Cisco 2005 Annual Report Download - page 63

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66
Employee 401(k) Plans
The Company sponsors the Cisco Systems, Inc. 401(k) Plan (the “Plan”) to provide retirement benefits for its employees. As allowed
under Section 401(k) of the Internal Revenue Code, the Plan provides tax-deferred salary contributions for eligible employees.
The Company also has other 401(k) plans that it sponsors. These plans arose from acquisitions of other companies and are not
material to the Company on either an individual or aggregate basis.
Employees can contribute from 1% to 25% of their annual compensation to the Plan. Employee contributions are limited to
a maximum annual amount as set periodically by the Internal Revenue Code. Through December 31, 2002, the Company matched
employee contributions dollar for dollar up to a maximum of $1,500 per person per year. Effective January 1, 2003, the Company
began matching employee contributions up to 50% of the first 6% of eligible earnings that are contributed by employees. Therefore,
the maximum matching contribution that the Company may allocate to each participant’s account will not exceed $6,300 for the
2005 calendar year due to the $210,000 annual limit on eligible earnings imposed by the Internal Revenue Code. All matching
contributions vest immediately. The Company’s matching contributions to the Plan totaled $84 million, $81 million, and $40 million
in fiscal 2005, 2004, and 2003, respectively.
Effective January 1, 2004, employees who meet the age requirements and reach the Plan contribution limits can make a catch-up
contribution not to exceed the lesser of 50% of their eligible compensation or the limit set forth in the Internal Revenue Code.
The catch-up contributions are not eligible for matching contributions.
In addition, the Plan provides for discretionary profit-sharing contributions as determined by the Board of Directors. Such
contributions to the Plan are allocated among eligible participants in the proportion of their salaries to the total salaries of all
participants. There were no discretionary profit-sharing contributions made in fiscal 2005, 2004, or 2003.
11. Income Taxes
The provision for income taxes consisted of the following (in millions):
 July 30, 2005   

 $ 1,340    
 497   
1,837   

 496    
 (292)   
204    

 404    
 (150)    
254    
 $ 2,295   
The Company paid income taxes of $1.266 billion, $644 million, and $1.424 billion in fiscal 2005, 2004, and 2003, respectively. Income
before provision for income taxes consisted of the following (in millions):
 July 30, 2005   
 $ 7,028   
 1,008    
 $ 8,036   
Notes to Consolidated Financial Statements