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Cisco Systems Acquiring Scientific-Atlanta

Cisco Systems Inc., the worldwide leader in networking for the Internet, signed a definitive agreement to acquire Scientific-Atlanta Inc. Scientific-Atlanta is a leading global provider of set-top boxes, end-to-end video distribution networks and video system integration. The combined entity creates a world-class universal digital communicator for watching video, making phone calls and shopping online.

San Jose, California-based Cisco has agreed to pay $43 per share in cash in exchange for each share of Scientific-Atlanta, and assume outstanding options, for an aggregate purchase price of approximately $6.9 billion, or approximately $5.3 billion net of Scientific-Atlanta's existing cash balance, be financed with a combination of cash and debt. The transaction is expected to close in the third quarter of Cisco's fiscal year 2006.

Cisco joins Google, Yahoo and other Silicon Valley companies quickly advancing and developing technologies that are changing the way people get their news and entertainment. Observers say Cisco is expected to play a big role in emerging services to deliver television programs over the Internet. Telcoms plan to use the technology to offer an alternative to cable and satellite TV.

"Video is emerging as the key strategic application in the service provider triple play bundle of consumer entertainment, communication and online services," said John Chambers, president/ceo of Cisco Systems. "The combination of Cisco and Scientific-Atlanta brings unmatched experience and innovation in delivering large scale video systems and networks, and the addition of Scientific-Atlanta further extends Cisco's commitment to and leadership in the service provider market. Moreover, Cisco's international presence and IP leadership will also create strategic synergies that accelerate the combined growth opportunity."

Chambers continued, "As consumers demand more sophisticated information and entertainment services in their home, tightly coupled applications, devices and networks will be essential. The collective strength of Linksys and Scientific-Atlanta will extend Cisco's leadership position across the entire networked digital home."

"The combined strengths and resources of our two companies will position us to address more quickly the growing number of opportunities in the markets we serve and enable us to create new products and services that might not have existed otherwise," said Jim McDonald, chairman/ceo/president of Scientific-Atlanta.

Scientific-Atlanta has platforms and technologies that enable scaling to millions of subscribers quickly and easily. This, along with the Cisco IP Next Generation Network architecture, will allow providers to move beyond video/IPTV to develop and deliver a variety of integrated media services in the connected home.

Following the close of the transaction, Scientific-Atlanta will become a division of the Routing and Service Provider Technology Group, under the leadership of Cisco svp Mike Volpi, who McDonald will report directly to.

Lawrence, Georgiabased Scientific-Atlanta was founded in 1951 and held its Initial Public Offering (IPO) on July 29, 1959. The company has more than 7,500 employees. For FY2005, which ended July 1, 2005, Scientific-Atlanta reported revenues of $1.91 billion.

Scientific-Atlanta has agreed to file a proxy statement in connection with the proposed acquisition. The proxy statement will be mailed to the shareholders of Scientific-Atlanta. Investors and security holders may obtain free copies of these documents (when they are available) and other documents filed with the Securities and Exchange Commission at the SEC's web site at www.sec.gov. In addition, investors and security holders may obtain free copies of the documents filed with the SEC by Scientific-Atlanta by going to Scientific-Atlanta's Investor Relations page on its corporate website at www.scientificatlanta.com.

Cisco (www.cisco.com) was founded in 1984 by a small group of computer scientists from Stanford University. Since the company's inception, Cisco engineers have been leaders in the development of Internet Protocol (IP)-based networking technologies. Today, with more than 34,000 employees worldwide, this tradition of IP innovation continues with industry-leading products in the core areas of routing and switching, as well as advanced technologies in areas such as: Home Networking, Optical, Storage Networking, IP Telephony, Network Security and Wireless LAN.

Information concerning Cisco's directors and executive officers is set forth in Cisco's proxy statement for its 2005 annual meeting of shareholders, which was filed with the SEC on Sept. 26, 2005, and annual report on Form 10-K filed with the SEC on September 19, 2005. These documents are available free of charge at the SEC's website at www.sec.gov or by going to Cisco's Investor Relations website at www.cisco.com/go/investors.

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