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    2020 Annual Report Powering an Inclusive Future for All


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    About Cisco Cisco (NASDAQ: CSCO) is the worldwide leader in technology that powers the Internet. Discover more at thenetwork.cisco.com and follow us on Twitter at @Cisco. Our purpose To power an inclusive future for all Our mission To inspire new possibilities for our customers by reimagining their applications, securing their data, transforming their infrastructure, and empowering their teams Our commitment To drive the most trusted customer experience in the industry with our extraordinary people and great technologies


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    Why Cisco? Fiscal 2020 summary report 2 Letter to shareholders 4 Financial highlights for fiscal 2020 Trusted Continuous Technology partner innovation leadership 6 Strategy 7 Leadership Global scale Driven by 8 Governance and responsibility and reach purpose 16 Stakeholder engagement Forward-looking statements Introduction to summary report This report contains projections and other forward-looking statements regarding future events or the future This section provides an overview of Cisco. It does not contain all of financial performance of Cisco, including future operating results. the information you should consider. Please review our Annual Report These projections and statements on Form 10-K, our Proxy Statement for our 2020 Annual Meeting of are only predictions. Actual events or results may differ materially from those Shareholders, and our Corporate Social Responsibility (CSR) Report, all in the projections or other forward- available on www.cisco.com. looking statements. See Cisco’s filings with the Securities and Exchange Commission, including its most recent filings on Forms 10-K and 10-Q, for a discussion of important risk factors that could cause actual events or results to differ materially from those Online report in the projections or other forward- looking statements. Visit our website to read online versions of this Annual Report, our Proxy Statement, and our CSR Report. To see our interactive online report, visit our Annual Reports webpage. We welcome any feedback you may have. Cisco 2020 Annual Report 1


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    Letter to shareholders To our shareholders, At the start of fiscal 2020, we could not responsibility have never been greater, as have imagined what we would have to businesses around the world are running on face this year: the wide-ranging social and economic impacts of the COVID-19 Cisco technology to stay connected, secure, and productive. By helping our customers Key milestones pandemic; the resulting changes to digitize for the future and inspiring new businesses and how we work; and the possibilities for them, I am confident we will grim reminders of social injustice that have emerge from this challenging time an even persisted in society for too long. While stronger company than before. Achieved our target of the year has brought many challenges, I 50% of revenue from firmly believe that, with determination and With the rapid shift to remote operations software and services focus, we can turn them into opportunities and automation, many customers are and progress. increasingly reliant on our broad portfolio in fiscal 2020 of technologies. As we prepare for what Navigating a global crisis with ingenuity comes next, we are helping our customers During difficult times like these, it reminds us modernize their infrastructure while developing business resiliency solutions to Introduced Cisco how strong we are when we come together. At the start of the pandemic, we laid out support new ways of working. Silicon One, a some principles to guide our approach single, unified silicon for supporting our employees, customers, Defining the future of the Internet with unparalleled innovation architecture, the partners, and communities. We were quickly able to get 95% of our employees Our new business resiliency solutions build Cisco 8000 carrier- productively working from home, while also upon some of our recent innovations. In class router family, hosting a series of weekly video check-ins the applications space, we introduced new and our new IOS XR7 with guest speakers and medical and mental technologies that provide deep insights health experts to discuss issues that were into the physical and virtual network operating system top-of-mind. To support our customers’ infrastructure through the lens of the business continuity, our teams worked application, enabling real-time correction around the clock to scale our collaboration and using automation to resolve issues before they happen. Our acquisition of Announced new and security capabilities, and we introduced a variety of free offers and trials to make ThousandEyes complements our portfolio flexible purchasing sure everyone had the tools they needed by providing deeper and broader visibility options that to operate. and analytics across networks and applications. By integrating these SaaS- enable customers Our employees also came together to do all based capabilities with our AppDynamics to consume our they could to help the communities most in application intelligence portfolio and Cisco technology however need. They found ways to 3D-print surgical Intersight—our cloud-based management they choose face shields for healthcare workers, and they platform, we believe we can provide suggested that our DX80 video units, instead unparalleled observability, intelligence, and of sitting idle in our offices during lockdowns, insights at cloud-scale. could be shipped to hospitals to enable Met our target of families to communicate with patients. These In the collaboration space, our portfolio is are just a few examples of the significant at the center of our customers’ strategies 80% employee contributions we made to the pandemic for empowering teams and increasing participation in response. I am tremendously proud of what productivity. We take a security-first community impact in our teams and IT teams around the world approach and continue to scale our analytics capabilities. We acquired Voicea, fiscal 2020 have accomplished in delivering digital connections despite the huge challenges which brought artificial intelligence (AI) and they faced. automation capabilities to Webex, and we introduced the Webex Assistant feature Ranked #1 Best Place In the first half of fiscal 2020, we continued for Webex Meetings, which captures to feel the effects of an increasingly content and action items. We also acquired to Work in the World uncertain global macro environment. CloudCherry, adding advanced analytics in 2019 and 2020 by This uncertainty was exacerbated by the and rich customer journey mapping to our Great Place to Work® pandemic, which further impacted our Contact Center portfolio. financial results in the second half of the year. Although there continues to be a lot of uncertainty, we believe our role and 2 Cisco 2020 Annual Report


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    As we look to the Our customers’ experience with Cisco and the past year, we paused to reflect and ask: what trust they place in us matter now more than comes next? We know our responsibilities future, we will continue ever. They rely on us to help connect, secure, don’t end with technology; we want to make a to focus on what we can and automate their environments so they can better world possible. We concluded that our achieve their desired outcomes. We have the new purpose is to power an inclusive future control, operate with opportunity to leverage our broad portfolio for all. This purpose can be fulfilled not only through our technologies, which connect the transparency, keep of turnkey solutions and strong customer world, but also through our corporate social relationships to provide differentiated value our minds and hearts and cost savings for our customers. We want responsibility activities, which are intended to create positive opportunity for everyone. I open, and have the to continue to make it as easy as possible for can’t think of a purpose more fitting for Cisco our customers to consume our technology. conviction to drive As a result, we are accelerating our efforts or more relevant for today. progress — both inside to offer everything in our portfolio as a We also developed a new framework for our and outside Cisco. service and cloud-delivered, simplifying and response to a crisis, an injustice, or a global automating as much as possible, and being challenge. We will focus our efforts on the more flexible in its delivery. most vulnerable; families and community; research and resilience; and strategic In security, we introduced Cisco SecureX, We will also accelerate our investments recovery. We are committed to thinking a broad cloud-based security platform in areas such as cloud security and beyond our initial response and using all our connecting the breadth of our portfolio and collaboration, increased automation in resources and capabilities to work toward our customers’ security infrastructure by the enterprise, the future of work, and long-term partnerships and solutions that providing unified visibility and automation application insights and analytics. At the improve lives all around the world. across applications, the network, endpoints, same time, we will continue our focus on and the cloud. We also integrated Cisco multicloud investment, 5G and WiFi-6, The Cisco of today is more agile, innovative, SD-WAN with Cisco Umbrella, helping 400G, optical networking, next-generation and focused. Thanks to our hard work over customers evolve toward a SASE (Secure silicon, AI, and more. recent years, we have delivered on our financial commitments, brought market- Access Service Edge) architecture. This Accelerating our shift to more software leading innovation to our customers, future secure networking model, which and services transitioned our business model, and delivers security and networking services Throughout fiscal 2020, we demonstrated fostered a culture that has truly shined. As together from the cloud, is intended to operational resilience based on our solid we look to the future, we will continue to enable organizations to securely connect focus on what we can control, to operate financial foundation, strong customer any user or device to any application with with transparency, to keep our minds and relationships, differentiated innovation, and a the best experience. hearts open, and to have the conviction compelling strategic shift to more software and subscription-based offerings built on the to drive progress—both inside and outside The broad and accelerating adoption Cisco. I am confident we will emerge from strength of our key technology platforms. of multicloud and modern application fiscal 2020 even better positioned to create environments is changing how the world’s In fiscal 2017, we set a three-year goal for value for all our stakeholders. largest networks are built, operated, and 30% of our revenue to come from software, secured, and Cisco is at the center of and while we achieved 29% in fiscal 2020, Thank you for your continued support. this transition. We have made significant we did achieve 31% in the fourth quarter. In investments in the development of software, fiscal 2020, 74% of our software revenue silicon, and optics—the building blocks for was sold as subscription, exceeding our the Internet for the future. We believe this target of 66%. We also delivered 51% of our strategy will change the economics of how revenue from software and services in fiscal the Internet will be built to support 5G and 2020, exceeding our target of 50%. Chuck Robbins 400G, while helping our customers innovate Chairman and Chief Executive Officer faster than ever before. During fiscal 2020, we The momentum in shifting our business model October 19, 2020 introduced Cisco Silicon One, a single, unified is contributing to our solid profitability. In fiscal silicon architecture, as well as the Cisco 8000 2020, we delivered another year of expanding gross and operating margins. We also grew carrier-class router family built on Silicon our earnings per share in fiscal 2020 despite One, and our new IOS XR7 operating system. the challenging environment. We also announced new flexible purchasing options that help enable customers to Looking to a brighter future with consume our technology however they renewed purpose choose. We collaborated closely with several For 20 years, Cisco’s purpose was to change of the largest webscale companies throughout the way the world lived, worked, played, and the development process, and they are strong learned by building networks that shaped the advocates of our strategy. Internet we all know and rely on today. This Cisco 2020 Annual Report 3


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    Financial highlights for fiscal 2020 Revenue Trend Revenue Revenue ($B) by product category and services* by geographical segment 60 51.9 49.3 49.3 50 40 12.9 12.6 39.0 13.3 36.7 36.0 30 20 55% Infrastructure platforms 59% Americas 10 11% Applications 26% EMEA 0 6% Security 15% APJC 2018 2019 2020 <1% Other Product revenue Services revenue 27% Services Operating cash flow Margins ($B) (%) 20 70 62.0% 62.9% 64.3% 15.8 15.4 60 15 13.7 50 10 40 30 27.4% 27.6% 25.0% 5 20 0 10 2018 2019 2020 2018 2019 2020 Operating cash flow Gross margin Operating margin * percentages may not equal 100% due to rounding 4 Cisco 2020 Annual Report


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    We executed well in fiscal 2020, delivering strong margins despite the very challenging environment. Software subscriptions were 74% of our software revenue, and remaining performance obligations continued to grow strongly, reflecting the strength of our portfolio of software and services. We continue to invest in innovation as we focus on delivering long-term growth and shareholder value. Kelly Kramer Chief Financial Officer Capital allocation Dividends paid per share Share repurchases Primary uses of cash ($) and diluted share count (M) 2.5 500 5000 432 4,881 418 2.0 400 4780 1.5 1.42 300 4560 1.36 1.24 4,453 1.0 200 4340 4,254 0.5 100 4120 51% Repayment of debt 59 30% Dividends 0.0 0 3900 13% Share repurchases 2018 2019 2020 2018 2019 2020 4% CapEx Dividends paid per share Absolute number of shares repurchased Diluted share count 2% Acquisitions, net Total shareholder return Comparison of 5-year cumulative total return* among Cisco Systems, Inc., the S&P 500 Index, This graph shows a five-year and the S&P Information Technology Index comparison of the cumulative total shareholder return on Cisco common $300 S&P Information stock with the cumulative total returns $250 Technology of the S&P 500 Index and the S&P S&P 500 $200 Information Technology Index. The $150 Cisco graph tracks the performance of a Systems, Inc. $100 investment in Cisco’s common $100 stock and in each of the indexes (with $50 the reinvestment of all dividends) on the date specified. Shareholder $0 July July July July July July returns over the indicated period are 2015 2016 2017 2018 2019 2020 based on historical data and should * $100 invested on 7/25/15 in stock or index, including reinvestment of dividends. not be considered indicative of future Fiscal year ending July 25. shareholder returns. Cisco 2020 Annual Report 5


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    Strategy As our customers add billions of new connections to their enterprises, and as more applications move to a multicloud environment, the network becomes even more critical. Our customers are navigating change at an unprecedented pace and our intent is to inspire new possibilities for them by helping transform their infrastructure, expand applications and analytics, address their security needs, and empower their teams. We believe that our customers are looking for intent-based networks that provide meaningful business value through automation, security, and analytics across private, hybrid, and multicloud environments. Our vision is to deliver highly secure, software-defined, automated, and intelligent platforms for our customers. We are expanding our research and development investments in certain product areas including cloud security, cloud collaboration, and application insights and analytics. We are investing to optimize our product offerings for application to education, healthcare and other specific industries. We are also making investments to enable us to increase automation and support the customer as the workplace changes. In addition, we continue to remain focused on investments around SD-WAN, multicloud environments, 5G and WiFi-6, 400G speeds, optical networking, next generation silicon and AI. We are also accelerating our efforts to enable the delivery of network functionality as a service. Our intent-based networking platform is designed to be intelligent, highly secure, powered by “intent” and informed by “context”— features aiming to constantly learn, adapt, automate and protect in order to optimize network operations and defend against Transforming an evolving cyber threat landscape. Our intent-based networking offerings are designed infrastructure to provide a single, highly secure network fabric that helps ensure policy consistency and network assurance; enables faster launches of new business services; and significantly improves issue resolution times while being open and extendable. In our view, over the next several years, customers will be increasingly writing modern Applications software applications that can run on any hybrid cloud, and will be adding billions of and analytics connections to their environment. They will need to be able to build applications quickly, deploy them nearly anywhere, monitor experiences, and act in real time. Our security strategy is focused on delivering an effective cybersecurity architecture combining network, cloud, and endpoint-based solutions. Our portfolio is designed to Security is prevent, detect, and remediate a cyber-attack and to integrate security across networking foundational domains. Our intent is to enable our customers to secure their networks for a multicloud world by delivering a platform that continuously detects threats and verifies trust. As people are an important competitive advantage for our customers, teams need Empowering effective and simple ways to work better together and interact with their customers to teams build better relationships and increase collaboration. We are transforming our offerings to meet the evolving needs of our customers. As our Transforming core networking evolves, we expect we will add more common software features across our business our core networking platforms. We are increasing the amount of software offerings that we model provide and the proportion of subscription software offerings. 6 Cisco 2020 Annual Report


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    Leadership Cisco’s executive leadership team Diverse leadership 53% diverse based on Chuck Robbins Liz Centoni Mark Chandler gender Chairman and Chief SVP, Strategy, Emerging EVP, Chief Legal and Executive Officer Technologies, and Officer and Chief ethnicity Incubation Compliance Officer At Cisco, diversity, inclusion, and collaboration are fundamental to who we are, how we create the best teams, and how we drive success. A diverse workplace creates a Eyal Dagan Jonathan Davidson Gerri Elliott SVP, Common SVP and General EVP and Chief Sales vibrant culture where everyone Hardware Group Manager, Cisco and Marketing Officer is welcomed, respected, Mass-Scale Infrastructure valued, and heard. Cisco has signed the CEO Action for Diversity and Inclusion™ Pledge. We are delivering on our vision of accelerating full-spectrum diversity—including gender, Francine Katsoudas Kelly A. Kramer Stella Low age, race, ethnicity, orientation, EVP and EVP and Chief Chief Communications ability, nationality, religion, Chief People Officer Financial Officer* Officer veteran status, background, culture, experience, strengths, and perspectives. It starts at the top in that 40% of our Executive Leadership Team (ELT) are women and 53% are diverse in terms of gender and ethnicity, making Cisco an Maria Martinez Todd Nightingale Jeetu Patel industry leader in ELT diversity. Executive Vice President SVP and General Manager, SVP and and Chief Customer Enterprise Networking General Manager, Security Experience Officer and Cloud and Applications** Leadership@Cisco Learn more about Cisco’s Executive Leadership Team at https://newsroom.cisco.com/ exec-bios. Mark Patterson Irving Tan Michael D. Timmeny SVP, Chief of Staff to EVP, Chief of SVP and Chief the Chairman and CEO Operations Government Strategy Officer * Ms. Kramer notified Cisco of her decision to resign from Cisco. She will continue to serve in her role until such time as a successor is appointed. ** Mr. Patel joined the ELT after the close of fiscal 2020. Cisco 2020 Annual Report 7


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    Governance and responsibility Cisco is committed to shareholder-friendly corporate governance, and the Board of Directors has adopted clear corporate policies that promote excellence in corporate governance. Shareholder Risk management approach We believe that risk is inherent in innovation and the pursuit of long-term growth engagement opportunities. Cisco’s management is responsible for day-to-day risk management At Cisco, we recognize the activities. The Board of Directors, acting directly and through its committees, is importance of regular and transparent responsible for the oversight of Cisco’s risk management. With the oversight of the communication with our shareholders. Board of Directors, Cisco has implemented practices, processes, and programs Each year, we continually engage with designed to help manage the risks to which we are exposed in our business and to a significant portion of shareholders align risk-taking with our efforts to increase shareholder value. that include our top institutional Cisco’s management has implemented an enterprise risk management (ERM) investors. In fiscal 2020, our Chairman program, managed by Cisco’s internal audit function, that is designed to work across of the Board and Chief Executive the business to identify, assess, govern, and manage risks and Cisco’s response to Officer, Secretary, and Investor those risks. Cisco’s internal audit function performs an annual risk assessment that Relations team held meetings and is utilized by the ERM program. The structure of the ERM program includes both an conference calls with investors ERM operating committee that focuses on risk management-related topics and an representing approximately 27% of ERM executive committee consisting of members of executive management. The our outstanding shares, including ERM operating committee conducts global risk reviews and provides regular updates 65% of our top 30 shareholders. We to the ERM executive committee. engaged with these shareholders on a variety of topics, including our business The Audit Committee, which oversees financial and risk management policies, including and long-term strategy, corporate data protection (comprising both privacy and security), receives regular reports on ERM governance and risk management from the chair of the ERM operating committee and regular reports on cybersecurity practices, board leadership and from Cisco’s Chief Security and Trust Officer. Other board committees oversee specific refreshment, diversity, corporate social categories of risk associated with their respective areas of responsibility. The Board responsibility initiatives (including of Directors regularly discusses core subjects with executive management, including environmental, social, and governance strategy, operations, information systems, finance, and legal and public policy matters, matters), executive compensation in which risk oversight is an inherent element. program, and other matters of shareholder interest. Policies and practices We have adopted these policies and practices consistent with our commitment to transparency and best-in-class practices, as well as to ensure compliance 27% with the rules and regulations of the SEC, the listing requirements of NASDAQ, and applicable corporate governance requirements. – Shareholder proxy access – Annual election of all directors (since IPO) – Majority voting (since 2007) In fiscal 2020, we reached – Robust Lead Independent Director role out to investors representing – Shareholder right to call a special meeting (since IPO) approximately 27% of our outstanding – No poison pill shares, including 65% of our top – Recoupment policy (since 2008) 30 shareholders. – Stock ownership guidelines for directors and executive officers – Shareholder recommendations for director candidate to the board – Shareholder right to act by written consent (since IPO) 8 Cisco 2020 Annual Report


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    Executive compensation Our pay practices align with our pay-for-performance philosophy and underscore our commitment NEOs other CEO to sound compensation and than CEO governance practices. These charts summarize the major elements of target total direct compensation for our CEO and our other named executive officers (NEOs1) as a group for fiscal 2020 15% Variable cash incentive awards 11% Variable cash incentive awards (performance-based) (performance-based) and demonstrate our continued pay-for-performance philosophy. 6% Base salary 7% Base salary 59% Performance-based equity 61% Performance-based equity incentive awards incentive awards 20% Time-based equity 21% Time-based equity 1 As defined in our Proxy Statement incentive awards incentive awards for our 2020 Annual Meeting of Shareholders Our executive We apply leading executive compensation practices compensation program – Independent compensation – No single-trigger vesting of rewards performance committee equity award grants – Compensation philosophy – Independent compensation – No stock option repricing or designed to attract consultant cash-out of underwater equity and retain, motivate – Comprehensive annual awards performance, and reward compensation program risk – “No perks” policy with limited achievement assessment exceptions – Performance measures – Caps on incentive – No supplemental executive aligned with shareholder compensation retirement plan or interests – None of our executive executive-defined benefit – Majority of annual total officers have employment, pension plan direct compensation is severance or change in – No golden parachute tax performance based control agreements gross-ups – No dividends paid on – Stock ownership guidelines – Broad anti-pledging and unvested awards – Recoupment policy anti-hedging policies Cisco 2020 Annual Report 9


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    Board of directors Cisco’s Board of Directors believes strongly in the value of an independent board of directors. Independent board members have consistently comprised over 75% of the members of Cisco’s Board of Directors. All members of the key board committees—the Audit Committee, the Compensation and Management Development Committee, and the Nomination and Governance Committee—are independent. The role of the board of directors in strategy One of the Board’s key responsibilities is overseeing management’s formulation and execution of Cisco’s strategy. Throughout the year, our CEO, the executive leadership team, and other leaders from across the company provide detailed business and strategy updates to the Board. During these reviews, the Board engages with the executive leadership team and other business leaders regarding various topics, including business strategy and initiatives, capital allocation, portfolio updates, the competitive landscape, talent and culture including inclusion and diversity, ESG concerns including human rights implications of Cisco product development and sales, and regulatory developments. Additionally, on an annual basis, the Board reviews and approves Cisco’s financial plan. The Lead Independent Director also chairs regularly scheduled executive sessions of the independent directors, without Cisco management present, during which Cisco’s strategy is reviewed and other topics are discussed. M. Michele Burns, 62 Michael D. Capellas, 66 Independent Director Director since: 2003 Lead Independent Director Director since: 2006 Former Chairman and CEO Founder and CEO Mercer LLC Capellas Strategic Partners Ms. Burns provides to the Board of Directors expertise in corporate Mr. Capellas brings to the Board of Directors experience in executive finance, accounting, and strategy, including experience gained as the roles and a background of leading global organizations in the chief financial officer of three public companies. Through her experience technology industry. Through this experience, he has developed gained as chief executive officer of Mercer, she brings expertise expertise in several valued areas, including strategic product in global and operational management, including a background in development, business development, sales, marketing, and finance. organizational leadership and human resources. Ms. Burns also has experience serving as a public company outside director. Skills Committees Skills Committees CHAIR CHAIR CHAIR Wesley G. Bush, 59 Mark Garrett, 62 Independent Director Director since: 2019 Independent Director Director since: 2018 Former Chairman and CEO Former CFO Northrop Grumman Corporation Adobe Systems Incorporated Mr. Bush brings to the Board of Directors his extensive international Mr. Garrett brings to the Board of Directors an extensive history of business experience, including over 35 years in the aerospace and leadership in finance and accounting in the technology industry, defense industry. In addition, he brings extensive financial, strategic, including experience in product and business model transition and and operational experience. Mr. Bush also has experience serving as transformation to the cloud. Mr. Garrett also has experience serving a public company outside director. as a public company outside director. Skills Committees Skills Committees CHAIR Board snapshot Board governance Director tenure Board diversity structure 5 Directors 0-7 years 9 Independent 40% Gender/Ethnic/Racial/ 3 Directors 8-14 years Sexual Orientation 1 Non-independent diversity* 2 Directors 15+ years * Categories covered under California law AB 979. 10 Cisco 2020 Annual Report


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    Dr. Kristina M. Johnson, 63 Arun Sarin, KBE, 65 Independent Director Director since: 2012 Independent Director Director since: 2009 President Former CEO The Ohio State University Vodafone Group Plc Dr. Johnson brings to the Board of Directors an engineering background Mr. Sarin provides to the Board of Directors a telecommunications as well as expertise in science, technology, business, education, industry and technology background, as well as leadership skills, and government. In addition, she has leadership and management including his global chief executive experience at Vodafone Group experience, both in an academic context as chancellor, provost, and Plc. He also provides an international perspective as well as expertise dean of nationally recognized academic institutions and in a corporate in general management, finance, marketing, and operations. In context as a board member of public technology companies. addition, Mr. Sarin has experience as a director, including service as an outside board member of companies in the information technology, banking, financial services, and retail industries. Skills Committees Skills Committees Roderick C. McGeary, 70 Brenton L. Saunders, 50 Independent Director Director since: 2003 Independent Director Director since: 2017 Former Vice Chairman, Consulting President, CEO and Chairman KPMG LLP Vesper Healthcare Acquisition Corp. Mr. McGeary brings to the Board of Directors a combination Mr. Saunders brings to the Board of Directors his extensive of executive experience in management and technology leadership experience, including his role as chief executive officer of consulting. He also has expertise in leading talented teams as two global healthcare companies, as well as his financial, strategic, well as skills in finance, accounting, and auditing with technology and operational experience. He is a natural innovator and leader with industry experience. a deep understanding of business transformation. Skills Committees Skills Committees CHAIR Charles H. Robbins, 54 Dr. Lisa T. Su, 50 Chairman and CEO Director since: 2015 Independent Director Director since: 2020 Chairman since: 2017 President and CEO Advanced Micro Devices, Inc. Mr. Robbins brings to the Board of Directors extensive industry, Dr. Su brings to the Board of Directors her extensive business company, and operational experience acquired from having served leadership experience, including her role as president and chief as Cisco’s CEO since 2015, and prior to that from having led Cisco’s executive officer of a global semiconductor company, as well as global sales and partner teams. He has a thorough knowledge of her technology and semiconductor expertise. Dr. Su also provides Cisco’s segments, technology areas, geographies, and competition. expertise in global strategy, marketing, and engineering, and has He also has a proven track record of driving results and played a experience serving as a public company outside director. key role in leading and executing many of Cisco’s investments and strategy shifts to meet its growth initiatives. Skills Skills Committees Board skills and attributes Key to committees Gender/ Audit Committee Leadership 10 Ethnic/Racial/Sexual 4 Orientation diversity* Acquisition Committee Sales and Technology 8 marketing 5 Nomination and Governance Committee Financial experience 7 Academia 1 Finance Committee Global Public company Compensation and Management business 9 board experience 10 Development Committee * Categories covered under California law AB 979. Cisco 2020 Annual Report 11


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    Corporate social responsibility Our world is shaped by the expanding capabilities of information technology, which have the potential to create opportunities— or deepen inequalities. This dynamic defines our purpose: to power an inclusive future for all. We announced this new purpose in 2020 and began to develop a framework for how we can fulfill it through our technology, actions, and intentions. Throughout our upcoming 2020 CSR Impact Report, which we intend to publish in December 2020, there will be examples of how Cisco is bringing this purpose to life. By designing inclusive technologies, investing in underserved communities, and engaging our customers and peers, there is so much we can do. Cisco’s Corporate Social Responsibility (CSR) efforts are organized into several areas that guide our work to power an inclusive future for all: trust and responsibility, leading a conscious culture, energy and greenhouse gas (GHG) emissions, circular economy, supply chain excellence, and technology for good. Our previous CSR reporting framework comprised three pillars: people, society, and planet. For fiscal 2020 we have adjusted those pillars to describe our commitments, goals, and impacts more specifically and to focus on the environmental, social, and governance (ESG) topics that are significant to Cisco. CSR governance and management Cisco Corporate Affairs leads our social investment programs and champions our commitment to CSR performance and transparency. This team engages with internal and external stakeholders and leads CSR assessment and reporting activities, which are aligned with standards set by the Global Reporting Initiative (GRI). Cisco supports the United Nations’ Sustainable Development Goals and aligns its environmental, social, and governance work with them. The team works cross-functionally to assess and monitor CSR priorities, drive process for CSR management, and provide reporting guidance and coordination across business functions. CSR priorities are owned by business functions and are integrated into ongoing business strategy and planning. Business functions set CSR goals, implement plans, and measure performance. Where a cross-functional approach is needed, teams are established to implement our commitments. The Nomination and Governance Committee of the Board reviews Cisco’s policies and programs concerning corporate social responsibility, including environmental, social, and governance matters. This structure is designed to ensure we prioritize the right issues as a company, and that we stay on track with our commitments. Board of Directors Other Board Committees Nomination and  Acquisition  Compensation and Governance Committee  Audit Management Development  Finance Corporate CSR Business Functions and Governance, Risk, and Controls Champion Cisco’s company-wide commitment Cross-Functional Groups Champion Enterprise Risk Management (ERM) to CSR performance and transparency Conduct due diligence and implement policies efforts across the business to identify, assess, and programs for specific CSR focus areas and manage risks CSR Focus Areas*  Ethics and integrity  Product and packaging materials  Local community impact  Employee training and development  IT solutions for the environment  Global social impact–IT skills and digital readiness  Inclusion and diversity  Data security and privacy  Global social impact–critical human needs  Employee wellness and benefits  Digital rights and inclusion and disaster relief  Energy and GHG emissions  Socially responsible supply chain  Economic inequality  Human Rights Employees Supply Chain and Partners Certification of Code of Business Conduct Ongoing enforcement of Supplier Code of Conduct * These CSR Focus Areas are the significant topics identified in our FY19 Assessment. An updated, detailed assessment will be completed for our FY21 CSR Impact report. 12 Cisco 2020 Annual Report


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    Trust and responsibility More than 80% of the world’s web embedded from the start. We also traffic travels across Cisco connections, apply global principles of human rights and our software and solutions help to the sourcing, design, and sale of protect the data of millions of users our products and work to integrate and over 500,000 organizations, from a human rights perspective across hospitals and educational institutions to Cisco’s global business. critical infrastructure and government agencies to businesses of all sizes Earning and upholding stakeholder including the Fortune 500. trust goes beyond the integrity of solutions and networks. It also speaks Given the critical nature of the solutions to our financial transparency and high we provide, holding ourselves to the standards of ethical conduct. Cisco highest standards as a trustworthy, has forged trusted relationships among transparent, and accountable global stakeholders, and consistently company is vital to our business and appears on lists of the world’s most our customers. We design and build ethical businesses. solutions with security and privacy Leading a conscious culture Selected goals: Cisco’s relationship with our people is Best Workplaces in 2019, with 93% of one of mutual benefit. Our employees employees surveyed saying Cisco is a 80% bring talent and ingenuity to design our great place to work, and again in 2020. Achieve 80% products and solutions, help safeguard We know that we can’t become a employee customers’ data, develop programs catalyst for social change until we first participation in that create competitive advantage, and embody that which we seek to build. community impact help us power an inclusive future. In When we see injustice, we act boldly, by 2020 - Achieved turn, we provide them with meaningful careers and professional development bravely, and deliberately to make opportunities, as well as resources to change, remove barriers, and support communities. Recent events have New social justice help them be healthy, empowered, and forced us all to take a hard look at our and diversity goals: purposeful in all aspects of life. world and the racism within it and have Our values and expectations are laid out in our Code of Business Conduct. Every galvanized us to lead needed change. We have set out our commitment +25% Achieve a 25% employee must certify compliance with to the African American (AA)/Black increase in the code each year. In fiscal 2020, we community and detailed the actions we representation of all updated the code to include references will take in support of Social Justice. employees who self- to our conscious culture. These actions include influencing identify as AA/Black our ecosystem to support policy, When people are respected for who from entry level legislation and organizations working they are and encouraged to seek through manager to ensure equal rights for AA/Black balance between work and personal life, level by 2023 people in 2020 and beyond; working to we believe they are more productive increase the representation of AA/Black and successful in their jobs and able employees at all levels of the company; to give their best to their families and communities. In fiscal 2020, we met our delivering anti-discrimination education +75% for our workforce; and more. Achieve a 75% goal for 80% employee participation in increase in community impact. Employee actions We will continually reassess and representation of included advocating for causes, recalibrate our efforts when needed employees who self- volunteering, donating, and participating to meet our goals and be transparent identify as AA/Black in programs that positively impact about where we still need to do more from director through communities. We also doubled our work. This is how we hold ourselves VP+ level by 2023 Time2Give benefit, which employees accountable in the service of true can use for volunteer service, from 5 impact and change, as we continue to to 10 days for this calendar year. We expand these actions across the full were honored to be ranked #1 on the spectrum of diversity. Great Place to Work® list of the World’s Cisco 2020 Annual Report 13


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    Selected goals: Energy and GHG emissions The scope of environmental impact The largest portion of Cisco’s carbon -60% we consider includes our operations, footprint is from the operation of our Reduce total Cisco extended operations (supply chain), products by our customers. Cisco has Scope 1 and 2 GHG products, and services. We determine set a goal to improve large rack-mounted emissions worldwide our environmental priorities based on equipment system power efficiency by 60% absolute by their sustainability and business value. from 77% to 87% by fiscal 2022 (fiscal FY22 (FY07 baseline) We set public goals to address potential 2016 baseline). This improvement will environmental impacts and meet the reduce customer operating expense and expectations of our stakeholders. Cisco’s carbon footprint. In fiscal 2020, 85% In fiscal 2020, Cisco continued its we launched the Cisco® 8000 Series family of routers, which, compared to Use electricity ongoing, 13-year effort to reduce our the prior generation, weighs far less and generated from total, worldwide Scope 1 and 2 GHG requires only a fraction of the space and renewable sources emissions. To meet our Scope 1 and power. Measured by material usage and for at least 85% of 2 GHG emissions reduction goal, Cisco power, the Cisco 8000 Series is a win for our global electricity plans to invest $45 million in energy the environment. requirements by FY22 efficiency and renewable energy over the five-year goal period. At the end Cisco encourages employees to take of fiscal 2019, our emissions were part in our environmental sustainability 87% 49% below our fiscal 2007 baseline and 83% of our global electricity was efforts. We provide an online portal, educational activities, and volunteer Improve large rack- generated by renewable sources.* opportunities to employees who want mounted equipment to make an impact at work and in system power Our collaboration products enable their communities. We also sponsor efficiency from 77% teleworking and reduce business travel, environment-related projects with to 87% by FY22 increasing employee productivity and universities and global innovation (FY16 baseline) building resilience for our business, challenges for employees as well as for our partners, and our customers. university students and recent graduates. This resilience allowed our customers These efforts are designed to improve to transition to extended work- recruitment and retention among from-home due to COVID-19 while candidate and employee cohorts that maintaining employee productivity and increasingly make employment decisions customer engagement. based on a company’s commitment to environmental sustainability. * Fiscal 2020 performance will be reported in our 2020 Environmental Technical Review and our CSR Impact Report scheduled for release in December 2020. Selected goals: Circular economy and supply chain excellence Making the world a better place with As we source raw materials for 100% technology begins with how that products, we consider how we can Design all new technology is designed, made, used, reduce the demand on finite resources products and and reused. We address environmental and protect human rights during the packaging using and social impacts along the entire mining process. By designing products circular design product lifecycle to help ensure we and packaging grounded in circular principles by FY25 respect and uphold human rights, design, we can eliminate waste and promote worker health and well-being, facilitate ease of repair, disassembly, and minimize negative environmental and reuse at end of life. +50% impacts. A responsible, resilient supply chain is critical to our business success Increase product and supports our ability to move from a packaging efficiency linear economy to a circular economy. by 50%, measured by package volume per weight of product, by FY25 (FY19 baseline) 14 Cisco 2020 Annual Report


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    During product assembly, we expect We know that collaboration is critical our manufacturing suppliers, and their suppliers, to uphold Cisco’s to achieving our vision. Cisco was a founding partner of the Ellen MacArthur 80% standards for labor, health and safety, Foundation. We were also a founding 80% of Cisco environment, and ethics. We also member of the Responsible Business component, partner with suppliers to reduce their Alliance (RBA) and have long adopted the manufacturing, and own GHG emissions, build products RBA Code of Conduct as our Supplier logistics suppliers at zero-waste factories, and facilitate Code of Conduct. We actively engage by spend will have a public absolute GHG our closed-loop material sourcing. Our in other groups to influence practices reduction goal by FY25 commitment to a circular economy that promote circularity and responsible includes keeping equipment in use sourcing across our value chain. longer and building a world-class returns program that maximizes the This work aligns with Cisco’s core -30% value of assets while reducing the values and, we believe, directly benefits Reduce Cisco environmental impact of manufacturing our business outcomes, including upstream supply and waste on communities. business continuity, worker retention, chain-related Scope 3 productivity, and customer satisfaction. GHG emissions by 30% absolute by FY30 (FY19 baseline) Tech for good Goal: The same technology that generates As long as humanitarian crises exist sales for our business can also be around the world, there cannot be an 1 billion used by nonprofits working to solve our inclusive future for all. Similarly, the Positively impact 1 greatest challenges, such as critical promise of a digital economy—where billion people through human needs and disaster relief, connectivity unleashes new possibilities our social impact economic inequality, and education, for creativity and innovation—cannot grants and signature including training in digital skills. We are be realized until people’s basic needs programs by 2025 helping address these challenges by for food, water, shelter, and healthcare investing in early-stage solutions and are met. forming long-term partnerships that allow organizations to put technology Our technology is particularly essential to its highest and best use. We are when used to restore connectivity in crisis also teaching IT skills to millions of zones. Cisco’s disaster response team, students every year through the Cisco Tactical Operations (TacOps), deploys Networking Academy and through trained team members, supported by investing in entrepreneurs who employee volunteers, to restore mission- harness technology for social and critical communications in the wake of environmental impact. In fiscal 2020, disasters and other events where first 2.3 million people participated in Cisco responders need support. Since the Networking Academy courses in 180 program began in 2005, the TacOps countries, bringing the total to 12.6 team has responded to 64 worldwide million students since inception. incidents, from natural disasters to forced mass migration, providing free crisis Cisco set a goal in 2016 to positively communication networks to support impact one billion people through our recovery. The team continues to evolve to social impact grants and signature meet changing global needs. corporate social responsibility programs. We are proud that, by the end of Whatever challenges lie ahead of us, fiscal 2019, we had positively impacted Cisco intends to be ready to support 469 million people with the skills and those who need it the most. resources needed for an inclusive future.1 For more information about our performance, see our CSR website at CSR.cisco.com. Our 2020 CSR Impact Report and Environmental Technical Review are expected to be published in December 2020. 1 Some of our social impact grantees receive funding from other organizations. Further details on our progress in fiscal 2020 will be available in our 2020 CSR Impact report. Cisco 2020 Annual Report 15


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    Stakeholder engagement At Cisco, we believe that by offering an attractive value proposition to customers and partners, by creating diverse and inclusive workplaces and a conscious culture for employees, and by engaging regularly with shareholders and communities, we can create and maximize long-term value. The following chart presents a summary of our key stakeholder groups and some examples of how we engage with them. Our goal Who we engage with How we engage Customers and – Global Customer Advisory – Partner Summit Board – Partner Education partners – Cisco Live/Cisco Connect Connection events – Online community – Customer satisfaction forums surveys Communities; – Cisco Foundation – World Economic Forum governments and – Cisco Networking – High-tech policy blog regulators; NGOs/ Academy – Advocacy nonprofits; industry – Industry working groups, – Social media channels Long- leaders trade associations, and standards bodies term value – Annual Shareholder – Investor meetings Shareholders creation Meeting – Company briefings – Conferences – Tech-Talks – Roadshows Employees – Regular “Check-In” – Team Space company meetings – “We Are Cisco” – Functional/regional online community “All-Hands” meetings – Inclusion and – Leadership Quarterly and Collaboration Leader Day community comprising 25+ diverse employee groups 16 Cisco 2020 Annual Report


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    UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (Mark one)  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended July 25, 2020 or  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 (IRS Employer incorporation or organization) Identification No.) 170 West Tasman Drive 95134-1706 San Jose, California (Address of principal executive offices) (Zip Code) Registrant’s telephone number, including area code: (408) 526-4000 Securities registered pursuant to Section 12(b) of the Act: Title of Each Class: Trading Symbol(s) Name of Each Exchange on which Registered Common Stock, par value $0.001 per share CSCO The Nasdaq Stock Market LLC Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes No  Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yes No  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  No Indicate by check mark whether the registrant has submitted electronically 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  No Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer  Accelerated filer  Non-accelerated filer  (Do not check if a smaller reporting company) Smaller reporting company  Emerging growth company  If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.  Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  No Aggregate market value of registrant’s common stock held by non-affiliates of the registrant, based upon the closing price of a share of the registrant’s common stock on January 24, 2020 as reported by the Nasdaq Global Select Market on that date: $207.1 billion Number of shares of the registrant’s common stock outstanding as of August 28, 2020: 4,233,425,297 DOCUMENTS INCORPORATED BY REFERENCE Portions of the registrant’s Proxy Statement relating to the registrant’s 2020 Annual Meeting of Shareholders, to be held on December 10, 2020, are incorporated by reference into Part III of this Annual Report on Form 10-K where indicated.


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    PART I Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Item 1A. Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Item 1B. Unresolved Staff Comments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 Item 2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 Item 4. Mine Safety Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 Item 6. Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . . . . . . . . 33 Item 7A. Quantitative and Qualitative Disclosures About Market Risk. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 Item 8. Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . . . . . . . . . . . . . . . 104 Item 9A. Controls and Procedures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104 Item 9B. Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105 PART III Item 10. Directors, Executive Officers and Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105 Item 11. Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters . . . . . 105 Item 13. Certain Relationships and Related Transactions, and Director Independence . . . . . . . . . . . . . . . . . . . . . . . . . . 105 Item 14. Principal Accountant Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106 PART IV Item 15. Exhibits and Financial Statement Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106 Item 16. Form 10-K Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108 Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109


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    This Annual Report on Form 10-K, including the “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,” “momentum,” “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, future responses to and effects of the COVID-19 pandemic, 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 “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. PART I Item 1. Business General Cisco designs and sells a broad range of technologies that have been powering the Internet since 1984. We are integrating intent- based technologies across networking, security, collaboration, applications and the cloud. These technologies are designed to help our customers manage more users, devices and things connecting to their networks. This will enable us to provide customers with a highly secure, intelligent platform for their digital business. We conduct our business globally and manage our business by geography. Our business is organized into the following three geographic segments: Americas; Europe, Middle East, and Africa (EMEA); and Asia Pacific, Japan, and China (APJC). Our products and technologies are grouped into the following categories: Infrastructure Platforms; Applications; Security and Other Products. In addition to our product offerings, we provide a broad range of service offerings, including technical support services and advanced services. Increasingly, we are delivering our technologies through software and services. Our customers include businesses of all sizes, public institutions, governments, and service providers. These customers often look to us as a strategic partner to help them use information technology (IT) to differentiate themselves and drive positive business outcomes. We were incorporated in California in December 1984, and our headquarters are in San Jose, California. The mailing address of our headquarters is 170 West Tasman Drive, San Jose, California 95134-1706, and our telephone number at that location is (408) 526-4000. Our website is www.cisco.com. Through a link on the Investor Relations section of our website, we make available the following filings as soon as reasonably practicable after they are electronically filed with or furnished to the Securities and Exchange Commission (SEC): our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act. All such filings are available free of charge. The information posted on our website is not incorporated into this report. Strategy and Priorities As our customers add billions of new connections to their enterprises, and as more applications move to a multicloud environment, the network becomes even more critical. Our customers are navigating change at an unprecedented pace and our mission is to inspire new possibilities for them by helping transform their infrastructure, expand applications and analytics, address their security needs, and empower their teams. We believe that our customers are looking for intent-based networks that provide meaningful business value through automation, security, and analytics across private, hybrid, and multicloud environments. Our vision is to deliver highly secure, software-defined, automated and intelligent platforms for our customers. We are expanding our research and development (R&D) investments in certain product areas including cloud security, cloud collaboration, and application insights and analytics. We are investing to optimize our product offerings for application to education, healthcare and other specific industries. We are also making investments to enable us to increase automation and support the customer as the workplace changes. In addition, we continue to remain focused on investments around Software-Defined Wide Area Network (SD-WAN), multicloud environments, 5G and WiFi-6, 400G speeds, optical networking, next generation silicon and artificial intelligence (AI). We are also accelerating our efforts to enable the delivery of network functionality as a service. 1


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    Transforming Infrastructure Our intent-based networking strategy began with Software-Defined Access (SD-Access) technology, one of our leading enterprise architectures. We announced the initial development of new network product offerings featuring our intent-based networking technology with the launch of the Catalyst 9000 series of switches. Our intent-based networking platform is designed to be intelligent, highly secure, powered by “intent” and informed by “context”— features aiming to constantly learn, adapt, automate and protect in order to optimize network operations and defend against an evolving cyber threat landscape. Our intent- based networking offerings are designed to provide a single, highly secure network fabric that helps ensure policy consistency and network assurance; enables faster launches of new business services; and significantly improves issue resolution times while being open and extendable. SD-Access, built on the principles of Cisco Digital Networking Architecture (DNA), provides what we see as a transformational shift in the building and managing of networks. Our Catalyst 9000 series of switches represented the initial build in our campus portfolio of our intent-based networking capabilities and provide highly differentiated advancements in security, programmability, and performance while lowering operating costs through innovations in hardware and software. Since the initial launch, we have continued to transform our enterprise access portfolio by bringing together several technologies to form the only integrated, intent-based architecture, with security at the foundation. This architecture is designed to help our customers connect their users and devices over any network, to applications and data, no matter where they are. We have introduced several innovations that extend our intent-based networking capabilities to wireless and enterprise routing products, including SD-WAN and Internet of Things (IoT) edge platforms. Our SD-WAN solutions are designed to provide direct branch to cloud connectivity, enabling the workforce to access their software-as-a-service (SaaS) applications and workloads in an optimized and highly secure manner. To further our innovation in this area, we are applying the latest technologies such as machine learning and advanced analytics to operate and enhance network capabilities. These new network product offerings are designed to enable customers to detect cybersecurity threats, for instance in encrypted traffic. We have created what is in our view the only network that is designed for security while maintaining privacy. Our customers are operating in multicloud environments with private, public and hybrid clouds. For the data center, our strategy is to deliver multicloud architectures that bring policy and operational consistency regardless of where applications or data reside by extending our Application Centric Infrastructure (ACI) and our hyperconverged offerings. In fiscal 2020, we announced details of our technology strategy for the Internet for the Future aimed at addressing the broad adoption of multicloud and application environments. We have made significant investments in the development of software, silicon and optics — what we believe are the building blocks for the Internet for the future. We introduced Cisco Silicon One, a single unified silicon architecture, as well as the Cisco 8000 carrier-class router family built on Silicon One and our new operating system. Applications and Analytics In our view, over the next several years, customers will be increasingly writing modern software applications that can run on any hybrid cloud, and will be adding billions of connections to their environment. They will need to be able to build applications quickly, deploy them nearly anywhere, monitor experiences, and act in real time. We believe we are uniquely positioned to enable successful business outcomes for customers in hybrid and multicloud environments. In our view, the network is increasingly critical to business success and we believe our customers will benefit from the insights and intelligence that we are making accessible through our highly differentiated platforms. As our customers navigate the multicloud world, the need to connect new devices, protect their assets and monitor cloud consumption, they will require advisory cloud services that are provided in a consistent manner. We are focused on enabling simple, intelligent, automated and highly secure clouds by delivering the infrastructure to navigate complex IT environments through our software and subscription-based offerings including Webex, Meraki cloud networking, and certain other Security and Application offerings. We believe that customers and partners view our approach to the cloud as differentiated and unique, recognizing that we offer a solution for all cloud environments, including private, hybrid and public clouds. Security is Foundational We believe data is one of our customers’ most strategic assets, and this data is increasingly distributed across every organization and ecosystem, on customer premises, at the edge of the network, and in the cloud. As such, we believe that security is the top IT priority for many of our customers. Our security strategy is focused on delivering an effective cybersecurity architecture combining network, cloud and endpoint-based solutions. Our portfolio is designed to prevent, detect, and remediate a cyber-attack and to integrate security across networking domains. Our intent is to enable our customers to secure their networks for a multicloud world by delivering a platform that continuously detects threats and verifies trust. By combining a number of security technologies, we 2


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    are delivering an end-to-end, zero-trust architecture. Additionally, through our offerings we help our customers shorten the time between threat detection and response. Empowering Teams Our customers’ communications continue to evolve as we move to a digital, cloud-based world. As people are an important competitive advantage for our customers, teams need effective and simple ways to work better together and interact with their customers to build better relationships and increase collaboration. As an example, we believe our collaboration portfolio which includes our subscription- based Webex conferencing platform, is at the center of our customers’ strategy for enabling teams to increase productivity. Transforming our Business Model We are transforming our offerings to meet the evolving needs of our customers. Historically, our various networking technology products have aligned with their respective product categories. However, increasingly our offerings are crossing multiple product categories. As our core networking evolves, we expect we will add more common software features across our core networking platforms. We are increasing the amount of software offerings that we provide and the proportion of subscription software offerings. We have various types of software arrangements including system software, on premise software, hybrid software and SaaS offerings. In terms of monetization, our software offerings fall into the broad categories of subscription arrangements, including SaaS and term licenses, and perpetual licenses. As part of the transformation of our business, we continued to make strides during fiscal 2020 to develop and sell more software and subscription-based offerings. We are also focused on the entire customer lifecycle to drive expansion and renewals. For a discussion of the risks associated with our strategy, see “Item 1A. Risk Factors,” including the risk factor entitled “We depend upon the development of new products and services, and enhancements to existing products and services, 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 information regarding sales of our major products and services, see Note 19 to the Consolidated Financial Statements. Products and Services Our products and services are grouped into the following categories: Infrastructure Platforms Infrastructure Platforms consist of our core networking technologies of switching, routing, wireless, and data center products that are designed to work together to deliver networking capabilities and transport and/or store data. These technologies consist of both hardware and software offerings that help our customers build networks, automate, orchestrate, integrate, and digitize data. We believe it is critical for us to continue to deliver continuous value to our customers. We continued to make progress in shifting more of our business to software and subscriptions across our core networking portfolio, and in expanding our software offerings. Our objective is to continue moving to cloud-managed solutions across our enterprise networking portfolio. We continue to expand on our intent-based infrastructure, which focuses on simplicity, automation, and security, allowing enterprises to manage and govern the interactions of users, devices and applications across their IT environments. We started with our Nexus 9000 series of switches for the data center, which along with ACI provide enhancements in security, programmability and performance while lowering operating costs. Our Cisco Catalyst 9000 series of switches were developed for security, mobility, IoT, and the cloud. These switches formed the foundation for our leading enterprise architectures, built on the principles of Cisco DNA. We continued to expand on this technology by extending SD-Access and Cisco DNA Center across our enterprise networking portfolio and by extending ACI to the public and private cloud. In addition, we now have a unified operating system and policy management platform for our enterprise networking portfolio to drive simplicity and consistency across our customers’ networks. Our switching portfolio encompasses campus switching as well as data center switching offerings. Our campus switching offerings provide the foundation for converged data, voice, video, and IoT services. These switches offer enhanced security and reliability and are designed to scale efficiently as our customers grow. Within campus switching are our Catalyst 9000 series of switches that include hardware with embedded software, along with a software subscription referred to as Cisco DNA. Cisco DNA provides automation, analytics and security features and can be centrally monitored, managed, and configured. Our data center switching offerings provide the foundation for mission critical data centers with high availability, scalability, and security across traditional data centers and private and public cloud data centers. We continue to add deeper and broader visibility and analytics across our networks and applications, enabling us to deliver better experiences for our customers. Our routing portfolio interconnects public and private wireline and mobile networks, delivering highly secure and reliable connectivity to campus, data center and branch networks. Our routing solutions are designed to meet the scale, reliability, and security needs of our customers. We introduced the principles of Cisco DNA into our routing portfolio by integrating SD-WAN into our offerings. In fiscal 2020, we launched the Cisco 8000 portfolio, a family of high density, low power next generation routing platforms focused on our customers’ evolution to support 100G and 400G connectivity speeds. 3


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    Our Wireless portfolio provides indoor and outdoor wireless coverage designed for seamless roaming use of voice, video, and data applications. These products include wireless access points that are standalone, controller appliance-based, switch- converged, and Meraki cloud-managed offerings. We expanded our capabilities to include network assurance and automation through Cisco DNA and Cisco DNA Spaces location-based services. Our Catalyst and Meraki Wi-Fi 6-based access points are designed for high-density public or private environments to improve speed, performance, and capacity for wireless networking in both homes and enterprises. Our Data Center portfolio incorporates various technologies and solutions including the Cisco Unified Computing System, our hyperconverged offering, HyperFlex, and software management capabilities which combine computing, networking, and storage infrastructure management and virtualization to deliver agility, simplicity and scale. These products are designed to extend the power and simplicity of unified computing for data-intensive workloads, applications at the edge of the network, and the next generation of distributed application architectures. Applications The Applications product category consists primarily of software-related offerings that utilize the core networking and data center platforms to provide their functions. Our Applications offerings consist of both hardware and software-based solutions, including both software licenses and software-as-a-service. Applications include our collaboration offerings (unified communications, Cisco TelePresence and conferencing) as well as AppDynamics and IoT software offerings. Our Collaboration strategy is to make communications more effective, comprehensive, and less complex by creating innovative solutions through combining the power of software, hardware, and the network. We offer end-to-end solutions which can be delivered from the cloud, premise or mixed environments, and which integrate voice, video, and messaging on fixed and mobile networks across a wide range of devices/endpoints such as mobile phones, tablets, desktop and laptop computers, video units, and collaboration appliances. Our Cognitive Collaboration integrates AI and machine learning across the Webex portfolio, bringing intelligence and context to help our customers work smarter and increase productivity. Our Webex Cloud Contact Center solution is designed to provide the agility, flexibility, scalability, security, efficiency and innovation in order to enable better customer experiences for businesses and their customers. For on-premise collaboration markets, we launched multi-party Internet Protocol (IP) Phones to extend our reach into third-party call control platforms as well as a new series of telephony headsets which offer innovative integration with our market leading IP phone business. Our analytics solutions seek to help businesses deliver consistently high-quality digital experiences by connecting end- user experience and application performance to business outcomes. Our applications monitor, correlate, analyze, and act on application performance and business performance data in real time. This automated, cross-stack intelligence enables developers, IT operations, and business owners to make mission critical and strategic improvements. We continue to invest in IoT as the number of connected IoT devices continues to grow. Our Control Center Platform enables enterprises to automate the lifecycle of connected devices, including tools designed to automatically and remotely onboard, manage, and monetize their IoT devices. Security The Security product category primarily includes our network security, cloud and email security, identity and access management, advanced threat protection, and unified threat management products. Our offerings are powered by cloud-delivered threat intelligence based on our Cisco Talos technology. All of these products are part of our integrated cybersecurity architecture that is designed to allow our customers to confront risks by continuously defending against threats and verifying trust, across their environments. Regardless of size or industry, security continues to be a leading priority for our customers as they defend against ongoing ransomware and account breaches that represent risk of compromise and economic loss to their businesses. We continue to integrate security across our portfolio as we believe our security solutions can help build a foundation of trust between users, devices, and applications; across clouds, networks, and mobile workers. When targeted, our solutions help prevent attacks by continuously detecting and remediating the most advanced threats. In fiscal 2020, we continued to invest in cloud-delivered security and extended our security platform with the launch of SecureX. These investments included extending our zero-trust architecture with the on-going integration of Duo Security (“Duo”) and integrating Umbrella with our SD-WAN solutions to help secure our customer’s network transformation toward a secure access service edge (SASE). Building on our integrated architecture, we launched SecureX, a security platform that brings together the breadth of the Cisco Security portfolio helping our customers accelerate responsiveness across the security lifecycle. Other Products Our Other Products category primarily consists of our cloud and system management and emerging technologies products. 4


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    Services In addition to our product offerings, we provide a broad range of service and support options for our customers. Our overall service and support offerings are combined into one organization, Customer Experience, that is responsible for the end-to-end customer experience. Our support and maintenance services help our customers ensure their products operate efficiently, remain available, and benefit from the most up-to-date system, and application software. These services help customers protect their network investments, manage risk, and minimize downtime for systems running mission-critical applications. A key example is Cisco Smart Services, which leverages the intelligence from the installed base of our products and customer connections to protect and optimize network investment for our customers and partners. We have expanded these offerings from traditional hardware support to software, solutions, and premium support. We also provide comprehensive advisory services that are focused on responsive, preventive, and consultative support of our technologies for specific networking needs. We are investing in and expanding advisory services in the areas of software, cloud, security, and analytics, which reflects our strategy of selling customer outcomes. We are focused on three priorities including, utilizing technology advisory services to drive higher product and services; assessment and migration services providing the tools, expertise and methodologies to enable our customers to migrate to new technology platforms; and providing optimization services aligned with customers’ business expectations. Customers and Markets Many factors influence the IT, collaboration, and networking requirements of our customers. These include the size of the organization, number and types of technology systems, geographic location, and business applications deployed throughout the customer’s network. Our customer base is not limited to any specific industry, geography, or market segment. In each of the past three fiscal years, no single customer accounted for 10% or more of revenue. Our customers primarily operate in the following markets: enterprise, commercial, service provider, and public sector. Enterprise Enterprise businesses are large regional, national, or global organizations with multiple locations or branch offices and typically employ 1,000 or more employees. Many enterprise businesses have unique IT, collaboration, and networking needs within a multivendor environment. We offer service and support packages, financing, and managed network services, primarily through our service provider partners. We sell these products through a network of third-party application and technology vendors and channel partners, as well as selling directly to these customers. Commercial We define commercial businesses as organizations which typically have fewer than 1,000 employees. We sell to the larger, or midmarket, customers within the commercial market through a combination of our direct sales force and channel partners. These customers typically require the latest advanced technologies that our enterprise customers demand, but with less complexity. Small businesses, or organizations with fewer than 100 employees, require information technologies and communication products that are easy to configure, install, and maintain. We sell to these smaller organizations within the commercial market primarily through channel partners. Service Providers Service providers offer data, voice, video, and mobile/wireless services to businesses, governments, utilities, and consumers worldwide. This customer market category includes regional, national, and international wireline carriers, web-scale operators as well as Internet, cable, and wireless providers. We also include media, broadcast, and content providers within our service provider market, as the lines in the telecommunications industry continue to blur between traditional network-based, content- based and application-based services. Service providers use a variety of our products and services for their own networks. In addition, many service providers use Cisco data center, virtualization, and collaboration technologies to offer managed or Internet-based services to their business customers. Compared with other customers, service providers are more likely to require network design, deployment, and support services because of the greater scale and higher complexity of their networks, whose requirements are addressed, we believe, by our architectural approach. Public Sector Public sector entities include federal governments, state and local governments, as well as educational institution customers. Many public sector entities have unique IT, collaboration, and networking needs within a multi-vendor environment. We sell to public sector entities through a network of third-party application and technology vendors, and channel partners, as well as through direct sales. 5


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    Sales Overview As of the end of fiscal 2020, our worldwide sales and marketing functions consisted of approximately 25,800 employees, including managers, sales representatives, and technical support personnel. We have field sales offices in 95 countries, and we sell our products and services both directly and through a variety of channels with support from our salesforce. A substantial portion of our products and services is sold through channel partners, and the remainder is sold through direct sales. 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. Some service providers are also systems integrators. Distributors typically hold inventory and sell to systems integrators, service providers, and other resellers. We refer to sales through distributors as our two-tier system of sales to the end customer. Starting in fiscal 2019, in connection with the adoption of Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers, a new accounting standard related to revenue recognition, we started recognizing revenue from two-tier distributors on a sell-in method. Prior to this, we recognized revenue based on a sell-through method using point of sales information provided by these distributors. These distributors are generally given business terms that allow them to return a portion of inventory, receive credits for changes in selling prices, receive certain rebates, and participate in various cooperative marketing programs. For information regarding risks related to our channels, see “Item 1A. Risk Factors,” including the risk factors entitled “Disruption of or changes in our distribution model could harm our sales and margins” and “Inventory management relating to our sales to our two-tier distribution channel is complex, and excess inventory may harm our gross margins.” For information regarding risks relating to our international operations, see “Item 1A. Risk Factors,” including the risk factors entitled “Our operating results may be adversely affected by unfavorable economic and market conditions and the uncertain geopolitical environment;” “Entrance into new or developing markets exposes us to additional competition and will likely increase demands on our service and support operations;” “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 are exposed to fluctuations in currency exchange rates that could negatively impact our financial results and cash flows;” and “Cyber-attacks, data breaches or malware may disrupt our operations, harm our operating results and financial condition, and damage our reputation, and cyber- attacks or data breaches on our customers’ networks, or in cloud-based services provided by or enabled by us, could result in claims of liability against us, damage our reputation or otherwise harm our business,” among others. Our service offerings complement our products through a range of consulting, technical, project, quality, and software maintenance services, including 24-hour online and telephone support through technical assistance centers. Financing Arrangements We provide financing arrangements for certain qualified customers to build, maintain, and upgrade their networks. We believe customer financing is a competitive advantage in obtaining business, particularly for those customers involved in significant infrastructure projects. Our financing arrangements include the following: Leases: • Sales-type • Direct financing • Operating Loans Financed service contracts Channels financing arrangements End-user financing arrangements 6


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    Acquisitions, Investments, and Alliances The markets in which we compete require a wide variety of technologies, products, and capabilities. Our growth strategy is based on the components of innovation, which we sometimes refer to as “build, buy, partner, invest, and co-develop”. This five- prong approach to how we innovate can be summarized as follows: Build Working within Cisco, with the developer community, or with customers Buy Acquiring or divesting, depending on goals Partner Strategically partnering to further build out the business Invest Making investments in areas where technology is in its infancy or where there is no dominant technology Co-develop Developing new solutions with multi-party teams that may include customers, channel partners, startups, independent software vendors, and academics Acquisitions We have acquired many companies, and we expect to make future acquisitions. Mergers and acquisitions of high-technology companies are inherently risky, especially if the acquired company has yet to generate revenue. No assurance can be given that our previous or future acquisitions will be successful or will not materially adversely affect our financial condition or operating results. Prior acquisitions have resulted in a wide range of outcomes, from successful introduction of new products and technologies to an inability to do so. The risks associated with acquisitions are more fully discussed in “Item 1A. Risk Factors,” including the risk factor entitled “We have made and expect to continue to make acquisitions that could disrupt our operations and harm our operating results.” Investments in Privately Held Companies We make investments in privately held companies that develop technology or provide services that are complementary to our products or that provide strategic value. The risks associated with these investments are more fully discussed in “Item 1A. Risk Factors,” including the risk factor entitled “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.” Strategic Alliances We pursue strategic alliances with other companies in areas where collaboration can produce industry advancement and acceleration of new markets. The objectives and goals of a strategic alliance can include one or more of the following: technology exchange, product development, joint sales and marketing, or new market creation. Companies with which we have added or expanded strategic alliances during fiscal 2020 and in recent years include Apple, Google, Microsoft, and Amazon Web Services, among others. Companies with which we have strategic alliances in some areas may be competitors in other areas, and in our view this trend may increase. The risks associated with our strategic alliances are more fully discussed in “Item 1A. Risk Factors,” including the risk factor entitled “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.” Competition We compete in the networking and communications equipment markets, providing products and services designed to transport, and help secure data, voice, and video traffic across cloud, private and public networks and the Internet. These markets are characterized by rapid change, converging technologies, and a migration to networking and communications solutions that offer relative advantages. These market factors represent both an opportunity and 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 our new product markets. 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 (in each case relative to only some of our products or services) include: Amazon Web Services LLC; Arista Networks, Inc.; Broadcom Inc.; CommScope Holding Company, Inc.; Check Point Software Technologies Ltd.; Dell Technologies Inc.; Dynatrace; F5 Networks, Inc.; FireEye, Inc.; Fortinet, Inc.; Hewlett-Packard Enterprise Company; Huawei Technologies Co., Ltd.; Juniper Networks, Inc.; Lenovo Group Limited; LogMeIn, Inc.; Microsoft Corporation; New Relic, Inc.; Nokia Corporation; Nutanix, Inc.; Palo Alto Networks, Inc.; RingCentral, Inc.; Slack Technologies, Inc.; Ubiquiti Networks; VMware, Inc.; Zoom Video Communications, Inc.; and Zscaler, Inc.; among others. 7


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    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 which 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 within the data center. Due to several factors, including the availability of highly scalable and general purpose microprocessors, application-specific integrated circuits (ASICs) offering advanced services, standards-based protocols, cloud computing, and virtualization, the convergence of technologies within the enterprise 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 sell successful business outcomes • The ability to provide a broad range of networking and communications products and services • Product performance • Price • The ability to introduce new products, including providing continuous new customer value and 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. Therefore, 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. Research and Development We regularly introduce new products and features to address the requirements of our markets. We allocate our research and development budget among our product categories, which consist of Infrastructure Platforms, Applications, Security, and Other Product technologies. Our research and development expenditures are applied generally to all product areas, with specific areas of focus being identified from time to time. Recent areas of increased focus include our intent-based networking technologies (which encompasses switching, routing, and wireless technologies within Infrastructure Platforms), conferencing, security, and analytics products. Our expenditures for research and development costs were expensed as incurred. The industry in which we compete is subject to rapid technological developments, evolving standards, changes in customer requirements, and new product introductions and enhancements. As a result, our success depends in part upon our ability, on a cost- effective and timely basis, to continue to enhance our existing products and to develop and introduce new products that improve performance and reduce total cost of ownership. To achieve these objectives, our management and engineering personnel work with customers to identify and respond to customer needs, as well as with other innovators of Internet working products, including universities, laboratories, and corporations. We also expect to continue to make acquisitions and investments, where appropriate, to provide us with access to new technologies. Nonetheless, there can be no assurance that we will be able to successfully 8


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    develop products to address new customer requirements and technological changes or that those products will achieve market acceptance. Manufacturing We rely on contract manufacturers for our manufacturing needs. We presently use a variety of independent third-party companies to provide services related to printed-circuit board assembly, in-circuit test, product repair, and product assembly. Proprietary software on electronically programmable memory chips is used to configure products that meet customer requirements and to maintain quality control and security. The manufacturing process enables us to configure the hardware and software in unique combinations to meet a wide variety of individual customer requirements. The manufacturing process uses automated testing equipment and burn-in procedures, as well as comprehensive inspection, testing, and statistical process controls, which are designed to help ensure the quality and reliability of our products. The manufacturing processes and procedures are generally certified to International Organization for Standardization (ISO) 9001 standards. Our arrangements with contract manufacturers generally provide for quality, cost, and delivery requirements, as well as manufacturing process terms, such as continuity of supply; inventory management; flexibility regarding capacity, quality, and cost management; oversight of manufacturing; and conditions for use of our intellectual property. We have not entered into any significant long-term contracts with any manufacturing service provider. We generally have the option to renew arrangements on an as-needed basis. These arrangements generally do not commit us to purchase any particular amount or any quantities beyond amounts covered by orders or forecasts that we submit covering discrete periods of time. Patents, Intellectual Property, and Licensing We seek to establish and maintain our proprietary rights in our technology and products through the use of patents, copyrights, trademarks, and trade secret laws. We have a program to file applications for and obtain patents, copyrights, and trademarks in the United States and in selected foreign countries where we believe filing for such protection is appropriate. We also seek to maintain our trade secrets and confidential information by nondisclosure policies and through the use of appropriate confidentiality agreements. We have obtained a substantial number of patents and trademarks in the United States and in other countries. There can be no assurance, however, that the rights obtained can be successfully enforced against infringing products in every jurisdiction. Although we believe the protection afforded by our patents, copyrights, trademarks, and trade secrets has value, the rapidly changing technology in the networking industry and uncertainties in the legal process make our future success dependent primarily on the innovative skills, technological expertise, and management abilities of our employees rather than on the protection afforded by patent, copyright, trademark, and trade secret laws. Many of our products are designed to include software or other intellectual property licensed from third parties. While it may be necessary in the future to seek or renew licenses relating to various aspects of our products, we believe, based upon past experience and standard industry practice that such licenses generally could be obtained on commercially reasonable terms. Nonetheless, there can be no assurance that the necessary licenses would be available on acceptable terms, if at all. Our 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, inclusion in our products of software or other intellectual property licensed from third parties on a nonexclusive basis can limit our ability to protect our proprietary rights in our products. The industry in which we compete is characterized by rapidly changing technology, a large number of patents, and frequent claims and related litigation regarding patent and other intellectual property rights. There can be no assurance that our patents and other proprietary rights will not be challenged, invalidated, or circumvented; that others will not assert intellectual property rights to technologies that are relevant to us; or that our rights will give us a competitive advantage. In addition, the laws of some foreign countries may not protect our proprietary rights to the same extent as the laws of the United States. The risks associated with patents and intellectual property are more fully discussed in “Item 1A. Risk Factors,” including the risk factors entitled “Our proprietary rights may prove difficult to enforce,” “We may be found to infringe on intellectual property rights of others,” and “We rely on the availability of third-party licenses.” 9


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    Employees Employees are summarized as follows (approximate numbers): July 25, 2020 Employees by geography: United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38,900 Rest of world . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38,600 Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77,500 Employees by line item on the Consolidated Statements of Operations: Cost of sales (1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,100 Research and development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,200 Sales and marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,800 General and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,400 Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77,500 (1) Cost of sales includes manufacturing support, services, and training. Information about our Executive Officers The following table shows the name, age, and position as of August 31, 2020 of each of our executive officers: Name Age Position with the Company Charles H. Robbins . . . . . . . . . . . . 54 Chairman and Chief Executive Officer Mark Chandler . . . . . . . . . . . . . . . 64 Executive Vice President, Chief Legal Officer and Chief Compliance Officer Gerri Elliott. . . . . . . . . . . . . . . . . . 64 Executive Vice President and Chief Sales and Marketing Officer Kelly A. Kramer . . . . . . . . . . . . . . 53 Executive Vice President and Chief Financial Officer Maria Martinez . . . . . . . . . . . . . . . 62 Executive Vice President and Chief Customer Experience Officer Irving Tan . . . . . . . . . . . . . . . . . . . 50 Executive Vice President, Chief of Operations Mr. Robbins has served as Chief Executive Officer since July 2015, as a member of the Board of Directors since May 2015 and as Chairman of the Board since December 2017. He joined Cisco in December 1997, from which time until March 2002 he held a number of managerial positions within Cisco’s sales organization. Mr. Robbins was promoted to Vice President in March 2002, assuming leadership of Cisco’s U.S. channel sales organization. Additionally, in July 2005 he assumed leadership of Cisco’s Canada channel sales organization. In December 2007, Mr. Robbins was promoted to Senior Vice President, U.S. Commercial, and in August 2009 he was appointed Senior Vice President, U.S. Enterprise, Commercial and Canada. In July 2011, Mr. Robbins was named Senior Vice President, Americas. In October 2012, Mr. Robbins was promoted to Senior Vice President, Worldwide Field Operations, in which position he served until assuming the role of Chief Executive Officer. He is a member of the board of directors of BlackRock, Inc. Mr. Chandler joined Cisco in July 1996, upon Cisco’s acquisition of StrataCom, Inc., where he served as General Counsel. He served as Cisco’s Managing Attorney for Europe, the Middle East, and Africa from December 1996 until June 1999; as Director, Worldwide Legal Operations from June 1999 until February 2001; and was promoted to Vice President, Worldwide Legal Services in February 2001. In October 2001, Mr. Chandler was promoted to Vice President, Legal Services and General Counsel, and in May 2003 he additionally was appointed Secretary, a position he held through November 2015. In February 2006, Mr. Chandler was promoted to Senior Vice President, and in May 2012 he was appointed Chief Compliance Officer. In June 2018, Mr. Chandler was promoted to Executive Vice President and Chief Legal Officer. Before joining StrataCom, Mr. Chandler had served as Vice President, Corporate Development and General Counsel of Maxtor Corporation. Ms. Elliott joined Cisco in April 2018. Ms. Elliott is a former Executive Vice President of Juniper Networks, Inc., where she served as EVP and Chief Customer Officer from March 2013 to February 2014, EVP and Chief Sales Officer from July 2011 to March 2013 and EVP, Strategic Alliances from June 2009 to July 2011. Before joining Juniper, Ms. Elliott held a series of senior executive positions with Microsoft Corporation from 2001-2008 including Corporate Vice President of Microsoft’s Industry Solutions Group, Worldwide Public Sector and North American Enterprise Sales organizations. Prior to joining Microsoft Corporation, Ms. Elliott spent 22 years at IBM Corporation, where she held several senior executive positions both in the U.S. and internationally. Since 2014 Ms. Elliott has served as a director on several public company boards including Whirlpool Corporation (since 2014), Bed Bath & Beyond, Inc. (2014-17), Imperva, Inc. (2015-18), Marvell Technology Group Ltd. (2017-18) and Mimecast Ltd. (2017-18), 10


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    and during this period she also founded and led the development of Broadrooms.com, an informational resource for executive women who serve or want to serve on corporate boards in the U.S. Ms. Kramer joined Cisco in January 2012 as Senior Vice President, Corporate Finance. She served in that position until October 2014 and served as Cisco’s Senior Vice President, Business Technology and Operations Finance from October 2013 until December 2014. She was appointed to her current position effective January 2015. From January 2009 until she joined Cisco, Ms. Kramer served as Vice President and Chief Financial Officer of GE Healthcare Systems. Ms. Kramer served as Vice President and Chief Financial Officer of GE Healthcare Diagnostic Imaging from August 2007 to January 2009 and as Chief Financial Officer of GE Healthcare Biosciences from January 2006 to July 2007. Prior to that, Ms. Kramer held various leadership positions with GE corporate and other GE businesses. She is a member of the board of directors of Gilead Sciences, Inc. On August 12, 2020, Ms. Kramer notified Cisco of her decision to resign from Cisco. She will continue to serve in her role until such time as a replacement is appointed. Ms. Martinez joined Cisco in April 2018. Prior to joining Cisco, she served in a variety of senior executive roles at Salesforce. com, inc. including President, Global Customer Success and Latin America from March 2016 to April 2018; President, Sales and Customer Success from February 2013 to March 2016; Executive Vice President and Chief Growth Officer from February 2012 to February 2013; and Executive Vice President, Customers for Life from February 2010 to February 2012. Ms. Martinez’s experience prior to Salesforce includes Corporate Vice President of Worldwide Services at Microsoft Corporation, President and Chief Executive Officer of Embrace Networks, Inc. and various senior leadership roles at Motorola, Inc. and AT&T Inc./Bell Laboratories. Ms. Martinez is a member of the board of directors of McKesson Corporation and was a member of the board of directors of Plantronics, Inc. from September 2015 to April 2018. Mr. Tan joined Cisco in December 2005, serving in manager-level and director-level positions within Cisco’s Sales and Managed Services functions until March 2008, at which time he joined Hewlett Packard Corporation as General Manager of its Communications and Media Solutions Group in Asia Pacific and Japan. In April 2009, Mr. Tan rejoined Cisco, serving as Sales Director in charge of Malaysia and Singapore, and in February 2013 he was promoted to Vice President, Sales with responsibility for the Southeast Asia region. In April 2014, Mr. Tan was promoted to Senior Vice President, Sales with responsibility for Cisco’s APJ geography. In January 2018, Mr. Tan was promoted to Senior Vice President, Chief of Operations, and was promoted to Executive Vice President, Chief of Operations effective as of July 28, 2019. Mr. Tan is a member of the board of directors of Stanley Black & Decker, Inc. 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. OUR BUSINESS, RESULTS OF OPERATIONS AND FINANCIAL CONDITION HAVE BEEN ADVERSELY AFFECTED AND COULD IN THE FUTURE BE MATERIALLY ADVERSELY AFFECTED BY THE COVID-19 PANDEMIC The COVID-19 pandemic and the resulting containment measures have caused economic and financial disruptions globally, including in most of the regions in which we sell our products and services and conduct our business operations. In the second half of fiscal 2020, the COVID-19 pandemic had an impact on our financial results and business operations, with a significant impact in the third quarter of fiscal 2020 on our supply chain where we saw manufacturing challenges and component constraints. The magnitude and duration of the disruption, its continuing impact on us, and resulting decline in global business activity is uncertain. These disruptions include the unprecedented actions taken to try to contain the pandemic such as travel bans and restrictions, business closures, and social distancing measures, such as quarantines and shelter-in-place orders. The COVID-19 pandemic and the responsive measures taken in many countries have adversely affected and could in the future materially adversely affect our business, results of operations and financial condition. Shelter-in-place orders and other measures, including work-from-home and other policies implemented to protect workers, has and could in the future impact our supply chain. Vendors may be under pressure to allocate product to certain customers for business, regulatory or political reasons, and/or demand changes in agreed pricing as a condition of supply. Such disruptions may continue, or worsen, in the future. In addition, current and future restrictions or disruptions of transportation, such as reduced availability of air transport, port closures, and increased border controls or closures, can also impact our ability to meet customer demand and could materially adversely affect us. Our customers have also experienced, and may continue to experience, disruptions in their operations, which can result in delayed, reduced, or canceled orders, and increased collection risks, and which may adversely affect our results of operations. The COVID-19 pandemic may also result in long-term changes in customer needs for our products and services in various sectors, along with IT- 11


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    related capital spending reductions, or shifts in spending focus, that could materially adversely affect us if we are unable to adjust our product and service offerings to match customer needs. The recent shift to a remote working environment also creates challenges. For example, governmental lockdowns, restrictions or new regulations has and could in the future impact the ability of our employees and vendors to work with the same speed and productivity in certain areas, even as other areas do not see negative impact. The extent and/or duration of ongoing workforce restrictions and limitations could impact our ability to enhance, develop and support existing products and services, and hold product sales and marketing events to the extent we were able to previously. In addition, malefactors are seeking to use the COVID-19 pandemic to launch new cyber-attacks. See the risk factors below entitled “Cyber-attacks, data breaches or malware may disrupt our operations, harm our operating results and financial condition, and damage our reputation, and cyber-attacks or data breaches on our customers’ networks, or in cloud-based services provided by or enabled by us, could result in claims of liability against us, damage our reputation or otherwise harm our business” and “Vulnerabilities and critical security defects, prioritization decisions regarding remedying vulnerabilities or security defects, failure of third party providers to remedy vulnerabilities or security defects, or customers not deploying security releases or deciding not to upgrade products, services or solutions could result in claims of liability against us, damage our reputation or otherwise harm our business.” The COVID-19 pandemic has also led to increased disruption and volatility in capital markets and credit markets. The pandemic and resulting economic uncertainty could adversely affect our liquidity and capital resources in the future. The inputs into certain of our judgments, assumptions, and estimates considered the economic implications of the COVID-19 pandemic on our critical and significant accounting estimates. The actual results that we experience may differ materially from our estimates. As the COVID-19 pandemic continues to develop, many of our estimates could require increased judgment and carry a higher degree of variability and volatility. As events continue to evolve our estimates may change materially in future periods. We are continuing to monitor the pandemic and take appropriate actions in accordance with the recommendations and requirements of relevant authorities. The extent of the impact of the COVID-19 pandemic on our operational and financial performance is currently uncertain and will depend on many factors outside our control, including, without limitation, the timing, extent, trajectory and duration of the pandemic, the development and availability of effective treatments and vaccines, the imposition of protective public safety measures, and the impact of the pandemic on the global economy. Potential negative impacts of these external factors include, but are not limited to, material adverse effects on demand for our products and services; our supply chain and sales and distribution channels; collectability of customer accounts; our ability to execute strategic plans; impairments; and our profitability and cost structure. To the extent the COVID-19 pandemic adversely affects our business, results of operations and financial condition, it may also have the effect of exacerbating the other risks discussed in this “Risk Factors” section. 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 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, and in emerging technologies, as well as the adoption of new standards • The transformation of our business to deliver more software and subscription offerings where revenue is recognized over time • Variations in sales channels, product costs, mix of products sold, or mix of direct sales and indirect sales 12


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    • 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 • 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 • 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 continues to be challenging and inconsistent, and is being significantly impacted by the COVID-19 pandemic. During fiscal 2020, we continued to see a more broad-based weakening in the global macroeconomic environment which impacted our commercial and enterprise markets. We also experienced continuing weakness in the service provider market and emerging countries, and we expect ongoing uncertainty in these markets. Additionally, instability in the global credit markets, the impact of uncertainty regarding global central bank monetary policy, the instability in the geopolitical environment in many parts of the world including as a result of the United Kingdom “Brexit” withdrawal from the European Union, the current economic challenges in China, including global economic ramifications of Chinese economic difficulties, 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. 13


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    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, emerging countries in the aggregate experienced a decline in product orders in fiscal 2020, and in certain prior periods. 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 PRIORITY AND GROWTH AREAS AS WELL AS MAINTAINING LEADERSHIP IN INFRASTRUCTURE PLATFORMS AND IN 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 priority and growth areas, such as Security and Applications, while also focusing on maintaining leadership in Infrastructure Platforms and in 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. 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, the significant impacts of the COVID-19 pandemic, and related market uncertainty. During fiscal 2020, we continued to see a more broad-based weakening in the global macroeconomic environment which impacted our commercial and enterprise markets. We also experienced continuing weakness in the service provider market and emerging countries, and we expect ongoing uncertainty in these markets. Our revenue may grow at a slower rate than in past periods or decline as it did during fiscal 2020, and in certain prior periods 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 more variability and less predictability in our 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. 14


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    WE EXPECT GROSS MARGIN TO VARY OVER TIME, AND OUR LEVEL OF PRODUCT GROSS MARGIN MAY NOT BE SUSTAINABLE Although our product gross margin increased in fiscal 2020, our level of product gross margins declined in the fourth quarter of fiscal 2020 and have declined in certain prior periods on a year-over-year basis, and could decline in future periods due to adverse impacts from various 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 including the transformation of our business to deliver more software and subscription offerings • 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 such as those impacting the market for memory components • Excess inventory and inventory holding charges • Obsolescence charges • Changes in shipment volume • The timing of revenue recognition and revenue deferrals • Increased cost (including those caused by tariffs), 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 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 other Infrastructure Platforms and Applications products, in addition to longer sales cycles. Service provider product orders decreased during fiscal 2020 and in certain prior periods, and at various times in the past, including in recent quarters, we have experienced significant weakness in product orders from service providers. Product orders from the service provider market could continue to decline and, as has been the case in the past, such weakness could persist over extended periods of time given fluctuating market conditions. 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, 15


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    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, political or regulatory 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 sales to the end customer. 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 areas, and in key priority and growth areas. For example, as products related to network programmability, such as software defined networking (SDN) products, become more prevalent, we expect to face increased competition from companies that develop networking products based on commoditized hardware, referred to as “white box” hardware, to the extent customers decide to purchase those product 16


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    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. For information regarding our competitors, see the section entitled “Competition” contained in Item 1. Business of this report. Some of our competitors 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 which 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, ASICs offering advanced services, standards based protocols, cloud computing and virtualization, the convergence of technologies within the enterprise 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 sell successful business outcomes • The ability to provide a broad range of networking and communications products and services • Product performance • Price • The ability to introduce new products, including providing continuous new customer value and 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. 17


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    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 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. Our distributors 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. 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 • Industry consolidation occurring within one or more component supplier markets, such as the semiconductor market, could either limit supply or increase costs A reduction or interruption in supply, including disruptions on our global supply chain as a result of the COVID-19 pandemic; 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 including capacity or cost problems resulting from industry consolidation, 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 18


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    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 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 14 to the Consolidated Financial Statements. WE DEPEND UPON THE DEVELOPMENT OF NEW PRODUCTS AND SERVICES, AND ENHANCEMENTS TO EXISTING PRODUCTS AND SERVICES, 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 and services are characterized by rapidly changing technology, evolving industry standards, new product and service introductions, and evolving methods of building and operating networks. Our operating results depend on our ability to develop and introduce new products and services into existing and emerging markets and to reduce the production costs of existing products. If customers do not purchase and/or renew our offerings our business could be harmed. The COVID-19 pandemic may also result in long-term changes in customer needs for our products and services in various sectors, along with IT-related capital spending reductions, or shifts in spending focus, that could materially adversely affect us if we are unable to adjust our product and service offerings to match customer needs. The process of developing new technology, including intent-based networking, more programmable, flexible and virtual networks, and technology related to other market transitions— such as security, digital transformation and IoT, 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 strategic priorities to developing new products and services before knowing whether our investments will result in products and services 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. In addition, our business could be adversely affected in periods surrounding our new product introductions if customers delay purchasing decisions to qualify or otherwise evaluate the new product offerings. 19


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    We have also been transforming our business to move from selling individual products and services to selling products and services integrated into architectures and solutions, and we are seeking to meet the evolving needs of customers which include offering our products and solutions in the manner in which customers wish to consume them. As a part of this transformation, we continue to make changes to how we are organized and how we build and deliver our technology, including changes in our business models with customers. If our strategy for addressing our customer needs, or the architectures and solutions we develop do not meet those needs, or the changes we are making in how we are organized and how we build and deliver or technology is incorrect or ineffective, our business could be harmed. 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 and services depends on several factors, including proper new product and service definition, component costs, timely completion and introduction of these products and services, differentiation of new products and services from those of our competitors, and market acceptance of these products and services. There can be no assurance that we will successfully identify new product and services opportunities, develop and bring new products and services to market in a timely manner, or achieve market acceptance of our products and services or that products, services and technologies developed by others will not render our products, services or technologies obsolete or noncompetitive. The products and technologies in our other product categories and key priority and 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 and services. 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. We initiated a restructuring plan in the first quarter of fiscal 2021, which includes a voluntary early retirement program. 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 priority and growth areas, such as Security and Applications, and we also intend to focus on maintaining leadership in Infrastructure Platforms and in 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. 20


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    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 market transitions, 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 anticipated market transitions, 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 • 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 • 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 legal structure • Incur large write-offs and restructuring and other related expenses • Become subject to intellectual property or other litigation 21


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    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. 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. See the risk factors above, including the risk factor entitled “We depend upon the development of new products and services, and enhancements to existing products and services, 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 priority and 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 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, 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 2017 we recorded a charge to product cost of sales of $125 million related to the expected remediation costs for anticipated failures in future periods of a widely-used component sourced from a third party which is included in several of our products, and 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. 22


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    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. Our business in emerging countries in the aggregate experienced a decline in orders in fiscal 2020, and in certain prior periods. We continue to assess the sustainability of any improvements in our business in these countries and there can be no assurance that our investments in these countries will be successful. 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 global central bank monetary policy; issues related to the political relationship between the United States and other countries that can affect regulatory matters, affect the willingness of customers in those countries to purchase products from companies headquartered in the United States or affect our ability to procure components if a government body were to deny us access to those components; government-related disruptions or shutdowns; 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, including the current economic challenges in China and global economic ramifications of Chinese economic difficulties; instability as a result of Brexit; environmental protection measures, trade protection measures such as tariffs, 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 or affect our ability to procure components • Political considerations that affect service provider and government spending patterns • Health or similar issues, including pandemics or epidemics such as the COVID-19 pandemic which could continue to affect customer purchasing decisions • 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 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 23


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    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. Our portfolio includes available-for-sale debt investments and equity investments, the values of which are subject to market price volatility. 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. Our non-marketable equity and other investments 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. For information regarding the market risks associated with the fair value of portfolio investments and interest rates, refer to the section titled “Quantitative and Qualitative Disclosures About Market Risk.” 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- 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. 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 24


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    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 14(e) to the Consolidated Financial Statements contained in this report. 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 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 “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. 25


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    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 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. The asserted claims by Brazilian federal tax authorities which remain are for calendar years 2003 through 2007, and the asserted claims by the tax authorities from the state of Sao Paulo are for calendar years 2005 through 2007. The total remaining asserted claims by Brazilian state and federal tax authorities aggregate to $155 million for the alleged evasion of import and other taxes, $756 million for interest, and $383 million for various penalties, all determined using an exchange rate as of July 25, 2020. 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 Note 14 to the Consolidated Financial Statements, subsection (f) “Legal Proceedings.” 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 changes to domestic manufacturing deduction, foreign-derived intangible income, global intangible low-tax income and base erosion and anti-abuse tax laws, regulations, or interpretations thereof; by expiration of or lapses in tax incentives; by transfer pricing adjustments, including the effect of acquisitions on our 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 changes to the taxation of earnings of our foreign subsidiaries, the deductibility of expenses attributable to foreign income, and 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 comprised of 37 countries, including the United States, has made changes to numerous long-standing tax principles. There can be no assurance that these changes, once adopted by countries, will not have an adverse impact on 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 was subject to reduced tax rates. 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. 26


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    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 been 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. CYBER-ATTACKS, DATA BREACHES OR MALWARE MAY DISRUPT OUR OPERATIONS, HARM OUR OPERATING RESULTS AND FINANCIAL CONDITION, AND DAMAGE OUR REPUTATION, AND CYBER- ATTACKS OR DATA BREACHES ON OUR CUSTOMERS’ NETWORKS, OR IN CLOUD-BASED SERVICES PROVIDED BY OR ENABLED BY US, COULD RESULT IN CLAIMS OF LIABILITY AGAINST US, DAMAGE OUR REPUTATION OR OTHERWISE HARM OUR BUSINESS Despite our implementation of security measures, the products and services we sell to customers, and our servers, data centers and the cloud-based solutions on which our data, and data of our customers, suppliers and business partners are stored, are vulnerable to cyber-attacks, data breaches, malware, and similar disruptions from unauthorized access or tampering by malicious actors or inadvertent error. Any such event could compromise our products, services, and networks or those of our customers, and the information stored on our systems or those of our customers could be improperly accessed, processed, disclosed, lost or stolen, which could subject us to liability to our customers, suppliers, business partners and others, give rise to legal/regulatory action, and could have a material adverse effect on our business, operating results, and financial condition and may cause damage to our reputation. Efforts to limit the ability of malicious actors to disrupt the operations of the Internet or undermine our own security efforts may be costly to implement and meet with resistance, and may not be successful. Breaches of security in our customers’ networks, or in cloud-based services provided by or enabled by us, regardless of whether the breach is attributable to a vulnerability in our products or services, could result in claims of liability against us, damage our reputation or otherwise harm our business. VULNERABILITIES AND CRITICAL SECURITY DEFECTS, PRIORITIZATION DECISIONS REGARDING REMEDYING VULNERABILITIES OR SECURITY DEFECTS, FAILURE OF THIRD PARTY PROVIDERS TO REMEDY VULNERABILITIES OR SECURITY DEFECTS, OR CUSTOMERS NOT DEPLOYING SECURITY RELEASES OR DECIDING NOT TO UPGRADE PRODUCTS, SERVICES OR SOLUTIONS COULD RESULT IN CLAIMS OF LIABILITY AGAINST US, DAMAGE OUR REPUTATION OR OTHERWISE HARM OUR BUSINESS The products and services we sell to customers, and our cloud-based solutions, inevitably contain vulnerabilities or critical security defects which have not been remedied and cannot be disclosed without compromising security. We may also make prioritization decisions in determining which vulnerabilities or security defects to fix, and the timing of these fixes, which could result in an exploit which compromises security. Customers also need to test security releases before they can be deployed which can delay implementation. In addition, we rely on third-party providers of software and cloud-based service and we cannot control the rate at which they remedy vulnerabilities. Customers may also not deploy a security release, or decide not to upgrade to the latest versions of our products, services or cloud-based solutions containing the release, leaving them vulnerable. Vulnerabilities and critical security defects, prioritization errors in remedying vulnerabilities or security defects, failure of third-party providers to remedy vulnerabilities or security defects, or customers not deploying security releases or deciding not to upgrade products, services or solutions could result in claims of liability against us, damage our reputation or otherwise harm our business. TERRORISM AND OTHER EVENTS MAY HARM OUR BUSINESS, OPERATING RESULTS AND FINANCIAL CONDITION 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 loss of infrastructure and utilities services such as energy, transportation, or telecommunications 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. 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 in the past 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 27


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    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 fiscal 2020, we have senior unsecured notes outstanding in an aggregate principal amount of $14.5 billion that mature at specific dates from calendar year 2021 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 $10.0 billion, and we had no commercial paper notes outstanding under this program as of July 25, 2020. The outstanding senior unsecured notes bear fixed-rate interest payable semiannually. 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. 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. 28


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    Item 1B. Unresolved Staff Comments None. Item 2. Properties Our corporate headquarters are located at an owned site in San Jose, California, in the United States of America. The locations of our headquarters by geographic segment are as follows: Americas EMEA APJC San Jose, California, USA Amsterdam, Netherlands Singapore In addition to our headquarters site, we own additional sites in the United States, which include facilities in the surrounding areas of San Jose, California; Research Triangle Park, North Carolina; Richardson, Texas; Lawrenceville, Georgia; and Boxborough, Massachusetts. We also own land for expansion in some of these locations. In addition, we lease office space in many U.S. locations. Outside the United States our operations are conducted primarily in leased sites. Other significant sites (in addition to the two non-U.S. headquarters locations) are located in Australia, Belgium, Canada, China, Germany, India, Japan, Mexico, Poland, and the United Kingdom. We believe that our existing facilities, including both owned and leased, are in good condition and suitable for the conduct of our business. Item 3. Legal Proceedings For a description of our material pending legal proceedings, see Note 14 “Commitments and Contingencies - (f) Legal Proceedings” of the Notes to Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K, which is incorporated herein by reference. Item 4. Mine Safety Disclosures Not applicable. 29


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    PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities (a) Cisco common stock is traded on the Nasdaq Global Select Market under the symbol CSCO. Information regarding quarterly cash dividends declared on Cisco’s common stock during fiscal 2020 and 2019 may be found in Supplementary Financial Data on page 104 of this report. There were 37,920 registered shareholders as of August 28, 2020. (b) None. (c) Issuer purchases of equity securities (in millions, except per-share amounts): Approximate Dollar Value of Shares Total Total Number of Shares That May Yet Be Number of Purchased as Part of Purchased Under Shares Average Price Paid Publicly Announced the Plans or Period Purchased per Share Plans or Programs Programs April 26, 2020 to May 23, 2020 . . . . . . . . . . . . . . . . . — $ — — $ 10,841 May 24, 2020 to June 20, 2020 . . . . . . . . . . . . . . . . . — $ — — $ 10,841 June 21, 2020 to July 25, 2020 . . . . . . . . . . . . . . . . . . — $ — — $ 10,841 Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — $ — — On September 13, 2001, we announced that our Board of Directors had authorized a stock repurchase program. As of July 25, 2020, the remaining authorized amount for stock repurchases under this program, including the additional authorization, is approximately $10.8 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 15 to the Consolidated Financial Statements). 30

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