any question or issue arising under the Notice, this Agreement or the Plan shall be conclusive and binding on all persons having an interest in this Option. The provisions of this Agreement are severable and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable.

15.Governing Law and Forum . This Agreement shall be governed by and construed in accordance with the laws of the State of California without regard to the conflict of laws principles thereof. For purposes of litigating any dispute that may arise directly or indirectly from this Agreement, the parties hereby submit and consent to litigation in the exclusive jurisdiction of the State of California and agree that any such litigation shall be conducted only in the courts of California or the federal courts for the United States for the Northern District of California and no other courts.

16.Excess Shares . If the Option Shares covered by this Agreement exceed, as of the Grant Date, the number of Shares which may without shareholder approval be issued under the Plan, then this Option shall be void with respect to those excess shares, unless shareholder approval of an amendment sufficiently increasing the number of Shares issuable under the Plan is obtained in accordance with the provisions of the Plan and all applicable laws, regulations and rules.

17.Leave of Absence . Unless otherwise determined by the Committee, to the extent permitted by local law, the following provisions shall apply upon the Optionee’s commencement of an authorized leave of absence:

(a) The Exercise Schedule in effect under the Notice shall be frozen as of the first day of the authorized leave, and this Option shall not become exercisable for any additional installments of the Option Shares during the period Optionee remains on such leave.

(b) In no event shall this Option become exercisable for any additional Option Shares or otherwise remain outstanding if Optionee does not resume Service prior to the Expiration Date of the Option term.

18.Further Instruments . The parties agree to execute such further instruments and to take such further action as may be reasonably necessary to carry out the purposes and intent of this Agreement.

19.Authorization to Release and Transfer Necessary Personal Information .

(a) Optionee hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of Optionee’s personal information as described in this Agreement by and among, as applicable, the Employer, and the Company and its Parent, Subsidiaries and Affiliates for the exclusive purpose of implementing, administering and managing Optionee’s participation in the Plan.

(b) Optionee understands that the Company and the Employer may hold certain personal information about Optionee, including, but not limited to, Optionee’s name, home address and telephone number, date of birth, social insurance number (or any other social or national identification number), salary, nationality, job title, residency status, any Shares or directorships held in the Company, details of all options or any other entitlement to Shares awarded, canceled, exercised, vested, unvested or outstanding (the “Data”) for the purpose of implementing, administering and managing the Optionee’s participation in the Plan. Optionee understands that Data may be transferred to the Company or any of its Parent, Subsidiaries or Affiliates, or to any third parties assisting in the implementation, administration and management of the Plan, that these recipients may be located in Optionee’s country or elsewhere, including outside the European Economic Area, and that the recipient’s country (e.g., the United States) may have different data privacy laws and protections than Optionee’s country. Optionee understands that Optionee may request a list with the names and addresses of any potential recipients of the Data by contacting Optionee’s local human resources representative. Optionee authorizes the recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for the sole purposes of implementing, administering and managing Optionee’s participation in the Plan, including any requisite transfer of such Data to a broker or other third party assisting with the administration of the Option under the Plan or with whom Shares acquired pursuant to these Options or cash from the sale of such Shares may be deposited. Furthermore, you acknowledge and understand that the transfer of the Data to the Company or any of its Parent, Subsidiaries or Affiliates, or to any third parties is necessary for your participation in the Plan.

(c) Optionee understands that Data will be held only as long as is necessary to implement, administer and manage Optionee’s participation in the Plan. Optionee understands that Optionee may, at any time, view the Data, request additional information about the storage and processing of the Data, require any necessary amendments to the Data or refuse or withdraw the consents herein by contacting Optionee’s local human resources representative in writing. Optionee further acknowledges that withdrawal of consent may affect Optionee’s ability to vest in or realize benefits from the Options, and Optionee’s ability to participate in the Plan. For more

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information on the consequences of Optionee’s refusal to consent or withdrawal of consent, Optionee understands that Optionee may contact Optionee’s local human resources representative.

20.No Entitlement or Claims for Compensation .

(a) Optionee’s rights, if any, in respect of or in connection with this Option or any other Award are derived solely from the discretionary decision of the Company to permit Optionee to participate in the Plan and to benefit from a discretionary Award. The Plan may be amended, suspended or terminated by the Company at any time, unless otherwise provided in the Plan and this Agreement. By accepting this Option, Optionee expressly acknowledges that there is no obligation on the part of the Company to continue the Plan and/or grant any additional Awards to Optionee or benefits in lieu of Options or any other Awards even if Options have been granted repeatedly in the past. All decisions with respect to future Option grants, if any, will be at the sole discretion of the Committee.

(b) This Option and the Shares subject to the Option are not intended to replace any pension rights or compensation and are not to be considered compensation of a continuing or recurring nature, or part of Optionee’s normal or expected compensation, and in no way represent any portion of Optionee’s salary, compensation or other remuneration for any purpose, including but not limited to, calculating any severance, resignation, termination, redundancy, dismissal, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments, and in no event should be considered as compensation for, or relating in any way to, past services for the Company, the Employer or any Parent, Subsidiary or Affiliate. The value of the Option and the Shares subject to the Option are an extraordinary item that do not constitute compensation of any kind for services of any kind rendered to the Company, the Employer or any Parent, Subsidiary or Affiliate and which are outside the scope of Optionee’s written employment agreement (if any).

(c) Optionee acknowledges that he or she is voluntarily participating in the Plan.

(d) Neither the Plan nor this Option or any other Award granted under the Plan shall be deemed to give Optionee a right to remain an Employee, Consultant or director of the Company, a Parent, Subsidiary or an Affiliate. The Employer reserves the right to terminate the Service of Optionee at any time, with or without cause, and for any reason, subject to applicable laws, the Company’s Articles of Incorporation and Bylaws and a written employment agreement (if any).

(e) The grant of the Option and Optionee’s participation in the Plan will not be interpreted to form an employment contract or relationship with the Company, the Employer or any Parent, Subsidiary or Affiliate.

(f) The future value of the underlying Shares is unknown and cannot be predicted with certainty. If the underlying Shares do not increase in value, the Option will have no value. If Optionee exercises the Option and obtains Shares, the value of the Shares acquired upon exercise may increase or decrease in value, even below the Exercise Price. Optionee also understands that neither the Company, nor the Employer or any Parent, Subsidiary or Affiliate is responsible for any foreign exchange fluctuation between the Employer’s local currency and the United States Dollar that may affect the value of this Option.

(g) In consideration of the grant of the Option, no claim or entitlement to compensation or damages shall arise from forfeiture of the Option resulting from termination of Optionee’s Service by the Company or the Employer (for any reason whatsoever and whether or not in breach of local labor laws) and Optionee irrevocably releases the Company and the Employer from any such claim that may arise; if, notwithstanding the foregoing, any such claim is found by a court of competent jurisdiction to have arisen, Optionee shall be deemed irrevocably to have waived Optionee’s entitlement to pursue such claim.

(h) Optionee agrees that the Company may require Options granted hereunder be exercised with, and the Option Shares held by, a broker designated by the Company.

(i) Optionee agrees that his or her rights hereunder (if any) shall be subject to set-off by the Company for any valid debts the Optionee owes to the Company.

(j) The Option and the benefits under the Plan, if any, will not automatically transfer to another company in the case of a merger, take-over or transfer of liability.

21.No Advice Regarding Grant . The Company and the Employer have not provided any tax, legal or financial advice, nor has the Company or the Employer made any recommendations regarding Optionee’s participation in the Plan, or Optionee’s acquisition or sale of the underlying Shares. Optionee is hereby advised to consult with Optionee’s own personal tax, legal and financial advisors regarding Optionee’s participation in the Plan before taking any action related to the Plan.

22.Electronic Delivery . The Company may, in its sole discretion, decide to deliver any documents related to Optionee’s current or future participation in the Plan by electronic means or to request Optionee’s consent to participate in the Plan by electronic means. Optionee hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.

23.Language . If this Agreement or any other document related to the Plan is translated into a language other then English and the meaning of the translated version is different from the English version, the English version will take precedence.

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24.Appendix . Notwithstanding any provisions in this Agreement, the Option shall be subject to any special terms and conditions set forth in any Appendix to this Agreement for Optionee’s country of residence. Moreover, if Optionee relocates to one of the countries included in the Appendix, the special terms and conditions for such country will apply to Optionee, to the extent the Company determines that the application of such terms and conditions is necessary or advisable in order to comply with local law or facilitate the administration of the Plan. The Appendix constitutes part of this Agreement.

25.Imposition of Other Requirements . The Company reserves the right to impose other requirements on Optionee’s participation in the Plan, on the Option and on any Shares acquired under the Plan, to the extent the Company determines it is necessary or advisable in order to comply with local law or facilitate the administration of the Plan. Optionee agrees to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing. Furthermore, Optionee acknowledges that the laws of the country in which Optionee is working at the time of grant, vesting and exercise of the Option or the sale of Shares received pursuant to this Agreement (including any rules or regulations governing securities, foreign exchange, tax, labor, or other matters) may subject Optionee to additional procedural or regulatory requirements that Optionee is and will be solely responsible for and must fulfill.

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CISCO SYSTEMS, INC.

STOCK GRANT AGREEMENT

This Stock Grant Agreement (the “Agreement”) is made and entered into as of the Grant Date (as defined below) by and between Cisco Systems, Inc., a California corporation (the “Company”), and you pursuant to the Cisco Systems, Inc. 2005 Stock Incentive Plan (the “Plan”). The material terms of this Stock Grant Award are as follows:

Employee ID:
Grant Date:
Grant Number:
Restricted Shares:
First Vest Date:	, 20  (the first annual anniversary of the vesting commencement date)

To the extent any capitalized terms used in this Agreement are not defined, they shall have the meaning ascribed to them in the Plan. In the event of a conflict between the terms and provisions of the Plan and the terms and provisions of this Agreement, the Plan terms and provisions shall prevail.

In consideration of the mutual agreements herein contained and intending to be legally bound hereby, the parties agree as follows:

1.Restricted Shares . Pursuant to the Plan, the Company hereby transfers to you, and you hereby accept from the Company, a Stock Grant Award consisting of the Restricted Shares, on the terms and conditions set forth herein and in the Plan.

2.Vesting of Restricted Shares . So long as your Service continues, the Restricted Shares shall vest in accordance with the following schedule: percent ( %) of the total number of Restricted Shares issued pursuant to this Agreement shall vest on the First Vest Date and on each annual anniversary thereafter, unless otherwise provided by the Plan or Section 3 below. In the event of the termination of your Service for any reason, all unvested Restricted Shares shall be immediately forfeited without consideration. For purposes of facilitating the enforcement of the provisions of this Section 2, the Company may issue stop-transfer instructions on the Restricted Shares to the Company’s transfer agent, or otherwise hold the Restricted Shares in escrow, until the Restricted Shares have vested and you have satisfied all applicable obligations with respect to the Restricted Shares, including any applicable tax withholding obligations set forth in Section 5 below. Any new, substituted or additional securities or other property which is issued or distributed with respect to the unvested Restricted Shares shall be subject to the same terms and conditions as are applicable to the unvested Restricted Shares under this Agreement and the Plan.

3.Special Acceleration.

(a) To the extent the Restricted Shares are outstanding at the time of a Corporate Transaction, but not otherwise fully vested, such Restricted Shares shall automatically accelerate immediately prior to the effective date of the Corporate Transaction and shall become vested in full at that time. No such acceleration, however, shall occur if and to the extent: (i) this Stock Grant Agreement is, in connection with the Corporate Transaction, assumed by the successor corporation (or parent thereof), or (ii) the Restricted Shares are replaced with a cash incentive program of the successor corporation which preserves the Fair Market Value of the Restricted Shares at the time of the Corporate Transaction and provides for subsequent pay-out in accordance with the vesting schedule set forth in Section 2 above.

(b) Immediately following the effective date of the Corporate Transaction, this Stock Grant Agreement shall terminate and cease to be outstanding, except to the extent assumed by the successor corporation (or parent thereof) in connection with the Corporate Transaction.

(c) If this Stock Grant Agreement is assumed in connection with a Corporate Transaction, then the Committee shall appropriately adjust the number of shares and the kind of shares or securities covered by this Stock Grant Agreement immediately after such Corporate Transaction.

(d) To the extent the Restricted Shares are outstanding at the time of a Change in Control but not otherwise fully vested, such Restricted Shares shall automatically accelerate immediately prior to the effective date of the Change in Control and shall become vested in full at that time.

(e) This Stock Grant Agreement shall not in any way affect the right of the Company to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate, sell or transfer all or any part of its business or assets.

4.Restriction on Election to Recognize Income in the Year of Grant . Under Section 83 of the Code, the Fair Market Value of the Restricted Shares on the date the Restricted Shares vest will be taxable as ordinary income at that time. You understand, acknowledge and agree that, as a

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condition to the grant of this Award, you may not elect to be taxed at the time the Restricted Shares are acquired by filing an election under Section 83(b) of the Code with the Internal Revenue Service.

5.Withholding Taxes . You agree to make arrangements satisfactory to the Company for the satisfaction of any applicable withholding tax obligations that arise in connection with the Restricted Shares which, at the sole discretion of the Company, may include (i) having the Company withhold Shares from the Restricted Shares held in escrow, or (ii) any other arrangement approved by the Company, in any case, equal in value to the amount necessary to satisfy any such withholding tax obligation. Such Shares shall be valued based on the Fair Market Value as of the day prior to the date that the amount of tax to be withheld is to be determined under applicable law. The Company shall not be required to release the Restricted Shares from the stop-transfer instructions or escrow unless and until such obligations are satisfied.

6.Tax Advice . You represent, warrant and acknowledge that the Company has made no warranties or representations to you with respect to the income tax consequences of the transactions contemplated by this Agreement, and you are in no manner relying on the Company or the Company’s representatives for an assessment of such tax consequences.

YOU UNDERSTAND THAT THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. YOU SHOULD CONSULT YOUR OWN TAX ADVISOR REGARDING ANY STOCK GRANT AWARD. NOTHING STATED HEREIN IS INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED, FOR THE PURPOSE OF AVOIDING TAXPAYER PENALTIES.

7.Non-Transferability of Restricted Shares . Restricted Shares which have not vested pursuant to Section 2 above shall not be anticipated, assigned, attached, garnished, optioned, transferred or made subject to any creditor’s process, whether voluntarily or involuntarily or by the operation of law. However, this Section 7 shall not preclude you from designating a beneficiary who will receive any vested Restricted Shares in the event of the your death, nor shall it preclude a transfer of vested Restricted Shares by will or by the laws of descent and distribution.

8.Restriction on Transfer . Regardless of whether the transfer or issuance of the Restricted Shares has been registered under the Securities Act or has been registered or qualified under the securities laws of any state, the Company may impose additional restrictions upon the sale, pledge, or other transfer of the Restricted Shares (including the placement of appropriate legends on stock certificates and the issuance of stop-transfer instructions to the Company’s transfer agent) if, in the judgment of the Company and the Company’s counsel, such restrictions are necessary in order to achieve compliance with the provisions of the Securities Act, the securities laws of any state, or any other law.

9.Stock Certificate Restrictive Legends. Stock certificates evidencing the Restricted Shares may bear such restrictive legends as the Company and the Company’s counsel deem necessary under applicable law or pursuant to this Agreement.

10.Representations, Warranties, Covenants, and Acknowledgments . You hereby agree that in the event the Company and the Company’s counsel deem it necessary or advisable in the exercise of their discretion, the transfer or issuance of the Restricted Shares may be conditioned upon you making certain representations, warranties, and acknowledgments relating to compliance with applicable securities laws.

11.Voting and Other Rights . Subject to the terms of this Agreement, you shall have all the rights and privileges of a shareholder of the Company while the Restricted Shares are subject to stop-transfer instructions, or otherwise held in escrow, including the right to vote and to receive dividends (if any).

12.Authorization to Release Necessary Personal Information .

(a) You hereby authorize and direct your employer to collect, use and transfer in electronic or other form, any personal information (the “Data”) regarding your employment, the nature and amount of your compensation and the facts and conditions of your participation in the Plan (including, but not limited to, your name, home address, telephone number, date of birth, social security number (or any other social or national identification number), salary, nationality, job title, number of Shares held and the details of all Awards or any other entitlement to Shares awarded, cancelled, exercised, vested, unvested or outstanding) for the purpose of implementing, administering and managing your participation in the Plan. You understand that the Data may be transferred to the Company or any of its Subsidiaries, or to any third parties assisting in the implementation, administration and management of the Plan, including any requisite transfer to a broker or other third party assisting with the administration of this Stock Grant Award under the Plan or with whom Shares acquired pursuant to this Stock Grant Award or cash from the sale of such shares may be deposited. You acknowledge that recipients of the Data may be located in different countries, and those countries may have data privacy laws and protections different from those in the country of your residence. Furthermore, you acknowledge and understand that the transfer of the Data to the Company or any of its Subsidiaries, or to any third parties is necessary for your participation in the Plan.

(b) You may at any time withdraw the consents herein by contacting your local human resources representative in writing. You further acknowledge that withdrawal of consent may affect your ability to exercise or realize benefits from this Stock Grant Award, and your ability to participate in the Plan.

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13.No Entitlement or Claims for Compensation .

(a) Your rights, if any, in respect of or in connection with this Stock Grant Award or any other Award is derived solely from the discretionary decision of the Company to permit you to participate in the Plan and to benefit from a discretionary Award. By accepting this Stock Grant Award, you expressly acknowledge that there is no obligation on the part of the Company to continue the Plan and/or grant any additional Awards to you. This Stock Grant Award is not intended to be compensation of a continuing or recurring nature, or part of your normal or expected compensation, and in no way represents any portion of a your salary, compensation, or other remuneration for purposes of pension benefits, severance, redundancy, resignation or any other purpose.

(b) Neither the Plan nor this Stock Grant Award or any other Award granted under the Plan shall be deemed to give you a right to remain an Employee, Consultant or director of the Company, a Parent, a Subsidiary or an Affiliate. The Company and its Parents and Subsidiaries and Affiliates reserve the right to terminate your Service at any time, with or without cause, and for any reason, subject to applicable laws, the Company’s Articles of Incorporation and Bylaws and a written employment agreement (if any), and you shall be deemed irrevocably to have waived any claim to damages or specific performance for breach of contract or dismissal, compensation for loss of office, tort or otherwise with respect to the Plan, this Stock Grant Award or any outstanding Award that is forfeited and/or is terminated by its terms or to any future Award.

(c) You agree that the Company may require that Restricted Shares be held by a broker designated by the Company. In addition, you agree that your rights hereunder shall be subject to set-off by the Company for any valid debts you owe the Company.

14.Governing Law . This Agreement shall be governed by and construed in accordance with the laws of the State of California without regard to the conflict of laws principles thereof.

15.Notices . Any notice required or permitted under the terms of this Agreement shall be in writing and shall be deemed sufficient when delivered personally or sent by confirmed email, telegram, or fax or forty-eight (48) hours after being deposited in the U.S. mail, as certified or registered mail, with postage prepaid, and addressed to the Company at the Company’s principal corporate offices or to you at the address maintained for you in the Company’s records or, in either case, as subsequently modified by written notice to the other party.

16.Binding Effect . Subject to the limitations set forth in this Agreement, this Agreement shall be binding upon, and inure to the benefit of, the executors, administrators, heirs, legal representatives, successors, and assigns of the parties hereto.

17.Severability . If any provision of this Agreement is held to be unenforceable for any reason, it shall be adjusted rather than voided, if possible, in order to achieve the intent of the parties to the extent possible. In any event, all other provisions of this Agreement shall be deemed valid and enforceable to the full extent possible.

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CISCO SYSTEMS, INC.

PERFORMANCE-BASED STOCK UNIT AGREEMENT

This Performance-Based Stock Unit Agreement (the “Agreement”) is made and entered into as of the Grant Date (as defined below) by and between Cisco Systems, Inc., a California corporation (the “Company”), and you pursuant to the Cisco Systems, Inc. 2005 Stock Incentive Plan (the “Plan”). The material terms of this Stock Unit Award are as follows:

Employee ID:

Grant Date:

Grant Number:

Target Amount of

Performance-Based Stock Units:  

Vest Date:

To the extent any capitalized terms used in this Agreement are not defined, they shall have the meaning ascribed to them in the Plan. In the event of a conflict between the terms and provisions of the Plan and the terms and provisions of this Agreement, the Plan terms and provisions shall prevail.

In consideration of the mutual agreements herein contained and intending to be legally bound hereby, the parties agree as follows:

1. Performance-Based Stock Units . Pursuant to the Plan, the Company hereby grants to you, [subject to the approval by the stockholders of the Company of the amendment and restatement of the Plan,] and you hereby accept from the Company, Performance-Based Stock Units, each of which is a bookkeeping entry representing the equivalent in value of one (1) Share, on the terms and conditions set forth herein and in the Plan. The Target Amount of Performance-Based Stock Units stated above reflects the target number of Performance-Based Stock Units (the “Target Amount”). The number of Performance-Based Stock Units ultimately paid out to you will range from % to % of the Target Amount as determined based upon the Company’s performance during the performance period against the performance goals as set forth in Exhibit A .

2. Vesting of Performance-Based Stock Units . So long as your Service continues and subject to, and to the extent of, the satisfaction of the performance goals as set forth in Exhibit A , the Performance-Based Stock Units shall vest in accordance with the following schedule: ( %) of the total number of Performance-Based Stock Units earned, if any, pursuant to the satisfaction of the performance goals in Exhibit A shall vest on the Vest Date, unless otherwise provided by the Plan or Sections 3(b) or 4 below. If you take a leave of absence, the Company may, at its discretion and to the extent permitted under applicable local law, either suspend vesting during the period of leave or pro-rate the Performance-Based Stock Units, notwithstanding the Company’s Vesting Policy for Leaves of Absence. Prior to the time that the Performance-Based Stock Units are settled, you shall have no rights other than those of a general creditor of the Company. The Performance-Based Stock Units represent an unfunded and unsecured obligation of the Company.

3. Termination of Service .

(a) Except as otherwise provided in Section 3(b) below or Section 4, in the event of the termination of your Service for any reason (whether or not in breach of local labor laws), all unvested Performance-Based Stock Units shall be immediately forfeited without consideration. For purposes of the preceding sentence, your right to vest in the Performance-Based Stock Units will terminate effective as of the date that you are no longer actively providing Service (or earlier upon your “Separation from Service” within the meaning of Code Section 409A) and will not be extended by any notice period mandated under local law ( e.g. , active Service would not include a period of “garden leave” or similar period pursuant to local law); the Company shall have the exclusive discretion to determine when you are no longer actively providing Service for purposes of the Performance-Based Stock Units.

(b) In the event that you resign or your Service is terminated for any reason other than Cause on or after the date that (x) you have attained at least ( ) years of age and (y) your age plus your years of Service is at least equal to ( ), and so long as such resignation or the termination of your Service occurs no earlier than the anniversary of the Grant Date (the satisfaction of the aforementioned conditions is referred to herein as “Retirement” ¹ ), all unvested Performance-Based Stock Units may be earned pursuant to the satisfaction of the performance goals in Exhibit A ,

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and shall vest in accordance with the vesting schedule set forth in Section 2 above, determined as if your Service had continued after your resignation or termination of Service, and shall be settled in accordance with Section 5(a); provided that any unsettled or unvested Performance-Based Stock Units shall be forfeited without consideration immediately upon the breach of any of the following conditions:

(i) Unless prohibited by applicable law, you shall render, as an independent advisor or consultant and not as an Employee, such advisory or consulting services to the Company (or any Parent, Subsidiary or Affiliate) as shall reasonably be requested by the Company (or any Parent, Subsidiary or Affiliate), and such services shall not be terminated for Cause (for purposes of clarity, any request to provide such advisory or consulting services to the Company (or any Parent, Subsidiary or Affiliate) shall not be considered a continuation of “Service” unless the Company specifically provides that the continuation of services is a continuation of “Service” for purposes of this Section 3(b)).

(ii) For a period of ( ) beginning on the date of your termination of Service or during any period in which you provide independent advisory or consulting services to the Company (or any Parent, Subsidiary or Affiliate), you shall not directly or indirectly, individually or on behalf of other persons or entities, intentionally solicit or induce (a) any employee of the Company (or any Parent, Subsidiary or Affiliate) to leave the employee’s employment in order to accept employment with another person or entity or (b) any customer of the Company (or any Parent, Subsidiary or Affiliate) with whom you have worked in your capacity as an Employee prior to your termination of Service whose identity and/or any related information constitutes protected trade secrets (with such customers determined as of the date of the termination of your Service, to retain or use any other person or entity for the purpose of rendering services in competition with the Company (or any Parent, Subsidiary or Affiliate) or to purchase products from any business which, in the opinion of the Company (or any Parent, Subsidiary or Affiliate), competes with or is in conflict with the interests of the Company (or any Parent, Subsidiary or Affiliate), in either case, unless these restrictions are prohibited (whether in whole or in part) by applicable law.

(iii) For a period of ( ) beginning on the date of your termination of Service or during any period in which you provide independent advisory or consulting services to the Company (or any Parent, Subsidiary or Affiliate), you shall not render services for any organization or engage directly or indirectly in any business which, in the opinion of the Company, competes with or is in conflict with the interests of the Company (or any Parent, Subsidiary or Affiliate), unless this restriction is prohibited by applicable law.

(iv) You shall not, without prior written authorization from the Company, use or disclose any confidential information or trade secrets concerning the Company (or any Parent, Subsidiary or Affiliate), in each case as determined by the Committee, and the Committee’s determination shall be conclusive and binding.

(c) Notwithstanding any provisions to the contrary in this Agreement, in the event of the termination of your Service for Cause or in the event of the termination for Cause of any independent advisory or consulting services you may be providing as described in Section 3(b)(i), any unsettled or unvested Performance-Based Stock Units shall terminate and be forfeited immediately without consideration.

¹  If you are subject to the employment protections of a country within the European Economic Area because you reside in such country or are otherwise subject thereto, “Retirement” shall mean your years of Service is at least equal to  (  ), regardless of your age, and the provisions concerning Retirement shall apply to you so long as the termination of your Service occurs no earlier than the one-year anniversary of the Grant Date. In all cases, years of Service shall be determined based on the date you originally provided Service. If you previously terminated Service, but subsequently returned to Service prior to the Grant Date, you will receive credit for your prior Service.

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4. Special Acceleration .

(a) To the extent the Performance-Based Stock Units are outstanding at the time of a Corporate Transaction, such Performance-Based Stock Units shall automatically become vested in full at the Target Amount immediately prior to the effective date of the Corporate Transaction and settled in accordance with Section 5 below. No such accelerated vesting, however, shall occur if and to the extent: (i) these Performance-Based Stock Units are, in connection with the Corporate Transaction, either assumed by the successor corporation (or parent thereof) or replaced with comparable performance-based stock units of the successor corporation (or parent thereof), in each case, having a minimum payout equal to the Target Amount and preserving the settlement provisions set forth in Section 5 below or (ii) these Performance-Based Stock Units are replaced with a cash incentive program of the successor corporation which complies with Code Section 409A and, at a minimum, preserves the fair market value of the Performance-Based Stock Units at the time of the Corporate Transaction (based on the Target Amount) and provides for subsequent pay-out in accordance with the settlement provisions set forth in Section 5 below. The determination of the comparability of performance-based stock units under clause (i) shall be made by the Committee, and such determination shall be final, binding and conclusive.

(b) Immediately following the effective date of the Corporate Transaction, this Agreement shall terminate and cease to be outstanding, except as set forth in Section 5 below with respect to the settlement of Performance-Based Stock Units or to the extent assumed by the successor corporation (or parent thereof) in connection with the Corporate Transaction.

(c) If this Agreement is assumed in connection with a Corporate Transaction, then the Committee shall appropriately adjust the number of units and the kind of shares or securities to be issued pursuant to this Agreement immediately after such Corporate Transaction.

(d) To the extent the Performance-Based Stock Units are outstanding at the time of a Change in Control, such Performance-Based Stock Units shall automatically accelerate immediately prior to the effective date of the Change in Control and shall become vested in full at the Target Amount at that time and settled in accordance with Section 5 below.

(e) This Agreement shall not in any way affect the right of the Company to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate, sell or transfer all or any part of its business or assets.

5. Settlement of Performance-Based Stock Units .

(a) General Settlement Terms . The Performance-Based Stock Units, to the extent earned and vested hereunder (including, without limitation by reason of Retirement), shall be automatically settled in Shares on the Vest Date (which constitutes a fixed payment date for purposes of Code Section 409A) or, if earlier, upon the earliest to occur of the settlement events set forth below or in the Company’s Vesting Acceleration Policy for Death and Terminal Illness; it being understood that nothing herein shall limit the Company’s ability to amend or terminate such policy in its sole discretion and without your consent.

(b) Corporate Transaction . If, as of the Grant Date, you have not satisfied and it is not possible for you to satisfy the age and Service Retirement conditions with respect to this Performance-Based Stock Unit award and this Performance-Based Stock Unit award is not assumed or replaced as described in Section 4(a) in connection with a Corporate Transaction, then the Performance-Based Stock Units shall be automatically settled in Shares immediately prior to the effective date of the Corporate Transaction instead of on the Vest Date.

(c) Change in Control . In the event a Change in Control is consummated prior to the Vest Date and such Change in Control is a permissible distribution event under Code Section 409A, the Performance-Based Stock Units shall be automatically settled in Shares immediately prior to the effective date of the Change in Control. In the event such Change in Control is not a permissible distribution event under Code Section 409A, the Performance-Based Stock Units shall be automatically settled in Shares upon the earlier of (i) the Vest Date or (ii) your Separation from Service that occurs immediately prior to or at any time after such Change in Control. Notwithstanding the foregoing, if, as of the Grant Date, you have not satisfied and it is not possible for you to satisfy the age and Service Retirement conditions with respect to this Performance-Based Stock Unit award, then such settlement shall in all cases occur immediately prior the effective date of the Change in Control.

(d) The Company shall have no obligation to issue Shares pursuant to this Agreement unless and until you have satisfied any applicable tax and/or other obligations pursuant to Section 6 below and such issuance otherwise complies with all applicable law.

(e) Notwithstanding anything in this Section 5 or in this Agreement, to the extent your Performance-Based Stock Units would otherwise be settled upon your Separation from Service, such settlement shall instead occur upon the Company’s first business day following the six-month anniversary of your Separation from Service.

6. Taxes .

(a) Regardless of any action the Company or your employer (the “Employer”) takes with respect to any and all income tax, social taxes or insurance contributions, payroll tax, payment on account or other tax-related items related to your participation in the Plan and legally applicable to you (“Tax-Related Items”), you acknowledge that the ultimate liability for all Tax-Related Items with respect to the Performance-Based Stock Units is and remains your responsibility and may exceed the amount actually withheld by the Company or the Employer. You further acknowledge that the Company and/or the Employer (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Performance-Based Stock Units, including the grant, vesting or settlement of the Performance-Based Stock Units, or the subsequent sale of any Shares acquired at vesting or the receipt of any dividends with respect to such

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Shares; and (ii) do not commit to and are under no obligation to structure the terms or any aspect of the Performance-Based Stock Units to reduce or eliminate your liability for Tax-Related Items or achieve any particular tax result. Further, if you become subject to taxation in more than one jurisdiction between the Grant Date and the date of any relevant taxable event, you acknowledge that the Company and/or the Employer (or former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.

(b) Prior to any relevant tax, withholding or required deduction event, as applicable, you agree to make arrangements satisfactory to the Company for the satisfaction of any applicable tax, withholding, required deduction and payment on account obligations of the Company and/or the Employer that arise in connection with the Performance-Based Stock Units. In this regard, you authorize the Company and/or the Employer, or their respective agents, at their discretion, to satisfy any obligations related to Tax-Related Items by one or a combination of the following: (1) withholding from your wages or other cash compensation payable to you by the Company or the Employer; (2) withholding from proceeds of the sale of Shares acquired upon settlement of the Performance-Based Stock Units either through a voluntary sale or through a mandatory sale arranged by the Company (on your behalf pursuant to this authorization); (3) withholding of Shares that would otherwise be issued upon settlement of the Performance-Based Stock Units; or (4) requiring you to satisfy the liability for Tax-Related Items by means of any other arrangement approved by the Company. If the obligation for Tax-Related Items is satisfied by withholding of Shares, for tax purposes, you are deemed to have been issued the full number of Shares subject to the vested Performance-Based Stock Units, notwithstanding that a number of the Shares are held back solely for the purpose of paying the Tax-Related Items due as a result of any aspect of your participation in the Plan. To avoid financial accounting charges under applicable accounting guidance, the Company may withhold or account for Tax-Related Items by considering applicable minimum statutory rates or may take any other action required to avoid financial accounting charges under applicable accounting guidance.

(c) Finally, you will pay to the Company or the Employer any amount of Tax-Related Items that the Company or the Employer may be required to withhold or account for as a result of your participation in the Plan or your acquisition of Shares that cannot be satisfied by the means previously described. The Company shall not be required to issue or deliver Shares pursuant to this Agreement unless and until such obligations are satisfied.

7. Tax and Legal Advice . You represent, warrant and acknowledge that neither the Company nor your Employer have made any warranties or representations to you with respect to any Tax-Related Items, legal or financial consequences of the transactions contemplated by this Agreement, and you are in no manner relying on the Company, your Employer’s or the Company’s or the Employer’s representatives for an assessment of such consequences. YOU UNDERSTAND THAT THE LAWS GOVERNING THIS AWARD ARE SUBJECT TO CHANGE. YOU SHOULD CONSULT YOUR OWN PROFESSIONAL TAX, LEGAL AND FINANCIAL ADVISOR REGARDING ANY PERFORMANCE-BASED STOCK UNITS. YOU UNDERSTAND THAT THE COMPANY AND YOUR EMPLOYER ARE NOT PROVIDING ANY TAX, LEGAL, OR FINANCIAL ADVICE, NOR IS THE COMPANY OR YOUR EMPLOYER MAKING ANY RECOMMENDATION REGARDING YOUR ACCEPTANCE OF THIS AWARD. NOTHING STATED HEREIN IS INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED, FOR THE PURPOSE OF AVOIDING TAXPAYER OR OTHER PENALTIES.

8. Non-Transferability of Performance-Based Stock Units . Performance-Based Stock Units shall not be anticipated, assigned, attached, garnished, optioned, transferred or made subject to any creditor’s process, whether voluntarily or involuntarily or by operation of law.

9. Restriction on Transfer . Regardless of whether the transfer or issuance of the Shares to be issued pursuant to the Performance-Based Stock Units has been registered under the Securities Act or has been registered or qualified under the securities laws of any state, the Company may impose additional restrictions upon the sale, pledge, or other transfer of the Shares (including the placement of appropriate legends on stock certificates and the issuance of stop-transfer instructions to the Company’s transfer agent) if, in the judgment of the Company and the Company’s counsel, such restrictions are necessary in order to achieve compliance with the provisions of the Securities Act, the securities laws of any state, or any other law including all applicable foreign laws.

10. Restrictive Legends and Stop-Transfer Instructions . Stock certificates evidencing the Shares issued pursuant to the Performance-Based Stock Units may bear such restrictive legends and/or appropriate stop-transfer instructions may be issued to the Company’s transfer agent as the Company and the Company’s counsel deem necessary under applicable law or pursuant to this Agreement.

11. Representations, Warranties, Covenants, and Acknowledgments . You hereby agree that in the event the Company and the Company’s counsel deem it necessary or advisable in the exercise of their discretion, the transfer or issuance of the Shares issued pursuant to the Performance-Based Stock Units may be conditioned upon you making certain representations, warranties, and acknowledgments relating to compliance with applicable laws.

12. Voting and Other Rights . Subject to the terms of this Agreement, you shall not have any voting rights or any other rights and privileges of a stockholder of the Company unless and until the Performance-Based Stock Units are settled in Shares. In addition, you shall not have any rights to dividend equivalent payments with respect to Performance-Based Stock Units.

13. Authorization to Release and Transfer Necessary Personal Information .

(a) You hereby explicitly and unambiguously consent to the collection, use and transfer, in electronic or other form, of your personal information as described in this Agreement by and among, as applicable, the Employer, and the Company and its Parent, Subsidiaries and Affiliates for the exclusive purpose of implementing, administering and managing your participation in the Plan.

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(b) You understand that the Company and the Employer may hold certain personal information about you, including, but not limited to, your name, home address and telephone number, date of birth, social insurance number (or any other social or national identification number), salary, nationality, job title, residency status, any Shares or directorships held in the Company, details of all Performance-Based Stock Units or any other entitlement to Shares awarded, canceled, exercised, vested, unvested or outstanding (the “Data”) for the purpose of implementing, administering and managing your participation in the Plan. You understand that Data may be transferred to the Company or any of its Parent, Subsidiaries or Affiliates, or to any third parties assisting in the implementation, administration and management of the Plan, that these recipients may be located in your country or elsewhere, including outside the European Economic Area, and that the recipient’s country (e.g., the United States) may have different data privacy laws and protections than your country. You understand that you may request a list with the names and addresses of any potential recipients of the Data by contacting your local human resources representative. You authorize the recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for the sole purposes of implementing, administering and managing your participation in the Plan, including any requisite transfer of such Data to a broker or other third party assisting with the administration of these Performance-Based Stock Units under the Plan or with whom Shares acquired pursuant to these Performance-Based Stock Units or cash from the sale of such Shares may be deposited. Furthermore, you acknowledge and understand that the transfer of the Data to the Company or any of its Parent, Subsidiaries or Affiliates, or to any third parties is necessary for your participation in the Plan.

(c) You understand that Data will be held only as long as is necessary to implement, administer and manage your participation in the Plan. You understand that you may, at any time, view the Data, request additional information about the storage and processing of the Data, require any necessary amendments to the Data or refuse or withdraw the consents herein by contacting your local human resources representative in writing. You further acknowledge that withdrawal of consent may affect your ability to vest in or realize benefits from these Performance-Based Stock Units, and your ability to participate in the Plan. For more information on the consequences of your refusal to consent or withdrawal of consent, you understand that you may contact your local human resources representative.

14. No Entitlement or Claims for Compensation .

(a) Your rights, if any, in respect of or in connection with these Performance-Based Stock Units or any other Award are derived solely from the discretionary decision of the Company to permit you to participate in the Plan and to benefit from a discretionary Award. The Plan may be amended, suspended or terminated by the Company at any time, unless otherwise provided in the Plan and this Agreement. By accepting these Performance-Based Stock Units, you expressly acknowledge that there is no obligation on the part of the Company to continue the Plan and/or grant any additional Performance-Based Stock Units to you or benefits in lieu of Restricted Stock Units, even if Performance-Based Stock Units have been granted repeatedly in the past. All decisions with respect to future grants of Performance-Based Stock Units, if any, will be at the sole discretion of the Committee.

(b) The Performance-Based Stock Units and the Shares subject to the Performance-Based Stock Units are not intended to replace any pension rights or compensation and are not to be considered compensation of a continuing or recurring nature, or part of your normal or expected compensation, and in no way represent any portion of your salary, compensation or other remuneration for any purpose, including but not limited to, calculating any severance, resignation, termination, redundancy, dismissal, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments, and in no event should be considered as compensation for, or relating in any way to, past services for the Company, the Employer or any Parent, Subsidiary or Affiliate. The value of the Performance-Based Stock Units is an extraordinary item that does not constitute compensation of any kind for services of any kind rendered to the Company, the Employer or any Parent, Subsidiary or Affiliate and which is outside the scope of your written employment agreement (if any).

(c) You acknowledge that you are voluntarily participating in the Plan.

(d) Neither the Plan nor these Performance-Based Stock Units or any other Award granted under the Plan shall be deemed to give you a right to remain an Employee, Consultant or director of the Company, a Parent, Subsidiary or an Affiliate. The Employer reserves the right to terminate your Service at any time, with or without cause, and for any reason, subject to applicable laws, the Company’s Articles of Incorporation and Bylaws, and a written employment agreement (if any).

(e) The grant of the Performance-Based Stock Units and your participation in the Plan will not be interpreted to form an employment contract or relationship with the Company, the Employer or any Parent, Subsidiary or Affiliate.

(f) The future value of the underlying Shares is unknown and cannot be predicted with certainty and if you vest in the Performance-Based Stock Units and are issued Shares, the value of those Shares may increase or decrease. You also understand that neither the

Company, nor the Employer or any Parent, Subsidiary or Affiliate is responsible for any foreign exchange fluctuation between your Employer’s local currency and the United States Dollar that may affect the value of this Award.

(g) In consideration of the grant of the Performance-Based Stock Units, no claim or entitlement to compensation or damages shall arise from forfeiture of the Performance-Based Stock Units resulting from termination of your Service by the Company or the Employer (for any reason whatsoever and whether or not in breach of local labor laws) or from the Company’s determination that performance goals have not been satisfied in whole or in part and you irrevocably release the Company and the Employer from any such claim that may arise; if, notwithstanding the foregoing, any such claim is found by a court of competent jurisdiction to have arisen, you shall be deemed irrevocably to have waived your entitlement to pursue such claim.

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(h) You agree that the Company may require Shares received pursuant to the Performance-Based Stock Units to be held by a broker designated by the Company.

(i) You agree that your rights hereunder (if any) shall be subject to set-off by the Company for any valid debts you owe the Company.

(j) The Performance-Based Stock Units and the benefits under the Plan, if any, will not automatically transfer to another company in the case of a merger, take-over or transfer of liability.

15. Governing Law and Forum . This Agreement shall be governed by and construed in accordance with the laws of the State of California without regard to the conflict of laws principles thereof. For purposes of litigating any dispute that may arise directly or indirectly from this Agreement, the parties hereby submit and consent to litigation in the exclusive jurisdiction of the State of California and agree that any such litigation shall be conducted only in the courts of California or the federal courts for the United States for the Northern District of California and no other courts.

16. Notices . Any notice required or permitted under the terms of this Agreement shall be in writing and shall be deemed sufficient when delivered personally or sent by confirmed email, telegram, or fax or forty-eight (48) hours after being deposited in the mail, as certified or registered mail, with postage prepaid, and addressed to the Company at the Company’s principal corporate offices or to you at the address maintained for you in the Company’s records or, in either case, as subsequently modified by written notice to the other party.

17. Binding Effect . Subject to the limitations set forth in this Agreement, this Agreement shall be binding upon, and inure to the benefit of, the executors, administrators, heirs, legal representatives, successors, and assigns of the parties hereto.

18. Severability . If any provision of this Agreement is held to be unenforceable for any reason, it shall be adjusted rather than voided, if possible, in order to achieve the intent of the parties to the extent possible. In any event, all other provisions of this Agreement shall be deemed valid and enforceable to the full extent possible.

19. Electronic Delivery . The Company may, in its sole discretion, decide to deliver any documents related to your current or future participation in the Plan by electronic means or to request your consent to participate in the Plan by electronic means. You hereby consent to receive such documents by electronic delivery and agree to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.

20. Language . If this Agreement or any other document related to the Plan is translated into a language other than English and the meaning of the translated version is different from the English version, the English version will take precedence.

21. Appendix . Notwithstanding any provisions in this Agreement, the Performance-Based Stock Units shall be subject to any special terms and conditions set forth in any Appendix to this Agreement for your country of residence. Moreover, if you relocate to one of the countries included in the Appendix, the special terms and conditions for such country will apply to you, to the extent the Company determines that the application of such terms and conditions is necessary or advisable in order to comply with local law or facilitate the administration of the Plan. The Appendix constitutes part of this Agreement.

22. Imposition of Other Requirements . The Company reserves the right to impose other requirements on your participation in the Plan, on the Performance-Based Stock Units and on any Shares acquired under the Plan, to the extent the Company determines it is necessary or advisable in order to comply with local law or facilitate the administration of the Plan. You agree to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing. Furthermore, you acknowledge that the laws of the country in which you are working at the time of grant, vesting and settlement of the Performance-Based Stock Units or the sale of Shares received pursuant to this Agreement (including any rules or regulations governing securities, foreign exchange, tax, labor, or other matters) may subject you to additional procedural or regulatory requirements that you are and will be solely responsible for and must fulfill.

23. Acceptance of Agreement . You must expressly accept the terms and conditions of your Performance-Based Stock Units as set forth in this Agreement by electronically accepting this Agreement within 300 days after the Company sends this Agreement to you. If you do not accept your Performance-Based Stock Units in the manner instructed by the Company, your Performance-Based Stock Units will be subject to cancellation.

*    *    *    *

You acknowledge that by clicking on the I agree button below, you agree to be bound by the terms of this Agreement.

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6

(For Grants Beginning September 2013)

CISCO SYSTEMS, INC.STOCK UNIT AGREEMENT

This Stock Unit Agreement (the “Agreement”) is made and entered into as of the Grant Date (as defined below) by and between Cisco Systems, Inc., a California corporation (the “Company”), and you pursuant to the Cisco Systems, Inc. 2005 Stock Incentive Plan (the “Plan”). The material terms of this Stock Unit Award are as follows:

Employee ID:    

Grant Date:    

Grant Number:    

Restricted Stock Units:    

First Vest Date:    

To the extent any capitalized terms used in this Agreement are not defined, they shall have the meaning ascribed to them in the Plan. In the event of a conflict between the terms and provisions of the Plan and the terms and provisions of this Agreement, the Plan terms and provisions shall prevail.

In consideration of the mutual agreements herein contained and intending to be legally bound hereby, the parties agree as follows:

1.Restricted Stock Units. Pursuant to the Plan, the Company hereby grants to you, and you hereby accept from the Company, Restricted Stock Units, each of which is a bookkeeping entry representing the equivalent in value of one (1) Share, on the terms and conditions set forth herein and in the Plan.

2.Vesting of Restricted Stock Units. So long as your Service continues, the Restricted Stock Units shall vest in accordance with the following schedule: ________________ percent ( ___%) of the total number of Restricted Stock Units granted pursuant to this Agreement shall vest on the First Vest Date and on each ______ anniversary thereafter, unless otherwise provided by the Plan or Section 4 below. If you take a leave of absence, the Company may, at its discretion, suspend vesting during the period of leave to the extent permitted under the employment laws in the jurisdiction where you are providing Service or the terms your employment or service agreement, if any. Prior to the time that the Restricted Stock Units are settled, you shall have no rights other than those of a general creditor of the Company. The Restricted Stock Units represent an unfunded and unsecured obligation of the Company.

3.Termination of Service. In the event of the termination of your Service for any reason (whether or not later found to be invalid or in breach of the employment laws in the jurisdiction where you are employed or providing Service, or the terms your employment or service agreement, if any), all unvested Restricted Stock Units shall be immediately forfeited without consideration. For purposes of the preceding sentence, your right to vest in the Restricted Stock Units will terminate effective as of the date that you are no longer providing Service; the Company shall have the exclusive discretion to determine when you are no longer providing Service for purposes of the Restricted Stock Units.

4.Special Acceleration.

(a)To the extent the Restricted Stock Units are outstanding at the time of a Corporate Transaction, such Restricted Stock Units shall automatically become vested in full immediately prior to the effective date of the Corporate Transaction. No such accelerated vesting, however, shall occur if and to the extent: (i) these Restricted Stock Units are, in connection with the Corporate Transaction, either assumed by the successor corporation (or parent thereof) or replaced with comparable restricted stock units of the successor corporation (or parent thereof) or (ii) these Restricted Stock Units are replaced with a cash incentive program of the successor corporation which complies with Code Section 409A and preserves the fair market value of the Restricted Stock Units at the time of the Corporate Transaction and provides for subsequent pay-out in accordance with the settlement provisions set forth in Section 5 below. The determination of the comparability of restricted stock units under clause (i) shall be made by the Committee, and such determination shall be final, binding and conclusive.

(b)Immediately following the effective date of the Corporate Transaction, this Agreement shall terminate and cease to be outstanding, except as set forth in Section 5 below with respect to the deferred settlement of Restricted Stock Units or to the extent assumed by the successor corporation (or parent thereof) in connection with the Corporate Transaction.

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(c)If this Agreement is assumed in connection with a Corporate Transaction, then the Committee shall appropriately adjust the number of units and the kind of shares or securities to be issued pursuant to this Agreement immediately after such Corporate Transaction.

(d)To the extent the Restricted Stock Units are outstanding at the time of a Change in Control, such Restricted Stock Units shall automatically accelerate immediately prior to the effective date of the Change in Control and shall become vested in full at that time and settled in accordance with Section 5 below.

(e)This Agreement shall not in any way affect the right of the Company to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate, sell or transfer all or any part of its business or assets.

5.Settlement of Restricted Stock Units. To the extent you are eligible but have not elected to defer settlement of the Restricted Stock Units, the Restricted Stock Units shall be automatically settled in Shares upon vesting of such Restricted Stock Units, provided that the Company shall have no obligation to issue Shares pursuant to this Agreement unless and until you have satisfied any applicable Tax-Related Items, as described an defined in Section 6 below, and such issuance otherwise complies with all applicable laws. To the extent you are eligible but have elected to defer settlement of the Restricted Stock Units, the vested portion of the Restricted Stock Units shall be settled in Shares upon the earlier of: (a) your separation from service within the meaning of Code Section 409A (“Separation from Service”) and (b) the fixed payment date elected by you, if any, at the time of such deferral (which shall be the first business day of a year no earlier than six years after the year of the Grant Date in accordance with procedures approved by the Committee), provided that the Company shall have no obligation to issue Shares pursuant to this Agreement unless such issuance complies with all applicable law. Notwithstanding the foregoing, to the extent your Restricted Stock Units would otherwise be settled upon your Separation from Service, such settlement shall instead occur upon the Company's first business day following the six-month anniversary of your Separation from Service.

6.Taxes.

(a)Regardless of any action the Company or your employer (the “Employer”) takes with respect to any and all income tax, social taxes or insurance contributions, payroll tax, payment on account or other tax-related items related to your participation in the Plan and legally applicable to you (“Tax-Related Items”), you acknowledge that the ultimate liability for all Tax-Related Items with respect to the Restricted Stock Units is and remains your responsibility and may exceed the amount actually withheld by the Company or the Employer. You further acknowledge that the Company and/or the Employer (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Restricted Stock Units, including the grant, vesting or settlement of the Restricted Stock Units, or the subsequent sale of any Shares acquired at vesting or the receipt of any dividends with respect to such Shares, and (ii) do not commit to and are under no obligation to structure the terms or any aspect of the Restricted Stock Units to reduce or eliminate your liability for Tax-Related Items or achieve any particular tax result. Further, if you become subject to taxation in more than one jurisdiction between the Grant Date and the date of any relevant taxable event, you acknowledge that the Company and/or the Employer (or former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.

(b)Prior to any relevant tax, withholding or required deduction event, as applicable, you agree to make arrangements satisfactory to the Company for the satisfaction of any applicable tax, withholding, required deduction and payment on account obligations of the Company and/or the Employer that arise in connection with the Restricted Stock Units. In this regard, you authorize the Company and/or the Employer, or their respective agents, at their discretion, to satisfy any obligations related to Tax-Related Items by one or a combination of the following: (1) withholding from your wages or other cash compensation payable to you by the Company or the Employer; (2) withholding from proceeds of the sale of Shares acquired upon settlement of the Restricted Stock Units either through a voluntary sale or through a mandatory sale arranged by the Company (on your behalf pursuant to this authorization); (3) withholding of Shares that would otherwise be issued upon settlement of the Restricted Stock Units; or (4) requiring you to satisfy the liability for Tax-Related Items by means of any other arrangement approved by the Company. If the obligation for Tax-Related Items is satisfied by withholding of Shares, for tax purposes, you are deemed to have been issued the full number of Shares subject to the vested Restricted Stock Units, notwithstanding that a number of the Shares are held back solely for the purpose of paying the Tax-Related Items due as a result of any aspect of your participation in the Plan. You agree to provide the Company and/or its stock plan broker/administrator with the information necessary to manage your Tax-Related Item withholding and acknowledge that should you fail to provide such information on a timely basis, the Company and/or its stock plan broker / administrator may be obligated to withhold amounts from you and it may be necessary for you to seek a refund directly from the tax authorities. To avoid financial accounting charges under applicable accounting guidance, the Company may withhold or account for Tax-Related Items by considering applicable minimum statutory rates or may take any other action required to avoid financial accounting charges under applicable accounting guidance. If the Company does not satisfy the obligation for Tax-Related Items by the withholding of Shares and instead withholds proceeds from the sale of Shares acquired upon settlement of the Restricted Stock Units, the Company may withhold or account for Tax-Related Items by considering maximum applicable rates, in which case you will receive a refund of any over-withheld amount in cash to the extent that any over-withheld amount has not otherwise been remitted to the applicable tax authority and will have no entitlement to the Common Stock equivalent.

(c)Finally, you will pay to the Company or the Employer any amount of Tax-Related Items that the Company or the Employer may be required to withhold or account for as a result of your participation in the Plan or your acquisition of Shares that cannot be

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satisfied by the means previously described. The Company shall not be required to issue or deliver Shares pursuant to this Agreement unless and until such obligations are satisfied.

7.Tax and Legal Advice. You represent, warrant and acknowledge that neither the Company nor your Employer have made any warranties or representations to you with respect to any Tax-Related Items, legal or financial consequences of the transactions contemplated by this Agreement, and you are in no manner relying on the Company, the Employer’s or the Company’s or the Employer’s representatives for an assessment of such consequences. YOU UNDERSTAND THAT THE LAWS GOVERNING THIS AWARD ARE SUBJECT TO CHANGE. YOU SHOULD CONSULT YOUR OWN PROFESSIONAL TAX, LEGAL AND FINANCIAL ADVISOR REGARDING ANY RESTRICTED STOCK UNITS. YOU UNDERSTAND THAT THE COMPANY AND THE EMPLOYER ARE NOT PROVIDING ANY TAX, LEGAL, OR FINANCIAL ADVICE, NOR IS THE COMPANY OR THE EMPLOYER MAKING ANY RECOMMENDATION REGARDING YOUR ACCEPTANCE OF THIS AWARD. NOTHING STATED HEREIN IS INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED, FOR THE PURPOSE OF AVOIDING TAXPAYER OR OTHER PENALTIES.

8.Non-Transferability of Restricted Stock Units. Restricted Stock Units shall not be anticipated, assigned, attached, garnished, optioned, transferred or made subject to any creditor’s process, whether voluntarily or involuntarily or by operation of law.

9.Restriction on Transfer. Regardless of whether the transfer or issuance of the Shares to be issued pursuant to the Restricted Stock Units has been registered under the Securities Act or has been registered or qualified under the securities laws of any state, the Company may impose additional restrictions upon the sale, pledge, or other transfer of the Shares (including the placement of appropriate legends on stock certificates and the issuance of stop-transfer instructions to the Company’s transfer agent) if, in the judgment of the Company and the Company’s counsel, such restrictions are necessary in order to achieve compliance with the provisions of the Securities Act, the securities laws of any state, or any other law, including all applicable foreign laws.

10.Restrictive Legends and Stop-Transfer Instructions. Stock certificates evidencing the Shares issued pursuant to the Restricted Stock Units may bear such restrictive legends and/or appropriate stop-transfer instructions may be issued to the Company’s transfer agent as the Company and the Company’s counsel deem necessary under applicable law or pursuant to this Agreement.

11.Representations, Warranties, Covenants, and Acknowledgments. You hereby agree that in the event the Company and the Company’s counsel deem it necessary or advisable in the exercise of their discretion, the transfer or issuance of the Shares issued pursuant to the Restricted Stock Units may be conditioned upon you making certain representations, warranties, and acknowledgments relating to compliance with applicable laws.

12.Voting and Other Rights. Subject to the terms of this Agreement, you shall not have any voting rights or any other rights and privileges of a stockholder of the Company unless and until the Restricted Stock Units are settled in Shares. In addition, you shall not have any rights to dividend equivalent payments with respect to Restricted Stock Units.

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13.Authorization to Release and Transfer Necessary Personal Information.

(a)You hereby explicitly and unambiguously consent to the collection, use and transfer, in electronic or other form, of your personal information as described in this Agreement by and among, as applicable, the Employer, and the Company and its Parent, Subsidiaries and Affiliates for the exclusive purpose of implementing, administering and managing your participation in the Plan.

(b)You understand that the Company and the Employer may hold certain personal information about you, including, but not limited to, your name, home address and telephone number, date of birth, social insurance number (or any other social or national identification number), salary, nationality, job title, residency status, any Shares or directorships held in the Company, details of all Restricted Stock Units or any other entitlement to Shares awarded, canceled, exercised, vested, unvested or outstanding (the “Data”) for the purpose of implementing, administering and managing your participation in the Plan. You understand that the Data may be transferred to the Company or any of its Parent, Subsidiaries or Affiliates, or to any third parties assisting in the implementation, administration and management of the Plan, that these recipients may be located in your country or elsewhere, including outside the European Economic Area, and that the recipient’s country (e.g., the United States) may have different data privacy laws and protections than your country. You understand that you may request a list with the names and addresses of any potential recipients of the Data by contacting your local human resources representative. You authorize the recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for the sole purposes of implementing, administering and managing your participation in the Plan, including any requisite transfer of such Data to a broker or other third party assisting with the administration of these Restricted Stock Units under the Plan or with whom Shares acquired pursuant to these Restricted Stock Units or cash from the sale of such Shares may be deposited. Furthermore, you acknowledge and understand that the transfer of the Data to the Company or any of its Parent, Subsidiaries or Affiliates, or to any third parties is necessary for your participation in the Plan.

(c)You understand that the Data will be held only as long as is necessary to implement, administer and manage your participation in the Plan. You understand that you may, at any time, view the Data, request additional information about the storage and processing of the Data, require any necessary amendments to the Data or refuse or withdraw the consents herein by contacting your local human resources representative in writing. Further, you understand that you are providing the consents herein on a purely voluntary basis. If you do not consent, or if you later seek to revoke your consent, your employment status or service and career with the Employer will not be adversely affected; the only adverse consequence of refusing or withdrawing your consent is that the Company would not be able to grant you Restricted Stock Units or other equity awards, or administer or maintain such awards.  Therefore, you understand that refusing or withdrawing your consent may affect your ability to vest in or realize benefits from these Restricted Stock Units and your ability to participate in the Plan. For more information on the consequences of your refusal to consent or withdrawal of consent, you understand that you may contact your local human resources representative.

14.No Entitlement or Claims for Compensation.

(a)Your rights, if any, in respect of or in connection with these Restricted Stock Unitsor any other Award are derived solely from the discretionary decision of the Company to permit you to participate in the Plan and to benefit from a discretionary Award. The Plan may be amended, suspended or terminated by the Company at any time, unless otherwise provided in the Plan and this Agreement. By accepting these Restricted Stock Units, you expressly acknowledge that there is no obligation on the part of the Company to continue the Plan and/or grant any additional Restricted Stock Units to you or benefits in lieu of Restricted Stock Units, even if Restricted Stock Units have been granted in the past. All decisions with respect to future grants of Restricted Stock Units, if any, will be at the sole discretion of the Committee.

(b)The Restricted Stock Units and the Shares subject to the Restricted Stock Units are not intended to replace any pension rights or compensation and are not to be considered compensation of a continuing or recurring nature, or part of your normal or expected compensation, and in no way represent any portion of your salary, compensation or other remuneration for any purpose, including, but not limited to, calculating any severance, resignation, termination, redundancy, dismissal, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments, and in no event should be considered as compensation for, or relating in any way to, past services for the Company, the Employeror any Parent, Subsidiary or Affiliate. The value of the Restricted Stock Unitsis an extraordinary item that does not constitute compensation of any kind for services of any kind rendered to the Company, the Employer or any Parent, Subsidiary or Affiliate and which is outside the scope of your written employment or service agreement (if any).

(c)You acknowledge that you are voluntarily participating in the Plan.

(d)Neither the Plan nor these Restricted Stock Units or any other Award granted under the Plan shall be deemed to give you a right to remain an Employee, Consultant or director of the Company, a Parent, Subsidiary or an Affiliate. The Employer reserves the right to terminate your Service at any time, with or without cause, and for any reason.

(e)The grant of the Restricted Stock Units and your participation in the Plan will not be interpreted to form an employment contract or service relationship with the Company, the Employer or any Parent, Subsidiary or Affiliate.

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(f)The future value of the underlying Shares is unknown, indeterminable and cannot be predicted with certainty and if you vest in the Restricted Stock Units and are issued Shares, the value of those Shares may increase or decrease. You also understand that none of the Company, the Employer or any Parent, Subsidiary or Affiliate is responsible for any foreign exchange fluctuation between the Employer’s local currency and the United States Dollar that may affect the value of this Award.

(g)No claim or entitlement to compensation or damages shall arise from forfeiture of the Restricted Stock Units resulting from the termination of your Service by the Company or the Employer (for any reason whatsoever and whether or not later found to be invalid or in breach of the employment laws in the jurisdiction where you are employed or providing Service, or the terms your employment or service agreement, if any) and, in consideration of the grant of the Award to which you are not otherwise entitled, you irrevocably agree never to institute any claim against the Employer, the Company or its Parent, Subsidiaries or Affiliates, waive your ability, if any, to bring any such claim, and release the Company and its Parent, Subsidiaries and Affiliates from any such claim; if notwithstanding the foregoing, any such claim is allowed by a court of competent jurisdiction, then, by accepting the Award, you shall be deemed irrevocably to have agreed to not pursue such claim and agree to execute any and all documents necessary to request the withdrawal of such claim.

(h)You agree that the Company may require Shares received pursuant to the Restricted Stock Units to be held by a broker designated by the Company.

(i)You agree that your rights hereunder (if any) shall be subject to set-off by the Company for any valid debts you owe the Company.

(j)Unless otherwise provided in the Plan or this Agreement, or by the Company in its discretion, the Restricted Stock Units and the benefits evidenced by this Agreement do not create any entitlement to have the Restricted Stock Units transferred to, or assumed by, another company, nor to be exchanged, cashed out or substituted for in connection with any Corporate Transaction affecting the Common Stock.

15.Governing Law and Forum. This Agreement shall be governed by and construed in accordance with the laws of the State of California without regard to the conflict of laws principles thereof. For purposes of litigating any dispute that may arise directly or indirectly from this Agreement, the parties hereby submit and consent to litigation in the exclusive jurisdiction of the State of California and agree that any such litigation shall be conducted only in the courts of California or the federal courts for the United States for the Northern District of California and no other courts.

16.Notices. Any notice required or permitted under the terms of this Agreement shall be in writing and shall be deemed sufficient when delivered personally or sent by confirmed email, telegram, or fax or forty-eight (48) hours after being deposited in the mail, as certified or registered mail, with postage prepaid, and addressed to the Company at the Company’s principal corporate offices or to you at the address maintained for you in the Company’s records or, in either case, as subsequently modified by written notice to the other party.

17.Binding Effect. Subject to the limitations set forth in this Agreement, this Agreement shall be binding upon, and inure to the benefit of, the executors, administrators, heirs, legal representatives, successors, and assigns of the parties hereto.

18.Severability. If any provision of this Agreement is held to be unenforceable for any reason, it shall be adjusted rather than voided, if possible, in order to achieve the intent of the parties to the extent possible. In any event, all other provisions of this Agreement shall be deemed valid and enforceable to the full extent possible.

19.Waiver. You agree that a waiver by the Company of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any other provision of this Agreement, or of any subsequent breach by you or any other participant.

20.Electronic Delivery. The Company may, in its sole discretion, decide to deliver any documents related to your current or future participation in the Plan by electronic means or to request your consent to participate in the Plan by electronic means. You hereby consent to receive such documents by electronic delivery and agree to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.

21.Language. If this Agreement or any other document related to the Plan is translated into a language other than English and the meaning of the translated version is different from the English version, the English version will take precedence.

22.Appendix. Notwithstanding any provisions in this Agreement, the Restricted Stock Units shall be subject to any special terms and conditions set forth in any Appendix to this Agreement for your country of residence. Moreover, if you relocate to one of the countries included in the Appendix, the special terms and conditions for such country will apply to you, to the extent the Company determines that the application of such terms and conditions is necessary or advisable in order to comply with local law or facilitate the administration of the Plan. The Appendix constitutes part of this Agreement.

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23.Imposition of Other Requirements.The Company reserves the right to impose other requirements on your participation in the Plan, on the Restricted Stock Units and on any Shares acquired under the Plan, to the extent the Company determines it is necessary or advisable in order to comply with local law or facilitate the administration of the Plan. You agree to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing. Furthermore, you acknowledge that the laws of the country in which you are working at the time of grant, vesting and settlement of the Restricted Stock Units or the sale of Shares received pursuant to this Agreement (including any rules or regulations governing securities, foreign exchange, tax, labor, or other matters) may subject you to additional procedural or regulatory requirements that you are and will be solely responsible for and must fulfill.

24.Acceptance of Agreement. You must expressly accept the terms and conditions of your Restricted Stock Units as set forth in this Agreement by electronically accepting this Agreement within 300 days after the Company sends this Agreement to you. If you do not accept your Restricted Stock Units in the manner instructed by the Company, your Restricted Stock Units will be subject to cancellation.

*    *    *    *

You acknowledge that by clicking on the I agree button below, you agree to be bound by the terms of this Agreement.

PLEASE PRINT AND KEEP A COPY FOR YOUR RECORDS

6

(For Grants Beginning September 2012 and

Prior to September 2013)

CISCO SYSTEMS, INC.

STOCK UNIT AGREEMENT

This Stock Unit Agreement (the “Agreement”) is made and entered into as of the Grant Date (as defined below) by and between Cisco Systems, Inc., a California corporation (the “Company”), and you pursuant to the Cisco Systems, Inc. 2005 Stock Incentive Plan (the “Plan”). The material terms of this Stock Unit Award are as follows:

Employee ID:

Grant Date:

Grant Number:

Restricted Stock Units:

First Vest Date:

To the extent any capitalized terms used in this Agreement are not defined, they shall have the meaning ascribed to them in the Plan. In the event of a conflict between the terms and provisions of the Plan and the terms and provisions of this Agreement, the Plan terms and provisions shall prevail.

In consideration of the mutual agreements herein contained and intending to be legally bound hereby, the parties agree as follows:

1. Restricted Stock Units . Pursuant to the Plan, the Company hereby grants to you, and you hereby accept from the Company, Restricted Stock Units, each of which is a bookkeeping entry representing the equivalent in value of one (1) Share, on the terms and conditions set forth herein and in the Plan.

2. Vesting of Restricted Stock Units . So long as your Service continues, the Restricted Stock Units shall vest in accordance with the following schedule: ___________ percent (__%) of the total number of Restricted Stock Units granted pursuant to this Agreement shall vest on the First Vest Date and on each __________ anniversary thereafter, unless otherwise provided by the Plan or Section 4 below. If you take a leave of absence, the Company may, at its discretion, suspend vesting during the period of leave to the extent permitted under applicable local law. Prior to the time that the Restricted Stock Units are settled, you shall have no rights other than those of a general creditor of the Company. The Restricted Stock Units represent an unfunded and unsecured obligation of the Company.

3. Termination of Service . In the event of the termination of your Service for any reason (whether or not in breach of local labor laws), all unvested Restricted Stock Units shall be immediately forfeited without consideration. For purposes of the preceding sentence, your right to vest in the Restricted Stock Units will terminate effective as of the date that you are no longer actively providing Service and will not be extended by any notice period mandated under local law ( e.g. , active Service would not include a period of “garden leave” or similar period pursuant to local law); the Company shall have the exclusive discretion to determine when you are no longer actively providing Service for purposes of the Restricted Stock Units.

4. Special Acceleration .

(a) To the extent the Restricted Stock Units are outstanding at the time of a Corporate Transaction, such Restricted Stock Units shall automatically become vested in full immediately prior to the effective date of the Corporate Transaction. No such accelerated vesting, however, shall occur if and to the extent: (i) these Restricted Stock Units are, in connection with the Corporate Transaction, either assumed by the successor corporation (or parent thereof) or replaced with comparable restricted stock units of the successor corporation (or parent thereof) or (ii) these Restricted Stock Units are replaced with a cash incentive program of the successor corporation which complies with Code Section 409A and preserves the fair market value of the Restricted Stock Units at the time of the Corporate Transaction and provides for subsequent pay-out in accordance with the settlement provisions set forth in Section 5 below. The determination of the comparability of restricted stock units under clause (i) shall be made by the Committee, and such determination shall be final, binding and conclusive.

(b) Immediately following the effective date of the Corporate Transaction, this Agreement shall terminate and cease to be outstanding, except as set forth in Section 5 below with respect to the deferred settlement of Restricted Stock Units or to the extent assumed by the successor corporation (or parent thereof) in connection with the Corporate Transaction.

(c) If this Agreement is assumed in connection with a Corporate Transaction, then the Committee shall appropriately adjust the number of units and the kind of shares or securities to be issued pursuant to this Agreement immediately after such Corporate Transaction.

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(d) To the extent the Restricted Stock Units are outstanding at the time of a Change in Control, such Restricted Stock Units shall automatically accelerate immediately prior to the effective date of the Change in Control and shall become vested in full at that time and settled in accordance with Section 5 below.

(e) This Agreement shall not in any way affect the right of the Company to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate, sell or transfer all or any part of its business or assets.

5. Settlement of Restricted Stock Units . To the extent you are eligible but have not elected to defer settlement of the Restricted Stock Units, the Restricted Stock Units shall be automatically settled in Shares upon vesting of such Restricted Stock Units, provided that the Company shall have no obligation to issue Shares pursuant to this Agreement unless and until you have satisfied any applicable tax and/or other obligations pursuant to Section 6 below and such issuance otherwise complies with all applicable law. To the extent you are eligible but have elected to defer settlement of the Restricted Stock Units, the vested portion of the Restricted Stock Units shall be settled in Shares upon the earlier of: (a) your separation from service within the meaning of Code Section 409A (“Separation from Service”) and (b) the fixed payment date elected by you, if any, at the time of such deferral (which shall be the first business day of a year no earlier than six years after the year of the Grant Date in accordance with procedures approved by the Committee), provided that the Company shall have no obligation to issue Shares pursuant to this Agreement unless such issuance complies with all applicable law. Notwithstanding the foregoing, to the extent your Restricted Stock Units would otherwise be settled upon your Separation from Service, such settlement shall instead occur upon the Company’s first business day following the six-month anniversary of your Separation from Service.

6. Taxes .

(a) Regardless of any action the Company or your employer (the “Employer”) takes with respect to any and all income tax, social taxes or insurance contributions, payroll tax, payment on account or other tax-related items related to your participation in the Plan and legally applicable to you (“Tax-Related Items”), you acknowledge that the ultimate liability for all Tax-Related Items with respect to the Restricted Stock Units is and remains your responsibility and may exceed the amount actually withheld by the Company or the Employer. You further acknowledge that the Company and/or the Employer (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Restricted Stock Units, including the grant, vesting or settlement of the Restricted Stock Units, or the subsequent sale of any Shares acquired at vesting or the receipt of any dividends with respect to such Shares; and (ii) do not commit to and are under no obligation to structure the terms or any aspect of the Restricted Stock Units to reduce or eliminate your liability for Tax-Related Items or achieve any particular tax result. Further, if you become subject to taxation in more than one jurisdiction between the Grant Date and the date of any relevant taxable event, you acknowledge that the Company and/or the Employer (or former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.

(b) Prior to any relevant tax, withholding or required deduction event, as applicable, you agree to make arrangements satisfactory to the Company for the satisfaction of any applicable tax, withholding, required deduction and payment on account obligations of the Company and/or the Employer that arise in connection with the Restricted Stock Units. In this regard, you authorize the Company and/or the Employer, or their respective agents, at their discretion, to satisfy any obligations related to Tax-Related Items by one or a combination of the following: (1) withholding from your wages or other cash compensation payable to you by the Company or the Employer; (2) withholding from proceeds of the sale of Shares acquired upon settlement of the Restricted Stock Units either through a voluntary sale or through a mandatory sale arranged by the Company (on your behalf pursuant to this authorization); (3) withholding of Shares that would otherwise be issued upon settlement of the Restricted Stock Units; or (4) requiring you to satisfy the liability for Tax-Related Items by means of any other arrangement approved by the Company. If the obligation for Tax-Related Items is satisfied by withholding of Shares, for tax purposes, you are deemed to have been issued the full number of Shares subject to the vested Restricted Stock Units, notwithstanding that a number of the Shares are held back solely for the purpose of paying the Tax-Related Items due as a result of any aspect of your participation in the Plan. To avoid financial accounting charges under applicable accounting guidance, the Company may withhold or account for Tax-Related Items by considering applicable minimum statutory rates or may take any other action required to avoid financial accounting charges under applicable accounting guidance.

(c) Finally, you will pay to the Company or the Employer any amount of Tax-Related Items that the Company or the Employer may be required to withhold or account for as a result of your participation in the Plan or your acquisition of Shares that cannot be satisfied by the means previously described. The Company shall not be required to issue or deliver Shares pursuant to this Agreement unless and until such obligations are satisfied.

7. Tax and Legal Advice . You represent, warrant and acknowledge that neither the Company nor your Employer have made any warranties or representations to you with respect to any Tax-Related Items, legal or financial consequences of the transactions contemplated by this Agreement, and you are in no manner relying on the Company, your Employer’s or the Company’s or the Employer’s representatives for an assessment of such consequences. YOU UNDERSTAND THAT THE LAWS GOVERNING THIS AWARD ARE SUBJECT TO CHANGE. YOU SHOULD CONSULT YOUR OWN PROFESSIONAL TAX, LEGAL AND FINANCIAL ADVISOR REGARDING ANY RESTRICTED STOCK UNITS. YOU UNDERSTAND THAT THE COMPANY AND YOUR EMPLOYER ARE NOT PROVIDING ANY TAX, LEGAL, OR FINANCIAL ADVICE, NOR IS THE COMPANY OR YOUR EMPLOYER MAKING ANY RECOMMENDATION REGARDING YOUR ACCEPTANCE OF THIS AWARD. NOTHING STATED HEREIN IS INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED, FOR THE PURPOSE OF AVOIDING TAXPAYER OR OTHER PENALTIES.

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8. Non-Transferability of Restricted Stock Units . Restricted Stock Units shall not be anticipated, assigned, attached, garnished, optioned, transferred or made subject to any creditor’s process, whether voluntarily or involuntarily or by operation of law.

9. Restriction on Transfer . Regardless of whether the transfer or issuance of the Shares to be issued pursuant to the Restricted Stock Units has been registered under the Securities Act or has been registered or qualified under the securities laws of any state, the Company may impose additional restrictions upon the sale, pledge, or other transfer of the Shares (including the placement of appropriate legends on stock certificates and the issuance of stop-transfer instructions to the Company’s transfer agent) if, in the judgment of the Company and the Company’s counsel, such restrictions are necessary in order to achieve compliance with the provisions of the Securities Act, the securities laws of any state, or any other law including all applicable foreign laws.

10. Restrictive Legends and Stop-Transfer Instructions . Stock certificates evidencing the Shares issued pursuant to the Restricted Stock Units may bear such restrictive legends and/or appropriate stop-transfer instructions may be issued to the Company’s transfer agent as the Company and the Company’s counsel deem necessary under applicable law or pursuant to this Agreement.

11. Representations, Warranties, Covenants, and Acknowledgments . You hereby agree that in the event the Company and the Company’s counsel deem it necessary or advisable in the exercise of their discretion, the transfer or issuance of the Shares issued pursuant to the Restricted Stock Units may be conditioned upon you making certain representations, warranties, and acknowledgments relating to compliance with applicable laws.

12. Voting and Other Rights . Subject to the terms of this Agreement, you shall not have any voting rights or any other rights and privileges of a stockholder of the Company unless and until the Restricted Stock Units are settled in Shares. In addition, you shall not have any rights to dividend equivalent payments with respect to Restricted Stock Units.

13. Authorization to Release and Transfer Necessary Personal Information .

(a) You hereby explicitly and unambiguously consent to the collection, use and transfer, in electronic or other form, of your personal information as described in this Agreement by and among, as applicable, the Employer, and the Company and its Parent, Subsidiaries and Affiliates for the exclusive purpose of implementing, administering and managing your participation in the Plan .

(b) You understand that the Company and the Employer may hold certain personal information about you, including, but not limited to, your name, home address and telephone number, date of birth, social insurance number (or any other social or national identification number), salary, nationality, job title, residency status, any Shares or directorships held in the Company, details of all Restricted Stock Units or any other entitlement to Shares awarded, canceled, exercised, vested, unvested or outstanding (the “Data”) for the purpose of implementing, administering and managing your participation in the Plan. You understand that Data may be transferred to the Company or any of its Parent, Subsidiaries or Affiliates, or to any third parties assisting in the implementation, administration and management of the Plan, that these recipients may be located in your country or elsewhere, including outside the European Economic Area, and that the recipient’s country (e.g., the United States) may have different data privacy laws and protections than your country. You understand that you may request a list with the names and addresses of any potential recipients of the Data by contacting your local human resources representative. You authorize the recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for the sole purposes of implementing, administering and managing your participation in the Plan, including any requisite transfer of such Data to a broker or other third party assisting with the administration of these Restricted Stock Units under the Plan or with whom Shares acquired pursuant to these Restricted Stock Units or cash from the sale of such Shares may be deposited. Furthermore, you acknowledge and understand that the transfer of the Data to the Company or any of its Parent, Subsidiaries or Affiliates, or to any third parties is necessary for your participation in the Plan .

(c) You understand that Data will be held only as long as is necessary to implement, administer and manage your participation in the Plan. You understand that you may, at any time, view the Data, request additional information about the storage and processing of the Data, require any necessary amendments to the Data or refuse or withdraw the consents herein by contacting your local human resources representative in writing. You further acknowledge that withdrawal of consent may affect your ability to vest in or realize benefits from these Restricted Stock Units, and your ability to participate in the Plan. For more information on the consequences of your refusal to consent or withdrawal of consent, you understand that you may contact your local human resources representative .

14. No Entitlement or Claims for Compensation .

(a) Your rights, if any, in respect of or in connection with these Restricted Stock Units or any other Award are derived solely from the discretionary decision of the Company to permit you to participate in the Plan and to benefit from a discretionary Award. The Plan may be amended, suspended or terminated by the Company at any time, unless otherwise provided in the Plan and this Agreement. By accepting these Restricted Stock Units, you expressly acknowledge that there is no obligation on the part of the Company to continue the Plan and/or grant any additional Restricted Stock Units to you or benefits in lieu of Restricted Stock Units, even if Restricted Stock Units have been granted repeatedly in the past. All decisions with respect to future grants of Restricted Stock Units, if any, will be at the sole discretion of the Committee.

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(b) The Restricted Stock Units and the Shares subject to the Restricted Stock Units are not intended to replace any pension rights or compensation and are not to be considered compensation of a continuing or recurring nature, or part of your normal or expected compensation, and in no way represent any portion of your salary, compensation or other remuneration for any purpose, including but not limited to, calculating any severance, resignation, termination, redundancy, dismissal, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments, and in no event should be considered as compensation for, or relating in any way to, past services for the Company, the Employer or any Parent, Subsidiary or Affiliate. The value of the Restricted Stock Units is an extraordinary item that does not constitute compensation of any kind for services of any kind rendered to the Company, the Employer or any Parent, Subsidiary or Affiliate and which is outside the scope of your written employment agreement (if any).

(c) You acknowledge that you are voluntarily participating in the Plan.

(d) Neither the Plan nor these Restricted Stock Units or any other Award granted under the Plan shall be deemed to give you a right to remain an Employee, Consultant or director of the Company, a Parent, Subsidiary or an Affiliate. The Employer reserves the right to terminate your Service at any time, with or without cause, and for any reason, subject to applicable laws, the Company’s Articles of Incorporation and Bylaws, and a written employment agreement (if any).

(e) The grant of the Restricted Stock Units and your participation in the Plan will not be interpreted to form an employment contract or relationship with the Company, the Employer or any Parent, Subsidiary or Affiliate.

(f) The future value of the underlying Shares is unknown and cannot be predicted with certainty and if you vest in the Restricted Stock Units and are issued Shares, the value of those Shares may increase or decrease. You also understand that neither the Company, nor the Employer or any Parent, Subsidiary or Affiliate is responsible for any foreign exchange fluctuation between your Employer’s local currency and the United States Dollar that may affect the value of this Award.

(g) In consideration of the grant of the Restricted Stock Units, no claim or entitlement to compensation or damages shall arise from forfeiture of the Restricted Stock Units resulting from termination of your Service by the Company or the Employer (for any reason whatsoever and whether or not in breach of local labor laws) and you irrevocably release the Company and the Employer from any such claim that may arise; if, notwithstanding the foregoing, any such claim is found by a court of competent jurisdiction to have arisen, you shall be deemed irrevocably to have waived your entitlement to pursue such claim.

(h) You agree that the Company may require Shares received pursuant to the Restricted Stock Units to be held by a broker designated by the Company.

(i) You agree that your rights hereunder (if any) shall be subject to set-off by the Company for any valid debts you owe the Company.

(j) The Restricted Stock Units and the benefits under the Plan, if any, will not automatically transfer to another company in the case of a merger, take-over or transfer of liability.

15. Governing Law and Forum . This Agreement shall be governed by and construed in accordance with the laws of the State of California without regard to the conflict of laws principles thereof. For purposes of litigating any dispute that may arise directly or indirectly from this Agreement, the parties hereby submit and consent to litigation in the exclusive jurisdiction of the State of California and agree that any such litigation shall be conducted only in the courts of California or the federal courts for the United States for the Northern District of California and no other courts.

16. Notices . Any notice required or permitted under the terms of this Agreement shall be in writing and shall be deemed sufficient when delivered personally or sent by confirmed email, telegram, or fax or forty-eight (48) hours after being deposited in the mail, as certified or registered mail, with postage prepaid, and addressed to the Company at the Company’s principal corporate offices or to you at the address maintained for you in the Company’s records or, in either case, as subsequently modified by written notice to the other party.

17. Binding Effect . Subject to the limitations set forth in this Agreement, this Agreement shall be binding upon, and inure to the benefit of, the executors, administrators, heirs, legal representatives, successors, and assigns of the parties hereto.

18. Severability . If any provision of this Agreement is held to be unenforceable for any reason, it shall be adjusted rather than voided, if possible, in order to achieve the intent of the parties to the extent possible. In any event, all other provisions of this Agreement shall be deemed valid and enforceable to the full extent possible.

19. Electronic Delivery . The Company may, in its sole discretion, decide to deliver any documents related to your current or future participation in the Plan by electronic means or to request your consent to participate in the Plan by electronic means. You hereby consent to receive such documents by electronic delivery and agree to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.

20. Language . If this Agreement or any other document related to the Plan is translated into a language other than English and the meaning of the translated version is different from the English version, the English version will take precedence.

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21. Appendix . Notwithstanding any provisions in this Agreement, the Restricted Stock Units shall be subject to any special terms and conditions set forth in any Appendix to this Agreement for your country of residence. Moreover, if you relocate to one of the countries included in the Appendix, the special terms and conditions for such country will apply to you, to the extent the Company determines that the application of such terms and conditions is necessary or advisable in order to comply with local law or facilitate the administration of the Plan. The Appendix constitutes part of this Agreement.

22. Imposition of Other Requirements . The Company reserves the right to impose other requirements on your participation in the Plan, on the Restricted Stock Units and on any Shares acquired under the Plan, to the extent the Company determines it is necessary or advisable in order to comply with local law or facilitate the administration of the Plan. You agree to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing. Furthermore, you acknowledge that the laws of the country in which you are working at the time of grant, vesting and settlement of the Restricted Stock Units or the sale of Shares received pursuant to this Agreement (including any rules or regulations governing securities, foreign exchange, tax, labor, or other matters) may subject you to additional procedural or regulatory requirements that you are and will be solely responsible for and must fulfill.

23. Acceptance of Agreement . You must expressly accept the terms and conditions of your Restricted Stock Units as set forth in this Agreement by electronically accepting this Agreement within 300 days after the Company sends this Agreement to you. If you do not accept your Restricted Stock Units in the manner instructed by the Company, your Restricted Stock Units will be subject to cancellation.

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You acknowledge that by clicking on the I agree button below, you agree to be bound by the terms of this Agreement.

PLEASE PRINT AND KEEP A COPY FOR YOUR RECORDS

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(For Grants Beginning September 2010 and

Prior to September 2012)

CISCO SYSTEMS, INC.

STOCK UNIT AGREEMENT

This Stock Unit Agreement (the “Agreement”) is made and entered into as of the Grant Date (as defined below) by and between Cisco Systems, Inc., a California corporation (the “Company”), and you pursuant to the Cisco Systems, Inc. 2005 Stock Incentive Plan (the “Plan”). The material terms of this Stock Unit Award are as follows:

Employee ID:

Grant Date:

Grant Number:

Restricted Stock Units:

First Vest Date:

To the extent any capitalized terms used in this Agreement are not defined, they shall have the meaning ascribed to them in the Plan. In the event of a conflict between the terms and provisions of the Plan and the terms and provisions of this Agreement, the Plan terms and provisions shall prevail.

In consideration of the mutual agreements herein contained and intending to be legally bound hereby, the parties agree as follows:

1. Restricted Stock Units . Pursuant to the Plan, the Company hereby grants to you, and you hereby accept from the Company, Restricted Stock Units, each of which is a bookkeeping entry representing the equivalent in value of one (1) Share, on the terms and conditions set forth herein and in the Plan.

2. Vesting of Restricted Stock Units . So long as your Service continues, the Restricted Stock Units shall vest in accordance with the following schedule: ( %) of the total number of Restricted Stock Units granted pursuant to this Agreement shall vest on the First Vest Date and on each anniversary thereafter, unless otherwise provided by the Plan or Section 4 below. If you take a leave of absence, the Company may, at its discretion, suspend vesting during the period of leave to the extent permitted under applicable local law. Prior to the time that the Restricted Stock Units are settled, you shall have no rights other than those of a general creditor of the Company. The Restricted Stock Units represent an unfunded and unsecured obligation of the Company.

3. Termination of Service . In the event of the termination of your Service for any reason (whether or not in breach of local labor laws), all unvested Restricted Stock Units shall be immediately forfeited without consideration. For purposes of the preceding sentence, your right to vest in the Restricted Stock Units will terminate effective as of the date that you are no longer actively providing Service and will not be extended by any notice period mandated under local law ( e.g. , active Service would not include a period of “garden leave” or similar period pursuant to local law); the Company shall have the exclusive discretion to determine when you are no longer actively providing Service for purposes of the Restricted Stock Units.

4. Special Acceleration .

(a) To the extent the Restricted Stock Units are outstanding at the time of a Corporate Transaction, such Restricted Stock Units shall automatically become vested in full immediately prior to the effective date of the Corporate Transaction. No such accelerated vesting, however, shall occur if and to the extent: (i) these Restricted Stock Units are, in connection with the Corporate Transaction, either assumed by the successor corporation (or parent thereof) or replaced with comparable restricted stock units of the successor corporation (or parent thereof) or (ii) these Restricted Stock Units are replaced with a cash incentive program of the successor corporation which complies with Code Section 409A and preserves the fair market value of the Restricted Stock Units at the time of the Corporate Transaction and provides for subsequent pay-out in accordance with the settlement provisions set forth in Section 5 below. The determination of the comparability of restricted stock units under clause (i) shall be made by the Committee, and such determination shall be final, binding and conclusive.

(b) Immediately following the effective date of the Corporate Transaction, this Agreement shall terminate and cease to be outstanding, except as set forth in Section 5 below with respect to the deferred settlement of Restricted Stock Units or to the extent assumed by the successor corporation (or parent thereof) in connection with the Corporate Transaction.

(c) If this Agreement is assumed in connection with a Corporate Transaction, then the Committee shall appropriately adjust the number of units and the kind of shares or securities to be issued pursuant to this Agreement immediately after such Corporate Transaction.

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(d) To the extent the Restricted Stock Units are outstanding at the time of a Change in Control, such Restricted Stock Units shall automatically accelerate immediately prior to the effective date of the Change in Control and shall become vested in full at that time and settled in accordance with Section 5 below.

(e) This Agreement shall not in any way affect the right of the Company to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate, sell or transfer all or any part of its business or assets.

5. Settlement of Restricted Stock Units . To the extent you are eligible but have not elected to defer settlement of the Restricted Stock Units, the Restricted Stock Units shall be automatically settled in Shares upon vesting of such Restricted Stock Units, provided that the Company shall have no obligation to issue Shares pursuant to this Agreement unless and until you have satisfied any applicable tax and/or other obligations pursuant to Section 6 below and such issuance otherwise complies with all applicable law. To the extent you are eligible but have elected to defer settlement of the Restricted Stock Units, the vested portion of the Restricted Stock Units shall be settled in Shares upon the earlier of: (a) your separation from service within the meaning of Code Section 409A (“Separation from Service”) and (b) the fixed payment date elected by you, if any, at the time of such deferral (which shall be the first business day of a year no earlier than five years after the year of the Grant Date in accordance with procedures approved by the Committee), provided that the Company shall have no obligation to issue Shares pursuant to this Agreement unless such issuance complies with all applicable law. Notwithstanding the foregoing, to the extent your Restricted Stock Units would otherwise be settled upon your Separation from Service, such settlement shall instead occur upon the Company’s first business day following the six-month anniversary of your Separation from Service.

6. Taxes .

(a) Regardless of any action the Company or your employer (the “Employer”) takes with respect to any and all income tax, social taxes or insurance contributions, payroll tax, payment on account or other tax-related items related to your participation in the Plan and legally applicable to you (“Tax-Related Items”), you acknowledge that the ultimate liability for all Tax-Related Items with respect to the Restricted Stock Units is and remains your responsibility and may exceed the amount actually withheld by the Company or the Employer. You further acknowledge that the Company and/or the Employer (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Restricted Stock Units, including the grant, vesting or settlement of the Restricted Stock Units, or the subsequent sale of any Shares acquired at vesting or the receipt of any dividends with respect to such Shares; and (ii) do not commit to and are under no obligation to structure the terms or any aspect of the Restricted Stock Units to reduce or eliminate your liability for Tax-Related Items or achieve any particular tax result. Further, if you become subject to taxation in more than one jurisdiction between the Grant Date and the date of any relevant taxable event, you acknowledge that the Company and/or the Employer (or former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.

(b) Prior to any relevant tax, withholding or required deduction event, as applicable, you agree to make arrangements satisfactory to the Company for the satisfaction of any applicable tax, withholding, required deduction and payment on account obligations of the Company and/or the Employer that arise in connection with the Restricted Stock Units. In this regard, you authorize the Company and/or the Employer, or their respective agents, at their discretion, to satisfy any obligations related to Tax-Related Items by one or a combination of the following: (1) withholding from your wages or other cash compensation payable to you by the Company or the Employer; (2) withholding from proceeds of the sale of Shares acquired upon settlement of the Restricted Stock Units either through a voluntary sale or through a mandatory sale arranged by the Company (on your behalf pursuant to this authorization); (3) withholding of Shares that would otherwise be issued upon settlement of the Restricted Stock Units; or (4) requiring you to satisfy the liability for Tax-Related Items by means of any other arrangement approved by the Company. If the obligation for Tax-Related Items is satisfied by withholding of Shares, for tax purposes, you are deemed to have been issued the full number of Shares subject to the vested Restricted Stock Units, notwithstanding that a number of the Shares are held back solely for the purpose of paying the Tax-Related Items due as a result of any aspect of your participation in the Plan. To avoid financial accounting charges under applicable accounting guidance, the Company may withhold or account for Tax-Related Items by considering applicable minimum statutory rates or may take any other action required to avoid financial accounting charges under applicable accounting guidance.

(c) Finally, you will pay to the Company or the Employer any amount of Tax-Related Items that the Company or the Employer may be required to withhold or account for as a result of your participation in the Plan or your acquisition of Shares that cannot be satisfied by the means previously described. The Company shall not be required to issue or deliver Shares pursuant to this Agreement unless and until such obligations are satisfied.

7. Tax and Legal Advice . You represent, warrant and acknowledge that neither the Company nor your Employer have made any warranties or representations to you with respect to any Tax-Related Items, legal or financial consequences of the transactions contemplated by this Agreement, and you are in no manner relying on the Company, your Employer’s or the Company’s or the Employer’s representatives for an assessment of such consequences. YOU UNDERSTAND THAT THE LAWS GOVERNING THIS AWARD ARE SUBJECT TO CHANGE. YOU SHOULD CONSULT YOUR OWN PROFESSIONAL TAX, LEGAL AND FINANCIAL ADVISOR REGARDING ANY RESTRICTED STOCK UNITS. YOU UNDERSTAND THAT THE COMPANY AND YOUR EMPLOYER ARE NOT PROVIDING ANY TAX, LEGAL, OR FINANCIAL ADVICE, NOR IS THE COMPANY OR YOUR EMPLOYER MAKING ANY RECOMMENDATION REGARDING YOUR ACCEPTANCE OF THIS AWARD. NOTHING STATED HEREIN IS INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED, FOR THE PURPOSE OF AVOIDING TAXPAYER OR OTHER PENALTIES.

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8. Non-Transferability of Restricted Stock Units . Restricted Stock Units shall not be anticipated, assigned, attached, garnished, optioned, transferred or made subject to any creditor’s process, whether voluntarily or involuntarily or by operation of law.

9. Restriction on Transfer . Regardless of whether the transfer or issuance of the Shares to be issued pursuant to the Restricted Stock Units has been registered under the Securities Act or has been registered or qualified under the securities laws of any state, the Company may impose additional restrictions upon the sale, pledge, or other transfer of the Shares (including the placement of appropriate legends on stock certificates and the issuance of stop-transfer instructions to the Company’s transfer agent) if, in the judgment of the Company and the Company’s counsel, such restrictions are necessary in order to achieve compliance with the provisions of the Securities Act, the securities laws of any state, or any other law including all applicable foreign laws.

10. Restrictive Legends and Stop-Transfer Instructions . Stock certificates evidencing the Shares issued pursuant to the Restricted Stock Units may bear such restrictive legends and/or appropriate stop-transfer instructions may be issued to the Company’s transfer agent as the Company and the Company’s counsel deem necessary under applicable law or pursuant to this Agreement.

11. Representations, Warranties, Covenants, and Acknowledgments . You hereby agree that in the event the Company and the Company’s counsel deem it necessary or advisable in the exercise of their discretion, the transfer or issuance of the Shares issued pursuant to the Restricted Stock Units may be conditioned upon you making certain representations, warranties, and acknowledgments relating to compliance with applicable laws.

12. Voting and Other Rights . Subject to the terms of this Agreement, you shall not have any voting rights or any other rights and privileges of a stockholder of the Company unless and until the Restricted Stock Units are settled in Shares. In addition, you shall not have any rights to dividend equivalent payments with respect to Restricted Stock Units.

13. Authorization to Release and Transfer Necessary Personal Information .

(a) You hereby explicitly and unambiguously consent to the collection, use and transfer, in electronic or other form, of your personal information as described in this Agreement by and among, as applicable, the Employer, and the Company and its Parent, Subsidiaries and Affiliates for the exclusive purpose of implementing, administering and managing your participation in the Plan.

(b) You understand that the Company and the Employer may hold certain personal information about you, including, but not limited to, your name, home address and telephone number, date of birth, social insurance number (or any other social or national identification number), salary, nationality, job title, residency status, any Shares or directorships held in the Company, details of all Restricted Stock Units or any other entitlement to Shares awarded, canceled, exercised, vested, unvested or outstanding (the “Data”) for the purpose of implementing, administering and managing your participation in the Plan. You understand that Data may be transferred to the Company or any of its Parent, Subsidiaries or Affiliates, or to any third parties assisting in the implementation, administration and management of the Plan, that these recipients may be located in your country or elsewhere, including outside the European Economic Area, and that the recipient’s country (e.g., the United States) may have different data privacy laws and protections than your country. You understand that you may request a list with the names and addresses of any potential recipients of the Data by contacting your local human resources representative. You authorize the recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for the sole purposes of implementing, administering and managing your participation in the Plan, including any requisite transfer of such Data to a broker or other third party assisting with the administration of these Restricted Stock Units under the Plan or with whom Shares acquired pursuant to these Restricted Stock Units or cash from the sale of such Shares may be deposited. Furthermore, you acknowledge and understand that the transfer of the Data to the Company or any of its Parent, Subsidiaries or Affiliates, or to any third parties is necessary for your participation in the Plan.

(c) You understand that Data will be held only as long as is necessary to implement, administer and manage your participation in the Plan. You understand that you may, at any time, view the Data, request additional information about the storage and processing of the Data, require any necessary amendments to the Data or refuse or withdraw the consents herein by contacting your local human resources representative in writing. You further acknowledge that withdrawal of consent may affect your ability to vest in or realize benefits from these Restricted Stock Units, and your ability to participate in the Plan. For more information on the consequences of your refusal to consent or withdrawal of consent, you understand that you may contact your local human resources representative.

14. No Entitlement or Claims for Compensation .

(a) Your rights, if any, in respect of or in connection with these Restricted Stock Units or any other Award are derived solely from the discretionary decision of the Company to permit you to participate in the Plan and to benefit from a discretionary Award. The Plan may be amended, suspended or terminated by the Company at any time, unless otherwise provided in the Plan and this Agreement. By accepting these Restricted Stock Units, you expressly acknowledge that there is no obligation on the part of the Company to continue the Plan and/or grant any additional Restricted Stock Units to you or benefits in lieu of Restricted Stock Units, even if Restricted Stock Units have been granted repeatedly in the past. All decisions with respect to future grants of Restricted Stock Units, if any, will be at the sole discretion of the Committee.

(b) The Restricted Stock Units and the Shares subject to the Restricted Stock Units are not intended to replace any pension rights or compensation and are not to be considered compensation of a continuing or recurring nature, or part of your normal or expected compensation, and in no way represent any portion of your salary, compensation or other remuneration for any purpose, including but not limited to,

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calculating any severance, resignation, termination, redundancy, dismissal, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments, and in no event should be considered as compensation for, or relating in any way to, past services for the Company, the Employer or any Parent, Subsidiary or Affiliate. The value of the Restricted Stock Units is an extraordinary item that does not constitute compensation of any kind for services of any kind rendered to the Company, the Employer or any Parent, Subsidiary or Affiliate and which is outside the scope of your written employment agreement (if any).

(c) You acknowledge that you are voluntarily participating in the Plan.

(d) Neither the Plan nor these Restricted Stock Units or any other Award granted under the Plan shall be deemed to give you a right to remain an Employee, Consultant or director of the Company, a Parent, Subsidiary or an Affiliate. The Employer reserves the right to terminate your Service at any time, with or without cause, and for any reason, subject to applicable laws, the Company’s Articles of Incorporation and Bylaws, and a written employment agreement (if any).

(e) The grant of the Restricted Stock Units and your participation in the Plan will not be interpreted to form an employment contract or relationship with the Company, the Employer or any Parent, Subsidiary or Affiliate.

(f) The future value of the underlying Shares is unknown and cannot be predicted with certainty and if you vest in the Restricted Stock Units and are issued Shares, the value of those Shares may increase or decrease. You also understand that neither the Company, nor the Employer or any Parent, Subsidiary or Affiliate is responsible for any foreign exchange fluctuation between your Employer’s local currency and the United States Dollar that may affect the value of this Award.

(g) In consideration of the grant of the Restricted Stock Units, no claim or entitlement to compensation or damages shall arise from forfeiture of the Restricted Stock Units resulting from termination of your Service by the Company or the Employer (for any reason whatsoever and whether or not in breach of local labor laws) and you irrevocably release the Company and the Employer from any such claim that may arise; if, notwithstanding the foregoing, any such claim is found by a court of competent jurisdiction to have arisen, you shall be deemed irrevocably to have waived your entitlement to pursue such claim.

(h) You agree that the Company may require Shares received pursuant to the Restricted Stock Units to be held by a broker designated by the Company.

(i) You agree that your rights hereunder (if any) shall be subject to set-off by the Company for any valid debts you owe the Company.

(j) The Restricted Stock Units and the benefits under the Plan, if any, will not automatically transfer to another company in the case of a merger, take-over or transfer of liability.

15. Governing Law and Forum . This Agreement shall be governed by and construed in accordance with the laws of the State of California without regard to the conflict of laws principles thereof. For purposes of litigating any dispute that may arise directly or indirectly from this Agreement, the parties hereby submit and consent to litigation in the exclusive jurisdiction of the State of California and agree that any such litigation shall be conducted only in the courts of California or the federal courts for the United States for the Northern District of California and no other courts.

16. Notices . Any notice required or permitted under the terms of this Agreement shall be in writing and shall be deemed sufficient when delivered personally or sent by confirmed email, telegram, or fax or forty-eight (48) hours after being deposited in the mail, as certified or registered mail, with postage prepaid, and addressed to the Company at the Company’s principal corporate offices or to you at the address maintained for you in the Company’s records or, in either case, as subsequently modified by written notice to the other party.

17. Binding Effect . Subject to the limitations set forth in this Agreement, this Agreement shall be binding upon, and inure to the benefit of, the executors, administrators, heirs, legal representatives, successors, and assigns of the parties hereto.

18. Severability . If any provision of this Agreement is held to be unenforceable for any reason, it shall be adjusted rather than voided, if possible, in order to achieve the intent of the parties to the extent possible. In any event, all other provisions of this Agreement shall be deemed valid and enforceable to the full extent possible.

19. Electronic Delivery . The Company may, in its sole discretion, decide to deliver any documents related to your current or future participation in the Plan by electronic means or to request your consent to participate in the Plan by electronic means. You hereby consent to receive such documents by electronic delivery and agree to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.

20. Language . If this Agreement or any other document related to the Plan is translated into a language other than English and the meaning of the translated version is different from the English version, the English version will take precedence.

21. Appendix . Notwithstanding any provisions in this Agreement, the Restricted Stock Units shall be subject to any special terms and conditions set forth in any Appendix to this Agreement for your country of residence. Moreover, if you relocate to one of the countries included in the Appendix, the special terms and conditions for such country will apply to you, to the extent the Company determines that the application

4

of such terms and conditions is necessary or advisable in order to comply with local law or facilitate the administration of the Plan. The Appendix constitutes part of this Agreement.

22. Imposition of Other Requirements . The Company reserves the right to impose other requirements on your participation in the Plan, on the Restricted Stock Units and on any Shares acquired under the Plan, to the extent the Company determines it is necessary or advisable in order to comply with local law or facilitate the administration of the Plan. You agree to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing. Furthermore, you acknowledge that the laws of the country in which you are working at the time of grant, vesting and settlement of the Restricted Stock Units or the sale of Shares received pursuant to this Agreement (including any rules or regulations governing securities, foreign exchange, tax, labor, or other matters) may subject you to additional procedural or regulatory requirements that you are and will be solely responsible for and must fulfill.

23. Acceptance of Agreement . You must expressly accept the terms and conditions of your Restricted Stock Units as set forth in this Agreement by electronically accepting this Agreement within 300 days after the Company sends this Agreement to you. If you do not accept your Restricted Stock Units in the manner instructed by the Company, your Restricted Stock Units will be subject to cancellation.

*    *    *    *

You acknowledge that by clicking on the I agree button below, you agree to be bound by the terms of this Agreement.

PLEASE PRINT AND KEEP A COPY FOR YOUR RECORDS

5

PERFORMANCE RSU LETTER

[Date]

[Name]

[Address]

[Address]

Dear :

[introductory text]

Your leadership team has recommended that you receive a performance-based restricted stock unit (PRSU) right with a target of [ ]. RSUs will be granted after the end of FY[ ] based upon the satisfaction of an FY[ ] performance condition.

The right to receive a grant of a restricted stock unit depends on Cisco’s satisfaction of certain [ ] targets for FY[ ]. Assuming those targets are met or exceeded, the restricted stock units that you are granted will vest [ ] percent on the date of grant and [ ] percent on each of the next [ ] anniversaries of the date of grant thereafter, subject to your continued employment with Cisco or an affiliate on the applicable vesting date. On each vesting date, the vested units will be settled in Cisco common stock. In addition, in the unlikely event that a corporate transaction or change in control (each as defined in Cisco’s 2005 Stock Incentive Plan) is consummated during FY[ ] or prior to the Compensation and Management Development Committee’s Certification regarding satisfaction of the FY[ ] performance conditions, the performance-based restricted stock unit right will be deemed fully earned at target (100%) immediately prior to the effective date of the corporate transaction or the change in control, as the case may be, and will be settled in fully vested Cisco common stock at that time.

Lastly, please note that, if you are employed outside the United States, the Compensation and Management Development Committee can grant the PRSU Right to you, in its sole discretion, only if and as long as it is permitted and feasible to grant restricted stock units under the laws of the country in which you are employed. If local laws make the grant of restricted stock units illegal or impractical, Cisco will let you know as soon as possible. You are under no obligation to accept the PRSU Right or any restricted stock units that may subsequently be granted to you.

[concluding text]

Sincerely,

A CTION R EQUIRED : M USTBERETURNEDBY [INSERT APPROPRIATE DATE]

		Deferral Election for Annual Equity Award 2005 Stock Incentive Plan (For Elections Prior to January 2011)
Name (Last, First, Middle Initial)	Employee Number

You may use this form to:

• Indicate the percentage of your annual restricted stock unit grant under the 2005 Stock Incentive Plan that you wish to defer. Your elected percentage will apply to each vesting installment of such grant.

• Designate the settlement timing of the deferred portion of your vested annual restricted stock unit grant.

PLEASE REMEMBER THAT ONCE YOU MAKE AN ELECTION TO DEFER A RESTRICTED STOCK UNIT GRANT, YOU CANNOT REVOKE THAT ELECTION.

D EFERRAL ELECTION	Please select if you wish to defer restricted stock units; fill in the appropriate blanks.
åRestricted Stock Unit Grant	I elect to defer  % (you may only insert 25%, 50%, 75%, or 100%) of my annual restricted stock unit award anticipated to be granted under the 2005 Stock Incentive Plan (the “Plan”) on  , 201  (subject to my continued employment with the Company or the Employer). I understand that this elected percentage will apply to each vesting installment of this grant.

S ETTLEMENT DATE *	Please complete this section to indicate settlement timing for the deferred portion of your vested annual restricted stock unit grant. You may only choose one alternative.
åSeparation of Service OR	I elect to defer the settlement of the deferred portion of my vested annual restricted stock unit grant to my Separation of Service (as defined in Section 409A of the Internal Revenue Code).
åDate Specific (subject to earlier settlement upon separation from service)	I elect to defer the settlement of the deferred portion of my vested annual restricted stock unit grant to the earlier of (i) my Separation from Service; or (ii) the first business day of 20  (insert a year no earlier than 5 years after the year of grant and no later than 15 years after the year of grant).
*       Any vested portion of the deferred portion of my restricted stock unit grant will be settled in shares of the Company’s common stock.

ACTION REQUIRED : MUSTBERETURNEDBY [INSERT APPROPRIATE DATE]

Deferral Election for

Annual Equity Award

2005 Stock Incentive Plan

I understand:

• To the extent I do not elect to defer the settlement of my restricted stock unit grant, such portion of the restricted stock unit grant will be automatically settled in shares of the Company’s common stock upon the vesting of the restricted stock unit grant (subject to acceleration in certain cases), as more fully set forth in the Stock Unit Agreement.

• Any vested portion of the deferred restricted stock unit grant will be settled in shares of the Company’s common stock as elected by me above.

• If my Separation from Service occurs before my restricted stock unit grant vests, any unvested restricted stock units will be forfeited as of the date my Separation from Service occurs.

• Any employment taxes that are due upon the vesting of my restricted stock unit grant (including the deferred portion of my grant) shall be deducted at the time of vesting by one or a combination of the following:

(1) withholding from my wages or other cash compensation payable to me by the Company or the Employer;

(2) withholding from proceeds of the sale of shares acquired upon settlement of the restricted stock units either through a voluntary sale or through a mandatory sale arranged by the Company (on my behalf pursuant to this authorization);

(3) withholding of shares that would otherwise be issued upon settlement of the restricted stock units; or

(4) requiring me to satisfy the liability for any employment taxes by means of any other arrangement approved by the Company.

• The receipt of shares of the Company’s common stock pursuant to any restricted stock unit grant will be taxed as ordinary income to me based on the value of the shares on the date the stock unit grant is settled and I receive shares of the Company’s common stock. This is true whether or not I elect to defer settlement of my restricted stock units.

• The settlement of the deferred portion of my annual restricted stock unit grant upon my Separation from Service will be delayed for 6 months.

ACKNOWLEDGED AND AGREED:

Signature of Participant                                          Date

ACTION REQUIRED : MUSTBERETURNEDBY [INSERT APPROPRIATE DATE]

		Deferral Election for Annual Equity Award 2005 Stock Incentive Plan
Name (Last, First, Middle Initial)	Employee Number

You may use this form to:

• Indicate the percentage of your annual restricted stock unit grant under the 2005 Stock Incentive Plan that you wish to defer. Your elected percentage will apply to each vesting installment of such grant.

• Designate the settlement timing of the deferred portion of your vested annual restricted stock unit grant.

PLEASE REMEMBER THAT ONCE YOU MAKE AN ELECTION TO DEFER A RESTRICTED STOCK UNIT GRANT, YOU CANNOT REVOKE THAT ELECTION.

D EFERRAL E LECTION		Please select if you wish to defer restricted stock units; fill in the appropriate blanks.
å	Restricted Stock Unit Grant	I elect to defer  % (you may only insert 25%, 50%, 75%, or 100%) of my annual restricted stock unit award anticipated to be granted under the 2005 Stock Incentive Plan (the “Plan”) on  , 201  (subject to my continued employment with the Company or the Employer). I understand that this elected percentage will apply to each vesting installment of this grant.

S ETTLEMENT D ATE *		Please complete this section to indicate settlement timing for the deferred portion of your vested annual restricted stock unit grant. You may only choose one alternative.
å OR	Separationof Service	I elect to defer the settlement of the deferred portion of my vested annual restricted stock unit grant to my Separation of Service (as defined in Section 409A of the Internal Revenue Code).
å	Date Specific (subject to earlier settlement upon separation from service)	I elect to defer the settlement of the deferred portion of my vested annual restricted stock unit grant to the earlier of (i) my Separation from Service; or (ii) the first business day of 20  (insert a year no earlier than 6 years after the year of grant and no later than 15 years after the year of grant).

* Any vested portion of the deferred portion of my restricted stock unit grant will be settled in shares of the Company’s common stock.

ACTION REQUIRED : MUSTBERETURNEDBY [INSERT APPROPRIATE DATE]

Deferral Election for

Annual Equity Award

2005 Stock Incentive Plan

I understand:

• To the extent I do not elect to defer the settlement of my restricted stock unit grant, such portion of the restricted stock unit grant will be automatically settled in shares of the Company’s common stock upon the vesting of the restricted stock unit grant (subject to acceleration in certain cases), as more fully set forth in the Stock Unit Agreement.

• Any vested portion of the deferred restricted stock unit grant will be settled in shares of the Company’s common stock as elected by me above.

• If my Separation from Service occurs before my restricted stock unit grant vests, any unvested restricted stock units will be forfeited as of the date my Separation from Service occurs.

• “Separation from Service” is defined in Treasury Regulation Section 1.409A-1(h). While separation from service generally means termination of employment, a Separation from Service can also occur in the case of certain leaves of absence or upon a significant reduction in my work schedule. These events can trigger a “Separation from Service” resulting in the forfeiture of my unvested restricted stock units.

• Certain leaves of absence can result in the suspension of vesting of my unvested restricted stock units. If I take a leave of absence that suspends the vesting of my restricted stock units such that they are unvested as of the applicable distribution event (whether that is Separation from Service or a date specific I elected), my restricted stock units that are unvested at the time of such distribution event shall be forfeited.

• Any employment taxes that are due upon the vesting of my restricted stock unit grant (including the deferred portion of my grant) shall be deducted at the time of vesting by one or a combination of the following:

(1) withholding from my wages or other cash compensation payable to me by the Company or the Employer;

(2) withholding from proceeds of the sale of shares acquired upon settlement of the restricted stock units either through a voluntary sale or through a mandatory sale arranged by the Company (on my behalf pursuant to this authorization);

(3) withholding of shares that would otherwise be issued upon settlement of the restricted stock units; or

(4) requiring me to satisfy the liability for any employment taxes by means of any other arrangement approved by the Company.

• The receipt of shares of the Company’s common stock pursuant to any restricted stock unit grant will be taxed as ordinary income to me based on the value of the shares on the date the stock unit grant is settled and I receive shares of the Company’s common stock. This is true whether or not I elect to defer settlement of my restricted stock units.

• The settlement of the deferred portion of my annual restricted stock unit grant upon my Separation from Service will be delayed for 6 months.

ACKNOWLEDGED AND AGREED:

Signature of Participant                                          Date

Non-Employee Director Initial RSU Grant

(For Grants Effective on and after the Date of the

Company's 2015 Annual Meeting of Shareholders)

CISCO SYSTEMS, INC.

STOCK UNIT AGREEMENT

This Stock Unit Agreement (the “Agreement”) is made and entered into as of the Grant Date (as defined below) by and between Cisco Systems, Inc., a California corporation (the “Company”), and you pursuant to the Cisco Systems, Inc. 2005 Stock Incentive Plan (the “Plan”). The material terms of this Stock Unit Award are as follows:

Grantee:

Grant Date:

Grant Number:

Restricted Stock Units:

Vest Date: (the date of the Annual Meeting of Shareholders following the initial election or appointment date)

To the extent any capitalized terms used in this Agreement are not defined, they shall have the meaning ascribed to them in the Plan. In the event of a conflict between the terms and provisions of the Plan and the terms and provisions of this Agreement, the Plan terms and provisions shall prevail.

In consideration of the mutual agreements herein contained and intending to be legally bound hereby, the parties agree as follows:

1.    Restricted Stock Units. Pursuant to the Plan, the Company hereby grants to you, and you hereby accept from the Company, Restricted Stock Units, each of which is a bookkeeping entry representing the equivalent in value of one (1) Share, on the terms and conditions set forth herein and in the Plan.

2.    Vesting of Restricted Stock Units. So long as your service on the Board continues, the Restricted Stock Units shall vest in accordance with the following schedule: one-hundred percent (100%) of the total number of Restricted Stock Units granted pursuant to this Agreement shall vest on the Vest Date, unless otherwise provided by the Plan or Section 4 below.

3.    Termination of Service. Except as provided in Section 4 below, in the event of the termination of your Board service for any reason, all unvested Restricted Stock Units shall be immediately forfeited without consideration.

4.    Special Acceleration.

(a)    To the extent the Restricted Stock Units are outstanding at the time of a Corporate Transaction or a Change in Control, such Restricted Stock Units shall automatically accelerate immediately prior to the effective date of the Corporate Transaction or the Change in Control, as the case may be, and shall become vested in full at that time.

(b)    If your service on the Board ceases as a result of your death or Disability, to the extent the Restricted Stock Units are outstanding, such Restricted Stock Units shall automatically accelerate and shall become vested in full at that time.

(c)    This Agreement shall not in any way affect the right of the Company to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate, sell or transfer all or any part of its business or assets.

5.    Settlement of Restricted Stock Units. To the extent you have not elected to defer settlement of the Restricted Stock Units, the Restricted Stock Units shall be automatically settled in Shares upon vesting of such Restricted Stock Units, provided that the Company shall have no obligation to issue Shares pursuant to this Agreement unless such issuance complies with all applicable law. To the extent you have elected to defer settlement of the Restricted Stock Units, the vested portion of the Restricted Stock Units shall be settled in Shares upon your separation from service within the meaning of Code Section 409A (“Separation from Service”), provided that the Company shall have no obligation to issue Shares pursuant to this Agreement unless such issuance complies with all applicable law.

6.    Tax Advice. You represent, warrant and acknowledge that the Company has made no warranties or representations to you with respect to the income tax consequences of the transactions contemplated by this Agreement, and you are in no manner relying on the Company or the Company’s representatives for an assessment of such tax consequences. YOU UNDERSTAND THAT THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. YOU SHOULD CONSULT YOUR OWN TAX ADVISOR REGARDING ANY RESTRICTED STOCK UNITS. NOTHING STATED HEREIN IS INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED, FOR THE PURPOSE OF AVOIDING TAXPAYER PENALTIES.

1

7.    Non-Transferability of Restricted Stock Units. Restricted Stock Units shall not be anticipated, assigned, attached, garnished, optioned, transferred or made subject to any creditor’s process, whether voluntarily or involuntarily or by operation of law.

8.    Restriction on Transfer. Regardless of whether the transfer or issuance of the Shares to be issued pursuant to the Restricted Stock Units has been registered under the Securities Act or has been registered or qualified under the securities laws of any state, the Company may impose additional restrictions upon the sale, pledge, or other transfer of the Shares (including the placement of appropriate legends on stock certificates and the issuance of stop-transfer instructions to the Company’s transfer agent) if, in the judgment of the Company and the Company’s counsel, such restrictions are necessary in order to achieve compliance with the provisions of the Securities Act, the securities laws of any state, or any other law.

9.    Stock Certificate Restrictive Legends. Stock certificates evidencing the Shares issued pursuant to the Restricted Stock Units may bear such restrictive legends as the Company and the Company’s counsel deem necessary under applicable law or pursuant to this Agreement.

10.    Representations, Warranties, Covenants, and Acknowledgments. You hereby agree that in the event the Company and the Company’s counsel deem it necessary or advisable in the exercise of their discretion, the transfer or issuance of the Shares issued pursuant to the Restricted Stock Units may be conditioned upon you making certain representations, warranties, and acknowledgments relating to compliance with applicable securities laws.

11.    Voting, Dividend and Other Rights. Subject to the terms of this Agreement and except as set forth below, you shall not have any voting rights or any other rights and privileges of a shareholder of the Company unless and until the Restricted Stock Units are settled upon vesting. To the extent you have elected to defer settlement of Restricted Stock Units with a Grant Date on or after the Company’s 2015 Annual Meeting of Shareholders, dividend equivalents shall accrue after the vesting of the Restricted Stock Units and will be subject to the same conditions and restrictions as the Restricted Stock Units to which they attach as set forth in the Plan or this Agreement and will be settled in additional Shares upon your Separation from Service.

12.    Authorization to Release Necessary Personal Information.

(a)    You hereby authorize and direct the Company to collect, use and transfer in electronic or other form, any personal information (the “Data”) regarding your service, the nature and amount of your compensation and the facts and conditions of your participation in the Plan (including, but not limited to, your name, home address, telephone number, date of birth, social security number (or any other social or national identification number), compensation, nationality, job title, number of Shares held and the details of all Awards or any other entitlement to Shares awarded, cancelled, exercised, vested, unvested or outstanding) for the purpose of implementing, administering and managing your participation in the Plan. You understand that the Data may be transferred to the Company or any of its Subsidiaries, or to any third parties assisting in the implementation, administration and management of the Plan, including any requisite transfer to a broker or other third party assisting with the administration of these Restricted Stock Units under the Plan or with whom Shares acquired pursuant to these Restricted Stock Units or cash from the sale of such shares may be deposited. You acknowledge that recipients of the Data may be located in different countries, and those countries may have data privacy laws and protections different from those in the country of your residence. Furthermore, you acknowledge and understand that the transfer of the Data to the Company or any of its Subsidiaries, or to any third parties is necessary for your participation in the Plan.

(b)    Prior to the time that the Restricted Stock Units are settled upon vesting, you shall have no rights other than those of a general creditor of the Company. The Restricted Stock Units represent an unfunded and unsecured obligation of the Company.

(c)    You may at any time withdraw the consents herein by contacting the Company’s local human resources representative in writing. You further acknowledge that withdrawal of consent may affect your ability to exercise or realize benefits from these Restricted Stock Units, and your ability to participate in the Plan.

13.    No Entitlement or Claims for Compensation.

(a)    Your rights, if any, in respect of or in connection with these Restricted Stock Units or any other Award are derived solely from the discretionary decision of the Company to permit you to participate in the Plan and to benefit from a discretionary Award. By accepting these Restricted Stock Units, you expressly acknowledge that there is no obligation on the part of the Company to continue the Plan and/or grant any additional Awards to you. These Restricted Stock Units are not intended to be compensation of a continuing or recurring nature, or part of your normal or expected compensation, and in no way represents any portion of a your compensation or other remuneration for purposes of pension benefits, severance, redundancy, resignation or any other purpose.

(b)    Neither the Plan nor these Restricted Stock Units or any other Award granted under the Plan shall be deemed to give you a right to continue to serve on the Board of the Company for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Company or the Company’s shareholders, which rights are hereby expressly reserved by each, to terminate your service on the Board at any time, for any reason, with or without cause, in accordance with the provisions of applicable law, the Company’s Articlesof Incorporationand Bylaws. You shall be deemed irrevocably to have waived any claim to damages or specific performance for breach of contract or dismissal, compensation for loss of office, tort or otherwise with respect to the Plan, these Restricted Stock Units or any outstanding Award that is forfeited and/or is terminated by its terms or to any future Award.

(c)    You agree that your rights hereunder shall be subject to set-off by the Company for any valid debts you owe the Company.

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14.    Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California without regard to the conflict of laws principles thereof.

15.    Notices. Any notice required or permitted under the terms of this Agreement shall be in writing and shall be deemed sufficient when delivered personally or sent by confirmed email, telegram, or fax or forty-eight (48) hours after being deposited in the U.S. mail, as certified or registered mail, with postage prepaid, and addressed to the Company at the Company's principal corporate offices or to you at the address maintained for you in the Company's records or, in either case, as subsequently modified by written notice to the other party.

16.    Binding Effect. Subject to the limitations set forth in this Agreement, this Agreement shall be binding upon, and inure to the benefit of, the executors, administrators, heirs, legal representatives, successors, and assigns of the parties hereto.

17.    Severability. If any provision of this Agreement is held to be unenforceable for any reason, it shall be adjusted rather than voided, if possible, in order to achieve the intent of the parties to the extent possible. In any event, all other provisions of this Agreement shall be deemed valid and enforceable to the full extent possible.

3

Non-Employee Director Initial RSU Grant

(For Grants Beginning November 2012 Through the Date that is

One Day Prior to the Date of the Company's 2015 Annual Meeting of Shareholders)

CISCO SYSTEMS, INC.

STOCK UNIT AGREEMENT

This Stock Unit Agreement (the “Agreement”) is made and entered into as of the Grant Date (as defined below) by and between Cisco Systems, Inc., a California corporation (the “Company”), and you pursuant to the Cisco Systems, Inc. 2005 Stock Incentive Plan (the “Plan”). The material terms of this Stock Unit Award are as follows:

Grantee:

Grant Date:

Grant Number:

Restricted Stock Units:

Vest Date:  (the date of the Annual Meeting of Shareholders following the initial election or appointment date)

To the extent any capitalized terms used in this Agreement are not defined, they shall have the meaning ascribed to them in the Plan. In the event of a conflict between the terms and provisions of the Plan and the terms and provisions of this Agreement, the Plan terms and provisions shall prevail.

In consideration of the mutual agreements herein contained and intending to be legally bound hereby, the parties agree as follows:

1. Restricted Stock Units . Pursuant to the Plan, the Company hereby grants to you, and you hereby accept from the Company, Restricted Stock Units, each of which is a bookkeeping entry representing the equivalent in value of one (1) Share, on the terms and conditions set forth herein and in the Plan.

2. Vesting of Restricted Stock Units . So long as your service on the Board continues, the Restricted Stock Units shall vest in accordance with the following schedule: one-hundred percent (100%) of the total number of Restricted Stock Units granted pursuant to this Agreement shall vest on the Vest Date, unless otherwise provided by the Plan or Section 4 below.

3. Termination of Service . Except as provided in Section 4 below, in the event of the termination of your Board service for any reason, all unvested Restricted Stock Units shall be immediately forfeited without consideration.

4. Special Acceleration .

(a) To the extent the Restricted Stock Units are outstanding at the time of a Corporate Transaction or a Change in Control, such Restricted Stock Units shall automatically accelerate immediately prior to the effective date of the Corporate Transaction or the Change in Control, as the case may be, and shall become vested in full at that time.

(b) If your service on the Board ceases as a result of your death or Disability, to the extent the Restricted Stock Units are outstanding, such Restricted Stock Units shall automatically accelerate and shall become vested in full at that time.

(c) This Agreement shall not in any way affect the right of the Company to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate, sell or transfer all or any part of its business or assets.

5. Settlement of Restricted Stock Units . To the extent you have not elected to defer settlement of the Restricted Stock Units, the Restricted Stock Units shall be automatically settled in Shares upon vesting of such Restricted Stock Units, provided that the Company shall have no obligation to issue Shares pursuant to this Agreement unless such issuance complies with all applicable law. To the extent you have elected to defer settlement of the Restricted Stock Units, the vested portion of the Restricted Stock Units shall be settled in Shares upon your separation from service within the meaning of Code Section 409A (“Separation from Service”), provided that the Company shall have no obligation to issue Shares pursuant to this Agreement unless such issuance complies with all applicable law.

6. Tax Advice . You represent, warrant and acknowledge that the Company has made no warranties or representations to you with respect to the income tax consequences of the transactions contemplated by this Agreement, and you are in no manner relying on the Company or the Company’s representatives for an assessment of such tax consequences. YOU UNDERSTAND THAT THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. YOU SHOULD CONSULT YOUR OWN TAX ADVISOR REGARDING ANY RESTRICTED STOCK UNITS. NOTHING STATED HEREIN IS INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED, FOR THE PURPOSE OF AVOIDING TAXPAYER PENALTIES.

1

7. Non-Transferability of Restricted Stock Units . Restricted Stock Units shall not be anticipated, assigned, attached, garnished, optioned, transferred or made subject to any creditor’s process, whether voluntarily or involuntarily or by operation of law.

8. Restriction on Transfer . Regardless of whether the transfer or issuance of the Shares to be issued pursuant to the Restricted Stock Units has been registered under the Securities Act or has been registered or qualified under the securities laws of any state, the Company may impose additional restrictions upon the sale, pledge, or other transfer of the Shares (including the placement of appropriate legends on stock certificates and the issuance of stop-transfer instructions to the Company’s transfer agent) if, in the judgment of the Company and the Company’s counsel, such restrictions are necessary in order to achieve compliance with the provisions of the Securities Act, the securities laws of any state, or any other law.

9. Stock Certificate Restrictive Legends . Stock certificates evidencing the Shares issued pursuant to the Restricted Stock Units may bear such restrictive legends as the Company and the Company’s counsel deem necessary under applicable law or pursuant to this Agreement.

10. Representations, Warranties, Covenants, and Acknowledgments . You hereby agree that in the event the Company and the Company’s counsel deem it necessary or advisable in the exercise of their discretion, the transfer or issuance of the Shares issued pursuant to the Restricted Stock Units may be conditioned upon you making certain representations, warranties, and acknowledgments relating to compliance with applicable securities laws.

11. Voting and Other Rights . Subject to the terms of this Agreement, you shall not have any voting rights or any other rights and privileges of a shareholder of the Company unless and until the Restricted Stock Units are settled upon vesting.

12. Authorization to Release Necessary Personal Information .

(a) You hereby authorize and direct the Company to collect, use and transfer in electronic or other form, any personal information (the “Data”) regarding your service, the nature and amount of your compensation and the facts and conditions of your participation in the Plan (including, but not limited to, your name, home address, telephone number, date of birth, social security number (or any other social or national identification number), compensation, nationality, job title, number of Shares held and the details of all Awards or any other entitlement to Shares awarded, cancelled, exercised, vested, unvested or outstanding) for the purpose of implementing, administering and managing your participation in the Plan. You understand that the Data may be transferred to the Company or any of its Subsidiaries, or to any third parties assisting in the implementation, administration and management of the Plan, including any requisite transfer to a broker or other third party assisting with the administration of these Restricted Stock Units under the Plan or with whom Shares acquired pursuant to these Restricted Stock Units or cash from the sale of such shares may be deposited. You acknowledge that recipients of the Data may be located in different countries, and those countries may have data privacy laws and protections different from those in the country of your residence. Furthermore, you acknowledge and understand that the transfer of the Data to the Company or any of its Subsidiaries, or to any third parties is necessary for your participation in the Plan.

(b) Prior to the time that the Restricted Stock Units are settled upon vesting, you shall have no rights other than those of a general creditor of the Company. The Restricted Stock Units represent an unfunded and unsecured obligation of the Company.

(c) You may at any time withdraw the consents herein by contacting the Company’s local human resources representative in writing. You further acknowledge that withdrawal of consent may affect your ability to exercise or realize benefits from these Restricted Stock Units, and your ability to participate in the Plan.

13. No Entitlement or Claims for Compensation .

(a) Your rights, if any, in respect of or in connection with these Restricted Stock Units or any other Award are derived solely from the discretionary decision of the Company to permit you to participate in the Plan and to benefit from a discretionary Award. By accepting these Restricted Stock Units, you expressly acknowledge that there is no obligation on the part of the Company to continue the Plan and/or grant any additional Awards to you. These Restricted Stock Units are not intended to be compensation of a continuing or recurring nature, or part of your normal or expected compensation, and in no way represents any portion of a your compensation or other remuneration for purposes of pension benefits, severance, redundancy, resignation or any other purpose.

(b) Neither the Plan nor these Restricted Stock Units or any other Award granted under the Plan shall be deemed to give you a right to continue to serve on the Board of the Company for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Company or the Company’s shareholders, which rights are hereby expressly reserved by each, to terminate your service on the Board at any time, for any reason, with or without cause, in accordance with the provisions of applicable law, the Company’s Articles of Incorporation and Bylaws. You shall be deemed irrevocably to have waived any claim to damages or specific performance for breach of contract or dismissal, compensation for loss of office, tort or otherwise with respect to the Plan, these Restricted Stock Units or any outstanding Award that is forfeited and/or is terminated by its terms or to any future Award.

(c) You agree that your rights hereunder shall be subject to set-off by the Company for any valid debts you owe the Company.

14. Governing Law . This Agreement shall be governed by and construed in accordance with the laws of the State of California without regard to the conflict of laws principles thereof.

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15. Notices . Any notice required or permitted under the terms of this Agreement shall be in writing and shall be deemed sufficient when delivered personally or sent by confirmed email, telegram, or fax or forty-eight (48) hours after being deposited in the U.S. mail, as certified or registered mail, with postage prepaid, and addressed to the Company at the Company’s principal corporate offices or to you at the address maintained for you in the Company’s records or, in either case, as subsequently modified by written notice to the other party.

16. Binding Effect . Subject to the limitations set forth in this Agreement, this Agreement shall be binding upon, and inure to the benefit of, the executors, administrators, heirs, legal representatives, successors, and assigns of the parties hereto.

17. Severability . If any provision of this Agreement is held to be unenforceable for any reason, it shall be adjusted rather than voided, if possible, in order to achieve the intent of the parties to the extent possible. In any event, all other provisions of this Agreement shall be deemed valid and enforceable to the full extent possible.

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Non-Employee Director Annual RSU Grant

(For Grants Effective on and after the Date of the

Company's 2015 Annual Meeting of Shareholders)

CISCO SYSTEMS, INC.

STOCK UNIT AGREEMENT

This Stock Unit Agreement (the “Agreement”) is made and entered into as of the Grant Date (as defined below) by and between Cisco Systems, Inc., a California corporation (the “Company”), and you pursuant to the Cisco Systems, Inc. 2005 Stock Incentive Plan (the “Plan”). The material terms of this Stock Unit Award are as follows:

Grantee:

Grant Date:     

Grant Number:

Restricted Stock Units:

Vest Date: The completion of one (1) year of Board service measured from the Grant Date.

To the extent any capitalized terms used in this Agreement are not defined, they shall have the meaning ascribed to them in the Plan. In the event of a conflict between the terms and provisions of the Plan and the terms and provisions of this Agreement, the Plan terms and provisions shall prevail.

In consideration of the mutual agreements herein contained and intending to be legally bound hereby, the parties agree as follows:

1.    Restricted Stock Units. Pursuant to the Plan, the Company hereby grants to you, and you hereby accept from the Company, Restricted Stock Units, each of which is a bookkeeping entry representing the equivalent in value of one (1) Share, on the terms and conditions set forth herein and in the Plan.

2.    Vesting of Restricted Stock Units. So long as your service on the Board continues, the Restricted Stock Units shall vest in accordance with the following schedule: one-hundred percent (100%) of the total number of Restricted Stock Units granted pursuant to this Agreement shall vest on the Vest Date, unless otherwise provided by the Plan or Section 4 below.

3.    Termination of Service. Except as provided in Section 4 below, in the event of the termination of your Board service for any reason, all unvested Restricted Stock Units shall be immediately forfeited without consideration.

4.    Special Acceleration.

(a)    To the extent the Restricted Stock Units are outstanding at the time of a Corporate Transaction or a Change in Control, such Restricted Stock Units shall automatically accelerate immediately prior to the effective date of the Corporate Transaction or the Change in Control, as the case may be, and shall become vested in full at that time.

(b)    If your service on the Board ceases as a result of your death or Disability, to the extent the Restricted Stock Units are outstanding, such Restricted Stock Units shall automatically accelerate and shall become vested in full at that time.

(c)    This Agreement shall not in any way affect the right of the Company to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate, sell or transfer all or any part of its business or assets.

5.    Settlement of Restricted Stock Units. To the extent you have not elected to defer settlement of the Restricted Stock Units, the Restricted Stock Units shall be automatically settled in Shares upon vesting of such Restricted Stock Units, provided that the Company shall have no obligation to issue Shares pursuant to this Agreement unless such issuance complies with all applicable law. To the extent you have elected to defer settlement of the Restricted Stock Units, the vested portion of the Restricted Stock Units shall be settled in Shares upon your separation from service within the meaning of Code Section 409A (“Separation from Service”), provided that the Company shall have no obligation to issue Shares pursuant to this Agreement unless such issuance complies with all applicable law.

6.    Tax Advice. You represent, warrant and acknowledge that the Company has made no warranties or representations to you with respect to the income tax consequences of the transactions contemplated by this Agreement, and you are in no manner relying on the Company or the Company’s representatives for an assessment of such tax consequences. YOU UNDERSTAND THAT THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. YOU SHOULD CONSULT YOUR OWN TAX ADVISOR REGARDING ANY RESTRICTED STOCK UNITS. NOTHING STATED HEREIN IS INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED, FOR THE PURPOSE OF AVOIDING TAXPAYER PENALTIES.

7.    Non-Transferability of Restricted Stock Units. Restricted Stock Units shall not be anticipated, assigned, attached, garnished, optioned, transferred or made subject to any creditor’s process, whether voluntarily or involuntarily or by operation of law.

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8.    Restriction on Transfer. Regardless of whether the transfer or issuance of the Shares to be issued pursuant to the Restricted Stock Units has been registered under the Securities Act or has been registered or qualified under the securities laws of any state, the Company may impose additional restrictions upon the sale, pledge, or other transfer of the Shares (including the placement of appropriate legends on stock certificates and the issuance of stop-transfer instructions to the Company’s transfer agent) if, in the judgment of the Company and the Company’s counsel, such restrictions are necessary in order to achieve compliance with the provisions of the Securities Act, the securities laws of any state, or any other law.

9.    Stock Certificate Restrictive Legends. Stock certificates evidencing the Shares issued pursuant to the Restricted Stock Units may bear such restrictive legends as the Company and the Company’s counsel deem necessary under applicable law or pursuant to this Agreement.

10.    Representations, Warranties, Covenants, and Acknowledgments. You hereby agree that in the event the Company and the Company’s counsel deem it necessary or advisable in the exercise of their discretion, the transfer or issuance of the Shares issued pursuant to the Restricted Stock Units may be conditioned upon you making certain representations, warranties, and acknowledgments relating to compliance with applicable securities laws.

11.    Voting, Dividend and Other Rights. Subject to the terms of this Agreement and except as set forth below, you shall not have any voting rights or any other rights and privileges of a shareholder of the Company unless and until the Restricted Stock Units are settled upon vesting. To the extent you have elected to defer settlement of Restricted Stock Units with a Grant Date on or after the Company’s 2015 Annual Meeting of Shareholders, dividend equivalents shall accrue after the vesting of the Restricted Stock Units and will be subject to the same conditions and restrictions as the Restricted Stock Units to which they attach as set forth in the Plan or this Agreement and will be settled in additional Shares upon your Separation from Service.

12.    Authorization to Release Necessary Personal Information.

(a)    You hereby authorize and direct the Company to collect, use and transfer in electronic or other form, any personal information (the “Data”) regarding your service, the nature and amount of your compensation and the facts and conditions of your participation in the Plan (including, but not limited to, your name, home address, telephone number, date of birth, social security number (or any other social or national identification number), compensation, nationality, job title, number of Shares held and the details of all Awards or any other entitlement to Shares awarded, cancelled, exercised, vested, unvested or outstanding) for the purpose of implementing, administering and managing your participation in the Plan. You understand that the Data may be transferred to the Company or any of its Subsidiaries, or to any third parties assisting in the implementation, administration and management of the Plan, including any requisite transfer to a broker or other third party assisting with the administration of these Restricted Stock Units under the Plan or with whom Shares acquired pursuant to these Restricted Stock Units or cash from the sale of such shares may be deposited. You acknowledge that recipients of the Data may be located in different countries, and those countries may have data privacy laws and protections different from those in the country of your residence. Furthermore, you acknowledge and understand that the transfer of the Data to the Company or any of its Subsidiaries, or to any third parties is necessary for your participation in the Plan.

(b)    Prior to the time that the Restricted Stock Units are settled upon vesting, you shall have no rights other than those of a general creditor of the Company. The Restricted Stock Units represent an unfunded and unsecured obligation of the Company.

(c)    You may at any time withdraw the consents herein by contacting the Company’s local human resources representative in writing. You further acknowledge that withdrawal of consent may affect your ability to exercise or realize benefits from these Restricted Stock Units, and your ability to participate in the Plan.

13.    No Entitlement or Claims for Compensation.

(a)    Your rights, if any, in respect of or in connection with these Restricted Stock Units or any other Award are derived solely from the discretionary decision of the Company to permit you to participate in the Plan and to benefit from a discretionary Award. By accepting these Restricted Stock Units, you expressly acknowledge that there is no obligation on the part of the Company to continue the Plan and/or grant any additional Awards to you. These Restricted Stock Units are not intended to be compensation of a continuing or recurring nature, or part of your normal or expected compensation, and in no way represents any portion of a your compensation or other remuneration for purposes of pension benefits, severance, redundancy, resignation or any other purpose.

(b)    Neither the Plan nor these Restricted Stock Units or any other Award granted under the Plan shall be deemed to give you a right to continue to serve on the Board of the Company for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Company or the Company’s shareholders, which rights are hereby expressly reserved by each, to terminate your service on the Board at any time, for any reason, with or without cause, in accordance with the provisions of applicable law, the Company’s Articlesof Incorporationand Bylaws. You shall be deemed irrevocably to have waived any claim to damages or specific performance for breach of contract or dismissal, compensation for loss of office, tort or otherwise with respect to the Plan, these Restricted Stock Units or any outstanding Award that is forfeited and/or is terminated by its terms or to any future Award.

(c)    You agree that your rights hereunder shall be subject to set-off by the Company for any valid debts you owe the Company.

14.    Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California without regard to the conflict of laws principles thereof.

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15.    Notices. Any notice required or permitted under the terms of this Agreement shall be in writing and shall be deemed sufficient when delivered personally or sent by confirmed email, telegram, or fax or forty-eight (48) hours after being deposited in the U.S. mail, as certified or registered mail, with postage prepaid, and addressed to the Company at the Company's principal corporate offices or to you at the address maintained for you in the Company's records or, in either case, as subsequently modified by written notice to the other party.

16.    Binding Effect. Subject to the limitations set forth in this Agreement, this Agreement shall be binding upon, and inure to the benefit of, the executors, administrators, heirs, legal representatives, successors, and assigns of the parties hereto.

17.    Severability. If any provision of this Agreement is held to be unenforceable for any reason, it shall be adjusted rather than voided, if possible, in order to achieve the intent of the parties to the extent possible. In any event, all other provisions of this Agreement shall be deemed valid and enforceable to the full extent possible.

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NON-EMPLOYEE DIRECTOR ANNUAL RSU GRANT

(For Grants Beginning Fiscal 2009 Through the Date that is

One Day Prior to the Date of the Company's 2015 Annual Meeting of Shareholders)

CISCO SYSTEMS, INC.

STOCK UNIT AGREEMENT

This Stock Unit Agreement (the “Agreement”) is made and entered into as of the Grant Date (as defined below) by and between Cisco Systems, Inc., a California corporation (the “Company”), and you pursuant to the Cisco Systems, Inc. 2005 Stock Incentive Plan (the “Plan”). The material terms of this Stock Unit Award are as follows:

Grantee:

Grant Date:

Grant Number:

Restricted Stock Units:

Vest Date: The completion of one (1) year of Board service measured from the Grant Date.

To the extent any capitalized terms used in this Agreement are not defined, they shall have the meaning ascribed to them in the Plan. In the event of a conflict between the terms and provisions of the Plan and the terms and provisions of this Agreement, the Plan terms and provisions shall prevail.

In consideration of the mutual agreements herein contained and intending to be legally bound hereby, the parties agree as follows:

1.Restricted Stock Units . Pursuant to the Plan, the Company hereby grants to you, and you hereby accept from the Company, Restricted Stock Units, each of which is a bookkeeping entry representing the equivalent in value of one (1) Share, on the terms and conditions set forth herein and in the Plan.

2.Vesting of Restricted Stock Units . So long as your service on the Board continues, the Restricted Stock Units shall vest in accordance with the following schedule: one-hundred percent (100%) of the total number of Restricted Stock Units granted pursuant to this Agreement shall vest on the Vest Date, unless otherwise provided by the Plan or Section 4 below.

3.Termination of Service . Except as provided in Section 4 below, in the event of the termination of your Board service for any reason, all unvested Restricted Stock Units shall be immediately forfeited without consideration.

4.Special Acceleration .

(a) To the extent the Restricted Stock Units are outstanding at the time of a Corporate Transaction or a Change in Control, such Restricted Stock Units shall automatically accelerate immediately prior to the effective date of the Corporate Transaction or the Change in Control, as the case may be, and shall become vested in full at that time.

(b) If your service on the Board ceases as a result of your death or Disability, to the extent the Restricted Stock Units are outstanding, such Restricted Stock Units shall automatically accelerate and shall become vested in full at that time.

(c) This Agreement shall not in any way affect the right of the Company to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate, sell or transfer all or any part of its business or assets.

5.Settlement of Restricted Stock Units . To the extent you have not elected to defer settlement of the Restricted Stock Units, the Restricted Stock Units shall be automatically settled in Shares upon vesting of such Restricted Stock Units, provided that the Company shall have no obligation to issue Shares pursuant to this Agreement unless such issuance complies with all applicable law. To the extent you have elected to defer settlement of the Restricted Stock Units, the vested portion of the Restricted Stock Units shall be settled in Shares upon your separation from service within the meaning of Code Section 409A (“Separation from Service”), provided that the Company shall have no obligation to issue Shares pursuant to this Agreement unless such issuance complies with all applicable law.

6.Tax Advice . You represent, warrant and acknowledge that the Company has made no warranties or representations to you with respect to the income tax consequences of the transactions contemplated by this Agreement, and you are in no manner relying on the Company or the Company’s representatives for an assessment of such tax consequences. YOU UNDERSTAND THAT THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. YOU SHOULD CONSULT YOUR OWN TAX ADVISOR REGARDING ANY RESTRICTED STOCK UNITS. NOTHING STATED HEREIN IS INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED, FOR THE PURPOSE OF AVOIDING TAXPAYER PENALTIES.

7.Non-Transferability of Restricted Stock Units . Restricted Stock Units shall not be anticipated, assigned, attached, garnished, optioned, transferred or made subject to any creditor’s process, whether voluntarily or involuntarily or by operation of law.

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8.Restriction on Transfer . Regardless of whether the transfer or issuance of the Shares to be issued pursuant to the Restricted Stock Units has been registered under the Securities Act or has been registered or qualified under the securities laws of any state, the Company may impose additional restrictions upon the sale, pledge, or other transfer of the Shares (including the placement of appropriate legends on stock certificates and the issuance of stop-transfer instructions to the Company’s transfer agent) if, in the judgment of the Company and the Company’s counsel, such restrictions are necessary in order to achieve compliance with the provisions of the Securities Act, the securities laws of any state, or any other law.

9.Stock Certificate Restrictive Legends . Stock certificates evidencing the Shares issued pursuant to the Restricted Stock Units may bear such restrictive legends as the Company and the Company’s counsel deem necessary under applicable law or pursuant to this Agreement.

10.Representations, Warranties, Covenants, and Acknowledgments . You hereby agree that in the event the Company and the Company’s counsel deem it necessary or advisable in the exercise of their discretion, the transfer or issuance of the Shares issued pursuant to the Restricted Stock Units may be conditioned upon you making certain representations, warranties, and acknowledgments relating to compliance with applicable securities laws.

11.Voting and Other Rights . Subject to the terms of this Agreement, you shall not have any voting rights or any other rights and privileges of a shareholder of the Company unless and until the Restricted Stock Units are settled upon vesting.

12.Authorization to Release Necessary Personal Information .

(a) You hereby authorize and direct the Company to collect, use and transfer in electronic or other form, any personal information (the “Data”) regarding your service, the nature and amount of your compensation and the facts and conditions of your participation in the Plan (including, but not limited to, your name, home address, telephone number, date of birth, social security number (or any other social or national identification number), compensation, nationality, job title, number of Shares held and the details of all Awards or any other entitlement to Shares awarded, cancelled, exercised, vested, unvested or outstanding) for the purpose of implementing, administering and managing your participation in the Plan. You understand that the Data may be transferred to the Company or any of its Subsidiaries, or to any third parties assisting in the implementation, administration and management of the Plan, including any requisite transfer to a broker or other third party assisting with the administration of these Restricted Stock Units under the Plan or with whom Shares acquired pursuant to these Restricted Stock Units or cash from the sale of such shares may be deposited. You acknowledge that recipients of the Data may be located in different countries, and those countries may have data privacy laws and protections different from those in the country of your residence. Furthermore, you acknowledge and understand that the transfer of the Data to the Company or any of its Subsidiaries, or to any third parties is necessary for your participation in the Plan.

(b) Prior to the time that the Restricted Stock Units are settled upon vesting, you shall have no rights other than those of a general creditor of the Company. The Restricted Stock Units represent an unfunded and unsecured obligation of the Company.

(c) You may at any time withdraw the consents herein by contacting the Company’s local human resources representative in writing. You further acknowledge that withdrawal of consent may affect your ability to exercise or realize benefits from these Restricted Stock Units, and your ability to participate in the Plan.

13.No Entitlement or Claims for Compensation .

(a) Your rights, if any, in respect of or in connection with these Restricted Stock Units or any other Award are derived solely from the discretionary decision of the Company to permit you to participate in the Plan and to benefit from a discretionary Award. By accepting these Restricted Stock Units, you expressly acknowledge that there is no obligation on the part of the Company to continue the Plan and/or grant any additional Awards to you. These Restricted Stock Units are not intended to be compensation of a continuing or recurring nature, or part of your normal or expected compensation, and in no way represents any portion of a your compensation or other remuneration for purposes of pension benefits, severance, redundancy, resignation or any other purpose.

(b) Neither the Plan nor these Restricted Stock Units or any other Award granted under the Plan shall be deemed to give you a right to continue to serve on the Board of the Company for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Company or the Company’s shareholders, which rights are hereby expressly reserved by each, to terminate your service on the Board at any time, for any reason, with or without cause, in accordance with the provisions of applicable law, the Company’s Articles of Incorporation and Bylaws. You shall be deemed irrevocably to have waived any claim to damages or specific performance for breach of contract or dismissal, compensation for loss of office, tort or otherwise with respect to the Plan, these Restricted Stock Units or any outstanding Award that is forfeited and/or is terminated by its terms or to any future Award.

(c) You agree that your rights hereunder shall be subject to set-off by the Company for any valid debts you owe the Company.

14.Governing Law . This Agreement shall be governed by and construed in accordance with the laws of the State of California without regard to the conflict of laws principles thereof.

15.Notices . Any notice required or permitted under the terms of this Agreement shall be in writing and shall be deemed sufficient when delivered personally or sent by confirmed email, telegram, or fax or forty-eight (48) hours after being deposited in the U.S. mail, as certified or

2

registered mail, with postage prepaid, and addressed to the Company at the Company’s principal corporate offices or to you at the address maintained for you in the Company’s records or, in either case, as subsequently modified by written notice to the other party.

16.Binding Effect . Subject to the limitations set forth in this Agreement, this Agreement shall be binding upon, and inure to the benefit of, the executors, administrators, heirs, legal representatives, successors, and assigns of the parties hereto.

17.Severability . If any provision of this Agreement is held to be unenforceable for any reason, it shall be adjusted rather than voided, if possible, in order to achieve the intent of the parties to the extent possible. In any event, all other provisions of this Agreement shall be deemed valid and enforceable to the full extent possible.

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NON-EMPLOYEE DIRECTOR INITIAL GRANT

(For Grants Prior to Fiscal 2009)

CISCO SYSTEMS, INC.

NOTICE OF GRANT OF STOCK OPTION

Notice is hereby given of the following option grant (the “Option”) made to purchase shares of Cisco Systems, Inc. (the “Company”) common stock:

Optionee:

Grant Date:

Type of Option: Nonstatutory Stock Option

Grant Number:

Number of Option Shares: shares

Exercise Price: $ per share

Expiration Date:

Date Exercisable: Immediately Exercisable

Vesting Schedule

The Option Shares shall initially be unvested and subject to repurchase by the Company at the Exercise Price paid per share. Optionee shall acquire a vested interest in, and the Company’s repurchase right shall accordingly lapse, with respect to, the Option Shares in a series of four (4) successive equal annual installments upon Optionee’s completion of each year of service as a member of the Board over the four (4) year period measured from the Grant Date. In no event shall any additional Option Shares vest after Optionee’s cessation of Board service.

REPURCHASE RIGHT . OPTIONEE HEREBY AGREES THAT ALL UNVESTED OPTION SHARES ACQUIRED UPON THE EXERCISE OF THE OPTION SHALL NOT BE TRANSFERABLE AND SHALL BE SUBJECT TO REPURCHASE BY THE COMPANY, AT THE EXERCISE PRICE PAID PER SHARE, UPON OPTIONEE’S TERMINATION OF SERVICE AS A MEMBER OF THE BOARD PRIOR TO VESTING IN THOSE SHARES. THE TERMS AND CONDITIONS OF SUCH REPURCHASE RIGHT SHALL BE SPECIFIED IN A STOCK PURCHASE AGREEMENT, IN FORM AND SUBSTANCE SATISFACTORY TO THE COMPANY, EXECUTED BY OPTIONEE AT THE TIME OF THE OPTION EXERCISE.

Optionee understands and agrees that the Option is offered subject to and in accordance with the terms of the Cisco Systems, Inc. 2005 Stock Incentive Plan (the “Plan”). Optionee further agrees to be bound by the terms of the Plan and the terms of the Option as set forth in the Stock Option Agreement attached hereto.

No Service Contract . Nothing in this Notice or in the attached Stock Option Agreement or in the Plan shall confer upon Optionee any right to continue to serve on the Board for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Company or the Company’s shareholders, which rights are hereby expressly reserved by each, to terminate Optionee’s service on the Board at any time, for any reason, with or without cause, and in accordance with the provisions of applicable law.

Definitions . All capitalized terms in this Notice shall have the meaning assigned to them in this Notice, the attached Stock Option Agreement or the Plan.

DATED: ,

CISCO SYSTEMS, INC.

By:

Title:

OPTIONEE

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STOCK OPTION AGREEMENT

Recitals

A. The Board has adopted the Plan for the purpose of retaining the services of selected Employees, non-employee members of the Board or of the board of directors of any Parent or Subsidiary and Consultants and other independent advisors who provide services to the Company (or any Parent or Subsidiary).

B. Optionee is to render valuable services to the Company (or a Parent or Subsidiary), and this Agreement is executed pursuant to, and is intended to carry out the purposes of, the Plan in connection with the Company’s grant of an option to Optionee.

C. All capitalized terms in this Agreement shall have the meaning assigned to them in this Agreement, the attached Notice of Grant of Stock Option (the “ Notice”), or the Plan.

NOW, THEREFORE , it is hereby agreed as follows:

1.Grant of Option . The Company hereby grants to Optionee, as of the Grant Date, a Nonstatutory Stock Option to purchase up to the number of Option Shares specified in the Notice. The Option Shares shall be purchasable from time to time during the Option term specified in Paragraph 2 at the Exercise Price specified in the Notice.

2.Option Term . This Option shall have a maximum term of nine (9) years measured from the Grant Date and shall accordingly expire at the close of business on the Expiration Date, unless sooner terminated in accordance with Paragraph 4, 5, 6 or 7.

3.Non-Transferability. This Option shall not be anticipated, assigned, attached, garnished, optioned, transferred or made subject to any creditor’s process, whether voluntarily or involuntarily or by operation of law. Notwithstanding the foregoing, should the Optionee die while holding this Option, then this Option shall be transferred in accordance with Optionee’s will or the laws of descent and distribution.

4.Exercisability/Vesting .

(a) This Option shall be immediately exercisable for any or all of the Option Shares, whether or not the Option Shares are vested in accordance with the Vesting Schedule set forth in the Notice, and shall remain so exercisable until the Expiration Date or the sooner termination of the Option term under this Paragraph 4 or Paragraph 5, 6 or 7.

(b) Optionee shall, in accordance with the Vesting Schedule set forth in the Notice, vest in the Option Shares in a series of installments over his or her period of Board service. Vesting in the Option Shares may be accelerated pursuant to the provisions of Paragraph 5, 6 or 7. In no event, however, shall any additional Option Shares vest following Optionee’s cessation of service as a Board member.

(c) As an administrative matter, the exercisable portion of this Option may only be exercised until the close of the Nasdaq Global Select Market on the Expiration Date or the earlier termination date under Paragraph 5, 6 or 7 or, if such date is not a trading day on the Nasdaq Global Select Market, the last trading day before such date. Any later attempt to exercise this Option will not be honored. For example, if Optionee ceases to remain in service as provided in Paragraph 5(a) and the date twelve (12) months from the date of cessation is Monday, July 4 (a holiday on which the Nasdaq Global Select Market is closed), Optionee must exercise the exercisable portion of this Option by 4 pm Eastern Daylight Time on Friday, July 1.

5.Cessation of Board Service . Should Optionee’s service as a Board member cease while this Option remains outstanding, then the Option term specified in Paragraph 2 shall terminate (and this Option shall cease to be outstanding) prior to the Expiration Date in accordance with the following provisions:

(a) Should Optionee cease to serve as a Board member for any reason (other than death or Disability) while this Option is outstanding, then the period for exercising this Option shall be reduced to a twelve (12)-month period commencing with the date of such cessation of Board service, but in no event shall this Option be exercisable at any time after the Expiration Date. During such limited period of exercisability, this Option may not be exercised in the aggregate for more than the number of Option Shares (if any) in which Optionee is vested on the date of his or her cessation of Board service. Upon the earlier of (i) the expiration of such twelve (12)-month period or (ii) the specified Expiration Date, the Option shall terminate and cease to be exercisable with respect to any vested Option Shares for which the Option has not been exercised.

(b) Should Optionee die during the twelve (12)-month period following his or her cessation of Board service and hold this Option at the time of his or her death, then the personal representative of Optionee’s estate or the person or persons to whom the Option is transferred pursuant to Optionee’s will or in accordance with the laws of descent and distribution shall have the right to exercise this Option for any or all of the Option Shares in which Optionee is vested at the time of Optionee’s cessation of Board service (less any Option Shares purchased by Optionee after such cessation of Board service but prior to death). Such right of exercise shall terminate, and this Option shall accordingly cease to be exercisable for such vested Option Shares, upon the earlier of (i) the expiration of the twelve (12)-month period measured from the date of Optionee’s cessation of Board service or (ii) the specified Expiration Date.

(c) Should Optionee cease service as a Board member by reason of death or Disability, then all Option Shares at the time subject to this Option but not otherwise vested shall immediately vest in full so that Optionee (or the personal representative of Optionee’s estate or the person or persons to whom the Option is transferred upon Optionee’s death) shall have the right to exercise this Option for any or all of

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the Option Shares as fully-vested shares of Common Stock at any time prior to the earlier of (i) the expiration of the twelve (12)-month period measured from the date of Optionee’s cessation of Board service or (ii) the specified Expiration Date.

(d) Upon Optionee’s cessation of Board service for any reason other than death or Disability, this Option shall immediately terminate and cease to be outstanding with respect to any and all Option Shares in which Optionee is not otherwise at that time vested in accordance with the normal Vesting Schedule set forth in the Notice or the special vesting acceleration provisions of Paragraph 6 or 7 below.

6.Corporate Transaction .

(a) In the event of a Corporate Transaction, all Option Shares at the time subject to this Option but not otherwise vested shall automatically vest so that this Option shall, immediately prior to the specified effective date for the Corporate Transaction, become fully exercisable for all of the Option Shares at the time subject to this Option and may be exercised for all or any portion of such shares as fully-vested shares of Common Stock. Immediately following the consummation of the Corporate Transaction, this Option shall terminate and cease to be outstanding, except to the extent assumed by the successor corporation or its parent company.

(b) If this Option is assumed in connection with a Corporate Transaction, then this Option shall be appropriately adjusted, immediately after such Corporate Transaction, to apply to the number and class of securities which would have been issuable to Optionee in consummation of such Corporate Transaction had the Option been exercised immediately prior to such Corporate Transaction, and appropriate adjustments shall also be made to the Exercise Price, provided the aggregate Exercise Price shall remain the same.

7.Change In Control/Hostile Take-Over .

(a) All Option Shares subject to this Option at the time of a Change In Control but not otherwise vested shall automatically vest so that this Option shall, immediately prior to the effective date of such Change In Control, become fully exercisable for all of the Option Shares at the time subject to this Option and may be exercised for all or any portion of such shares as fully-vested shares of Common Stock. This Option shall remain exercisable for such fully-vested Option Shares until the earliest to occur of (i) the specified Expiration Date, (ii) the sooner termination of this Option in accordance with Paragraph 4, 5 or 6 or (iii) the surrender of this Option under Paragraph 7(b).

(b) Optionee shall have an unconditional right (exercisable during the thirty (30)-day period immediately following the consummation of a “Hostile Take-Over” (as defined below)) to surrender this Option to the Company in exchange for a cash distribution from the Company in an amount equal to the excess of (i) the “Take-Over Price” (as defined below) of the Option Shares at the time subject to the surrendered Option (whether or not those Option Shares are otherwise at the time vested) over (ii) the aggregate Exercise Price payable for such shares. This Paragraph 7(b) limited stock appreciation right shall in all events terminate upon the expiration or sooner termination of the Option term and may not be assigned or transferred by Optionee. For purposes of this Option, “Hostile Take-Over” shall mean the acquisition, directly or indirectly, by any person or related group of persons (other than the Company or a person that directly or indirectly controls, is controlled by, or is under common control with, the Company) of beneficial ownership (within the meaning of Rule 13d-3 of the Exchange Act) of securities possessing more than thirty five percent (35%) of the total combined voting power of the Company’s outstanding securities pursuant to a tender or exchange offer made directly to the Company’s shareholders which the Board does not recommend such shareholders to accept. Further, for purposes of this Option, “Take-Over Price” shall mean the greater of (i) the Fair Market Value on the date the Option is surrendered to the Company in connection with a Hostile Take-Over, or (ii) the highest reported price per share of Common Stock paid by the tender offeror in effecting the Hostile Take-Over.

(c) To exercise the Paragraph 7(b) limited stock appreciation right, Optionee must, during the applicable thirty (30)-day exercise period, provide the Company with written notice of the option surrender in which there is specified the number of Option Shares as to which the Option is being surrendered. Such notice must be accompanied by the return of Optionee’s copy of this Agreement, together with any written amendments to such Agreement. The cash distribution shall be paid to Optionee within five (5) business days following such delivery date. Upon receipt of such cash distribution, this Option shall be cancelled with respect to the shares subject to the surrendered Option (or the surrendered portion), and Optionee shall cease to have any further right to acquire those Option Shares under this Agreement. The Option shall, however, remain outstanding for the balance of the Option Shares (if any) in accordance with the terms and provisions of this Agreement, and the Company shall accordingly issue a new stock option agreement (substantially in the same form as this Agreement) for those remaining Option Shares.

8.Adjustment in Option Shares . In the event of a subdivision of the outstanding Shares, a declaration of a dividend payable in Shares, a declaration of a dividend payable in a form other than Shares in an amount that has a material effect on the price of Shares, a combination or consolidation of the outstanding Shares (by reclassification or otherwise) into a lesser number of Shares, a recapitalization, a spin-off or a similar occurrence, appropriate adjustments shall be made to (i) the total number and/or kind of shares or securities subject to this Option and (ii) the Exercise Price in order to reflect such change and thereby preclude a dilution or enlargement of benefits hereunder.

9.Shareholder Rights . The holder of this Option shall not have any shareholder rights with respect to the Option Shares until such person shall have exercised the Option, paid the Exercise Price and become a holder of record of the purchased Shares.

10.Manner of Exercising Option .

(a) In order to exercise this Option with respect to all or any part of the Option Shares for which this Option is at the time exercisable, Optionee (or any other person or persons exercising the Option) must take the following actions:

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(i) Pay the aggregate Exercise Price for the purchased Shares in one or more of the following forms:

(A) cash or check which, in the Company’s sole discretion, shall be made payable to a Company-designated brokerage firm or the Company; and

(B) as permitted by applicable law, through a special sale and remittance procedure pursuant to which Optionee (or any other person or persons exercising the Option) shall concurrently provide irrevocable written instructions (I) to a Company-designated brokerage firm (or in the case of an executive officer or Board member of the Company, an Optionee-designated brokerage firm) to effect the immediate sale of the purchased Shares and remit to the Company, out of the sale proceeds available on the settlement date, sufficient funds to cover the aggregate Exercise Price payable for the purchased Shares plus, if applicable, the amount necessary to satisfy the Company’s withholding obligations at the minimum statutory withholding rates and (II) to the Company to deliver the certificates for the purchased Shares directly to such brokerage firm in order to complete the sale transaction.

(ii) Furnish to the Company appropriate documentation that the person or persons exercising the Option (if other than Optionee) have the right to exercise this Option.

(iii) Make appropriate arrangements with the Company (or Parent or Subsidiary employing or retaining Optionee) for the satisfaction of all tax withholding requirements applicable to the Option exercise.

(iv) To the extent that the option is exercised for one or more unvested Option Shares, Optionee (or other person exercising the option) shall deliver to the Secretary of the Company a purchase agreement for those unvested Option Shares.

(b) As soon as practical after the exercise date, the Company shall issue to or on behalf of Optionee (or any other person or persons exercising this Option) the purchased Option Shares (as evidenced by an appropriate entry on the books of the Company or a duly authorized transfer agent of the Company), subject to the appropriate legends and/or stop transfer instructions.

(c) In no event may this Option be exercised for any fractional Shares.

11.No Impairment of Rights . This Agreement shall not in any way affect the right of the Company to adjust, reclassify, reorganize or otherwise make changes in its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets. In addition, nothing in this Agreement shall in any way be construed or interpreted so as to affect adversely or otherwise impair the right of the Company or the shareholders to remove Optionee from the Board at any time in accordance with the provisions of applicable law.

12.Compliance with Laws and Regulations .

(a) The exercise of this Option and the issuance of the Option Shares upon such exercise shall be subject to compliance by the Company and Optionee with all applicable laws, regulations and rules relating thereto, including all applicable regulations of any stock exchange (or the Nasdaq Global Select Market, if applicable) on which the Shares may be listed for trading at the time of such exercise and issuance.

(b) The inability of the Company to obtain approval from any regulatory body having authority deemed by the Company to be necessary to the lawful issuance and sale of any Shares pursuant to this Option shall relieve the Company of any liability with respect to the non-issuance or sale of the Shares as to which such approval shall not have been obtained. The Company, however, shall use its best efforts to obtain all such approvals.

13.Successors and Assigns . Except to the extent otherwise provided in Paragraphs 3, 5, 6 and 7, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the Company and its successors and assigns and Optionee, Optionee’s assigns and the legal representatives, heirs and legatees of Optionee’s estate.

14.Notices . Any notice required or permitted under the terms of this Agreement shall be in writing and shall be deemed sufficient when delivered personally or sent by confirmed email, telegram, or fax or forty-eight (48) hours after being deposited in the U.S. mail, as certified or registered mail, with postage prepaid, and addressed to the Company at the Company’s principal corporate offices or to the Optionee at the address maintained for the Optionee in the Company’s records or, in either case, as subsequently modified by written notice to the other party.

15.Construction . The Notice, this Agreement, and the Option evidenced hereby (a) are made and granted pursuant to the Plan and are in all respects limited by and subject to the terms of the Plan, and (b) constitute the entire agreement between Optionee and the Company on the subject matter hereof and supercede all proposals, written or oral, and all other communications between the parties related to the subject matter. All decisions of the Committee with respect to any question or issue arising under the Notice, this Agreement or the Plan shall be conclusive and binding on all persons having an interest in this Option.

16.Governing Law . The interpretation, performance and enforcement of this Agreement shall be governed by the laws of the State of California without resort to the conflict of laws principles thereof.

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17.Excess Shares . If the Option Shares covered by this Agreement exceed, as of the Grant Date, the number of Shares which may without shareholder approval be issued under the Plan, then this Option shall be void with respect to those excess shares, unless shareholder approval of an amendment sufficiently increasing the number of Shares issuable under the Plan is obtained in accordance with the provisions of the Plan and all applicable laws, regulations and rules.

18.Further Instruments . The parties agree to execute such further instruments and to take such further action as may be reasonably necessary to carry out the purposes and intent of this Agreement.

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NON-EMPLOYEE DIRECTOR ANNUAL GRANT

(For Grants Prior to Fiscal 2009)

CISCO SYSTEMS, INC.

NOTICE OF GRANT OF STOCK OPTION

Notice is hereby given of the following option grant (the “Option”) made to purchase shares of Cisco Systems, Inc. (the “Company”) common stock:

Optionee:

Grant Date:

Type of Option: Nonstatutory Stock Option

Grant Number:

Number of Option Shares: shares

Exercise Price: $ per share

Expiration Date:

Date Exercisable: Immediately Exercisable

Vesting Schedule

The Option Shares shall initially be unvested and subject to repurchase by the Company at the Exercise Price paid per share. Optionee shall acquire a vested interest in, and the Company’s repurchase right shall accordingly lapse, with respect to, the Option Shares in a series of two (2) successive equal annual installments upon Optionee’s completion of each year of service as a member of the Board over the two (2) year period measured from the Grant Date. In no event shall any additional Option Shares vest after Optionee’s cessation of Board service.

REPURCHASE RIGHT . OPTIONEE HEREBY AGREES THAT ALL UNVESTED OPTION SHARES ACQUIRED UPON THE EXERCISE OF THE OPTION SHALL NOT BE TRANSFERABLE AND SHALL BE SUBJECT TO REPURCHASE BY THE COMPANY, AT THE EXERCISE PRICE PAID PER SHARE, UPON OPTIONEE’S TERMINATION OF SERVICE AS A MEMBER OF THE BOARD PRIOR TO VESTING IN THOSE SHARES. THE TERMS AND CONDITIONS OF SUCH REPURCHASE RIGHT SHALL BE SPECIFIED IN A STOCK PURCHASE AGREEMENT, IN FORM AND SUBSTANCE SATISFACTORY TO THE COMPANY, EXECUTED BY OPTIONEE AT THE TIME OF THE OPTION EXERCISE.

Optionee understands and agrees that the Option is offered subject to and in accordance with the terms of the Cisco Systems, Inc. 2005 Stock Incentive Plan (the “Plan”). Optionee further agrees to be bound by the terms of the Plan and the terms of the Option as set forth in the Stock Option Agreement attached hereto.

No Service Contract . Nothing in this Notice or in the attached Stock Option Agreement or in the Plan shall confer upon Optionee any right to continue to serve on the Board for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Company or the Company’s shareholders, which rights are hereby expressly reserved by each, to terminate Optionee’s service on the Board at any time, for any reason, with or without cause, and in accordance with the provisions of applicable law.

Definitions . All capitalized terms in this Notice shall have the meaning assigned to them in this Notice, the attached Stock Option Agreement or the Plan.

DATED: ,

CISCO SYSTEMS, INC.

By:

Title:

OPTIONEE

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STOCK OPTION AGREEMENT

Recitals

A. The Board has adopted the Plan for the purpose of retaining the services of selected Employees, non-employee members of the Board or of the board of directors of any Parent or Subsidiary and Consultants and other independent advisors who provide services to the Company (or any Parent or Subsidiary).

B. Optionee is to render valuable services to the Company (or a Parent or Subsidiary), and this Agreement is executed pursuant to, and is intended to carry out the purposes of, the Plan in connection with the Company’s grant of an option to Optionee.

C. All capitalized terms in this Agreement shall have the meaning assigned to them in this Agreement, the attached Notice of Grant of Stock Option (the “ Notice”), or the Plan.

NOW, THEREFORE , it is hereby agreed as follows:

1.Grant of Option . The Company hereby grants to Optionee, as of the Grant Date, a Nonstatutory Stock Option to purchase up to the number of Option Shares specified in the Notice. The Option Shares shall be purchasable from time to time during the Option term specified in Paragraph 2 at the Exercise Price specified in the Notice.

2.Option Term . This Option shall have a maximum term of nine (9) years measured from the Grant Date and shall accordingly expire at the close of business on the Expiration Date, unless sooner terminated in accordance with Paragraph 4, 5, 6 or 7.

3.Non-Transferability . This Option shall not be anticipated, assigned, attached, garnished, optioned, transferred or made subject to any creditor’s process, whether voluntarily or involuntarily or by operation of law. Notwithstanding the foregoing, should the Optionee die while holding this Option, then this Option shall be transferred in accordance with Optionee’s will or the laws of descent and distribution.

4.Exercisability/Vesting .

(a) This Option shall be immediately exercisable for any or all of the Option Shares, whether or not the Option Shares are vested in accordance with the Vesting Schedule set forth in the Notice, and shall remain so exercisable until the Expiration Date or the sooner termination of the Option term under this Paragraph 4 or Paragraph 5, 6 or 7.

(b) Optionee shall, in accordance with the Vesting Schedule set forth in the Notice, vest in the Option Shares in a series of installments over his or her period of Board service. Vesting in the Option Shares may be accelerated pursuant to the provisions of Paragraph 5, 6 or 7. In no event, however, shall any additional Option Shares vest following Optionee’s cessation of service as a Board member.

(c) As an administrative matter, the exercisable portion of this Option may only be exercised until the close of the Nasdaq Global Select Market on the Expiration Date or the earlier termination date under Paragraph 5, 6 or 7 or, if such date is not a trading day on the Nasdaq Global Select Market, the last trading day before such date. Any later attempt to exercise this Option will not be honored. For example, if Optionee ceases to remain in service as provided in Paragraph 5(a) and the date twelve (12) months from the date of cessation is Monday, July 4 (a holiday on which the Nasdaq Global Select Market is closed), Optionee must exercise the exercisable portion of this Option by 4 pm Eastern Daylight Time on Friday, July 1.

5.Cessation of Board Service . Should Optionee’s service as a Board member cease while this Option remains outstanding, then the Option term specified in Paragraph 2 shall terminate (and this Option shall cease to be outstanding) prior to the Expiration Date in accordance with the following provisions:

(a) Should Optionee cease to serve as a Board member for any reason (other than death or Disability) while this Option is outstanding, then the period for exercising this Option shall be reduced to a twelve (12)-month period commencing with the date of such cessation of Board service, but in no event shall this Option be exercisable at any time after the Expiration Date. During such limited period of exercisability, this Option may not be exercised in the aggregate for more than the number of Option Shares (if any) in which Optionee is vested on the date of his or her cessation of Board service. Upon the earlier of (i) the expiration of such twelve (12)-month period or (ii) the specified Expiration Date, the Option shall terminate and cease to be exercisable with respect to any vested Option Shares for which the Option has not been exercised.

(b) Should Optionee die during the twelve (12)-month period following his or her cessation of Board service and hold this Option at the time of his or her death, then the personal representative of Optionee’s estate or the person or persons to whom the Option is transferred pursuant to Optionee’s will or in accordance with the laws of descent and distribution shall have the right to exercise this Option for any or all of the Option Shares in which Optionee is vested at the time of Optionee’s cessation of Board service (less any Option Shares purchased by Optionee after such cessation of Board service but prior to death). Such right of exercise shall terminate, and this Option shall accordingly cease to be exercisable for such vested Option Shares, upon the earlier of (i) the expiration of the twelve (12)-month period measured from the date of Optionee’s cessation of Board service or (ii) the specified Expiration Date.

(c) Should Optionee cease service as a Board member by reason of death or Disability, then all Option Shares at the time subject to this Option but not otherwise vested shall immediately vest in full so that Optionee (or the personal representative of Optionee’s estate or the

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person or persons to whom the Option is transferred upon Optionee’s death) shall have the right to exercise this Option for any or all of the Option Shares as fully-vested shares of Common Stock at any time prior to the earlier of (i) the expiration of the twelve (12)-month period measured from the date of Optionee’s cessation of Board service or (ii) the specified Expiration Date.

(d) Upon Optionee’s cessation of Board service for any reason other than death or Disability, this Option shall immediately terminate and cease to be outstanding with respect to any and all Option Shares in which Optionee is not otherwise at that time vested in accordance with the normal Vesting Schedule set forth in the Notice or the special vesting acceleration provisions of Paragraph 6 or 7 below.

6.Corporate Transaction .

(a) In the event of a Corporate Transaction, all Option Shares at the time subject to this Option but not otherwise vested shall automatically vest so that this Option shall, immediately prior to the specified effective date for the Corporate Transaction, become fully exercisable for all of the Option Shares at the time subject to this Option and may be exercised for all or any portion of such shares as fully-vested shares of Common Stock. Immediately following the consummation of the Corporate Transaction, this Option shall terminate and cease to be outstanding, except to the extent assumed by the successor corporation or its parent company.

(b) If this Option is assumed in connection with a Corporate Transaction, then this Option shall be appropriately adjusted, immediately after such Corporate Transaction, to apply to the number and class of securities which would have been issuable to Optionee in consummation of such Corporate Transaction had the Option been exercised immediately prior to such Corporate Transaction, and appropriate adjustments shall also be made to the Exercise Price, provided the aggregate Exercise Price shall remain the same.

7.Change In Control/Hostile Take-Over .

(a) All Option Shares subject to this Option at the time of a Change In Control but not otherwise vested shall automatically vest so that this Option shall, immediately prior to the effective date of such Change In Control, become fully exercisable for all of the Option Shares at the time subject to this Option and may be exercised for all or any portion of such shares as fully-vested shares of Common Stock. This Option shall remain exercisable for such fully-vested Option Shares until the earliest to occur of (i) the specified Expiration Date, (ii) the sooner termination of this Option in accordance with Paragraph 4, 5 or 6 or (iii) the surrender of this Option under Paragraph 7(b).

(b) Optionee shall have an unconditional right (exercisable during the thirty (30)-day period immediately following the consummation of a “Hostile Take-Over” (as defined below)) to surrender this Option to the Company in exchange for a cash distribution from the Company in an amount equal to the excess of (i) the “Take-Over Price” (as defined below) of the Option Shares at the time subject to the surrendered Option (whether or not those Option Shares are otherwise at the time vested) over (ii) the aggregate Exercise Price payable for such shares. This Paragraph 7(b) limited stock appreciation right shall in all events terminate upon the expiration or sooner termination of the Option term and may not be assigned or transferred by Optionee. For purposes of this Option, “Hostile Take-Over” shall mean the acquisition, directly or indirectly, by any person or related group of persons (other than the Company or a person that directly or indirectly controls, is controlled by, or is under common control with, the Company) of beneficial ownership (within the meaning of Rule 13d-3 of the Exchange Act) of securities possessing more than thirty five percent (35%) of the total combined voting power of the Company’s outstanding securities pursuant to a tender or exchange offer made directly to the Company’s shareholders which the Board does not recommend such shareholders to accept. Further, for purposes of this Option, “Take-Over Price” shall mean the greater of (i) the Fair Market Value on the date the Option is surrendered to the Company in connection with a Hostile Take-Over, or (ii) the highest reported price per share of Common Stock paid by the tender offeror in effecting the Hostile Take-Over.

(c) To exercise the Paragraph 7(b) limited stock appreciation right, Optionee must, during the applicable thirty (30)-day exercise period, provide the Company with written notice of the option surrender in which there is specified the number of Option Shares as to which the Option is being surrendered. Such notice must be accompanied by the return of Optionee’s copy of this Agreement, together with any written amendments to such Agreement. The cash distribution shall be paid to Optionee within five (5) business days following such delivery date. Upon receipt of such cash distribution, this Option shall be cancelled with respect to the shares subject to the surrendered Option (or the surrendered portion), and Optionee shall cease to have any further right to acquire those Option Shares under this Agreement. The Option shall, however, remain outstanding for the balance of the Option Shares (if any) in accordance with the terms and provisions of this Agreement, and the Company shall accordingly issue a new stock option agreement (substantially in the same form as this Agreement) for those remaining Option Shares.

8.Adjustment in Option Shares . In the event of a subdivision of the outstanding Shares, a declaration of a dividend payable in Shares, a declaration of a dividend payable in a form other than Shares in an amount that has a material effect on the price of Shares, a combination or consolidation of the outstanding Shares (by reclassification or otherwise) into a lesser number of Shares, a recapitalization, a spin-off or a similar occurrence, appropriate adjustments shall be made to (i) the total number and/or kind of shares or securities subject to this Option and (ii) the Exercise Price in order to reflect such change and thereby preclude a dilution or enlargement of benefits hereunder.

9.Shareholder Rights . The holder of this Option shall not have any shareholder rights with respect to the Option Shares until such person shall have exercised the Option, paid the Exercise Price and become a holder of record of the purchased Shares.

10.Manner of Exercising Option .

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(a) In order to exercise this Option with respect to all or any part of the Option Shares for which this Option is at the time exercisable, Optionee (or any other person or persons exercising the Option) must take the following actions:

(i) Pay the aggregate Exercise Price for the purchased Shares in one or more of the following forms:

(A) cash or check which, in the Company’s sole discretion, shall be made payable to a Company-designated brokerage firm or the Company; and

(B) as permitted by applicable law, through a special sale and remittance procedure pursuant to which Optionee (or any other person or persons exercising the Option) shall concurrently provide irrevocable written instructions (I) to a Company-designated brokerage firm (or in the case of an executive officer or Board member of the Company, an Optionee-designated brokerage firm) to effect the immediate sale of the purchased Shares and remit to the Company, out of the sale proceeds available on the settlement date, sufficient funds to cover the aggregate Exercise Price payable for the purchased Shares plus, if applicable, the amount necessary to satisfy the Company’s withholding obligations at the minimum statutory withholding rates and (II) to the Company to deliver the certificates for the purchased Shares directly to such brokerage firm in order to complete the sale transaction.

(ii) Furnish to the Company appropriate documentation that the person or persons exercising the Option (if other than Optionee) have the right to exercise this Option.

(iii) Make appropriate arrangements with the Company (or Parent or Subsidiary employing or retaining Optionee) for the satisfaction of all tax withholding requirements applicable to the Option exercise.

(iv) To the extent that the option is exercised for one or more unvested Option Shares, Optionee (or other person exercising the option) shall deliver to the Secretary of the Company a purchase agreement for those unvested Option Shares.

(b) As soon as practical after the exercise date, the Company shall issue to or on behalf of Optionee (or any other person or persons exercising this Option) the purchased Option Shares (as evidenced by an appropriate entry on the books of the Company or a duly authorized transfer agent of the Company), subject to the appropriate legends and/or stop transfer instructions.

(c) In no event may this Option be exercised for any fractional Shares.

11.No Impairment of Rights . This Agreement shall not in any way affect the right of the Company to adjust, reclassify, reorganize or otherwise make changes in its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets. In addition, nothing in this Agreement shall in any way be construed or interpreted so as to affect adversely or otherwise impair the right of the Company or the shareholders to remove Optionee from the Board at any time in accordance with the provisions of applicable law.

12.Compliance with Laws and Regulations .

(a) The exercise of this Option and the issuance of the Option Shares upon such exercise shall be subject to compliance by the Company and Optionee with all applicable laws, regulations and rules relating thereto, including all applicable regulations of any stock exchange (or the Nasdaq Global Select Market, if applicable) on which the Shares may be listed for trading at the time of such exercise and issuance.

(b) The inability of the Company to obtain approval from any regulatory body having authority deemed by the Company to be necessary to the lawful issuance and sale of any Shares pursuant to this Option shall relieve the Company of any liability with respect to the non-issuance or sale of the Shares as to which such approval shall not have been obtained. The Company, however, shall use its best efforts to obtain all such approvals.

13.Successors and Assigns . Except to the extent otherwise provided in Paragraphs 3, 5, 6 and 7, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the Company and its successors and assigns and Optionee, Optionee’s assigns and the legal representatives, heirs and legatees of Optionee’s estate.

14.Notices . Any notice required or permitted under the terms of this Agreement shall be in writing and shall be deemed sufficient when delivered personally or sent by confirmed email, telegram, or fax or forty-eight (48) hours after being deposited in the U.S. mail, as certified or registered mail, with postage prepaid, and addressed to the Company at the Company’s principal corporate offices or to the Optionee at the address maintained for the Optionee in the Company’s records or, in either case, as subsequently modified by written notice to the other party.

15.Construction . The Notice, this Agreement, and the Option evidenced hereby (a) are made and granted pursuant to the Plan and are in all respects limited by and subject to the terms of the Plan, and (b) constitute the entire agreement between Optionee and the Company on the subject matter hereof and supercede all proposals, written or oral, and all other communications between the parties related to the subject matter. All decisions of the Committee with respect to any question or issue arising under the Notice, this Agreement or the Plan shall be conclusive and binding on all persons having an interest in this Option.

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16.Governing Law . The interpretation, performance and enforcement of this Agreement shall be governed by the laws of the State of California without resort to the conflict of laws principles thereof.

17.Excess Shares . If the Option Shares covered by this Agreement exceed, as of the Grant Date, the number of Shares which may without shareholder approval be issued under the Plan, then this Option shall be void with respect to those excess shares, unless shareholder approval of an amendment sufficiently increasing the number of Shares issuable under the Plan is obtained in accordance with the provisions of the Plan and all applicable laws, regulations and rules.

18.Further Instruments . The parties agree to execute such further instruments and to take such further action as may be reasonably necessary to carry out the purposes and intent of this Agreement.

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NON-EMPLOYEE DIRECTOR STOCK GRANT

CISCO SYSTEMS, INC.

STOCK GRANT AGREEMENT

This Stock Grant Agreement (the “Agreement”) is made and entered into as of the Grant Date (as defined below) by and between Cisco Systems, Inc., a California corporation (the “Company”), and you pursuant to the Cisco Systems, Inc. 2005 Stock Incentive Plan (the “Plan”). The material terms of this Stock Grant Award are as follows:

Grantee:
Grant Date:
Grant Number:
Restricted Shares:
Vest Date:	The completion of one (1) year of Board service measured from the Grant Date.

To the extent any capitalized terms used in this Agreement are not defined, they shall have the meaning ascribed to them in the Plan. In the event of a conflict between the terms and provisions of the Plan and the terms and provisions of this Agreement, the Plan terms and provisions shall prevail.

In consideration of the mutual agreements herein contained and intending to be legally bound hereby, the parties agree as follows:

1.Restricted Shares . Pursuant to the Plan, the Company hereby transfers to you, and you hereby accept from the Company, a Stock Grant Award consisting of the Restricted Shares, on the terms and conditions set forth herein and in the Plan.

2.Vesting of Restricted Shares . So long as your service on the Board continues, the Restricted Shares shall vest in accordance with the following schedule: one-hundred percent (100%) of the total number of Restricted Shares issued pursuant to this Agreement shall vest on the Vest Date, unless otherwise provided by the Plan or Section 3 below. Except as provided in Section 3 below, in the event of the termination of your Board service for any reason, all unvested Restricted Shares shall be immediately forfeited without consideration. For purposes of facilitating the enforcement of the provisions of this Section 2, the Company may issue stop-transfer instructions on the Restricted Shares to the Company’s transfer agent, or otherwise hold the Restricted Shares in escrow, until the Restricted Shares have vested and you have satisfied all applicable obligations with respect to the Restricted Shares, including any applicable tax withholding obligations set forth in Section 5 below. Any new, substituted or additional securities or other property which is issued or distributed with respect to the unvested Restricted Shares shall be subject to the same terms and conditions as are applicable to the unvested Restricted Shares under this Agreement and the Plan.

3.Special Acceleration .

(a) To the extent the Restricted Shares are outstanding at the time of a Corporate Transaction or a Change in Control, but not otherwise fully vested, such Restricted Shares shall automatically accelerate immediately prior to the effective date of the Corporate Transaction or the Change in Control, as the case may be, and shall become vested in full at that time.

(b) If your service on the Board ceases as a result of your death or Disability then, to the extent the Restricted Shares are outstanding, but not otherwise fully vested, such Restricted Shares shall automatically accelerate and shall become vested in full at that time.

(c) This Stock Grant Agreement shall not in any way affect the right of the Company to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate, sell or transfer all or any part of its business or assets.

4.Restriction on Election to Recognize Income in the Year of Grant . Under Section 83 of the Code, the Fair Market Value of the Restricted Shares on the date the Restricted Shares vest will be taxable as ordinary income at that time. You understand, acknowledge and agree that, as a condition to the grant of this Award, you may not elect to be taxed at the time the Restricted Shares are acquired by filing an election under Section 83(b) of the Code with the Internal Revenue Service.

5.Withholding Taxes . You agree to make arrangements satisfactory to the Company for the satisfaction of any applicable withholding tax obligations that arise in connection with the Restricted Shares which, at the sole discretion of the Company, may include (i) having the Company withhold Shares from the Restricted Shares held in escrow, or (ii) any other arrangement approved by the Company, in any case, equal in value to the amount necessary to satisfy any such withholding tax obligation. Such Shares shall be valued based on the Fair Market Value as of the day prior to the date that the amount of tax to be withheld is to be determined under applicable law. The Company shall not be required to release the Restricted Shares from the stop-transfer instructions or escrow unless and until such obligations are satisfied.

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6.Tax Advice . You represent, warrant and acknowledge that the Company has made no warranties or representations to you with respect to the income tax consequences of the transactions contemplated by this Agreement, and you are in no manner relying on the Company or the Company’s representatives for an assessment of such tax consequences. YOU UNDERSTAND THAT THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. YOU SHOULD CONSULT YOUR OWN TAX ADVISOR REGARDING ANY STOCK GRANT AWARD. NOTHING STATED HEREIN IS INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED, FOR THE PURPOSE OF AVOIDING TAXPAYER PENALTIES.

7.Non-Transferability of Restricted Shares . Restricted Shares which have not vested pursuant to Section 2 above shall not be anticipated, assigned, attached, garnished, optioned, transferred or made subject to any creditor’s process, whether voluntarily or involuntarily or by the operation of law. However, this Section 7 shall not preclude you from designating a beneficiary who will receive any vested Restricted Shares in the event of the your death, nor shall it preclude a transfer of vested Restricted Shares by will or by the laws of descent and distribution.

8.Restriction on Transfer . Regardless of whether the transfer or issuance of the Restricted Shares has been registered under the Securities Act or has been registered or qualified under the securities laws of any state, the Company may impose additional restrictions upon the sale, pledge, or other transfer of the Restricted Shares (including the placement of appropriate legends on stock certificates and the issuance of stop-transfer instructions to the Company’s transfer agent) if, in the judgment of the Company and the Company’s counsel, such restrictions are necessary in order to achieve compliance with the provisions of the Securities Act, the securities laws of any state, or any other law.

9.Stock Certificate Restrictive Legends . Stock certificates evidencing the Restricted Shares may bear such restrictive legends as the Company and the Company’s counsel deem necessary under applicable law or pursuant to this Agreement.

10.Representations, Warranties, Covenants, and Acknowledgments . You hereby agree that in the event the Company and the Company’s counsel deem it necessary or advisable in the exercise of their discretion, the transfer or issuance of the Restricted Shares may be conditioned upon you making certain representations, warranties, and acknowledgments relating to compliance with applicable securities laws.

11.Voting and Other Rights . Subject to the terms of this Agreement, you shall have all the rights and privileges of a shareholder of the Company while the Restricted Shares are subject to stop-transfer instructions, or otherwise held in escrow, including the right to vote and to receive dividends (if any).

12.Authorization to Release Necessary Personal Information .

(a) You hereby authorize and direct the Company to collect, use and transfer in electronic or other form, any personal information (the “Data”) regarding your service, the nature and amount of your compensation and the facts and conditions of your participation in the Plan (including, but not limited to, your name, home address, telephone number, date of birth, social security number (or any other social or national identification number), compensation, nationality, job title, number of Shares held and the details of all Awards or any other entitlement to Shares awarded, cancelled, exercised, vested, unvested or outstanding) for the purpose of implementing, administering and managing your participation in the Plan. You understand that the Data may be transferred to the Company or any of its Subsidiaries, or to any third parties assisting in the implementation, administration and management of the Plan, including any requisite transfer to a broker or other third party assisting with the administration of this Stock Grant Award under the Plan or with whom Shares acquired pursuant to this Stock Grant Award or cash from the sale of such shares may be deposited. You acknowledge that recipients of the Data may be located in different countries, and those countries may have data privacy laws and protections different from those in the country of your residence. Furthermore, you acknowledge and understand that the transfer of the Data to the Company or any of its Subsidiaries, or to any third parties is necessary for your participation in the Plan.

(b) You may at any time withdraw the consents herein by contacting your local human resources representative in writing. You further acknowledge that withdrawal of consent may affect your ability to exercise or realize benefits from this Stock Grant Award, and your ability to participate in the Plan.

13.No Entitlement or Claims for Compensation .

(a) Your rights, if any, in respect of or in connection with this Stock Grant Award or any other Award is derived solely from the discretionary decision of the Company to permit you to participate in the Plan and to benefit from a discretionary Award. By accepting this Stock Grant Award, you expressly acknowledge that there is no obligation on the part of the Company to continue the Plan and/or grant any additional Awards to you. This Stock Grant Award is not intended to be compensation of a continuing or recurring nature, or part of your normal or expected compensation, and in no way represents any portion of a your salary, compensation, or other remuneration for purposes of pension benefits, severance, redundancy, resignation or any other purpose.

(b) Neither the Plan nor this Stock Grant Award or any other Award granted under the Plan shall be deemed to give you a right to remain an Employee, Consultant or director of the Company, a Parent, a Subsidiary or an Affiliate. The Company and its Parents and Subsidiaries and Affiliates reserve the right to terminate your Service at any time, with or without cause, and for any reason, subject to applicable laws, the Company’s Articles of Incorporation and Bylaws and a written employment agreement (if any), and you shall be deemed irrevocably to have waived any claim to damages or specific performance for breach of contract or dismissal, compensation for loss of office, tort or otherwise with respect to the Plan, this Stock Grant Award or any outstanding Award that is forfeited and/or is terminated by its terms or to any future Award.

2

(c) You agree that the Company may require that Restricted Shares be held by a broker designated by the Company. In addition, you agree that your rights hereunder shall be subject to set-off by the Company for any valid debts you owe the Company.

14.Governing Law . This Agreement shall be governed by and construed in accordance with the laws of the State of California without regard to the conflict of laws principles thereof.

15.Notices . Any notice required or permitted under the terms of this Agreement shall be in writing and shall be deemed sufficient when delivered personally or sent by confirmed email, telegram, or fax or forty-eight (48) hours after being deposited in the U.S. mail, as certified or registered mail, with postage prepaid, and addressed to the Company at the Company’s principal corporate offices or to you at the address maintained for you in the Company’s records or, in either case, as subsequently modified by written notice to the other party.

16.Binding Effect . Subject to the limitations set forth in this Agreement, this Agreement shall be binding upon, and inure to the benefit of, the executors, administrators, heirs, legal representatives, successors, and assigns of the parties hereto.

17.Severability . If any provision of this Agreement is held to be unenforceable for any reason, it shall be adjusted rather than voided, if possible, in order to achieve the intent of the parties to the extent possible. In any event, all other provisions of this Agreement shall be deemed valid and enforceable to the full extent possible.

DATED: ,

CISCO SYSTEMS, INC.

By:

Title:

GRANTEE

3

NON-EMPLOYEE DIRECTOR STOCK UNIT

IN LIEU OF ANNUAL RETAINER

CISCO SYSTEMS, INC.

STOCK UNIT AGREEMENT

This Stock Unit Agreement (the “Agreement”) is made and entered into as of the Grant Date (as defined below) by and between Cisco Systems, Inc., a California corporation (the “Company”), and you pursuant to the Cisco Systems, Inc. 2005 Stock Incentive Plan (the “Plan”). The material terms of this Stock Unit Award are as follows:

Grantee:

Grant Date:

Grant Number:

Restricted Stock Units:

To the extent any capitalized terms used in this Agreement are not defined, they shall have the meaning ascribed to them in the Plan. In the event of a conflict between the terms and provisions of the Plan and the terms and provisions of this Agreement, the Plan terms and provisions shall prevail.

In consideration of the mutual agreements herein contained and intending to be legally bound hereby, the parties agree as follows:

1.Restricted Stock Units . Pursuant to the Plan, the Company hereby grants to you, and you hereby accept from the Company, Restricted Stock Units, each of which is a bookkeeping entry representing the equivalent in value of one (1) Share, on the terms and conditions set forth herein and in the Plan.

2.Vesting of Restricted Stock Units . One-hundred percent (100%) of the total number of Restricted Stock Units granted pursuant to this Agreement shall vest on the Grant Date.

3.Settlement of Restricted Stock Units . Restricted Stock Units shall be automatically settled in Shares upon your separation from service within the meaning of Code Section 409A (“Separation from Service”), provided that the Company shall have no obligation to issue Shares pursuant to this Agreement unless and until you have satisfied any applicable tax withholding obligations and such issuance otherwise complies with all applicable law.

4.Tax Advice . You represent, warrant and acknowledge that the Company has made no warranties or representations to you with respect to the income tax consequences of the transactions contemplated by this Agreement, and you are in no manner relying on the Company or the Company’s representatives for an assessment of such tax consequences. YOU UNDERSTAND THAT THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. YOU SHOULD CONSULT YOUR OWN TAX ADVISOR REGARDING ANY RESTRICTED STOCK UNITS. NOTHING STATED HEREIN IS INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED, FOR THE PURPOSE OF AVOIDING TAXPAYER PENALTIES.

5.Non-Transferability of Restricted Stock Units . Restricted Stock Units shall not be anticipated, assigned, attached, garnished, optioned, transferred or made subject to any creditor’s process, whether voluntarily or involuntarily or by operation of law. However, this Section 5 shall not preclude you from designating a beneficiary who will receive vested Shares pursuant to this award in the event of your death, nor shall it preclude a transfer of vested Shares pursuant to this award by will or by the laws of descent and distribution.

6.Restriction on Transfer . Regardless of whether the transfer or issuance of the Shares to be issued pursuant to the Restricted Stock Units has been registered under the Securities Act or has been registered or qualified under the securities laws of any state, the Company may impose additional restrictions upon the sale, pledge, or other transfer of the Shares (including the placement of appropriate legends on stock certificates and the issuance of stop-transfer instructions to the Company’s transfer agent) if, in the judgment of the Company and the Company’s counsel, such restrictions are necessary in order to achieve compliance with the provisions of the Securities Act, the securities laws of any state, or any other law.

7.Stock Certificate Restrictive Legends. Stock certificates evidencing the Shares issued pursuant to the Restricted Stock Units may bear such restrictive legends as the Company and the Company’s counsel deem necessary under applicable law or pursuant to this Agreement.

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8.Representations, Warranties, Covenants, and Acknowledgments . You hereby agree that in the event the Company and the Company’s counsel deem it necessary or advisable in the exercise of their discretion, the transfer or issuance of the Shares issued pursuant to the Restricted Stock Units may be conditioned upon you making certain representations, warranties, and acknowledgments relating to compliance with applicable securities laws.

9.Voting and Other Rights . Subject to the terms of this Agreement, you shall not have any voting rights or any other rights and privileges of a shareholder of the Company unless and until the Restricted Stock Units are settled in Shares upon your Separation from Service.

10.Authorization to Release Necessary Personal Information .

(a) You hereby authorize and direct the Company to collect, use and transfer in electronic or other form, any personal information (the “Data”) regarding your service, the nature and amount of your compensation and the facts and conditions of your participation in the Plan (including, but not limited to, your name, home address, telephone number, date of birth, social security number (or any other social or national identification number), compensation, nationality, job title, number of Shares held and the details of all Awards or any other entitlement to Shares awarded, cancelled, exercised, vested, unvested or outstanding) for the purpose of implementing, administering and managing your participation in the Plan. You understand that the Data may be transferred to the Company or any of its Subsidiaries, or to any third parties assisting in the implementation, administration and management of the Plan, including any requisite transfer to a broker or other third party assisting with the administration of these Restricted Stock Units under the Plan or with whom Shares acquired pursuant to these Restricted Stock Units or cash from the sale of such shares may be deposited. You acknowledge that recipients of the Data may be located in different countries, and those countries may have data privacy laws and protections different from those in the country of your residence. Furthermore, you acknowledge and understand that the transfer of the Data to the Company or any of its Subsidiaries, or to any third parties is necessary for your participation in the Plan.

(b) Prior to the time that the Restricted Stock Units are settled in Shares upon your Separation from Service, you shall have no rights other than those of a general creditor of the Company. The Restricted Stock Units represent an unfunded and unsecured obligation of the Company.

(c) You may at any time withdraw the consents herein by contacting the Company’s local human resources representative in writing. You further acknowledge that withdrawal of consent may affect your ability to exercise or realize benefits from these Restricted Stock Units, and your ability to participate in the Plan.

11.Governing Law . This Agreement shall be governed by and construed in accordance with the laws of the State of California without regard to the conflict of laws principles thereof.

12.Notices . Any notice required or permitted under the terms of this Agreement shall be in writing and shall be deemed sufficient when delivered personally or sent by confirmed email, telegram, or fax or forty-eight (48) hours after being deposited in the U.S. mail, as certified or registered mail, with postage prepaid, and addressed to the Company at the Company’s principal corporate offices or to you at the address maintained for you in the Company’s records or, in either case, as subsequently modified by written notice to the other party.

13.Binding Effect . Subject to the limitations set forth in this Agreement, this Agreement shall be binding upon, and inure to the benefit of, the executors, administrators, heirs, legal representatives, successors, and assigns of the parties hereto.

14.Severability . If any provision of this Agreement is held to be unenforceable for any reason, it shall be adjusted rather than voided, if possible, in order to achieve the intent of the parties to the extent possible. In any event, all other provisions of this Agreement shall be deemed valid and enforceable to the full extent possible.

DATED:

CISCO SYSTEMS, INC.

By:

Title:

GRANTEE

2

(Effective Beginning February 2013)

NON-EMPLOYEE DIRECTOR ELECTION UNDER THE

CISCO SYSTEMS, INC. 2005 STOCK INCENTIVE PLAN

INITIAL EQUITY AWARD

I, ________________________________, being a prospective newly elected or appointed non-employee member of the Board of Directors of Cisco Systems, Inc. (the “Company”) hereby (check one):

(i) ___ ELECT or (ii) ___ DO NOT ELECT to defer the settlement of my total initial restricted stock unit award anticipated to be granted under the 2005 Stock Incentive Plan (the “Plan”) on the date of my election or appointment in connection with my initial election or appointment as a non-employee member of the Board of Directors of the Company.

This election will be effective only if received by Cisco's Legal Department on or before the date of my election or appointment.

If I do not elect to defer the settlement of my initial restricted stock unit grant, my initial restricted stock unit grant will be automatically settled in shares of the Company's common stock on, or as soon as practicable after, the below described vesting date of the restricted stock unit grant.

My initial restricted stock unit grant will vest in full at the Company's Annual Meeting of Shareholders following my initial election or appointment date (subject to acceleration in certain cases), as more fully set forth in the Stock Unit Agreement. I understand that if my “separation from service” within the meaning of Section 409A of the Internal Revenue Code (“Separation from Service”) occurs before my restricted stock unit grant vests, the grant will be forfeited.

I understand that if I elect to defer the settlement of my initial restricted stock unit grant, the grant will not be settled in shares of the Company's common stock upon the above-described vesting date, but instead will be settled in shares of the Company's common stock on, or as soon as practicable after, my Separation from Service (which generally will be the date my service as a member of the Board of Directors of the Company terminates).

I understand that if I elect to defer the settlement of my initial restricted stock unit grant, dividends or dividend equivalents will not accrue during the deferral period.

I understand that my receipt of shares of the Company's common stock pursuant to any deferred stock unit grant will be taxed as ordinary income to me based on the value of the shares on the date the deferred stock unit grant is settled and I receive shares of the Company's common stock.

Signature of Non-Employee Director                Date

* Because individual circumstances vary, Cisco Systems, Inc. can not provide tax advice and you should consult with your own tax advisor regarding the income tax consequences of your potential elections.

(Effective December 2014)

NON-EMPLOYEE DIRECTOR ELECTIONS

ANNUAL RETAINER & EQUITY AWARD

ANNUAL RETAINER

The alternatives for the fiscal ________ annual retainer (anticipated to be $75,000) for non-employee members of the Board of Directors of Cisco Systems, Inc. (the “Company”) are:

• a non-deferred cash payment (default option),

• a deferred cash payment under the Company’s Deferred Compensation Plan (the “DCP”),

• a vested stock grant under the 2005 Stock Incentive Plan (the “Plan”), and/or

• a vested deferred stock unit grant under the Plan.

If you make no elections below, you will receive your full annual retainer in non-deferred cash.

I, being a non-employee member of the Board of Directors of the Company, hereby make the below elections with respect to my annual retainer for the next year of Board service commencing at the next Annual Meeting of Shareholders. (The Election Amount must total 100%.)

Alternative	Election Amount (0% to 100%, in increments of 25%)	Election under the DCP Separation from Service
Non-Deferred Cash (default option)	% (e.g. 0%, 25%, 50%, 75% or 100%)	N/A
Deferred Cash under the Deferred Compensation Plan	%	I elect to receive my DCP account balance (choose one of the options below): o  as soon as practicable after my “Separation from Service” o as soon as practicable in the calendar year following the calendar year of my “Separation from Service”
Vested Stock Grant	%	N/A
Vested Deferred Stock Unit Grant	%	N/A
TOTAL	100%

I understand the following:

• If I elect to receive deferred cash under the DCP:

◦ I authorize the Company to share my personal information with the third-party DCP administrator so that the DCP administrator can begin the enrollment process in order for me to make investment and beneficiary elections pursuant to the terms of the DCP.

◦ I will receive my DCP account balance in a cash lump sum, taxable as ordinary income, pursuant to my election above. If I make no election, I will receive my DCP account balance as soon as practicable after my “Separation from Service” within the meaning under Section 409A of the Internal Revenue Code, which generally will be the date my service as a member of the Board of Directors of the Company terminates.

• If I elect to receive a vested stock grant, the shares will be granted on the date of the Annual Meeting of Shareholders based on the closing value of the Company’s common stock on such date (the “Fair Market Value”), the shares will be taxed as ordinary income to me based on the Fair Market Value, and I will receive the shares as soon as practicable after that date.

• If I elect to receive a vested deferred stock unit grant:

◦ The deferred stock unit grant will be granted on the date of the Annual Meeting of Shareholders based on the Fair Market Value.

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◦ The deferred stock unit grant will be settled in shares of the Company’s common stock on, or as soon as practicable after, my Separation from Service.

◦ Dividend equivalents will accrue on the vested deferred stock unit grant and will be credited as additional deferred stock units to be settled in additional shares of the Company’s common stock on, or as soon as practicable after, my Separation from Service.

◦ Receipt of shares of the Company’s common stock pursuant to the deferred stock unit grant will be taxed as ordinary income to me based on the value of the shares on the date the deferred stock unit grant is settled and I receive shares of the Company’s common stock.

[ANNUAL EQUITY AWARD ELECTION ON NEXT PAGE]

2

ANNUAL EQUITY AWARD

I further (check one) (i) oELECT or (ii) oDO NOT ELECT to defer the settlement of my total annual restricted stock unit award anticipated to be granted under the 2005 Stock Incentive Plan (the “Plan”) on the date of the next Annual Meeting of Shareholders.

I understand the following:

• If I do not elect to defer the settlement of my annual restricted stock unit grant, the grant will be automatically settled in shares of the Company’s common stock on, or as soon as practicable after, the vesting of the grant upon the completion of one year of Board service following the date of grant (subject to acceleration in certain cases), as more fully set forth in the Stock Unit Agreement.

• If my Separation from Service occurs before my annual restricted stock unit grant vests, the grant will be forfeited.

• If I elect to defer the settlement of my annual restricted stock unit grant:

◦ The grant will not be settled in shares of the Company’s common stock upon the above-described vesting date, but instead will be deferred and settled in shares of the Company’s common stock on, or as soon as practicable after, my Separation from Service.

◦ Dividend equivalents will accrue after the deferred stock unit grant vests and will be credited as additional deferred stock units to be settled in additional shares of the Company’s common stock on, or as soon as practicable after, my Separation from Service.

◦ Receipt of shares of the Company’s common stock pursuant to any deferred stock unit grant will be taxed as ordinary income to me based on the value of the shares on the date the deferred stock unit grant is settled and I receive shares of the Company’s common stock.

* * * * *

I understand that these elections will be effective only if received by _____________________________ on or before ____________ [December 31, [PRECEDING YEAR]].

Signature of Non-Employee DirectorDate

* Because individual circumstances vary, Cisco Systems, Inc. cannot provide tax advice and you should consult with your own tax advisor regarding the income tax consequences of your potential elections.

3

(Effective Beginning February 2013

and Prior to December 2014)

NON-EMPLOYEE DIRECTOR ELECTION UNDER THE

CISCO SYSTEMS, INC. 2005 STOCK INCENTIVE PLAN

ANNUAL RETAINER & EQUITY AWARD

ANNUAL RETAINER

I, ________________________________, being a non-employee member of the Board of Directors of Cisco Systems, Inc. (the “Company”) hereby make the following election.

Please choose (a) or (b) below.

(a) _____ I elect to receive my full annual retainer for the next year of Board service commencing at the next Annual Meeting of Shareholders in cash.

(b) _____ I elect to receive _____% (insert a percentage between 25% and 100%) of my total annual retainer for the next year of Board service commencing at the next Annual Meeting of Shareholders, in the form of:

Please choose either (i) or (ii) below.

(i) ____ fully vested shares, which will be given to me under the 2005 Stock Incentive Plan (the “Plan”) on November __, 20__ based on the closing value of the Company's common stock on that date (the “Fair Market Value”); OR

(ii) ____ a fully vested deferred stock unit grant which will be granted under the Plan on November __, 20__ based on the Fair Market Value.

I understand that, to the extent I do not elect to receive all or any portion of my annual retainer in the form of either (i) shares or (ii) a deferred stock unit grant, I will receive such retainer in cash on, or as soon as practicable after, the date of the Annual Meeting of Shareholders on __________, 20__. If I make no election, I will receive my full annual retainer in cash.

I understand that, if I elect to receive shares, I will receive the shares on, or as soon as practicable after, the date of the annual shareholder meeting and that my receipt of shares will be taxed as ordinary income to me based on the value of the shares on the date of grant.

I understand that, if I elect to receive a deferred stock unit grant, any such grant will be settled in shares of the Company's common stock on, or as soon as practicable after, my “separation from service” within the meaning of Section 409A of the Internal Revenue Code (which generally will be the date my service as a member of the Board of Directors of the Company terminates).

I understand that if I elect to receive a deferred stock unit grant, dividends or dividend equivalents will not accrue during the deferral period.

I understand that my receipt of shares of the Company's common stock pursuant to any deferred stock unit grant will be taxed as ordinary income to me based on the value of the shares on the date the deferred stock unit grant is settled and I receive shares of the Company's common stock.

1

ANNUAL EQUITY AWARD

I further (check one) (i) ___ ELECT or (ii) ___ DO NOT ELECT to defer the settlement of my total annual restricted stock unit award anticipated to be granted under the 2005 Stock Incentive Plan (the “Plan”) on __________, 20__ immediately following the Company's 20__ Annual Meeting of Shareholders.

If I do not elect to defer the settlement of my annual restricted stock unit grant, the above-mentioned annual restricted stock unit grant will be automatically settled in shares of the Company's common stock on, or as soon as practicable after, the vesting of the restricted stock unit grant upon the completion of one year of Board service following the date of grant (subject to acceleration in certain cases), as more fully set forth in the Stock Unit Agreement. I understand that if my “separation from service” within the meaning of Section 409A of the Internal Revenue Code (“Separation from Service”) occurs before my restricted stock unit grant vests, the grant will be forfeited.

I understand that if I elect to defer the settlement of the above-mentioned annual restricted stock unit grant, the grant will not be settled in shares of the Company's common stock upon the above-described vesting date, but instead will be settled in shares of the Company's common stock on, or as soon as practicable after, my Separation from Service (which generally will be the date my service as a member of the Board of Directors of the Company terminates).

I understand that if I elect to defer the settlement of my annual restricted stock unit grant, dividends or dividend equivalents will not accrue during the deferral period.

I understand that my receipt of shares of the Company's common stock pursuant to any deferred stock unit grant will be taxed as ordinary income to me based on the value of the shares on the date the deferred stock unit grant is settled and I receive shares of the Company's common stock.

I understand that these elections will be effective only if received by _____________________________ on or before ____________ [December 31, [PRECEDING YEAR]].

Signature of Non-Employee Director                Date

* Because individual circumstances vary, Cisco Systems, Inc. can not provide tax advice and you should consult with your own tax advisor regarding the income tax consequences of your potential elections.

2

CISCO SYSTEMS, INC.

VESTING ACCELERATION POLICY

FOR

DEATH AND TERMINAL ILLNESS

AS

AMENDED SEPTEMBER 8, 2011

Unless and until the Compensation & Management Development Committee of the Board of Directors of Cisco Systems, Inc. determines otherwise, the following policy shall be applied to all equity awards issued under any equity plan maintained Cisco or any Cisco subsidiary, including equity awards and/or equity plans assumed by Cisco in connection with its acquisition of companies, and held by any employee of Cisco or any Cisco subsidiary (each such award shall be referred to herein as an “equity award”), except to the extent that the application of such policy would be prohibited by the applicable equity plan, equity award agreement or any applicable law, rule or regulation.

For purposes of this policy:

• the value of stock options and stock appreciation rights is based on the difference between the exercise price of the equity awards and the closing price of Cisco’s stock on the date of the employee’s death or terminal illness, as applicable, or if such day is not a trading day, the last trading day prior to the date of death or terminal illness, as applicable; and

• the value of stock grants, stock units, and unvested shares previously acquired pursuant to equity awards (such shares are referred to herein as “unvested equity award shares”) is based on the difference between the purchase price, if any, and the closing price of Cisco’s stock on the date of the employee’s death or terminal illness, as applicable, or if such day is not a trading day, the last trading day prior to the date of death or terminal illness, as applicable;

• “unvested equity award shares” includes outstanding and unvested performance-based restricted stock or stock unit awards and the accelerated vesting of such awards will be deemed to occur at target levels, subject to the specified limits below; and

• to the extent the vesting of any performance-based restricted stock or stock unit award is accelerated pursuant to this policy, the award will be settled upon the death or terminal illness of an employee, as the case may be, except that if the applicable award is subject to Section 409A of the Internal Revenue Code (“Code Section 409A”) and such terminal illness does not qualify as a “Disability” within the meaning of Code Section 409A, then the award will instead be settled on the fixed payment date following the end of the performance period on which the applicable award is normally paid out.

ACCELERATION UPON DEATH OF EMPLOYEE

Upon the death of an employee, Cisco will accelerate the vesting of the employee’s outstanding equity awards and any unvested equity award shares up to a specified limit based on the value of the equity awards and/or shares on the date of death. The limit on the amount of accelerated vesting is the greater of: (a) one-hundred percent (100%) of the unvested equity awards and/or unvested equity award shares up to a total value of $10 million; or (b) up to one year of vesting from the date of death as to all unvested equity awards and/or unvested equity award shares. For example, if an employee held unvested options for 100,000 shares with an exercise price of $1 which would vest in four annual installments of 25,000 shares, and the closing price of Cisco’s stock on the date of the employee’s death was $101, all 100,000 of the shares would become vested (100,000 shares x $100 (the difference between $101 and $1) = $10,000,000).

ACCELERATION UPON TERMINAL ILLNESS OF EMPLOYEE

Upon the terminal illness of an employee, Cisco will accelerate the vesting of the employee’s outstanding equity awards and any unvested equity award shares up to a specified limit based on the value of the equity awards and/or shares on the date of the terminal illness. An employee will be considered terminally ill upon the approval by Cisco’s employee life insurance provider of the accelerated life insurance benefit which indicates 12 months or less to live. When a request is made to accelerate the vesting of an employee’s outstanding equity awards and early life insurance payouts are not also requested, an employee will be considered terminally ill upon the approval by Cisco’s external, independent medical review vendor (which may include Cisco’s employee life insurance provider). The date of terminal illness will be the date the determination is made by Cisco’s employee life insurance provider or Cisco’s external, independent medical review vendor. The limit on the amount of accelerated vesting is the greater of: (a) one-hundred percent (100%) of the unvested equity awards and/or unvested equity award shares up to a total value of $10 million; or (b) up to one year of vesting from the date of the terminal illness as to all unvested equity awards and/or unvested equity award shares. For example, if an employee holds unvested options for 100,000 shares with an exercise price of $1 which would vest in four annual installments of 25,000 shares, and the closing price of Cisco’s stock on the date that the employee is determined to be terminally ill was $101, all 100,000 of the shares would become vested (100,000 shares x $100 (the difference between $101 and $1) = $10,000,000).

CISCO SYSTEMS, INC.

VESTING POLICY

FOR

LEAVES OF ABSENCE

Unless and until the Compensation & Management Development Committee of the Board of Directors of Cisco Systems, Inc. determines otherwise, the following policy shall be applied to all equity awards issued under any equity plan maintained Cisco or any Cisco subsidiary, including equity awards and/or equity plans assumed by Cisco in connection with its acquisition of companies, and held by any employee of Cisco or any Cisco subsidiary (each such award shall be referred to herein as an “equity award”), except to the extent that the application of such policy would be prohibited by the applicable equity plan, equity award agreement or any applicable law, rule or regulation.

(Effective until approximately November 2008)

SUSPENSION OF VESTING UPON AUTHORIZED LEAVE OF ABSENCE

The exercise or vesting schedule in effect for any outstanding equity award and any unvested shares previously acquired pursuant to any equity award (such shares referred to herein as “unvested equity award shares”) held by an employee at the time of the employee’s commencement of an authorized leave of absence shall be suspended as of the first day of the authorized leave of absence, and the equity award and any unvested equity shares shall not vest and/or become exercisable for any additional shares during the period the employee remains on such leave of absence.

(Effective in or around November 2008)

90 DAYS CONTINUED VESTING ON AUTHORIZED LEAVES OF ABSENCE

The exercise or vesting schedule in effect for any outstanding equity award and any unvested shares previously acquired pursuant to any equity award (such shares referred to herein as “unvested equity award shares”) held by an employee at the time of the employee’s commencement of an authorized leave of absence shall continue to vest and/or become exercisable in accordance with the vesting schedule set forth in the applicable equity award agreement during the period the employee remains on such authorized leave of absence; provided that, in no event shall any employee be entitled to vest for more than 90 days of authorized leaves of absence during any rolling 12-month period (the “LOA Limit”).

If an employee exceeds the LOA Limit during any rolling 12-month period, the unvested equity award shares held by such an employee shall be suspended immediately following the expiration of the LOA Limit and the equity award and any unvested equity shares shall not vest and/or become exercisable for any additional shares during the remainder of the rolling 12-month period.

CISCO SYSTEMS, INC.

TRANSFER POLICY

FOR

DIVORCE

Unless and until the Compensation & Management Development Committee of the Board of Directors of Cisco Systems, Inc. determines otherwise, the following policy shall be applied to all equity awards issued under any equity plan maintained Cisco or any Cisco subsidiary, including equity awards and/or equity plans assumed by Cisco in connection with its acquisition of companies, and held by any employee of Cisco or any Cisco subsidiary (each such award shall be referred to herein as an “equity award”), except to the extent that the application of such policy would be prohibited by the applicable equity plan, equity award agreement or any applicable law, rule or regulation.

PROHIBITION ON TRANSFER OF EQUITY AWARDS UPON DIVORCE

Except as provided below, equity awards and any unvested shares acquired pursuant to equity awards shall not be anticipated, assigned, attached, garnished, optioned, transferred or made subject to any creditor’s process in connection with the divorce of the holder of such equity award or shares. Equity awards and any unvested shares acquired pursuant to equity awards may be transferred by an executive officer of Cisco only to the extent required by a domestic relations order, as defined by the Internal Revenue Code or Title I of the Employee Retirement Income Security Act, or the rules thereunder, in settlement of marital property rights by any court of competent jurisdiction.

EX-10.5

Cisco Systems, Inc.                                 

2009 Deferred Compensation Plan

Exhibit 10.5

Amended and Restated

Effective January 1, 2013

Cisco Systems, Inc.                                 

2009 Deferred Compensation Plan

		TABLE OF CONTENTS
			Page
ARTICLE 1		DEFINITIONS	1
ARTICLE 2		SELECTION, ENROLLMENT, ELIGIBILITY	4
	2.1	Selection by 401(k) Administration Committee	4
	2.2	Enrollment and Eligibility Requirements; Commencement of Participation	4
ARTICLE 3		DEFERRAL COMMITMENTS/COMPANY CONTRIBUTION AMOUNTS/	5
		COMPANY MATCHING AMOUNTS/ VESTING/CREDITING/TAXES
	3.1	Annual Deferral Amount	5
	3.2	Maximum Deferral	6
	3.3	Election to Defer; Effect of Election Form	6
	3.4	Withholding and Crediting of Annual Deferral Amounts	7
	3.5	Company Matching Amount	7
	3.6	Discretionary Company Contribution Amount	7
	3.7	Crediting of Amounts after Benefit Distribution	7
	3.8	Vesting	8
	3.9	Crediting/Debiting of Account Balances	8
	3.10	FICA and Other Taxes	9
ARTICLE 4		SCHEDULED DISTRIBUTION; UNFORESEEABLE EMERGENCIES	10
	4.1	Scheduled Distribution	10
	4.2	Postponing Scheduled Distributions	10
	4.3	Other Benefits Take Precedence Over Scheduled Distributions	10
	4.4	Scheduled Distributions and Former Scientific-Atlanta Participants	10
	4.5	Unforeseeable Emergencies	11
ARTICLE 5		TERMINATION BENEFIT	11
	5.1	Termination Benefit	11

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	5.2	Payment of Termination Benefit	11
	5.3	Payment of Termination Benefit to Former Scientific-Atlanta Participants	12
ARTICLE 6		DISABILITY BENEFIT	12
	6.1	Disability Benefit	12
	6.2	Payment of Disability Benefit	12
	6.3	Payment of Disability Benefit to Former Scientific-Atlanta Participants	13
ARTICLE 7		DEATH BENEFIT	13
	7.1	Death Benefit	13
	7.2	Payment of Death Benefit	13
	7.3	Payment of Death Benefit to Former Scientific-Atlanta Participants	13
ARTICLE 8		BENEFICIARY DESIGNATION	13
	8.1	Beneficiary	13
	8.2	Beneficiary Designation; Change; Spousal Consent	14
	8.3	Acknowledgment	14
	8.4	No Beneficiary Designation	14
	8.5	Doubt as to Beneficiary	14
	8.6	Discharge of Obligations	14
ARTICLE 9		LEAVE OF ABSENCE	14
	9.1	Paid Leave of Absence	14
	9.2	Unpaid Leave of Absence	15
	9.3	Leaves Resulting in Separation From Service	15
ARTICLE 10		TERMINATION OF PLAN, AMENDMENT OR MODIFICATION	15
	10.1	Termination of Plan	15
	10.2	Amendment	15

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	10.3	Effect of Payment	15
ARTICLE 11		ADMINISTRATION	15
	11.1	Duties	15
	11.2	Agents	16
	11.3	Binding Effect of Decisions	16
	11.4	Indemnity of Committee	16
	11.5	Employer Information	16
ARTICLE 12		OTHER BENEFITS AND AGREEMENTS	16
	12.1	Coordination with Other Benefits	16
ARTICLE 13		CLAIMS PROCEDURES	17
	13.1	Presentation of Claim	17
	13.2	Notification of Decision	17
	13.3	Review of a Denied Claim	17
	13.4	Decision on Review	18
	13.5	Legal Action	18
ARTICLE 14		MISCELLANEOUS	18
	14.1	Status of Plan	18
	14.2	Unsecured General Creditor	18
	14.3	Employer’s Liability	18
	14.4	Nonassignability	18
	14.5	Not a Contract of Employment	19
	14.6	Furnishing Information	19
	14.7	Terms	19
	14.8	Captions	19

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14.9	Governing Law	19
14.10	Notice	19
14.11	Successors	20
14.12	Spouse’s Interest	20
14.13	Validity	20
14.14	Incompetent	20
14.15	Court Order	20
14.16	Distribution in the Event of Income Inclusion under Code Section 409A	20
14.17	Deduction Limitation on Benefit Payments	20

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CISCO SYSTEMS, INC.

2009 DEFERRED COMPENSATION PLAN

Amended and Restated

Effective January 1, 2013

Purpose

The purpose of this Plan is to provide specified benefits to a select group of management or highly compensated Employees who contribute materially to the continued growth, development and future business success of Cisco Systems, Inc., a California corporation, and its subsidiaries, if any, that participate in this Plan. This Plan shall be unfunded for tax purposes and for purposes of Title I of ERISA. This Plan is intended to comply with all applicable law, including Code Section 409A, and shall be operated and interpreted in accordance with this intention. Effective January 1, 2009, this Plan was amended and restated to reflect the Plan's merger with the Scientific-Atlanta Executive Deferred Compensation Plan, as amended and restated, effective May 15, 2002 (the “SA Grandfathered Plan”) and the Scientific-Atlanta 2005 Executive Deferred Compensation Plan, as amended and restated, effective January 1, 2008 (the “SA Post-2004 Plan”). Effective January 1, 2013 this Plan is hereby amended and restated to make certain changes to the administrative provisions of the Plan.

ARTICLE 1

Definitions

For purposes of this Plan, unless otherwise clearly apparent from the context, the following phrases or terms shall have the following indicated meanings:

1.1 “Account Balance” shall mean, with respect to a Participant, an entry on the records of the Employer equal to the sum of (i) the Deferral Account balance and (ii) the Company Contributions Account balance. The Account Balance shall be a bookkeeping entry only and shall be utilized solely as a device for the measurement and determination of the amounts to be paid to a Participant, or his or her designated Beneficiary, pursuant to this Plan.

1.2 “Annual Deferral Amount” shall mean that portion of a Participant's Base Salary, Bonus and Commissions that a Participant defers in accordance with Article 3 for any one Plan Year.

1.3 “Base Salary” shall mean the annual cash compensation relating to services performed during any calendar year, excluding distributions from nonqualified deferred compensation plans, Bonuses, Commissions, overtime, fringe benefits, stock options and other equity awards, relocation expenses, incentive payments, non-monetary awards, and automobile and other allowances paid to a Participant for employment services rendered (whether or not such allowances are included in the Employee's gross income). Base Salary shall be calculated before reduction for compensation voluntarily deferred or contributed by the Participant pursuant to all qualified or nonqualified plans of any Employer and shall be calculated to include amounts not otherwise included in the Participant's gross income under Code Sections 125, 132, 402(e)(3), 402(h), or 403(b) pursuant to plans or arrangements established by any Employer; provided, however, that all such amounts will be included in compensation only to the extent that had there been no such plan, the amount would have been payable in cash to the Employee. Notwithstanding anything in this Plan to the contrary,

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“Base Salary” shall not include any amount paid pursuant to a disability plan or pursuant to a disability insurance policy.

1.4 “Beneficiary” shall mean one or more persons, trusts, estates or other entities, designated in accordance with Article 8, that are entitled to receive benefits under this Plan upon the death of a Participant.

1.5 “Beneficiary Designation Form” shall mean the form, which may be in electronic format, that a Participant completes to designate one or more Beneficiaries in accordance with such procedures established by the Company.

1.6 “Benefit Distribution Date” shall mean the date that the distribution of all or a portion of a Participant's vested Account Balance becomes payable under the Plan. A Participant's Benefit Distribution Date shall be determined based on the event giving rise to the distribution as more fully described in Articles 4 through 7.

1.7 “Board” shall mean the board of directors of the Company.

1.8 “Bonus” shall mean any compensation, earned and payable to a Participant under any incentive pay program other than those programs designated by the Company as ineligible for deferral under the Plan.

1.9 “Claimant” shall have the meaning set forth in Section 13.1.

1.10 “Code” shall mean the Internal Revenue Code of 1986, as it may be amended from time to time. The definition of “Code” shall also include related guidance, rules and regulations issued by the U.S. Department of the Treasury and Internal Revenue Service thereunder.

1.11 “Commissions” shall mean pay other than Base Pay or Bonuses which is designated as commission payments under an Employer's payroll systems.

1.12 “Committee” shall mean the Compensation and Management Development Committee of the Board.

1.13 “Company” shall mean Cisco Systems, Inc., a California corporation, and any successor to all or substantially all of the Company's assets or business. With regard to the administration of the Plan, “Company” shall mean the 401(k) Plan Administration Committee (the “401(k) Administration Committee”).

1.14 “Company Contributions Account” shall mean (i) the sum of all of a Participant's Company Matching Amounts, plus (ii) the sum of all Discretionary Company Contributions, plus (iii) amounts credited or debited to the Participant's Company Contributions Account in accordance with this Plan, less (iv) all distributions made to the Participant or his or her Beneficiary pursuant to this Plan that relate to the Participant's Company Contributions Account.

1.15 “Company Matching Amount” shall mean, for any one Plan Year, the amount determined in accordance with Section 3.5.

1.16 “Death Benefit” shall mean the benefit set forth in Article 7.

1.17 “Deferral Account” shall mean (i) the sum of all of a Participant's Annual Deferral Amounts, plus (ii) amounts credited or debited to the Participant's Deferral Account in accordance with this Plan, less (iii) all distributions made to the Participant or his or her Beneficiary pursuant to this Plan that relate to his or her Deferral Account.

1.18 “Disability” or “Disabled” shall have the meaning set forth in Code Section 409A.

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1.19 “Disability Benefit” shall mean the benefit set forth in Article 6.

1.20 “Discretionary Company Contribution Amount” shall mean, for any one Plan Year, the amount determined in accordance with Section 3.6.

1.21 "Effective Date" shall mean January 1, 2013.

1.22 “Election Form” shall mean the form, which may be in electronic format, that a Participant completes in accordance with such procedures established by the Company.

1.23 “Employee” shall mean a person who is an employee of any Employer.

1.24 “Employer(s)” shall mean the Company and/or any of its subsidiaries (now in existence or hereafter formed or acquired) that have been selected by the Committee to participate in the Plan and have adopted the Plan as a participating Employer.

1.25 “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as it may be amended from time to time. The definition of “ERISA” shall also include related guidance, rules and regulations issued by the U.S. Department of Labor thereunder.

1.26 “401(k) Plan” shall mean, with respect to an Employer, a plan qualified under Code Section 401(a) that contains a cash or deferral arrangement described in Code Section 401(k), adopted by the Employer, as it may be amended from time to time, or any successor thereto.

1.27 “Installment Method” shall be an installment payment over the number of years selected by the Participantin accordance with this Plan. Such amounts shall be paid in quarterly, semi-annual or annual payments (over a period not to exceed ten (10) years). The amount of each installment shall be calculated by dividing the amount then subject to the installment payment by the number of installments then remaining to be made. The amount subject to installment payments that has not yet been paid shall continue to be credited/debited with additional amounts in accordance with Section 3.9. For purposes of this Plan, the right to receive benefit payments in installment payments shall be treated as the entitlement to a single payment.

1.28 “Participant” shall mean any Employee who is on the United States payroll of an Employer and (i) who is selected to participate in the Plan, (ii) who submits an executed Plan Agreement and Election Form, and (iii) whose Plan Agreement has not terminated.

1.29 “Plan” shall mean the Cisco Systems, Inc. 2009 Deferred Compensation Plan, which shall be evidenced by this instrument and by each Plan Agreement, as they may be amended from time to time.

1.30 “Plan Agreement” shall mean a written agreement, as may be amended from time to time, which is entered into by and between an Employer and a Participant. Each Plan Agreement executed by a Participant and the Participant's Employer shall provide for the entire benefit to which such Participant is entitled under the Plan; should there be more than one Plan Agreement, the Plan Agreement bearing the latest date of acceptance by the Employer shall supersede all previous Plan Agreements in their entirety and shall govern such entitlement. The terms of any Plan Agreement may be different for any Participant, and any Plan Agreement may provide additional benefits not set forth in the Plan or limit the benefits otherwise provided under the Plan; provided, however, that any such additional benefits or benefit limitations must be agreed to by both the Employer and the Participant.

1.31 “Plan Year” shall mean a period beginning on January 1 of each calendar year and continuing through December 31 of such calendar year.

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1.32 “SA Grandfathered Plan” shall mean the Scientific-Atlanta Executive Deferred Compensation Plan, as amended and restated effective May 15, 2002.

1.33 “SA Post-2004 Plan” shall mean the Scientific-Atlanta 2005 Executive Deferred Compensation Plan, as amended and restated effective January 1, 2008.

1.34 “Scheduled Distribution” shall mean the distribution set forth in Section 4.1.

1.35 “Supplement A” shall mean the supplement to this Plan governing the time and form of payments for participants of the SA Post-2004 Plan, with amounts deferred between January 1, 2005 and December 31, 2008.

1.36 “Supplement B” shall mean the supplement to this Plan governing the time and form of payments for participants of the SA Grandfathered Plan, with amounts deferred before January 1, 2005.

1.37 “Termination Benefit” shall mean the benefit set forth in Article 5 which shall be paid following a Participant's Termination of Employment.

1.38 “Termination of Employment” shall mean the separation from service with all Employers, voluntarily or involuntarily, for any reason other than Disability or death, as determined in accordance with Code Section 409A. For this purpose, the definition of “service recipient” for purposes of determining whether a separation from service has occurred for purposes of Code Section 409A shall be determined by utilizing the twenty percent (20%) tests described in section 1.409A-1(h) of the Code Section 409A regulations to the extent permitted under such regulations.

1.39 “Unforeseeable Emergency” shall mean a severe financial hardship of the Participant or his or her Beneficiary resulting from (i) an illness or accident of the Participant or Beneficiary, the Participant's or Beneficiary's spouse, or the Participant's or Beneficiary's dependent (as defined in Code Section 152(a)), (ii) a loss of the Participant's or Beneficiary's property due to casualty, or (iii) such other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant or the Participant's Beneficiary.

ARTICLE 2

Selection, Enrollment, Eligibility

2.1 Selection by 401(k) Administration Committee. Participation in the Plan shall be limited to a select group of management or highly compensated Employees. From that group, the 401(k) Administration Committee shall select, in its sole discretion, those individuals who may actually participate in this Plan.

2.2 Enrollment and Eligibility Requirements; Commencement of Participation. As a condition to participation, each selected Employee who is eligible to participate in the Plan effective as of the first day of a Plan Year shall complete a Plan Agreement and an Election Form, prior to the first day of such Plan Year, or such other earlier deadline as may be established by the Company in its sole discretion. In addition, the Company shall establish from time to time such other enrollment requirements as it determines, in its sole discretion, are necessary.

(a) Each selected Employee who is eligible to participate in the Plan shall commence participation in the Plan on the date that the Employee has met all enrollment requirements set forth in this Plan and required by the Company, including completing all required documents within the specified time period(s).

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(b) A newly hired Employee who is selected to participate in the Plan who first becomes a Participant after the beginning of a Plan Year must complete a Plan Agreement and an Election Form within thirty (30) days after he or she first becomes eligible to participate in the Plan, or within such other earlier deadline as may be established by the Company, in its sole discretion, in order to participate for that Plan Year. In such event, such person's participation in this Plan shall not commence earlier than the date determined by the Company pursuant to Section 2.2(a) and such person shall not be permitted to defer under this Plan any portion of his or her Base Salary or Commissions that are paid with respect to services performed prior to his or her participation commencement date, except to the extent permissible under Code Section 409A. Except as otherwise permitted by the Company (and in accordance with Code Section 409A), a Participant described in this Section 2.2(b) shall not be permitted to make a deferral election with respect to Bonuses for the first Plan Year in which he or she is eligible to participate. Subject to the requirements of Section 409A of the Code, a newly hired Employee who is in a classification of Employees otherwise eligible to participate in the Plan shall be eligible to participate in the Plan as of the first business day of the month following the month which contains the Employee's date of hire.

(c) A newly eligible Employee who is selected to participate in the Plan as a result of a promotion, or other change in employment status resulting in the individual first being eligible to participate in the Plan after the beginning of a Plan Year, must complete a Plan Agreement and an Election Form within thirty (30) days after he or she first becomes eligible to participate in the Plan, or within such other earlier deadline as may be established by the Company, in its sole discretion, in order to participate for that Plan Year. In such event, such person's participation in this Plan shall not commence earlier than the date determined by the Company pursuant to Section 2.2(a) and such person shall not be permitted to defer under this Plan any portion of his or her Base Salary or Commissions that are paid with respect to services performed prior to his or her participation commencement date, except to the extent permissible under Code Section 409A. Except as otherwise permitted by the Company (and in accordance with Code Section 409A), a Participant described in this Section 2.2(c) shall not be permitted to make a deferral election with respect to Bonuses for the first Plan Year in which he or she is eligible to participate. Subject to the requirements of Section 409A of the Code, Employees described in this Section 2.2(c) shall first become eligible to participate in the Plan as of the first business day of the month following the month in which the later of (i) the corporate action occurs which results in the Employee first becoming eligible to participate in the Plan; and (ii) the effective date of the Employee's promotion or other change in employment status.

(d) If an Employee fails to meet all requirements contained in this Section 2.2 within the period(s) required, that Employee shall not be eligible to participate in the Plan during such Plan Year.

ARTICLE 3

Deferral Commitments/Company Contribution Amounts/

Company Matching Amounts/ Vesting/Crediting/Taxes

3.1 Annual Deferral Amount. For each Plan Year, a Participant may elect to defer as his or her Annual Deferral Amount, Base Salary, Bonus and/or Commissions pursuant to such rules as may be established by the Company in accordance with Code Section 409A. For the avoidance of doubt,

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a Participant may not defer his or her severance payments (if any) under the Plan. Such Annual Deferral Amount may be subject to a minimum deferral amount established by the Company.

3.2 Maximum Deferral.

(a) Annual Deferral Amount. For each Plan Year, a Participant may elect to defer, as his or her Annual Deferral Amount, Base Salary, Bonus and/or Commissions, pursuant to such rules as may be established by the Company, up to the following maximum percentages for each deferral elected:

Deferral	Maximum Percentage
Base Salary	75%
Bonus	100%
Commissions	100%

(b) Short Plan Year. Notwithstanding the provisions of paragraph (a) above, if a Participant first becomes a Participant after the first day of a Plan Year, the maximum Annual Deferral Amount shall be limited to the amount of compensation not yet earned by the Participant as of the date the Participant submits a Plan Agreement and Election Form, except to the extent permissible under Code Section 409A. Solely to the extent required under Code Section 409A, with respect to compensation that is earned based upon a specified performance period, the Participant's deferral election will apply to the portion of such compensation that is equal to (i) the total amount of compensation for the performance period, multiplied by (ii) a fraction, the numerator of which is the number of days remaining in the performance period after the Participant's deferral election is made, and the denominator of which is the total number of days in the performance period.

3.3 Election to Defer; Effect of Election Form.

(a) Initial Plan Year. In connection with a Participant's commencement of participation in the Plan, the Participant shall make an irrevocable deferral election for the Plan Year in which the Participant commences participation in the Plan, along with such other elections as the Company deems necessary or desirable under the Plan. For these elections to be valid, the Election Form must be completed by the Participant, in accordance with Section 2.2 above.

(b) General Timing Rule for Deferral Elections in Subsequent Plan Years. For each succeeding Plan Year, a Participant may elect to defer Base Salary, Bonus and Commissions, and make such other elections as the Company deems necessary or desirable under the Plan by timely completing a new Election Form, in accordance with the Company's rules and procedures, before December 31^st preceding the Plan Year in which such compensation is earned, or before such other deadline established in accordance with the requirements of Code Section 409A.

Any deferral election(s) made in accordance with this Section 3.3(b) shall be irrevocable; provided, however, that if the Company permits Participants to make deferral elections for “Performance-Based Compensation” (as defined in paragraph (c) below) by the deadline(s) described above, it may, in its sole discretion, and in accordance with Code Section 409A, permit a Participant to subsequently change his or her deferral election for such compensation by submitting an Election Form no later than the deadline established by the Company pursuant to Section 3.3(c) below.

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(c) Performance-Based Compensation. Notwithstanding the provisions of paragraph (a) and (b) above, with respect to Bonus compensation that also qualifies as “Performance-Based Compensation,” the Company may, in its sole discretion, permit an irrevocable deferral election pertaining to such Performance-Based Compensation to be made by timely delivering an Election Form to the Company, in accordance with its rules and procedures, no later than six (6) months before the end of the performance service period and in accordance with Code Section 409A. For this purpose, “Performance-Based Compensation” shall be compensation, the payment or amount of which is contingent on pre-established organizational or individual performance criteria, which satisfies the requirements of Code Section 409A.

(d) Compensation Subject to Risk of Forfeiture. With respect to compensation (i) to which a Participant has a legally binding right to payment in a subsequent year, and (ii) that is subject to a forfeiture condition requiring the Participant's continued services for a period of at least twelve (12) months from the date the Participant obtains the legally binding right, the Company may, in its sole discretion, permit an irrevocable deferral election to be made with respect to such compensation by timely completing an Election Form in accordance with such rules and procedures as the Company may establish no later than the thirtieth (30th) day after the Participant obtains the legally binding right to the compensation, provided that the election is made at least twelve (12) months in advance of the earliest date at which the forfeiture condition could lapse.

3.4 Withholding and Crediting of Annual Deferral Amounts. For each Plan Year, the Base Salary portion of the Annual Deferral Amount shall be withheld from each regularly scheduled Base Salary payroll in equal amounts, as adjusted from time to time for increases and decreases in Base Salary. The Bonus and Commissions portion of the Annual Deferral Amount shall be withheld at the time the Bonus and Commissions would be paid to the Participant, whether or not this occurs during the Plan Year itself. Annual Deferral Amounts shall be credited to a Participant's Deferral Account.

3.5 Company Matching Amount. A Participant's Company Matching Amount (if any) for any Plan Year shall be an amount determined by the Committee, in its sole discretion, based on the amount of deferrals to this Plan and credited to a Participant. The amount (if any) credited to a Participant under this Plan for any Plan Year may be smaller or larger than the amount credited to any other Participant.

3.6 Discretionary Company Contribution Amount. A Participant's Discretionary Company Contribution Amount (if any) for any Plan Year shall be an amount determined by the Committee, in its sole discretion and credited to a Participant. The amount (if any) credited to a Participant under this Plan for any Plan Year may be smaller or larger than the amount credited to any other Participant.

3.7 Crediting of Amounts after Benefit Distribution. Notwithstanding any provision in this Plan to the contrary, should the complete distribution of a Participant's vested Account Balance occur prior to the date on which any portion of (i) the Annual Deferral Amount that a Participant has elected to defer in accordance with Section 3.3, (ii) the Company Matching Amount (if any) or (iii) the Discretionary Company Contribution Amount (if any), would otherwise be credited to the Participant's Account Balance, such amounts shall not be credited to the Participant's Account Balance, but shall be paid to the Participant.

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3.8 Vesting. A Participant shall at all times be one hundred percent (100%) vested in his or her Account Balance unless otherwise specified in the Participant's Plan Agreement, employment agreement or any other agreement entered into between the Participant and his or her Employer, or specified at the time the Committee determines to make a Company Matching Amount or a Discretionary Company Contribution Amount pursuant to Sections 3.5 and 3.6.

3.9 Crediting/Debiting of Account Balances. In accordance with, and subject to, the rules and procedures that are established from time to time by the Company, amounts shall be credited or debited to a Participant's Account Balance in accordance with the following rules:

(a) Measurement Funds. The Participant may elect one or more of the measurement funds selected by the Company, (the “Measurement Funds”) for the purpose of crediting or debiting additional amounts to his or her Account Balance. As necessary, the Company may, in its sole discretion, discontinue, substitute or add a Measurement Fund.

(b) Election of Measurement Funds. A Participant, in connection with his or her initial deferral election in accordance with Section 3.3(a) above, shall elect, on the Election Form, one or more Measurement Fund(s) (as described in Section 3.9(a) above) to be used to determine the amounts to be credited or debited to his or her Account Balance. If a Participant does not elect any of the Measurement Funds as described in the previous sentence, the Participant's Account Balance shall be allocated into the Measurement Fund(s), as determined by the Company, in its sole discretion. The Participant may (but is not required to) elect, by completing an Election Form in accordance with such rules and procedures established by the Company, to add or delete one or more Measurement Fund(s) to be used to determine the amounts to be credited or debited to his or her Account Balance, or to change the portion of his or her Account Balance allocated to each previously or newly elected Measurement Fund. If an election is made in accordance with the previous sentence, it shall apply as of the first business day deemed reasonably practicable by the Company, in its sole discretion, and shall continue thereafter for each subsequent day in which the Participant participates in the Plan, unless changed in accordance with the previous sentence. Notwithstanding the foregoing, the Company, in its sole discretion, may impose limitations on the frequency with which one or more of the Measurement Funds elected in accordance with this Section may be added or deleted by such Participant; furthermore, the Company, in its sole discretion, may impose limitations on the frequency with which the Participant may change the portion of his or her Account Balance allocated to each previously or newly elected Measurement Fund.

(c) Proportionate Allocation. In making any election described in Section 3.9(b) above, the Participant shall specify on the Election Form, in increments of one percent (1%), the percentage of his or her Account Balance or Measurement Fund, as applicable, to be allocated/reallocated.

(d) Crediting or Debiting Method. The performance of each Measurement Fund (either positive or negative) will be determined on a daily basis based on the manner in which such Participant's Account Balance has been hypothetically allocated among the Measurement Funds by the Participant.

(e) No Actual Investment. Notwithstanding any other provision of this Plan that may be interpreted to the contrary, the Measurement Funds are to be used for measurement purposes only, and a Participant's election of any such Measurement Fund, the allocation of his or

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her Account Balance thereto, the calculation of additional amounts and the crediting or debiting of such amounts to a Participant's Account Balance shallnot be considered or construed in any manner as an actual investment of his or her Account Balance in any such Measurement Fund. In the event that the Company in its own discretion decides to invest funds in any or all of the investments on which the Measurement Funds are based, no Participant shall have any rights in or to such investments themselves. Without limiting the foregoing, a Participant's Account Balance shall at all times be a bookkeeping entry only and shall not represent any investment made on his or her behalf by the Company; the Participant shall at all times remain an unsecured creditor of the Company.

(f) Trailing Dividends. In the event that notional dividends are credited after an account has otherwise been fully distributed, if such dividends are attributable to periods on or prior to the valuation date(s) for such distribution (as determined by the Company, in its sole discretion) but are not included in the Participant's distribution(s), the Participant shall be entitled to receive such dividends and they shall be paid in accordance with the procedures established by the Company no later than the time permitted by Treasury Regulation Section 1.409A-3(d); provided, however, that Participants shall not be entitled to any amounts that cannot be paid in accordance with such procedures by such deadline.

3.10 FICA and Other Taxes.

(a) Annual Deferrals, Company Matching Amounts and Discretionary Company Contribution Amounts. For each Plan Year in which an Annual Deferral Amount is being withheld from a Participant or the amount of any Company Matching Amount or Company Discretionary Contribution Amount credited to a Participant's Company Contributions Account becomes vested, the Participant's Employer(s) shall withhold from that portion of the Participant's Base Salary, Bonus and/or Commissions, that is not being deferred, in a manner determined by the Employer(s), the Participant's share of FICA and other employment taxes on such Annual Deferral Amount, Company Matching Amount and Discretionary Company Contribution Amount. If necessary, the Participant's Annual Deferral Amount or the Participant's Company Contributions Account, as applicable, may be reduced to pay such taxes (and associated income tax withholdings) in accordance with Code Section 409A.

(b) Distributions. The Participant's Employer(s) shall withhold from any payments made to a Participant under this Plan (including payments, if any, made pursuant to Section 14.16) all federal, state and local income, employment and other taxes required to be withheld by the Employer(s) in connection with such payments, in amounts and in a manner to be determined in the sole discretion of the Employer(s).

(c) Income Inclusion Under Code Section 409A. In the event that any portion of a Participant's Account is required to be included in income by the Participant prior to receipt of any distribution under this Plan resulting from a violation of the requirements of Code Section 409A, the Participant's Employer shall withhold from such Participant all federal, state and local income, employment and other taxes required to be withheld by the Employer in connection with such income inclusion in amounts and in a manner determined in the sole discretion of the Employer.

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ARTICLE 4

Scheduled Distribution; Unforeseeable Emergencies

4.1 Scheduled Distribution. At the same time that a Participant makes each election to defer an Annual Deferral Amount, the Participant may elect to receive a Scheduled Distribution, in the form of a lump sum payment, from the Plan with respect to all or a portion of the Annual Deferral Amount. The Scheduled Distribution shall be a lump sum payment in an amount that is equal to the portion of the Annual Deferral Amount the Participant elected to have distributed as a Scheduled Distribution, plus amounts credited or debited in the manner provided in Section 3.9 above on that amount, calculated as of the date on or around January 1 of the calendar year in which the Scheduled Distribution becomes payable in accordance with the procedures established by the Company. Subject to the other terms and conditions of this Plan, the Benefit Distribution Date for each Scheduled Distribution elected shall be the date in January of the Plan Year designated by the Participant determined in accordance with the procedures established by the Company. The Plan Year designated by the Participant must be at least two (2) Plan Years after the end of the Plan Year to which the Participant's deferral election described in Section 3.3 relates, unless otherwise provided on an Election Form approved by the Company in its sole discretion. By way of example, if a Scheduled Distribution is elected for Annual Deferral Amounts that are earned in the Plan Year commencing January 1, 2013, the earliest Scheduled Distribution Date that may be designated by a Participant would be in January 2012. In connection with any Company Matching Amount or Discretionary Company Contribution made with respect to any Plan Year, any election made by a Participant pursuant to this Section should also apply to these amounts. Notwithstanding the foregoing sentence, the Company may establish other procedures, consistent with Code Section 409A, for distribution elections pertaining to Company Matching Amounts and Discretionary Company Contribution Amounts.

4.2 Postponing Scheduled Distributions. A Participant may elect to postpone a Scheduled Distribution described in Section 4.1 above, and have such amount paid out on an allowable alternative distribution date designated by the Participant in accordance with this Section 4.2. In order to make this election, the Participant must complete a new Scheduled Distribution Election Form in accordance with such rules and procedures as the Company may establish and in accordance with the following criteria:

(a) Such Scheduled Distribution Election Form must be completed at least twelve (12) months prior to the Participant's previously designated Scheduled Distribution Date;

(b) The new Scheduled Distribution Date selected by the Participant must be at least five years after the previously designated Scheduled Distribution Date; and

(c) The election of the new Scheduled Distribution Date shall have no effect until at least twelve (12) months after the date on which the election is made.

4.3 Other Benefits Take Precedence Over Scheduled Distributions. Should a Benefit Distribution Date occur that triggers a benefit under Articles 5, 6 or 7, any amount that is subject to a Scheduled Distribution election under Section 4.1 shall not be paid in accordance with Section 4.1, but shall be paid in accordance with the other applicable Article. Notwithstanding the foregoing, this Section 4.3 shall be interpreted in a manner that is consistent with Code Section 409A.

4.4 Scheduled Distributions and Former Scientific-Atlanta Participants. Notwithstanding the foregoing, the time and form of payment of a scheduled distribution to a Participant in the SA

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Post-2004 Plan and/or SA Grandfathered Plan shall be determined in accordance with Supplements A and B, respectively.

4.5Unforeseeable Emergencies.

(a) If the Participant experiences an Unforeseeable Emergency, the Participant may petition the Company to receive a partial or full payout from the Plan, subject to the provisions set forth below.

(b) The payout, if any, from the Plan shall not exceed the lesser of (i) the Participant's vested Account Balance, calculated as of the close of business on or around the date on which the amount becomes payable, or (ii) the amount necessary to satisfy the Unforeseeable Emergency, plus amounts necessary to pay Federal, state, or local income taxes or penalties reasonably anticipated as a result of the distribution. Notwithstanding the foregoing, a Participant may not receive a payout from the Plan to the extent that the Unforeseeable Emergency would not be consistent with Code Section 409A.

(c) If a Participant's petition for payout from the Plan is approved, the Participant's Benefit Distribution Date shall occur within thirty (30) days after the beginning of the calendar quarter following the date of such approval (or at such later time permitted under Code Section 409A) and the Participant's deferrals under the Plan shall be terminated as of the date of such approval.

(d) In addition, a Participant's deferral elections under this Plan shall be terminated to the extent the Company determines, in its sole discretion, that termination of such Participant's deferral elections is required pursuant to Treas. Reg. §1.401(k)-1(d)(3) for the Participant to obtain a hardship distribution from an Employer's 401(k) Plan. If the Company determines, in its sole discretion, that a termination of the Participant's deferrals is required in accordance with the preceding sentence, the Participant's deferrals shall be terminated following the date on which such determination is made.

ARTICLE 5

Termination Benefit

5.1 Termination Benefit. A Participant who incurs a Termination of Employment shall receive, as a Termination Benefit of his or her entire vested Account Balance calculated as of the close of business on or around the Participant's Benefit Distribution Date(s), in accordance with the provisions set forth in Section 5.2.

5.2 Payment of Termination Benefit.

(a) At the same time that a Participant makes each election to defer an Annual Deferral Amount, the Participant may elect to receive the Termination Benefit in a lump sum or pursuant to an Installment Method of up to ten (10) years. Participant shall elect a Benefit Distribution Date consistent with Section 5.2(b). In connection with any Company Matching Amount or Discretionary Company Contribution made with respect to any Plan Year, any election made by a Participant pursuant to this Section 5.2 shall also apply to these amounts. Notwithstanding the foregoing sentence, the Company may establish other procedures, consistent with Code Section 409A, for distribution elections pertaining to Company Matching Amounts and Discretionary Company Contribution Amounts. If a Participant does not make any election with respect to the payment of the Termination Benefit, then

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such Participant shall be deemed to have elected to receive the Termination Benefit in a lump sum on the Benefit Distribution Date described in Section 5.2(b)(i).

(b) The following Benefit Distribution Dates may be selected by a Participant at the time he or she makes the Participant's election described in Section 5.2(a):

(i) Within thirty (30) days after the beginning of the first calendar quarter that is at least six (6) months after the Participant's Termination of Employment;

(ii) Within thirty (30) days after the beginning of the first calendar year that is at least six (6) months after the Participant's Termination of Employment; or

(iii) Within thirty (30) days after the beginning of the first calendar quarter elected by the Participant which is between one and five years after the Participant's Termination of Employment.

(c) Notwithstanding any other provision to the contrary, if the Participant has not attained age forty (40) with five (5) years of service on the date of his or her Termination of Employment, the Termination Benefit subject to the annual election shall be paid in a single sum on the Benefit Distribution Date elected for such purposes; provided, however, that the Participant may not elect the Benefit Distribution Date described in Section 5.2(b)(iii) for this purpose. For purposes of this Section 5.2(c), “years of service” shall be determined in the same manner as "vesting service" is determined under the Cisco Systems, Inc. 401(k) Plan.

(d) Notwithstanding anything in this Section 5.2 to the contrary, if the Participant's vested Account Balance on the date of his or her Termination of Employment is less than $100,000, then the distribution elections described in Sections 5.2(a) through 5.2(c) above shall be disregarded and the Participant's entire vested Account Balance shall be paid in a lump sum distribution on the Benefit Distribution Date described in Section 5.2(b)(i), above.

5.3 Payment of Termination Benefit to Former Scientific-Atlanta Participants. Notwithstanding the foregoing, the time and form of payment of the termination benefit to a Participant in the SA Post-2004 Plan and/or SA Grandfathered Plan shall be determined in accordance with Supplements A and B, respectively.

ARTICLE 6

Disability Benefit

6.1 Disability Benefit. Upon a Participant's Disability, the Participant shall receive a Disability Benefit which shall be equal to the Participant's entire vested Account Balance, calculated as of the Participant's Benefit Distribution Date.

6.2 Payment of Disability Benefit.

(a) A Participant, in connection with his or her commencement of participation in the Plan (or more frequently as the Company may prescribe), shall elect on an Election Form to receive the Disability Benefit in a lump sum or pursuant to an Installment Method of up to ten (10) years in accordance with such rules and procedures as the Company may establish. If a Participant does not make any election with respect to the payment of the Disability Benefit, then such Participant shall be deemed to have elected to receive the Disability Benefit in a lump sum. For this purpose, a Participant's Benefit Distribution Date shall be within thirty (30) days, after the beginning of the calendar quarter following the Participant's Disability.

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(b) A Participant may change the form of payment of the Disability Benefit by completing an Election Form in accordance with such rules and procedures established by the Company provided that the election to modify the Disability Benefit shall have no effect until at least twelve (12) months after the date on which the election is made.

All provisions relating to changing the Disability Benefit election under this Section 6.2 shall be interpreted in a manner that is consistent with Code Section 409A.

(c) The lump sum payment shall be made, or installment payments shall commence on the Participant's Benefit Distribution Date (or such later time permitted under Code Section 409A).

(d) Notwithstanding anything in this Article to the contrary, if a Participant's vested Account Balance is less than $100,000 on the date the Participant is determined to be Disabled, then the Participant shall receive payment of his or her entire vested Account Balance within thirty (30) days after the beginning of the calendar quarter following the Participant's Disability.

6.3 Payment of Disability Benefit to Former Scientific-Atlanta Participants. Notwithstanding the foregoing, the time and form of payment of the disability benefit to a Participant in the SA Post-2004 Plan and/or SA Grandfathered Plan shall be determined in accordance with Supplements A and B, respectively.

ARTICLE 7

Death Benefit

7.1 Death Benefit. The Participant's Beneficiary(ies) shall receive a Death Benefit upon the Participant's death which will be equal to the Participant's entire vested Account Balance, calculated as of the close of business as of the Participant's Benefit Distribution Date, which, for this purpose, shall be within thirty (30) days following the beginning of the second calendar quarter following the Participant's death.

7.2 Payment of Death Benefit. The Death Benefit shall be paid to the Participant's Beneficiary(ies) in a lump sum payment on the Participant's Benefit Distribution Date (or such later time permitted under Code Section 409A).

7.3 Payment of Death Benefit to Former Scientific-Atlanta Participants. Notwithstanding the foregoing, the time and form of payment of the death benefit to a Participant in the SA Post-2004 Plan and/or SA Grandfathered Plan shall be determined in accordance with Supplements A and B, respectively.

ARTICLE 8

Beneficiary Designation

8.1 Beneficiary. Each Participant shall have the right, at any time, to designate his or her Beneficiary(ies) (both primary as well as contingent) to receive any benefits payable under the Plan to a beneficiary upon the death of a Participant under such rules as shall be established by the Company. The Beneficiary designated under this Plan may be the same as or different from the Beneficiary designation under any other plan of an Employer in which the Participant participates.

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8.2 Beneficiary Designation; Change; Spousal Consent. A Participant shall designate his or her Beneficiary by completing the Beneficiary Designation Form, and returning it to the Company or its designated agent in accordance with such rules and procedures established by the Company. A Participant shall have the right to change a Beneficiary by completing and otherwise complying with the terms of the Beneficiary Designation Form and the Company's rules and procedures, as in effect from time to time. If the Participant names someone other than his or her spouse as a Beneficiary, the Company may, in its sole discretion, determine that spousal consent is required to be provided in a form designated by the Company, executed by such Participant's spouse and returned to the Company or its designated agent. Upon the proper completion of a new Beneficiary Designation Form, all Beneficiary designations previously filed shall be canceled and the Company shall be entitled to rely on the last Beneficiary Designation Form completed by the Participant in accordance with the applicable rules and procedures adopted with respect to the filing of such forms prior to his or her death.

8.3 Acknowledgment. No designation or change in designation of a Beneficiary shall be effective until completed and submitted in accordance with the rules and procedures established by the Company for this purpose.

8.4 No Beneficiary Designation. If a Participant fails to designate a Beneficiary as provided in Sections 8.1, 8.2 and 8.3 above or, if all designated Beneficiaries predecease the Participant or die prior to complete distribution of the Participant's benefits, then the Participant's designated Beneficiary shall be deemed to be his or her surviving spouse. If the Participant has no surviving spouse, the benefits remaining under the Plan to be paid to a Beneficiary shall be payable to the executor or personal representative of the Participant's estate.

8.5 Doubt as to Beneficiary. If there is any doubt as to the proper Beneficiary to receive payments pursuant to this Plan, the Committee shall have the right, exercisable in its discretion, to cause the Participant's Employer to withhold such payments until this matter is resolved to the Committee's satisfaction.

8.6 Discharge of Obligations. The payment of benefits under the Plan to a Beneficiary shall fully and completely discharge all Employers and the Company from all further obligations under this Plan with respect to the Participant, and that Participant's Plan Agreement shall terminate upon such full payment of benefits.

ARTICLE 9

Leave of Absence

9.1 Paid Leave of Absence. If a Participant is authorized by the Participant's Employer to take a paid leave of absence from the employment of the Employer, and such leave of absence does not constitute a separation from service in accordance with Code Section 409A, (i) the Participant shall continue to be considered eligible for the benefits provided in Articles 4, 5, 6 or 7 in accordance with the provisions of those Articles, and (ii) the Annual Deferral Amountshall continue to be withheld from his or her Base Salary, Bonuses and Commissions during such paid leave of absence in accordance with Section 3.3.

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9.2 Unpaid Leave of Absence. If a Participant is authorized by the Participant's Employer to take an unpaid leave of absence from the employment of the Employer for any reason, and such leave of absence does not constitute a separation from service in accordance with Code Section 409A, such Participant shall continue to be eligible for the benefits provided in Articles 4, 5, 6 or 7 in accordance with the provisions of those Articles. The Participant shall continue his or her deferrals with respect to amounts earned prior to the commencement of the unpaid leave of absence. When the Participant returns to employment, the Participant's deferrals with respect to amounts earned after his or her return to active employment shall continue in accordance with the applicable election(s) submitted for that Plan Year.  In addition, Participants who are on an unpaid leave may elect to defer an Annual Deferral Amount for the Plan Year following his or her return to employment and for every Plan Year thereafter while a Participant in the Plan, provided such deferral elections are otherwise allowed and an Election Form is completed in accordance with the rules and procedures established for each such election in accordance with Article 3 above.

9.3 Leaves Resulting in Separation From Service. In the event that a Participant's leave of absence from his or her Employer constitutes a separation from service in accordance with Code Section 409A, the Participant's vested Account Balance shall be distributed to the Participant in accordance with Article 5 or 6 of this Plan, as applicable.

ARTICLE 10

Termination of Plan, Amendment or Modification

10.1 Termination of Plan. Although each Employer anticipates that it will continue the Plan for an indefinite period of time, there is no guarantee that any Employer will continue the Plan or will not terminate its participation in the Plan at any time in the future. Accordingly, each Employer reserves the right to terminate its participation in the Plan. In addition, the Committee retains the right to terminate the Plan at any time. In the event of the termination of an Employer's participation in the Plan (or the Committee's termination of the Plan as a whole), the termination shall occur in a manner consistent with the requirements of Code Section 409A.

10.2 Amendment. The Committee may, at any time, amend or modify the Plan in whole or in part.

10.3 Effect of Payment. The full payment of the Participant's vested Account Balance under the Plan shall fully and completely discharge all Employers and the Company from all further obligations under this Plan with respect to the Participant and his or her Beneficiaries, and that Participant's Plan Agreement shall terminate upon such full payment of benefits.

ARTICLE 11

Administration

11.1 Duties. The 401(k) Administration Committee shall have the discretion and authority to (i) make, amend, interpret, and enforce all appropriate rules and regulations for the administration of this Plan, and (ii) decide or resolve any and all questions, including benefit entitlement determinations (including but not limited to the 401(k) Administrative Committee's authority to determine whether a Participant qualifies for a distribution on account of Disability or an Unforeseeable Emergency) and interpretations of this Plan, as may arise in connection with the Plan. When making a determination or calculation, the 401(k) Administration Committee shall be entitled to rely on information furnished by a Participant or the Company. The 401(k) Administration Committee may delegate some or all of its powers and authority under this Plan.

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11.2 Agents. In the administration of this Plan, the 401(k) Administration Committee may, from time to time, employ agents and delegate to them such administrative duties as it sees fit (including acting through a duly appointed representative) and may from time to time consult with counsel.

11.3 Binding Effect of Decisions. The decision or action of the 401(k) Administration Committee with respect to any question arising out of or in connection with the administration, interpretation and application of the Plan and the rules and regulations promulgated hereunder shall be final and conclusive and binding upon all persons having any interest in the Plan.

11.4 Indemnity of Committee. To the maximum extent permitted by applicable law, each member of the 401(k) Administration Committee, the Committee, and the Board, shall be indemnified and held harmless by the Company against and from (i) any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by him or her in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action taken or failure to act under the Plan, and (ii) from any and all amounts paid by him or her in settlement thereof, with the Company's approval, or paid by him or her in satisfaction of any judgment in any such claim, action, suit, or proceeding against him or her, provided he or she shall give the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his or her own behalf. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Company's Articlesof Incorporation or Bylaws, by contract, as a matter of law, or otherwise, or under any power that the Company may have to indemnify them or hold them harmless.

11.5 Employer Information. To enable the 401(k) Administration Committee to perform its functions, the Company and each Employer shall supply full and timely information on all matters relating to the Plan, the Participants and their Beneficiaries, the Account Balances of the Participants, the compensation of its Participants, the date and circumstances of the Disability, death or Termination of Employment of its Participants, and such other pertinent information as may be reasonably required.

ARTICLE 12

Other Benefits and Agreements

12.1 Coordination with Other Benefits. The benefits provided for a Participant and Participant's Beneficiary under the Plan are in addition to any other benefits available to such Participant under any other plan or program for employees of the Participant's Employer. The Plan shall supplement and shall not supersede, modify or amend any other such plan or program except as may otherwise be expressly provided.

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ARTICLE 13

Claims Procedures

13.1 Presentation of Claim. Any Participant or Beneficiary of a deceased Participant (such Participant or Beneficiary being referred to below as a “Claimant”) may deliver to the Company a written claim for a determination with respect to the amounts distributable to such Claimant from the Plan. All other claims must be made within one hundred eighty (180) days of the date on which the event that caused the claim to arise occurred. The claim must state with particularity the determination desired by the Claimant.

13.2 Notification of Decision. The Company shall consider a Claimant's claim within a reasonable time, but no later than ninety (90) days after receiving the claim. If the 401(k) Administration Committee determines that special circumstances require an extension of time for processing the claim, written notice of the extension shall be furnished to the Claimant prior to the termination of the initial ninety (90) day period. In no event shall such extension exceed a period of ninety (90) days from the end of the initial period. The extension notice shall indicate the special circumstances requiring an extension of time and the date by which the Company expects to render the benefit determination. The Company shall notify the Claimant in writing:

(a) that the Claimant's requested determination has been made, and that the claim has been allowed in full; or

(b) that the Company has reached a conclusion contrary, in whole or in part, to the Claimant's requested determination, and such notice must set forth in a manner calculated to be understood by the Claimant:

(i) the specific reason(s) for the denial of the claim, or any part of it;

(ii) specific reference(s) to pertinent provisions of the Plan upon which such denial was based;

(iii) a description of any additional material or information necessary for the Claimant to perfect the claim, and an explanation of why such material or information is necessary;

(iv) an explanation of the claim review procedure set forth in Section 13.3 below; and

(v) a statement of the Claimant's right to bring a civil action under ERISA Section 502(a) following an adverse benefit determination on review.

13.3 Review of a Denied Claim. On or before sixty (60) days after receiving a notice from the Company that a claim has been denied, in whole or in part, a Claimant (or the Claimant's duly authorized representative) may file with the 401(k) Administration Committee a written request for a review of the denial of the claim. The Claimant (or the Claimant's duly authorized representative):

(a) may, upon request and free of charge, have reasonable access to, and copies of, all documents, records and other information relevant (as defined in applicable ERISA regulations) to the claim for benefits;

(b) may submit written comments or other documents; and/or

(c) may request a hearing, which the Company, in its sole discretion, may grant.

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13.4 Decision on Review. The Company shall render its decision on review promptly, and no later than sixty (60) days after the Company receives the Claimant's written request for a review of the denial of the claim. If the Company determines that special circumstances require an extension of time for processing the claim, written notice of the extension shall be furnished to the Claimant prior to the termination of the initial sixty (60) day period. In no event shall such extension exceed a period of sixty (60) days from the end of the initial period. The extension notice shall indicate the special circumstances requiring an extension of time and the date by which the Company expects to render the benefit determination. In rendering its decision, the Company shall take into account all comments, documents, records and other information submitted by the Claimant relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination. The decision must be written in a manner calculated to be understood by the Claimant, and it must contain:

(a) specific reasons for the decision;

(b) specific reference(s) to the pertinent Plan provisions upon which the decision was based;

(c) a statement that the Claimant is entitled to receive, upon request and free of charge, reasonable access to and copies of, all documents, records and other information relevant (as defined in applicable ERISA regulations) to the Claimant's claim for benefits; and

(d) a statement of the Claimant's right to bring a civil action under ERISA Section 502(a).

13.5 Legal Action. A Claimant's compliance with the foregoing provisions of this Article 13 is a mandatory prerequisite to a Claimant's right to commence any legal action with respect to any claim for benefits under this Plan.

ARTICLE 14

Miscellaneous

14.1 Status of Plan. The Plan is intended to be a plan that is not qualified within the meaning of Code Section 401(a) and that “is unfunded and is maintained by an employer primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees” within the meaning of ERISA Sections 201(2), 301(a)(3) and 401(a)(1). The Plan shall be administered and interpreted (i) in a manner consistent with that intent, and (ii) in accordance with Code Section 409A.

14.2 Unsecured General Creditor. Participants and their Beneficiaries, heirs, successors and assigns shall have no legal or equitable rights, interests or claims in any property or assets of an Employer. For purposes of the payment of benefits under this Plan, any and all of an Employer's assets shall be, and remain, the general, unpledged unrestricted assets of the Employer. An Employer's obligation under the Plan shall be merely that of an unfunded and unsecured promise to pay money in the future.

14.3 Employer's Liability. An Employer's liability for the payment of benefits shall be defined only by the Plan and the Plan Agreement, as entered into between the Employer and a Participant. An Employer shall have no obligation to a Participant under the Plan except as expressly provided in the Plan and his or her Plan Agreement.

14.4 Nonassignability. Neither a Participant nor any other person shall have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber, transfer, hypothecate, alienate or convey in advance of actual receipt, the amounts, if any, payable hereunder, or any part thereof,

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which are, and all rights to which are expressly declared to be, unassignable and non-transferable. No part of the amounts payable shall, prior to actual payment, be subject to seizure, attachment, garnishment or sequestration for the payment of any debts, judgments, alimony or separate maintenance owed by a Participant or any other person, be transferable by operation of law in the event of a Participant's or any other person's bankruptcy or insolvency or be transferable to a spouse as a result of a property settlement or otherwise. Notwithstanding anything in this Plan to the contrary, the Company may establish procedures for the payment of all or a portion of a Participant's Account balance pursuant to a domestic relations order which would otherwise qualify a “qualified domestic relations order” under Code Section 414(p) if this Plan were qualified under Code Section 401(a).

14.5 Not a Contract of Employment. The terms and conditions of this Plan shall not be deemed to constitute a contract of employment between any Employer and the Participant. Such employment is hereby acknowledged to be “at-will”, meaning that it is not for any specified period of time and can be terminated by the Participant or his or her Employer at any time, with or without advance notice, and for any or no particular reason or cause. Nothing in this Plan shall be deemed to give a Participant the right to be retained in the service of any Employer or to interfere with the right of any Employer to discipline or discharge the Participant at any time.

14.6 Furnishing Information. A Participant or his or her Beneficiary will cooperate with the Company, Employer and/or the 401(k) Administration Committee (as applicable) by furnishing any and all information requested, and take such other actions as may be requested, in order to facilitate the administration of the Plan and the payments of benefits hereunder.

14.7 Terms. Whenever any words are used herein in the masculine, they shall be construed as though they were in the feminine in all cases where they would so apply; and whenever any words are used herein in the singular or in the plural, they shall be construed as though they were used in the plural or the singular, as the case may be, in all cases where they would so apply.

14.8 Captions. The captions of the articles, sections and paragraphs of this Plan are for convenience only and shall not control or affect the meaning or construction of any of its provisions.

14.9 Governing Law. Subject to ERISA, the provisions of this Plan shall be construed and interpreted according to the internal laws of the State of California without regard to its conflicts of laws principles.

14.10 Notice. Any notice or filing required or permitted under this Plan shall be sufficient if in writing and hand-delivered, or sent by registered or certified mail or overnight delivery service, to the address below:

Cisco Systems, Inc.

Attn:Cisco Systems, Inc. 2009 Deferred Compensation

Plan Administrator

170 West Tasman Drive

San Jose, CA 95134

Such notice shall be deemed given as of the date of delivery or, if delivery is made by mail, or overnight delivery service as of the date shown on the postmark on the receipt for registration or certification.

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Any notice or filing required or permitted to be given to a Participant under this Plan shall be sufficient if in writing and hand-delivered, or sent by mail or overnight delivery service, to the last known address of the Participant.

14.11 Successors. The provisions of this Plan shall bind and inure to the benefit of the Participant's Employer and its successors and assigns and the Participant and the Participant's designated Beneficiaries.

14.12 Spouse's Interest. The interest in the benefits hereunder of a spouse of a Participant who has predeceased the Participant shall automatically pass to the Participant and shall not be transferable by such spouse in any manner, including but not limited to such spouse's will, nor shall such interest pass under the laws of intestate succession.

14.13 Validity. In case any provision of this Plan shall be illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining parts hereof, but this Plan shall be construed and enforced as if such illegal or invalid provision had never been inserted herein.

14.14 Incompetent. If the Company determines in its discretion that a benefit under this Plan is to be paid to a minor, a person declared incompetent or to a person incapable of handling the disposition of that person's property, the 401(k) Administration Committee may direct payment of such benefit to the guardian, legal representative or person having the care and custody of such minor, incompetent or incapable person. The Company may require proof of minority, incompetence, incapacity or guardianship, as it may deem appropriate prior to distribution of the benefit. Any payment of a benefit shall be a payment for the account of the Participant and the Participant's Beneficiary, as the case may be, and shall be a complete discharge of any liability under the Plan for such payment amount.

14.15 Court Order. The Company is authorized to comply with any court order in any action in which the Plan or the Company has been named as a party, including any action involving a determination of the rights or interests in a Participant's benefits under the Plan as set forth in such procedures as the Company may establish pursuant to Section 14.4. Notwithstanding the foregoing, the Company shall interpret this provision in a manner that is consistent with Code Section 409A and other applicable tax law.

14.16 Distribution in the Event of Income Inclusion under Code Section 409A. If any portion of a Participant's Account Balance under this Plan is required to be included in income by the Participant prior to receipt due to a violation of the requirements of Code Section 409A, the Participant may petition the Company, as applicable, for a distribution of that portion of his or her Account Balance that is required to be included in his or her income. Upon the grant of such a petition, which grant shall not be unreasonably withheld, the Participant's Employer shall distribute to the Participant immediately available funds in an amount equal to the portion of his or her Account Balance required to be included in income as a result of the failure of the Plan to meet the requirements of Code Section 409A, which amount shall not exceed the Participant's unpaid vested Account Balance under the Plan. Such a distribution shall affect and reduce the Participant's benefits to be paid under this Plan.

14.17 Deduction Limitation on Benefit Payments. If an Employer reasonably anticipates that the Employer's deduction with respect to any distribution from this Plan would be limited or eliminated by application of Code Section 162(m), then to the extent deemed necessary by the Employer to ensure that the entire amount of any distribution from this Plan is deductible, the Employer may

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2009 Deferred Compensation Plan

delay payment of any amount that would otherwise be distributed from this Plan. Any amounts for which distribution is delayed pursuant to this Section 14.17 shall continue to be credited/debited with additional amounts in accordance with Section 3.9 above. The delayed amounts (and any amounts credited thereon) shall be distributed to the Participant (or his or her Beneficiary in the event of the Participant's death) at the earliest date the Employer reasonably anticipates that the deduction of the payment of the amount will not be limited or eliminated by application of Code Section 162(m).

.

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Cisco Systems, Inc.

2009 Deferred Compensation Plan

Supplement A

SUPPLEMENT A TO

CISCO SYSTEMS, INC.

2009 DEFERRED COMPENSATION PLAN

Special provisions applicable to participants of the Scientific-Atlanta 2005 Executive Deferred Compensation Plan, as amended and restated effective January 1, 2008 (the “SA Post-2004 Plan”), with amounts deferred between January 1, 2005 and December 31, 2008.

SUPPLEMENT A TO CISCO SYSTEMS, INC.

2009 DEFERRED COMPENSATION PLAN

Amended and Restated

Effective January 1, 2013

Purpose

The SA Post-2004 Plan merged with the Cisco Systems, Inc. Deferred Compensation Plan, effective January 1, 2009 (collectively the “Plan”). Except as otherwise specifically provided in this Supplement A, the rights and obligations of participants of the SA Post-2004 Plan, with amounts deferred between January 1, 2005 and December 31, 2008 (the “SA Post-2004 Plan Participants”), will be determined in accordance with the Plan. This Supplement A is a part of the Plan and shall be administered in accordance with the provisions thereof.

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Cisco Systems, Inc.

2009 Deferred Compensation Plan

Supplement A

ARTICLE-1

Definitions

For purposes of this Supplement A, the following special definitions shall apply. Section numbers shall refer exclusively to this Supplement A absent a specific statement to the contrary:

1.1 “Deferral Account” shall mean an account maintained by the Employer for each deferral election made by a SA Post-2004 Plan Participant under the SA Post-2004 Plan.

1.2 “Deferred Benefit Commencement Date” shall mean the date designated by a SA Post-2004 Plan Participant with respect to each deferral election as the date on which the payment of the Deferred Benefits that accumulate as a result of such election are to begin.

1.3 “Deferred Benefits” shall mean the amounts payable pursuant to the SA Post-2004 Plan to a SA Post-2004 Plan Participant, or to his or her Beneficiary or estate, following the SA Post-2004 Plan Participant's Separation from Service, the Deferred Benefit Commencement Date, Disability, or death.

1.4 “Employer” shall mean Scientific-Atlanta, Inc. or any of its majority owned subsidiaries and their successors.

1.5 “Separation from Service” shall have the meaning provided under Section 409A of the Internal Revenue Code, as amended, and the regulations promulgated thereunder (“Section 409A”).

ARTICLE-2

Deferred Benefit Commencement Date

2.1 Deferred Benefit Commencement Date. Except as otherwise provided in this Article and in Article 3 hereof, payment of the Deferred Benefits shall commence on one of the following permissible Deferred Benefit Commencement Dates, as elected by the SA Post-2004 Plan Participant pursuant to the terms of the SA Post-2004 Plan: (i) a set date which is no earlier than July 1 following the end of the Plan Year in which the election amount is deferred; (ii) the SA Post-2004 Plan Participant's Separation from Service date, or (iii) a date which is either the fifth (5th) or tenth (10th) anniversary of the SA Post-2004 Plan Participant's Separation from Service. The term “Retirement” used as a designation on any Election Form for a Deferred Benefit Commencement Date shall mean the SA Post-2004 Plan Participant's Separation from Service date.

2.2 Method of Payment. Except as otherwise provided in Article 3 hereof, payment of the Deferred Benefits shall be in the form of cash, pursuant to one of the following methods, as elected by the SA Post-2004 Plan Participant:

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2009 Deferred Compensation Plan

Supplement A

(a) A single lump sum payment of the entire balance of the respective Deferral Account, determined as of the Deferred Benefit Commencement Date and payable within sixty (60) days; or

(b) Annual, semi-annual or quarterly installments payable over a five (5), ten (10) or fifteen (15) year period, and commencing on the respective Deferred Benefit Commencement Date.

If the SA Post-2004 Plan Participant has elected to receive such Deferred Benefits in installments, the amount payable in the first year of such installments shall be an amount that will fully amortize the balance in the SA Post-2004 Plan Participant's Deferral Account determined as of the Deferred Benefit Commencement Date over the five (5), ten (10), or fifteen (15) year period. Thereafter, the amount payable in each succeeding year shall be adjusted to an amount that will fully amortize the remaining balance in such Deferral Account over the remaining years in the aforesaid five (5), ten (10), or fifteen (15) year installment period.

2.3 Postponing Distribution. If the Deferred Benefit Commencement Date selected by the SA Post-2004 Plan Participant is a set date which is no earlier than July 1 following the end of the Plan Year in which the Election Amount is deferred, then the SA Post-2004 Plan Participant may elect to postpone such distribution and have such amount paid out on an allowable alternative Deferred Benefit Commencement Date designated by the SA Post-2004 Plan Participant in accordance with this Section 2.3. In order to make this election, the SA Post-2004 Plan Participant must complete a new Election Form in accordance with such rules and procedures as the Company may establish and in accordance with the following criteria:

(a) Such Election Form must be completed at least twelve (12) months prior to the SA Post-2004 Plan Participant's previously designated Deferred Benefit Commencement Date;

(b) The new Deferred Benefit Commencement Date selected by the SA Post-2004 Plan Participant must be at least five (5) years after the previously designated Deferred Benefit Commencement Date; and

(c) The election of the new Deferred Benefit Commencement Date shall have no effect until at least twelve (12) months after the date on which the election is made.

ARTICLE-3

Payment of Deferred Benefits

3.1 Separation from Service. Deferred Benefits shall be paid to a SA Post-2004 Plan Participant upon his or her Separation from Service, as follows:

(a) Without exception, if a SA Post-2004 Plan Participant incurs a Separation from Service prior to attaining age fifty-five (55), then the balance of his or her Deferral Account shall be determined on a date that is six (6) months after his or her Separation from Service and paid in a lump sum within thirty (30) days of such date.

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Supplement A

(b) If a SA Post-2004 Plan Participant incurs a Separation from Service after attaining age fifty-five (55) or older, then the balance of his or her Deferral Account shall be determined on the applicable Deferred Benefit Commencement Date elected by the SA Post-2004 Plan Participant (except that benefits paid in accordance with Section 2.1(ii) shall be determined on a date that is six (6) months after the SA Post-2004 Plan Participant's Separation from Service). Such benefits shall paid or commence to be paid, as applicable, within thirty (30) days of such date, in accordance with the instructions regarding the form of payment in the applicable Election Form.

3.2Disability.

(a) Upon the determination of a SA Post-2004 Plan Participant's Disability, no further deferrals will be made to the Deferral Account and the Company shall pay the SA Post-2004 Plan Participant the balance in each of the SA Post-2004 Plan Participant's Deferral Accounts in the manner specified by the SA Post-2004 Plan Participant in his or her Election Form to apply in the event of his or her Disability, or if no such specification is made, on the Deferred Benefit Commencement Date that applies to such Deferral Account pursuant to the method requested by the SA Post-2004 Plan Participant in his or her Election Form.

(b) A SA Post-2004 Plan Participant may change the form of payment of the Disability benefit by completing an Election Form in accordance with such rules and procedures established by the Company provided that the election to modify the Disability benefit shall have no effect until at least twelve (12) months after the date on which the election is made.

(c) Sections 6.1 and 6.2 of Article 6 of the Plan will not govern a SA Post-2004 Plan Participant's Disability benefits.

3.3 Death. Deferred Benefits shall be paid upon the death of a SA Post-2004 Plan Participant, as follows:

(a) Upon the death of a SA Post-2004 Plan Participant, the Company shall pay the amounts in each of the SA Post-2004 Plan Participant's Deferral Accounts to the Beneficiary designated by the SA Post-2004 Plan Participant with respect to each Compensation Deferral Election in each of his or her respective Election Forms, or, if the SA Post-2004 Plan Participant fails to so designate a Beneficiary, to his or her surviving spouse. If the SA Post-2004 Plan Participant has no surviving spouse, then the benefits shall be payable to the executor or personal representative of the SA Post-2005 Plan Participant's estate.

(b) If the SA Post-2004 Plan Participant's Separation from Service is due to death, the Company shall pay to each respective Beneficiary or to the SA Post-2004 Plan Participant's estate, as the case may be, the amounts in each of the SA Post-2004 Plan Participant's respective Deferral Accounts, in the same manner as for a SA Post-2004 Plan Participant who has incurred a Separation from Service, as set forth in Section 3.1(a).

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Supplement A

(c) If the SA Post-2004 Plan Participant dies following his or her Separation from Service date but prior to his or her receiving the full payment of all Deferred Benefits payable to him or her, the respective Beneficiaries or the SA Post-2004 Plan Participant's estate, as the case may be, shall receive a distribution of the SA Post-2004 Plan Participant's Deferred Benefits in the same manner as it otherwise would have paid to the SA Post-2004 Plan Participant as if the SA Post-2004 Plan Participant had not died, unless the SA Post-2004 Plan Participant has specified in his or her Election Form a different manner of payment to a Beneficiary.

(d) If a Beneficiary who is receiving Deferred Benefits pursuant to the SA Post-2004 Plan dies, the remainder of the Deferred Benefits to which such Beneficiary was entitled at the time of his or her death shall continue to be payable to the beneficiary or beneficiaries designated by such Beneficiary in writing to the Company (or to the Beneficiary's estate or heirs if he or she fails to designate a beneficiary or beneficiaries).

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Cisco Systems, Inc.        

2009 Deferred Compensation Plan

Supplement B

SUPPLEMENT B TO

CISCO SYSTEMS, INC.

2009 DEFERRED COMPENSATION PLAN

Special provisions applicable to participants of the Scientific-Atlanta Executive Deferred Compensation Plan, as amended and restated effective May 15, 2002 (the “SA Grandfathered Plan”), with amounts deferred prior to January 1, 2005.

SUPPLEMENT B TO CISCO SYSTEMS, INC.

2009 DEFERRED COMPENSATION PLAN

Amended and Restated

Effective January 1, 2013

Purpose

The SA Grandfathered Plan merged with the Cisco Systems, Inc. Deferred Compensation Plan, effective January 1, 2009. Except as otherwise specifically provided in this Supplement B, the rights and obligations of participants of the SA Grandfathered Plan, with amounts deferred prior to January 1, 2005 (the “SA Grandfathered Plan Participants”), will be determined in accordance with the Plan. This Supplement B is a part of the Plan and shall be administered in accordance with the provisions thereof.

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2009 Deferred Compensation Plan

Supplement B

ARTICLE-1

Definitions

For purposes of this Supplement B, the following special definitions shall apply. Section numbers shall refer exclusively to this Supplement B absent a specific statement to the contrary:

1.1 “Deferral Account” shall mean an account maintained by the Employer for each deferral election made by a SA Grandfathered Plan Participant under the SA Grandfathered Plan.

1.2 “Deferred Benefit Commencement Date” shall mean the date irrevocably designated by a SA Grandfathered Plan Participant with respect to each deferral election as the date on which the payment of the Deferred Benefits that accumulate as a result of such election are to begin.

1.3 “Deferred Benefits” shall mean the amounts payable pursuant to the SA Grandfathered Plan to a SA Grandfathered Plan Participant, or to his or her Beneficiary or estate, following the SA Grandfathered Plan Participant's termination of employment, the Deferred Benefit Commencement Date, Total Disability, or death.

1.4 “Employer” shall mean Scientific-Atlanta, Inc. or any of its majority owned subsidiaries and their successors.

1.5 “Total Disability” shall mean a physical or mental condition which is expected to be totally and permanently disabling as determined in accordance with the terms and conditions of the long-term disability insurance plan currently or most recently maintained by the Employer for the benefit of the SA Grandfathered Plan Participant claiming to be totally disabled.

ARTICLE-2

Deferred Benefit Commencement Date

2.1 Deferred Benefit Commencement Date. Except as otherwise provided in this Article and in Article 3 hereof, payment of the Deferred Benefits (except for amounts held in the Insurance Fund, defined below) shall commence on one of the following permissible Deferred Benefit Commencement Dates, as elected by the SA Grandfathered Plan Participant pursuant to the terms of the SA Grandfathered Plan: (i) a set date which is no earlier than July 1 following the end of the Plan Year in which the election amount is deferred; (ii) the SA Grandfathered Plan Participant's termination of employment date, or (iii) a date which is either the fifth (5th) or tenth (10th) anniversary of the SA Grandfathered Plan Participant's termination of employment. The term “Retirement” used as a designation on any Election Form for a Deferred Benefit Commencement Date shall mean the SA Grandfathered Plan Participant's termination of employment date.

2.2 Method of Payment. Except as otherwise provided in Article 3 hereof, payment of the Deferred Benefits (other than benefits held in the Insurance Fund, defined below) shall be in the form of cash, pursuant to one of the following methods, as elected by the SA Grandfathered Plan Participant:

(a) A single lump sum payment of the entire balance of the respective Deferral Account, determined as of the Deferred Benefit Commencement Date and payable as soon as administratively practicable thereafter; or

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Cisco Systems, Inc.        

2009 Deferred Compensation Plan

Supplement B

(b) Annual, semi-annual or quarterly installments payable over a five (5), ten (10) or fifteen (15) year period, and commencing on the respective Deferred Benefit Commencement Date.

If the SA Grandfathered Plan Participant has elected to receive such Deferred Benefits in installments, the amount payable in the first year of such installments shall be an amount that will fully amortize the balance in the SA Grandfathered Plan Participant's Deferral Account determined as of the Deferred Benefit Commencement Date over the five (5), ten (10), or fifteen (15) year period. Thereafter, the amount payable in each succeeding year shall be adjusted to an amount that will fully amortize the remaining balance in such Deferral Account over the remaining years in the aforesaid five (5), ten (10), or fifteen (15) year installment period.

2.3 Postponing Distribution. A SA Grandfathered Plan Participant may revise or change any election or instruction relating to the Deferred Benefits contained in any Election Form, other than the election amount, by submitting to the Company a revised Election Form at least ninety (90) days prior to the effective date of such revision or change; provided, however, that the SA Grandfathered Plan Participant cannot change the deferral or payment period with respect to a particular election if payouts have commenced under such election.

2.4 Insurance Fund Payments. Proceeds of life insurance purchased with amounts credited to an Insurance Fund shall be payable as provided in the respective policy or policies and the applicable insurance proceeds payment agreement. The Insurance Fund is the fund available to eligible SA Grandfathered Plan Participants for use in purchasing life insurance. Amounts credited to an Insurance Fund shall be used to pay premiums on life insurance insuring the life of the SA Grandfathered Plan Participant, or, at the SA Grandfathered Plan Participant's election, the lives of the SA Grandfathered Plan Participant and his or her spouse on a joint and survivor basis, pursuant to such policies of insurance, and with such insurers, as the Company may determine from time to time. The Company shall be the owner of such insurance policy or policies.

ARTICLE-3

Payment of Deferred Benefits

3.1 Termination of Employment. Except as provided in Article 2, and for amounts deferred into an Insurance Fund, Deferred Benefits shall be paid to a SA Grandfathered Plan Participant upon his or her termination of employment, as follows:

(a) Upon the involuntary termination of a SA Grandfathered Plan Participant's employment, the amount in each Deferral Account shall be payable to the SA Grandfathered Plan Participant either (i) in the manner specified by the SA Grandfathered Plan Participant in his or her Election Form to apply in the event of his or her involuntary termination of employment; or (ii) if no such specification is made, on the Deferred Benefit Commencement Date that applies to such Deferral Account, pursuant to the method requested by the SA Grandfathered Plan Participant in his or her Election Form.

(b) Without exception, upon the voluntary termination of a SA Grandfathered Plan Participant's employment prior to attaining fifty-five (55) years of age:

(i) the amounts in each of the SA Grandfathered Plan Participant's Deferral Accounts shall cease to earn interest and the balance of each Deferral Account shall be

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Cisco Systems, Inc.        

2009 Deferred Compensation Plan

Supplement B

determined as of the nearest pay date following the SA Grandfathered Plan Participant's termination of employment date; and

(ii) the Company shall pay the SA Grandfathered Plan Participant the balance of each such Deferral Account not according to the SA Grandfathered Plan Participant's elections as specified in his or her Election Forms but in a lump sum, to be paid within sixty (60) days of the SA Grandfathered Plan Participant's voluntary termination of employment.

(c) Upon the voluntary termination of a SA Grandfathered Plan Participant's employment after attaining age fifty-five (55) or older, the Company will pay out to such SA Grandfathered Plan Participant all amounts in his or her Deferral Account in accordance with the instructions in the applicable Election Form.

3.2Total Disability.

(a) Upon the determination of a SA Grandfathered Plan Participant's Total Disability, the Company shall pay the SA Grandfathered Plan Participant the balance in each of the SA Grandfathered Plan Participant's Deferral Accounts (except for amounts deferred into an Insurance Fund) as if the SA Grandfathered Plan Participant had been terminated involuntarily, as set forth in Section 3.1(a), unless the SA Grandfathered Plan Participant has specified in his or her Election Form a different manner of payment.

(b) A SA Grandfathered Plan Participant may change the form of payment of the Total Disability benefit by completing an Election Form in accordance with Section 2.3, above.

(c) Sections 6.1 and 6.2 of Article 6 of the Plan will not govern a SA Grandfathered Plan Participant's Total Disability benefits.

3.3 Death. Deferred Benefits shall be paid upon the death of a SA Grandfathered Plan Participant (expect for amounts deferred into an Insurance Fund), as follows:

(a) Upon the death of a SA Grandfathered Plan Participant, the Company shall pay the amounts in each of the SA Grandfathered Plan Participant's Deferral Accounts to the Beneficiary designated by the SA Grandfathered Plan Participant with respect to each deferral election in each of his or her respective Election Forms, or, if the SA Grandfathered Plan Participant fails to so designate a Beneficiary, to his or her surviving spouse. If the SA Grandfathered Plan Participant has no surviving spouse, then the benefits shall be payable to the executor or personal representative of the SA Grandfathered Plan Participant's estate.

(b) If the SA Grandfathered Plan Participant dies prior to his or her termination of employment date, the Company shall pay to each respective Beneficiary, or to the SA Grandfathered Plan Participant's estate, as the case may be, the amounts in each of the SA Grandfathered Plan Participant's respective Deferral Accounts, in the same manner as for the SA Grandfathered Plan Participant who has been terminated involuntarily, as set forth in Section 3.1(a).

(c) If the SA Grandfathered Plan Participant dies following his or her termination of employment date but prior to his or her receiving the full payment of all Deferred Benefits payable to him or her, the Company shall pay to each of the respective Beneficiaries or to the SA

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2009 Deferred Compensation Plan

Supplement B

Grandfathered Plan Participant's estate, as the case may be, the same Deferred Benefit in the same manner as it otherwise would have paid to the SA Grandfathered Plan Participant as if the SA Grandfathered Plan Participant had not died, unless the SA Grandfathered Plan Participant has specified in his or her Election Form a different manner of payment to a Beneficiary.

(d) Notwithstanding the other provisions of this section, a Beneficiary may request a different payment schedule than what has been elected by the SA Grandfathered Plan Participant, if such change does not further defer the scheduled payout, by submitting a request in writing to the Company. The granting of any such request shall be within the discretion of the Company.

(e) If a Beneficiary who is receiving Deferred Benefits pursuant to the SA Grandfathered Plan dies, the remainder of the Deferred Benefits to which such Beneficiary was entitled at the time of his or her death shall continue to be payable to the beneficiary or beneficiaries designated by such Beneficiary in writing to the Company (or to the Beneficiary's estate or heirs if he or she fails to designate a beneficiary or beneficiaries).

ARTICLE-4

Investment Options

4.1 Investment Options.

(a) Effective January 1, 2009, a SA Grandfathered Plan Participant may select one or more investment options made available by the Company from time to time for his or her Deferral Account. Any investment option selection must specify the percentage of the amount specified in the deferral election to be invested in each investment option in one percent (1%) increments.

(b) Any investment option selection made by a SA Grandfathered Plan Participant for the investment of his Account shall be made in accordance with this section. The SA Grandfathered Plan Participant shall make the initial investment option selection on a form provided by the Company. Thereafter the SA Grandfathered Plan Participant may modify his or her initial investment option selections for past amounts deferred and/or for future deferrals in the manner established by the Company. A SA Grandfathered Plan Participant may modify his or her investment option selections in accordance with procedures established from time to time by the Company. Any modifications made in accordance with such procedures shall be implemented as soon as administratively practicable following the completion of the applicable procedures. An investment option selection for a deferral election shall remain in effect until superseded by a subsequent investment option selection modification, or until the complete distribution of the SA Grandfathered Plan Participant's Deferred Benefits related to that deferral election.

(c) If a SA Grandfathered Plan Participant fails to submit an investment option selection for a deferral Election, or if a SA Grandfathered Plan Participant's investment option selection does not equal one hundred percent (100%), the portion of the SA Grandfathered Plan Participant's deferral Election that is not subject to an investment option selection shall be invested in the Measurement Fund selected by the Company for this purpose.

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2009 Deferred Compensation Plan

Supplement B

ARTICLE-5

Hardship Withdrawals

5.1 Hardship Withdrawals. A SA Grandfathered Plan Participant may request a Hardship Withdrawal of all or a portion of his or her Deferred Benefits (excluding amounts deferred into a Insurance Fund) before the Deferred Benefit Commencement Date, as follows:

(a) The request for withdrawal must be to meet an “unforeseeable emergency.”

(b) For purposes of this Article V, an unforeseeable emergency is a severe financial hardship to the SA Grandfathered Plan Participant resulting from a sudden and unexpected illness or accident of the SA Grandfathered Plan Participant or a dependent of the SA Grandfathered Plan Participant, loss of the SA Grandfathered Plan Participant's property due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the SA Grandfathered Plan Participant. The circumstances that will constitute an unforeseeable emergency will depend upon the facts of each case, but, in any case, a hardship withdrawal may not be made to the extent that such hardship is or may be relieved:

(i) Through reimbursement or compensation by insurance or otherwise, or

(ii) By liquidation of the SA Grandfathered Plan Participant's assets, to the extent the liquidation of such assets would not itself cause severe financial hardship.

(c) The request for a Hardship Withdrawal must be made in writing to the Company and shall state the amount requested, the unforeseeable emergency to which the amount will be applied and shall also affirm that no other assets are reasonably available to meet the emergency.

(d) The Company shall consider applicable regulatory standards in assessing whether to grant a request for a Hardship Withdrawal.

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2009 Deferred Compensation Plan

Supplement C

SUPPLEMENT C TO

CISCO SYSTEMS, INC.

2009 DEFERRED COMPENSATION PLAN

Purpose

The purpose of this Supplement C to the Cisco Systems, Inc. 2009 Deferred Compensation Plan (the “Plan”) is to enable Non-Employee Directors of the Company to elect to defer receipt of their Director Retainer Fees. This Supplement C shall be effective as of November 20, 2014. Except as modified by this Supplement C, all the provisions of the Plan shall be incorporated into this Supplement C. This Supplement C is a part of the Plan and shall be administered in accordance with the provisions thereof.

ARTICLE 1

Definitions

The terms used in this Supplement C shall have the meanings defined in the Plan, except for the following special definitions. Section numbers shall refer exclusively to this Supplement C absent a specific statement to the contrary:

1.1 “AnnualDeferral Amount” shall mean that portion of the Director Retainer Fees that a Non-Employee Director defers in accordance with the Plan and Article 2 below for any one Plan Year.

1.2 “Director Retainer Fees” shall mean the annual cash retainer fees earned by a Participant in his or her capacity as a Non-Employee Director.

1.3 “Non-EmployeeDirector” shall mean a member of the Board who is not an employee of the Company or any of its subsidiaries. For purposes of this Supplement C, a Non-Employee Director shall be deemed to be a “Participant” for purposes of the terms of the Plan.

ARTICLE 2

Deferral of Fees

2.1 Deferral of Fees. For each Plan Year, a Non-Employee Director may elect to defer his or her Annual Deferral Amount pursuant to the terms of the Plan, this Supplement C and the election form for this purpose.

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2009 Deferred Compensation Plan

Supplement C

2.2 Election to Defer.

(a) Current Non-Employee Directors. A Non-Employee Director who is serving on the Board on the date this Supplement C becomes effective may elect to become a Participant in the Plan by electing, on or prior to December 31, 2014, to defer his or her Director Retainer Fees.

(b) New Non-Employee Directors. Each individual who first becomes a Non-Employee Director after the date this Supplement C becomes effective may elect to become a participant in the Plan by electing to make deferrals under the Plan no later than the deadline set forth in the election form with respect to the Director Retainer Fees in connection with such appointment or election.

(c) Effect of Election. An election under this Article 2 shall be effective only with respect to Director Retainer Fees earned after the effective date of the election. A Non-Employee Director may elect to become a Participant in the Plan for any subsequent plan year by electing, no later than December 31 of the immediately preceding Plan Year, to make deferrals under the Plan. Once a Non-Employee Director has elected to defer any portion of his or her Director Retainer Fees, the election may not be revoked and shall continue in effect for the remainder of the Non-Employee Director’s service as a member of the Board; provided, however, that a Non-Employee Director may change his or her deferral election in accordance with such rules and procedures as the Company may establish and to the extent required by Code Section 409A, in accordance with the criteria consistent with Section 4.2 of the Plan.

2.3 Investment of Deferred Director Retainer Fees. The Company shall establish a separate deferred compensation account on its books in the name of each Non-Employee Director who has elected to participate in the Plan. A cash amount shall be credited to each such Non-Employee Director’s account as of each date on which amounts deferred under the Plan would otherwise have been paid to such Non-Employee Director. In accordance with, and subject to, the rules and procedures that are established from time to time by the Company, amounts shall be credited or debited to a Non-Employee Director’s Account Balance in accordance with Section 3.9 of the Plan. The Non-Employee Director’s Account Balance shall become payable as set forth in Article 3 below.

ARTICLE 3

Payment of Account Balance

3.1 Distribution. Payment of a Non-Employee Director’s Account Balance shall only be made upon termination of the Non-Employee Director’s service as a member of the Board, his or her Disability or death.

(a) Each Non-Employee Director shall have the election to receive his or her entire vested Account Balance upon a termination of the Non-Employee Director’s service or Disability as selected by the Non-Employee Director which shall be either (i) within thirty (30) days after the termination of the Non-Employee Director’s service or Disability or (ii) within

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2009 Deferred Compensation Plan

Supplement C

thirty (30) days after the first day of the calendar year following the termination of the Non-Employee Director’s service or Disability. Notwithstanding the foregoing, if the Non-Employee Director is a “specified employee” (as defined in Treasury Regulation 1.409A-1(i)) at the time of such termination of service or Disability, payment of the entire vested Account Balance will not be made to the Non-Employee Director until the earlier of the first day of the 7^th month after the termination of the Non-Employee Director’s service or Disability, or the date of the Non-Employee Director’s death.

(b)Upon a Non-Employee Director’s death, the Non-Employee Director shall receive his or her entire vested Account Balance in accordance with Article 7 of the Plan.

3

EX-31.1

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO

EXCHANGE ACT RULE 13a-14(a)/15d-14(a)

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, John T. Chambers, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Cisco Systems, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 18, 2015

/s/ John T. Chambers

John T. Chambers

Chairman and Chief Executive Officer

(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO

EXCHANGE ACT RULE 13a-14(a)/15d-14(a)

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Kelly A. Kramer, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Cisco Systems, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 18, 2015

/s/ Kelly A. Kramer

Kelly A. Kramer

Executive Vice President and Chief Financial Officer
(Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, John T. Chambers, do hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

• the Quarterly Report on Form 10-Q of the Company for the quarter ended January 24, 2015, as filed with the Securities and Exchange Commission (the “Report”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

• the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: February 18, 2015

/s/ John T. Chambers

John T. Chambers

Chairman and Chief Executive Officer

(Principal Executive Officer)

EX-32.2

Exhibit 32.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Kelly A. Kramer, do hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

• the Quarterly Report on Form 10-Q of the Company for the quarter ended January 24, 2015, as filed with the Securities and Exchange Commission (the “Report”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

• the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: February 18, 2015

/s/ Kelly A. Kramer

Kelly A. Kramer

Executive Vice President and Chief Financial Officer
(Principal Financial Officer)

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Derivative Instruments (Tables)

6 Months Ended

Jan. 24, 2015

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivatives Recorded At Fair Value

The fair values of the Company’s derivative instruments and the line items on the Consolidated Balance Sheets to which they were recorded are summarized as follows (in millions):

	DERIVATIVE ASSETS					DERIVATIVE LIABILITIES
	Balance Sheet  Line Item	January 24, 2015		July 26, 2014		Balance Sheet Line Item	January 24, 2015		July 26, 2014
Derivatives designated as hedging instruments:
Foreign currency derivatives	Other current assets	$	4	$	7	Other current liabilities	$	88	$	6
Interest rate derivatives	Other assets	279		148		Other long-term liabilities	—		3
Equity derivatives	Other current assets	—		—		Other current liabilities	68		56
Total		283		155			156		65
Derivatives not designated as hedging instruments:
Foreign currency derivatives	Other current assets	5		3		Other current liabilities	6		2
Equity derivatives	Other assets	—		2		Other long-term liabilities	—		—
Total		5		5			6		2
Total		$	288	$	160		$	162	$	67

Gains And Losses On Derivatives Designated As Cash Flow Hedges

The effects of the Company’s cash flow and net investment hedging instruments on other comprehensive income (OCI) and the Consolidated Statements of Operations are summarized as follows (in millions):

GAINS (LOSSES) RECOGNIZED IN OCI ON DERIVATIVES FOR THE THREE MONTHS ENDED (EFFECTIVE PORTION)							GAINS (LOSSES) RECLASSIFIED FROM AOCI INTO INCOME FOR THE THREE MONTHS ENDED (EFFECTIVE PORTION)
	January 24, 2015			January 25, 2014			Line Item in Statements of Operations	January 24, 2015			January 25, 2014
Derivatives designated as cash flow hedging instruments:
Foreign currency derivatives	$	(75	)	$	(4	)	Operating expenses	$	(21	)	$	16
							Cost of sales—service	(5		)	3
Total	$	(75	)	$	(4	)		$	(26	)	$	19
Derivatives designated as net investment hedging instruments:
Foreign currency derivatives	$	24		$	16		Other income (loss), net	$	—		$	—

GAINS (LOSSES) RECOGNIZED IN OCI ON DERIVATIVES FOR THE SIX MONTHS ENDED (EFFECTIVE PORTION)							GAINS (LOSSES) RECLASSIFIED FROM AOCI INTO INCOME FOR THE SIX MONTHS ENDED (EFFECTIVE PORTION)
	January 24, 2015			January 25, 2014			Line Item in Statements of Operations	January 24, 2015			January 25, 2014
Derivatives designated as cash flow hedging instruments:
Foreign currency derivatives	$	(131	)	$	34		Operating expenses	$	(24	)	$	23
							Cost of sales—service	(6		)	5
Total	$	(131	)	$	34			$	(30	)	$	28
Derivatives designated as net investment hedging instruments:
Foreign currency derivatives	$	44		$	(3	)	Other income (loss), net	$	—		$	—

Schedule Of Derivative Fair Value Hedge Instruments Gain Loss In Statement Of Financial Performance

The effect on the Consolidated Statements of Operations of derivative instruments designated as fair value hedges and the underlying hedged items is summarized as follows (in millions):

		GAINS (LOSSES) ON DERIVATIVE INSTRUMENTS FOR THE THREE MONTHS ENDED						GAINS (LOSSES) RELATED TO HEDGED ITEMS FOR THE THREE MONTHS ENDED
Derivatives Designated as Fair Value Hedging Instruments	Line Item in Statements of Operations	January 24, 2015			January 25, 2014			January 24, 2015			January 25, 2014
Equity derivatives	Other income (loss), net	$	(18	)	$	(12	)	$	18		$	12
Interest rate derivatives	Interest expense	61			(53		)	(61		)	54
Total		$	43		$	(65	)	$	(43	)	$	66

		GAINS (LOSSES) ON DERIVATIVE INSTRUMENTS FOR THE SIX MONTHS ENDED						GAINS (LOSSES) RELATED TO HEDGED ITEMS FOR THE SIX MONTHS ENDED
Derivatives Designated as Fair Value Hedging Instruments	Line Item in Statements of Operations	January 24, 2015			January 25, 2014			January 24, 2015			January 25, 2014
Equity derivatives	Other income (loss), net	$	(12	)	$	(47	)	$	12		$	47
Interest rate derivatives	Interest expense	131			(35		)	(134		)	34
Total		$	119		$	(82	)	$	(122	)	$	81

Effect Of Derivative Instruments Not Designated As Fair Value Hedges On Consolidated Statement Of Operations Summary

The effect on the Consolidated Statements of Operations of derivative instruments not designated as hedges is summarized as follows (in millions):

		GAINS (LOSSES) FOR THE THREE MONTHS ENDED						GAINS (LOSSES) FOR THE SIX MONTHS ENDED
Derivatives Not Designated as Hedging Instruments	Line Item in Statements of Operations	January 24, 2015			January 25, 2014			January 24, 2015			January 25, 2014
Foreign currency derivatives	Other income (loss), net	$	(51	)	$	(63	)	$	(109	)	$	(20	)
Total return swaps—deferred compensation	Operating expenses	13			12			—			29
Equity derivatives	Other income (loss), net	8			13			4			24
Total		$	(30	)	$	(38	)	$	(105	)	$	33

Schedule Of Notional Amounts Of Derivatives Outstanding

The notional amounts of the Company’s outstanding derivatives are summarized as follows (in millions):

	January 24, 2015		July 26, 2014
Derivatives designated as hedging instruments:
Foreign currency derivatives—cash flow hedges	$	1,641	$	1,618
Interest rate derivatives	10,400		10,400
Net investment hedging instruments	216		345
Equity derivatives	238		238
Derivatives not designated as hedging instruments:
Foreign currency derivatives	1,969		2,528
Total return swaps—deferred compensation	449		428
Total	$	14,913	$	15,557

Offsetting Assets and Liabilities

Information related to these offsetting arrangements is summarized as follows (in millions):

	OFFSETTING OF DERIVATIVE ASSETS
	Gross Amounts Offset in Consolidated Balance Sheets						Gross Amounts Not Offset in the Consolidated Balance Sheets, but with Legal Rights to Offset
January 24, 2015	Gross Amount of Recognized Assets		Gross Amounts Offset in Consolidated Balance Sheets		Net Amount Presented on Consolidated Balance Sheets		Gross Derivative Amounts with Legal Rights to Offset			Cash Collateral Received			Net Amount
Derivatives	$	288	$	—	$	288	$	(58	)	$	(186	)	$	44

	OFFSETTING OF DERIVATIVE LIABILITIES
	Gross Amounts Offset in Consolidated Balance Sheets						Gross Amounts Not Offset in the Consolidated Balance Sheets, but with Legal Rights to Offset
January 24, 2015	Gross Amount of Recognized Liabilities		Gross Amounts Offset in Consolidated Balance Sheets		Net Amount Presented on Consolidated Balance Sheets		Gross Derivative Amounts with Legal Rights to Offset			Cash Collateral Pledged		Net Amount
Derivatives	$	162	$	—	$	162	$	(58	)	$	—	$	104

	OFFSETTING OF DERIVATIVE ASSETS
	Gross Amounts Offset in Consolidated Balance Sheets						Gross Amounts Not Offset in the Consolidated Balance Sheets, but with Legal Rights to Offset
July 26, 2014	Gross Amount of Recognized Assets		Gross Amounts Offset in Consolidated Balance Sheets		Net Amount Presented on Consolidated Balance Sheets		Gross Derivative Amounts with Legal Rights to Offset			Cash Collateral Received			Net Amount
Derivatives	$	160	$	—	$	160	$	(39	)	$	(60	)	$	61

	OFFSETTING OF DERIVATIVE LIABILITIES
	Gross Amounts Offset in Consolidated Balance Sheets						Gross Amounts Not Offset in the Consolidated Balance Sheets, but with Legal Rights to Offset
July 26, 2014	Gross Amount of Recognized Liabilities		Gross Amounts Offset in Consolidated Balance Sheets		Net Amount Presented on Consolidated Balance Sheets		Gross Derivative Amounts with Legal Rights to Offset			Cash Collateral Pledged			Net Amount
Derivatives	$	67	$	—	$	67	$	(39	)	$	(1	)	$	27

XML

Goodwill and Purchased Intangible Assets (Schedule Of Estimated Future Amortization Expense Of Purchased Intangible Assets) (Details) (USD $) In Millions, unless otherwise specified	Jan. 24, 2015	Jul. 26, 2014
Finite-Lived Intangible Assets, Future Amortization Expense [Abstract]
2015 (remaining six months)	$ 462
2016	734
2017	561
2018	420
2019	317
Thereafter	150
Total purchased intangible assets with finite lives, net	$ 2,644	$ 3,148

XML

Business Combinations (Summary Of Allocation Of Total Purchase Consideration) (Details) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Jan. 24, 2015
Business Acquisition [Line Items]
Purchase Consideration	$ 220
Net Liabilities Assumed	(17)
Purchased Intangible Assets	69
Goodwill	168
Metacloud, Inc.
Business Acquisition [Line Items]
Purchase Consideration	149
Net Liabilities Assumed	(7)
Purchased Intangible Assets	29
Goodwill	127
All others (two in total)
Business Acquisition [Line Items]
Purchase Consideration	71
Net Liabilities Assumed	(10)
Purchased Intangible Assets	40
Goodwill	$ 41

XML

Investments (Maturities Of Fixed Income Securities) (Details) (USD $) In Millions, unless otherwise specified	Jan. 24, 2015
Schedule of Investments [Line Items]
Amortized Cost	$ 46,274
Fair Value	46,377
Less than 1 year
Schedule of Investments [Line Items]
Amortized Cost	15,355
Fair Value	15,362
Due in 1 to 2 years
Schedule of Investments [Line Items]
Amortized Cost	14,963
Fair Value	14,995
Due in 2 to 5 years
Schedule of Investments [Line Items]
Amortized Cost	14,383
Fair Value	14,431
Due after 5 years
Schedule of Investments [Line Items]
Amortized Cost	1,573
Fair Value	$ 1,589

XML

Goodwill and Purchased Intangible Assets (Additional Information) (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jan. 24, 2015	Jan. 25, 2014	Jan. 24, 2015	Jan. 25, 2014
Goodwill and Intangible Assets Disclosure [Abstract]
Impairment of Intangible assets	$ 56	$ 0	$ 56	$ 0

XML

Borrowings (Additional Information) (Details) (USD $)	6 Months Ended		3 Months Ended
	Jan. 24, 2015	Jan. 25, 2014	Jan. 24, 2015	Jul. 26, 2014
Debt Instrument [Line Items]
Commercial paper, maximum borrowing limit	$ 3,000,000,000		$ 3,000,000,000
Commercial paper	0		0	0
Repayments of Senior Debt	506,000,000	22,000,000
Derivative, Notional Amount	14,913,000,000		14,913,000,000	15,557,000,000
Derivatives designated as hedging instruments: | Interest rate derivatives
Debt Instrument [Line Items]
Derivative, Notional Amount	10,400,000,000		10,400,000,000	10,400,000,000
Fixed-Rate Notes, 2.90%, Due November 2014
Debt Instrument [Line Items]
Repayments of Senior Debt			500,000,000
Unsecured revolving credit facility
Debt Instrument [Line Items]
Line of Credit Facility, Current Borrowing Capacity	3,000,000,000		3,000,000,000
Maturity date			Feb. 17, 2017
Interest Rate-Federal Funds rate plus 0.50%			0.50%
Interest rate-one-month LIBOR plus 1.00%			1.00%
Line of Credit Facility, Interest Rate Description			Any advances under the credit agreement will accrue interest at rates that are equal to, based on certain conditions, either (i) the higher of the Federal Funds rate plus 0.50%, Bank of America’s “prime rate” as announced from time to time, or one-month LIBOR plus 1.00% or (ii) LIBOR plus a margin that is based on the Company’s senior debt credit ratings as published by Standard & Poor’s Financial Services, LLC and Moody’s Investors Service, Inc.
Additional credit facility upon agreement	$ 2,000,000,000		$ 2,000,000,000
Additional unsecured revolving credit facility maturity date			Feb. 17, 2019

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Segment Information and Major Customers (Summary Of Reportable Segments) (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jan. 24, 2015	Jan. 25, 2014	Jan. 24, 2015	Jan. 25, 2014
Segment Reporting Information [Line Items]
Revenue	$ 11,936	$ 11,155	$ 24,181	$ 23,240
Gross margin	7,090	5,951	14,423	13,358
Unallocated corporate items
Segment Reporting Information [Line Items]
Gross margin	(278)	(889)	(695)	(1,099)
Americas
Segment Reporting Information [Line Items]
Revenue	7,101	6,460	14,602	13,776
Gross margin	4,406	3,977	9,216	8,627
EMEA
Segment Reporting Information [Line Items]
Revenue	3,091	2,896	6,093	5,829
Gross margin	1,910	1,870	3,825	3,758
APJC
Segment Reporting Information [Line Items]
Revenue	1,744	1,799	3,486	3,635
Gross margin	1,052	993	2,077	2,072
Segment total
Segment Reporting Information [Line Items]
Gross margin	$ 7,368	$ 6,840	$ 15,118	$ 14,457

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Net Income per Share (Tables)

6 Months Ended

Jan. 24, 2015

Earnings Per Share [Abstract]

Calculation Of Basic And Diluted Net Income Per Share

The following table presents the calculation of basic and diluted net income per share (in millions, except per-share amounts):

	Three Months Ended				Six Months Ended
	January 24, 2015		January 25, 2014		January 24, 2015		January 25, 2014
Net income	$	2,397	$	1,429	$	4,225	$	3,425
Weighted-average shares—basic	5,117		5,294		5,115		5,336
Effect of dilutive potential common shares	43		33		44		47
Weighted-average shares—diluted	5,160		5,327		5,159		5,383
Net income per share—basic	$	0.47	$	0.27	$	0.83	$	0.64
Net income per share—diluted	$	0.46	$	0.27	$	0.82	$	0.64
Antidilutive employee share-based awards, excluded	83		278		156		252

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Restructuring and Other Charges (Tables)

6 Months Ended

Jan. 24, 2015

Restructuring Charges [Abstract]

Liabilities Related To Restructuring And Other Charges

The following table summarizes the activities related to the restructuring and other charges as discussed above (in millions):

	Fiscal 2014 and Prior Plans						Fiscal 2015 Plan
	Employee Severance			Other			Employee Severance			Other			Total
Liability as of July 26, 2014	$	40		$	29		$	—		$	—		$	69
Gross charges in fiscal 2015	—			—			386			1			387
Cash payments	(18		)	—			(347		)	(3		)	(368		)
Non-cash items	—			(8		)	—			2			(6		)
Liability as of January 24, 2015	$	22		$	21		$	39		$	—		$	82

XML

Derivative Instruments (Derivatives Recorded At Fair Value) (Details) (USD $) In Millions, unless otherwise specified	Jan. 24, 2015	Jul. 26, 2014
Derivative [Line Items]
DERIVATIVE ASSETS	$ 288	$ 160
DERIVATIVE LIABILITIES	162	67
Derivatives designated as hedging instruments:
Derivative [Line Items]
DERIVATIVE ASSETS	283	155
DERIVATIVE LIABILITIES	156	65
Derivatives designated as hedging instruments: | Foreign currency derivatives | Other current assets
Derivative [Line Items]
DERIVATIVE ASSETS	4	7
Derivatives designated as hedging instruments: | Foreign currency derivatives | Other current liabilities
Derivative [Line Items]
DERIVATIVE LIABILITIES	88	6
Derivatives designated as hedging instruments: | Interest rate derivatives | Other assets
Derivative [Line Items]
DERIVATIVE ASSETS	279	148
Derivatives designated as hedging instruments: | Interest rate derivatives | Other long-term liabilities
Derivative [Line Items]
DERIVATIVE LIABILITIES	0	3
Derivatives designated as hedging instruments: | Equity derivatives | Other current assets
Derivative [Line Items]
DERIVATIVE ASSETS	0	0
Derivatives designated as hedging instruments: | Equity derivatives | Other current liabilities
Derivative [Line Items]
DERIVATIVE LIABILITIES	68	56
Derivatives not designated as hedging instruments:
Derivative [Line Items]
DERIVATIVE ASSETS	5	5
DERIVATIVE LIABILITIES	6	2
Derivatives not designated as hedging instruments: | Foreign currency derivatives | Other current assets
Derivative [Line Items]
DERIVATIVE ASSETS	5	3
Derivatives not designated as hedging instruments: | Foreign currency derivatives | Other current liabilities
Derivative [Line Items]
DERIVATIVE LIABILITIES	6	2
Derivatives not designated as hedging instruments: | Equity derivatives | Other assets
Derivative [Line Items]
DERIVATIVE ASSETS	0	2
Derivatives not designated as hedging instruments: | Equity derivatives | Other long-term liabilities
Derivative [Line Items]
DERIVATIVE LIABILITIES	$ 0	$ 0

XML

Fair Value (Assets and Liabilities Measured At Fair Value On Recurring Basis) (Details) (USD $) In Millions, unless otherwise specified	Jan. 24, 2015	Jul. 26, 2014
Fair Value, Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets:	$ 51,557	$ 50,443
Cash equivalents: | Money market funds
Fair Value, Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets:	2,977	4,935
Cash equivalents: | Corporate debt securities
Fair Value, Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets:	67	0
Available-for-sale investments: | U.S. government securities
Fair Value, Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets:	30,354	31,734
Available-for-sale investments: | U.S. government agency securities
Fair Value, Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets:	2,326	1,063
Available-for-sale investments: | Non-U.S. government and agency securities
Fair Value, Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets:	1,109	861
Available-for-sale investments: | Corporate debt securities
Fair Value, Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets:	11,213	9,159
Available-for-sale investments: | U.S. agency mortgage-backed securities
Fair Value, Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets:	1,375	579
Available-for-sale investments: | Publicly traded equity securities
Fair Value, Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets:	1,848	1,952
Derivative assets
Fair Value, Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets:	288	160
Derivative liabilities
Fair Value, Assets And Liabilities Measured On Recurring Basis [Line Items]
Liabilities:	162	67
Level 1
Fair Value, Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets:	4,825	6,887
Level 1 | Cash equivalents: | Money market funds
Fair Value, Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets:	2,977	4,935
Level 1 | Cash equivalents: | Corporate debt securities
Fair Value, Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets:	0	0
Level 1 | Available-for-sale investments: | U.S. government securities
Fair Value, Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets:	0	0
Level 1 | Available-for-sale investments: | U.S. government agency securities
Fair Value, Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets:	0	0
Level 1 | Available-for-sale investments: | Non-U.S. government and agency securities
Fair Value, Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets:	0	0
Level 1 | Available-for-sale investments: | Corporate debt securities
Fair Value, Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets:	0	0
Level 1 | Available-for-sale investments: | U.S. agency mortgage-backed securities
Fair Value, Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets:	0	0
Level 1 | Available-for-sale investments: | Publicly traded equity securities
Fair Value, Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets:	1,848	1,952
Level 1 | Derivative assets
Fair Value, Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets:	0	0
Level 1 | Derivative liabilities
Fair Value, Assets And Liabilities Measured On Recurring Basis [Line Items]
Liabilities:	0	0
Level 2
Fair Value, Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets:	46,732	43,554
Level 2 | Cash equivalents: | Money market funds
Fair Value, Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets:	0	0
Level 2 | Cash equivalents: | Corporate debt securities
Fair Value, Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets:	67	0
Level 2 | Available-for-sale investments: | U.S. government securities
Fair Value, Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets:	30,354	31,734
Level 2 | Available-for-sale investments: | U.S. government agency securities
Fair Value, Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets:	2,326	1,063
Level 2 | Available-for-sale investments: | Non-U.S. government and agency securities
Fair Value, Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets:	1,109	861
Level 2 | Available-for-sale investments: | Corporate debt securities
Fair Value, Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets:	11,213	9,159
Level 2 | Available-for-sale investments: | U.S. agency mortgage-backed securities
Fair Value, Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets:	1,375	579
Level 2 | Available-for-sale investments: | Publicly traded equity securities
Fair Value, Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets:	0	0
Level 2 | Derivative assets
Fair Value, Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets:	288	158
Level 2 | Derivative liabilities
Fair Value, Assets And Liabilities Measured On Recurring Basis [Line Items]
Liabilities:	162	67
Level 3
Fair Value, Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets:	0	2
Level 3 | Cash equivalents: | Money market funds
Fair Value, Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets:	0	0
Level 3 | Cash equivalents: | Corporate debt securities
Fair Value, Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets:	0	0
Level 3 | Available-for-sale investments: | U.S. government securities
Fair Value, Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets:	0	0
Level 3 | Available-for-sale investments: | U.S. government agency securities
Fair Value, Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets:	0	0
Level 3 | Available-for-sale investments: | Non-U.S. government and agency securities
Fair Value, Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets:	0	0
Level 3 | Available-for-sale investments: | Corporate debt securities
Fair Value, Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets:	0	0
Level 3 | Available-for-sale investments: | U.S. agency mortgage-backed securities
Fair Value, Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets:	0	0
Level 3 | Available-for-sale investments: | Publicly traded equity securities
Fair Value, Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets:	0	0
Level 3 | Derivative assets
Fair Value, Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets:	0	2
Level 3 | Derivative liabilities
Fair Value, Assets And Liabilities Measured On Recurring Basis [Line Items]
Liabilities:	$ 0	$ 0

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Commitments and Contingencies (Schedule of Financing Guarantees Outstanding) (Details) (USD $) In Millions, unless otherwise specified	Jan. 24, 2015	Jul. 26, 2014
Loss Contingencies [Line Items]
Maximum potential future payments relating to financing guarantees:	$ 471	$ 465
Deferred revenue associated with financing guarantees:	(269)	(293)
Maximum potential future payments relating to financing guarantees, net of associated deferred revenue	202	172
Channel partner
Loss Contingencies [Line Items]
Maximum potential future payments relating to financing guarantees:	316	263
Deferred revenue associated with financing guarantees:	(148)	(127)
End user
Loss Contingencies [Line Items]
Maximum potential future payments relating to financing guarantees:	155	202
Deferred revenue associated with financing guarantees:	$ (121)	$ (166)

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Restructuring and Other Charges (Additional Information) (Details) (USD $) In Millions, unless otherwise specified	6 Months Ended	3 Months Ended		6 Months Ended
	Jan. 24, 2015	Jan. 24, 2015	Jan. 25, 2014	Jan. 25, 2014	Jul. 26, 2014
Restructuring Cost and Reserve [Line Items]
Restructuring Charges	$ 387
Fiscal 2015 plan
Restructuring Cost and Reserve [Line Items]
Restructuring Charges	387	69
Fiscal 2015 plan | Expected Maximum
Restructuring Cost and Reserve [Line Items]
Restructuring and Related Cost, Expected Cost	600	600
Fiscal 2014 Plan
Restructuring Cost and Reserve [Line Items]
Restructuring Charges			73	310
Cumulative restructuring charges					$ 418

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Borrowings (Schedule Of Long-Term Debt) (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended	12 Months Ended
	Jan. 24, 2015	Jul. 26, 2014
Debt Instrument [Line Items]
Total	$ 20,252	$ 20,754
Unaccreted discount	(61)	(63)
Hedge accounting fair value adjustments	326	210
Total	20,517	20,901
Current portion of long-term debt	850	500
Long-term debt	19,667	20,401
Floating Rate Notes 3-month Libor Plus 0.05% Due September 2015 [Member]
Debt Instrument [Line Items]
Maturity Date	Sep. 03, 2015	Sep. 03, 2015
Notes	850	850
Effective Rate	0.36%	0.35%
Three-month LIBOR plus this Percentage (in %)	0.05%	0.05%
Floating Rate Notes 3-month Libor Plus 0.28% Due March 2017 [Member]
Debt Instrument [Line Items]
Maturity Date	Mar. 03, 2017	Mar. 03, 2017
Notes	1,000	1,000
Effective Rate	0.57%	0.56%
Three-month LIBOR plus this Percentage (in %)	0.28%	0.28%
Floating rate notes 3-month Libor plus 0.5% due March 2019 [Member]
Debt Instrument [Line Items]
Maturity Date	Mar. 01, 2019	Mar. 01, 2019
Notes	500	500
Effective Rate	0.79%	0.78%
Three-month LIBOR plus this Percentage (in %)	0.50%	0.50%
Fixed-Rate Notes, 2.90%, Due November 2014
Debt Instrument [Line Items]
Maturity Date	Nov. 17, 2014	Nov. 17, 2014
Notes	0	500
Debt Instrument, Interest Rate, Stated Percentage	2.90%	2.90%
Effective Rate	0.00%	3.11%
Fixed-Rate Notes, 5.5%, Due February 2016
Debt Instrument [Line Items]
Maturity Date	Feb. 22, 2016	Feb. 22, 2016
Notes	3,000	3,000
Debt Instrument, Interest Rate, Stated Percentage	5.50%	5.50%
Effective Rate	3.05%	3.04%
Fixed-Rate Notes, 1.1%, Due March 2017
Debt Instrument [Line Items]
Maturity Date	Mar. 03, 2017	Mar. 03, 2017
Notes	2,400	2,400
Debt Instrument, Interest Rate, Stated Percentage	1.10%	1.10%
Effective Rate	0.57%	0.56%
Fixed-Rate Notes, 3.15%, Due March 2017
Debt Instrument [Line Items]
Maturity Date	Mar. 14, 2017	Mar. 14, 2017
Notes	750	750
Debt Instrument, Interest Rate, Stated Percentage	3.15%	3.15%
Effective Rate	0.80%	0.79%
Fixed-Rate Notes, 4.95%, Due February 2019
Debt Instrument [Line Items]
Maturity Date	Feb. 15, 2019	Feb. 15, 2019
Notes	2,000	2,000
Debt Instrument, Interest Rate, Stated Percentage	4.95%	4.95%
Effective Rate	4.69%	4.69%
Fixed-Rate Notes, 2.125%, Due March 2019
Debt Instrument [Line Items]
Maturity Date	Mar. 01, 2019	Mar. 01, 2019
Notes	1,750	1,750
Debt Instrument, Interest Rate, Stated Percentage	2.125%	2.125%
Effective Rate	0.78%	0.77%
Fixed-Rate Notes, 4.45%, Due January 2020
Debt Instrument [Line Items]
Maturity Date	Jan. 15, 2020	Jan. 15, 2020
Notes	2,500	2,500
Debt Instrument, Interest Rate, Stated Percentage	4.45%	4.45%
Effective Rate	2.99%	2.98%
Fixed-Rate Notes, 2.90%, Due March 2021
Debt Instrument [Line Items]
Maturity Date	Mar. 04, 2021	Mar. 04, 2021
Notes	500	500
Debt Instrument, Interest Rate, Stated Percentage	2.90%	2.90%
Effective Rate	0.94%	0.93%
Fixed-Rate Notes,3.625%, Due March 2024
Debt Instrument [Line Items]
Maturity Date	Mar. 04, 2024	Mar. 04, 2024
Notes	1,000	1,000
Debt Instrument, Interest Rate, Stated Percentage	3.625%	3.625%
Effective Rate	1.06%	1.05%
Fixed-Rate Notes, 5.9%, Due February 2039
Debt Instrument [Line Items]
Maturity Date	Feb. 15, 2039	Feb. 15, 2039
Notes	2,000	2,000
Debt Instrument, Interest Rate, Stated Percentage	5.90%	5.90%
Effective Rate	6.11%	6.11%
Fixed-Rate Notes, 5.5%, Due January 2040
Debt Instrument [Line Items]
Maturity Date	Jan. 15, 2040	Jan. 15, 2040
Notes	2,000	2,000
Debt Instrument, Interest Rate, Stated Percentage	5.50%	5.50%
Effective Rate	5.67%	5.67%
Other long-term debt
Debt Instrument [Line Items]
Other long-term debt	$ 2	$ 4
Effective Rate	2.08%	2.39%

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Commitments and Contingencies (Schedule Of Future Minimum Lease Payments Under All Noncancelable Operating Leases) (Details) (USD $) In Millions, unless otherwise specified	Jan. 24, 2015
Commitments and Contingencies Disclosure [Abstract]
2015 (remaining six months)	$ 195
2016	287
2017	196
2018	139
2019	72
Thereafter	209
Total	$ 1,098

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Derivative Instruments (Effect Of Derivative Instruments Designated As Fair Value Hedges And Underlying Hedged Items On Consolidated Statements Of Operations) (Details) (Derivatives Designated as Fair Value Hedging Instruments, USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jan. 24, 2015	Jan. 25, 2014	Jan. 24, 2015	Jan. 25, 2014
Hedge Underlying Gain Loss [Line Items]
GAINS (LOSSES) ON DERIVATIVE INSTRUMENTS FOR THE THREE MONTHS ENDED	$ 43	$ (65)	$ 119	$ (82)
GAINS (LOSSES) RELATED TO HEDGED ITEMS FOR THE THREE MONTHS ENDED	(43)	66	(122)	81
Equity derivatives | Other income (loss), net
Hedge Underlying Gain Loss [Line Items]
GAINS (LOSSES) ON DERIVATIVE INSTRUMENTS FOR THE THREE MONTHS ENDED	(18)	(12)	(12)	(47)
GAINS (LOSSES) RELATED TO HEDGED ITEMS FOR THE THREE MONTHS ENDED	18	12	12	47
Interest rate derivatives | Interest expense
Hedge Underlying Gain Loss [Line Items]
GAINS (LOSSES) ON DERIVATIVE INSTRUMENTS FOR THE THREE MONTHS ENDED	61	(53)	131	(35)
GAINS (LOSSES) RELATED TO HEDGED ITEMS FOR THE THREE MONTHS ENDED	$ (61)	$ 54	$ (134)	$ 34

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Commitments and Contingencies (Schedule of Other Commitments) (Details) (Acquisition, USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jan. 24, 2015	Jan. 25, 2014	Jan. 24, 2015	Jan. 25, 2014
Acquisition
Contingency [Line Items]
Compensation expense related to acquisitions	$ 94	$ 106	$ 192	$ 410

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Borrowings (Schedule Of Future Principal Payments For Long-Term Debt) (Details) (USD $) In Millions, unless otherwise specified	Jan. 24, 2015	Jul. 26, 2014
Debt Disclosure [Abstract]
2015 (remaining six months)	$ 0
2016	3,851
2017	4,151
2018	0
2019	4,250
Thereafter	8,000
Total	$ 20,252	$ 20,754

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Investments (Equity Method and Cost Method Investment) (Details) (USD $) In Millions, unless otherwise specified	Jan. 24, 2015	Jul. 26, 2014
Investments, Debt and Equity Securities [Abstract]
Equity method investments	$ 541	$ 630
Cost method investments	316	269
Total	$ 857	$ 899

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Comprehensive Income

6 Months Ended

Jan. 24, 2015

Comprehensive Income [Abstract]

Comprehensive Income

15. Comprehensive Income

The components of AOCI, net of tax, and the other comprehensive income (loss), excluding noncontrolling interest, for the six months ended January 24, 2015 and January 25, 2014 are summarized as follows (in millions):

January 24, 2015	Net Unrealized Gains on Investments			Net Unrealized Gains (Losses) Cash Flow Hedging Instruments			Cumulative Translation Adjustment and Actuarial Gains (Losses)			Accumulated Other Comprehensive Income
BALANCE AT JULY 26, 2014	$	424		$	(12	)	$	265		$	677
Other comprehensive income (loss) before reclassifications attributable to Cisco Systems, Inc.	(23		)	(131		)	(379		)	(533		)
(Gains) losses reclassified out of other comprehensive income	(76		)	30			—			(46		)
Tax benefit (expense)	49			3			36			88
BALANCE AT JANUARY 24, 2015	$	374		$	(110	)	$	(78	)	$	186

January 25, 2014	Net Unrealized Gains on Investments			Net Unrealized Gains (Losses) Cash Flow Hedging Instruments			Cumulative Translation Adjustment and Actuarial Gains (Losses)			Accumulated Other Comprehensive Income
BALANCE AT JULY 27, 2013	$	379		$	8		$	221		$	608
Other comprehensive income (loss) before reclassifications attributable to Cisco Systems, Inc.	332			33			(14		)	351
(Gains) losses reclassified out of other comprehensive income	(165		)	(28		)	—			(193		)
Tax benefit (expense)	(60		)	(2		)	(1		)	(63		)
BALANCE AT JANUARY 25, 2014	$	486		$	11		$	206		$	703

The net gains (losses) reclassified out of other comprehensive income into the Consolidated Statements of Operations, with line item location, during each period were as follows (in millions):

	Three Months Ended					Six Months Ended
	January 24, 2015			January 25, 2014		January 24, 2015			January 25, 2014
Comprehensive Income Components	Income Before Taxes					Income Before Taxes					Line Item in Statements of Operations
Net unrealized gains on available-for-sale investments
	$	69		$	82	$	76		$	165	Other income (loss), net
Net unrealized gains and (losses) on cash flow hedging instruments:
Foreign currency derivatives	(21		)	16		(24		)	23		Operating expenses
Foreign currency derivatives	(5		)	3		(6		)	5		Cost of sales—service
	(26		)	19		(30		)	28
Total amounts reclassified out of other comprehensive income	$	43		$	101	$	46		$	193

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Goodwill and Purchased Intangible Assets (Schedule Of Goodwill By Reportable Segments) (Details) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Jan. 24, 2015
Goodwill [Roll Forward]
Balance	$ 24,239
Acquisitions	168
Other	(25)
Balance	24,382
Americas
Goodwill [Roll Forward]
Balance	15,080
Acquisitions	89
Other	(13)
Balance	15,156
EMEA
Goodwill [Roll Forward]
Balance	5,715
Acquisitions	63
Other	(7)
Balance	5,771
APJC
Goodwill [Roll Forward]
Balance	3,444
Acquisitions	16
Other	(5)
Balance	$ 3,455

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Employee Benefit Plans (Tables)

6 Months Ended

Jan. 24, 2015

Compensation and Retirement Disclosure [Abstract]

Summary Of Share-Based Compensation Expense

Share-based compensation expense consists primarily of expenses for stock options, stock purchase rights, restricted stock, and restricted stock units granted to employees. The following table summarizes share-based compensation expense (in millions):

	Three Months Ended					Six Months Ended
	January 24, 2015		January 25, 2014			January 24, 2015			January 25, 2014
Cost of sales—product	$	11	$	12		$	22		$	22
Cost of sales—service	34		40			71			73
Share-based compensation expense in cost of sales	45		52			93			95
Research and development	105		108			224			200
Sales and marketing	114		141			261			264
General and administrative	42		47			101			101
Restructuring and other charges	2		(1		)	(2		)	(4		)
Share-based compensation expense in operating expenses	263		295			584			561
Total share-based compensation expense	$	308	$	347		$	677		$	656
Income tax benefit for share-based compensation	$	85	$	82		$	179		$	160

Summary Of Share-Based Awards Available For Grant

A summary of share-based awards available for grant is as follows (in millions):

	Share-Based Awards Available for Grant
BALANCE AT JULY 27, 2013	228
Restricted stock, stock units, and other share-based awards granted	(98	)
Share-based awards canceled/forfeited/expired	36
Additional shares reserved	135
Shares withheld for taxes and not issued	6
Other	3
BALANCE AT JULY 26, 2014	310
Restricted stock, stock units, and other share-based awards granted	(28	)
Share-based awards canceled/forfeited/expired	27
Shares withheld for taxes and not issued	21
Other	(2	)
BALANCE AT JANUARY 24, 2015	328

Summary Of Restricted Stock And Stock Unit Activity

A summary of the restricted stock and stock unit activity, which includes time-based and performance-based or market-based restricted stock units, is as follows (in millions, except per-share amounts):

	Restricted Stock/ Stock Units		Weighted-Average Grant Date Fair Value per Share		Aggregated Fair Market Value
UNVESTED BALANCE AT JULY 27, 2013	143		$	18.80
Granted and assumed	72		20.85
Vested	(53	)	19.55		$	1,229
Canceled/forfeited	(13	)	18.61
UNVESTED BALANCE AT JULY 26, 2014	149		19.54
Granted and assumed	18		23.47
Vested	(41	)	19.47		$	1,053
Canceled/forfeited	(11	)	19.70
UNVESTED BALANCE AT JANUARY 24, 2015	115		$	20.18

Summary Of Stock Option Activity

A summary of the stock option activity is as follows (in millions, except per-share amounts):

	STOCK OPTIONS OUTSTANDING
	Number Outstanding		Weighted-Average Exercise Price per Share
BALANCE AT JULY 27, 2013	276		$	24.44
Assumed from acquisitions	6		3.60
Exercised	(78	)	18.30
Canceled/forfeited/expired	(17	)	27.53
BALANCE AT JULY 26, 2014	187		26.03
Assumed from acquisitions	1		2.72
Exercised	(45	)	20.49
Canceled/forfeited/expired	(10	)	29.48
BALANCE AT JANUARY 24, 2015	133		$	27.45

Summary Of Significant Ranges Of Outstanding And Exercisable Stock Options

The following table summarizes significant ranges of outstanding and exercisable stock options as of January 24, 2015 (in millions, except years and share prices):

	STOCK OPTIONS OUTSTANDING						STOCK OPTIONS EXERCISABLE
Range of Exercise Prices	Number Outstanding	Weighted- Average Remaining Contractual Life (in Years)	Weighted- Average Exercise Price per Share		Aggregate Intrinsic Value		Number Exercisable	Weighted- Average Exercise Price per Share		Aggregate Intrinsic Value
$  0.01 – 15.00	5	5.4	$	4.17	$	135	3	$	5.66	$	69
15.01 – 18.00	1	2.0	16.91		3		1	16.91		3
18.01 – 20.00	1	0.3	19.69		9		1	19.69		9
20.01 – 25.00	37	0.8	22.90		198		37	22.90		198
25.01 – 30.00	20	1.5	26.72		32		20	26.72		32
30.01 – 35.00	69	1.5	32.16		—		69	32.16		—
Total	133	1.5	$	27.45	$	377	131	$	27.94	$	311

Schedule of Assumptions Used

The assumptions for the valuation of time-based RSUs and PRSUs are summarized as follows:

	RESTRICTED STOCK UNITS						PERFORMANCE RESTRICTED STOCK UNITS
Three Months Ended	January 24, 2015			January 25, 2014			January 24, 2015			January 25, 2014
Number of shares granted (in millions)	1			37			1			—
Grant date fair value per share	$	25.07		$	19.90		$	25.39		N/A
Weighted-average assumptions/inputs:
Expected dividend yield	2.8		%	3.2		%	2.8		%	N/A
Range of risk-free interest rates	0.0% – 1.6%			0.1% – 1.4%			0.0% – 1.6%			N/A
Range of expected volatilities for index	N/A			N/A			14.4% – 63.7%			N/A

	RESTRICTED STOCK UNITS						PERFORMANCE RESTRICTED STOCK UNITS
Six Months Ended	January 24, 2015			January 25, 2014			January 24, 2015			January 25, 2014
Number of shares granted (in millions)	11			47			7			4
Grant date fair value per share	$	23.34		$	20.57		$	23.70		$	22.70
Weighted-average assumptions/inputs:
Expected dividend yield	3.0		%	3.1		%	3.0		%	2.3		%
Range of risk-free interest rates	0.0% – 1.8%			0.0% – 1.4%			0.0% – 1.8%			0.0% – 1.4%
Range of expected volatilities for index	N/A			N/A			14.4% – 70.0%			17.4% – 70.5%

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Borrowings (Schedule Of Short-Term Debt) (Details) (USD $) In Millions, unless otherwise specified	Jan. 24, 2015	Jul. 26, 2014
Short-term Debt [Line Items]
Amount	$ 855	$ 508
Current portion of long-term debt
Short-term Debt [Line Items]
Amount	850	500
Effective Rate	0.36%	3.11%
Other short-term debt
Short-term Debt [Line Items]
Amount	$ 5	$ 8
Effective Rate	2.73%	2.67%

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Employee Benefit Plans (Summary Of Significant Ranges Of Outstanding And Exercisable Stock Options) (Details) (USD $) In Millions, except Per Share data, unless otherwise specified	6 Months Ended
	Jan. 24, 2015	Jul. 26, 2014	Jul. 27, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number Outstanding (in shares)	133	187	276
Weighted- Average Remaining Contractual Life (in Year/Month/Date))	1 year 6 months
Weighted- Average Exercise Price per Share	$ 27.45	$ 26.03	$ 24.44
Aggregate Intrinsic Value	$ 377
Number Exercisable, shares	131	183
Weighted- Average Exercise Price per Share	$ 27.94	$ 26.50
Aggregate Intrinsic Value	311
$ 0.01 – 15.00
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number Outstanding (in shares)	5
Weighted- Average Remaining Contractual Life (in Year/Month/Date))	5 years 4 months 24 days
Weighted- Average Exercise Price per Share	$ 4.17
Aggregate Intrinsic Value	135
Number Exercisable, shares	3
Weighted- Average Exercise Price per Share	$ 5.66
Aggregate Intrinsic Value	69
15.01 – 18.00
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number Outstanding (in shares)	1
Weighted- Average Remaining Contractual Life (in Year/Month/Date))	2 years
Weighted- Average Exercise Price per Share	$ 16.91
Aggregate Intrinsic Value	3
Number Exercisable, shares	1
Weighted- Average Exercise Price per Share	$ 16.91
Aggregate Intrinsic Value	3
18.01 – 20.00
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number Outstanding (in shares)	1
Weighted- Average Remaining Contractual Life (in Year/Month/Date))	0 years 3 months 18 days
Weighted- Average Exercise Price per Share	$ 19.69
Aggregate Intrinsic Value	9
Number Exercisable, shares	1
Weighted- Average Exercise Price per Share	$ 19.69
Aggregate Intrinsic Value	9
20.01 – 25.00
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number Outstanding (in shares)	37
Weighted- Average Remaining Contractual Life (in Year/Month/Date))	0 years 9 months 18 days
Weighted- Average Exercise Price per Share	$ 22.90
Aggregate Intrinsic Value	198
Number Exercisable, shares	37
Weighted- Average Exercise Price per Share	$ 22.90
Aggregate Intrinsic Value	198
25.01 – 30.00
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number Outstanding (in shares)	20
Weighted- Average Remaining Contractual Life (in Year/Month/Date))	1 year 6 months
Weighted- Average Exercise Price per Share	$ 26.72
Aggregate Intrinsic Value	32
Number Exercisable, shares	20
Weighted- Average Exercise Price per Share	$ 26.72
Aggregate Intrinsic Value	32
30.01 – 35.00
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number Outstanding (in shares)	69
Weighted- Average Remaining Contractual Life (in Year/Month/Date))	1 year 6 months
Weighted- Average Exercise Price per Share	$ 32.16
Aggregate Intrinsic Value	0
Number Exercisable, shares	69
Weighted- Average Exercise Price per Share	$ 32.16
Aggregate Intrinsic Value	$ 0

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Fair Value (Tables)

6 Months Ended

Jan. 24, 2015

Fair Value Disclosures [Abstract]

Assets And Liabilities Measured At Fair Value On A Recurring Basis

Assets and liabilities measured at fair value on a recurring basis as of January 24, 2015 and July 26, 2014 were as follows (in millions):

	JANUARY 24, 2015 FAIR VALUE MEASUREMENTS								JULY 26, 2014 FAIR VALUE MEASUREMENTS
	Level 1		Level 2		Level 3		Total Balance		Level 1		Level 2		Level 3		Total Balance
Assets:
Cash equivalents:
Money market funds	$	2,977	$	—	$	—	$	2,977	$	4,935	$	—	$	—	$	4,935
Corporate debt securities	—		67		—		67		—		—		—		—
Available-for-sale investments:
U.S. government securities	—		30,354		—		30,354		—		31,734		—		31,734
U.S. government agency securities	—		2,326		—		2,326		—		1,063		—		1,063
Non-U.S. government and agency securities	—		1,109		—		1,109		—		861		—		861
Corporate debt securities	—		11,213		—		11,213		—		9,159		—		9,159
U.S. agency mortgage-backed securities	—		1,375		—		1,375		—		579		—		579
Publicly traded equity securities	1,848		—		—		1,848		1,952		—		—		1,952
Derivative assets	—		288		—		288		—		158		2		160
Total	$	4,825	$	46,732	$	—	$	51,557	$	6,887	$	43,554	$	2	$	50,443
Liabilities:
Derivative liabilities	$	—	$	162	$	—	$	162	$	—	$	67	$	—	$	67
Total	$	—	$	162	$	—	$	162	$	—	$	67	$	—	$	67

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Goodwill and Purchased Intangible Assets (Schedule Of Purchased Intangible Assets With Finite And Indefinite Lives) (Details) (USD $) In Millions, unless otherwise specified	Jan. 24, 2015	Jul. 26, 2014
Business Acquisition [Line Items]
Gross	$ 5,780	$ 5,857
Accumulated Amortization	(3,136)	(2,709)
Total purchased intangible assets with finite lives, net	2,644	3,148
In-process research and development, with indefinite lives	111	132
Total- Gross	5,891	5,989
Total, net	2,755	3,280
TECHNOLOGY
Business Acquisition [Line Items]
Gross	4,020	4,100
Accumulated Amortization	(2,270)	(1,976)
Total purchased intangible assets with finite lives, net	1,750	2,124
CUSTOMER RELATIONSHIPS
Business Acquisition [Line Items]
Gross	1,709	1,706
Accumulated Amortization	(847)	(720)
Total purchased intangible assets with finite lives, net	862	986
OTHER
Business Acquisition [Line Items]
Gross	51	51
Accumulated Amortization	(19)	(13)
Total purchased intangible assets with finite lives, net	$ 32	$ 38

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Investments (Gross Realized Gains And Gross Realized Losses Related To Available-For-Sale Investment) (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jan. 24, 2015	Jan. 25, 2014	Jan. 24, 2015	Jan. 25, 2014
Investments [Abstract]
Gross realized gains	$ 92	$ 97	$ 113	$ 192
Gross realized losses	(23)	(15)	(37)	(27)
Total	$ 69	$ 82	$ 76	$ 165

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Financing Receivables and Operating Leases (Schedule Of Financing Receivables Categorized By Internal Credit Risk Rating) (Details) (USD $) In Millions, unless otherwise specified	Jan. 24, 2015		Jul. 26, 2014	Jan. 25, 2014
Financing Receivable, Recorded Investment [Line Items]
Gross receivables less unearned income	$ 7,906		$ 8,187
Total financing receivables before allowance for credit loss	8,134	[1]	8,420	8,018	[1]
1 to 4
Financing Receivable, Recorded Investment [Line Items]
Gross receivables less unearned income	3,996		4,312
5 to 6
Financing Receivable, Recorded Investment [Line Items]
Gross receivables less unearned income	3,531		3,498
7 and Higher
Financing Receivable, Recorded Investment [Line Items]
Gross receivables less unearned income	379		377
Total
Financing Receivable, Recorded Investment [Line Items]
Gross receivables less unearned income	7,906		8,187
Lease Receivables
Financing Receivable, Recorded Investment [Line Items]
Gross receivables less unearned income	3,163		3,294
Total financing receivables before allowance for credit loss	3,391	[1]		3,551	[1]
Lease Receivables | 1 to 4
Financing Receivable, Recorded Investment [Line Items]
Gross receivables less unearned income	1,632		1,615
Lease Receivables | 5 to 6
Financing Receivable, Recorded Investment [Line Items]
Gross receivables less unearned income	1,386		1,538
Lease Receivables | 7 and Higher
Financing Receivable, Recorded Investment [Line Items]
Gross receivables less unearned income	145		141
Lease Receivables | Total
Financing Receivable, Recorded Investment [Line Items]
Gross receivables less unearned income	3,163		3,294
Loan Receivables
Financing Receivable, Recorded Investment [Line Items]
Gross receivables less unearned income	1,674		1,683
Total financing receivables before allowance for credit loss	1,674	[1]		1,660	[1]
Loan Receivables | 1 to 4
Financing Receivable, Recorded Investment [Line Items]
Gross receivables less unearned income	717		953
Loan Receivables | 5 to 6
Financing Receivable, Recorded Investment [Line Items]
Gross receivables less unearned income	803		593
Loan Receivables | 7 and Higher
Financing Receivable, Recorded Investment [Line Items]
Gross receivables less unearned income	154		137
Loan Receivables | Total
Financing Receivable, Recorded Investment [Line Items]
Gross receivables less unearned income	1,674		1,683
Financed Service Contracts and Other
Financing Receivable, Recorded Investment [Line Items]
Gross receivables less unearned income	3,069		3,210
Total financing receivables before allowance for credit loss	3,069	[1]		2,807	[1]
Financed Service Contracts and Other | 1 to 4
Financing Receivable, Recorded Investment [Line Items]
Gross receivables less unearned income	1,647		1,744
Financed Service Contracts and Other | 5 to 6
Financing Receivable, Recorded Investment [Line Items]
Gross receivables less unearned income	1,342		1,367
Financed Service Contracts and Other | 7 and Higher
Financing Receivable, Recorded Investment [Line Items]
Gross receivables less unearned income	80		99
Financed Service Contracts and Other | Total
Financing Receivable, Recorded Investment [Line Items]
Gross receivables less unearned income	$ 3,069		$ 3,210

[1] Total financing receivables before allowance for credit loss.

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Supplemental Information (Stock Repurchases Since Inception of Program) (Details) (USD $) Share data in Millions, unless otherwise specified	Jan. 24, 2015	Jul. 26, 2014
Supplementary Information [Line Items]
Authorized common stock repurchase amount	$ 97,000,000,000
Cumulative stock repurchased and retired (in shares)	4,373	4,288
Repurchases of common stock under the repurchase program	90,666,000,000	88,445,000,000
Shares of Common Stock (in shares)
Supplementary Information [Line Items]
Cumulative stock repurchased and retired (in shares)	4,373
Common Stock and Additional Paid-In Capital
Supplementary Information [Line Items]
Repurchases of common stock under the repurchase program	22,021,000,000
Retained Earnings
Supplementary Information [Line Items]
Repurchases of common stock under the repurchase program	68,645,000,000
Total Cisco Shareholders’ Equity
Supplementary Information [Line Items]
Repurchases of common stock under the repurchase program	$ 90,666,000,000

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Consolidated Statements Of Equity (Parenthetical) (USD $)	6 Months Ended
	Jan. 24, 2015	Jan. 25, 2014
Statement of Stockholders' Equity [Abstract]
Cash dividends declared, per common share	$ 0.38	$ 0.34

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Financing Receivables and Operating Leases (Schedule Of Aging Analysis Of Financing Receivables) (Details) (USD $) In Millions, unless otherwise specified	Jan. 24, 2015	Jul. 26, 2014
Financing Receivable, Recorded Investment, Past Due [Line Items]
31-60 days past due (Includes billed and unbilled)	$ 345	$ 338
61-90 days past due (includes billed and unbilled)	240	307
90 days or over past due ( includes billed and unbilled)	786	452
Total Past Due	1,371	1,097
Current	6,535	7,090
Total	7,906	8,187
Nonaccrual Financing Receivables	116	79
Impaired Financing Receivables	89	69
Lease Receivables
Financing Receivable, Recorded Investment, Past Due [Line Items]
31-60 days past due (Includes billed and unbilled)	171	63
61-90 days past due (includes billed and unbilled)	63	48
90 days or over past due ( includes billed and unbilled)	224	203
Total Past Due	458	314
Current	2,705	2,980
Total	3,163	3,294
Nonaccrual Financing Receivables	53	48
Impaired Financing Receivables	48	41
Loan Receivables
Financing Receivable, Recorded Investment, Past Due [Line Items]
31-60 days past due (Includes billed and unbilled)	30	7
61-90 days past due (includes billed and unbilled)	42	21
90 days or over past due ( includes billed and unbilled)	177	28
Total Past Due	249	56
Current	1,425	1,627
Total	1,674	1,683
Nonaccrual Financing Receivables	33	19
Impaired Financing Receivables	33	19
Financed Service Contracts and Other
Financing Receivable, Recorded Investment, Past Due [Line Items]
31-60 days past due (Includes billed and unbilled)	144	268
61-90 days past due (includes billed and unbilled)	135	238
90 days or over past due ( includes billed and unbilled)	385	221
Total Past Due	664	727
Current	2,405	2,483
Total	3,069	3,210
Nonaccrual Financing Receivables	30	12
Impaired Financing Receivables	$ 8	$ 9

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Comprehensive Income (Tables)

6 Months Ended

Jan. 24, 2015

Comprehensive Income [Abstract]

Components Of AOCI, Net Of Tax

The components of AOCI, net of tax, and the other comprehensive income (loss), excluding noncontrolling interest, for the six months ended January 24, 2015 and January 25, 2014 are summarized as follows (in millions):

January 24, 2015	Net Unrealized Gains on Investments			Net Unrealized Gains (Losses) Cash Flow Hedging Instruments			Cumulative Translation Adjustment and Actuarial Gains (Losses)			Accumulated Other Comprehensive Income
BALANCE AT JULY 26, 2014	$	424		$	(12	)	$	265		$	677
Other comprehensive income (loss) before reclassifications attributable to Cisco Systems, Inc.	(23		)	(131		)	(379		)	(533		)
(Gains) losses reclassified out of other comprehensive income	(76		)	30			—			(46		)
Tax benefit (expense)	49			3			36			88
BALANCE AT JANUARY 24, 2015	$	374		$	(110	)	$	(78	)	$	186

January 25, 2014	Net Unrealized Gains on Investments			Net Unrealized Gains (Losses) Cash Flow Hedging Instruments			Cumulative Translation Adjustment and Actuarial Gains (Losses)			Accumulated Other Comprehensive Income
BALANCE AT JULY 27, 2013	$	379		$	8		$	221		$	608
Other comprehensive income (loss) before reclassifications attributable to Cisco Systems, Inc.	332			33			(14		)	351
(Gains) losses reclassified out of other comprehensive income	(165		)	(28		)	—			(193		)
Tax benefit (expense)	(60		)	(2		)	(1		)	(63		)
BALANCE AT JANUARY 25, 2014	$	486		$	11		$	206		$	703

Reclassification out of Accumulated Other Comprehensive Income

The net gains (losses) reclassified out of other comprehensive income into the Consolidated Statements of Operations, with line item location, during each period were as follows (in millions):

	Three Months Ended					Six Months Ended
	January 24, 2015			January 25, 2014		January 24, 2015			January 25, 2014
Comprehensive Income Components	Income Before Taxes					Income Before Taxes					Line Item in Statements of Operations
Net unrealized gains on available-for-sale investments
	$	69		$	82	$	76		$	165	Other income (loss), net
Net unrealized gains and (losses) on cash flow hedging instruments:
Foreign currency derivatives	(21		)	16		(24		)	23		Operating expenses
Foreign currency derivatives	(5		)	3		(6		)	5		Cost of sales—service
	(26		)	19		(30		)	28
Total amounts reclassified out of other comprehensive income	$	43		$	101	$	46		$	193

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Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jan. 24, 2015

Accounting Policies [Abstract]

New Accounting Pronouncements Recently Adopted

New Accounting Updates Recently Adopted

In March 2013, the FASB issued an accounting standard update requiring an entity to release into net income the entire amount of a cumulative translation adjustment related to its investment in a foreign entity when as a parent it sells either a part or all of its investment in the foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets within the foreign entity. This accounting standard update became effective for the Company beginning in the first quarter of fiscal 2015. The application of this accounting standard update did not have any impact to the Company's Consolidated Financial Statements.

In July 2013, the FASB issued an accounting standard update that provides explicit guidance on the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward or a tax credit carryforward exists. Under the new standard update, an unrecognized tax benefit, or a portion of an unrecognized tax benefit, is to be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward or a tax credit carryforward. This accounting standard update became effective for the Company beginning in the first quarter of fiscal 2015 and applied prospectively. The application of this accounting standard update did not have a material impact to the Company's Consolidated Financial Statements.

In April 2014, the FASB issued an accounting standard update that changes the criteria for reporting discontinued operations. This accounting standard update raises the threshold for a disposal transaction to qualify as a discontinued operation and requires additional disclosures about discontinued operations and disposals of individually significant components that do not qualify as discontinued operations. The Company adopted this accounting standard update in the second quarter of fiscal 2015, and it did not have any impact upon adoption.

Recent Accounting Standards or Updates Not Yet Effective

Recent Accounting Standards or Updates Not Yet Effective

In May 2014, the FASB issued an accounting standard update related to revenue from contracts with customers, which will supersede nearly all current U.S. GAAP guidance on this topic and eliminate industry-specific guidance. The underlying principle is to recognize revenue when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. This accounting standard update will be effective for the Company beginning in the first quarter of fiscal 2018. The new revenue standard may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of adoption.  Early adoption is not permitted.  The Company is currently evaluating the impact of this accounting standard update on its Consolidated Financial Statements.

Fair Value Measurement, Policy [Policy Text Block]

Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be either recorded or disclosed at fair value, the Company considers the principal or most advantageous market in which it would transact, and it also considers assumptions that market participants would use when pricing the asset or liability.

(a) Fair Value Hierarchy

The accounting guidance for fair value measurement requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is as follows:

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability, such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

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Net Income per Share

6 Months Ended

Jan. 24, 2015

Earnings Per Share [Abstract]

Net Income per Share

18.     Net Income per Share

The following table presents the calculation of basic and diluted net income per share (in millions, except per-share amounts):

	Three Months Ended				Six Months Ended
	January 24, 2015		January 25, 2014		January 24, 2015		January 25, 2014
Net income	$	2,397	$	1,429	$	4,225	$	3,425
Weighted-average shares—basic	5,117		5,294		5,115		5,336
Effect of dilutive potential common shares	43		33		44		47
Weighted-average shares—diluted	5,160		5,327		5,159		5,383
Net income per share—basic	$	0.47	$	0.27	$	0.83	$	0.64
Net income per share—diluted	$	0.46	$	0.27	$	0.82	$	0.64
Antidilutive employee share-based awards, excluded	83		278		156		252

Employee equity share options, unvested shares, and similar equity instruments granted by the Company are treated as potential common shares outstanding in computing diluted earnings per share. Diluted shares outstanding include the dilutive effect of in-the-money options, unvested restricted stock, and restricted stock units. The dilutive effect of such equity awards is calculated based on the average share price for each fiscal period using the treasury stock method. Under the treasury stock method, the amount the employee must pay for exercising stock options, the amount of compensation cost for future service that the Company has not yet recognized, and the amount of tax benefits that would be recorded in additional paid-in capital when the award becomes deductible are collectively assumed to be used to repurchase shares.

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Comprehensive Income (AOCI components) (Details) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Jan. 24, 2015	Jan. 25, 2014	Jul. 26, 2014
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
AOCI Balance			$ 677
AOCI Balance	186		677
Net Unrealized Gains on Investments
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
AOCI Balance	424	379
Other comprehensive income (loss) before reclassifications attributable to Cisco Systems, Inc.	(23)	332
(Gains) losses reclassified out of other comprehensive income	(76)	(165)
Tax benefit (expense)	49	(60)
AOCI Balance	374	486
Net Unrealized Gains (Losses) Cash Flow Hedging Instruments
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
AOCI Balance	(12)	8
Other comprehensive income (loss) before reclassifications attributable to Cisco Systems, Inc.	(131)	33
(Gains) losses reclassified out of other comprehensive income	30	(28)
Tax benefit (expense)	3	(2)
AOCI Balance	(110)	11
Cumulative Translation Adjustment and Actuarial Gains (Losses)
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
AOCI Balance	265	221
Other comprehensive income (loss) before reclassifications attributable to Cisco Systems, Inc.	(379)	(14)
(Gains) losses reclassified out of other comprehensive income	0	0
Tax benefit (expense)	36	(1)
AOCI Balance	(78)	206
Accumulated Other Comprehensive Income
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
AOCI Balance	677	608
Other comprehensive income (loss) before reclassifications attributable to Cisco Systems, Inc.	(533)	351
(Gains) losses reclassified out of other comprehensive income	(46)	(193)
Tax benefit (expense)	88	(63)
AOCI Balance	$ 186	$ 703

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Restructuring and Other Charges (Schedule Of Activities Related To Restructuring And Other Charges) (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended	6 Months Ended
	Jan. 24, 2015	Jan. 24, 2015
Restructuring Reserve [Roll Forward]
Liability as of beginning period		$ 69
Gross charges		387
Cash payments		(368)
Non-cash items		(6)
Liability as of ending period	82	82
Fiscal 2014 plan and prior plans | Employee Severance
Restructuring Reserve [Roll Forward]
Liability as of beginning period		40
Gross charges		0
Cash payments		(18)
Non-cash items		0
Liability as of ending period	22	22
Fiscal 2014 plan and prior plans | Other
Restructuring Reserve [Roll Forward]
Liability as of beginning period		29
Gross charges		0
Cash payments		0
Non-cash items		(8)
Liability as of ending period	21	21
Fiscal 2015 plan
Restructuring Reserve [Roll Forward]
Gross charges	69	387
Fiscal 2015 plan | Employee Severance
Restructuring Reserve [Roll Forward]
Liability as of beginning period		0
Gross charges		386
Cash payments		(347)
Non-cash items		0
Liability as of ending period	39	39
Fiscal 2015 plan | Other
Restructuring Reserve [Roll Forward]
Liability as of beginning period		0
Gross charges		1
Cash payments		(3)
Non-cash items		2
Liability as of ending period	$ 0	$ 0

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Income Taxes (Tables)

6 Months Ended

Jan. 24, 2015

Income Tax Disclosure [Abstract]

Income tax provision [Table Text Block]

The following table provides details of income taxes (in millions, except percentages):

	Three Months Ended						Six Months Ended
	January 24, 2015			January 25, 2014			January 24, 2015			January 25, 2014
Income before provision for income taxes	$	2,873		$	1,755		$	5,233		$	4,295
Provision for income taxes	$	476		$	326		$	1,008		$	870
Effective tax rate	16.6		%	18.6		%	19.3		%	20.3		%

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Supplemental Information (Tables)

6 Months Ended

Jan. 24, 2015

Stockholders' Equity Note [Abstract]

Stock Repurchases Since Inception Of Program

The stock repurchases since the inception of this program and the related impacts on Cisco shareholders’ equity are summarized in the following table (in millions): 

	Shares of Common Stock	Common Stock and Additional Paid-In Capital		Retained Earnings		Total Cisco Shareholders’ Equity
Repurchases of common stock under the repurchase program	4,373	$	22,021	$	68,645	$	90,666

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Business Combinations (Tables)

6 Months Ended

Jan. 24, 2015

Business Combinations [Abstract]

Schedule of Business Acquisitions, by Acquisition

A summary of the allocation of the total purchase consideration is presented as follows (in millions):

	Purchase Consideration		Net Liabilities Assumed			Purchased Intangible Assets		Goodwill
Metacloud, Inc.	$	149	$	(7	)	$	29	$	127
All others (two in total)	71		(10		)	40		41
Total acquisitions	$	220	$	(17	)	$	69	$	168

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Consolidated Statements Of Equity (USD $) In Millions	Total USD ($)		Shares of Common Stock	Common Stock and Additional Paid-In Capital USD ($)	Retained Earnings USD ($)	Accumulated Other Comprehensive Income USD ($)	Total Cisco Shareholders’ Equity USD ($)	Non-controlling Interests USD ($)
Beginning balance at Jul. 27, 2013	$ 59,128			$ 42,297	$ 16,215	$ 608	$ 59,120	$ 8
Beginning balance (in shares) at Jul. 27, 2013			5,389
Net income	3,425				3,425		3,425
Other comprehensive (loss) income	102					95	95	7
Issuance of common stock (in shares)			84
Issuance of common stock	837			837			837
Repurchase of common stock (in shares)			(269)
Repurchase of common stock	(6,020)			(2,118)	(3,902)		(6,020)
Shares repurchased for tax withholdings on vesting of restricted stock units (in shares)			(13)
Shares repurchased for tax withholdings on vesting of restricted stock units	(309)			(309)			(309)
Cash dividends declared (per common share)	(1,810)				(1,810)		(1,810)
Tax effects from employee stock incentive plans	29			29			29
Share-based compensation expense	656			656			656
Purchase acquisitions and other	46			46			46
Ending Balance at Jan. 25, 2014	56,084			41,438	13,928	703	56,069	15
Ending Balance (in shares) at Jan. 25, 2014			5,191
Beginning balance at Jul. 26, 2014	56,661			41,884	14,093	677	56,654	7
Beginning balance (in shares) at Jul. 26, 2014			5,107
Net income	4,225				4,225		4,225
Other comprehensive (loss) income	(483)					(491)	(491)	8
Issuance of common stock (in shares)			100
Issuance of common stock	1,162			1,162			1,162
Repurchase of common stock (in shares)	(85)	[1]	(85)
Repurchase of common stock	(2,221)			(697)	(1,524)		(2,221)
Shares repurchased for tax withholdings on vesting of restricted stock units (in shares)			(15)
Shares repurchased for tax withholdings on vesting of restricted stock units	(369)			(369)			(369)
Cash dividends declared (per common share)	(1,947)				(1,947)		(1,947)
Tax effects from employee stock incentive plans	25			25			25
Share-based compensation expense	677			677			677
Purchase acquisitions and other	3			3			3
Ending Balance at Jan. 24, 2015	$ 57,733			$ 42,685	$ 14,847	$ 186	$ 57,718	$ 15
Ending Balance (in shares) at Jan. 24, 2015			5,107

[1] Includes stock repurchases of $150 million, which were pending settlement as of January 24, 2015. There were $126 million of stock repurchases that were pending settlement as of July 26, 2014.

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Goodwill and Purchased Intangible Assets (Tables)

6 Months Ended

Jan. 24, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill By Reportable Segment

The following table presents the goodwill allocated to the Company’s reportable segments as of and during the six months ended January 24, 2015 (in millions):

	Balance at July 26, 2014		Acquisitions		Other			Balance at January 24, 2015
Americas	$	15,080	$	89	$	(13	)	$	15,156
EMEA	5,715		63		(7		)	5,771
APJC	3,444		16		(5		)	3,455
Total	$	24,239	$	168	$	(25	)	$	24,382

Schedule Of Intangible Assets Acquired Through Business Combinations

The following table presents details of the Company’s intangible assets acquired through business combinations completed during the six months ended January 24, 2015 (in millions, except years):

	FINITE LIVES						INDEFINITE LIVES		TOTAL
	TECHNOLOGY			CUSTOMER RELATIONSHIPS			IPR&D
	Weighted- Average Useful Life (in Years)	Amount		Weighted- Average Useful Life (in Years)	Amount		Amount		Amount
Metacloud, Inc.	3.0	$	24	5.0	$	3	$	2	$	29
All others (two in total)	5.0	25		8.1	11		4		40
Total		$	49		$	14	$	6	$	69

Schedule Of Purchased Intangible Assets

The following tables present details of the Company’s purchased intangible assets (in millions):

January 24, 2015	Gross		Accumulated Amortization			Net
Purchased intangible assets with finite lives:
Technology	$	4,020	$	(2,270	)	$	1,750
Customer relationships	1,709		(847		)	862
Other	51		(19		)	32
Total purchased intangible assets with finite lives	5,780		(3,136		)	2,644
In-process research and development, with indefinite lives	111		—			111
Total	$	5,891	$	(3,136	)	$	2,755

July 26, 2014	Gross		Accumulated Amortization			Net
Purchased intangible assets with finite lives:
Technology	$	4,100	$	(1,976	)	$	2,124
Customer relationships	1,706		(720		)	986
Other	51		(13		)	38
Total purchased intangible assets with finite lives	5,857		(2,709		)	3,148
In-process research and development, with indefinite lives	132		—			132
Total	$	5,989	$	(2,709	)	$	3,280

Schedule Of Amortization Of Purchased Intangible Assets

The following table presents the amortization of purchased intangible assets (in millions):

	Three Months Ended				Six Months Ended
	January 24, 2015		January 25, 2014		January 24, 2015		January 25, 2014
Amortization of purchased intangible assets:
Cost of sales	$	242	$	189	$	431	$	363
Operating expenses	72		71		143		136
Total	$	314	$	260	$	574	$	499

Schedule Of Estimated Future Amortization Expense Of Purchased Intangible Assets

The estimated future amortization expense of purchased intangible assets with finite lives as of January 24, 2015 is as follows (in millions):

Fiscal Year	Amount
2015 (remaining six months)	$	462
2016	734
2017	561
2018	420
2019	317
Thereafter	150
Total	$	2,644

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Derivative Instruments (Schedule Of Notional Amounts Of Derivatives Outstanding) (Details) (USD $) In Millions, unless otherwise specified	Jan. 24, 2015	Jul. 26, 2014
Derivative [Line Items]
Derivatives	$ 14,913	$ 15,557
Derivatives designated as hedging instruments: | Foreign currency derivatives
Derivative [Line Items]
Derivatives	1,641	1,618
Derivatives designated as hedging instruments: | Interest rate derivatives
Derivative [Line Items]
Derivatives	10,400	10,400
Derivatives designated as hedging instruments: | Net investment hedging instruments
Derivative [Line Items]
Derivatives	216	345
Derivatives designated as hedging instruments: | Equity derivatives
Derivative [Line Items]
Derivatives	238	238
Derivatives not designated as hedging instruments: | Foreign currency derivatives
Derivative [Line Items]
Derivatives	1,969	2,528
Derivatives not designated as hedging instruments: | Total return swaps—deferred compensation
Derivative [Line Items]
Derivatives	$ 449	$ 428

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Commitments and Contingencies (Tables)

6 Months Ended

Jan. 24, 2015

Commitments and Contingencies Disclosure [Abstract]

Schedule Of Future Annual Minimum Lease Payments Under All Noncancelable Operating Leases

Future minimum lease payments under all noncancelable operating leases with an initial term in excess of one year as of January 24, 2015 are as follows (in millions):

Fiscal Year	Amount
2015 (remaining six months)	$	195
2016	287
2017	196
2018	139
2019	72
Thereafter	209
Total	$	1,098

Compensation expenses related to business combinations

The following table summarizes the compensation expense related to acquisitions (in millions):

	Three Months Ended				Six Months Ended
	January 24, 2015		January 25, 2014		January 24, 2015		January 25, 2014
Compensation expense related to acquisitions	$	94	$	106	$	192	$	410

Schedule Of Product Warranty Liability

The following table summarizes the activity related to the product warranty liability (in millions):

	Six Months Ended
	January 24, 2015			January 25, 2014
Balance at beginning of period	$	446		$	402
Provision for warranties issued	355			356
Payments	(327		)	(333		)
Balance at end of period	$	474		$	425

Schedule of Guarantor Obligations

The aggregate amounts of financing guarantees outstanding at January 24, 2015 and July 26, 2014, representing the total maximum potential future payments under financing arrangements with third parties along with the related deferred revenue, are summarized in the following table (in millions):

	January 24, 2015			July 26, 2014
Maximum potential future payments relating to financing guarantees:
Channel partner	$	316		$	263
End user	155			202
Total	$	471		$	465
Deferred revenue associated with financing guarantees:
Channel partner	$	(148	)	$	(127	)
End user	(121		)	(166		)
Total	$	(269	)	$	(293	)
Maximum potential future payments relating to financing guarantees, net of associated deferred revenue	$	202		$	172

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Goodwill and Purchased Intangible Assets (Schedule Of Amortization Of Purchased Intangible Assets) (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jan. 24, 2015	Jan. 25, 2014	Jan. 24, 2015	Jan. 25, 2014
Acquired Intangible Asset Amortization by Statement of Operations Class [Line Items]
Amortization of purchased intangible assets	$ 72	$ 71	$ 143	$ 136
Cost of sales
Acquired Intangible Asset Amortization by Statement of Operations Class [Line Items]
Amortization of purchased intangible assets	242	189	431	363
Operating expenses
Acquired Intangible Asset Amortization by Statement of Operations Class [Line Items]
Amortization of purchased intangible assets	72	71	143	136
Total
Acquired Intangible Asset Amortization by Statement of Operations Class [Line Items]
Amortization of purchased intangible assets	$ 314	$ 260	$ 574	$ 499

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Investments (Additional Information) (Details) (USD $)	3 Months Ended		6 Months Ended		66 Months Ended
	Jan. 24, 2015	Jan. 25, 2014	Jan. 24, 2015	Jan. 25, 2014	Jan. 24, 2015	Jul. 26, 2014	Oct. 25, 2014
Schedule of Investments [Line Items]
Impairment charges on available-for-sale investments	$ 0	$ 11,000,000	$ 0	$ 11,000,000
Other than temporary impairment, credit losses recognized in earnings, credit losses on debt securities held	0		0		0
Average daily balance of securities lending	600,000,000	900,000,000
Minimum market value percentage for collateral on loaned securities	102.00%	102.00%
Secured lending transactions outstanding	0		0		0	0
Cost method investment carrying value	316,000,000		316,000,000		316,000,000	269,000,000
VCE
Schedule of Investments [Line Items]
Cumulative gross investment in VCE	716,000,000		716,000,000		716,000,000
Losses from VCE	0	58,000,000	47,000,000	111,000,000	691,000,000
Proceeds from Sale of Equity Method Investments			152,000,000
Equity Method Investment, Ownership Percentage (in %)							35.00%
Ownership interest in cost method investment (in %)	10.00%		10.00%		10.00%
Cost method investment carrying value	0		0		0
Gains recognized related to restructuring of VCE	$ 126,000,000		$ 126,000,000

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Consolidated Balance Sheets (USD $) In Millions, unless otherwise specified	Jan. 24, 2015	Jul. 26, 2014
Current assets:
Cash and cash equivalents	$ 4,797	$ 6,726
Investments	48,225	45,348
Accounts receivable, net of allowance for doubtful accounts of $270 at January 24, 2015 and $265 at July 26, 2014	4,541	5,157
Inventories	1,890	1,591
Financing receivables, net	4,210	4,153
Deferred tax assets	2,654	2,808
Other current assets	1,565	1,331
Total current assets	67,882	67,114
Property and equipment, net	3,212	3,252
Financing receivables, net	3,549	3,918
Goodwill	24,382	24,239
Purchased intangible assets, net	2,755	3,280
Other assets	3,142	3,331
TOTAL ASSETS	104,922	105,134
Current liabilities:
Short-term debt	855	508
Accounts payable	988	1,032
Income taxes payable	0	159
Accrued compensation	2,694	3,181
Deferred revenue	9,369	9,478
Other current liabilities	6,128	5,451
Total current liabilities	20,034	19,809
Long-term debt	19,667	20,401
Income taxes payable	1,433	1,851
Deferred revenue	4,652	4,664
Other long-term liabilities	1,403	1,748
Total liabilities	47,189	48,473
Commitments and contingencies (Note 12)
Cisco shareholders’ equity:
Preferred stock, no par value: 5 shares authorized; none issued and outstanding	0	0
Common stock and additional paid-in capital, $0.001 par value: 20,000 shares authorized; 5,107 shares issued and outstanding at each of January 24, 2015 and July 26, 2014	42,685	41,884
Retained earnings	14,847	14,093
Accumulated other comprehensive income	186	677
Total Cisco shareholders’ equity	57,718	56,654
Noncontrolling interests	15	7
Total equity	57,733	56,661
TOTAL LIABILITIES AND EQUITY	$ 104,922	$ 105,134

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Segment Information and Major Customers (Tables)

6 Months Ended

Jan. 24, 2015

Segment Reporting [Abstract]

Reportable Segments

Summarized financial information by segment for the three and six months ended January 24, 2015 andJanuary 25, 2014, based on the Company’s internal management system and as utilized by the Company’s Chief Operating Decision Maker ("CODM"), is as follows (in millions):

	Three Months Ended						Six Months Ended
	January 24, 2015			January 25, 2014			January 24, 2015			January 25, 2014
Revenue:
Americas	$	7,101		$	6,460		$	14,602		$	13,776
EMEA	3,091			2,896			6,093			5,829
APJC	1,744			1,799			3,486			3,635
Total	$	11,936		$	11,155		$	24,181		$	23,240
Gross margin:
Americas	$	4,406		$	3,977		$	9,216		$	8,627
EMEA	1,910			1,870			3,825			3,758
APJC	1,052			993			2,077			2,072
Segment total	7,368			6,840			15,118			14,457
Unallocated corporate items	(278		)	(889		)	(695		)	(1,099		)
Total	$	7,090		$	5,951		$	14,423		$	13,358

Net Sales For Groups Of Similar Products And Services

The following table presents revenue for groups of similar products and services (in millions):

	Three Months Ended				Six Months Ended
	January 24, 2015		January 25, 2014		January 24, 2015		January 25, 2014
Revenue:
Switching	$	3,616	$	3,258	$	7,462	$	6,998
NGN Routing	1,764		1,730		3,713		3,756
Collaboration	990		899		1,939		1,950
Service Provider Video	776		957		1,647		1,944
Data Center	846		605		1,539		1,206
Wireless	611		517		1,216		1,064
Security	416		393		871		758
Other	59		64		126		144
Product	9,078		8,423		18,513		17,820
Service	2,858		2,732		5,668		5,420
Total	$	11,936	$	11,155	$	24,181	$	23,240

Property And Equipment, Net

Property and equipment information is based on the physical location of the assets. The following table presents property and equipment information for geographic areas (in millions):

	January 24, 2015		July 26, 2014
Property and equipment, net:
United States	$	2,668	$	2,697
International	544		555
Total	$	3,212	$	3,252

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Employee Benefit Plans (Summary Of Stock Option Activity) (Details) (USD $) In Millions, except Per Share data, unless otherwise specified	6 Months Ended	12 Months Ended
	Jan. 24, 2015	Jul. 26, 2014
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Beginning balance, Number Outstanding, options	187	276
Assumed from acquisitions	1	6
Exercised	(45)	(78)
Canceled/forfeited/expired	(10)	(17)
Ending balance, Number Outstanding, options	133	187
Weighted-Average Exercise Price per Share, Beginning Balance, dollars per share	$ 26.03	$ 24.44
Assumed from acquisitions, Weighted-Average Exercise Price per Share, dollars per share	$ 2.72	$ 3.60
Exercised, Weighted-Average Exercise Price per Share, dollars per share	$ 20.49	$ 18.30
Canceled/forfeited/expired, Weighted-Average Exercise Price per Share, dollars per share	$ 29.48	$ 27.53
Weighted-Average Exercise Price per Share, Ending Balance, dollars per share	$ 27.45	$ 26.03

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Consolidated Statements of Comprehensive Income (Parenthetical) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jan. 24, 2015	Jan. 25, 2014	Jan. 24, 2015	Jan. 25, 2014
Statement of Comprehensive Income [Abstract]
Other Comprehensive Income (Loss), Available-for-sale Securities, before Reclassification Adjustments, Tax	$ 9	$ (69)	$ 23	$ (122)
Other Comprehensive Income (Loss), Reclassification Adjustment from AOCI for Sale of Securities, Tax	24	31	26	62
Other Comprehensive Income (Loss), Unrealized Gain (Loss) on Derivatives Arising During Period, Tax	0	1	3	(2)
Other Comprehensive Income Loss Foreign Currency Translation Adjustment and actuarial gains and losses,Tax	$ 26	$ 2	$ 36	$ (1)

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Employee Benefit Plans (Summary of Share-Based Awards available for Grant) (Details) In Millions, unless otherwise specified	6 Months Ended	12 Months Ended
	Jan. 24, 2015	Jul. 26, 2014
Employee Stock Benefit Plans [Abstract]
Balance at beginning of fiscal period	310	228
Restricted stock, stock units, and other share-based awards granted	(28)	(98)
Share-based awards canceled/forfeited/expired	27	36
Additional shares reserved		135
Shares withheld for taxes and not issued	21	6
Other	(2)	3
Balance at end of fiscal period	328	310

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Financing Receivables and Operating Leases (Schedule Of Financing Receivables) (Details) (USD $) In Millions, unless otherwise specified	Jan. 24, 2015	Oct. 25, 2014	Jul. 26, 2014	Jan. 25, 2014	Oct. 26, 2013	Jul. 27, 2013
Financing Receivables [Line Items]
Allowance for credit loss	$ (375)	$ (368)	$ (349)	$ (374)	$ (350)	$ (344)
Current	4,210		4,153
Deferred revenue:	14,021		14,142
Lease Receivables
Financing Receivables [Line Items]
Gross	3,369		3,532
Residual value	228		233
Unearned income	(206)		(238)
Allowance for credit loss	(250)		(233)
Current	1,462		1,476
Noncurrent	1,679		1,818
Total, net	3,141		3,294
Loan Receivables
Financing Receivables [Line Items]
Gross	1,674		1,683
Residual value	0		0
Unearned income	0		0
Allowance for credit loss	(85)		(98)
Current	782		728
Noncurrent	807		857
Total, net	1,589		1,585
Financed Service Contracts and Other
Financing Receivables [Line Items]
Gross	3,069		3,210
Residual value	0		0
Unearned income	0		0
Allowance for credit loss	(40)		(18)
Current	1,966		1,949
Noncurrent	1,063		1,243
Total, net	3,029		3,192
Total
Financing Receivables [Line Items]
Gross	8,112		8,425
Residual value	228		233
Unearned income	(206)		(238)
Allowance for credit loss	(375)		(349)
Current	4,210		4,153
Noncurrent	3,549		3,918
Total, net	$ 7,759		$ 8,071

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Employee Benefit Plans (Additional Information) (Details) (USD $) In Billions, except Share data, unless otherwise specified	6 Months Ended
	Jan. 24, 2015 stock_incentive_plan	Jan. 25, 2014	Jan. 23, 2015	Jul. 26, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of stock incentive plans	4
Total compensation cost related to unvested share-based awards	$ 2.0
Expected period of recognition of compensation cost, years	2 years 3 months 18 days
Closing stock price			$ 28.21
In-the-money exercisable stock option shares	59,000,000
Number Exercisable, shares	131,000,000			183,000,000
Weighted- Average Exercise Price per Share	$ 27.94			$ 26.50
2005 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares reserved for issuance (in shares)	694,000,000
Exercise price as a percentage of market value (in percentage)	100.00%
Description of PRSU granted contingent on performance metrics	generally 50% of the PRSUs are earned based on the average of annual operating cash flow and earnings per share goals established at the beginning of each fiscal year over a three-year performance period. Generally, the remaining 50% of the PRSUs are earned based on the Company’s TSR measured against the benchmark TSR of a peer group over the same period.
PRSU allocation between Financial operating goals and TSR	50.00%
2005 Plan | Stock awards prior to November 12, 2009 | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expiration date for stock options and stock appreciation rights (in years)	9 years
2005 Plan | Stock awards subsequent to November 12, 2009 [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Reduction in shares available for issuance pursuant to November 12, 2009 amendment (ratio)	1.5
2005 Plan | Stock awards subsequent to November 12, 2009 [Member] | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expiration date for stock options and stock appreciation rights (in years)	10 years
2005 Plan | Employee Stock Option | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Award Vesting Rights, Percentage	20.00%
Share-based Compensation Arrangement by Share-based Payment Award, Award Requisite Service Period	48 months
2005 Plan | Employee Stock Option | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Award Vesting Rights, Percentage	25.00%
Share-based Compensation Arrangement by Share-based Payment Award, Award Requisite Service Period	36 months
2005 Plan | Time based stock award | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Award Vesting Rights, Percentage	20.00%
2005 Plan | Time based stock award | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Award Vesting Rights, Percentage	25.00%
2005 Plan | Performance base and Market base RSU [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Award Requisite Service Period	3 years
2005 Plan | PRSU based on financial performance metrics | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Award Vesting Rights, Percentage	0.00%
2005 Plan | PRSU based on financial performance metrics | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Award Vesting Rights, Percentage	150.00%
2005 Plan | PRSU based on TSR [Member] | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Award Vesting Rights, Percentage	0.00%
2005 Plan | PRSU based on TSR [Member] | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Award Vesting Rights, Percentage	150.00%
2005 Plan | Performance based RSU based on Financial or nonFinancial operating goal [Member] | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Award Requisite Service Period	6 months
2005 Plan | Performance based RSU based on Financial or nonFinancial operating goal [Member] | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Award Requisite Service Period	3 years
2005 Plan | PRSU based on nonfinancial operating goals | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Award Vesting Rights, Percentage	0.00%
2005 Plan | PRSU based on nonfinancial operating goals | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Award Vesting Rights, Percentage	100.00%
1996 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares reserved for issuance (in shares)	2,500,000,000
Exercise price as a percentage of market value (in percentage)	100.00%
Expiration date for stock options and stock appreciation rights (in years)	9 years
Percentage in which stock options and RSUs become exercisable for within one year from date of grant, minimum	20.00%
Percentage in which stock options and RSUs become exercisable for within one year from date of grant, maximum	25.00%
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights	Certain other grants utilized a 60-month ratable vesting schedule. In addition, the Board of Directors, or other committees administering the 1996 Plan, had the discretion to use a different vesting schedule and did so from time to time.
Stock options ratable vesting schedule, nonstandard (in months)	60
Termination of Stock Plan	Dec. 31, 2006
1996 Plan | Employee Stock Option | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Award Requisite Service Period	36 months
1996 Plan | Employee Stock Option | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Award Requisite Service Period	48 months
Employee Stock Purchase Rights
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares reserved for issuance (in shares)	621,400,000
ESPP-Offering Period Plan Description	24-month offering period, which consists of four consecutive 6-month purchase periods
ESPP-Discount rate	15.00%
Termination of Stock Plan	Jan. 03, 2020
Stock Issued During Period, Shares, Employee Stock Purchase Plans	14,000,000	14,000,000
ESPP-shares available for issuance, shares	161,000,000

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Financing Receivables and Operating Leases (Tables)

6 Months Ended

Jan. 24, 2015

Receivables [Abstract]

Financing Receivables

A summary of the Company's financing receivables is presented as follows (in millions):

January 24, 2015	Lease Receivables			Loan Receivables			Financed Service Contracts and Other			Total
Gross	$	3,369		$	1,674		$	3,069		$	8,112
Residual value	228			—			—			228
Unearned income	(206		)	—			—			(206		)
Allowance for credit loss	(250		)	(85		)	(40		)	(375		)
Total, net	$	3,141		$	1,589		$	3,029		$	7,759
Reported as:
Current	$	1,462		$	782		$	1,966		$	4,210
Noncurrent	1,679			807			1,063			3,549
Total, net	$	3,141		$	1,589		$	3,029		$	7,759

July 26, 2014	Lease Receivables			Loan Receivables			Financed Service Contracts and Other			Total
Gross	$	3,532		$	1,683		$	3,210		$	8,425
Residual value	233			—			—			233
Unearned income	(238		)	—			—			(238		)
Allowance for credit loss	(233		)	(98		)	(18		)	(349		)
Total, net	$	3,294		$	1,585		$	3,192		$	8,071
Reported as:
Current	$	1,476		$	728		$	1,949		$	4,153
Noncurrent	1,818			857			1,243			3,918
Total, net	$	3,294		$	1,585		$	3,192		$	8,071

Contractual Maturities Of The Gross Lease Receivables

Future minimum lease payments at January 24, 2015 are summarized as follows (in millions):

Fiscal Year	Amount
2015 (remaining six months)	$	883
2016	1,281
2017	753
2018	327
2019	115
Thereafter	10
Total	$	3,369

Schedule Of Internal Credit Risk Rating For Each Portfolio Segment And Class

Gross receivables less unearned income categorized by the Company’s internal credit risk rating as of January 24, 2015 and July 26, 2014 are summarized as follows (in millions):

	INTERNAL CREDIT RISK RATING
January 24, 2015	1 to 4		5 to 6		7 and Higher		Total
Lease receivables	$	1,632	$	1,386	$	145	$	3,163
Loan receivables	717		803		154		1,674
Financed service contracts and other	1,647		1,342		80		3,069
Total	$	3,996	$	3,531	$	379	$	7,906

	INTERNAL CREDIT RISK RATING
July 26, 2014	1 to 4		5 to 6		7 and Higher		Total
Lease receivables	$	1,615	$	1,538	$	141	$	3,294
Loan receivables	953		593		137		1,683
Financed service contracts and other	1,744		1,367		99		3,210
Total	$	4,312	$	3,498	$	377	$	8,187

Schedule Of Financing Receivables By Portfolio Segment And Class Aging Analysis

The following tables present the aging analysis of gross receivables less unearned income as of January 24, 2015 and July 26, 2014 (in millions):

	DAYS PAST DUE (INCLUDES BILLED AND UNBILLED)
January 24, 2015	31-60		61-90		91+		Total Past Due		Current		Total		Nonaccrual Financing Receivables		Impaired Financing Receivables
Lease receivables	$	171	$	63	$	224	$	458	$	2,705	$	3,163	$	53	$	48
Loan receivables	30		42		177		249		1,425		1,674		33		33
Financed service contracts and other	144		135		385		664		2,405		3,069		30		8
Total	$	345	$	240	$	786	$	1,371	$	6,535	$	7,906	$	116	$	89

	DAYS PAST DUE (INCLUDES BILLED AND UNBILLED)
July 26, 2014	31-60		61-90		91+		Total Past Due		Current		Total		Nonaccrual Financing Receivables		Impaired Financing Receivables
Lease receivables	$	63	$	48	$	203	$	314	$	2,980	$	3,294	$	48	$	41
Loan receivables	7		21		28		56		1,627		1,683		19		19
Financed service contracts and other	268		238		221		727		2,483		3,210		12		9
Total	$	338	$	307	$	452	$	1,097	$	7,090	$	8,187	$	79	$	69

Allowance For Credit Loss And Related Financing Receivables

The allowances for credit loss and the related financing receivables are summarized as follows (in millions):

	CREDIT LOSS ALLOWANCES
Three Months Ended January 24, 2015	Lease Receivables			Loan Receivables			Financed Service Contracts and Other		Total
Allowance for credit loss as of October 25, 2014	$	248		$	84		$	36	$	368
Provisions	7			3			4		14
Recoveries (write-offs), net	(1		)	—			—		(1		)
Foreign exchange and other	(4		)	(2		)	—		(6		)
Allowance for credit loss as of January 24, 2015	$	250		$	85		$	40	$	375
Financing receivables as of January 24, 2015 (1)	$	3,391		$	1,674		$	3,069	$	8,134

	CREDIT LOSS ALLOWANCES
Six Months Ended January 24, 2015	Lease Receivables			Loan Receivables			Financed Service Contracts and Other			Total
Allowance for credit loss as of July 26, 2014	$	233		$	98		$	18		$	349
Provisions	29			(10		)	23			42
Recoveries (write-offs), net	(5		)	1			—			(4		)
Foreign exchange and other	(7		)	(4		)	(1		)	(12		)
Allowance for credit loss as of January 24, 2015	$	250		$	85		$	40		$	375

	CREDIT LOSS ALLOWANCES
Three Months Ended January 25, 2014	Lease Receivables			Loan Receivables			Financed Service Contracts and Other		Total
Allowance for credit loss as of October 26, 2013	$	237		$	93		$	20	$	350
Provisions	18			9			2		29
Recoveries (write-offs), net	1			—			—		1
Foreign exchange and other	(2		)	(4		)	—		(6		)
Allowance for credit loss as of January 25, 2014	$	254		$	98		$	22	$	374
Financing receivables as of January 25, 2014 (1)	$	3,551		$	1,660		$	2,807	$	8,018

	CREDIT LOSS ALLOWANCES
Six Months Ended January 25, 2014	Lease Receivables		Loan Receivables			Financed Service Contracts and Other		Total
Allowance for credit loss as of July 27, 2013	$	238	$	86		$	20	$	344
Provisions	15		15			2		32
Recoveries (write-offs), net	1		—			—		1
Foreign exchange and other	—		(3		)	—		(3		)
Allowance for credit loss as of January 25, 2014	$	254	$	98		$	22	$	374

⁽¹⁾ Total financing receivables before allowance for credit loss.

Schedule of Property Subject to or Available for Operating Lease

Amounts relating to equipment on operating lease assets and the associated accumulated depreciation are summarized as follows (in millions):

	January 24, 2015			July 26, 2014
Operating lease assets	$	343		$	362
Accumulated depreciation	(195		)	(202		)
Operating lease assets, net	$	148		$	160

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Financing Receivables and Operating Leases (Additional Information) (Details) (USD $)	3 Months Ended		6 Months Ended
	Jan. 24, 2015		Jan. 24, 2015 Rating		Jul. 26, 2014	Jan. 25, 2014
Financing Receivables And Guarantees [Line Items]
Average lease term (in years)	4 years
Deferred revenue:	$ 14,021,000,000		$ 14,021,000,000		$ 14,142,000,000
Financing receivable, allowance for credit loss and deferred revenue	1,928,000,000		1,928,000,000		2,220,000,000
Total financing receivables before allowance for credit loss	8,134,000,000	[1]	8,134,000,000	[1]	8,420,000,000	8,018,000,000	[1]
Threshold for past due receivables (in days)	31 days
Unbilled or current financing receivables included in greater than 91 days plus past due	542,000,000		542,000,000		334,000,000
Financing Receivable, 90 Days Past Due and Still Accruing	217,000,000		217,000,000		78,000,000
Operating Leases, Future Minimum Payments, Remainder of Fiscal Year	100,000,000		100,000,000
Minimum future rental from operating leases (per year amount in Fiscal 2016)	200,000,000		200,000,000
Investment Credit Risk Ratings Range Lowest			1
Investment Credit Risk Ratings Range Highest			10
Rating at or higher when receivables deemed impaired			8
Maximum
Financing Receivables And Guarantees [Line Items]
Loan receivables term (in years)	3 years
Minimum future rentals from operating leases (per year amount in Fiscal 2017)	100,000,000		100,000,000
Minimum future rentals from operating leases (per year amount in Fiscal 2018)	100,000,000		100,000,000
Minimum future rentals from operating leases (per year amount in Fiscal 2019)	100,000,000		100,000,000
Financed Service Contracts and Other | Minimum
Financing Receivables And Guarantees [Line Items]
Financed service contracts term (in years)	1 year
Financed Service Contracts and Other | Maximum
Financing Receivables And Guarantees [Line Items]
Financed service contracts term (in years)	3 years
Investment-grade ratings | Minimum
Financing Receivables And Guarantees [Line Items]
Financing credit risk rating-investment-lowest	1
Investment-grade ratings | Maximum
Financing Receivables And Guarantees [Line Items]
Financing credit risk rating-investment-lowest	4
Non-investment grade ratings | Minimum
Financing Receivables And Guarantees [Line Items]
Financing credit risk rating-investment-lowest	5
Non-investment grade ratings | Maximum
Financing Receivables And Guarantees [Line Items]
Financing credit risk rating-investment-lowest	6
Substandard | Minimum
Financing Receivables And Guarantees [Line Items]
Financing credit risk rating-investment-lowest	7
Lease Receivables
Financing Receivables And Guarantees [Line Items]
Total financing receivables before allowance for credit loss	3,391,000,000	[1]	3,391,000,000	[1]		3,551,000,000	[1]
Loan Receivables
Financing Receivables And Guarantees [Line Items]
Total financing receivables before allowance for credit loss	1,674,000,000	[1]	1,674,000,000	[1]		1,660,000,000	[1]
Financed Service Contracts and Other
Financing Receivables And Guarantees [Line Items]
Deferred revenue:	1,530,000,000		1,530,000,000		1,843,000,000
Total financing receivables before allowance for credit loss	$ 3,069,000,000	[1]	$ 3,069,000,000	[1]		$ 2,807,000,000	[1]

[1] Total financing receivables before allowance for credit loss.

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Commitments and Contingencies

6 Months Ended

Jan. 24, 2015

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

12. Commitments and Contingencies

(a) Operating Leases

The Company leases office space in many U.S. locations. Outside the United States, larger leased sites include sites in Belgium, Canada, China, France, Germany, India, Israel, Japan, Norway, and the United Kingdom. The Company also leases equipment and vehicles. Future minimum lease payments under all noncancelable operating leases with an initial term in excess of one year as of January 24, 2015 are as follows (in millions):

Fiscal Year	Amount
2015 (remaining six months)	$	195
2016	287
2017	196
2018	139
2019	72
Thereafter	209
Total	$	1,098

(b) Purchase Commitments with Contract Manufacturers and Suppliers

The Company purchases components from a variety of suppliers and uses several contract manufacturers to provide manufacturing services for its products. During the normal course of business, in order to manage manufacturing lead times and help ensure adequate component supply, the Company enters into agreements with contract manufacturers and suppliers that allow them to either procure inventory based upon criteria as defined by the Company or establish the parameters defining the Company’s requirements. A significant portion of the Company’s reported purchase commitments arising from these agreements consists of firm, noncancelable, and unconditional commitments. In certain instances, these agreements allow the Company the option to cancel, reschedule, and adjust the Company’s requirements based on its business needs prior to firm orders being placed. As of January 24, 2015 and July 26, 2014, the Company had total purchase commitments for inventory of $4,257 million and $4,169 million, respectively.

The Company records a liability for firm, noncancelable, and unconditional purchase commitments for quantities in excess of its future demand forecasts consistent with the valuation of the Company’s excess and obsolete inventory. As of January 24, 2015 and July 26, 2014, the liability for these purchase commitments was $165 million and $162 million, respectively, and was included in other current liabilities.

(c) Other Commitments

In connection with the Company’s business combinations, the Company has agreed to pay certain additional amounts contingent upon the achievement of certain agreed-upon technology, development, product, or other milestones or upon the continued employment with the Company of certain employees of the acquired entities.

The following table summarizes the compensation expense related to acquisitions (in millions):

	Three Months Ended				Six Months Ended
	January 24, 2015		January 25, 2014		January 24, 2015		January 25, 2014
Compensation expense related to acquisitions	$	94	$	106	$	192	$	410

As of January 24, 2015, the Company estimated that future cash compensation expense of up to $428 million may be required to be recognized pursuant to the applicable business combination agreements, which included the remaining potential compensation expense related to Insieme Networks, Inc., as more fully discussed immediately below.

Insieme Networks, Inc.In the third quarter of fiscal 2012, the Company made an investment in Insieme Networks, Inc. ("Insieme"), an early stage company focused on research and development in the data center market. As set forth in the agreement between the Company and Insieme, this investment included $100 million of funding and a license to certain of the Company’s technology. Immediately prior to the call option exercise and acquisition described below, the Company owned approximately 83% of Insieme as a result of these investments and consolidated the results of Insieme in its Consolidated Financial Statements. In connection with this investment, the Company and Insieme entered into a put/call option agreement that provided the Company with the right to purchase the remaining interests in Insieme. In addition, the noncontrolling interest holders could require the Company to purchase their shares upon the occurrence of certain events.

During the first quarter of fiscal 2014, the Company exercised its call option and entered into an agreement to purchase the remaining interests in Insieme. The acquisition closed in the second quarter of fiscal 2014, at which time the former noncontrolling interest holders became eligible to receive up to two milestone payments, which will be determined using agreed-upon formulas based primarily on revenue for certain of Insieme’s products. The Company recorded compensation expense of $51 million and $54 million during the three months ended January 24, 2015 and January 25, 2014, respectively, and $104 million and $311 million during the six months ended January 24, 2015 and January 25, 2014, respectively, related to the fair value of the vested portion of amounts that are expected to be earned by the former noncontrolling interest holders. Continued vesting and changes to the fair value of the amounts probable of being earned will result in adjustments to the recorded compensation expense in future periods. Based on the terms of the agreement, the Company has determined that the maximum amount that could be recorded as compensation expense by the Company is approximately $845 million (which includes the $520 million that has been expensed to date), net of forfeitures. The milestone payments, if earned, are expected to be paid primarily during fiscal 2016 and fiscal 2017.

The Company also has certain funding commitments, primarily related to its investments in privately held companies and venture funds, some of which are based on the achievement of certain agreed-upon milestones, and some of which are required to be funded on demand. The funding commitments were $230 million and $255 million as of January 24, 2015 and July 26, 2014, respectively.

(d) Product Warranties

The following table summarizes the activity related to the product warranty liability (in millions):

	Six Months Ended
	January 24, 2015			January 25, 2014
Balance at beginning of period	$	446		$	402
Provision for warranties issued	355			356
Payments	(327		)	(333		)
Balance at end of period	$	474		$	425

The Company accrues for warranty costs as part of its cost of sales based on associated material product costs, labor costs for technical support staff, and associated overhead. The Company’s products are generally covered by a warranty for periods ranging from 90 days to five years, and for some products the Company provides a limited lifetime warranty.

(e) Financing and Other Guarantees

In the ordinary course of business, the Company provides financing guarantees for various third-party financing arrangements extended to channel partners and end-user customers. Payments under these financing guarantee arrangements were not material for the periods presented.

Channel Partner Financing Guarantees   The Company facilitates arrangements for third-party financing extended to channel partners, consisting of revolving short-term financing, generally with payment terms ranging from 60 to 90 days. These financing arrangements facilitate the working capital requirements of the channel partners, and, in some cases, the Company guarantees a portion of these arrangements. The volume of channel partner financing was $6.2 billion and $5.9 billion for the three months ended January 24, 2015 and January 25, 2014, respectively. The volume of channel partner financing was $12.5 billion and $12.2 billion for the six months ended January 24, 2015 and January 25, 2014, respectively. The balance of the channel partner financing subject to guarantees was $1.3 billion and $1.2 billion as of January 24, 2015 and July 26, 2014, respectively.

End-User Financing Guarantees   The Company also provides financing guarantees for third-party financing arrangements extended to end-user customers related to leases and loans, which typically have terms of up to three years. The volume of financing provided by third parties for leases and loans as to which the Company had provided guarantees was $39 million and $20 million for the three months ended January 24, 2015 and January 25, 2014, respectively, and was $65 million and $45 million for the six months ended January 24, 2015 and January 25, 2014, respectively.

Financing Guarantee Summary   The aggregate amounts of financing guarantees outstanding at January 24, 2015 and July 26, 2014, representing the total maximum potential future payments under financing arrangements with third parties along with the related deferred revenue, are summarized in the following table (in millions):

	January 24, 2015			July 26, 2014
Maximum potential future payments relating to financing guarantees:
Channel partner	$	316		$	263
End user	155			202
Total	$	471		$	465
Deferred revenue associated with financing guarantees:
Channel partner	$	(148	)	$	(127	)
End user	(121		)	(166		)
Total	$	(269	)	$	(293	)
Maximum potential future payments relating to financing guarantees, net of associated deferred revenue	$	202		$	172

Other Guarantees The Company’s other guarantee arrangements as of January 24, 2015 and July 26, 2014 that were subject to recognition and disclosure requirements werenot material.

(f) Supplier Component Remediation Liability

The Company has recorded in other current liabilities a liability for the expected remediation cost for certain products sold in prior fiscal years containing memory components manufactured by a single supplier between 2005 and 2010. These components are widely used across the industry and are included in a number of the Company's products. Defects in some of these components have caused products to fail after a power cycle event.  Defect rates due to this issue have been and are expected to be low. However, the Company has seen a small number of its customers experience a growing number of failures in their networks as a result of this component problem. Although the majority of these products are beyond the Company's warranty terms, the Company is proactively working with customers on mitigation. Prior to the second quarter of fiscal 2014, the Company had a liability of $63 million related to this issue for expected remediation costs based on the intended approach at that time. In February 2014, on the basis of the growing number of failures described above, the Company decided to expand its approach, which resulted in an additional charge to product cost of sales of $655 million being recorded for the second quarter of fiscal 2014. The remaining supplier component remediation liability as of January 24, 2015 and July 26, 2014 was $613 million and $670 million, respectively.

(g) Indemnifications

In the normal course of business, the Company indemnifies other parties, including customers, lessors, and parties to other transactions with the Company, with respect to certain matters. The Company has agreed to hold such parties harmless against losses arising from a breach of representations or covenants or out of intellectual property infringement or other claims made against certain parties. These agreements may limit the time within which an indemnification claim can be made and the amount of the claim.

The Company has an obligation to indemnify certain expenses pursuant to such an agreement in, among other cases, a case involving certain of the Company’s service provider customers that are subject to patent infringement claims asserted by Sprint Communications Company, L.P. (“Sprint”) in the U.S. District Court for the District of Kansas filed on December 19, 2011 (including one case that was later transferred to the District of Delaware). Sprint alleges that the service providers infringe Sprint’s patents by offering Voice over Internet Protocol-based telephone services utilizing products provided by the Company and other manufacturers. Sprint is seeking monetary damages. Trial dates have been set for the first half of calendar year 2016 in the case proceeding in the District of Kansas. Trial in Delaware is scheduled for February 2017. The parties conducted mediations, and the Company participated through a mediation involving a service provider customer. Those particular mediations did not resolve the parties’ disputes, but the parties plan to engage in additional dispute resolution efforts, including participation by the Company. The Company believes that the service providers have strong defenses and that its products do not infringe the patents subject to the claims and/or that the patents are invalid. Due to the uncertainty surrounding the litigation process, which involves numerous defendants, the Company is unable to reasonably estimate the ultimate outcome of this litigation at this time. Should the plaintiff prevail in litigation, mediation, or settlement, the Company, in accordance with its agreement, may have an obligation to indemnify its service provider customers for damages, mediation awards, or settlement amounts arising from their use of Cisco products.

In addition, the Company has entered into indemnification agreements with its officers and directors, and the Company’s Amended and Restated Bylaws contain similar indemnification obligations to the Company’s agents.

It is not possible to determine the maximum potential amount under these indemnification agreements due to the Company’s limited history with prior indemnification claims and the unique facts and circumstances involved in each particular agreement. Historically, payments made by the Company under these agreements have not had a material effect on the Company’s operating results, financial position, or cash flows.

(h) Legal Proceedings

BrazilBrazilian authorities have investigated the Company’s Brazilian subsidiary and certain of its current and former employees, as well as a Brazilian importer of the Company’s products, and its affiliates and employees, relating to alleged evasion of import taxes and alleged improper transactions involving the subsidiary and the importer. Brazilian tax authorities have assessed claims against the Company’s Brazilian subsidiary based on a theory of joint liability with the Brazilian importer for import taxes, interest, and penalties. In addition to claims asserted by the Brazilian federal tax authorities in prior fiscal years, tax authorities from the Brazilian state of Sao Paulo have asserted similar claims on the same legal basis in prior fiscal years. In the first quarter of fiscal 2013, the Brazilian federal tax authorities asserted an additional claim against the Company’s Brazilian subsidiary based on a theory of joint liability with respect to an alleged underpayment of income taxes, social taxes, interest, and penalties by a Brazilian distributor.

The asserted claims by Brazilian federal tax authorities are for calendar years 2003 through 2008, and the asserted claims by the tax authorities from the state of Sao Paulo are for calendar years 2005 through 2007. The total asserted claims by Brazilian state and federal tax authorities aggregate to approximately $335 million for the alleged evasion of import and other taxes, approximately $1.3 billion for interest, and approximately $1.5 billion for various penalties, all determined using an exchange rate as of January 24, 2015. The Company has completed a thorough review of the matters and believes the asserted claims against the Company’s Brazilian subsidiary are without merit, and the Company is defending the claims vigorously. While the Company believes there is no legal basis for the alleged liability, due to the complexities and uncertainty surrounding the judicial process in Brazil and the nature of the claims asserting joint liability with the importer, the Company is unable to determine the likelihood of an unfavorable outcome against its Brazilian subsidiary and is unable to reasonably estimate a range of loss, if any. The Company does not expect a final judicial determination for several years.

Russia and the Commonwealth of Independent StatesAt the request of the U.S. Securities and Exchange Commission (SEC) and the U.S. Department of Justice, the Company is conducting an investigation into allegations which the Company and those agencies received regarding possible violations of the U.S. Foreign Corrupt Practices Act involving business activities of the Company's operations in Russia and certain of the Commonwealth of Independent States, and by certain resellers of the Company’s products in those countries.  The Company takes any such allegations very seriously and is fully cooperating with and sharing the results of its investigation with the SEC and the Department of Justice.  While the outcome of the Company's investigation is currently not determinable, the Company does not expect that it will have a material adverse effect on its consolidated financial position, results of operations, or cash flows. The countries that are the subject of the investigation collectively comprise less than 2% of the Company’s revenues.

RockstarThe Company and some of its service provider customers were subject to patent claims asserted in December 2013 in the Eastern District of Texas and the District of Delaware by subsidiaries of the Rockstar Consortium (“Rockstar”). Rockstar, whose members include Apple, Microsoft, LM Ericsson, Sony, and Blackberry, had purchased a portfolio of patents out of the Nortel Networks’ bankruptcy proceedings (the “Nortel Portfolio”). In connection with this matter, during the first quarter of fiscal 2015 the Company recorded a charge to product cost of sales of $188 million.

In December 2014, RPX Corporation (“RPX”) and Rockstar entered into an agreement, which closed on January 28, 2015, resulting in over 30 technology companies, including the Company and the various service provider customers described above, obtaining a license to the patents owned by Rockstar. The Company paid approximately $300 million in connection with this transaction, with the payment recorded against the amount previously reserved and as an intangible asset to be amortized over its estimated useful life. In connection with the closing of the transaction, Rockstar dismissed all litigation it had brought against the participating companies.

In addition, the Company is subject to legal proceedings, claims, and litigation arising in the ordinary course of business, including intellectual property litigation. While the outcome of these matters is currently not determinable, the Company does not expect that the ultimate costs to resolve these matters will have a material adverse effect on its consolidated financial position, results of operations, or cash flows.

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Investments (Tables)

6 Months Ended

Jan. 24, 2015

Investments, Debt and Equity Securities [Abstract]

Summary Of Available-For-Sale Investments

The following tables summarize the Company’s available-for-sale investments (in millions):

January 24, 2015	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Fixed income securities:
U.S. government securities	$	30,302	$	53	$	(1	)	$	30,354
U.S. government agency securities	2,324		3		(1		)	2,326
Non-U.S. government and agency securities	1,108		1		—			1,109
Corporate debt securities	11,180		61		(28		)	11,213
U.S. agency mortgage-backed securities	1,360		15		—			1,375
Total fixed income securities	46,274		133		(30		)	46,377
Publicly traded equity securities	1,296		562		(10		)	1,848
Total	$	47,570	$	695	$	(40	)	$	48,225

July 26, 2014	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Fixed income securities:
U.S. government securities	$	31,717	$	29	$	(12	)	$	31,734
U.S. government agency securities	1,062		1		—			1,063
Non-U.S. government and agency securities	860		2		(1		)	861
Corporate debt securities	9,092		74		(7		)	9,159
U.S. agency mortgage-backed securities	574		5		—			579
Total fixed income securities	43,305		111		(20		)	43,396
Publicly traded equity securities	1,314		648		(10		)	1,952
Total	$	44,619	$	759	$	(30	)	$	45,348

Non-U.S. government and agency securities include agency and corporate debt securities that are guaranteed by non-U.S. governments.

Gross Realized Gains And Gross Realized Losses Related To Available-For-Sale Investment

The following table presents the gross realized gains and gross realized losses related to the Company’s available-for-sale investments (in millions):

	Three Months Ended						Six Months Ended
	January 24, 2015			January 25, 2014			January 24, 2015			January 25, 2014
Gross realized gains	$	92		$	97		$	113		$	192
Gross realized losses	(23		)	(15		)	(37		)	(27		)
Total	$	69		$	82		$	76		$	165

The following table presents the realized net gains (losses) related to the Company’s available-for-sale investments by security type (in millions):

	Three Months Ended				Six Months Ended
	January 24, 2015		January 25, 2014		January 24, 2015		January 25, 2014
Net gains (losses) on investments in publicly traded equity securities	$	60	$	69	$	56	$	144
Net gains on investments in fixed income securities	9		13		20		21
Total	$	69	$	82	$	76	$	165

Available-For-Sale Investments With Gross Unrealized Losses

The following tables present the breakdown of the available-for-sale investments with gross unrealized losses and the duration that those losses had been unrealized at January 24, 2015 and July 26, 2014 (in millions):

	UNREALIZED LOSSES LESS THAN 12 MONTHS					UNREALIZED LOSSES 12 MONTHS OR GREATER					TOTAL
January 24, 2015	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross  Unrealized  Losses
Fixed income securities:
U.S. government securities	$	4,558	$	(1	)	$	—	$	—		$	4,558	$	(1	)
U.S. government agency securities	854		(1		)	—		—			854		(1		)
Corporate debt securities	3,952		(25		)	363		(3		)	4,315		(28		)
Total fixed income securities	9,364		(27		)	363		(3		)	9,727		(30		)
Publicly traded equity securities	119		(10		)	1		—			120		(10		)
Total	$	9,483	$	(37	)	$	364	$	(3	)	$	9,847	$	(40	)

	UNREALIZED LOSSES LESS THAN 12 MONTHS					UNREALIZED LOSSES 12 MONTHS OR GREATER					TOTAL
July 26, 2014	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross  Unrealized  Losses
Fixed income securities:
U.S. government securities	$	7,676	$	(12	)	$	45	$	—		$	7,721	$	(12	)
Non-U.S. government and agency securities	361		(1		)	22		—			383		(1		)
Corporate debt securities	1,875		(3		)	491		(4		)	2,366		(7		)
Total fixed income securities	9,912		(16		)	558		(4		)	10,470		(20		)
Publicly traded equity securities	132		(10		)	—		—			132		(10		)
Total	$	10,044	$	(26	)	$	558	$	(4	)	$	10,602	$	(30	)

Maturities of Fixed Income Securities

The following table summarizes the maturities of the Company’s fixed income securities at January 24, 2015 (in millions):

	Amortized Cost		Fair Value
Less than 1 year	$	15,355	$	15,362
Due in 1 to 2 years	14,963		14,995
Due in 2 to 5 years	14,383		14,431
Due after 5 years	1,573		1,589
Total	$	46,274	$	46,377

Equity Method and Cost Method Investments

For such investments that were accounted for under the equity and cost method as of January 24, 2015 and July 26, 2014, the amounts are summarized in the following table (in millions):

	January 24, 2015		July 26, 2014
Equity method investments	$	541	$	630
Cost method investments	316		269
Total	$	857	$	899

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Employee Benefit Plans (Summary Assumptions Related To And Valuation Of Employee Share-Based Awards (Time-Based Restricted Stock Units)) (Details) (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jan. 24, 2015	Jan. 25, 2014	Jan. 24, 2015	Jan. 25, 2014
RESTRICTED STOCK UNITS
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares granted (in millions)	1	37	11	47
Grant date fair value per share	$ 25.07	$ 19.90	$ 23.34	$ 20.57
Expected dividend	2.80%	3.20%	3.00%	3.10%
Range of Risk Free Interest Rate, Minimum	0.00%	0.10%	0.00%	0.00%
Range of Risk Free Interest Rate, Maximum	1.60%	1.40%	1.80%	1.40%
PERFORMANCE RESTRICTED STOCK UNITS
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares granted (in millions)	1	0	7	4
Grant date fair value per share	$ 25.39		$ 23.70	$ 22.70
Expected dividend	2.80%		3.00%	2.30%
Range of Risk Free Interest Rate, Minimum	0.00%		0.00%	0.00%
Range of Risk Free Interest Rate, Maximum	1.60%		1.80%	1.40%
Range of Expected Volatility Rate, Minimum	14.40%		14.40%	17.40%
Range of Expected Volatility Rate, Maximum	63.70%		70.00%	70.50%

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Employee Benefit Plans

6 Months Ended

Jan. 24, 2015

Compensation and Retirement Disclosure [Abstract]

Employee Benefit Plans

14. Employee Benefit Plans

(a) Employee Stock Incentive Plans

Stock Incentive Plan Program Description    As of January 24, 2015, the Company had four stock incentive plans: the 2005 Stock Incentive Plan (the “2005 Plan”); the 1996 Stock Incentive Plan (the “1996 Plan”); the Cisco Systems, Inc. SA Acquisition Long-Term Incentive Plan (the “SA Acquisition Plan”); and the Cisco Systems, Inc. WebEx Acquisition Long-Term Incentive Plan (the “WebEx Acquisition Plan”). In addition, the Company has, in connection with the acquisitions of various companies, assumed the share-based awards granted under stock incentive plans of the acquired companies or issued share-based awards in replacement thereof. Share-based awards are designed to reward employees for their long-term contributions to the Company and provide incentives for them to remain with the Company. The number and frequency of share-based awards are based on competitive practices, operating results of the Company, government regulations, and other factors. Since the inception of the stock incentive plans, the Company has granted share-based awards to a significant percentage of its employees, and the majority has been granted to employees below the vice president level. The Company’s primary stock incentive plans are summarized as follows:

2005 Plan As of January 24, 2015, the maximum number of shares issuable under the 2005 Plan over its term was 694 million shares, plus the number of any shares underlying awards outstanding on November 15, 2007 under the 1996 Plan, the SA Acquisition Plan, and the WebEx Acquisition Plan that are forfeited or are terminated for any other reason before being exercised or settled. If any awards granted under the 2005 Plan are forfeited or are terminated for any other reason before being exercised or settled, the unexercised or unsettled shares underlying the awards will again be available under the 2005 Plan. Starting November 19, 2013, shares withheld by the Company from an award other than a stock option or stock appreciation right to satisfy withholding tax liabilities resulting from such award will again be available for issuance, based on the fungible share ratio in effect on the date of grant.

Pursuant to an amendment approved by the Company’s shareholders on November 12, 2009, the number of shares available for issuance under the 2005 Plan is reduced by 1.5 shares for each share awarded as a stock grant or a stock unit, and any shares underlying awards outstanding under the 1996 Plan, the SA Acquisition Plan, and the WebEx Acquisition Plan that expire unexercised at the end of their maximum terms become available for reissuance under the 2005 Plan. The 2005 Plan permits the granting of stock options, restricted stock, and restricted stock units (RSUs), the vesting of which may be performance-based or market-based along with the requisite service requirement, and stock appreciation rights to employees (including employee directors and officers), consultants of the Company and its subsidiaries and affiliates, and non-employee directors of the Company. Stock options and stock appreciation rights granted under the 2005 Plan have an exercise price of at least 100% of the fair market value of the underlying stock on the grant date and prior to November 12, 2009 have an expiration date no later than nine years from the grant date. The expiration date for stock options and stock appreciation rights granted subsequent to the amendment approved on November 12, 2009 shall be no later than 10 years from the grant date.

The stock options will generally become exercisable for 20% or 25% of the option shares one year from the date of grant and then ratably over the following 48 months or 36 months, respectively. Time-based stock grants and time-based RSUs will generally vest with respect to 20% or 25% of the shares or share units covered by the grant on each of the first through fifth or fourth anniversaries of the date of the grant, respectively. The majority of the performance-based and market-based RSUs vest at the end of the three-year requisite service period or earlier if the award recipient meets certain retirement eligibility conditions. Other performance-based RSUs, that are based on the achievement of financial and/or non-financial operating goals, typically vest upon the achievement of milestones (and may require subsequent service periods), with overall vesting ranging from six months to three years. The Compensation and Management Development Committee of the Board of Directors has the discretion to use different vesting schedules. Stock appreciation rights may be awarded in combination with stock options or stock grants, and such awards shall provide that the stock appreciation rights will not be exercisable unless the related stock options or stock grants are forfeited. Stock grants may be awarded in combination with non-statutory stock options, and such awards may provide that the stock grants will be forfeited in the event that the related non-statutory stock options are exercised.

1996 Plan   The 1996 Plan expired on December 31, 2006, and the Company can no longer make equity awards under the 1996 Plan. The maximum number of shares issuable over the term of the 1996 Plan was 2.5 billion shares. Stock options granted under the 1996 Plan have an exercise price of at least 100% of the fair market value of the underlying stock on the grant date and expire no later than nine years from the grant date. The stock options generally became exercisable for 20% or 25% of the option shares one year from the date of grant and then ratably over the following 48 months or 36 months, respectively. Certain other grants utilized a 60-month ratable vesting schedule. In addition, the Board of Directors, or other committees administering the 1996 Plan, had the discretion to use a different vesting schedule and did so from time to time.

Acquisition Plans In connection with the Company’s acquisitions of Scientific-Atlanta, Inc. (“Scientific-Atlanta”) and WebEx Communications, Inc. (“WebEx”), the Company adopted the SA Acquisition Plan and the WebEx Acquisition Plan, respectively, each effective upon completion of the applicable acquisition. These plans constitute assumptions, amendments, restatements, and renamings of the 2003 Long-Term Incentive Plan of Scientific-Atlanta and the WebEx Communications, Inc. Amended and Restated 2000 Stock Incentive Plan, respectively. The plans permit the grant of stock options, stock, stock units, and stock appreciation rights to certain employees of the Company and its subsidiaries and affiliates who had been employed by Scientific-Atlanta or its subsidiaries or WebEx or its subsidiaries, as applicable. As a result of the shareholder approval of the amendment and extension of the 2005 Plan, as of November 15, 2007, the Company will no longer make stock option grants or direct share issuances under either the SA Acquisition Plan or the WebEx Acquisition Plan.

(b) Employee Stock Purchase Plan

The Company has an Employee Stock Purchase Plan, which includes its subplan named the International Employee Stock Purchase Plan (together, the “Purchase Plan”), under which 621.4 million shares of the Company’s common stock have been reserved for issuance as of January 24, 2015. Eligible employees are offered shares through a 24-month offering period, which consists of four consecutive 6-month purchase periods. Employees may purchase a limited number of shares of the Company’s stock at a discount of up to 15% of the lesser of the market value at the beginning of the offering period or the end of each 6-month purchase period. The Purchase Plan is scheduled to terminate on January 3, 2020. The Company issued 14 million shares under the Purchase Plan during each of the six months ended January 24, 2015 and January 25, 2014. As of January 24, 2015, 161 million shares were available for issuance under the Purchase Plan.

(c) Summary of Share-Based Compensation Expense

Share-based compensation expense consists primarily of expenses for stock options, stock purchase rights, restricted stock, and restricted stock units granted to employees. The following table summarizes share-based compensation expense (in millions):

	Three Months Ended					Six Months Ended
	January 24, 2015		January 25, 2014			January 24, 2015			January 25, 2014
Cost of sales—product	$	11	$	12		$	22		$	22
Cost of sales—service	34		40			71			73
Share-based compensation expense in cost of sales	45		52			93			95
Research and development	105		108			224			200
Sales and marketing	114		141			261			264
General and administrative	42		47			101			101
Restructuring and other charges	2		(1		)	(2		)	(4		)
Share-based compensation expense in operating expenses	263		295			584			561
Total share-based compensation expense	$	308	$	347		$	677		$	656
Income tax benefit for share-based compensation	$	85	$	82		$	179		$	160

As of January 24, 2015, the total compensation cost related to unvested share-based awards not yet recognized was $2.0 billion, which is expected to be recognized over approximately 2.3 years on a weighted-average basis.

(d) Share-Based Awards Available for Grant

A summary of share-based awards available for grant is as follows (in millions):

	Share-Based Awards Available for Grant
BALANCE AT JULY 27, 2013	228
Restricted stock, stock units, and other share-based awards granted	(98	)
Share-based awards canceled/forfeited/expired	36
Additional shares reserved	135
Shares withheld for taxes and not issued	6
Other	3
BALANCE AT JULY 26, 2014	310
Restricted stock, stock units, and other share-based awards granted	(28	)
Share-based awards canceled/forfeited/expired	27
Shares withheld for taxes and not issued	21
Other	(2	)
BALANCE AT JANUARY 24, 2015	328

As reflected in the preceding table, for each share awarded as restricted stock or subject to a restricted stock unit award under the 2005 Plan, an equivalent of 1.5 shares was deducted from the available share-based award balance. For restricted stock units that were awarded with vesting contingent upon the achievement of future financial performance or market-based metrics, the maximum awards that can be achieved upon full vesting of such awards were reflected in the preceding table.

(e) Restricted Stock and Stock Unit Awards

A summary of the restricted stock and stock unit activity, which includes time-based and performance-based or market-based restricted stock units, is as follows (in millions, except per-share amounts):

	Restricted Stock/ Stock Units		Weighted-Average Grant Date Fair Value per Share		Aggregated Fair Market Value
UNVESTED BALANCE AT JULY 27, 2013	143		$	18.80
Granted and assumed	72		20.85
Vested	(53	)	19.55		$	1,229
Canceled/forfeited	(13	)	18.61
UNVESTED BALANCE AT JULY 26, 2014	149		19.54
Granted and assumed	18		23.47
Vested	(41	)	19.47		$	1,053
Canceled/forfeited	(11	)	19.70
UNVESTED BALANCE AT JANUARY 24, 2015	115		$	20.18

(f) Stock Option Awards

A summary of the stock option activity is as follows (in millions, except per-share amounts):

	STOCK OPTIONS OUTSTANDING
	Number Outstanding		Weighted-Average Exercise Price per Share
BALANCE AT JULY 27, 2013	276		$	24.44
Assumed from acquisitions	6		3.60
Exercised	(78	)	18.30
Canceled/forfeited/expired	(17	)	27.53
BALANCE AT JULY 26, 2014	187		26.03
Assumed from acquisitions	1		2.72
Exercised	(45	)	20.49
Canceled/forfeited/expired	(10	)	29.48
BALANCE AT JANUARY 24, 2015	133		$	27.45

The following table summarizes significant ranges of outstanding and exercisable stock options as of January 24, 2015 (in millions, except years and share prices):

	STOCK OPTIONS OUTSTANDING						STOCK OPTIONS EXERCISABLE
Range of Exercise Prices	Number Outstanding	Weighted- Average Remaining Contractual Life (in Years)	Weighted- Average Exercise Price per Share		Aggregate Intrinsic Value		Number Exercisable	Weighted- Average Exercise Price per Share		Aggregate Intrinsic Value
$  0.01 – 15.00	5	5.4	$	4.17	$	135	3	$	5.66	$	69
15.01 – 18.00	1	2.0	16.91		3		1	16.91		3
18.01 – 20.00	1	0.3	19.69		9		1	19.69		9
20.01 – 25.00	37	0.8	22.90		198		37	22.90		198
25.01 – 30.00	20	1.5	26.72		32		20	26.72		32
30.01 – 35.00	69	1.5	32.16		—		69	32.16		—
Total	133	1.5	$	27.45	$	377	131	$	27.94	$	311

The aggregate intrinsic value in the preceding table represents the total pretax intrinsic value, based on the Company’s closing stock price of $28.21 as of January 23, 2015, that would have been received by the option holders had those option holders exercised their stock options as of that date. The total number of in-the-money stock options exercisable as of January 24, 2015 was 59 million. As of July 26, 2014, 183 million outstanding stock options were exercisable, and the weighted-average exercise price was $26.50.

(g) Valuation of Employee Share-Based Awards

Time-based restricted stock units and performance-based restricted stock units (PRSUs) that are based on the Company’s financial performance metrics or non-financial operating goals are valued using the market value of the Company’s common stock on the date of grant, discounted for the present value of expected dividends. On the date of grant, the Company estimated the fair value of the total shareholder return (TSR) component of the PRSUs using a Monte Carlo simulation model. The assumptions for the valuation of time-based RSUs and PRSUs are summarized as follows:

	RESTRICTED STOCK UNITS						PERFORMANCE RESTRICTED STOCK UNITS
Three Months Ended	January 24, 2015			January 25, 2014			January 24, 2015			January 25, 2014
Number of shares granted (in millions)	1			37			1			—
Grant date fair value per share	$	25.07		$	19.90		$	25.39		N/A
Weighted-average assumptions/inputs:
Expected dividend yield	2.8		%	3.2		%	2.8		%	N/A
Range of risk-free interest rates	0.0% – 1.6%			0.1% – 1.4%			0.0% – 1.6%			N/A
Range of expected volatilities for index	N/A			N/A			14.4% – 63.7%			N/A

	RESTRICTED STOCK UNITS						PERFORMANCE RESTRICTED STOCK UNITS
Six Months Ended	January 24, 2015			January 25, 2014			January 24, 2015			January 25, 2014
Number of shares granted (in millions)	11			47			7			4
Grant date fair value per share	$	23.34		$	20.57		$	23.70		$	22.70
Weighted-average assumptions/inputs:
Expected dividend yield	3.0		%	3.1		%	3.0		%	2.3		%
Range of risk-free interest rates	0.0% – 1.8%			0.0% – 1.4%			0.0% – 1.8%			0.0% – 1.4%
Range of expected volatilities for index	N/A			N/A			14.4% – 70.0%			17.4% – 70.5%

The PRSUs granted during the first two quarters of fiscal 2015 and the first quarter of fiscal 2014 are contingent on the achievement of the Company’s financial performance metrics, its comparative market-based returns, or the achievement of financial and non-financial operating goals. For the awards based on financial performance metrics or comparative market-based returns, generally 50% of the PRSUs are earned based on the average of annual operating cash flow and earnings per share goals established at the beginning of each fiscal year over a three-year performance period. Generally, the remaining 50% of the PRSUs are earned based on the Company’s TSR measured against the benchmark TSR of a peer group over the same period. Each PRSU recipient could vest in 0% to 150% of the target shares granted contingent on the achievement of the Company's financial performance metrics or its comparative market-based returns and 0% to 100% of the target shares granted contingent on the achievement of non-financial operating goals.

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Investments (Realized Net Gains (Losses) Related To Available-For-Sale Investments) (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jan. 24, 2015	Jan. 25, 2014	Jan. 24, 2015	Jan. 25, 2014
Schedule of Available-for-sale Securities [Line Items]
Total	$ 69	$ 82	$ 76	$ 165
Net gains (losses) on investments in publicly traded equity securities
Schedule of Available-for-sale Securities [Line Items]
Total	60	69	56	144
Net gains on investments in fixed income securities
Schedule of Available-for-sale Securities [Line Items]
Total	$ 9	$ 13	$ 20	$ 21

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Net Income per Share (Calculation Of Basic And Diluted Net Income Per Share) (Details) (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jan. 24, 2015	Jan. 25, 2014	Jan. 24, 2015	Jan. 25, 2014
Earnings Per Share [Abstract]
Net income	$ 2,397	$ 1,429	$ 4,225	$ 3,425
Weighted-average shares—basic (in shares)	5,117	5,294	5,115	5,336
Incremental Common Shares Attributable to Dilutive Effect of Share-based Payment Arrangements (in shares)	43	33	44	47
Weighted-average shares—diluted (in shares)	5,160	5,327	5,159	5,383
Net income per share—basic	$ 0.47	$ 0.27	$ 0.83	$ 0.64
Net income per share—diluted	$ 0.46	$ 0.27	$ 0.82	$ 0.64
Antidilutive employee share-based awards, excluded (in shares)	83	278	156	252

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Consolidated Statements Of Cash Flows (USD $) In Millions, unless otherwise specified	6 Months Ended
	Jan. 24, 2015	Jan. 25, 2014
Cash flows from operating activities:
Net income	$ 4,225	$ 3,425
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization, and other	1,224	1,203
Share-based compensation expense	677	656
Provision for receivables	62	56
Deferred income taxes	385	(26)
Excess tax benefits from share-based compensation	(83)	(73)
(Gains) losses on investments and other, net	(182)	(163)
Change in operating assets and liabilities, net of effects of acquisitions and divestitures:
Accounts receivable	501	1,134
Inventories	(340)	(77)
Financing receivables	74	245
Other assets	(218)	179
Accounts payable	(32)	(161)
Income taxes, net	(528)	(444)
Accrued compensation	(390)	(804)
Deferred revenue	26	(205)
Other liabilities	(27)	577
Net cash provided by operating activities	5,374	5,522
Cash flows from investing activities:
Purchases of investments	(20,061)	(15,874)
Proceeds from sales of investments	9,948	9,081
Proceeds from maturities of investments	7,212	7,988
Acquisition of businesses, net of cash and cash equivalents acquired	(217)	(2,784)
Purchases of investments in privately held companies	(91)	(263)
Return of investments in privately held companies	227	81
Acquisition of property and equipment	(550)	(577)
Proceeds from sales of property and equipment	5	164
Other	(109)	(6)
Net cash used in investing activities	(3,636)	(2,190)
Cash flows from financing activities:
Issuances of common stock	1,162	837
Repurchases of common stock—repurchase program	(2,196)	(5,680)
Shares repurchased for tax withholdings on vesting of restricted stock units	(369)	(309)
Short-term borrowings, original maturities less than 90 days, net	(4)	998
Issuances of debt	0	4
Repayments of debt	(506)	(22)
Excess tax benefits from share-based compensation	83	73
Dividends paid	(1,947)	(1,810)
Other	110	(9)
Net cash used in financing activities	(3,667)	(5,918)
Net decrease in cash and cash equivalents	(1,929)	(2,586)
Cash and cash equivalents, beginning of period	6,726	7,925
Cash and cash equivalents, end of period	4,797	5,339
Supplemental cash flow information:
Cash paid for interest	383	340
Cash paid for income taxes, net	$ 1,152	$ 1,340

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Consolidated Balance Sheets (Parenthetical) (USD $) In Millions, except Per Share data, unless otherwise specified	Jan. 24, 2015	Jul. 26, 2014
Statement of Financial Position [Abstract]
Accounts receivable, allowance for doubtful accounts	$ 270	$ 265
Preferred stock, par value (in dollars per share)	$ 0	$ 0
Preferred stock, shares authorized (in shares)	5	5
Preferred stock, issued (in shares)	0	0
Preferred stock, outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	20,000	20,000
Common stock, shares issued (in shares)	5,107	5,107
Common stock, shares outstanding (in shares)	5,107	5,107

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Financing Receivables and Operating Leases

6 Months Ended

Jan. 24, 2015

Receivables [Abstract]

Financing Receivables and Operating Leases

7. Financing Receivables and Operating Leases

(a) Financing Receivables

Financing receivables primarily consist of lease receivables, loan receivables, and financed service contracts and other. Lease receivables represent sales-type and direct-financing leases resulting from the sale of the Company’s and complementary third-party products and are typically collateralized by a security interest in the underlying assets. Loan receivables represent financing arrangements related to the sale of the Company’s products and services, which may include additional funding for other costs associated with network installation and integration of the Company’s products and services. Lease receivables consist of arrangements with terms of four years on average, while loan receivables generally have terms of up to three years. The financed service contracts and other category includes financing receivables related to technical support and advanced services, as well as receivables related to financing of certain indirect costs associated with leases. Revenue related to the technical support services is typically deferred and included in deferred service revenue and is recognized ratably over the period during which the related services are to be performed, which typically ranges from one to three years.

A summary of the Company's financing receivables is presented as follows (in millions):

January 24, 2015	Lease Receivables			Loan Receivables			Financed Service Contracts and Other			Total
Gross	$	3,369		$	1,674		$	3,069		$	8,112
Residual value	228			—			—			228
Unearned income	(206		)	—			—			(206		)
Allowance for credit loss	(250		)	(85		)	(40		)	(375		)
Total, net	$	3,141		$	1,589		$	3,029		$	7,759
Reported as:
Current	$	1,462		$	782		$	1,966		$	4,210
Noncurrent	1,679			807			1,063			3,549
Total, net	$	3,141		$	1,589		$	3,029		$	7,759

July 26, 2014	Lease Receivables			Loan Receivables			Financed Service Contracts and Other			Total
Gross	$	3,532		$	1,683		$	3,210		$	8,425
Residual value	233			—			—			233
Unearned income	(238		)	—			—			(238		)
Allowance for credit loss	(233		)	(98		)	(18		)	(349		)
Total, net	$	3,294		$	1,585		$	3,192		$	8,071
Reported as:
Current	$	1,476		$	728		$	1,949		$	4,153
Noncurrent	1,818			857			1,243			3,918
Total, net	$	3,294		$	1,585		$	3,192		$	8,071

As of January 24, 2015 and July 26, 2014, the deferred service revenue related to "Financed Service Contracts and Other" was $1,530 million and $1,843 million, respectively.

Future minimum lease payments at January 24, 2015 are summarized as follows (in millions):

Fiscal Year	Amount
2015 (remaining six months)	$	883
2016	1,281
2017	753
2018	327
2019	115
Thereafter	10
Total	$	3,369

Actual cash collections may differ from the contractual maturities due to early customer buyouts, refinancings, or defaults.

(b) Credit Quality of Financing Receivables

Gross receivables less unearned income categorized by the Company’s internal credit risk rating as of January 24, 2015 and July 26, 2014 are summarized as follows (in millions):

	INTERNAL CREDIT RISK RATING
January 24, 2015	1 to 4		5 to 6		7 and Higher		Total
Lease receivables	$	1,632	$	1,386	$	145	$	3,163
Loan receivables	717		803		154		1,674
Financed service contracts and other	1,647		1,342		80		3,069
Total	$	3,996	$	3,531	$	379	$	7,906

	INTERNAL CREDIT RISK RATING
July 26, 2014	1 to 4		5 to 6		7 and Higher		Total
Lease receivables	$	1,615	$	1,538	$	141	$	3,294
Loan receivables	953		593		137		1,683
Financed service contracts and other	1,744		1,367		99		3,210
Total	$	4,312	$	3,498	$	377	$	8,187

The Company determines the adequacy of its allowance for credit loss by assessing the risks and losses inherent in its financing receivables by portfolio segment. The portfolio segment is based on the types of financing offered by the Company to its customers, which consist of the following: lease receivables, loan receivables, and financed service contracts and other.

The Company’s internal credit risk ratings of 1 through 4 correspond to investment-grade ratings, while credit risk ratings of 5 and 6 correspond to non-investment grade ratings. Credit risk ratings of 7 and higher correspond to substandard ratings.

In circumstances when collectibility is not deemed reasonably assured, the associated revenue is deferred in accordance with the Company’s revenue recognition policies, and the related allowance for credit loss, if any, is included in deferred revenue. The Company also records deferred revenue associated with financing receivables when there are remaining performance obligations, as it does for financed service contracts. Total allowances for credit loss and deferred revenue as of January 24, 2015 and July 26, 2014 were $1,928 million and $2,220 million, respectively, and they were associated with total financing receivables before allowance for credit loss of $8,134 million and $8,420 million as of their respective period ends.

The following tables present the aging analysis of gross receivables less unearned income as of January 24, 2015 and July 26, 2014 (in millions):

	DAYS PAST DUE (INCLUDES BILLED AND UNBILLED)
January 24, 2015	31-60		61-90		91+		Total Past Due		Current		Total		Nonaccrual Financing Receivables		Impaired Financing Receivables
Lease receivables	$	171	$	63	$	224	$	458	$	2,705	$	3,163	$	53	$	48
Loan receivables	30		42		177		249		1,425		1,674		33		33
Financed service contracts and other	144		135		385		664		2,405		3,069		30		8
Total	$	345	$	240	$	786	$	1,371	$	6,535	$	7,906	$	116	$	89

	DAYS PAST DUE (INCLUDES BILLED AND UNBILLED)
July 26, 2014	31-60		61-90		91+		Total Past Due		Current		Total		Nonaccrual Financing Receivables		Impaired Financing Receivables
Lease receivables	$	63	$	48	$	203	$	314	$	2,980	$	3,294	$	48	$	41
Loan receivables	7		21		28		56		1,627		1,683		19		19
Financed service contracts and other	268		238		221		727		2,483		3,210		12		9
Total	$	338	$	307	$	452	$	1,097	$	7,090	$	8,187	$	79	$	69

Past due financing receivables are those that are 31 days or more past due according to their contractual payment terms. The data in the preceding tables is presented by contract, and the aging classification of each contract is based on the oldest outstanding receivable, and therefore past due amounts also include unbilled and current receivables within the same contract. The balances of either unbilled or current financing receivables included in the category of 91 days plus past due for financing receivables were $542 million and $334 million as of January 24, 2015 and July 26, 2014, respectively.

As of January 24, 2015, the Company had financing receivables of $217 million, net of unbilled or current receivables from the same contract, that were in the category of 91 days plus past due but remained on accrual status. Such balance was $78 million as of July 26, 2014. A financing receivable may be placed on nonaccrual status earlier if, in management’s opinion, a timely collection of the full principal and interest becomes uncertain.

(c) Allowance for Credit Loss Rollforward

The allowances for credit loss and the related financing receivables are summarized as follows (in millions):

	CREDIT LOSS ALLOWANCES
Three Months Ended January 24, 2015	Lease Receivables			Loan Receivables			Financed Service Contracts and Other		Total
Allowance for credit loss as of October 25, 2014	$	248		$	84		$	36	$	368
Provisions	7			3			4		14
Recoveries (write-offs), net	(1		)	—			—		(1		)
Foreign exchange and other	(4		)	(2		)	—		(6		)
Allowance for credit loss as of January 24, 2015	$	250		$	85		$	40	$	375
Financing receivables as of January 24, 2015 (1)	$	3,391		$	1,674		$	3,069	$	8,134

	CREDIT LOSS ALLOWANCES
Six Months Ended January 24, 2015	Lease Receivables			Loan Receivables			Financed Service Contracts and Other			Total
Allowance for credit loss as of July 26, 2014	$	233		$	98		$	18		$	349
Provisions	29			(10		)	23			42
Recoveries (write-offs), net	(5		)	1			—			(4		)
Foreign exchange and other	(7		)	(4		)	(1		)	(12		)
Allowance for credit loss as of January 24, 2015	$	250		$	85		$	40		$	375

	CREDIT LOSS ALLOWANCES
Three Months Ended January 25, 2014	Lease Receivables			Loan Receivables			Financed Service Contracts and Other		Total
Allowance for credit loss as of October 26, 2013	$	237		$	93		$	20	$	350
Provisions	18			9			2		29
Recoveries (write-offs), net	1			—			—		1
Foreign exchange and other	(2		)	(4		)	—		(6		)
Allowance for credit loss as of January 25, 2014	$	254		$	98		$	22	$	374
Financing receivables as of January 25, 2014 (1)	$	3,551		$	1,660		$	2,807	$	8,018

	CREDIT LOSS ALLOWANCES
Six Months Ended January 25, 2014	Lease Receivables		Loan Receivables			Financed Service Contracts and Other		Total
Allowance for credit loss as of July 27, 2013	$	238	$	86		$	20	$	344
Provisions	15		15			2		32
Recoveries (write-offs), net	1		—			—		1
Foreign exchange and other	—		(3		)	—		(3		)
Allowance for credit loss as of January 25, 2014	$	254	$	98		$	22	$	374

⁽¹⁾ Total financing receivables before allowance for credit loss.

The Company assesses the allowance for credit loss related to financing receivables on either an individual or a collective basis. The Company considers various factors in evaluating lease and loan receivables and the earned portion of financed service contracts for possible impairment on an individual basis. These factors include the Company’s historical experience, credit quality and age of the receivable balances, and economic conditions that may affect a customer’s ability to pay. When the evaluation indicates that it is probable that all amounts due pursuant to the contractual terms of the financing agreement, including scheduled interest payments, are unable to be collected, the financing receivable is considered impaired. All such outstanding amounts, including any accrued interest, will be assessed and fully reserved at the customer level. The Company’s internal credit risk ratings are categorized as 1 through 10, with the lowest credit risk rating representing the highest quality financing receivables.

Typically, the Company also considers receivables with a risk rating of 8 or higher to be impaired and will include them in the individual assessment for allowance. These balances, as of January 24, 2015 and July 26, 2014, are presented under “(b) Credit Quality of Financing Receivables” above.

The Company evaluates the remainder of its financing receivables portfolio for impairment on a collective basis and records an allowance for credit loss at the portfolio segment level. When evaluating the financing receivables on a collective basis, the Company uses expected default frequency rates published by a major third-party credit-rating agency as well as its own historical loss rate in the event of default, while also systematically giving effect to economic conditions, concentration of risk, and correlation.

(d) Operating Leases

The Company provides financing of certain equipment through operating leases, and the amounts are included in property and equipment in the Consolidated Balance Sheets. Amounts relating to equipment on operating lease assets and the associated accumulated depreciation are summarized as follows (in millions):

	January 24, 2015			July 26, 2014
Operating lease assets	$	343		$	362
Accumulated depreciation	(195		)	(202		)
Operating lease assets, net	$	148		$	160

Minimum future rentals on noncancelable operating leases at January 24, 2015 were approximately $0.1 billion for the remaining six months of fiscal 2015, $0.2 billion for fiscal 2016, and less than $0.1 billion per year for each of fiscal 2017 through fiscal 2019.

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Income Taxes (Additional Information) (Details) (USD $)	3 Months Ended	6 Months Ended
	Jan. 24, 2015	Jan. 24, 2015
Income Tax Disclosure [Abstract]
R&D tax benefit related to FY 2014	$ 91,000,000	$ 91,000,000
Unrecognized Tax Benefits	2,000,000,000	2,000,000,000
Unrecognized Tax Benefits that Would Impact Effective Tax Rate	1,800,000,000	1,800,000,000
Unrecognized tax benefit that could be reduced in next 12 months	$ 300,000,000	$ 300,000,000

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Employee Benefit Plans (Summary Of Share-Based Compensation Expense) (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jan. 24, 2015	Jan. 25, 2014	Jan. 24, 2015	Jan. 25, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total share-based compensation expense	$ 308	$ 347	$ 677	$ 656
Income tax benefit for share-based compensation	85	82	179	160
Cost of sales—product
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total share-based compensation expense	11	12	22	22
Cost of sales—service
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total share-based compensation expense	34	40	71	73
Cost of sales
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total share-based compensation expense	45	52	93	95
Research and development
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total share-based compensation expense	105	108	224	200
Sales and marketing
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total share-based compensation expense	114	141	261	264
General and administrative
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total share-based compensation expense	42	47	101	101
Restructuring and other charges
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total share-based compensation expense	2	(1)	(2)	(4)
Operating expenses
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total share-based compensation expense	$ 263	$ 295	$ 584	$ 561

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Shareholders' Equity (Stock Repurchase Program) (Details) (USD $) In Millions, except Per Share data, unless otherwise specified	6 Months Ended
	Jan. 24, 2015
Stockholders' Equity Note [Abstract]
Cumulative Shares Repurchased, Beginning balance (in shares)	4,288
Repurchase of Common Stock During Period (in shares)	85	[1]
Cumulative Shares Repurchased, Ending balance (in shares)	4,373
Cumulative Weighted-Average Price per Share, Beginning balance, dollars per share	$ 20.63
Repurchase of common stock under the stock repurchase program, Weighted-Average Price per Share, dollars per share	$ 26.15
Cumulative Weighted-Average Price per Share, Ending balance, dollars per share	$ 20.73
Cumulative Amount Repurchased, Beginning balance	$ 88,445
Stock Repurchased During the Period, Shares	2,221	[1]
Cumulative Amount Repurchased, Ending balance	$ 90,666

[1] Includes stock repurchases of $150 million, which were pending settlement as of January 24, 2015. There were $126 million of stock repurchases that were pending settlement as of July 26, 2014.

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Document and Entity Information	6 Months Ended
	Jan. 24, 2015	Feb. 13, 2015
Document Documentand Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jan. 24, 2015
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2015
Trading Symbol	CSCO
Entity Registrant Name	CISCO SYSTEMS, INC.
Entity Central Index Key	0000858877
Entity Current Reporting Status	Yes
Current Fiscal Year End Date	--07-25
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		5,104,738,671

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Investments

6 Months Ended

Jan. 24, 2015

Investments, Debt and Equity Securities [Abstract]

Investments

8. Investments

(a) Summary of Available-for-Sale Investments

The following tables summarize the Company’s available-for-sale investments (in millions):

January 24, 2015	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Fixed income securities:
U.S. government securities	$	30,302	$	53	$	(1	)	$	30,354
U.S. government agency securities	2,324		3		(1		)	2,326
Non-U.S. government and agency securities	1,108		1		—			1,109
Corporate debt securities	11,180		61		(28		)	11,213
U.S. agency mortgage-backed securities	1,360		15		—			1,375
Total fixed income securities	46,274		133		(30		)	46,377
Publicly traded equity securities	1,296		562		(10		)	1,848
Total	$	47,570	$	695	$	(40	)	$	48,225

July 26, 2014	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Fixed income securities:
U.S. government securities	$	31,717	$	29	$	(12	)	$	31,734
U.S. government agency securities	1,062		1		—			1,063
Non-U.S. government and agency securities	860		2		(1		)	861
Corporate debt securities	9,092		74		(7		)	9,159
U.S. agency mortgage-backed securities	574		5		—			579
Total fixed income securities	43,305		111		(20		)	43,396
Publicly traded equity securities	1,314		648		(10		)	1,952
Total	$	44,619	$	759	$	(30	)	$	45,348

Non-U.S. government and agency securities include agency and corporate debt securities that are guaranteed by non-U.S. governments.

(b) Gains and Losses on Available-for-Sale Investments

The following table presents the gross realized gains and gross realized losses related to the Company’s available-for-sale investments (in millions):

	Three Months Ended						Six Months Ended
	January 24, 2015			January 25, 2014			January 24, 2015			January 25, 2014
Gross realized gains	$	92		$	97		$	113		$	192
Gross realized losses	(23		)	(15		)	(37		)	(27		)
Total	$	69		$	82		$	76		$	165

The following table presents the realized net gains (losses) related to the Company’s available-for-sale investments by security type (in millions):

	Three Months Ended				Six Months Ended
	January 24, 2015		January 25, 2014		January 24, 2015		January 25, 2014
Net gains (losses) on investments in publicly traded equity securities	$	60	$	69	$	56	$	144
Net gains on investments in fixed income securities	9		13		20		21
Total	$	69	$	82	$	76	$	165

There were no impairment charges on available-for-sale investments for the three and six months ended January 24, 2015. For the three and six months ended January 25, 2014, the realized gains related to the Company's available-for-sale investments included impairment charges of $11 million for publicly traded equity securities, which were due to a decline in the fair value of those securities below their cost basis that were determined to be other than temporary.

The following tables present the breakdown of the available-for-sale investments with gross unrealized losses and the duration that those losses had been unrealized at January 24, 2015 and July 26, 2014 (in millions):

	UNREALIZED LOSSES LESS THAN 12 MONTHS					UNREALIZED LOSSES 12 MONTHS OR GREATER					TOTAL
January 24, 2015	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross  Unrealized  Losses
Fixed income securities:
U.S. government securities	$	4,558	$	(1	)	$	—	$	—		$	4,558	$	(1	)
U.S. government agency securities	854		(1		)	—		—			854		(1		)
Corporate debt securities	3,952		(25		)	363		(3		)	4,315		(28		)
Total fixed income securities	9,364		(27		)	363		(3		)	9,727		(30		)
Publicly traded equity securities	119		(10		)	1		—			120		(10		)
Total	$	9,483	$	(37	)	$	364	$	(3	)	$	9,847	$	(40	)

	UNREALIZED LOSSES LESS THAN 12 MONTHS					UNREALIZED LOSSES 12 MONTHS OR GREATER					TOTAL
July 26, 2014	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross  Unrealized  Losses
Fixed income securities:
U.S. government securities	$	7,676	$	(12	)	$	45	$	—		$	7,721	$	(12	)
Non-U.S. government and agency securities	361		(1		)	22		—			383		(1		)
Corporate debt securities	1,875		(3		)	491		(4		)	2,366		(7		)
Total fixed income securities	9,912		(16		)	558		(4		)	10,470		(20		)
Publicly traded equity securities	132		(10		)	—		—			132		(10		)
Total	$	10,044	$	(26	)	$	558	$	(4	)	$	10,602	$	(30	)

As of January 24, 2015, for fixed income securities that were in unrealized loss positions, the Company has determined that (i) it does not have the intent to sell any of these investments and (ii) it is not more likely than not that it will be required to sell any of these investments before recovery of the entire amortized cost basis. In addition, as of January 24, 2015, the Company anticipates that it will recover the entire amortized cost basis of such fixed income securities and has determined that no other-than-temporary impairments associated with credit losses were required to be recognized during the six months ended January 24, 2015.

The Company has evaluated its publicly traded equity securities as of January 24, 2015 and has determined that there was no indication of other-than-temporary impairments in the respective categories of unrealized losses. This determination was based on several factors, which include the length of time and extent to which fair value has been less than the cost basis, the financial condition and near-term prospects of the issuer, and the Company’s intent and ability to hold the publicly traded equity securities for a period of time sufficient to allow for any anticipated recovery in market value.

(c) Maturities of Fixed Income Securities

The following table summarizes the maturities of the Company’s fixed income securities at January 24, 2015 (in millions):

	Amortized Cost		Fair Value
Less than 1 year	$	15,355	$	15,362
Due in 1 to 2 years	14,963		14,995
Due in 2 to 5 years	14,383		14,431
Due after 5 years	1,573		1,589
Total	$	46,274	$	46,377

Actual maturities may differ from the contractual maturities because borrowers may have the right to call or prepay certain obligations. The remaining contractual principal maturities for mortgage-backed securities were allocated assuming no prepayments.

(d) Securities Lending

The Company periodically engages in securities lending activities with certain of its available-for-sale investments. These transactions are accounted for as a secured lending of the securities, and the securities are typically loaned only on an overnight basis. The average daily balance of securities lending for the six months ended January 24, 2015 and January 25, 2014 was $0.6 billion and $0.9 billion, respectively. The Company requires collateral equal to at least 102% of the fair market value of the loaned security and that the collateral be in the form of cash or liquid, high-quality assets. The Company engages in these secured lending transactions only with highly creditworthy counterparties, and the associated portfolio custodian has agreed to indemnify the Company against collateral losses. The Company did not experience any losses in connection with the secured lending of securities during the periods presented. As of January 24, 2015 and July 26, 2014, the Company had no outstanding securities lending transactions.

(e) Investments in Privately Held Companies

The carrying value of the Company’s investments in privately held companies was included in other assets. For such investments that were accounted for under the equity and cost method as of January 24, 2015 and July 26, 2014, the amounts are summarized in the following table (in millions):

	January 24, 2015		July 26, 2014
Equity method investments	$	541	$	630
Cost method investments	316		269
Total	$	857	$	899

Variable Interest Entities

VCE Joint Venture VCE is a joint venture formed in fiscal 2010 between the Company and EMC Corporation (“EMC”), with investments from VMware, Inc. (“VMware”) and Intel Capital Corporation ("Intel"). In October 2014, the Company, EMC, VMware, and Intel agreed to restructure VCE, and this transaction was completed in the second quarter of fiscal 2015. Prior to the restructuring, the Company’s cumulative gross investment in VCE was approximately $716 million inclusive of convertible notes and accrued interest on convertible notes. The Company recorded cumulative losses from VCE under the equity method of $691 million since inception. The Company ceased accounting for the VCE investment under the equity method in October 2014 and recorded no losses during the three months ended January 24, 2015, compared with losses of $58 million recorded for the three months ended January 25, 2014, and losses of $47 million and $111 million were recorded for the six months ended January 24, 2015 and January 25, 2014, respectively. Under the terms of the restructuring, VCE paid $152 million to the Company for a portion of the outstanding principal balance of the convertible notes held by it and accrued interest on such notes, and the remaining principal balance of other such notes, and the accrued interest thereon, was cancelled. Pursuant to the restructuring, VCE also redeemed a portion of the Company’s equity interest in VCE, reducing the Company’s ownership interest in VCE from 35% prior to the restructuring to 10%.  In connection with this transaction, the Company has written this investment down to a book value of zero and has recognized a gain of $126 million for the three and six months ended January 24, 2015.

Other Variable Interest EntitiesIn the ordinary course of business, the Company has investments in other privately held companies and provides financing to certain customers. These other privately held companies and customers may be considered to be variable interest entities. The Company evaluates on an ongoing basis its investments in these other privately held companies and its customer financings and has determined that as of January 24, 2015 there were no other variable interest entities required to be consolidated in the Company’s Consolidated Financial Statements.

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Derivative Instruments (Effect Of Derivative Instruments Designated As Cash Flow Hedges On Other Comprehensive Income And Consolidated Statements Of Operations Summary) (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jan. 24, 2015	Jan. 25, 2014	Jan. 24, 2015	Jan. 25, 2014
Derivatives designated as cash flow hedging instruments:
Derivative [Line Items]
GAINS (LOSSES) RECOGNIZED IN OCI ON DERIVATIVES FOR THE THREE MONTHS ENDED (EFFECTIVE PORTION)	$ (75)	$ (4)	$ (131)	$ 34
GAINS (LOSSES) RECLASSIFIED FROM AOCI INTO INCOME FOR THE THREE MONTHS ENDED (EFFECTIVE PORTION)	(26)	19	(30)	28
Derivatives designated as cash flow hedging instruments: | Foreign currency derivatives
Derivative [Line Items]
GAINS (LOSSES) RECOGNIZED IN OCI ON DERIVATIVES FOR THE THREE MONTHS ENDED (EFFECTIVE PORTION)	(75)	(4)	(131)	34
Derivatives designated as cash flow hedging instruments: | Foreign currency derivatives | Operating expenses
Derivative [Line Items]
GAINS (LOSSES) RECLASSIFIED FROM AOCI INTO INCOME FOR THE THREE MONTHS ENDED (EFFECTIVE PORTION)	(21)	16	(24)	23
Derivatives designated as cash flow hedging instruments: | Foreign currency derivatives | Cost of sales—service
Derivative [Line Items]
GAINS (LOSSES) RECLASSIFIED FROM AOCI INTO INCOME FOR THE THREE MONTHS ENDED (EFFECTIVE PORTION)	(5)	3	(6)	5
Derivatives designated as net investment hedging instruments: | Foreign currency derivatives
Derivative [Line Items]
GAINS (LOSSES) RECOGNIZED IN OCI ON DERIVATIVES FOR THE THREE MONTHS ENDED (EFFECTIVE PORTION)	24	16	44	(3)
Derivatives designated as net investment hedging instruments: | Foreign currency derivatives | Other income (loss), net
Derivative [Line Items]
GAINS (LOSSES) RECLASSIFIED FROM AOCI INTO INCOME FOR THE THREE MONTHS ENDED (EFFECTIVE PORTION)	$ 0	$ 0	$ 0	$ 0

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Commitments and Contingencies (Additional Information) (Details) (USD $)	3 Months Ended		6 Months Ended		3 Months Ended		15 Months Ended	3 Months Ended
	Jan. 24, 2015	Jan. 25, 2014	Jan. 24, 2015	Jan. 25, 2014	Oct. 25, 2014	Apr. 28, 2012	Oct. 25, 2014	Apr. 25, 2015	Jul. 26, 2014
Contingency [Line Items]
Purchase Commitments	$ 4,257,000,000		$ 4,257,000,000						$ 4,169,000,000
Liability for purchase commitments	165,000,000		165,000,000						162,000,000
Future compensation expense & contingent consideration, maximum	428,000,000		428,000,000
Commitments and contingencies
Volume of channel partner financing	6,200,000,000	5,900,000,000	12,500,000,000	12,200,000,000
Balance of the channel partner financing subject to guarantees	1,300,000,000		1,300,000,000						1,200,000,000
Financing provided by third parties for leases and loans on which the Company has provided guarantees	39,000,000	20,000,000	65,000,000	45,000,000
Cost of Goods Sold	3,806,000,000	4,323,000,000	7,725,000,000	8,070,000,000
Brazilian Authority Claim Of Import Tax Evasion By Importer Tax Portion	335,000,000		335,000,000
Brazilian Authority Claim Of Import Tax Evasion By Importer Interest Portion	1,300,000,000		1,300,000,000
Brazilian Authority Claim Of Import Tax Evasion By Importer Penalties Portion	1,500,000,000		1,500,000,000
Minimum
Contingency [Line Items]
Warranty period for products, in days	90 days
Channel partners revolving short-term financing payment term	60 days
Maximum
Contingency [Line Items]
Warranty period for products, in years	5 years
Channel partners revolving short-term financing payment term	90 days
End User Lease And Loan Term	3 years
Insieme Networks Inc
Contingency [Line Items]
Variable Interest Entities Investment						100,000,000
Ownership percentage as a result of investment					83.00%
Compensation expense related to acquisitions	51,000,000	54,000,000	104,000,000	311,000,000			520,000,000
Insieme Networks Inc | Maximum | Including compensation that has been expensed through current reporting period [Member]
Contingency [Line Items]
Commitments and contingencies	845,000,000		845,000,000
Investments In Privately Held Companies
Contingency [Line Items]
Commitments and contingencies	230,000,000		230,000,000						255,000,000
Supplier Component Remediation Liability
Contingency [Line Items]
Commitments and contingencies	613,000,000	63,000,000	613,000,000	63,000,000					670,000,000
Cost of Goods Sold		655,000,000
Russia and the Commonwealth of Independent States [Member]
Contingency [Line Items]
Percentage of revenue, Percentage	2.00%
Rockstar [Member]
Contingency [Line Items]
Cost of Goods Sold					188,000,000
Rockstar [Member] | Subsequent Event [Member] | Partially offset to $188 million accrued to Cost of goods sold in Q1'15
Contingency [Line Items]
Loss Contingency, Damages Awarded, Value								$ 300,000,000

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Consolidated Statements Of Operations (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jan. 24, 2015	Jan. 25, 2014	Jan. 24, 2015	Jan. 25, 2014
REVENUE:
Product	$ 9,078	$ 8,423	$ 18,513	$ 17,820
Service	2,858	2,732	5,668	5,420
Total revenue	11,936	11,155	24,181	23,240
COST OF SALES:
Product	3,806	4,323	7,725	8,070
Service	1,040	881	2,033	1,812
Total cost of sales	4,846	5,204	9,758	9,882
GROSS MARGIN	7,090	5,951	14,423	13,358
OPERATING EXPENSES:
Research and development	1,529	1,412	3,112	3,136
Sales and marketing	2,308	2,277	4,823	4,688
General and administrative	490	451	994	966
Amortization of purchased intangible assets	72	71	143	136
Restructuring and other charges	69	73	387	310
Total operating expenses	4,468	4,284	9,459	9,236
OPERATING INCOME	2,622	1,667	4,964	4,122
Interest income	189	169	368	338
Interest expense	(139)	(136)	(278)	(276)
Other income (loss), net	201	55	179	111
Interest and other income (loss), net	251	88	269	173
INCOME BEFORE PROVISION FOR INCOME TAXES	2,873	1,755	5,233	4,295
Provision for income taxes	476	326	1,008	870
NET INCOME	$ 2,397	$ 1,429	$ 4,225	$ 3,425
Net income per share:
Basic (in dollars per share)	$ 0.47	$ 0.27	$ 0.83	$ 0.64
Diluted (in dollars per share)	$ 0.46	$ 0.27	$ 0.82	$ 0.64
Shares used in per-share calculation:
Basic (in shares)	5,117	5,294	5,115	5,336
Diluted (in shares)	5,160	5,327	5,159	5,383
Cash dividends declared per common share (in dollars per share)	$ 0.19	$ 0.17	$ 0.38	$ 0.34

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Summary of Significant Accounting Policies

6 Months Ended

Jan. 24, 2015

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

2. Recent Accounting Pronouncements

(a) New Accounting Updates Recently Adopted

In March 2013, the FASB issued an accounting standard update requiring an entity to release into net income the entire amount of a cumulative translation adjustment related to its investment in a foreign entity when as a parent it sells either a part or all of its investment in the foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets within the foreign entity. This accounting standard update became effective for the Company beginning in the first quarter of fiscal 2015. The application of this accounting standard update did not have any impact to the Company's Consolidated Financial Statements.

In July 2013, the FASB issued an accounting standard update that provides explicit guidance on the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward or a tax credit carryforward exists. Under the new standard update, an unrecognized tax benefit, or a portion of an unrecognized tax benefit, is to be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward or a tax credit carryforward. This accounting standard update became effective for the Company beginning in the first quarter of fiscal 2015 and applied prospectively. The application of this accounting standard update did not have a material impact to the Company's Consolidated Financial Statements.

In April 2014, the FASB issued an accounting standard update that changes the criteria for reporting discontinued operations. This accounting standard update raises the threshold for a disposal transaction to qualify as a discontinued operation and requires additional disclosures about discontinued operations and disposals of individually significant components that do not qualify as discontinued operations. The Company adopted this accounting standard update in the second quarter of fiscal 2015, and it did not have any impact upon adoption.

(b) Recent Accounting Standards or Updates Not Yet Effective

In May 2014, the FASB issued an accounting standard update related to revenue from contracts with customers, which will supersede nearly all current U.S. GAAP guidance on this topic and eliminate industry-specific guidance. The underlying principle is to recognize revenue when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. This accounting standard update will be effective for the Company beginning in the first quarter of fiscal 2018. The new revenue standard may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of adoption.  Early adoption is not permitted.  The Company is currently evaluating the impact of this accounting standard update on its Consolidated Financial Statements.

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Basis of Presentation

6 Months Ended

Jan. 24, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

1. Basis of Presentation

The fiscal year for Cisco Systems, Inc. (the “Company” or “Cisco”) is the 52 or 53 weeks ending on the last Saturday in July. Fiscal 2015 and fiscal 2014 are each 52-week fiscal years. The Consolidated Financial Statements include the accounts of Cisco and its subsidiaries. All intercompany accounts and transactions have been eliminated. The Company conducts business globally and is primarily managed on a geographic basis in the following three geographic segments: the Americas; Europe, Middle East, and Africa (EMEA); and Asia Pacific, Japan, and China (APJC).

The accompanying financial data as of January 24, 2015 and for the three and six months ended January 24, 2015 and January 25, 2014 has been prepared by the Company, without audit, pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (SEC). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States (GAAP) have been condensed or omitted pursuant to such rules and regulations. The July 26, 2014 Consolidated Balance Sheet was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States. However, the Company believes that the disclosures are adequate to make the information presented not misleading. These Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended July 26, 2014.

The Company consolidates its investments in a venture fund managed by SOFTBANK Corp. and its affiliates (“SOFTBANK”) as this is a variable interest entity and the Company is the primary beneficiary. The noncontrolling interests attributed to SOFTBANK are presented as a separate component from the Company’s equity in the equity section of the Consolidated Balance Sheets. SOFTBANK’s share of the earnings in the venture fund are not presented separately in the Consolidated Statements of Operations as these amounts are not material for any of the fiscal periods presented.

In the opinion of management, all adjustments (which include normal recurring adjustments, except as disclosed herein) necessary to present fairly the consolidated balance sheet as of January 24, 2015; the results of operations and statements of comprehensive income for the three and six months ended January 24, 2015 and January 25, 2014; and the statements of cash flows and equity for the six months ended January 24, 2015 and January 25, 2014, as applicable, have been made. The results of operations for the three and six months ended January 24, 2015 are not necessarily indicative of the operating results for the full fiscal year or any future periods.

Certain reclassifications have been made to the amounts in prior periods in order to conform to the current period’s presentation. The Company has evaluated subsequent events through the date that the financial statements were issued.

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Shareholders' Equity

6 Months Ended

Jan. 24, 2015

Stockholders' Equity Note [Abstract]

Shareholders' Equity

13. Shareholders’ Equity

(a) Cash Dividends on Shares of Common Stock

During the six months ended January 24, 2015, the Company declared and paid cash dividends of $0.38 per common share, or $1.9 billion, on the Company’s outstanding common stock. During the six months ended January 25, 2014, the Company declared and paid cash dividends of $0.34 per common share, or $1.8 billion, on the Company’s outstanding common stock.

On February 11, 2015, the Company’s Board of Directors declared a quarterly dividend of $0.21 per common share to be paid on April 22, 2015 to all shareholders of record as of the close of business on April 2, 2015. Any future dividends will be subject to the approval of the Company’s Board of Directors.

(b) Stock Repurchase Program

In September 2001, the Company’s Board of Directors authorized a stock repurchase program. As of January 24, 2015, the Company’s Board of Directors had authorized an aggregate repurchase of up to $97 billion of common stock under this program, and the remaining authorized repurchase amount was $6.3 billion, with no termination date. A summary of the stock repurchase activity under the stock repurchase program, reported based on the trade date, is summarized as follows (in millions, except per-share amounts):

	Shares Repurchased	Weighted- Average Price per Share		Amount Repurchased
Cumulative balance at July 26, 2014	4,288	$	20.63	$	88,445
Repurchase of common stock under the stock repurchase program (1)	85	26.15		2,221
Cumulative balance at January 24, 2015	4,373	$	20.73	$	90,666

⁽¹⁾ Includes stock repurchases of $150 million, which were pending settlement as of January 24, 2015. There were $126 million of stock repurchases that were pending settlement as of July 26, 2014.

The purchase price for the shares of the Company’s stock repurchased is reflected as a reduction to shareholders’ equity. The Company is required to allocate the purchase price of the repurchased shares as (i) a reduction to retained earnings and (ii) a reduction of common stock and additional paid-in capital. Issuance of common stock and the tax benefit related to employee stock incentive plans are recorded as an increase to common stock and additional paid-in capital.

(c) Restricted Stock Unit Withholdings

For the six months ended January 24, 2015 and January 25, 2014, the Company repurchased approximately 15 million and 13 million shares, or $369 million and $309 million, of common stock, respectively, in settlement of employee tax withholding obligations due upon the vesting of restricted stock or stock units.

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Fair Value

6 Months Ended

Jan. 24, 2015

Fair Value Disclosures [Abstract]

Fair Value

9. Fair Value

Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be either recorded or disclosed at fair value, the Company considers the principal or most advantageous market in which it would transact, and it also considers assumptions that market participants would use when pricing the asset or liability.

(a) Fair Value Hierarchy

The accounting guidance for fair value measurement requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is as follows:

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability, such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

(b) Assets and Liabilities Measured at Fair Value on a Recurring Basis

Assets and liabilities measured at fair value on a recurring basis as of January 24, 2015 and July 26, 2014 were as follows (in millions):

	JANUARY 24, 2015 FAIR VALUE MEASUREMENTS								JULY 26, 2014 FAIR VALUE MEASUREMENTS
	Level 1		Level 2		Level 3		Total Balance		Level 1		Level 2		Level 3		Total Balance
Assets:
Cash equivalents:
Money market funds	$	2,977	$	—	$	—	$	2,977	$	4,935	$	—	$	—	$	4,935
Corporate debt securities	—		67		—		67		—		—		—		—
Available-for-sale investments:
U.S. government securities	—		30,354		—		30,354		—		31,734		—		31,734
U.S. government agency securities	—		2,326		—		2,326		—		1,063		—		1,063
Non-U.S. government and agency securities	—		1,109		—		1,109		—		861		—		861
Corporate debt securities	—		11,213		—		11,213		—		9,159		—		9,159
U.S. agency mortgage-backed securities	—		1,375		—		1,375		—		579		—		579
Publicly traded equity securities	1,848		—		—		1,848		1,952		—		—		1,952
Derivative assets	—		288		—		288		—		158		2		160
Total	$	4,825	$	46,732	$	—	$	51,557	$	6,887	$	43,554	$	2	$	50,443
Liabilities:
Derivative liabilities	$	—	$	162	$	—	$	162	$	—	$	67	$	—	$	67
Total	$	—	$	162	$	—	$	162	$	—	$	67	$	—	$	67

Level 1 publicly traded equity securities are determined by using quoted prices in active markets for identical assets. Level 2 fixed income securities are priced using quoted market prices for similar instruments or nonbinding market prices that are corroborated by observable market data. The Company uses inputs such as actual trade data, benchmark yields, broker/dealer quotes, and other similar data, which are obtained from quoted market prices, independent pricing vendors, or other sources, to determine the ultimate fair value of these assets and liabilities. The Company uses such pricing data as the primary input to make its assessments and determinations as to the ultimate valuation of its investment portfolio and has not made, during the periods presented, any material adjustments to such inputs. The Company is ultimately responsible for the financial statements and underlying estimates. The Company’s derivative instruments are primarily classified as Level 2, as they are not actively traded and are valued using pricing models that use observable market inputs. The Company did not have any transfers between Level 1 and Level 2 fair value measurements during the periods presented.

Level 3 assets include certain derivative instruments, the values of which are determined based on discounted cash flow models using inputs that the Company could not corroborate with market data.

(c) Assets Measured at Fair Value on a Nonrecurring Basis

The Company recognized $2 million and $3 million of losses related to the impairment of privately held investments for the three and six months ended January 24, 2015, respectively, and $9 million and $10 million for the three and six months ended January 25, 2014, respectively. The Company recognized $56 million of losses related to the impairment of purchased intangible assets for the three and six months ended January 24, 2015. There were no impairment charges of purchased intangible assets for the corresponding periods in fiscal 2014. These assets were measured at fair value due to events or circumstances the Company identified as having significant impact on their fair value during the respective periods. To arrive at the valuation of these assets, the Company considers any significant changes in the financial metrics and economic variables and also uses third-party valuation reports to assist in the valuation as necessary.

The fair value measurement of the impaired investments was classified as Level 3 because significant unobservable inputs were used in the valuation due to the absence of quoted market prices and inherent lack of liquidity. Significant unobservable inputs, which included financial metrics of comparable private and public companies, financial condition and near-term prospects of the investees, recent financing activities of the investees, and the investees’ capital structure as well as other economic variables, reflected the assumptions market participants would use in pricing these assets. The impairment charges, representing the difference between the net book value and the fair value as a result of the evaluation, were recorded to other income (loss), net.

The fair value for purchased intangibles for which the carrying amount was not deemed to be recoverable was determined using the future discounted cash flows that the assets are expected to generate. The difference between the estimated fair value and the carrying value of the assets was recorded as an impairment charge, which was included in product cost of sales and operating expenses as applicable. See Note 4.

(d) Other Fair Value Disclosures

The carrying value of the Company’s investments in privately held companies that were accounted for under the cost method was $316 million and $269 million as of January 24, 2015 and July 26, 2014, respectively. It was not practicable to estimate the fair value of this portfolio.

The fair value of the Company’s short-term loan receivables and financed service contracts approximates their carrying value due to their short duration. The aggregate carrying value of the Company’s long-term loan receivables and financed service contracts and other as of January 24, 2015 and July 26, 2014 was $1.9 billion and $2.1 billion, respectively. The estimated fair value of the Company’s long-term loan receivables and financed service contracts and other approximates their carrying value. The Company uses significant unobservable inputs in determining discounted cash flows to estimate the fair value of its long-term loan receivables and financed service contracts, and therefore they are categorized as Level 3.

As of January 24, 2015, the estimated fair value of the short-term debt approximates its carrying value due to the short maturities. As of January 24, 2015, the fair value of the Company’s senior notes and other long-term debt was $22.3 billion with a carrying amount of $20.5 billion. This compares to a fair value of $22.4 billion and a carrying amount of $20.9 billion as of July 26, 2014. The fair value of the senior notes and other long-term debt was determined based on observable market prices in a less active market and was categorized as Level 2 in the fair value hierarchy.

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Derivative Instruments (Offsetting of Derivative Assets and Liabilities) (Details) (USD $) In Millions, unless otherwise specified	Jan. 24, 2015	Jul. 26, 2014
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Gross Amount of Recognized Assets	$ 288	$ 160
Gross Amounts Offset in Consolidated Balance Sheets	0	0
Net Amount Presented on Consolidated Balance Sheets	288	160
Gross Derivative Amounts with Legal Rights to Offset	(58)	(39)
Cash Collateral Received	(186)	(60)
Net Amount	44	61
Gross Amount of Recognized Liabilities	162	67
Gross Amounts Offset in Consolidated Balance Sheets	0	0
Net Amount Presented on Consolidated Balance Sheets	162	67
Gross Derivative Amounts with Legal Rights to Offset	(58)	(39)
Cash Collateral Pledged	0	(1)
Net Amount	$ 104	$ 27

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Restructuring and Other Charges

6 Months Ended

Jan. 24, 2015

Restructuring Charges [Abstract]

Restructuring and Other Charges

5. Restructuring and Other Charges

Fiscal 2015 Plan

In connection with a restructuring action announced in August 2014 ("Fiscal 2015 Plan"), the Company incurred cumulative charges of $69 million and $387 million for the three and six months ended January 24, 2015, respectively. The Company estimates that it will recognize aggregate pre-tax charges pursuant to the restructuring action in an amount not expected to exceed $600 million, consisting of severance and other one-time termination benefits and other associated costs. These charges are primarily cash-based and the Company expects the remaining amount to be recognized during the remainder of fiscal 2015.

Fiscal 2014 Plan

In connection with a restructuring action announced in August 2013 ("Fiscal 2014 Plan"), the Company incurred cumulative charges of approximately $418 million, of which $73 million and $310 million were incurred during the three and six months ended January 25, 2014, respectively. The Company completed the Fiscal 2014 Plan at the end of fiscal 2014.

The following table summarizes the activities related to the restructuring and other charges as discussed above (in millions):

	Fiscal 2014 and Prior Plans						Fiscal 2015 Plan
	Employee Severance			Other			Employee Severance			Other			Total
Liability as of July 26, 2014	$	40		$	29		$	—		$	—		$	69
Gross charges in fiscal 2015	—			—			386			1			387
Cash payments	(18		)	—			(347		)	(3		)	(368		)
Non-cash items	—			(8		)	—			2			(6		)
Liability as of January 24, 2015	$	22		$	21		$	39		$	—		$	82

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Financing Receivables and Operating Leases (Schedule Of Contractual Maturities Of Gross Lease Receivables) (Details) (USD $) In Millions, unless otherwise specified	Jan. 24, 2015
Financing Receivables And Guarantees [Abstract]
2015 (remaining six months)	$ 883
2016	1,281
2017	753
2018	327
2019	115
Thereafter	10
Total	$ 3,369

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Business Combinations

6 Months Ended

Jan. 24, 2015

Business Combinations [Abstract]

Business Combinations

3. Business Combinations

The Company completed three business combinations during the six months ended January 24, 2015. A summary of the allocation of the total purchase consideration is presented as follows (in millions):

	Purchase Consideration		Net Liabilities Assumed			Purchased Intangible Assets		Goodwill
Metacloud, Inc.	$	149	$	(7	)	$	29	$	127
All others (two in total)	71		(10		)	40		41
Total acquisitions	$	220	$	(17	)	$	69	$	168

On September 29, 2014, the Company completed its acquisition of Metacloud, Inc. ("Metacloud"), a provider of private clouds for global organizations. With its acquisition of Metacloud, the Company aims to advance its Intercloud strategy to deliver a globally distributed, highly secure cloud platform capable of meeting customer demands. Revenue from the Metacloud acquisition has been included in the Company's Service category.

The total purchase consideration related to the Company’s business combinations completed during the six months ended January 24, 2015 consisted of cash consideration and vested share-based awards assumed. The total cash and cash equivalents acquired from these business combinations was approximately $4 million. Total transaction costs related to the Company’s business combination activities were $5 million and $6 millionfor the six months ended January 24, 2015 and January 25, 2014, respectively. These transaction costs were expensed as incurred in general and administrative (G&A) expenses in the Consolidated Statements of Operations.

The Company’s purchase price allocation for business combinations completed during recent periods is preliminary and subject to revision as additional information about fair value of assets and liabilities becomes available. Additional information, that existed as of the acquisition date but at that time was unknown to the Company may become known to the Company during the remainder of the measurement period, a period not to exceed 12 months from the acquisition date. Adjustments in the purchase price allocation may require a recasting of the amounts allocated to goodwill retroactive to the period in which the acquisition occurred.

The goodwill generated from the Company’s business combinations completed during the six months ended January 24, 2015 is primarily related to expected synergies. The goodwill is generally not deductible for income tax purposes.

The Consolidated Financial Statements include the operating results of each business combination from the date of acquisition. Pro forma results of operations for the acquisitions completed during the six months ended January 24, 2015 have not been presented because the effects of the acquisitions, individually and in the aggregate, were not material to the Company’s financial results.

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Goodwill and Purchased Intangible Assets

6 Months Ended

Jan. 24, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Purchased Intangible Assets

4. Goodwill and Purchased Intangible Assets

(a) Goodwill

The following table presents the goodwill allocated to the Company’s reportable segments as of and during the six months ended January 24, 2015 (in millions):

	Balance at July 26, 2014		Acquisitions		Other			Balance at January 24, 2015
Americas	$	15,080	$	89	$	(13	)	$	15,156
EMEA	5,715		63		(7		)	5,771
APJC	3,444		16		(5		)	3,455
Total	$	24,239	$	168	$	(25	)	$	24,382

The column entitled “Other” primarily includes purchase accounting adjustments.

(b) Purchased Intangible Assets

The following table presents details of the Company’s intangible assets acquired through business combinations completed during the six months ended January 24, 2015 (in millions, except years):

	FINITE LIVES						INDEFINITE LIVES		TOTAL
	TECHNOLOGY			CUSTOMER RELATIONSHIPS			IPR&D
	Weighted- Average Useful Life (in Years)	Amount		Weighted- Average Useful Life (in Years)	Amount		Amount		Amount
Metacloud, Inc.	3.0	$	24	5.0	$	3	$	2	$	29
All others (two in total)	5.0	25		8.1	11		4		40
Total		$	49		$	14	$	6	$	69

The following tables present details of the Company’s purchased intangible assets (in millions):

January 24, 2015	Gross		Accumulated Amortization			Net
Purchased intangible assets with finite lives:
Technology	$	4,020	$	(2,270	)	$	1,750
Customer relationships	1,709		(847		)	862
Other	51		(19		)	32
Total purchased intangible assets with finite lives	5,780		(3,136		)	2,644
In-process research and development, with indefinite lives	111		—			111
Total	$	5,891	$	(3,136	)	$	2,755

July 26, 2014	Gross		Accumulated Amortization			Net
Purchased intangible assets with finite lives:
Technology	$	4,100	$	(1,976	)	$	2,124
Customer relationships	1,706		(720		)	986
Other	51		(13		)	38
Total purchased intangible assets with finite lives	5,857		(2,709		)	3,148
In-process research and development, with indefinite lives	132		—			132
Total	$	5,989	$	(2,709	)	$	3,280

Purchased intangible assets include intangible assets acquired through business combinations as well as through direct purchases or licenses.

The following table presents the amortization of purchased intangible assets (in millions):

	Three Months Ended				Six Months Ended
	January 24, 2015		January 25, 2014		January 24, 2015		January 25, 2014
Amortization of purchased intangible assets:
Cost of sales	$	242	$	189	$	431	$	363
Operating expenses	72		71		143		136
Total	$	314	$	260	$	574	$	499

Amortization of purchased intangible assets for the three and six months ended January 24, 2015 included impairment charges of approximately $56 million. The impairment was primarily due to reductions in expected future cash flows related to certain of the Company's technology intangible assets and was recorded as amortization of purchased intangible assets. There were no impairment charges related to purchased intangible assets during the three and six months ended January 25, 2014.

The estimated future amortization expense of purchased intangible assets with finite lives as of January 24, 2015 is as follows (in millions):

Fiscal Year	Amount
2015 (remaining six months)	$	462
2016	734
2017	561
2018	420
2019	317
Thereafter	150
Total	$	2,644

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Balance Sheet Details

6 Months Ended

Jan. 24, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Balance Sheet Details

6. Balance Sheet Details

The following tables provide details of selected balance sheet items (in millions):

	January 24, 2015		July 26, 2014
Inventories:
Raw materials	$	265	$	77
Work in process	2		5
Finished goods:
Distributor inventory and deferred cost of sales	733		595
Manufactured finished goods	577		606
Total finished goods	1,310		1,201
Service-related spares	274		273
Demonstration systems	39		35
Total	$	1,890	$	1,591

Property and equipment, net:
Land, buildings, and building and leasehold improvements	$	4,457		$	4,468
Computer equipment and related software	1,417			1,425
Production, engineering, and other equipment	5,745			5,756
Operating lease assets	343			362
Furniture and fixtures	498			509
	12,460			12,520
Less accumulated depreciation and amortization	(9,248		)	(9,268		)
Total	$	3,212		$	3,252

Other assets:
Deferred tax assets	$	1,448	$	1,700
Investments in privately held companies	857		899
Other	837		732
Total	$	3,142	$	3,331

Deferred revenue:
Service	$	9,020	$	9,640
Product:
Unrecognized revenue on product shipments and other deferred revenue	4,276		3,924
Cash receipts related to unrecognized revenue from two-tier distributors	725		578
Total product deferred revenue	5,001		4,502
Total	$	14,021	$	14,142
Reported as:
Current	$	9,369	$	9,478
Noncurrent	4,652		4,664
Total	$	14,021	$	14,142

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Financing Receivables and Operating Leases (Operating Lease Schedule) (Details) (USD $) In Millions, unless otherwise specified	Jan. 24, 2015	Jul. 26, 2014
Operating lease [Abstract]
Operating lease assets	$ 343	$ 362
Accumulated depreciation	(195)	(202)
Operating lease assets, net	$ 148	$ 160

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Derivative Instruments (Additional Information) (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended	6 Months Ended
	Jan. 24, 2015	Jan. 24, 2015	Jul. 26, 2014
Derivative [Line Items]
Net derivative gains to be reclassified from AOCI into earnings in next twelve months	$ 102.0
Net liability position	162	162	67
Long-term Debt
Derivative [Line Items]
Description of Interest Rate Derivative Activities		In fiscal 2014 and 2013, the Company entered into interest rate swaps designated as fair value hedges related to fixed-rate senior notes that are due on various dates from 2017 through 2024. In the periods prior to fiscal 2013, the Company entered into interest rate swaps designated as fair value hedges related to fixed-rate senior notes that are due in 2016 and 2017.
Derivatives designated as cash flow hedging instruments:
Derivative [Line Items]
Foreign currency cash flow hedges maturity period, maximum, months	18 months
Net investment hedging instruments
Derivative [Line Items]
Foreign currency cash flow hedges maturity period, maximum, months	6 months
Fixed Income Securities [Member]
Derivative [Line Items]
Number of Interest Rate Derivatives Held	0	0	0
Right to request collateral subject to specified credit rating and in net liability position [Member]
Derivative [Line Items]
Net liability position	$ 0	0	$ 3

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Investments (Summary Of Available-For-Sale Investments) (Details) (USD $) In Millions, unless otherwise specified	Jan. 24, 2015	Jul. 26, 2014
Available-for-sale investments: [Line Items]
Amortized Cost	$ 47,570	$ 44,619
Available-for-sale Securities, Accumulated Gross Unrealized Gain, before Tax	695	759
Available-for-sale Securities, Accumulated Gross Unrealized Loss, before Tax	(40)	(30)
Fair Value	48,225	45,348
Total fixed income securities
Available-for-sale investments: [Line Items]
Amortized Cost	46,274	43,305
Available-for-sale Securities, Accumulated Gross Unrealized Gain, before Tax	133	111
Available-for-sale Securities, Accumulated Gross Unrealized Loss, before Tax	(30)	(20)
Fair Value	46,377	43,396
Total fixed income securities | U.S. government securities
Available-for-sale investments: [Line Items]
Amortized Cost	30,302	31,717
Available-for-sale Securities, Accumulated Gross Unrealized Gain, before Tax	53	29
Available-for-sale Securities, Accumulated Gross Unrealized Loss, before Tax	(1)	(12)
Fair Value	30,354	31,734
Total fixed income securities | U.S. government agency securities
Available-for-sale investments: [Line Items]
Amortized Cost	2,324	1,062
Available-for-sale Securities, Accumulated Gross Unrealized Gain, before Tax	3	1
Available-for-sale Securities, Accumulated Gross Unrealized Loss, before Tax	(1)	0
Fair Value	2,326	1,063
Total fixed income securities | Non-U.S. government and agency securities
Available-for-sale investments: [Line Items]
Amortized Cost	1,108	860
Available-for-sale Securities, Accumulated Gross Unrealized Gain, before Tax	1	2
Available-for-sale Securities, Accumulated Gross Unrealized Loss, before Tax	0	(1)
Fair Value	1,109	861
Total fixed income securities | Corporate debt securities
Available-for-sale investments: [Line Items]
Amortized Cost	11,180	9,092
Available-for-sale Securities, Accumulated Gross Unrealized Gain, before Tax	61	74
Available-for-sale Securities, Accumulated Gross Unrealized Loss, before Tax	(28)	(7)
Fair Value	11,213	9,159
Total fixed income securities | U.S. agency mortgage-backed securities
Available-for-sale investments: [Line Items]
Amortized Cost	1,360	574
Available-for-sale Securities, Accumulated Gross Unrealized Gain, before Tax	15	5
Available-for-sale Securities, Accumulated Gross Unrealized Loss, before Tax	0	0
Fair Value	1,375	579
Publicly traded equity securities [Member]
Available-for-sale investments: [Line Items]
Amortized Cost	1,296	1,314
Available-for-sale Securities, Accumulated Gross Unrealized Gain, before Tax	562	648
Available-for-sale Securities, Accumulated Gross Unrealized Loss, before Tax	(10)	(10)
Fair Value	$ 1,848	$ 1,952

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Income Taxes (Income Before Provision For Income Taxes) (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jan. 24, 2015	Jan. 25, 2014	Jan. 24, 2015	Jan. 25, 2014
Income Tax Disclosure [Abstract]
INCOME BEFORE PROVISION FOR INCOME TAXES	$ 2,873	$ 1,755	$ 5,233	$ 4,295
Provision for income taxes	$ 476	$ 326	$ 1,008	$ 870
Effective Income Tax Rate Reconciliation, Percent	16.60%	18.60%	19.30%	20.30%

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Financing Receivables and Operating Leases (Summary Of Allowances For Credit Loss And Related Financing Receivables) (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended				6 Months Ended
	Jan. 24, 2015		Jan. 25, 2014		Jan. 24, 2015		Jan. 25, 2014		Jul. 26, 2014
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Allowance for credit loss as of	$ 368		$ 350		$ 349		$ 344
Provisions	14		29		42		32
Recoveries (write off), net			1				1
Recoveries (write-offs), net	(1)				(4)
Foreign exchange and other	(6)		(6)		(12)		(3)
Allowance for credit loss as of	375		374		375		374
Total financing receivables before allowance for credit loss	8,134	[1]	8,018	[1]	8,134	[1]	8,018	[1]	8,420
Lease Receivables
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Allowance for credit loss as of	248		237		233		238
Provisions	7		18		29		15
Recoveries (write off), net			1				1
Recoveries (write-offs), net	(1)				(5)
Foreign exchange and other	(4)		(2)		(7)		0
Allowance for credit loss as of	250		254		250		254
Total financing receivables before allowance for credit loss	3,391	[1]	3,551	[1]	3,391	[1]	3,551	[1]
Loan Receivables
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Allowance for credit loss as of	84		93		98		86
Provisions	3		9		(10)		15
Recoveries (write off), net			0		1		0
Recoveries (write-offs), net	0
Foreign exchange and other	(2)		(4)		(4)		(3)
Allowance for credit loss as of	85		98		85		98
Total financing receivables before allowance for credit loss	1,674	[1]	1,660	[1]	1,674	[1]	1,660	[1]
Financed Service Contracts and Other
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Allowance for credit loss as of	36		20		18		20
Provisions	4		2		23		2
Recoveries (write off), net			0				0
Recoveries (write-offs), net	0				0
Foreign exchange and other	0		0		(1)		0
Allowance for credit loss as of	40		22		40		22
Total financing receivables before allowance for credit loss	$ 3,069	[1]	$ 2,807	[1]	$ 3,069	[1]	$ 2,807	[1]

[1] Total financing receivables before allowance for credit loss.

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Shareholders' Equity (Additional Information) (Details) (USD $) Share data in Millions, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended		3 Months Ended
	Jan. 24, 2015	Jan. 25, 2014	Jan. 24, 2015	Jan. 25, 2014	Apr. 25, 2015	Jul. 26, 2014
Class of Stock [Line Items]
Cash dividends paid per common share (in dollars per share)	$ 0.19	$ 0.17	$ 0.38	$ 0.34
Cash dividends declared, per common share			$ 0.38	$ 0.34
Payments of Dividends			$ 1,947,000,000	$ 1,810,000,000
Authorized common stock repurchase amount	97,000,000,000		97,000,000,000
Remaining authorized repurchase amount	6,300,000,000		6,300,000,000
Shares Paid for Tax Withholding for Share Based Compensation (shares in million)	15	13
Payments Related to Tax Withholding for Share-based Compensation	369,000,000	309,000,000	369,000,000	309,000,000
Stock repurchase program
Class of Stock [Line Items]
Accrued Liabilities, Current	$ 150,000,000		$ 150,000,000			$ 126,000,000
Subsequent Event [Member]
Class of Stock [Line Items]
Dividends Payable, Date Declared					Feb. 11, 2015
Cash dividends declared, per common share					$ 0.21
Dividends Payable, Date of Record					Apr. 02, 2015
Dividends Payable, Date to be Paid					Apr. 22, 2015

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Balance Sheet Details (Tables)

6 Months Ended

Jan. 24, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Inventories

The following tables provide details of selected balance sheet items (in millions):

	January 24, 2015		July 26, 2014
Inventories:
Raw materials	$	265	$	77
Work in process	2		5
Finished goods:
Distributor inventory and deferred cost of sales	733		595
Manufactured finished goods	577		606
Total finished goods	1,310		1,201
Service-related spares	274		273
Demonstration systems	39		35
Total	$	1,890	$	1,591

Property And Equipment, Net

Property and equipment, net:
Land, buildings, and building and leasehold improvements	$	4,457		$	4,468
Computer equipment and related software	1,417			1,425
Production, engineering, and other equipment	5,745			5,756
Operating lease assets	343			362
Furniture and fixtures	498			509
	12,460			12,520
Less accumulated depreciation and amortization	(9,248		)	(9,268		)
Total	$	3,212		$	3,252

Other Assets

Other assets:
Deferred tax assets	$	1,448	$	1,700
Investments in privately held companies	857		899
Other	837		732
Total	$	3,142	$	3,331

Deferred Revenue

Deferred revenue:
Service	$	9,020	$	9,640
Product:
Unrecognized revenue on product shipments and other deferred revenue	4,276		3,924
Cash receipts related to unrecognized revenue from two-tier distributors	725		578
Total product deferred revenue	5,001		4,502
Total	$	14,021	$	14,142
Reported as:
Current	$	9,369	$	9,478
Noncurrent	4,652		4,664
Total	$	14,021	$	14,142

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Goodwill and Purchased Intangible Assets (Schedule Of Intangible Assets Acquired Through Business Combinations) (Details) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Jan. 24, 2015
Intangible Assets Acquired Through Business Combinations
Amount	$ 69
IPR&D
Intangible Assets Acquired Through Business Combinations
Amount	6
TECHNOLOGY
Intangible Assets Acquired Through Business Combinations
Amount	49
CUSTOMER RELATIONSHIPS
Intangible Assets Acquired Through Business Combinations
Amount	14
Metacloud, Inc.
Intangible Assets Acquired Through Business Combinations
Amount	29
Metacloud, Inc. | IPR&D
Intangible Assets Acquired Through Business Combinations
Amount	2
Metacloud, Inc. | TECHNOLOGY
Intangible Assets Acquired Through Business Combinations
Weighted- Average Useful Life (in Years)	3 years
Amount	24
Metacloud, Inc. | CUSTOMER RELATIONSHIPS
Intangible Assets Acquired Through Business Combinations
Weighted- Average Useful Life (in Years)	5 years
Amount	3
All others (two in total)
Intangible Assets Acquired Through Business Combinations
Amount	40
All others (two in total) | IPR&D
Intangible Assets Acquired Through Business Combinations
Amount	4
All others (two in total) | TECHNOLOGY
Intangible Assets Acquired Through Business Combinations
Weighted- Average Useful Life (in Years)	5 years
Amount	25
All others (two in total) | CUSTOMER RELATIONSHIPS
Intangible Assets Acquired Through Business Combinations
Weighted- Average Useful Life (in Years)	8 years 1 month 6 days
Amount	11
Total
Intangible Assets Acquired Through Business Combinations
Amount	$ 69

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Derivative Instruments

6 Months Ended

Jan. 24, 2015

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments

11. Derivative Instruments

(a) Summary of Derivative Instruments

The Company uses derivative instruments primarily to manage exposures to foreign currency exchange rate, interest rate, and equity price risks. The Company’s primary objective in holding derivatives is to reduce the volatility of earnings and cash flows associated with changes in foreign currency exchange rates, interest rates, and equity prices. The Company’s derivatives expose it to credit risk to the extent that the counterparties may be unable to meet the terms of the agreement. The Company does, however, seek to mitigate such risks by limiting its counterparties to major financial institutions. In addition, the potential risk of loss with any one counterparty resulting from this type of credit risk is monitored. Management does not expect material losses as a result of defaults by counterparties.

The fair values of the Company’s derivative instruments and the line items on the Consolidated Balance Sheets to which they were recorded are summarized as follows (in millions):

	DERIVATIVE ASSETS					DERIVATIVE LIABILITIES
	Balance Sheet  Line Item	January 24, 2015		July 26, 2014		Balance Sheet Line Item	January 24, 2015		July 26, 2014
Derivatives designated as hedging instruments:
Foreign currency derivatives	Other current assets	$	4	$	7	Other current liabilities	$	88	$	6
Interest rate derivatives	Other assets	279		148		Other long-term liabilities	—		3
Equity derivatives	Other current assets	—		—		Other current liabilities	68		56
Total		283		155			156		65
Derivatives not designated as hedging instruments:
Foreign currency derivatives	Other current assets	5		3		Other current liabilities	6		2
Equity derivatives	Other assets	—		2		Other long-term liabilities	—		—
Total		5		5			6		2
Total		$	288	$	160		$	162	$	67

The effects of the Company’s cash flow and net investment hedging instruments on other comprehensive income (OCI) and the Consolidated Statements of Operations are summarized as follows (in millions):

GAINS (LOSSES) RECOGNIZED IN OCI ON DERIVATIVES FOR THE THREE MONTHS ENDED (EFFECTIVE PORTION)							GAINS (LOSSES) RECLASSIFIED FROM AOCI INTO INCOME FOR THE THREE MONTHS ENDED (EFFECTIVE PORTION)
	January 24, 2015			January 25, 2014			Line Item in Statements of Operations	January 24, 2015			January 25, 2014
Derivatives designated as cash flow hedging instruments:
Foreign currency derivatives	$	(75	)	$	(4	)	Operating expenses	$	(21	)	$	16
							Cost of sales—service	(5		)	3
Total	$	(75	)	$	(4	)		$	(26	)	$	19
Derivatives designated as net investment hedging instruments:
Foreign currency derivatives	$	24		$	16		Other income (loss), net	$	—		$	—

GAINS (LOSSES) RECOGNIZED IN OCI ON DERIVATIVES FOR THE SIX MONTHS ENDED (EFFECTIVE PORTION)							GAINS (LOSSES) RECLASSIFIED FROM AOCI INTO INCOME FOR THE SIX MONTHS ENDED (EFFECTIVE PORTION)
	January 24, 2015			January 25, 2014			Line Item in Statements of Operations	January 24, 2015			January 25, 2014
Derivatives designated as cash flow hedging instruments:
Foreign currency derivatives	$	(131	)	$	34		Operating expenses	$	(24	)	$	23
							Cost of sales—service	(6		)	5
Total	$	(131	)	$	34			$	(30	)	$	28
Derivatives designated as net investment hedging instruments:
Foreign currency derivatives	$	44		$	(3	)	Other income (loss), net	$	—		$	—

As of January 24, 2015, the Company estimates that approximately $102 million of net derivative losses related to its cash flow hedges included in accumulated other comprehensive income (AOCI) will be reclassified into earnings within the next 12 months when the underlying hedged item impacts earnings.

The effect on the Consolidated Statements of Operations of derivative instruments designated as fair value hedges and the underlying hedged items is summarized as follows (in millions):

		GAINS (LOSSES) ON DERIVATIVE INSTRUMENTS FOR THE THREE MONTHS ENDED						GAINS (LOSSES) RELATED TO HEDGED ITEMS FOR THE THREE MONTHS ENDED
Derivatives Designated as Fair Value Hedging Instruments	Line Item in Statements of Operations	January 24, 2015			January 25, 2014			January 24, 2015			January 25, 2014
Equity derivatives	Other income (loss), net	$	(18	)	$	(12	)	$	18		$	12
Interest rate derivatives	Interest expense	61			(53		)	(61		)	54
Total		$	43		$	(65	)	$	(43	)	$	66

		GAINS (LOSSES) ON DERIVATIVE INSTRUMENTS FOR THE SIX MONTHS ENDED						GAINS (LOSSES) RELATED TO HEDGED ITEMS FOR THE SIX MONTHS ENDED
Derivatives Designated as Fair Value Hedging Instruments	Line Item in Statements of Operations	January 24, 2015			January 25, 2014			January 24, 2015			January 25, 2014
Equity derivatives	Other income (loss), net	$	(12	)	$	(47	)	$	12		$	47
Interest rate derivatives	Interest expense	131			(35		)	(134		)	34
Total		$	119		$	(82	)	$	(122	)	$	81

The effect on the Consolidated Statements of Operations of derivative instruments not designated as hedges is summarized as follows (in millions):

		GAINS (LOSSES) FOR THE THREE MONTHS ENDED						GAINS (LOSSES) FOR THE SIX MONTHS ENDED
Derivatives Not Designated as Hedging Instruments	Line Item in Statements of Operations	January 24, 2015			January 25, 2014			January 24, 2015			January 25, 2014
Foreign currency derivatives	Other income (loss), net	$	(51	)	$	(63	)	$	(109	)	$	(20	)
Total return swaps—deferred compensation	Operating expenses	13			12			—			29
Equity derivatives	Other income (loss), net	8			13			4			24
Total		$	(30	)	$	(38	)	$	(105	)	$	33

The notional amounts of the Company’s outstanding derivatives are summarized as follows (in millions):

	January 24, 2015		July 26, 2014
Derivatives designated as hedging instruments:
Foreign currency derivatives—cash flow hedges	$	1,641	$	1,618
Interest rate derivatives	10,400		10,400
Net investment hedging instruments	216		345
Equity derivatives	238		238
Derivatives not designated as hedging instruments:
Foreign currency derivatives	1,969		2,528
Total return swaps—deferred compensation	449		428
Total	$	14,913	$	15,557

(b) Offsetting of Derivative Instruments

The Company presents its derivative instruments at gross fair values in the Consolidated Balance Sheets. However, the Company’s master netting and other similar arrangements with the respective counterparties allow for net settlement under certain conditions, which are designed to reduce credit risk by permitting net settlement with the same counterparty. To further limit credit risk, the Company also enters into collateral security arrangements related to certain derivative instruments whereby cash is posted as collateral between the counterparties based on the fair market value of the derivative instrument. Information related to these offsetting arrangements is summarized as follows (in millions):

	OFFSETTING OF DERIVATIVE ASSETS
	Gross Amounts Offset in Consolidated Balance Sheets						Gross Amounts Not Offset in the Consolidated Balance Sheets, but with Legal Rights to Offset
January 24, 2015	Gross Amount of Recognized Assets		Gross Amounts Offset in Consolidated Balance Sheets		Net Amount Presented on Consolidated Balance Sheets		Gross Derivative Amounts with Legal Rights to Offset			Cash Collateral Received			Net Amount
Derivatives	$	288	$	—	$	288	$	(58	)	$	(186	)	$	44

	OFFSETTING OF DERIVATIVE LIABILITIES
	Gross Amounts Offset in Consolidated Balance Sheets						Gross Amounts Not Offset in the Consolidated Balance Sheets, but with Legal Rights to Offset
January 24, 2015	Gross Amount of Recognized Liabilities		Gross Amounts Offset in Consolidated Balance Sheets		Net Amount Presented on Consolidated Balance Sheets		Gross Derivative Amounts with Legal Rights to Offset			Cash Collateral Pledged		Net Amount
Derivatives	$	162	$	—	$	162	$	(58	)	$	—	$	104

	OFFSETTING OF DERIVATIVE ASSETS
	Gross Amounts Offset in Consolidated Balance Sheets						Gross Amounts Not Offset in the Consolidated Balance Sheets, but with Legal Rights to Offset
July 26, 2014	Gross Amount of Recognized Assets		Gross Amounts Offset in Consolidated Balance Sheets		Net Amount Presented on Consolidated Balance Sheets		Gross Derivative Amounts with Legal Rights to Offset			Cash Collateral Received			Net Amount
Derivatives	$	160	$	—	$	160	$	(39	)	$	(60	)	$	61

	OFFSETTING OF DERIVATIVE LIABILITIES
	Gross Amounts Offset in Consolidated Balance Sheets						Gross Amounts Not Offset in the Consolidated Balance Sheets, but with Legal Rights to Offset
July 26, 2014	Gross Amount of Recognized Liabilities		Gross Amounts Offset in Consolidated Balance Sheets		Net Amount Presented on Consolidated Balance Sheets		Gross Derivative Amounts with Legal Rights to Offset			Cash Collateral Pledged			Net Amount
Derivatives	$	67	$	—	$	67	$	(39	)	$	(1	)	$	27

(c) Foreign Currency Exchange Risk

The Company conducts business globally in numerous currencies. Therefore, it is exposed to adverse movements in foreign currency exchange rates. To limit the exposure related to foreign currency changes, the Company enters into foreign currency contracts. The Company does not enter into such contracts for trading purposes.

The Company hedges forecasted foreign currency transactions related to certain operating expenses and service cost of sales with currency options and forward contracts. These currency options and forward contracts, designated as cash flow hedges, generally have maturities of less than 18 months. The Company assesses effectiveness based on changes in total fair value of the derivatives. The effective portion of the derivative instrument’s gain or loss is initially reported as a component of AOCI and subsequently reclassified into earnings when the hedged exposure affects earnings. The ineffective portion, if any, of the gain or loss is reported in earnings immediately. During the periods presented, the Company did not discontinue any cash flow hedges for which it was probable that a forecasted transaction would not occur.

The Company enters into foreign exchange forward and option contracts to reduce the short-term effects of foreign currency fluctuations on assets and liabilities such as foreign currency receivables, including long-term customer financings, investments, and payables. These derivatives are not designated as hedging instruments. Gains and losses on the contracts are included in other income (loss), net, and substantially offset foreign exchange gains and losses from the remeasurement of intercompany balances or other current assets, investments, or liabilities denominated in currencies other than the functional currency of the reporting entity.

The Company hedges certain net investments in its foreign operations with forward contracts to reduce the effects of foreign currency fluctuations on the Company’s net investment in those foreign subsidiaries. These derivative instruments generally have maturities of up to six months.

(d) Interest Rate Risk

Interest Rate Derivatives, Investments   The Company’s primary objective for holding fixed income securities is to achieve an appropriate investment return consistent with preserving principal and managing risk. To realize these objectives, the Company may utilize interest rate swaps or other derivatives designated as fair value or cash flow hedges. As of January 24, 2015 and July 26, 2014, the Company did not have any outstanding interest rate derivatives related to its fixed income securities.

Interest Rate Derivatives Designated as Fair Value Hedge, Long-Term DebtIn fiscal 2014 and 2013, the Company entered into interest rate swaps designated as fair value hedges related to fixed-rate senior notes that are due on various dates from 2017 through 2024. In the periods prior to fiscal 2013, the Company entered into interest rate swaps designated as fair value hedges related to fixed-rate senior notes that are due in 2016 and 2017. Under these interest rate swaps, the Company receives fixed-rate interest payments and makes interest payments based on LIBOR plus a fixed number of basis points. The effect of such swaps is to convert the fixed interest rates of the senior fixed-rate notes to floating interest rates based on LIBOR. The gains and losses related to changes in the fair value of the interest rate swaps are included in interest expense and substantially offset changes in the fair value of the hedged portion of the underlying debt that are attributable to the changes in market interest rates. The fair value of the interest rate swaps was reflected in other assets and other long-term liabilities.

(e) Equity Price Risk

The Company may hold equity securities for strategic purposes or to diversify its overall investment portfolio. The publicly traded equity securities in the Company’s portfolio are subject to price risk. To manage its exposure to changes in the fair value of certain equity securities, the Company has entered into equity derivatives that are designated as fair value hedges. The changes in the value of the hedging instruments are included in other income (loss), net, and offset the change in the fair value of the underlying hedged investment. In addition, the Company periodically enters into equity derivatives that are not designated as accounting hedges. The changes in the fair value of these derivatives are also included in other income (loss), net.

The Company is also exposed to variability in compensation charges related to certain deferred compensation obligations to employees. Although not designated as accounting hedges, the Company utilizes derivatives such as total return swaps to economically hedge this exposure.

(f) Hedge Effectiveness

For the periods presented, amounts excluded from the assessment of hedge effectiveness were not material for fair value, cash flow, and net investment hedges. In addition, hedge ineffectiveness for fair value, cash flow, and net investment hedges was not material for any of the periods presented.

(g) Collateral and Credit-Risk-Related Contingent Features

For certain derivative instruments, the Company and its counterparties have entered into arrangements requiring the party that is in a liability position from a mark-to-market standpoint to post cash collateral to the other party. See further discussion under “(b) Offsetting of Derivative Instruments” above.

In addition, certain derivative instruments are executed under agreements that have provisions requiring the Company and the counterparty to maintain a specified credit rating from certain credit-rating agencies. Under such agreements, if the Company’s or the counterparty’s credit rating falls below a specified credit rating, either party has the right to request collateral on the derivatives’ net liability position. No such derivatives were in a net liability position as of January 24, 2015. The fair market value of such derivatives was $3 million as of July 26, 2014.

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Income Taxes

6 Months Ended

Jan. 24, 2015

Income Tax Disclosure [Abstract]

Income Taxes

16. Income Taxes

The following table provides details of income taxes (in millions, except percentages):

	Three Months Ended						Six Months Ended
	January 24, 2015			January 25, 2014			January 24, 2015			January 25, 2014
Income before provision for income taxes	$	2,873		$	1,755		$	5,233		$	4,295
Provision for income taxes	$	476		$	326		$	1,008		$	870
Effective tax rate	16.6		%	18.6		%	19.3		%	20.3		%

During the three months ended January 24, 2015, the Tax Increase Prevention Act of 2014 reinstated the U.S. federal R&D tax credit for calendar year 2014 R&D expenses.  As a result, the effective tax rate for the three and six months ended January 24, 2015 reflected tax benefits related to fiscal 2015 R&D expenses and a tax benefit of $91 million related to fiscal 2014 R&D expenses.

As of January 24, 2015, the Company had $2.0 billion of unrecognized tax benefits, of which $1.8 billion, if recognized, would favorably impact the effective tax rate. The Company regularly engages in discussions and negotiations with tax authorities regarding tax matters in various jurisdictions. The Company believes it is reasonably possible that certain federal, foreign, and state tax matters may be concluded in the next 12 months. Specific positions that may be resolved include issues involving transfer pricing and various other matters. Accordingly, the Company estimates that it is reasonably possible that the unrecognized tax benefits at January 24, 2015 could be reduced by $300 million in the next 12 months.

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Employee Benefit Plans (Summary Of Restricted Stock And Stock Unit Activity) (Details) (Restricted Stock/Stock Units, USD $) In Millions, except Per Share data, unless otherwise specified	6 Months Ended	12 Months Ended
	Jan. 24, 2015	Jul. 26, 2014
Restricted Stock/Stock Units
Restricted Stock and Stock Unit Activity [Roll Forward]
Beginning balance, Restricted Stock/Stock Units, shares	149	143
Granted and assumed	18	72
Vested	(41)	(53)
Canceled/forfeited	(11)	(13)
Ending balance, Restricted Stock/Stock Units, shares	115	149
Beginning balance, Weighted-Average Grant-Date Fair Value per Share, dollars per share	$ 19.54	$ 18.80
Granted and assumed, Weighted-Average Grant-Date Fair Value per Share, dollars per share	$ 23.47	$ 20.85
Vested, Weighted-Average Grant-Date Fair Value per Share, dollars per share	$ 19.47	$ 19.55
Canceled/forfeited, Weighted-Average Grant-Date Fair Value per Share, dollars per share	$ 19.70	$ 18.61
Ending balance, Weighted-Average Grant-Date Fair Value per Share, dollars per share	$ 20.18	$ 19.54
Vested, Vest-Date Fair Value in Aggregate	$ 1,053	$ 1,229

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Business Combinations (Additional Information) (Details) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Jan. 24, 2015	Jan. 25, 2014
Supplementary Information [Line Items]
Number of business combinations (in numbers)	3
Acquired Cash and Cash Equivalents	$ 4
General and administrative
Supplementary Information [Line Items]
Business Acquisition, Transaction Costs	$ 5	$ 6

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Segment Information and Major Customers (Summary Of Net Revenue For Groups Of Similar Products And Services) (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jan. 24, 2015	Jan. 25, 2014	Jan. 24, 2015	Jan. 25, 2014
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenue	$ 11,936	$ 11,155	$ 24,181	$ 23,240
Switching
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenue	3,616	3,258	7,462	6,998
NGN Routing
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenue	1,764	1,730	3,713	3,756
Collaboration
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenue	990	899	1,939	1,950
Service Provider Video
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenue	776	957	1,647	1,944
Data Center
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenue	846	605	1,539	1,206
Wireless
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenue	611	517	1,216	1,064
Security
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenue	416	393	871	758
Other
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenue	59	64	126	144
Product:
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenue	9,078	8,423	18,513	17,820
Service
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenue	$ 2,858	$ 2,732	$ 5,668	$ 5,420

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Shareholders' Equity (Tables)

6 Months Ended

Jan. 24, 2015

Stockholders' Equity Note [Abstract]

Stock Repurchase Program

A summary of the stock repurchase activity under the stock repurchase program, reported based on the trade date, is summarized as follows (in millions, except per-share amounts):

	Shares Repurchased	Weighted- Average Price per Share		Amount Repurchased
Cumulative balance at July 26, 2014	4,288	$	20.63	$	88,445
Repurchase of common stock under the stock repurchase program (1)	85	26.15		2,221
Cumulative balance at January 24, 2015	4,373	$	20.73	$	90,666

⁽¹⁾ Includes stock repurchases of $150 million, which were pending settlement as of January 24, 2015. There were $126 million of stock repurchases that were pending settlement as of July 26, 2014.

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Segment Information and Major Customers (Additional Information) (Details) (USD $)	3 Months Ended		6 Months Ended
	Jan. 24, 2015	Jan. 25, 2014	Jan. 24, 2015	Jan. 25, 2014	Jul. 26, 2014
Segment Reporting Information [Line Items]
Number of geographic segments			3
Revenue	$ 11,936,000,000	$ 11,155,000,000	$ 24,181,000,000	$ 23,240,000,000
United States
Segment Reporting Information [Line Items]
Revenue	6,100,000,000	5,600,000,000	12,700,000,000	12,000,000,000
Cash and cash equivalents and investments	3,200,000,000		3,200,000,000		4,700,000,000
International
Segment Reporting Information [Line Items]
Cash and cash equivalents and investments	$ 49,800,000,000		$ 49,800,000,000		$ 47,400,000,000

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Consolidated Statements of Comprehensive Income (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jan. 24, 2015	Jan. 25, 2014	Jan. 24, 2015	Jan. 25, 2014
Statement of Comprehensive Income [Abstract]
Net income	$ 2,397	$ 1,429	$ 4,225	$ 3,425
Change in net unrealized gains, net of tax benefit (expense) of $9 and $23 for the three and six months ended January 24, 2015, respectively, and $(69) and $(122) for the corresponding periods of fiscal 2014, respectively	30	96	8	217
Net gains reclassified into earnings, net of tax expense of $24 and $26 for the three and six months ended January 24, 2015, respectively, and $31 and $62 for the corresponding periods of fiscal 2014, respectively	(45)	(51)	(50)	(103)
Total- Available-for-sale investments	(15)	45	(42)	114
Change in unrealized gains and losses, net of tax benefit (expense) of $0 and $3 for the three and six months ended January 24, 2015, respectively, and $1 and $(2) for the corresponding periods of fiscal 2014, respectively	(75)	(4)	(128)	31
Net (gains) losses reclassified into earnings	26	(19)	30	(28)
Total- Cash flow hedging instruments	(49)	(23)	(98)	3
Net change in cumulative translation adjustment and actuarial gains and losses net of tax benefit (expense) of $26 and $36 for the three and six months ended January 24, 2015, respectively, and $2 and $(1) for the corresponding periods of fiscal 2014, respectively	(193)	(88)	(343)	(15)
Other comprehensive income (loss)	(257)	(66)	(483)	102
Comprehensive income	2,140	1,363	3,742	3,527
Comprehensive (income) loss attributable to noncontrolling interests	(8)	(3)	(8)	(7)
Comprehensive income attributable to Cisco Systems, Inc.	$ 2,132	$ 1,360	$ 3,734	$ 3,520

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Commitments and Contingencies (Schedule Of Product Warranty Liability) (Details) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Jan. 24, 2015	Jan. 25, 2014
Movement in Standard and Extended Product Warranty, Increase (Decrease) [Roll Forward]
Balance at beginning of period	$ 446	$ 402
Provision for warranties issued	355	356
Payments	(327)	(333)
Balance at end of period	$ 474	$ 425

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Supplemental Information

6 Months Ended

Jan. 24, 2015

Stockholders' Equity Note [Abstract]

Supplemental Information

Supplemental Information

In September 2001, the Company’s Board of Directors authorized a stock repurchase program. As of January 24, 2015, the Company’s Board of Directors had authorized an aggregate repurchase of up to $97 billion of common stock under this program with no termination date. The stock repurchases since the inception of this program and the related impacts on Cisco shareholders’ equity are summarized in the following table (in millions): 

	Shares of Common Stock	Common Stock and Additional Paid-In Capital		Retained Earnings		Total Cisco Shareholders’ Equity
Repurchases of common stock under the repurchase program	4,373	$	22,021	$	68,645	$	90,666

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Balance Sheet Details (Details) (USD $) In Millions, unless otherwise specified	Jan. 24, 2015	Jul. 26, 2014
Inventories:
Raw materials	$ 265	$ 77
Work in process	2	5
Distributor inventory and deferred cost of sales	733	595
Manufactured finished goods	577	606
Total finished goods	1,310	1,201
Service-related spares	274	273
Demonstration systems	39	35
Total	1,890	1,591
Property and equipment, net:
Land, buildings, and building and leasehold improvements	4,457	4,468
Computer equipment and related software	1,417	1,425
Production, engineering, and other equipment	5,745	5,756
Operating lease assets	343	362
Furniture and fixtures	498	509
Property, plant and equipment, gross	12,460	12,520
Less accumulated depreciation and amortization	(9,248)	(9,268)
Total	3,212	3,252
Other assets:
Deferred tax assets	1,448	1,700
Investments in privately held companies	857	899
Other	837	732
Total	3,142	3,331
Deferred Revenue Arrangement [Line Items]
Deferred revenue:	14,021	14,142
Current	9,369	9,478
Noncurrent	4,652	4,664
Service
Deferred Revenue Arrangement [Line Items]
Deferred revenue:	9,020	9,640
Product:
Deferred Revenue Arrangement [Line Items]
Deferred revenue:	5,001	4,502
Product: | Unrecognized revenue on product shipments and other deferred revenue
Deferred Revenue Arrangement [Line Items]
Deferred revenue:	4,276	3,924
Product: | Cash receipts related to unrecognized revenue from two-tier distributors
Deferred Revenue Arrangement [Line Items]
Deferred revenue:	$ 725	$ 578

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Derivative Instruments (Effect Of Derivative Instruments Not Designated As Hedges On Consolidated Statement Of Operations Summary) (Details) (Derivatives not designated as hedging instruments:, USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jan. 24, 2015	Jan. 25, 2014	Jan. 24, 2015	Jan. 25, 2014
Derivative Instruments, Gain (Loss) [Line Items]
GAINS (LOSSES) FOR THE THREE MONTHS ENDED	$ (30)	$ (38)	$ (105)	$ 33
Foreign currency derivatives | Other income (loss), net
Derivative Instruments, Gain (Loss) [Line Items]
GAINS (LOSSES) FOR THE THREE MONTHS ENDED	(51)	(63)	(109)	(20)
Total return swaps—deferred compensation | Operating expenses
Derivative Instruments, Gain (Loss) [Line Items]
GAINS (LOSSES) FOR THE THREE MONTHS ENDED	13	12	0	29
Equity derivatives | Other income (loss), net
Derivative Instruments, Gain (Loss) [Line Items]
GAINS (LOSSES) FOR THE THREE MONTHS ENDED	$ 8	$ 13	$ 4	$ 24

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Segment Information and Major Customers (Property and Equipment Information for Geographic Areas) (Details) (USD $) In Millions, unless otherwise specified	Jan. 24, 2015	Jul. 26, 2014
Segment Reporting, Asset Reconciling Item [Line Items]
Property and equipment, net	$ 3,212	$ 3,252
United States
Segment Reporting, Asset Reconciling Item [Line Items]
Property and equipment, net	2,668	2,697
International
Segment Reporting, Asset Reconciling Item [Line Items]
Property and equipment, net	$ 544	$ 555

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Investments (Available-For-Sale Investments With Gross Unrealized Losses) (Details) (USD $) In Millions, unless otherwise specified	Jan. 24, 2015	Jul. 26, 2014
Schedule of Investments [Line Items]
Fair value of investment securities with unrealized losses less than 12 months	$ 9,483	$ 10,044
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Accumulated Loss	(37)	(26)
Fair value of investment securities with unrealized losses12 months or greater	364	558
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Accumulated Loss	(3)	(4)
Fair value of investment securities with unrealized losses	9,847	10,602
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	(40)	(30)
Publicly traded equity securities
Schedule of Investments [Line Items]
Fair value of investment securities with unrealized losses less than 12 months	119	132
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Accumulated Loss	(10)	(10)
Fair value of investment securities with unrealized losses12 months or greater	1	0
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Accumulated Loss	0	0
Fair value of investment securities with unrealized losses	120	132
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	(10)	(10)
Total fixed income securities
Schedule of Investments [Line Items]
Fair value of investment securities with unrealized losses less than 12 months	9,364	9,912
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Accumulated Loss	(27)	(16)
Fair value of investment securities with unrealized losses12 months or greater	363	558
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Accumulated Loss	(3)	(4)
Fair value of investment securities with unrealized losses	9,727	10,470
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	(30)	(20)
Total fixed income securities | U.S. government securities
Schedule of Investments [Line Items]
Fair value of investment securities with unrealized losses less than 12 months	4,558	7,676
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Accumulated Loss	(1)	(12)
Fair value of investment securities with unrealized losses12 months or greater	0	45
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Accumulated Loss	0	0
Fair value of investment securities with unrealized losses	4,558	7,721
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	(1)	(12)
Total fixed income securities | U.S. government agency securities
Schedule of Investments [Line Items]
Fair value of investment securities with unrealized losses less than 12 months	854
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Accumulated Loss	(1)
Fair value of investment securities with unrealized losses12 months or greater	0
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Accumulated Loss	0
Fair value of investment securities with unrealized losses	854
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	(1)
Total fixed income securities | Non-U.S. government and agency securities
Schedule of Investments [Line Items]
Fair value of investment securities with unrealized losses less than 12 months		361
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Accumulated Loss		(1)
Fair value of investment securities with unrealized losses12 months or greater		22
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Accumulated Loss		0
Fair value of investment securities with unrealized losses		383
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss		(1)
Total fixed income securities | Corporate debt securities
Schedule of Investments [Line Items]
Fair value of investment securities with unrealized losses less than 12 months	3,952	1,875
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Accumulated Loss	(25)	(3)
Fair value of investment securities with unrealized losses12 months or greater	363	491
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Accumulated Loss	(3)	(4)
Fair value of investment securities with unrealized losses	4,315	2,366
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	$ (28)	$ (7)

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Segment Information and Major Customers

6 Months Ended

Jan. 24, 2015

Segment Reporting [Abstract]

Segment Information and Major Customers

17. Segment Information and Major Customers

(a) Revenue and Gross Margin by Segment

The Company conducts business globally and is primarily managed on a geographic basis consisting of three segments: the Americas, EMEA, and APJC. The Company’s management makes financial decisions and allocates resources based on the information it receives from its internal management system. Sales are attributed to a segment based on the ordering location of the customer. The Company does not allocate research and development, sales and marketing, or general and administrative expenses to its segments in this internal management system because management does not include the information in its measurement of the performance of the operating segments. In addition, the Company does not allocate amortization and impairment of acquisition-related intangible assets, share-based compensation expense, significant litigation and other contingencies, impacts to cost of sales from purchase accounting adjustments to inventory, charges related to asset impairments and restructurings, and certain other charges to the gross margin for each segment because management does not include this information in its measurement of the performance of the operating segments.

Summarized financial information by segment for the three and six months ended January 24, 2015 andJanuary 25, 2014, based on the Company’s internal management system and as utilized by the Company’s Chief Operating Decision Maker ("CODM"), is as follows (in millions):

	Three Months Ended						Six Months Ended
	January 24, 2015			January 25, 2014			January 24, 2015			January 25, 2014
Revenue:
Americas	$	7,101		$	6,460		$	14,602		$	13,776
EMEA	3,091			2,896			6,093			5,829
APJC	1,744			1,799			3,486			3,635
Total	$	11,936		$	11,155		$	24,181		$	23,240
Gross margin:
Americas	$	4,406		$	3,977		$	9,216		$	8,627
EMEA	1,910			1,870			3,825			3,758
APJC	1,052			993			2,077			2,072
Segment total	7,368			6,840			15,118			14,457
Unallocated corporate items	(278		)	(889		)	(695		)	(1,099		)
Total	$	7,090		$	5,951		$	14,423		$	13,358

Revenue in the United States was $6.1 billionand$5.6 billion for the three months ended January 24, 2015 and January 25, 2014, respectively, and was $12.7 billion and $12.0 billion for the six months ended January 24, 2015 and January 25, 2014, respectively.

(b) Revenue for Groups of Similar Products and Services

The Company designs, manufactures, and sells Internet Protocol (IP)-based networking and other products related to the communications and IT industry and provides services associated with these products and their use. The Company groups its products and technologies into the following categories: Switching, NGN Routing, Collaboration, Service Provider Video, Data Center, Wireless, Security, and Other Products. These products, primarily integrated by Cisco IOS Software, link geographically dispersed local-area networks (LANs), metropolitan-area networks (MANs), and wide-area networks (WANs).

The following table presents revenue for groups of similar products and services (in millions):

	Three Months Ended				Six Months Ended
	January 24, 2015		January 25, 2014		January 24, 2015		January 25, 2014
Revenue:
Switching	$	3,616	$	3,258	$	7,462	$	6,998
NGN Routing	1,764		1,730		3,713		3,756
Collaboration	990		899		1,939		1,950
Service Provider Video	776		957		1,647		1,944
Data Center	846		605		1,539		1,206
Wireless	611		517		1,216		1,064
Security	416		393		871		758
Other	59		64		126		144
Product	9,078		8,423		18,513		17,820
Service	2,858		2,732		5,668		5,420
Total	$	11,936	$	11,155	$	24,181	$	23,240

The Company has made certain reclassifications to the product revenue amounts for prior periods to conform to the current period’s presentation.

(c) Additional Segment Information

The majority of the Company’s assets, excluding cash and cash equivalents and investments, as of January 24, 2015 and July 26, 2014 were attributable to its U.S. operations. The Company’s total cash and cash equivalents and investments held by various foreign subsidiaries were $49.8 billion and $47.4 billion as of January 24, 2015 and July 26, 2014, respectively, and the remaining $3.2 billion and $4.7 billion at the respective period ends were available in the United States.

Property and equipment information is based on the physical location of the assets. The following table presents property and equipment information for geographic areas (in millions):

	January 24, 2015		July 26, 2014
Property and equipment, net:
United States	$	2,668	$	2,697
International	544		555
Total	$	3,212	$	3,252

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Fair Value (Additional Information) (Details) (USD $)	3 Months Ended		6 Months Ended
	Jan. 24, 2015	Jan. 25, 2014	Jan. 24, 2015	Jan. 25, 2014	Jul. 26, 2014
Fair Value Measurements [Line Items]
Impairment of Intangible assets	$ 56,000,000	$ 0	$ 56,000,000	$ 0
Carrying Value, Cost Method Investments	316,000,000		316,000,000		269,000,000
Senior notes, carrying value	20,517,000,000		20,517,000,000		20,901,000,000
Level 2
Fair Value Measurements [Line Items]
Senior notes, fair value	22,300,000,000		22,300,000,000		22,400,000,000
Senior notes, carrying value	20,500,000,000		20,500,000,000		20,900,000,000
Level 3
Fair Value Measurements [Line Items]
Long term loan receivables and financed service contracts and others carrying value	1,900,000,000		1,900,000,000		2,100,000,000
Level 3 | Other Nonoperating Income (Expense)
Fair Value Measurements [Line Items]
Private investment impairment	2,000,000	9,000,000	3,000,000	10,000,000
Level 3 | Product cost of sales or operating expenses
Fair Value Measurements [Line Items]
Impairment of Intangible assets	$ 56,000,000	$ 0	$ 56,000,000	$ 0

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Borrowings (Tables)

6 Months Ended

Jan. 24, 2015

Debt Disclosure [Abstract]

Schedule Of Short-Term Debt

The following table summarizes the Company’s short-term debt (in millions, except percentages):

	January 24, 2015				July 26, 2014
	Amount		Effective Rate		Amount		Effective Rate
Current portion of long-term debt	$	850	0.36	%	$	500	3.11	%
Other short-term debt	5		2.73	%	8		2.67	%
Total short-term debt	$	855			$	508

Schedule Of Long-Term Debt

The following table summarizes the Company’s long-term debt (in millions, except percentages):

		January 24, 2015				July 26, 2014
	Maturity Date	Amount			Effective Rate	Amount			Effective Rate
Senior notes:
Floating-rate notes:
Three-month LIBOR plus 0.05%	September 3, 2015	$	850		0.36%	$	850		0.35%
Three-month LIBOR plus 0.28%	March 3, 2017	1,000			0.57%	1,000			0.56%
Three-month LIBOR plus 0.50%	March 1, 2019	500			0.79%	500			0.78%
Fixed-rate notes:
2.90%	November 17, 2014	—			—	500			3.11%
5.50%	February 22, 2016	3,000			3.05%	3,000			3.04%
1.10%	March 3, 2017	2,400			0.57%	2,400			0.56%
3.15%	March 14, 2017	750			0.80%	750			0.79%
4.95%	February 15, 2019	2,000			4.69%	2,000			4.69%
2.125%	March 1, 2019	1,750			0.78%	1,750			0.77%
4.45%	January 15, 2020	2,500			2.99%	2,500			2.98%
2.90%	March 4, 2021	500			0.94%	500			0.93%
3.625%	March 4, 2024	1,000			1.06%	1,000			1.05%
5.90%	February 15, 2039	2,000			6.11%	2,000			6.11%
5.50%	January 15, 2040	2,000			5.67%	2,000			5.67%
Other long-term debt		2			2.08%	4			2.39%
Total		20,252				20,754
Unaccreted discount		(61		)		(63		)
Hedge accounting fair value adjustments		326				210
Total		$	20,517			$	20,901
Reported as:
Current portion of long-term debt		$	850			$	500
Long-term debt		19,667				20,401
Total		$	20,517			$	20,901

Schedule Of Principal Payments For Long-Term Debt

As of January 24, 2015, future principal payments for long-term debt, including the current portion, are summarized as follows (in millions):

Fiscal Year	Amount
2015 (remaining six months)	$	—
2016	3,851
2017	4,151
2018	—
2019	4,250
Thereafter	8,000
Total	$	20,252

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Borrowings

6 Months Ended

Jan. 24, 2015

Debt Disclosure [Abstract]

Borrowings

10. Borrowings

(a) Short-Term Debt

The following table summarizes the Company’s short-term debt (in millions, except percentages):

	January 24, 2015				July 26, 2014
	Amount		Effective Rate		Amount		Effective Rate
Current portion of long-term debt	$	850	0.36	%	$	500	3.11	%
Other short-term debt	5		2.73	%	8		2.67	%
Total short-term debt	$	855			$	508

In fiscal 2011, the Company established a short-term debt financing program of up to $3.0 billion through the issuance of commercial paper notes. The Company uses the proceeds from the issuance of commercial paper notes for general corporate purposes. The Company had no commercial paper notes outstanding as of each of January 24, 2015 and July 26, 2014.

The effective interest rate on the current portion of long-term debt includes the impact of interest rate swaps, as discussed further in "(b) Long-Term Debt." Other notes and borrowings consist of the short-term portion of secured borrowings associated with customer financing arrangements. These notes and credit facilities were subject to various terms and foreign currency market interest rates pursuant to individual financial arrangements between the financing institution and the applicable foreign subsidiary.

On November 17, 2014, upon the maturity of the Company’s 2014 Fixed-Rate Notes (2.90%), the Company repaid an aggregate principal amount of $500 million.

(b) Long-Term Debt

The following table summarizes the Company’s long-term debt (in millions, except percentages):

		January 24, 2015				July 26, 2014
	Maturity Date	Amount			Effective Rate	Amount			Effective Rate
Senior notes:
Floating-rate notes:
Three-month LIBOR plus 0.05%	September 3, 2015	$	850		0.36%	$	850		0.35%
Three-month LIBOR plus 0.28%	March 3, 2017	1,000			0.57%	1,000			0.56%
Three-month LIBOR plus 0.50%	March 1, 2019	500			0.79%	500			0.78%
Fixed-rate notes:
2.90%	November 17, 2014	—			—	500			3.11%
5.50%	February 22, 2016	3,000			3.05%	3,000			3.04%
1.10%	March 3, 2017	2,400			0.57%	2,400			0.56%
3.15%	March 14, 2017	750			0.80%	750			0.79%
4.95%	February 15, 2019	2,000			4.69%	2,000			4.69%
2.125%	March 1, 2019	1,750			0.78%	1,750			0.77%
4.45%	January 15, 2020	2,500			2.99%	2,500			2.98%
2.90%	March 4, 2021	500			0.94%	500			0.93%
3.625%	March 4, 2024	1,000			1.06%	1,000			1.05%
5.90%	February 15, 2039	2,000			6.11%	2,000			6.11%
5.50%	January 15, 2040	2,000			5.67%	2,000			5.67%
Other long-term debt		2			2.08%	4			2.39%
Total		20,252				20,754
Unaccreted discount		(61		)		(63		)
Hedge accounting fair value adjustments		326				210
Total		$	20,517			$	20,901
Reported as:
Current portion of long-term debt		$	850			$	500
Long-term debt		19,667				20,401
Total		$	20,517			$	20,901

To achieve its interest rate risk management objectives, the Company entered into interest rate swaps in prior periods with an aggregate notional amount of $10.4 billion designated as fair value hedges of certain of its fixed-rate senior notes. In effect, these swaps convert the fixed interest rates of the fixed-rate notes to floating interest rates based on the London InterBank Offered Rate (LIBOR). The gains and losses related to changes in the fair value of the interest rate swaps substantially offset changes in the fair value of the hedged portion of the underlying debt that are attributable to the changes in market interest rates. For additional information, see Note 11.

The effective rates for the fixed-rate debt include the interest on the notes, the accretion of the discount, and, if applicable, adjustments related to hedging. Interest is payable semiannually on each class of the senior fixed-rate notes and payable quarterly on the floating-rate notes. Each of the senior fixed-rate notes is redeemable by the Company at any time, subject to a make-whole premium. 

The senior notes rank at par with the commercial paper notes that may be issued in the future pursuant to the Company’s short-term debt financing program, as discussed above under “(a) Short-Term Debt.” As of January 24, 2015, the Company was in compliance with all debt covenants.

As of January 24, 2015, future principal payments for long-term debt, including the current portion, are summarized as follows (in millions):

Fiscal Year	Amount
2015 (remaining six months)	$	—
2016	3,851
2017	4,151
2018	—
2019	4,250
Thereafter	8,000
Total	$	20,252

(c) Credit Facility

On February 17, 2012, the Company entered into a credit agreement with certain institutional lenders that provides for a $3.0 billion unsecured revolving credit facility that is scheduled to expire on February 17, 2017. Any advances under the credit agreement will accrue interest at rates that are equal to, based on certain conditions, either (i) the higher of the Federal Funds rate plus 0.50%, Bank of America’s “prime rate” as announced from time to time, or one-month LIBOR plus 1.00% or (ii) LIBOR plus a margin that is based on the Company’s senior debt credit ratings as published by Standard & Poor’s Financial Services, LLC and Moody’s Investors Service, Inc. The credit agreement requires the Company to comply with certain covenants, including that it maintain an interest coverage ratio as defined in the agreement. As of January 24, 2015, the Company wasin compliance with the required interest coverage ratio and the other covenants, and the Company had not borrowed any funds under the credit facility.

The Company may also, upon the agreement of either the existing lenders or additional lenders not currently parties to the agreement, increase the commitments under the credit facility by up to an additional $2.0 billion and/or extend the expiration date of the credit facility by up to two additional years, or up to February 17, 2019.

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Comprehensive Income (Reclassification out of other comprehensive income) (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jan. 24, 2015	Jan. 25, 2014	Jan. 24, 2015	Jan. 25, 2014
Net Unrealized Gains on Investments | Other income (loss), net
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items]
Net unrealized gains on available-for-sale investments	$ 69	$ 82	$ 76	$ 165
Derivatives designated as cash flow hedging instruments:
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items]
Total amounts reclassified out of other comprehensive income	(26)	19	(30)	28
Derivatives designated as cash flow hedging instruments: | Operating expenses
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items]
Total amounts reclassified out of other comprehensive income	(21)	16	(24)	23
Derivatives designated as cash flow hedging instruments: | Cost of sales—service
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items]
Total amounts reclassified out of other comprehensive income	(5)	3	(6)	5
Total Cisco Shareholders’ Equity
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items]
Total amounts reclassified out of other comprehensive income	$ 43	$ 101	$ 46	$ 193