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Notes to Consolidated Financial Statements
32 Cisco Systems, Inc. 2002 Annual Report
In July 2002, the FASB issued Statement of Financial Accounting Standards No. 146, “Accounting for Costs Associated with
Exit or Disposal Activities” (“SFAS 146”). SFAS 146 requires that a liability for costs associated with an exit or disposal activity
be recognized and measured initially at fair value only when the liability is incurred. SFAS 146 is effective for exit or disposal
activities that are initiated after December 31, 2002. The Company does not expect the adoption of SFAS 146 to have a material
impact on its operating results or financial position.
Reclassifications Certain reclassifications have been made to prior year balances in order to conform to the current year presentation.
3. Business Combinations
Purchase Combinations
During the year ended July 27, 2002, the Company completed a number of purchase acquisitions which are summarized as follows
(in millions):
Consideration Purchased
Including Assumed In-Process Intangible
Acquired Company Liabilities R&D Expense Goodwill Assets
Allegro Systems, Inc. $ 164 $ 28 $ 19 $ 105
AuroraNetics, Inc. 51 9 16 14
Hammerhead Networks, Inc. 175 27 105 –
Navarro Networks, Inc. 85 1 73 –
Total $ 475 $ 65 $ 213 $ 119
The Company acquired Allegro Systems, Inc. to enhance its existing virtual private network (VPN) and security solutions. The
Company acquired AuroraNetics, Inc. to enhance its development of high-end routing technologies in the metropolitan network
environment. The Company acquired Hammerhead Networks, Inc. to augment its Internet Protocol aggregation portfolio consisting
of cable, broadband, and leased-line products. The Company acquired Navarro Networks, Inc. to complement its continued
development of Ethernet switching solutions.
In connection with the acquisition of AuroraNetics, Inc., the Company may be required to pay certain additional amounts of
up to $100 million, payable in common stock and to be accounted for under the purchase method, contingent upon the company
achieving certain agreed-upon technology and other milestones.
A summary of the purchase transactions completed in fiscal 2001 and 2000 is outlined as follows (in millions):
Consideration Purchased
Including Assumed In-Process Intangible
Acquired Company Liabilities R&D Expense Goodwill Assets
FISCAL 2001
IPmobile, Inc. $ 422 $ 181 $ 144 $ 13
NuSpeed, Inc. 463 164 212 2
IPCell Technologies, Inc. 213 75 73 29
PixStream Incorporated 395 67 170 145
Active Voice Corporation 266 37 151 99
Radiata, Inc. 211 29 71 99
Other 903 302 150 237
Total $2,873 $ 855 $ 971 $624
FISCAL 2000
Monterey Networks, Inc. $ 517 $ 354 $ 102 $ 52
The optical systems business of Pirelli S.p.A. 2,018 245 1,426 291
Aironet Wireless Communications, Inc. 835 243 400 189
JetCell, Inc. 203 88 67 70
Qeyton Systems 887 260 540 27
Other 509 183 245 90
Total $4,969 $ 1,373 $ 2,780 $719