LERACH COUGHLIN STOIA GELLER RUDMAN & ROBBINS LLPsecurities.stanford.edu/filings-documents/1018/CSCO01/... · 2006-06-14 · Exhibit R: Excerpts from the deposition of Mrinalini Ingram

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LERACH COUGHLIN STOIA GELLER RUDMAN & ROBBINS LLP WILLIAM S. LERACH (68581) SPENCER A. BURKHOLZ (147029) DANIEL S. DROSMAN (200643) JONAH H. GOLDSTEIN (193777) MATTHEW P. MONTGOMERY (180196) LUCAS F. OLTS (234843) JESSICA D. TALLY (234432) 655 West Broadway, Suite 1900 San Diego, CA 92101 Telephone: 619/231-1058 619/231-7423 (fax) [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected]

– and – PATRICK J. COUGHLIN (111070) LESLEY E. WEAVER (191305) 100 Pine Street, Suite 2600 San Francisco, CA 94111 Telephone: 415/288-4545 415/288-4534 (fax) [email protected] [email protected]

LEVIN, PAPANTONIO, THOMAS, MITCHELL, ECHSNER & PROCTOR, P.A. TIMOTHY M. O’BRIEN (pro hac vice) 316 South Baylen Street, Suite 600 Pensacola, FL 32501 Telephone: 850/435-7000 850/497-7057 (fax)

Co-Lead Counsel for Plaintiffs

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

In re CISCO SYSTEMS, INC. SECURITIES LITIGATION

This Document Relates To:

ALL ACTIONS.

) ) ) ) ) ) ) )

Master File No. C-01-20418-JW(PVT)

CLASS ACTION

DECLARATION OF LESLEY E. WEAVER IN RESPONSE TO DEFENDANT PRICEWATERHOUSECOOPERS LLP’S EVIDENTIARY OBJECTIONS TO MATERIAL CITED IN SUPPORT OF PLAINTIFFS’ OPPOSITIONS TO MOTIONS FOR SUMMARY JUDGMENT

DATE: June 13, 2006 TIME: 9:00 a.m. COURTROOM: Hon. James Ware

Case 5:01-cv-20418-JW Document 557 Filed 06/06/2006 Page 1 of 8

DECLARATION OF LESLEY E. WEAVER - C-01-20418-JW(PVT) - 1 -

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I, LESLEY E. WEAVER, declare as follows:

1. I am an attorney duly licensed to practice before all of the courts of the State of

California and this Court. I am a member of the law firm of Lerach Coughlin Stoia Geller Rudman

& Robbins LLP, one of the counsel of record for plaintiff in the above-entitled action. I have

personal knowledge of the matters stated herein and, if called upon, I could and would competently

testify thereto.

2. Attached are true and correct copies of the following exhibits:

Exhibit A: March 11, 2005 Order: (1) Granting Plaintiffs’ Motion to Compel Documents Responsive to Document Request No. 68; (2) Granting in Part and Denying in Part Plaintiffs’ Motion to Compel Production of Documents Relating or Referring to the Relevant Period; and (3) Granting in Part and Denying in Part Plaintiffs’ Motion to Compel Defendants to Answer Interrogatory No. 5;

Exhibit B: Excerpts from the deposition of Nghia Tran;

Exhibit C: Excerpts from the deposition of James MacCallum;

Exhibit D: Excerpts from the deposition of Cynthia Smith;

Exhibit E: Excerpts from the deposition of Phuc Tran;

Exhibit F: Excerpts from the deposition of Rory Snyder;

Exhibit G: Excerpts from the deposition of Edward Kozel;

Exhibit H: Excerpts from the deposition of Mrinalini Ingram of September 14, 2005;

Exhibit I: Stipulation Regarding the Authenticity of Handwriting on Exhibit 63;

Exhibit J: Excerpts from the deposition of Michael Jerome;

Exhibit K: Excerpts from the deposition of Brian Fukuhara;

Exhibit L: Letter from Kevin Young to Matt Montgomery, dated November 2, 2005;

Exhibit M: Letter from Lesley Weaver to Felix Lee, dated November 4, 2005;

Exhibit N: Excerpts from the deposition of Clifford Pike;

Exhibit O: Excerpts from the deposition of Erik Alberts;

Exhibit P: Excerpts from the deposition of Kevin Kennedy;

Exhibit Q: Excerpts from the deposition of Richard Justice;

Exhibit R: Excerpts from the deposition of Mrinalini Ingram of December 8, 2004;

Exhibit S: Excerpts from the deposition of Donald Listwin; and


DECLARATION OF LESLEY E. WEAVER - C-01-20418-JW(PVT) - 2 -

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Exhibit T: Excerpts from the deposition of Kevin DeNuccio.

I declare under penalty of perjury under the laws of the United States that the foregoing is

true and correct. Executed this 6th day of June, 2006, at San Francisco, California.

s/ LESLEY E. WEAVER LESLEY E. WEAVER

S:\CasesSD\Cisco\DEC00031591.doc


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CERTIFICATE OF SERVICE

I hereby certify that on June 6, 2006, I electronically filed the foregoing with the Clerk of the

Court using the CM/ECF system which will send notification of such filing to the e-mail addresses

denoted on the attached Electronic Mail Notice List, and I hereby certify that I have mailed the

foregoing document or paper via the United States Postal Service to the non-CM/ECF participants

indicated on the attached Manual Notice List.

I further certify that I caused this document to be forwarded to the following designated

Internet site at: http://securities.lerachlaw.com/.

s/ LESLEY E. WEAVER LESLEY E. WEAVER

LERACH COUGHLIN STOIA GELLER

RUDMAN & ROBBINS LLP 655 West Broadway, Suite 1900 San Diego, CA 92101 Telephone: 619/231-1058 619/231-7423 (fax) E-mail: [email protected]


Mailing Information for a Case 5:01-cv-20418-JW

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The following are those who are currently on the list to receive e-mail notices for this case.

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J. Erik Connolly Winston & Strawn LLP West Wacker Drive Chicago, IL 60601-9703 Frederick W. Gerkens, III Wechsler Harwood Halebian & Feffer, LLP 488 Madison Avenue, 8th Floor New York,, NY 10022 John Halebian Wechsler Harwood Halebian & Feffer LLP 488 Madison Avenue 8th Floor New York, NY 10022 Corey D. Holzer Holzer Holzer & Cannon LLC 1117 Perimeter Center West Suite E-107 Atlanta, GA 30338 Peter Lawrence Kaufman Levin Papantonio Thomas Mitchell Echsner 316 South Baylen Street, Suite 600 Pensacola, FL 32502 Frederick T. Kuykendall Levin Papantonio Thomas Mitchell Echsner 316 South Baylen Street, Suite 600 Pensacola, Fl 32501 Christopher R. Leclerc Heller Ehrman LLP 275 Middlefield Road Menlo Park, Ca 94025-3506 Fredric G. Levin Levin PapantonioThomas Mitchell Echsner 316 South Baylen Street, Suite 600 Pensacola, fL 32501 Timothy M. O'Brien Levin Papantonio Thomas Mitcgell Echsner


316 South Baylen Street, Suite 600 Pensacola, Fl 32501 J. Papantonio Papantonio Levin, Papantonio, Thomas, Mitchell, Ech 316 South Baylen Street, Suite 600 Pensacola,, Fl 32501 Troy A. Rafferty Levin Papantonio Thomas Mitchell Echsner 600 West Broadway, Suite 1800 San Diego, Ca 92101 Joe Scarborough Levin, Papantonio, Thomas, Mitchell, Ech 316 South Baylen Street, Suite 600 Pensacola,, Fl 32501 Robert E. Smith, JR Levin Papantonio thomas Mitchell Echsner 316 South Baylen St., Ste 400 Pensacola, FL 32502 Melvyn I. Weiss Attorney at Law One Pennsylvania Plaza New York, NY 10119-1063


EXHIBIT A

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IYU, I L)O r • 0/ ( U

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNI A

SAN JOSE DIVISION

In re CISCO SYSTEMS, INC.SECURITIES LITIGATION

Master File No. C-01-20418 -JW (PVT)

CLASS ACTION

This Document Relates To :

ALL ACTIONS.

ORDER.: (1) GRANTINGPLAINTIFFS' MOTION TO COMPELDOCUMENTS RESPONSIVE TODOCUMENT REQUEST NO. 68;(2) GRANTING IN PART AND DENYING INPART PLAINTIFFS' MOTION TO COMPELPRODUCTION OF DOCUMENTS RELATINGOR. REFERRING TO THE RELEVANTPERIOD; AND (3) GRANTING IN PART ANDDENYING IN PART PLAINTIFFS' MOTIONTO COMPEL DEPENDANTS TO ANSWERINTERROGATORY NO. 5

24367/004021SF/5 138746.1

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Plaintiffs' Motion to Compel Production of a Complete Set ofUnredacted Documents

Responsive to Document Request No . 68, Motion to Compel Production of Documents Relating

or Referring to the Relevant Period, and Motion to Compel Defendants to Answer Interrogatory

No . 5 came before this Court for a hearing on March 3, 2005 at 10:30 am. After consideration of

the briefs, declarations, exhibits and oral arguments of counsel, and all other matters presented to

the Court and good cause appearing, IT IS HEREBY ORDERED that : (1) Plaintiffs' Motion to

Compel Production of a Complete Set of Unredacted Documents Responsive to Document

Request No. 68 is Granted; (2) Plaintiffs' Motion to Compel Production of Documents Relating

or Referring to the Relevant Period is GRANTED IN PART and DENIED IN PART; and (3)

plaintiffs' Motion to Compel Defendants to Answer Interrogatory No . 5 is GRANTED IN PART

and DENIED IN PART .

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1 . Defendants shall produce all non-privileged documents responsive to plaintiffs'

Document Request No. 68 by March 25, 2005 . Defendants shall not withhold or redact any of

these documents on relevance grounds. Any documents responsive to Document Request No . 68

that already have been redacted on relevance grounds shall be provided to plaintiff's in unredacted

form.

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(b) Larry R. Carter;

(c) Gary R. Daichendt;

(d) Carl Redfield ;

(e) Donald J. Listwin ;

(f) Donald T. Valentine;

(g) Edward R. Kozel ;

(h) Michaelangelo Volpi ;

(I) Judith L. Estrin;

2. With regard to plaintiffs' Interrogatory No. 5, defendants shall identify all

documents, by Bates range, produced from the electronic or hard-copy files of each of the

following individual defendants :

(a) John T. Chambers ;

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224367/0 0402 /S'/5138746.1

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0) Carol A. Bartz;

(Ir) Steven M. West; and

(1) Robert L . Puette .

Defendants shall provide plaintiffs with the specified information for each defendant at least 28

days prior to the deposition of that defendant . Defendants shall also provide plaintiffs with the

sources of an additional 500 documents, which plaintiffs shall identify by Bates number .

Defendants shall provide plaintiffs with the source for each document so identified within 28

days. This ruling is without prejudice to plaintiffs' right to seek source information for additional

documents or persons. Except as so ordered in this paragraph, the motion to compel a fiuther

response to Interrogatory No . 5 is denied.

3. With respect to plaintiffs' motion to compel documents created or generated

outside the Relevant Period (811198 through 5131/01), the Court finds that documents are not

irrelevant or outside the scope of discovery merely because they were created or generated prior

to the Relevant Period, or after the Relevant Period . Defendants shall not withhold or redact

information solely because the date of its creation or generation predates or postdates the

Relevant Period . The defendants are not required to engage in another wholesale company search

for responsive information outside the Relevant Period at this time . However, Defendants remain

under a continuing obligation to undertake reasonable searches at locations where responsive

information is likely to be found and supplement prior productions of documents in accordance

with Rule 26 (e) F.R.Civ.P. Plaintiffs' motion to compel production of documents created

outside the Relevant Period is granted only to the extent set forth above .

IT IS SO ORDERED .

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Dated: March 11, 2005

3

1E HONORABLE ED'SPECIAL DISCOVERY

24367100402/5E15138746I

[tiOl •k T - L V V V V•V jrITl 11U-IIJ 0 r . /I U

PROOF OF SERVICE BY MAIL & FACSIMIL E

T, Sandra Chan, not a party to the within action, hereby declare that on March 14,

2005, 1 served the attached Order Granting Cisco Systems, Inc . and Larry Carter`s Motions to

Compel and Order : (1) Granting Plaintiffs' Motion to Compel Documents Responsive to

Document Request No . 68 ; (2) Granting In Part and Denying In Part Plaintiffs' Motion to

Compel Production of Documents Relating or Referring to the Relevant Period ; and (3) Granting

In Part and Denying In Part Plaintiffs' Motion to Compel Defendants to Answer Interrogatory

No. 5 on the parties in the within action by facsimile and depositing true copies thereof enclosed

in sealed envelopes with certified postage thereon fally prepaid, in the United States Mail, in San

Francisco, California, addressed as follows :

Matthew P . Montgomery Esq . Kevin Peter Muck Esq .Lerach, Coughlin, Stoia, Geller, Rudman & Robbins LLPFenwick & West LLP401 B St. Embarcadero Center WestSuite 1600 275 Battery Street , Suite 1500San Diego , CA 92101-4297 San Francisco , CA 94111 USA

Norman J . Blears Esq .Heller, Ehrman, White & McAuliffeRobbins LLP275 Middlefield Rd.Menlo Park, CA 94025 USA

Daniel Drosman. Esq .Leach, Coughlin, Stoia, Geller , Rudman. &

401 B St.Suite 1600San Diego , CA 92101-4297

Alice L . Jensen Esq.Fenwick & West LLPEmbarcadero Center W est275 Battery Street, Suite 1500San Francisco , CA 94111 USA

1 . Michael Papantonio Esq .Levin, Papantonio, et al .316 S . Baylen St .Suite 600Pensacola , FL 32501 USA

Frederick T. Kuykendall Esq.Levin, Papantonio, et al.316 S. Baylen St .Suite 600Pensacola, 'FL 32501 USA

Timothy M. O'Brien Esq.Levin, Papantonio, et al .316 S. Baylen St .Suite 600Pensacola, FL 32501 USA

Felix S . Lee Esq ..Fenwick & West LLPEmbareadero Center West275 Battery Street, Suite 1500San Francisco , CA 94111 USA

Dean S . Kristy Esq.Fenwick & West LLPRobbins LLPEmbarcadero Center West275 Battery Street, Suite 1500San Francisco, CA 94111 USA

r 3 ~ V ~ I V V I U/ I U

Daniel Rockey Esq.Heller, Ehrman, White & McAuliffe275 Middlefield Rd .Menlo Park, CA 94025 US A

Patrick J . Coughlin Esq.Lerach, Coughlin, Stoia, Geller, Rudman &

100 Pine Street26th FloorSan Francisco, CA 9411 1

Lesley E . Weaver Esq. Connie M. Chung Esq.Lerach, Coughlin, Stoic, Geller, Rudman & Robbins LL PLerach, Coughlin, Stoia, Geller, Rudman & Robbins LLF100 Pine Street 100 Pine Street26th Floor 26th FloorSan Francisco, CA 94111 San Francisco, CA 9411 1

Lucas F. Alts Esq.Lerach, Coughlin,, Stoia, Geller, Rudman & Robbins LL P

401BSt-Suite 1600San Diego , CA 92101 .4297

I declare under penalty of perjury the foregoing to be true and correct. Executed in

San Francisco , CALIFORNIA on March 14, 2005 .

Sandra-Chan

4

EXHIBIT B

a

CONFIDENTIA L


NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

---000---

In re : Master File No .

CISCO SYSTEMS, INC., C-01-20418

SECURITIES LITIGATION W(PVT )

CONFIDENTIA LThis Document Relates to :

ALL ACTIONS .

Videotaped deposition of

NGHIA HONG TRAM, taken on behalf of

Plaintiffs, at 100 Pine Street, Suite 2600,

San Francisco, California, commencing at

9 :57 a .m., Monday, January 10, 2005, before

Deirdre F . Cram, C .S .R . 9339 .

1

EASTWOOD-STEINdeposition services & litigation support (800) 514-2714

CONFIDENTIA L

and your right is the court reporter . I'm going tobe asking you a series of questions . If possible,

3 you're going to be answering those questions, and

4 she's going to be taking down your answers .

5 The gentlemen to your left and my right 09:59 :18

6 may be interposing objections from time to time .

7 Now, if they do interpose an objection, you should8 allow them to do so, but unless your attorney

9 instructs you otherwise, you should still answer the

10 question once their objection is on the record. 09:59:25

11 Do you understand that?12 A. I understand .13 Q. Okay. Now, because the court reporter is14 transcribing my questions , your answers and th e

15 objections , its important that no one talk over each 09 :59 :3516 other because she can't transcribe two people

17 speaking at the same time .18 Do you understand that?19 A. I understand .

20 Q. Because of that, you need to wait until I 09:59 :4521 finish my question before you begin your answer, and

122 I'll try and do the same thing ..23 Now, do you understand that, even though.24 were in a conference room right now, the oath tha t

25 you took has the same force and effect that it would 09 :59 :56

7

1 in a court of law ?

2 A. I understand .3 Q. Is there any reason today, whether it's an4 illness or medication or anything else , that yo u

5 can't give your best testimony today ? 10 :00 :096 A. No.7 Q. All right . Before we get started on th e

8 questions , I just wanted to explain the time period9 were going to be talking about primarily, which is

10 August of 1999 through Februa ry of 2001, which I'll 10 :00:20

11 also refer to as the relevant time period .

12 Do you understand that?13 A. I understand.14 Q. Now, if I ask you a question in the past

15 tense, I want you to assume that I 'm talking about 10:00 :33

16 that period . Do you understand?17 A. I understand .18 Q. I may occasionally refer to another time

19 period , but if it' s just in the past tense , and I'm

20 not specific, that's the time period I mean . 10 :00:44

21 Now, if I ask you a general question, and

22 the answer that you want to give is different for

different parts of the relevant time period, then I

would like you to make that clear. Do yo u

25 understand ? 10:00:56

8

1 A. I understand .

2 Q. Okay . Mr. Tran, do you have a college3 degree?

4 A. Yes, I do.5 Q. And what is it in ? 10 :01 :00

6 A. I have a Bachelor of Science in finance

7 and a Bachelor of Science in accounting.S. Q. Do you have any graduate degrees?9 A. No, I do not .10 Q. Other than your degree in accounting, do 10:01 :1311 you have any other specialized training i n12 accounting ?13 A . I passed the CPA exam.14 Q. Anything else ?

15 A . No. 10:01 :2616 Q . After you received your undergraduate,17 degrees, what was the first job that you took ?1.8 A . I worked as an auditor for Arthur Andersen19 LLP .

2 0 Q. How long did you work there? 10 :01 :4821 A. About eight and a half years .

22 Q. So what year did you stop working there?23 A. I stopped working on August 2000 , around2 4 August .

25 Q. And did you take another job at that time? 10 :02:02

9

1 A. Yes, I took a job with Cisco Systems .2 Q. And what was that job ?3 A. I was the finance business manager for

4 Cisco Capital .5 Q. How long did you have that job? 10 :02:226 A. I had that job for approximately tw o7 years .8 Q. So did you begin that job in August of

9 2000?10 A. Yes, I did. 10:02:3611 Q. And when did that end ?12 A. My role in Cisco Capital? It ended13 around, I think, May 2002 .14 Q. Did you take another job at that time ?15 A. Yes . Still with Cisco Systems, I took a 10 :02:5016 position in the European theater as the treasur y17 accountant for the EMEA .18 Q. What does that stand for?19 A. European -- Europe, Middle East and20 Africa. It's the field that covers pretty much the 10 :03:0921 European countries, as well as Africa .22 Q. Do you still have that job today?23 A. No. I took another position .24 Q. Okay. When did that happen ?25 A. May of this year, 2004. 10:03 :23


CONFIDENTIAL

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Q. And what is that position ?

A. I'm the regional controller for Southeast

Asia.Q. That's for Cisco Systems ?

A. Cisco Systems. 10:03:42

Q. I'd like to discuss your role as th e

finance business manager at Cisco Capital for a

while . VVlhat were your responsibilities in that

capacity ?A. My responsibility was primarily to review 10 :03 :56

accounting policies, oversee the reserve process ,assist in the financial planning and analysis, as

well as coordinate the international capital entitiesin the consolidation and month-end close process .

Q. And who did you report to? 10:04 :12

A. I reported, originally, to Rory Snyder

when I first joined .Q. What was his position at that time ?A. He was the controller for Cisco Capital .

Q. And when did you stop reporting to him? 10 :04 :27A. Within about four months after I started ,

when he left the company .Q. Who did you begin reporting to at that

point?A. I start reporting to Sue Perkins. 10:04:42

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Q. And how long did you report to her ?

A. I reported to her approximately nine to 12months .

Q. So approximately when did you stopreporting to her? 10:05:04

A. I don't recall the specific time, but i t

was around early 2002 .Q. In your role as the finance business

manager, did you have any people reporting to you?A. I first started with a two individuals 10:05:22

reporting to me .Q. Who were they ?A. I don't recall their names specifically .Q. What were their positions?A. Staff accountants. 10:05:32Q. You said when you started two people

reported to you .A. Correct .Q. Later on, did more people report to . you?

A. Correct. 10:05:48Q. How many more?A. By the time I left my position wit h

Cisco Capital, I had approximately 13 individualsreporting to me .

Q. And do you recall who they were? 10 :05:59

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A. No, I do not .Q. Do you recall what their titles were?

A. They were essentially lease accountants,

booking analysts .Q. Can you approximate for me how many of 10 :06 :23

those people were lease accountants and how many were

bookings analysts ?

A. There were approximately, I would say,four lease accountants, and the remainder were

booking analysts. 10:06 :3 8Q. Why did the number of reports increase so

much from when you started your job ?A. I increased my roles . I also oversaw the

operational function, which was essentially

overseeing the booking of new leases into the 10 :06 :55

accounting system .Q. Is that why the bookings analysts began

reporting to you ?

A. Correct .Q . And then, why did the lease accountants 10 :07 :12

begin reporting to you' ?A. Lease accountants were essentially helping

with the general ledger for Cisco Capital . So weincreased the staff count as the volume came in .

Q . Do you mean to say that the volume of 10 :07 :3 3

finance leases at Cisco Capital was increasing during

that period ?A. No. When I started my position , we were

looking at what actually was the resource needs, an d

as I built up the roles and responsibilities and 10 :07:46

identi fied additional resource needs, then we wer eable to fill those .

Q. At the time you joined Cisco Capital, whatwas the purpose of that subsidiary?

A. The purpose of that subsidia ry is to 10:08:18provide a financing option for our customers in theacquisition of our product.

Q. Was Cisco Capital growing quickly at thetime you joined the company?

MR . KRISTY : Object to the form of the 10:08:39question . Vague and ambiguous .

THE WITNESS : Can you please clarify?BY MR. MONTGOMERY :

Q, Was Cisco Capital growing when you joinedthe company? 10:08 :48

A. Growing in what sense ?Q. The volume of financing it was providing .A. Yes .Q. Was it growing faster than Cisco Capital

anticipated ? 10:09 :00


CONFIDENTIAL

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MR. KRISTY: Objection to the form of thequestion. Lacks foundation .

THE WITNESS : 1 was not involved in the

business aspect . Based on the forecast that I was

given, the growth expectations were in line . 10:09 :14BY MR . MONTGOMERY :

Q. Were sonic of the customers thatCisco Capital was serving Internet service providers?

A . Yes .

Q. And during the relevant period, did 10 :09 :39

Cisco Capital refer to sottte of those service

providers as Tier I service providers?

A. Yes .Q . And did Cisco Capital refer to other

Internet service providers as Tier 2 or Tier 3? 10 :09 :53

A. Yes .

Q. Are Intents t sex ice prf eiders suntetimes

referred to as ISPs ?

A. Yes .

MR. MONTGOMERY : What exhibit are we on? 10 :10:21TI-HL REPORTER: I don't know.MR. MONTGOMERY : Off the record for a

minute .THE VIDEOGRAPHER: The time is 10:10.

Were going off the record. 10 :10:26

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(Discussion off the record . )THE VIDEOGRAPHER : The time is 10 :11 a.m.

Were back on the record.BY MR. MONTGOMERY:

Q. You understand you're still under oath? 10 :1 1A. Yes, I do .Q. I'd like to ask the court reporter to mark

what will be Exhibit 61 .(Deposition Exhibit No. 61 was marked

for identification.) 10:11 :22BY MR. MONTGOMERY :

Q. Do you recognize what type of documentExhibit 61 is?

A. No, I do not.Q. Have you ever seen Exhibit 61 before? 10:13A. No, I have not .Q. Please take a look at page -- for

convenience, I think I'm going to refer to all th epage numbers by their Bates number, and just the lasttwo numbers, as we go through. 10:13:17

Do you see, in the lower right-handcorner, that's the Bates number?

A. Okay .Q. I'm just going to say Page 71 .A. Seventy-one? 10:13 :29

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1 Q. Yeah .

2 A. Okay .3 Q. Does the top of that page that you're

4 looking at begin "Segment : Applicatio n5 Infrastructure Provider"? 10:13 :386 A. Yes. it does .7 Q. Okay. So we're on the right page. The8 second half of that page says, "Tier- I Internet9 Service Provider," and it provides a definition o f

10 what a Tier I Internet service provider is . 10:13:5411 Do you see that ?1.2 A. Yes, I do .13 Q. And that definition says, "Sells t o14 service providers & large. enterprises. Typical wil l15 have a national IP backbone deployed ." I0:14 :0516 Do you see that?

17 A. Yes. I do.18 Q. And is that definition consistent with19 your understanding of what Tier 1 ISP was during the20 relevant period? 10:14:1 721 A. Yes, it does .22 Q. I'd like to ask you to turn the page to23 Page 72 of Exhibit 61 . At the top of that page,24 Exhibit 61 provides a definition for Tier 2 and 325 Internet service providers. 10:14:40

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1 Do you see that ?

2 A. Yes, I do .3 Q. That definition states, "Sells t o4 business, residential customers and service providers5 on a regional & local basis." 10:14 :486 Do you see that ?7 A. Yes, I do .8 Q. Is that consistent with your understanding9 of what a Tier 2 or 3 Internet service provider was

10 during the relevant period? 10:15 :0011 A. Yes, it is.12 Q. I'd like you to take a look at, now, what13 was previously marked as Exhibit 38 .

14 (Previously marked Exhibit 38 was15 shown to the witness.) 10:15:3416 BY MR. MONTGOMERY :17 Q. Have you seen documents like Exhibit 3818 before?19 A. I have not seen this specific document,

20 but I have seen documents that are structured like 10 :16 :3721 it.22 Q. Is Exhibit 38 a leasing report for23 Cisco Capital for September of 2000?24 A. I don't recall specifically, but i t

25 appears to be. 10:16:47


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Q. Do you know who created Exhibit 38?A. No, I do not .Q. Do you know who generally created leasing

reserve reports during the relevant period ?A. Generally, I did. 10:17 :06

Q. Is there anyone else, during the relevantperiod, while you were acting as finance business

manager, that would have created one of thesereports ?

A. When I first started, Sue Perkins did some 10:17:28

of the reports as we transitioned . Later on in therelevant period, my staff Would prepare the report,and I would review.

Q. \Yhat was the purpose of these, reports ?A. This was essentially to present to the 10 :17 :52

reserve committee the nature and amount of thereserves recorded on Cisco Capital's books for therelevant assets .

Q . And who was on the reserve committee

during that time? 10:18:08A. The reserve committee was generall y

chaired by Mrinalini Ingrain, and Jonathan Chadwick

would attend, as well as Dennis Powell would attendon a periodic basis . There are other members, but I

do not recall their names specifically . 10:18:26

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Q. Did this committee meet on a regular basisor periodic basis?

A. Yes, they met monthly .Q. And were those meetings called the reserve

meetings? 10:18 :48A. Yes, they were.

Q. Did you attend those meetings?A. Yes, I did .Q. Did anyone else from Cisco Capital attend

those meetings? 10:18:58

A. Yes, they did. Rory Snyder, before h eleft the company, and later, Sue Perkins, in her roleas acting controller.

Q. Anyone else that you can recall ?A. Michael Gonzalez. I do not recall any 10:19:09

others .Q. Are reports such as Exhibit 38 prepared on

a monthly basis?A. Yes, they were.Q. Do you recall any instances where these 10 :19:50

reports were created in-between the monthly period ?

A. No, I do not recall .Q. Let's take a look at the first page of

Exhibit 38 .A. Okay. 10:20:23

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Q . Do you see, in the first box in the middleof the page, it says, "Competitive Local Exchange

Carrier"?A. Uh-huh .Q . Do you have any understanding of what type 10 :20 :37

of customer that refers to?A. No, I do not recall .Q. Below that, theres three types, the three

tiers of Internet service providers . Is that

consistent with the definition we just discussed a 10 :20 :51moment ago ?

A. Yes, it is .Q. After that, it talks about "Enterprise

Line of Business ." Do you see that ?A. Yes, I do. 1020:58

Q. Do you have any understanding of how

that's defined?

A. I have an understanding.Q. And what is that ?A. Enterprise customers are much larger 10 :21 :04

customers drat we provide service to or sell produc tto .

Q. Private companies?A. Private companies .Q. Or public companies? 10:21 :1 5

A. Yes .Q. At the very bottom there, it says, "Small

and Medium Business ." Do you see that?A. Yes, I do .Q. Do you know what the definition of small 10 :21 .34

and medium business was, as opposed to enterpriseline of business ?

A. I do not know the specific definition ofsmall and medium business, but in general, they are atier below in size from an enterprise company. 10:21 :44

Q. All right . To the right of the list we

just discussed is a list of percentages . Do you seethat?

A. Yes, I do .Q. What do those percentages refer to? 10:22:08A. As I did not prepare this report., I can

only interpret, based on the column heading, thatit's reserve percentages .

Q. In the reports that you did prepare, i sthat what those percentages referenced? 10:22 :24

A. Yes._ Q. And, for example, let's look at

competitive local exchange carriers . Next to that,it says 10 percent; correct ?

A. Correct. 10:22:3 7


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A. Correct . I2 Q. To the extent that there were operating 2

3 leases in prefunded inventory, the revenue related to 3

4 those leases was not recognized at the time of 4

5 shipment; is that correct? 10:35:53 56 A. Correct. The revenue was eliminated 6

7 through intercompany. 7

8 Q. Prior to recognizing revenue on a direct 8

9 finance or sales-type lease, did Cisco Capital have 9

10 any requirements regarding evidence of an agreement'? 10 :36:20 1 011 A. Yes. 1112 Q. And what were -- I'm sorry. Go ahead, 12

13 A. The master lease agreement. 1314 Q. Cisco Capital required the existence of a 1.4

15 master lease agreement before revenue could be 1 0 : 36:43 ]. 5

16 recognized with regard to direct finance or sales 16

17 leases ; is that Correct? 3.7

18 A. From Cisco Capital's perspective. You 1 8

19 also have to understand that, during this process, 19

20 customers could order equipment and choose not to 10:36:56 20

21 finance it. So they would then be obligated under 21

22 the standard net 30 terms that all our cash customers 22

23 fall raider. So if they do choose to finance, then 23

24 they would need to have a lease agreement signed and 24

"5 documented. 10:37 :17 2 5

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customers and so forth, The original terms and legal

obligations are documented in the master leaseagreement, which covers all the subsequent schedules .

Q . Now, you stated before, is it correct ,

that sometimes a customer would order product and 10 :39 :07then, later on, decide to finance the product ?

A. Correct.Q. So between the time the product was

ordered and the decision to finance, the obligatio nwas covered under the normal invoice; is that 10 :39 :21correct ?

A, Correct .Q. And that had, typically, a net 30 payment

requirement ?A. Correct. € 0:39 :31Q. And what does net 30 mean ?A. Net 30 means the customer is obligated io

pay the full amount of the invoice within 30 days ofreceipt .

Q. Was it Cisco Capital's position that as 10 :39 :41long as either the payment was made within 30 days or

a master lease agreement was signed, revenu erecognition was appropriate ?

MR. lv RISTY : Object to the form of thequestion. 10:39:57

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1 Q. To the extent a customer is obtaining 12 product -- I'm sorry, was obtaining product as a 23 result of a direct finance or sales-type lease, 34 though, Cisco Capital required the existence of a 45 master lease agreement before revenue could be 10 :37 :43 56 recognized ; is that correct? 67 MR. KRISTY : Object to the, form. It's 78 ambiguous as to recognize by whom, but go ahead . 89 THE WITNESS : My recollection, that's the 9

10 requirement. 10:37 :55 1 011 BY MR. MONTGOMERY: 1 112 Q. So when we were talking before about 1 213 prefunded inventory, when you stated that it 1 314 reflected shipments where final lease documentation 1415 had not been signed, when you said "final lease 10 :38 :09 1 5

16 documentation," were you referring to master lease 1 617 agreements or some other type of lease documentation? 1 718 A. I was referring to individual schedules 1 8

19 that, are essentially addendum to the master lease 1 920 agreement. So each lease represents specific 10 :38 :25 2 021 equipment that's been sent to the customer . 2 122 So each time a customer leases a set of 2 2

assets, those specific equipments need to be set out 2 34 into a schedule, and usually that is what takes a bit 2 4

25 of time to finalize, based on acceptance from the 10:38 :41 25

THE WITNESS: Could you repeat that?BY MR_ MONTGOMERY :

Q. Let me rephrase . Was it Cisco Capital'sposition that if a customer ordered product pursuan tto an invoice which was net 30, and then decided to 10 :40 :22finance the purchase, that it was appropriate to

recognize revenue on that shipment as long as it waswithin the net-30-day period?

A. That is correct .

Q. What was Cisco Capital's position with 10 :41 :01regard to a customer that ordered product pursuant toan invoice that was net 30, expressed the intent tothen finance that purchase, but tlhen had not

completed a master lease agreement after 30 days ?MR. KRISTY : Object to the form of the 10:41 :21

question . Hypothetical, but you can answer .

THE WITNESS : What would happen was,

essentially, the customer would be obligated underthe initial purchase agreement, which is under th enet-30 terms. Therefore, if they had not paid within € 0 :41 :33the 30 days stipulated, then our collections team i nCisco, Inc . would be going after those customers to

collect the outstanding due. So it would fall underthe AR reserve process .

BY MR. MONTGOMERY: 10:41 :5 5


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number ending 24, does this indicate that, as of May

of 2001, Cisco Capital was still reserving

approximately 100 percent for most of its customersregarding the equipment financing that had been

funded? 13:01 :32A . For most of its customers, yes ,Q. Okay. Now I would like to turn to the

page Bates number ending 26 of Exhibit 62 . This isregarding the non-Cisco equipment financing; correct?

A. That is correct. 13:01 :59Q. And does this indicate that, as to most

customers, Cisco Capital was still reservingapproximately 25 percent ?

A. That is correct .Q . Okay, I would like to turn to the next 13 :02 :08

page, Bates number ending 27 . 1 apologize for thesmall type-, but that's the way we received it.

Can you tell me what this page represents?A. This represents an Excel schedule which I

used to track the loans that are in the Cisco Capital 13 :02 :36loan portfolio and any changes in reserves ,essentially activity . It supports the balances thatare represented in the summary pages .

Q. In the pages we just went over?A. Correct. 13:02:51

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earlier that you started creating these reportsaround the time you were hired in August of 2000, and

you changed the format to include this type ofinformation? 13:03 :05

A. There was a previous schedule that tracksthese loan activities . I have expanded onto it and

added additional columns and additional details .Q . Was one of the additional columns that you

added the credit score? 13 :03 :23A. Yes, it was .

Q. What was of purpose of this additionalanalysis, especially regarding the credit scores,

when, as we just went over, the general reserve rat e

for most of the customers and most of the transaction 13 :03 :50stayed the same?

A. I'm sorry . Can you repeat tlhat question?Q. Sure. Let me put it a different way.

Let's just talk about the shipped but not funded --

A. Correct. 13:03 :57

Q. -- that we looked at before .A. Right.Q, Most of them were reserved for at

100 percent?

A. Yes. 13:04:04

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1 Q. So, then, what value was added by then2 looking at all the customers by credit score ?3 A. It was really to track the non-equipment4 financing component of the loan .

S Q. Oh, okay. So that was -- I3:04:186 A. Those would be captured in D .7 Q. The previous page, I believe .8 A. Correct.9 Q. All right- So even though these

10 non- equipment loans were still mostly reserved at 13 :04 :4311 25 percent, there are more of them that are reserve d12 at 100 percent ; is that correct?13 A. Yes.

1.4 Q. And that's as a result of your analysis of15 the credit scores? 13:04:5416 A. That is a combination of my review, as17 well as the credit departnIent's review and feedback18 on the customers .19 Q. '!t here did you obtain the credit scores for20 each of the customers? 13:05:1521 A. The credit scores for the customers were22 presented to me by Brian Fukuhara and his team .23 Q. Did you receive a report that had th e24 credit scores of all the customers , or did you25 present them with a list of particular customers you 13:05 :33

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1 were interested in ?

2 A. I presented them with a list, a similar3 format as this (indicating) .4 Q. Do you know if they had a comprehensive5 list of the credit scores of all the Cisco Capital 13 :05 :456 customers ?

7 A. I do not recall .8 MR. MONTGOMERY : I'd like to ask the court9 reporter to mark what will be Exhibit 63 .

10 (Deposition Exhibit No. 63 was marked 13 :06 :5611 for identification . )12 BY MR. MONTGOMERY :13 Q. Before we get to that, could you tak e14 one quick look at Exhibit 62 again, the first page ?15 There"s some handwriting on the first page of 13:07:2316 Exhibit 62. Do you recognize that handwriting ?17 A. I do not recognize that handwriting.18 Q. Do you recognize Exhibit 63 ?19 A. Yes, I do.20 Q. What is it? 13:07:4721 A. This is a summary of the contingen t22 liability reserve that I put together for the monthly23 reserve meeting .24 Q. You created this document ?25 A. Yes, I did. 13:07:57

EAST WOOD-STEINdeposition services & litigation support (800) 514-2714

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Q. And when did you begin creating the --

strike that .

Was part of your job creating these typesof reports ?

A . Yes, it was. 13:08:07Q. And when did you assume that

responsibility ?

A . I don't recall the specific date, but i twas within a couple of months of my employment with

Cisco Capital. 13:08 :1 4Q. Who was responsible for creating these

reports prior to you beginning to do so?MR. KRISTY : Objection to form . Dicks

foundation .BY MR. MON'T'GOMERY: 13:08:27

Q. You can answer .A. My understanding was Rory Snyder .

Q. What contingent liabilities did thisreport reference?

A. It relates to guarantees that we provided 13 :08:56

to third-party leasing companies to enable them toprovide financing to customers, predominantly in theoverseas business ; i .e ., European theater and

Asia-Pacific theater .Q. Was there a specific reason that Cisco 13 :09 :1 6

guaranteed financing provided by third parties, as

opposed to just providing the financing itself?A. Yes . In the international arena, you have

to have a financing license, often in the country

itself, in order to provide financial services ; and 13:09 :30we do not have specific entities in everysingle

country in which we wanted to provide this financingoption to our customers. So we engaged third-party

leasing companies, who have that presence, to do theleasing transactions for us. 13:09 :48

Q. Who received contingent liability reportslike Exhibit 63 ?

A. The first couple of pages are a summary ofall the reports that were provided to us . The

reports were prepared by the third-party leasing 13 :1 0 :13

companies themselves, and were sent to the feedercontrollers for Cisco Capital, or accounting managers

such as Stephen Ross and Peter Jackson; Peter Jackson

being the accounting manager in Asia and Stephen Ros s

being the accounting manager in Ireland. They would 13 :10 :35

consolidate those reports and provide me a summar y

schedule which I then consolidate for the reservemeeting purposes.

Q. Okay. Look at the second page of

Exhibit 63. 13:10 :52

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A. Okay .Q. Now, the first column is entitled

"Partners." Do you see that? Or "Partner." Thefirst column all the way to the left..

A . Yes. 13:11 :04Q. And underneath "Partner," there is a lis t

of different companies . 'Those are the third parties

that were providing the financing ; is that correct?A. Correct .

Q. All right. The next column is entitled 13 :11 :14"Program." Do you see that?

A. Yes .Q. And under that, it says, "l-ea-se easse Pools" and

"Individual Transactions . "A. Correct . 13 :11 :25Q. What's a lease pool ?A. A lease pool is -- my understanding is

that we set up an arrangement with these partnersthat says if a customer has these certain criteria,then they can go into a specific pool, which has a 13-11 :40predestined guarantee level assigned to it . If thosecustomers don't fall into those predefinedrequirements, then they become an individual

transaction, where the guarantee level may b evariable . That's the difference between the two . 13 :11 :5 7

Q. What was the nature of the requirements inorder to participate in the lease pool ?

A. My understanding is credit quality, theindustry or business that they're in, and the size ofthe company. Things like that. 13:12:20

Q. So would the lease pool or lease pool senable Cisco Capital's partners to then provide these

guarantees without checking with Cisco Capital ordealing with Cisco Capital directly at all ?

A. These third-party partners did not provide 13 :12:38the guarantee . Cisco provided the guarantee . Thesepartners entered into the lease agreement with ourcustomers, and essentially, the lease is between thepartner and the end customer . So the lease asset ison their books and is the risk of the partner. 13:12:55

What we do is enable them or give them abusiness incentive to go in and provide thisfinancing to our customers . We tell them we willguarantee up to X percentage of any actual lossesincurred by the partner. 13:13 :1 1

Q. Was Cisco Capital's involvement differentin a lease pool transaction as opposed to anindividual transaction ?

A. The only difference would be the level ofguarantee provided to the partner. 13:13:29


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guarantees were viewed as contingent liabilities, and

the reserves was based on probability of loss .MR. MONTGOMERY: I'd like to ask the court

reporter to mark what will be Exhibit 64 .

(Deposition Exhibit No . 64 was marked 13:37 :57for identification. )

BY MR. MONTGOMERY :Q. Is Exhibit 64 a contingent liability

report from Cisco Capital from November of 1999?

A. It does appear to be . 13 :39:09Q. And does this report reflect th e

methodology that Cisco Capital used for calculatingthe contingency reserve before the change that youjust discussed?

A. I did not prepare this report, but based 13 :39 :26on what is presented here, it does appear to be tha t

is the case .Q. And does this report indicate that,

essentially, Cisco Capital was taking a 25-percentreserve for its outstanding guarantees? 13 :39 :44

A. I don't have the calculation, but it looks

like there is 122 million outstanding, of which theyreserved 16 million. So that would be a little over

10 percent by my rough calculation .MR. KRISTY: I think he's asking you about 13 :40 :1 1

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a different column. He's asking you as a percentage

of the current guarantee.BY MR. MONTGOMERY :

Q. Right. Let's take a look at the very toprow for Leasetec. 13:40:19

A. Yes .Q . And the current guarantee there is

10,791,000 and some-odd dollars . Do you see tliat?A. 10 million, 791 ; yes .

Q. Okay, and then you see the reserve is 13 :40 :34reserve balance is 2,697,922 ?

A. That is correct .

Q . And if you look down the column at all

such similar guarantees, does it appear that they areall approximately -- the reserve balances are all 13 :40 :51

approximately 25 percent of the current guarantees ?

A. It does appear to be that .Q. Now, looking at that report, is there any

way to tell how many of these leases provided by thepartners were operating leases, as opposed to sales 13 :41 :31

leases?

A. Based on this report, there is no way .

Q . Going back to Exhibit 63 for a second, you

testified earlier that at the time the new

methodology was adopted, the proportion of sales 13 :42 :04

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leases to operating leases was derived from the

proportion of Cisco Capital's portfolio in the U.S . ;correct ?

A. Correct, and other factors .

Q. Pardon? 13:42 :17A. And other factors . We took into

consideration the portfolio mix from the U .S . base,and then, we also got feedback from the international

entities with respect to their actual experiences and

a reasonableness check of our assumption. 13:42:30Q. And based on Exhibit 63, Cisco Capital' s

estimate at that time was that about $200 trillionworth of the leases were operating leases ; is thatcorrect?

A. Based on this estimate, yes. 13:42 :51Q. And about 127 million of the leases were

sales leases ; is that correct ?A. That is correct .

Q. Now, later on, I believe you testifiedthat Cisco Capital got better information from its 13 :43 :02partners about the designation of different kinds o f

leases ; is that right?A. That is correct.Q. And when that better information was

acquired, were these proportions found to be correct? 13 :43 :12

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of the business changed because, as the economy andthe overall economic downturn occurred in the

industry, it was more Iikely for us to do operatin gleases, because we changed, sort of, you know, the 13 :43 :35way we looked at customers, and therefore, you rvolume in operating leases actually increased as we

progressed .So it's hard to say whether I actually go t

more information, whether the information I had at 13 :43 :49this point in time (indicating) was accurate, versu s

what's down the road . It's a different portfoliobase .

Q . At the time that you got the better

information regarding the characterization of these 13 :44:13leases from Cisco Capital's partners, was a

significant adjustment made in the contingentliability reserve because the assumption at that time

was not correct ?

MR. KRISTY : Object to the form. 13:44:30THE WITNESS: I do not recall .

BY MR. MONTGOMERY: -Q. All right. Let's go back to Exhibit 64,

please. Now, is it your understanding that, as of

the time of Exhibit 64, Cisco Capital was reserving. 13:45 :1 2


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for all of the guarantees -- let me rephrase .

Is it your understanding that, as of th e

time Exhibit 64 was created, Cisco Capital was

reserving for all the guarantees it provided to its

partners as contingent liabilities? 13 :45 :33A. Yes, that is my understanding .

Q . And Cisco Capital was not deferring therevenue received on account of those leases?

A. Yes, that is my understanding.Q. Was there a change in accounting 13 :45 :46

standards, between the time that Exhibit 64 was

created and Exhibit 63 was created, that accounts forthe change in methodology ?

A. I do not recall .Q. Do you recal I if anything other than a 13 :46 :08

change in accounting methodology -- excuse me .

Do you recall if anything other than achange in accounting standards accounted for the

change in methodology between Exhibits 64 and 63 ?MR. KRISTY: Object to the form . 13 :46 :24THE WITNESS : The change occurred because

part of my initial role and responsibility, cominginto Cisco Capital, was to take another look at thereserve policies and procedures, help formalize them

and define them ; and so, through that process, I took 13 :46 :4 1

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another look at the partner guarantee program, andthat was when we determined that we should record therevenue deferral .

BY MR. MONTGOMERY :Q. At the time Exhibit 64 was created , is it 13 :47 :34

your understanding that Cisco Capital's methodologyfor calculating the contingent liability reserve wasconsistent with accounting standards ?

MR. KRISTY: Object to the form. Lacksfoundation. 13:47 :48

THE WITNESS: Can you repeat the questionfor me ?

BY MR. MONTGOMERY :Q. Sure . At the time that Exhibit 64 wa s

created, is it your understanding that 13:47:54Cisco Capital's methodology for calculating the

contingent liability reserve was consistent with the

accounting standards?

MR. KRISTY : Same objection .THE WITNESS : My understanding of the 13:48 :07

process, here at this time, was that it was no t

consistent . That is my opinion .

BY MR. MONTGOMERY:

Q. And what do you base that opinion on ?A. Based on my review of FASB 13 and the 13 :48:22

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relevant accounting guidance.

Q . And is it also based on your opinion that,

to the extent the leases reflected in Exhibit 64 were

operating leases, that the revenue from those leasesshould have been deferred? 13 :48 :4 7

MR. KR.ISTY: Same objection.THE WITNESS : That is based on my

interpretation of the accounting standards, yes .MR. MONTGOMERY: I'd like to ask the court

reporter to mark what will be marked as Exhibit 65 . 13 :49 :43

(Deposition Exhibit No. 65 was markedfor identification .)

BY MR. MONTGOMERY :Q. Is Exhibit 65 a contingent liabilit y

report from Cisco Capital for October of 1999? 13 :50:40A. It does appear to be. I did not prepare

this report .Q . According to this report, were the current

guarantees outstanding a€ the time approximately

$107 million'? 13 :51 :05A. Based on this report, that is correct .Q. And of that $107 million, can you

ascertain from this report what proportion wasreserved ?

A. Based on the cursory review I have, 1 13 : 5 1 :2 5

cannot ascertain the amount of reserve .Q. Does this report reflect that any reserve

was taken by Cisco Capital for its guarantees in

October of 1999 ?MR. KRISTY: Object to the form. He 13:51 :39

wasn't there when it was prepared . You can answer.THE WITNESS : I did not know what the

intent of this report was, so I could not say .

BY MR. MONTGOMERY:Q. I'm asking whether you see anything in the 13 :51 :51

report that indicates that a reserve was taken a tthat time. If you don't see anything, that's fine .

Ifyou do, that's fine . If you don't know, that'sfine as well .

MR. KRISTY: Object to the form. 13:52:05THE WITNESS : Based on this report, I d o

not see any reserve recorded .

BY MR. MONTGOMERY:

Q. If, in fact, Cisco Capital did not tak eany reserves for its liabilities related to 13:52:19

guarantees in October of 1999, in your opinion, would

that be consistent with generally accepted accountingprinciples ?

MR. KRISTY: Object to the form of thectuestion . Hvr>othetical, and he's not an emert . So 13:52 :3 3


EXHIBIT C



--- 000---

In re :

CISCO SYSTEMS, INC .,

SECURITIES LITIGATION

This document relates to :

ALL ACTIONS .

No . C-01-20418-JW

}

}

}

VIDEOTAPED DEPOSITION OF JAMES McKENZIE MacCALLUM

Wednesday, August 10, 2005

1

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6 8

I Q. You have been deposed on a previous I A. I can't recall ,2 occasion, is that correct? 2 BY MS . WEAVER :3 A. That's correct . 3 Q. Other than sales controllers identifyin g4 Q. So you are likely aware of the rulings, 4 non-standard transactions, did non-standard5 but I'll go over them briefly just so we're on the 5 transactions conic to your attention in any other way ?6 same page in this deposition . 6 A. I can't recall specific occasions .7 A. Okay. 10 :12A 7 Q. In temts of a standardized manner for8 Q. What we say is being transcribed by a 8 non-standard transactions to come to your attention ,9 court reporter so we need to take care not to talk 9 was it solely through the sales controllers?

10 over each other and to answer audibly . Do you 10 A. That was the primary mechanism.11 understand that? 11 Q. And you can't think of any other 10 :15A12 A. I do . 12 mechanisms, is that correct ?13 Q. So instead of uh-huh, yes or no, things 13 A. That's correct.14 of that nature . Do you understand? 14 Q. How else were you involved in th e15 A. Yes . 15 application of the revenue recognition policies other16 Q. If at any point you don't understand a 16 than interpreting non-standard transactions that w e17 question, please ask me to clarify it because if you 17 just discussed ?18 don't ask that I'm going to assume you understand the 18 A. We did some education to other employees19 question . Is that fair? 19 so that they understood the rules and the Cisco20 A. Yes . 20 policies .21 Q. Is there any reason why you cannot 21 Q. How long were you in the position o f22 testify truthfully today? 22 Finance Business Manager ?23 A. No. 23 A. About four or five niondis .24 Q. Is there any other reason why you can't 24 Q, And what was your next position?25 testify to the best of your ability? 25 A. I can't remember the title . It was

7 9

1 A. No . 1 Manager, Corporate Revenue .2 Q. You were previously employed by Cisco, 2 Q. How long were you in that position ?3 weren't you? 3 A. About twelve months.4 A. Yes. 4 Q. How were your duties and responsibilities5 Q. When did you begin? 5 different as Manager of Corporate Revenue than they6 A. January 2001 . 6 were in your prior position?7 Q. What was your original position at Cisco? 7 A. They expanded a little bit . At tha t8 A. Finance Business Manager . 8 point I took over worldwide control of revenue for th e9 Q. What were your duties and 9 company, had people reporting in to me at that point.

10 responsibilities in that role? 10 Q. Who reported to you? 10 : 16 A11 A. I was involved with the recognition, some 11 A. Pauline Kaye, Michelle Leung, Eri k12 revenue recognition policy, updating and training of 12 Alberts . I think that was it at that point.13 Cisco employees. 13 Q. And to whom did you directly report whe n14 Q. Were you involved in the application of 10 13A 14 you were Manager of Corporate Revenue ?15 the revenue recognition policy? 15 A. I reported to Mrinalini Ingram.16 A. I was. 16 Q. And when you said you took over worldwide17 Q. In what ways were you involved with that? 17 control of revenue, what did you mean ?18 A. I helped with the interpretation, certain 18 A. In charge of recording all the specia l19 non-standard deals . 19 deals and doing the accounting for those specia l20 Q. How were those non-standard deals 20 deals .21 identified? 21 Q. What's a special deal?22 A . Primarily by the sales controllers . 22 A. When I -- I'll use the terns both specia l23 Q . Were they identified in any other ways? 23 deals and non-standard deals, so just a deal tha t24 MS. FRITZ : Object to the question, 24 isn't a regular ship the box type deal .2 5 ambiguous. 25 Q. What do you mean, ship the box? 10 : 17 A


10 12

1 A. Sorry for the jargon. Ship a router or a 1 escapes me, and Joanne, Joanna Kaplan .2 switch or standard product . 2 Q, They were responsible for two tier, i s

Q. Jargon is fine as long as we define it 3 that correct ?4 and we understand each other . 4 A, Correct,5 A- Okay. 5 Q. And who was responsible for returns ?6 Q. So I want to understand the language you 6 A. That would have been me .7 used at Cisco. 7 Q. Anyone other than yourself?8 Other than recording special deals were 8 A. The people who reported in to me woul d9 .. you responsible for monitoring any other kind of 9 have helped me out with the analysis but myself and

10 transactions when you were Manager of Corporate 10 Mrinalini had the overall control of that .11 Revenue? 11 Q. When you say returns reserves, what 10 :20A12 A. Our group played a large role in the 12 specific reserves were you referring to ?13 overal I reserves, the revenue reserves, so there 13 A. Returns for -- reserves for RMAs .14 was -- 14 Q. Does that exclude two tier reserves?15 Q. 1,' hen you say reserves, what do you mean? 15 A. Yes ,16 A . We had debt reserves, we had two tier 15 Q. How many reserves were there during th e17 reserves, we had returns reserves . Those were the 17 time you were Manager of Corporate Revenue for18 major categories at that point . 18 returns ?19 Q. So when did you terminate in the position 19 A . How many reserves'?20 of Manager of Corporate Revenue? 20 Q. Yes .21 A. I don't remember the exact time . In 2002 10 : I SA 21 MS. FRITZ : Object to the question as to22 I became more involved with Cisco Capital and became 22 form .23 the Controller of Cisco Capital . 23 A. I don't understand the question .24 There was some transition so it would 24 BY MS . WEAVER :25 have been sort of the first or second calendar quarter 25 Q. Was there just one reserve for return s

11 1 3

1 of 2002 . 1 during the time that you were in charge of return s2 Q, You said that. you and a group of persons 2 reserves?3 were responsible for the overall reserves when you 3 MS. FRITZ: Same objection .4 were Manager of Corporate Revenue, is that correct? 4 A. Yes, one overall, one overall reserve .5 A . Right . 5 BY MS. WEAVER :6 Q. Who were the other people who were 6 Q. What was that reserve called ?7 responsible for the reserves? 7 A. Just there was a general returns reserve.8 MS . FRITZ: Object to the question . It's 8 Q. Were there particular components of th e9 ambiguous . 9 general returns reserve?

10 A. Can you restate the question? 10 A. There was an open RMA reserve and a11 BY MS . WEAVER: 11 general, general reserve.12 Q. You stated that you were responsible for 12 Q. And what was the open RMA reserve for? 10 :21 A13 the reserves with other individuals, is that correct? 13 A. The open RMA reserve was basically a14 A. Correct . 14 reserve for any RMAs that had been opened by Cisco15 Q. Who else was responsible for reserves? 15 customers .16 A. My boss, Mrinalini Ingram. There was a 16 Q. And just for purposes of definition, what17 director in charge of the accounts receivable, so he 17 do you mean by opened by Cisco customers?18 would have made recommendations on the AR reserves. 18 A. So a customer would call in to Cisco an d19 Q. Who was that? 10-19A 19 say we want to return the -- whatever product they ha d20 A. At that point it was John Delta Marco . 20 bought.21 Q. And anyone else? 21 At that point it becomes an open RMA .22 A. There were people involved with the two 22 When they return that product the RMA gets closed .23 tier distribution reserves . 23 Q. Was there a specific team that fielde d24 Q. Who were they? 24 RMA?25 A. The name was Beth, and the last name 25 A . Yes, there was an RMA team. At som e


22 24

1 Q . Were your responsibilities the same at 1 Q. And how was that calculated?1 2 KPMG as Audit Manager as they were at PWC as Audit 2 A . It -- basically we looked at percentage s

3 Manager? 3 of -- of historical returns, and used that percentag e4 A. Similar- 10 : 31A 4 as a basis to calculate the reserve .5 Q . And in both of those positions you were 5 Q. And do you recall roughly what that 10 35 A6 also monitoring compliance with GAAP, is that correct, 6 percentage was ?

7 as well as GAAS? 7 A. It was a single digit percentage .8 A. Yes . 8 Q. Do you recall roughly what percentage of9 Q. Were you familiar with PAS 48? 9 the general reserve was composed of the future return s

10 A. Yes . 10 reserve?11 Q, What is it? 11 MS .1~RI'IZ: I'm going to object to the12 A, € don't remember the title of it, but 1 12 question as overbroad .13 am familiar with it, 13 A . I don't recall . I don't recall .14 Q . Are you familiar with FAS 5? 14 BY MS . WEAVER :15 A. Yes . 15 Q. Did it vary ?16 Q. And FAS 99 as well? 16 A. It varied .17 A. FAS 99? 17 Q. Did the future returns reserve fluctuate ?18 Q. Yes. SAB-99? ? 8 A. Yes.19 A. SAB-99 I am not familiar with . 19 Q. And do you recall if it fluctuated by 1 02 0 Q. Based on your experience with GAAP. if 20 percentage points or more during the relevant period21 Cisco was reserving for RMAs when product was received 21 that we have defined?22 as opposed to when notified of the return, would that 22 MS . FRITZ : Objection to the question .23 have been GAAP compliant? 23 A. Yes.24 MS. FRI7Z: Object to the question, 1033 24 BY MS . WEAVER :25 improper, calls for a hypothetical, speculation, and 25 Q, Yes, it did fluctuate that much? Othe r

23 1 2 5

1 it also calls for improper expert testimony. This is 1 than the future returns reserve and the accounts2 a fact witness . 2 receivable reserve, did the general reserve account3 A. Can you repeat the question? 3 for anything else ?4 MS. WEAVER : Could you read it back? 4 M .S . FRITZ: Object to the question, 10 : 36A5 (Question read) 5 misstates the witness's testimony .6 A. No. 6 A. Sorry . Can you repeat it ?7 BY MS. WEAVER : 7 BY MS . WEAVER :8 Q. With regard to the general RMA reserve 8 Q. Do you understand what I'm trying to ge t9 that you referred to a moment ago, what components 9 at?

10 were there of that reserve? 10 A. No.11 MS. FRITZ: Object to the question . 10 :34A 11 Q. The general reserve was a reserve fo r12 BY MS . WEAVER : 12 accounts receivable and future returns, is that13 Q. Please answer the question . 13 correct?

14 MS. FRITZ: If you understand it . 14 A. Correct .15 A. There is a reserve that was calculated 15 Q. Was it a reserve for anything else?16 based on a percentage of the outstanding accounts 16 A. No.17 receivable balance. 17 Q. Why didn't Cisco have a separate futur e18 BY MS . WEAVER : 18 returns reserve?19 Q. So the general reserve was calculated 19 A. The accounting all rolled out the same20 based on accounts receivable, is that correct? 20 way, so it was just lumped into the same -- the sam e21 A. Correct . 21 bucket, per se .22 Q . Were there any -other components of the 22 Q. Did Cisco at some point create a separate21 general reserve? 23 future returns reserve ?124 A. There was a reserve that looked at future 24 MS. FRITZ : Object to the question .25 returns that we expected in as well . 25 A. Can you repeat the question ?


26

1 MS. WEAVER : 1Vill you read it back'?2 (Question read)

3 A. Yes .

4 BY MS. WEAVER :5 Q. When was that?

6 A. Q3 2001 .7 Q. Why?8 A. We wanted to be more conservative than we

9 had been in the past .10 Q. Why was it more conservative to have a

11 separate future returns reserve?

12 A. It added more reserve to the re turn -- to

13 the reserve .

14 Q. So Cisco both increased the reserve and15 created a separate reserve in Q3, Of? Is tha t16 correct?17 MS. FRITZ: Object to the question .18 A. The reserve was increased .19 BY MS. WEAVER :20 Q. Setting aside the actual increase in th e21 amount of the reserve , why was it more conservative to

22 create a separate reserve ?

23 MS. FRITZ: Object to the question .24 A. No reason .25 ff1

2 7

I BY MS. WEAVER :2 Q. There was no reason to do it ?3 A. No reason -- it wasn't really separate .4 It was all part of the same group of reserves .5 Q. Was it broken out as a separate line

6 item?

7 MS. FRITZ: Object to the question .8 A. I don't recall .9 BY MS . WEAVER :

10 Q. Whose decision was it to create a


12 MS. FRITZ : Object to the question,13 misstates the witness's testimony .

14 A. Mrinalini Ingram, she was who I reported15 to, so she had authority .16 Q. Did Ms. Ingram tell you to create a17 separate future returns reserve in Q3 01 ?18 A. No.19 Q. Did anyone'?20 A. No .21 Q. How was the separate reserve created?

22 MS. FRITZ: Object to the question .23 A. How was it created? We recorded a

24 journal entry.

25 Ill

2 8

1 BY MS . WEAVER :10 .37A 2 Q. When you say we, who do you mean ?

3 A. May have been me . I don't recal l4 specifically who, who did the journal entry .5 Q. How did you first become aware that Cisc o6 was going to create a separate future returns reserve ?7 MS.1~RITZ : Object to the question ,8 misstates the witness's testimony .9 A. We did -- we basically did some analysis

10 and we basically we did some analysis .11 Q. When you say we, who do you mean ?12 A. Primarily myself and Erik Alberts, with13 some help from people in the RMA group .14 Q. And which people in the RMA group are you15 referring to?

V16 A. I remember we had help from Erik Stunes .17 Q. Who is he?

18 A. I don't know what his position was bu t19 he -- he was goad with the data base in terms o f20 helping us sort through the data .21 Q. Was he involved with RMAs prior to th e22 time that lie assisted you in your analysis of the RM A23 reserve ?

24 A. Yes .

25 Q. Why did you do some analysis with regard

10 :39 ;

10 .40 ;

29

1 to future returns that caused you to create the

2 reserve ?3 MS. I=R1TZ : Can you read that back again ?4 (Question read )

10 : 38A 5 M.S. FRITZ: Object to the question ,6 misstates the witness's testimony .

7 A. The economic environment was changing a t

8 that point and so we -- so we looked at it .9 BY MS. WEAVER :10 Q. Do you recall when you performed tha t11 analysis ?

12 A. It was fairly short, fairly soon after I13 started working at Cisco, so probably -- probabl y

14 March, March 01 .15 Q. Was Mrinalini Ingram involved in th e16 analysis?

17 A. At a high level .18 Q. Was anyone to whom she reported involve d19 in the analysis?

20 A. What do you mean, involved with th e21 analysis ?22 Q. Aware that you were performing an RM A

23 analysis ?

24 A. Probably -- I think Suzanne Powel l25 probably would have been aware. Mrinalini reported to

10 :41A I


38 4 0

1 meeting, so they attended those on a quarterly basis . 1 A. Okay .2 Q. And who specifically at Pricewaterhouse 2 MS. FRITZ : I'ni going to object that that3 Coopers attended those meetings? 3 misstates the witness's testimony .4 MR. ROCKEY : Objection, vague as to time . 4 BY MS . WEAVER :5 BY MS . WEAVER : 5 Q. Do you understand what I mean by that ?6 Q. You understand the time period is the 6 A. I understand what you mean but there was7 relevant period, right? 7 a reserve in place for the futures ,

8 A. Yes. Like Jerome was generally there, 8 Q. And it was contained in the genera l9 Steve Mizell, Phuc Tran . 9 reserve, is that correct?

10 Q. Anyone else? 10 A. Correct .11 A. Tony Fuel[ . I can't remember when he 11 Q. Okay . So for clarity's sake, if I say12 started on the account. 12 future returns reserve going forward, I'ni onl y13 Q. Did they actively participate in the 13 referring to the separate future returns reserve tha t14 meetings? 14 was created in Q3 01 . Do you understand that?15 MS. FRITZ: Object to the question. 15 A. Yes. 10: 541 A16 A. They would ask questions when -- when 10 : 5 2 A 16 MS . FRITZ: Well, I have the same17 tThey felt it was necessary . 17 objection.18 BY MS. WEAVER : 18 BY MS . WEAVER :

19 Q. Do you recall any specific conversation 19 Q. So based on your attendance at th e20 in the meetings that you are referring to with anyone 20 meetings that we were discussing a moment ago which21 from Pricewaterhouse Coopers relating t0 a future 21 PWC attended and your experience with the return s22 returns reserve? 22 reserve, do you believe that PWC was aware that Cisc o

23 MR. ROCKEY : Objection, vague . 23 did not have a separate future returns reserve unti l24 A. 1 don't recall . 24 Q3 01 ?25 I!1 25 MR. ROCKEY : Same objection, asked and

39 4 1

1 BY MS. WEAVER: 1 aswered .2 Q. So no, you don't recall any specific 2 MS. FRITZ: And misstates the witness's3 conversation? 3 testimony.4 A. I don't recall . 4 A. Yes. I think I've answered the question .5 Q. Based on your attendance in those 5 BY MS. WEAVER -6 meetings and involvement with the returns reserve, do 6 Q. I'll read it back, You did not answer7 you believe that Pricewaterhouse Coopers was aware 7 the question in fact .8 that Cisco did not have a future returns reserve prior 8 Would you please read back the question ?9 to Q3 01? 9 (Question read) 10 : 5 5 A

10 MS . F RITZ : Objection . 10 MR. ROCKEY : Objection, lack o f11 MR. ROCKEY : Objection, misstates 11 foundation, asked and aswered, misstates the12 testimony, lack of foundation . 12 testimony .13 MS . FRITZ : Same objections . 13 MS . FRITZ: The same, I have the same14 A. Can you repeat the question, please? 10 : 53A 14 objections .

15 MS . WEAVER: Read it hack, please . 15 BY MS. WEAVER :16 (Question read) 16 Q. Answer the question .17 MR. ROCKEY : Same objections . 17 A. They were not aware of the change in th e18 MS . FRITZ : Uh-huh . 18 calculation until that point .19 A. I think the question is inaccurate . We 19 Q. And when did the change in the20 did have a reserve. 20 calculation occur?21 BY MS. WEAVER: 21 A. In Q3.22 Q. Okay . So going forward in the 22 Q. And specifically do you recall wha t23 deposition, if I refer to future returns reserve, I'm 23 month ?

24 going to be referring to the separate reserve that you 24 A. I believe we booked it in April .25 created in Q3 01, okay? 25 Q. Prior to April 2001 did you have an y

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1 conversations with anyone at PWC regarding whether or

2 not Cisco should break out a separate future return s

3 reserve ?

4 A. I can't recall .

5 Q. Did you have an opinion beginning th e

6 time you started at PWC until April 2001 as to whether

7 or not Cisco should create a separate future returns

8 reserve?

9 MS_ p'Rl'I2 Object to the question.10 BY MS . WEAVER :

11 Q. I'm sorry, yes. Did you have an opinion

12 beginning at the time you started at Cisco until April

13 2001 as to whether or not Cisco should create a


15 A. Did 1 have an opinion?

16 Q. Yes.

17 MS. FRITZ: Object to the question .

18 A. Yes .

19 BY, MS. WEAVER :

20 Q. What was that opinion ?

21 A. E felt that it should be created .

22 Q. And why ?

23 A. It was more conservative and th e

24 calculation was slightly more accurate, more detailed .

25 Q. And in what way was it more accurate and

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was reviewing the detail at that point .BY MS . WEAVER :

Q. What do you mean by that ?A. I had just started. I didn't kno w

exactly how all the returns -- all the reserves werebeing calculated .

They may very well have been looking at

historical rates to do that general reserve .Q. So what's your other reason for saying it

was more conservative to break out the future returns

reserve in a separate reserve?

A. Well, it added more -- more reserve .Q. Meaning that the reserve itself increased

in amount ?A. Increased .

Q. So you have testified that the generalreserve reserved for two components, AR and future

returns prior to April of 01, is that correct ?A. Sorry .

Q. You have testified that the genera lreserve reserved for two components, right? Accounts

receivable and future returns, prior to April of 2001 ,is that correct ?

A . Yes, it was primarily for the return sreserve .

10 :59 :

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1 more detailed? 1 Q. And there were no other components of th e2 A. It looked at the historical return rate 2 general reserve, is that correct ?3 and used that as a basis to record the entry . 3 MS. FRI17: Object to the question,4 Q. Prior to the time the separate reserve 4 misstates the witness's testimony .5 was created was the historical return rate used as a 5 A . I don't believe so .6 basis for any reserve? 6 BY MS . WEAVER :7 A . For the open RMA reserve it was used . 7 Q . And during the time period that you were8 Q. Was the historical return rate used for 8 Manager of Corporate Revenue you also had overview o f9 calculating the future returns reserve that was 9 other reserves, is that correct ?

10 comprised as part of the general reserve? 10 A. Correct . 11 .- OO A11 A. I'm not sure . 11 Q. Were there any other reserves of whic h12 Q. You're not aware of that? 12 you had oversight during that time frame that were13 A. I'm not sure . 13 comprised of more than one component?14 Q. Well, you are testifying that the 14 MS . FRITZ: Object to the question.15 separate future returns reserve was more conservative 15 A . No ,16 and more accurate because the calculation was based on 16 Q. Do you think it was GAAP compliant for17 historical rates, is that correct? 17 the general reserve prior to April 2001 to reserve for18 A- Yes. 18 both accounts receivable and the future returns19 Q. Are you saying that it was more 19 together?

20 conservative because the past return had not been 20 A. Yes .21 calculated on historical rates? 21 MR. ROCKEY : Objection, misstate s22 MR. ROCKEY: Objection, misstates his 22 testimony, calls for expert opinion, lack of _23 testimony . 23 foundation .24 MS . FRITZ: Objection . 10 : 58A 24 BY MS . WEAVER :25 A. I'm not aware . I liad just started and I 25 Q. When you say that the general reserve wa s

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1 was too large, is that correct? I that returns and allowances, RMA reserve .2 A. Yes. 2 Q, So there was no - -3 Q . Was it too large by a value of 30 million 3 A . It was calculated differently at tha t4 dollars? 4 point .5 A. I don't know how much it's too large by. 5 Q . But it was included in that genera l6 Q, And you never wrote a correcting memo, 6 number, is that correct ?7 did you? 7 A. That's a general, plus the open RMA8 MS . FRITZ: Object to the question, 8 number.9 misstates the witness's testimony . 9 Q. Which included future returns ?

10 A. Not that I remember. 10 A, Yes .

11 MR. ROCKEY : Asked and answered. 11 MS, WEAVER : IT mark as Exhibit 1085 a 4, 07 P12 MS . WEAVER: I'll mark as Exhibit 1084 a 12 document bearing Bates Number CIS-PPNPF-HC-005576 513 document bearing Bates Numbers CIS-PPNPF-0079680 13 through 768 .14 through 895 . 14 (Deposition Exhibit Number 108515 (Deposition Exhibit Number 1084 4 : 04P 15 was marked for identification )16 was marked for identification) 16 BY MS . WEAVER:

17 BY MS . WEAVER: 1? Q . Do you recognize Exhibit 1083 ?18 Q. Do you recognize Exhibit €084? 18 A . €083 or 1085 1?

19 A. No, i9 Q. I'm sorry, 1085 ..20 Q . Do you see tlhat it states it is from the 20 A. Yes.21 October Fiscal Year 01 Close Meeting? 21 Q. And what is Exhibit 1085 ?22 A. Yes . 22 A. It's a memo that € wrote to Mrinalini o n23 Q, And turning to the page with Bates Number 23 the returns reserve ,

24 0079761, do you see an entry there for returns and 24 Q. And do you see that the subject line o f

25 allowances or RMA reserve? 2S the email attaching the memo in Exhibit 1085 say s

207 20 9

1 A. Yes . 1 "FAS 48 revised"?2 Q, And do you see that there is an entry for 2 A . Yes. 4,08P3 fiscal year of October of 214 million dollars? 3 Q. And do you see, turning to the second4 A. Yes . 4 page of the memo, ending at Bates Number 5767, that a5 Q. And do you have any idea as you sit here S paragraph was added that read "If sales revenue i s6 today whether the FAS 48 return of 214 .2 million 6 recognized because the conditions in Paragraph 6 ar e7 dollars that you stated previously should have been 7 met, any costs or losses that may be expected in8 accrued for was inaccurate? 8 connection with any return shall be accrued i n9 A. Would you -- 4 : 05P 9 accordance with FAS Statement 5 accounting fo r

10 MS. FRITZ ., Objection to the question. 10 contingencies"? Do you see that ?11 BY MS, WEAVER : 11 A. Yes.12 Q. I'm looking at your memo . 12 Q, And then it continues "Sales revenue and13 MS. FRITZ : Misstates the testimony. 13 costs of sales reported in the income statement shal l14 A . Where is the -- 14 be reduced to reflect estimated returns ." Do you see15 BY MS . WEAVER : 15 that ?16 Q. Out of your memo -- 16 A. Yes.17 A. So the memo is inaccurate. 17 Q. Do you recall adding that paragraph ?18 Q. Do you know by what amount? 18 A. No.19 A. No, I don't. 19 Q. Do you recall I why that paragraph wa s20 MR . ROCKEY: Asked and answered. 20 added?21 BY MS . WEAVER : 21 MS . IRITZ: Objection, lacks foundation .22 Q. Incidentally, looking at exhibits 1083 22 A. Its just quoting more FAS business .23 and 1084, they don't reflect a future returns reserve, 23 BY MS . WEAVER:24 is that correct.? 24 Q. So here you revised your memo, isn't that25 A. The calculation would he in the -- in 25 true?


210 212

1 A. I would call it a minor modification, 4 .0 9P 1 you in response to the circulating drafts of the2 yes. 2 revenue recognition policy ?3 Q. And you didn't revise the figures 3 A. Yes .4 reflected below, is that correct? 4 Q. And do you see where he wrote "The5 A. I think it was -- if you took at the 5 application of this is not practical, we don't have6 times, it's sent about 30 minutes after the first . one. 6 the processes in place, nor will we for some time7 Q. And do you have any understanding as to 7 A. Yes.8 why you revised the memo? 8 Q. Do you have an understanding as to wha t9 MS . FRITZ: Objection, asked and 9 he was referring to ?

10 answered . 10 A. I think I was suggesting that sonic of the11 A. No. 11 maintenance revenue be attached to the warranty32 MS . WEAVER : I'll mark as Exhibit 1086 a 12 period .13 document bearing Bates Number CIS-PPNPF-0713078 . 13 Q. And do you recall how the issue was14 (Deposition Exhibit Number 1086 4 10P 14 resolved?15 was marked for identification) 15 A. Well, according to this, we don't start 4 :13 ?16 BY MS . WEAVER : 16 taking any maintenance revenue until after th e17 Q. Do you recognize Exhibit 1086? 17 warranty period, so what we do is -- the way we lef t18 A. Only as far -- that it's an email from 18 it was more conservative than the way I was19 Erik Alberts to myself- 19 suggesting .20 Q. And it's an entail that you received while 20 Q. And in what way was it more conservative?

21 you were at Cisco, right? 21 A. I think the warranty period was either 3022 A. While I was at Cisco, yes . 2 2 days or 90 clays . I can't remember. I think 90 days .23 Q, The subject says "RMA S Monthly 23 1 was suggesting that we should amortize24 Report .xls." Do you see that? 24 the maintenance revenue over the warranty period plu s25 A. Yes . 25 the following twelve months, whereas it looks like JiT1 1

211 213

1 Q. Do you see that it's dated March 12, 2001 1 Fuller is coming. hack and saying we can't take any2 at 1 1 :30 a .m .? 2 revenue over that warranty period, so we're -- we3 A. I do see that. 3 won't take any revenue for that 90 day period, an d4 Q. And do you believe that you based your 4 then we'll amortize it over the 12 months .5 memo at Exhibits 1082 and 1085 on the data that was 5 MS . WEAVER: I'll mark as Exhibit 1088 a 4 : 14 P6 contained or attached to Exhibit 1086? 6 document bearing Bates Number CIS-PPNPF-012495 57 A. It's quite possible. 7 through 957 .8 MS . WEAVER : I'II mark as Exhibit 1087 a 4 : 11P 8 (Deposition Exhibit Number 108 89 document bearing Bates Number CIS-PPNPF-0125537 9 was marked for identification )

10 through 538 . 10 BY MS. WEAVER :11 (Deposition Exhibit Number 1087 11 Q. Do you recognize Exhibit 1088 ?12 was marked for identification) 12 A . I have a vague recollection.13 MS. FRITZ: Do you have copies of that? 13 Q. Is it an email that you received whil e14 MS . WEAVER : I'm sorry . 14 you were at Cisco ?15 MS . (RITZ: Thank you . 15 A . Yes .16 BY MS . WE..AVER : 16 Q. And what do you recall about Exhibi t17 Q. Do you recognize Exhibit 1087? 17 1088?18 A. Vaguely . 18 A . Looks like we're just talking about som e19 Q. What is it? 19 of the PWC testing .20 A. An email from Jim Fuller to myself while 20 Q. And do you see on the second page of 4 :15P21 1 was at Cisco, although -- 21 Exhibit 1088 where Dan George wrote you, "Jim, as yo u22 Q. Isn't it actually an email from you to 4-12P 22 probably know, we have put the pinch on PWC regarding23 Jim Fuller? 23 fees"? Do you see that ?24 A. Yes . 24 A . I do see that .25 Q. And do you see that Jim Fuller entailed 25 Q. What is that referring to ?


222 22 4

1 Q. When you say it was backed out, that I sent it . Mark Firehammer, it looks like.

2 means that the open RMA report did not include 2 Q. Looking at the bottom of the page a t

3 two-tier information, is that correct'? 3 Exhibit 90, do you see where Mark Firehantnter wrote 1

4 MS . F RITZ: Objection to the question . 4 have not seen this SAF hit my queue"?

5 A. I believe that's correct . 5 A . I don't see that . 4 : 2 8 P

6 BY MS . WEAVER : 6 Q. The last sentence ?

7 Q. Looking at Exhibit 1090, do you recognize 7 A . Yes .

8 it? 8 Q. Do you know what SAF refers to?

9 A . I have a vague recollection as I'ni copied 9 A . I think it's a sales adjustment form .

10 on or I'm two'd on this email . 10 Q. Okay . I'll mark as Exhibit 1091 a

11 Q. So is Exhibit 1090 an email that you 11 document bearing Bates Number CIS-PPNPF-0 12558 2

12 received while you were at Cisco? 12 through 583 .

13 A . Yes . 13 (Deposition Exhibit plumber 109 1

14 Q. Do you see the subject line, "Request to 14 was marked for identification )

15 de-book 1 .238 million dollars for Ingrain Micro Asia"? 15 BY MS . WEAVER :

16 Do you see that.? 16 Q . Do you recognize Exhibit 1091 ?

17 A . Yes . 4 . 26P 17 A. 1 have a vague recollection .

18 Q_ Do you have any recollection as to this 18 Q. Is Exhibit 1091 all email you received

19 particular transaction? 19 while you were at Cisco from Phuc Iran at PWC?

20 A. No . 20 A. Yes, it is . 4 :29 P

21 Q. Do you see where Michelle Leung wrote in 21 Q. Looking at the last email on the first

22 the second entail -- and I'll omit the numbers. 22 page, do you see where Phuc wrote you, "Jim, Da n

23 Do you see where Michelle Leung wrote 23 wanted me to try and figure out how warranty and sale s

24 "Invoices were issued to Ingram Micro Singapore for 24 return accruals are calculated . I'm assuming it is

25 early shipments that had been rejected"'? 25 calculated based off of actual RMA's . I would like t o

223 22 5

1 A. Yes . I understand the methodology of the accruals ." Do yo u

2 Q. What is an early shipment? 2 see that?

3 A. Shipment shipped before the customer 3 A. Yes .

4 request date . 4 Q. What was he referring to ?

5 Q. And what did you understand it to mean 5 MR. ROCKEY: Objection, foundation .

6 when Michelle wrote that the shipments had been 6 A. What is he -- he's referring to th e

7 rejected'? 7 warranty and sales return accruals .

8 MS . I;RITZ: Objection to the question, 4 . 27P 8 BY MS . WEAVER :

9 lacks foundation . 9 Q. Did you have an understanding at the time

1 0 A. I don't know but Ingram Micro is a 10 as to what he was talking about` ?

11 distributor so that revenue would have been deferred 1,1 A. Only insofar as how the -- how those

12 anyway . 12 sales trends were accrued .13 BY MS. WEAVER : 13 Q. How did Cisco calculate its accruals fo r

14 Q. And why do you say that? 14 the warranty and sales return reserves at the tim e

15 A. Because that was our policy for -- that 15 that he asked this question ?

16 sell-through revenue recognition that we discussed 16 A. So warranty was 2 percent of the 4 : 30 P

17 earlier . 17 non-optical and 5 percent for optical, sales returns .

18 Q. But with regard to the bookings -- 18 We had the open RMA, plus that general returns

19 A. It looks like they de-booked it, yes . 19 reserve.

20 Q. Do you have an understanding as to why 20 Q. Do you see where you wrote "loo reserve i s

21 you were cc'd on this email? 21 made for future returns

22 A. I'm not sure who -- who sent it . Mark -- 22 A. Yes .

23 looks like everyone in the revenue group was -- was 2 3 Q. Was that true ?

24 copied . 24 A. It was -- it was inaccurate.

25 I'm not sure who Mark -- I'm not sure who 25 Q. But did you believe it was true at the


226 22 8

1 time? 1 A. Erik Alberts, Erik Stones, Mrinalini to2 A. I must have believed it was true . 1 2 some extent .3 wouldn't have wrote it . 3 Q. Did you share with PWC either draft of4 But subsequent to writing it, 4 the memos at Exhibits 1082 or 1 085 ?5 1 was educated that the general reserve was also there 5 A. Not to my knowledge .6 for the returns reserve, 6 Q. And why didn't you'?7 Q, Who educated you to that issue? 7 A. They were still -- they were still draf t8 A, I can't remember. 8 at that point.9 Q. Did it happen while you were at Cisco or 9 Q. But there was no final draft, is that

10 after this liitigation was commenced? 10 true ?13. A. It happened while € was at Cisco. 4 : 31 P 11 MS. FRITZ : Object to the question .12 Q Do you see the next sentence where you 12 A . I don't recall . I don't think so .13 wrote "Obviously this does not comply with GAAP as we 13 BY MS . WEAVER: 4: 3 4 P14 should be reserving for estimated future returns"? 14 Q. Did you submit any written report to PWC15 A. Yes . 15 on this issue ?16 Q. Did you believe that was true when you 16 A. I don't recall .17 wrote it? 17 Q. So no, you have no specific recollection ?18 A. At the time I suspect I believed that was 18 A. Correct .19 true. 19 Q. Do you see where you wrote that the20 Q. And do you believe it's true that fai#ure 20 warranty reserve was reserved at 2 percent of al l21 to reserve for future returns does not comply with 21 non-optical sales and 5 percent of optical ?22 GAAP? 22 A. Yes .23 A. Yes . 23 Q, Why was there a difference in the24 MR. ROCKEY : Objection, foundation, calls 24 percentage amount of the reserve for optical a s

25 for expert testimony . 25 opposed to non-optical ?

227 229

1 BY MS . WEAVER : 1 A. My recollection is the optical had a2 Q. Do you see. where you wrote "We are 2 longer warranty period .3 Currently determining the sufficiency of our sales 3 Q. And do you see at the beginning of thi s4 return reserve"? 4 email where you wrote "I assume that PWC has looked a t5 A . Yes . 5 this in the past in order to sign off on the financial6 Q. What were you doing to determine the 6 statements" ?7 sufficiency of the sales return reserve? 7 A. Yes .8 A. We worked with the RMA team to look at 8 Q. Why did you write that ?9 the data and estimate, estimate a return . 9 A . I was asking for their -- for thei r

10 Q. Was that the purpose of the memo at 10 analysis of the sales warranty accrual .11 Exhibits 1083 and -- 11 Q. What does it mean to sign off on 4 : 3 5 P12 A- The date of the memo? 4 :32P 12 financial statements?13 Q. I'm sorry, exhibits 1 082 -- 13 MR . ROCKEY : Objection, foundation .14 A. Yes, it's -- 14 A, It's the auditing firm would need to hav e15 Q. I'm sorry . Let me finish the question . 15 complied with GAAS in Generally Accepted Auditin g16 A. Okay . 16 Standards .17 Q. Was that the purpose of the memos at 17 BY MS. WEAVER:18 Exhibits 1082 and 1085 that you were referring to 1 8 Q. What does it mean to actually sign off o n19 earlier? 19 financial statements?

20 MS . FRITZ : Object to the question. 20 A. Those are questions for an expert .21. A . It's part and parcel of the same 21 Q. Didn't you yourself work at PWC and audi t22 analysis, yes . 22 financial statements?23 BY MS. WEAVER : 23 A. Only partners can sign off on financial

24 Q. Okay. And who besides you was engaged in 24 statements .25 that analysis'? 25 Q. Were you a part of a team that signed off


EXHIBIT D



---000---

In re :

)

CISCO SYSTEMS, INC . ,

SECURITIES LITIGATION, }

)

This Document relates to: )

ALL ACTIONS .

No .

C-01-20418-JW

(PVT )

Volume I

VIDEOTAPE 30(b)(6) DEPOSITION OF

CYNTHIA LEE SMITH

Friday, July 29, 2005

1


6 8

1 Q Okay, If you can turn to the -- just for the I So you understand even though we're in a2 record, this document is a notice of deposition of Cisco 2 conference room here today and there is no judge tha t

3 pursuant to federal rifle, civil rule procedure 30(b)(6) . 3 your testimony is going to have the same weight as i t4 And you see on the second page where it says number 1? 09 :01 4 would in a courtroom. 09 :0 35 A. Yes. 5 A. Yes.

6 Q. Okay. So is it your understanding that you 6 Q. And since, as you see, we have a court reporte r7 have been designated by Cisco to testify for the reason 7 recording everything that's said here today, so to mak e8 stated there in number 1? 8 it easier on her, what we need to do is just finish --

9 A. Yes. 09 :01 9 wait till I finish asking my question and then I'll wait 0 9 : 0 3

10 Q. So it states : "The policies, procedures and 10 till you completely finish answering so we don't speak

11 practices of Cisco with regard to Returns Materials 11 over other. It makes it very difficult for her t o12 Authorizations and returns ." So its your 12 record if we're speaking over each other.

13 understanding? Thank You . And then under number 2 it 13 A. I understand .

14 states -- 09 : 01 14 Q. So if at any time you don't understand a 0 9 : 0 3

15 A. Oh, sorry, yes . 15 question that I'm asking, it's my duty to make sure yo u16 Q. "Cisco's accounting for RMAs and returns, 16 understand the question and ask questions that are1 7 including, but not limited to: 17 understandable . So please don't hesitate to ask me to

18 (a) Cisco's methods for estimating expected 18 restate the question if you don't understand .19 product returns ; 09 :01 19 A. Okay. I will . 09 :0 3

20 (b) Cisco's treatment of RMA and returns under 20 Q. Your attorney may object to some of my21 FAS 48 and any other applicable accounting rules or 21 questions . Unless he instructs you not to answer, yo u

22 regulations ; 22 should just go ahead and answer the question after he' s23 (c) how Cisco accounted for RMAs and returns by 23 stated his objection .24 customer type (e .g. two tier) ; and 09 :02 24 A, Okay . 09 .0 4

25 (d) how Cisco accounted for RMAs and returns by 25 Q. And if you don't understand the question, don' t

7 9

1 program type (e .g ., warranty, technology refresh, staged 1 try and guess or try and assume what I'm saying . Just2 Products) ." 2 ask me to restate the question . We don't want you to

3 Do you see that`? 3 guess in any way today .

4 A. Yes. I see it . 09 :02 4 A. Okay. 09 :04

5 Q. And it's your understanding that you've been -- 5 Q, Thank you, So is there any reason today yo u

6 you're going to testify -- 6 can't give your best testimony`? Are you under any kin d

7 A. Yes. 7 of medication or - -8 Q. Thank You . All right . Could you please state 8 A. I am not.

9 your current business and resident address for the 09-02 9 Q, So there is no reason you can't give your 09 :0410 record? 10 best --

11 A. My business address is Cisco Systems -- can I 11 A. I can give my best testimony ,

12 have my card -- 170 West Tasman Drive_ San Jose, 12 Q. Thank you. All right . Before you came i n

13 California . You want the zip? 95 1 34-1 706 . 13 today, did you look at any documents that might hav e14 Q. And your resident address? 09-02 14 refreshed your recollection about the testimony that 09-0415 A. 14575 DebelI, Los Altos, California, 94022 . 15 you're going to give today ?

16 Q. Great . Thank you . 16 A. This document and another -- a couple othe r

17 A. Uh-huh . 17 documents that we have .

18 Q. Have you ever been deposed before? 18 Q. Okay. Do you know what those documents were ?

19 A. Not to my knowledge . 19 A. Yes. 09 :0420 Q. Okay. 20 Q. Okay. And what were they ?21 A. Not that I recall . 21 A. This document and an RMA policy .

22 Q, All right . So I'll just go over a few ground 22 Q. An RMA policy from Cisco?

23 rules to make it easy . I'm sure Mr. Lee went over some 23 A. Yes.24 of these with you or an attorney went over some of these 09 : 03 24 Q. And that was it, just those two documents? 09 :05

25 with you already, but just to make sure . 25 A. A presentation that I wrote on RMAs .


1 0

1 Q. And when was that? When did you write that?

2 A, I don't recall the date on the presentation.

3 Q. All right. Okay. Can you just describe that

4 presentation for me?

5 A. It was about an RMA reduction program .

6 Q. All right. But you don't remember the date in

7 which you wrote it ?

8 A. I don't recall the exact date on the

9 presentation.

10 Q. Do you have an estimate of what the date -- do

11 you remember approximately what the date was on the

12 document ?

13 A. Probably between 1999 and 200 . Somewhere in

14 that time period .

15 Q. And would you recognize the document if you saw

16 it again?

17 A. Yes.

18 Q. Do you remember your purpose of creating that

19 document, the one that you used to refresh you r20 recollection?

21 A. More or less, yeah .22 Q. So can you tell rite why'?

23 A . It was a report on a program that I was running

24 called retuned materials reduction.

25 Q, So when you created this document, was it part

1 1

I of your job, was that part of your jot) at . Cisco'?

2 A. Yes .

3 Q. And who did you create it for ?

4 A. Most likely I created it for the steering

5 committee .

6 Q. And what was your job at the tittle when you7 created the document?

8 A. Program manager.9 Q. Okay. At Cisco?

10 A. At Cisco .11 Q. And what were your responsibilities in that1 2 position ?

13 A. My responsibilities were to lead a team of14 people to reduce the quantity of returned materials .15 Q. So that was your -- that was your entire --16 A. Job.17 Q. -- purpose of your employment at that time?18 A. Yes.

19 MR. LEE: Wait for him to finish his question .

20 Q. M. OLTS : Okay . So I just want to define a

21 couple of things for the rest of our discussion here

22 today, I'm going to be talking in the past tense quite

23 a bit, and when I do that, I'm going to be talking about

24 a certain period of time . So we're going to try and

25 establish that period of time . That's going to be

12

1 August of 1999 through February of 2001 .2 At any time that you need to remind what tha t3 period of time is, that's fine . Or if you don' t

09 : 05 4 understand the question, just let me know, Bu t5 generally that's what I'm going to be speaking about ,6 So August 1999 through February 2001 . All right ?7 A. Yes.8 Q. And if I say "the relevant period," that's the

0 9 :0 5 9 time period I'm referring to. Tat's approximately the10 class period for our -- for our litigation . Okay ?11 A. Okay.

12 Q. Do you have any education after high school ?

13 A. Yes,0 9 : 06 14 Q. And where did you go to school after hig h

15 school ?16 A. UCLA.

17 Q. Did you receive a degree from UCLA ?

18 A. No.09 : 06 19 Q, When you were at UCLA, did you take any classe s

20 in accounting?

21 A. No.

22 Q. Do you have any other degree? Do you have an y23 degree from any institutions?

09 :06 24 A. Yes, 1 do.

25 Q, And where was that?

09 :0 8

09 :0 8

09 :0 8

09 :08

09 .0 8

1 3

1 A . University of Michigan .

2 Q . So did you transfer to the University o f3 Michigan - -

0 9 : 07 4 A . Yes .5 Q . -- from UCLA?6 A . Yes .7 Q . And what degree did you receive from Universit y8 of Michigan ?

09 -0 7 9 A. Mechanical engineering .10 Q. And what year did you graduate?

11 A. I don't remember. I graduated high school i n12 1976. So five years after that.13 Q. And did you receive any other degrees afte r

0 9 : 0 7 14 your degree at Michigan?

15 A . Yes.

16 Q . And what was that?

17 A . A master's in mechanical engineering.

18 Q . And where was that from ?

0 9 : 0 7 19 A . Stanford .20 Q . Do you remember what year that was ?21 A . No . Approximately two years after that .22 Q . So it was immediately following your- -23 A . Yes .

0 9 : 0 7 2 4 Q, Did you receive any other degrees ?

25 A . No .

09 :09

09 :09

09 :09

09 :09

09 :0 9

EASTWOOD-STEINdeposition services & litigation support (800) 514.2714

14 1 6

1 Q. So after you graduated from Stanford, did you 1 A. I was a mechanical engineer moved to manager.2 take a job? 2 So some of both .3 A. I was employed while I was at Stanford . 3 Q . So at what company did you actually become a4 Q. All right . And by whom were you employed .) 09 : 10 4 manager? 09 :12

5 A. Hewlett Packard . 5 A. The first one, the first start-up, X-Cyte .6 Q. And when you started at Hewlett Packard, what 6 Q. At X-Cyte you were a manager as well as a7 was your position? 7 mechanical engineer ?8 A. Mechanical engineer. 8 A . Correct.9 Q. And what were your -- what were your job 09 :10 9 Q. Okay. And what were your duties as a manager? 0 9 1 2

10 responsibilities as a mechanical engineer? 10 A. To lead teams of people to design products .11 A. To design a fiber optic receiver . I1 Q. Okay. So who exactly was it that you were12 Q. And how long did you hold that position? 12 managing?13 A. For approximately three years . 13 A. Mechanical engineers, electrical engineers,14 Q. And after the three years, then what did you 0 9 : 10 14 physicists . 0 9 : 1 215 do? 15 Q. And were you overlooking development of a16 A. I went to a start-up company . 16 certain product ?17 Q. What company was that? 17 A. Correct.18 A. X-Cyte . 18 Q. So was it your job to manage the entire team o f19 Q. And what was your position when you started at 09 :10 19 that project? 09 :1220 X-Cyte? 20 A. Typically, yes .21 A. Mechanical engineer. 21 Q. And did you -- and you had that position a t22 Q. I can see where this is going . And what did 22 X-Cyte ?23 your job entail at X-Cyte? 23 A. Yes.24 A. I designed RF, high frequency power supplies 09 . 10 24 Q. As a manager. 0 9 :1 325 and tags . 25 A. Yes.

1s 17

1 Q. What is a tag'? 1 Q. And then as well at Raychem?2 A. Its a remote recognition like how you get into 2 A. Yes .

3 the buildings when you put something up and the little 3 Q, And what kind of -- what kind of products were4 guy reads it . 09 :11 4 you developing at Raychem? 09 :1 35 Q. ©h, okay. And how long did you hold that 5 A . Raychern was polyethylene natural gas fittings .6 position? 6 Q. And then after Raychem, do you remember where7 A. Approximately three years. 7 you went ?

8 Q. And then where did you go? 8 A. Uponor.9 A. From X-Cyte I went to -- did I go to Raychem . 09 : 11 9 Q. And you were -- did you have a position as a 09 : 1 3

10 I don't exactly all remember . I worked at Raychem . 1 10 manager there as well ?11 worked at Uponor. I can just go -- I've had like five 11 A. Yes.12 different jobs . 12 Q. And what kind of products were you developing ?13 Q. Okay. So subsequent to leaving X-Cyte, you 13 A. The same products . Uponor bought it fro m14 worked at several different places, but you're not sure 09 .11 14 Raychem . 09-1 215 exactly -- 15 Q. That's the gas fittings .16 A. I'd have to get my resume for al I the dates . 16 A, Yes .17 Q. So you're not sure exactly the sequence? 17 Q. And then where did you go?18 A. I think it was Raychem, Uponor, Metcal and then 18 A. Jian .19 we were bought and then Jian. 0 9 :11 19 Q, Would you spell that for the record? 0 9 :1320 Q. So at Raychem, what was your position at 20 A. J-i-a-n.21 Raychem? 21 Q. And did you have a position of manager at Jian ?22 A. Mechanical engineer. 22 A. Yes, I did.23 Q, I'm sorry. So at alt of these -- at those five 23 Q. And what kind of product were you developing ?24 companies that you just listed, were you a mechanical 09 .12 24 A. That was software for building business plans . 09 :1 425 engineer at each of those companies? 25 Q. And then -- and you were a manager at Jian a s


18

1 well?

2 A. Yes .

3 Q. So did the size of the teams that you wer e4 managing these different companies, did those change

5 over time?6 A. They varied, yes.7 Q. They varied . Okay. Were they steadily getting

8 larger?

9 A. No.10 Q. No?11 A. Not necessarily .12 Q. Attd then where did you go after Jian?13 A. Cisco .

14 Q. And what year was that?15 A. 1999.16 Q. And then what was your position when you

17 staved at Cisco in 1999 ?18 A. Program manager.19 Q. And what were your responsibilities of program20 manager?21 A. RMA reduction .22 Q. So when you started at Cisco, that was your --

23 it was your first job to work with as a RMA -- strike24 that . I'nm sorry .25 So your fi rst posi t i o n at Cisco dea l t w ith

19

1 reducing the amount of RMAs?

2 A. Correct .3 Q. And was that the purpose of why you were hired?4 A. I believe so .5 Q. Did you understand that -- is that the position

6 that you applied for, or how did you come to work at

7 Cisco?

8 A. I don't recall . It might have been through the

9 Web.10 Q, So was it a position that you aspired for oi-

l I did they come recruit you ?

12 A. I don't recall . I interviewed .13 Q. Okay. That's fine. But in the interview

14 process, did Cisco represent to you that you would be

15 being brought in for the purpose of running the RMA

16 program?17 A. I don't recall . I don't think so . I think it

18 was more broad than that . More general .19 Q. Do you recall what your understanding was of

20 what the job was that you were applying for?21 A. I don't really remember. It just was22 engineering process work .

23 Q. Okay. Just to go hack a little bit, on the

24 previous jobs you had before you came to Cisco --

25 A. Yes.

20

1 Q. -- did you have any experience dealing with - -

2 dealing with returns ?

3 A. Some. When product comes back and it was

0 9 : 14 4 failed, we would do analysis on why it failed .

5 Q. But you didn't have any prior experience as6 running a team that was just focused on returns per se .7 A. No.

8 MR . LEE: Objection, vague and ambiguous .0 9 :14 9 Q. MR. OLTS: But is it We to say that as you r

10 role as a manager in your previous employment you deal t11 with product being returned by customers ?12 A . I don't quite understand what you mean there .13 Q. So at Raychem, for example, you were working a s

09 :14 14 a manager.

15 A. Yes .

16 Q. Correct ?

17 A. Yes .

18 Q. And part of that job as a manager was to dea l

09 :14 19 with -- in some way deal with product being returned b y

20 customers?

21 A . For failure analysis reasons.

22 Q. Okay. So as your job as a manager a t23 Raychem -- at your previous employment before Cisco - -

0 9 :15 24 A. Yes.

25 Q . -- the only return issue that you dealt with

09 :1 6

09 .1 7

09 :1 7

09 :1 7

09 :1 7

2 1

1 typically was for product failure returns ?

2 A. Correct .

3 Q. Okay. So . for example, if a customer was -- i n09 :15 4 your previous employment, if a customer was returning a

5 product because of an order error, for example, woul d6 you have dealt with that son of return ?

7 MR . LEE : Objection, compound.8 Q. MR. OLTS : At your previous employment, were

09 .-15 9 you aware of customers returning product for other10 reasons besides product failure ?

11 A . I don't recall .12 Q. So that wouldn't have been part of your job ,

13 dealing with other types of returns .09 .15 14 MR . LEE: Objection, vague and ambiguous.

15 THE WITNESS: Yeah, I'm not with you ,16 Q. MR. OLTS: Okay . So when you came to Cisco in17 1999 and you were hired as a program manager to dea l18 with RMAs ; is that correct ?

09 .16 19 A. I was hired as a program manager. That was m y20 title ,

21 Q. And did you have any other positions at Cisco' ?

22 A. Prior to that? _23 Q. No. No. After that. What was your nex t

09 :16 24 position at Cisco'?

25 A. My next position was head of the strategic

09 :1 8

09 :18 1

09 : 1 8

09 :19

09 :1 9


22 24

1 improvement group. 1 A . Yes .2 Q . And what were your duties in that position? 2 Q . So, for example, if a customer returned produc t3 A . To help other groups in Cisco be able to 3 because of an order error, for example, would that be an4 program manage their projects . 0 9 :19 4 aspect that your team would deal with? 09 : 2 25 Q. And how long did you hold that first position 5 A. Yes .6 as a program manager? 6 Q. Okay . So after your second position at Cisco ,7 A. I don't recall exactly . Maybe a year and a 7 did you hold any other positions ?8 half. 8 A. Yes, I did .9 Q. Do you recall when in '99 that you were hired 09 .19 9 Q, Okay . And what was the next position? 09 : 2 2

10 by Cisco? 10 A. I went to the voice technology group .11 A. May. 11 Q . Okay. And what were your responsibilitie s12 Q. May? So did you have any dealings with RMAs in 12 there?13 your second position as a strategic -- I'm sorry . What 13 A . Operations.14 was the -- 0 9 : 2 0 14 Q . And what do you mean by operations? 0 9 : 2 215 A. Strategic improvement group . 15 A . To do the metrics for the team, to manage the16 Q. I'm sorry . Did you have any dealings with RMAs 16 staff meetings .17 in that position? 17 Q . So did you deal with RMAs in that position?

18 A. Yes. 18 A . Not directly .19 Q. And what were those dealings? 09 :2 0 19 Q. Not directly. Was the RMA team that you 0 9 : 2 220 A . The same RMA team reported to me . 20 established still reporting to you at that time ?21 Q. So do you know if that RMA team was established 21 A. No, they were not .22 at the time that y ou came to Cisco in May of 1999 , or 22 Q. And do you know who they reported to at that23 was it already established by the time you got there? 23 time?

24 A. 1 established a team to reduce returned 09 : 20 24 A . I'm actually not sure how many of them were 09 :2 325 materials . I don't know what was previous . 25 left because the program was over .

23 2 5

1 Q. All right . But when you got there, the team 1 Q. Okay. And at what time was the program ended ?2 that you worked for wasn't in place . That was a team 2 A . I don't know exactly because I left . So3 that you had established when you -- when you worked 3 somewhere around that time period there might have bee n4 there . 0920 4 one or two left . 092 35 A. There were people that worked on RMAs prior to 5 Q . So around the time that you switched positions6 me. I established a team. 6 to the voice technology group, the RMA team was sort o f

7 Q. You established your own team . 7 disbanded, is that -- it was reduced in size ?8 A. Correct . 8 A . Reduced . Reduced .9 Q. And this was the team that reported to you -- 09 :21 9 Q . And do you know when that was? 09 : 2 3

10 A. Yes . 10 A . Let's see. 1999 . So probably two years . So11 Q. -- when you moved on to your next position? 11 200 1 .

12 A. Yes. 12 Q . In 2001 .13 Q. Was it your understanding that that was the 13 A . Probably closer to 2002.

14 primary team at Cisco that dealt with RMAs? 0921 14 Q . So do you remember the month? 09 :2 315 A. I don't understand primary . 15 A . No, I don't recall .16 Q. Were you aware of other people in the company 16 Q. Is it safe to say --.1 7 that were -- other teams at Cisco that were dealing with 17 A . It was probably around December .18 RMAs in any way? 18 Q. So late 2002 .19 A. Yes. 0 9 : 21 19 A . No, maybe January. Early 2002 . 09 : 2 320 Q. Okay. And what were those teams? 20 Q. So January 2002 . Approximately.21 A. Customer service . 21 A . Yes .

22 Q. Okay. So the team that you established, what 22 Q. Okay . And do you have an understanding of wh y23 was -- what was their role in dealing with RMAs? 23 the RMA team was reduced ?24 A. To reduce the quantity of RMAs . 09 :21 24 A . Yes . 09 :2425 Q. So across the board. At I sorts of RMAs. 25 Q . And what was that understanding ?


26

1 A . Because we operationalized the metrics and they

2 were no longer needed .

3 Q. So when you say operafionalized the metrics,

4 what do you mean?

5 A. So that each of the groups had their own RMA

6 number that they would monitor . You didn't need a

7 centralized team to look after .

8 Q. Just trying to get real specific here . Just

9 trying to get an understanding of the whole system .

10 When you say the different teams, what do you mean?

11 A. So, for example, sales .

12 Q. Okay.13 A. They would look at their RMAs and know how

14 many -- what their number -- what their percentage

15 should be . They had a target .

16 Q. And how was that accomplished? How did sales

17 be able to get their own number?

18 A. From the RMA reduction team .

19 Q. What did the RMA reduction team do to enable

20 sales to have their own RMA number ?

21 A. We worked with executives to say that RMA --

22 everyone should have an MBO of what their RMA number

23 should be and they should monitor to that percentage and

24 try and reduce it .

25 Q. What's an MEG?

28

1 A. Correct .

2 Q. And that was the primary group that was dealin g

3 with RMAs? I'm sorry . You said that the sales team was

0 9 : 2 4 4 able to develop their own RMA number, is that correct ?

5 After your RMA team -- the sales team was able t o

6 develop its own RMA numbers?

7 A . No, that's not -- I don't know what you mean b y8 RMA number . Can you clarify that ?

09 :24 9 Q. Sure. You said that the purpose of the RM A

10 team was to -- the RMA team that you ran - -11 A. Yes.12 Q. - was to be able to give these othe r13 individual teams like sales a way of monitoring thei r

09 : 2 4 14 own RMAs; is that correct ?

15 A. That's correct .

16 Q. Okay. I don't want to repeat myself, but were17 there any other -- were there any other teams that yo u

18 remember besides sales?0 9 : 2 5 19 A. Sales is the only one I remember that got a

20 target, that knew a percentage that they were trying t o21 hit .

22 Q. Okay.23 A. Right . So that they would look after it .

0 9 : 2 5 2 4 Q. And do you know who was in charge at that time

25 of the sales team?

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27 29

1 A. Management by objective. 1 A. Gary Daichendt .2 Q. And what does that mean? 2 MR . L EE : Wait for him to finish .3 A. That's how you're ranked, if you will, or 3 THE WITNESS : Sorry.

4 that's how you're scored . So if you're doing a good 0 9 .25 4 Q. MR. OLTS : I believe that you testified that

5 job, you meet your MBOs, your targets . 5 there was a specific number that the sales team wa s6 Q. And I know you said this but, for example, 6 trying to hit ; is that correct ?7 sales was one of the teams that you said . What were the 7 MR . LEE: Objection, vague and ambiguous .8 other teams, if you can remember? 8 Q. MR. OLTS: Okay . So your RMA helped the sales9 A. I don't recall the other teams. Primarily 0 9 : 2 5 9 team develop a way that they could establish an RM A

10 sales was the most significant . 10 number that they were trying to make every month ; is11 Q. Okay. So were the teams divided up by line of 11 that correct ?

12 business or was it -- was it divided up in some other 12 A. It's a percentage .13 way? 13 Q. A percentage of what ?14 A. I don't know what you mean by line of business. 09 :26 14 A. Product goes out, some product comes back .15 Q. For example, it's my understanding that Cisco 15 It's an RMA percentage. So they would look at thei r

16 had an enterprise line of business, for example, Do you 16 number and know what it was .17 know that term from your employment at Cisco? 17 Q. Okay. So is that like a percentage of booking s18 A. I do. That doesn't impact RMAs . Salesmen are 18 or percentage of sales made? Do you understand? Do yo u19 individual men . They report up, or women, that report 09 :26 19 know?

20 up a chain . 20 A. I don't remember which one it was.

21 Q. Okay. So when you say sales, you're referring 21 Q. If it was bookings or sales. Okay .22 to the sales team? 22 A. Most likely it was sales.

23 A. The sales force . 23 Q. So do you know how that number was established ,24 Q. The sales force. Okay. Great . So that would 09 :26 24 that percentage that they were trying to hit ?

25 include salesmen, sales managers, that sort of thing? 25 A. You mean the absolute? We provided the

09 :2 8

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34

1 Q, So approximately early 2002 the percentage of

2 RMAs had been reduced to around three percent .

3 A. I'm not positive of the number . The goal would

4 be broader than that, than just an absolute number .

5 Q. Okay. When you say the goal would be broader

6 than that, what do you mean?

7 A. Back to the MI3Os.

8 Q. Okay.9 A. Having people be aware of RMAs and be able to

10 understand.

1I. Q. All right. So would you say that anothe r

12 aspect of the team was to inform the salesmen about the

13 RMAs ?

14 A. Yes.15 Q. Okay. Were there any other purposes of the RMA

16 team?

17 A. Provide data, improve processes.

18 Q. So provide data to whom ?

19 A. To the company at large of where the RMAs are,

20 what the root cause was .21 Q. Okay. And so to whom would you provide that

22 information ?

23 A. A variety of people, the steering committee.

24 Q. The steering committee . Okay. And who was on

25 the steering committee'?

3 5

1 A. Well, Gary Daichendt . I don't recall all the

2 names, but people from finance, people from

3 manufacturing, people from customer service and people

4 from sales.

5 Q. So do you recall who from the finance

6 department was on the steering committee ?

7 A. I don't recall who the VP was at the time . We

8 reported to Larry Carter . So he might have been the

9 person .

10 Q. Do you remember who from manufacturing?

11 A. Carl Redfield was a sponsor, Randy Pond .

12 Q. And do you remember who from customer service?13 A. Who was in customer service then . I don' t

14 recall .

15 Q. Okay, And from sales, you said it was Gary

16 Daichendt?

17 A. Daichendt.

18 Q. Daichendt? I'm sorry . Was there anyone else

19 that you can recall ?

20 A. 1 don't recall, but the information wasn't kept

21 secret .

22 Q, So. you would say that all of the informatio n

23 that was provided the steering committee was generally

24 available to other people in the company ?

25 A. Who do you mean?

3 6

1 Q. You said it wasn't kept secret .2 A. Yeah .

3 Q. So I'm just trying to understand who

09 :33 4 A. At the executive level . 09 :3 6

5 Q. At the executive level . Okay. So like whe n

6 you say that someone from finance, someone fro m

7 manufacturing, someone from customer service was on th e

8 steering committee, would it be the vice president o f

09 : 3 3 9 those individual companies? 09 :3 610 A. I don't recall, but like it might have been a11 director.

12 Q. So some higher up in the committee, a n

13 executive - -

09 :34 14 A. Yes. 09 :3 6

15 Q. -- or a director of some sort?16 A. I believe so.

17 Q. Those were the members of the steering

18 committee .

09 : 3 4 19 A. As I recall- 09 . 3 6

20 Q. Okay. Great . And just to -- just to get clea r

21 on the time, you said that the RMA reduction team tha t

22 you created was from approximately May 1999 to

23 approximately January 2002. So during that entire

09 : 3 4 24 period, did they report all of the information that they 0 9 : 3 7

25 acquired to the steering committee?

37

1 A . That's too broad - -2 Q. Okay.

3 A . -- of statement . I don't understand exactly .0 9 :3 4 4 Q. What kind of -- what kind of information would 09 :3 7

5 you provide the steering committee ?6 A . RMAs as a percentage of bookings or safes. I7 don't recall exactly which number.

8 Q. Okay. Anything else?

0 9 : 3 5 9 A. Updates on the program. 09 : 3710 Q. Anything else generally ?

11 A. I think primarily just data . RMA data.12 Q. RMA data? And what form would these report s13 take? Would you create like a PowerPoint presentatio n

09 :35 14 or do you know? 09 :3 8

15 A. We had a Web site and, yes, we would do

16 PowerPoint,17 Q. So there was an RMA Web site?

18 A. Yes.

09 :3 5 19 Q. Was that part of Cisco's internal intranet? 09 :3 8

20 A. Yes .21 Q. And do you know who had access to that Web

22 site ?

23 A. Executives . I don't recall . Our team . Other

09 :36 24 people . 09 :3 8

25 Q. So is it safe to say that the members of th e

EASTWOOD-STEINdeposition services & litigation suppo rt (800) 514-2714

38 4 0

1 steering committee had access to that Web site? 1 A. That's a large, long span . Yes. RMA

2 A . I believe so . 2 percentages typically vary .

3 Q. And how often would you report to the steering 3 Q. Okay. Do you remember if there were -- I' m

4 committee? 09 .38 4 just trying to get an idea. So when you say that they 09 :4 1

5 A. I don't recall . You'd have to ask me a period 5 vary, do you mean that -- how much would they vary?

6 or something . 6 A. Well, start -- I don't recall the actual

7 Q. Okay. So when you started the RMA team back in 7 numbers. It increased and then it decreased . I mean --

8 May 1999, how often do you think you reported to the 8 and by day it would eo up and down, right .

9 steering committee? 09 : 3 9 9 Q. So your team had access to daily RMA numbers? 09 : 4 1

10 A. It wasn't regular. So I know in the beginning 10 A. Yes.

1I there were more meetings than once it got running . 11 Q. Okay. And were those daily RMA number s

12 Q. So more -- 12 available on the Web site?

13 A. Maybe -- 13 A. I believe, if I recall, that the Web site was

14 Q. I'm sorry . Go ahead . 09 .39 14 refreshed once every 24 hours, 09 : 4 2

15 A. It maybe in the beginning was once a quarter . 15 Q. Once every 24 hours . Okay. So just to try an d

16 Q. So once a quarter when the team first started . 16 get in idea what the Web site was like, let's say I ha d

17 A. Yes, I believe so . 17 access to the Web site and I logged on, I would be abl e

1.8 Q. And did the number of those reports go up as 18 to see the RAM numbers for that particular day or the

19 time went along? 0 9 : 3 9 19 previous day? I'm sorry . 0 9 : 4 2

20 A. No. 20 A. In sales, if you were a sales manager, you

21 Q. It decreased . 21 would go took at your RIMAs for that day, yes .

22 A. Yes. 22 Q. Okay. And what if I was an executive?

23 Q. So, say, in the middle, say, you know, August 23 A. We didn't put -- so if they were an executive ,

24 '99, how -- I'm just trying to get a -- 0 9 : 3 9 24 they'd have to go look at it by a sales guy . So 09 : 4 2

25 A. I don't recall . 25 typically the high level chart was not updated daily .

39 49.

1 Q. Okay.2 A. I mean, we went in the beginning . Afterwards

3 we had a Web site . So there was no need to go because

4 they had their numbers, they knew how to get thei r

5 numbers .6 Q. So if they wanted the numbers --

7 A. They could go took.

8 Q. So it's safe to say that the number o f9 meetings, interpersonal meetings you had with that

10 committee you had decreased over the life of the RMA

11 team?

12 A. Correct.13 Q. So are there any other committees that you know14 of that you reported to, that the RMA team reported to?

15 A. Not committees that 1 know of.

16 Q. Any individuals that you can remember ?

17 A, If anybody wanted to know about RMAs, we would

18 give them information .

19 Q. What was the name of the Web site?

20 A. The RMA reduction Web site .

21 Q. Very creative .

22 A. Yes.

23 Q. So during the time of April -- I'm sorry--

24 May 1999 to January 2002, did the percentage of RMAs

25 fluctuate a great deal?

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Q. Okay. So when you say high level chart --

A. It was by quarter.Q. So there was -- sounds like there was differentaspects to the Web site .A . Correct .Q. And that one part of the Web site was almostlike a quarterly report --A. Yes.

Q. -- of RMAs?A. Yes.Q. And that was updated once per quarter?

A. As I recall .

Q . And was that -- do you remember if that it was

at the beginning of the quarter, at the end ?

A. I don't recall.

Q. And then what were the other aspects of the Web

Site ?

A. RMA reduction . RMA numbers by sales person

rolling up .

Q. Okay. So just trying to get an understanding .

So there's a -- there's a portion of the Web site where

you could check individual salesman's numbers?

A. Correct.Q. And then when you say rolling up?

A . If I was a manager, I could see the sum of the

09 :4 2

09 :42

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98 10 0

1 A. 5183 . 1 recognize that . We just talked about 1 A. Parts of it. I had my team help me .

2 it here . 2 Q. When was this document created ?3 Q. Is that the only time that you recognize it 3 A . I don't know, and there is no date on it . So

4 from, or do you recognize it from your employment at 11 : 2 9 4 we could look at the graphs and maybe guess . 11 : 3 3

5 Cisco? 5 Q. 1 don't want you to guess . I just want to kno w6 A. I don't recall . I'm not familiar with this 6 if you remember.

7 document . 7 A . I don't remember exactly . I would look at th e

8 Q. Okay. 8 graphs and derive it from that .

9 A. But I wouldn't wart to say that-[ never saw 11 .30 9 Q . Without doing that, do you have a recollection 11 :3 3

10 parts of it before . It's possible . But I'm not 10 of when this document was created approximately ?

11 familiar with the document . 11 A. No. I would look here and see July 1999. S o

12 Q. Do you see on the front page where it says 12 sometime after that .

13 approved by "draft"? 13 Q. By looking at the document, does it refresh

14 A, Yes . 11 : 30 14 your recollection as to when the document was created? 11 :3 3

15 Q. Do you have any knowledge as to whether or not 15 A. You mean actual remembering it? Not really ,

16 this document replaced the previous exhibit as Cisco's 16 no.17 policy? 17 Q_ Does it help you remember ?

18 A. I have no knowledge . Yeah . 18 A. If l look at the dates, I would say it's afte r

19 Q. Going back to page 5183 . 11 : 3 0 19 that . I couldn't he more specific. I couldn't be more 1 1 : 3 3

20 A. Yes. 20 factual .21. Q . Do you see that under seetion .2 Product 21 Q Is this the document you were referring to whe n

22 Returns for Credit? 22 you stated that you had reviewed some documents prior t o

23 A. 2. Product Returns for Credit, yes . 23 your testimony here today?

24 Q. That this policy is exactly the same as the 113 0 24 A. Yes . 11 :3 4

25 policy in the previous document? 25 Q. This is the specific document?

99 10 1

1 MR. ROCKEY : Are you asking her to compare the 1 A. Yes.

2 two provisions and verify that they are exactly the 2 Q. Will you turn to page 534 -- I'm sorry . 3422 .3 same? 3 I'll just use the last four digits . Be easier .4 MR. OLTS : I'm sorry . Can we just not have any 11 .30 4 A. Yes. 11 :3 4

5 speaking objections? 5 Q. Under the title RMA Program Sponsors, th e

6 MR . ROCKEY : I'm just asking for a 6 document says : "Carl Redfield started an initiative to7 clarification of the question . I object as vague and 7 create a program that would reduce RMAs by 50% ." I s8 ambiguous . 8 this the program that was started when you first worke d9 MS . WEAVER : Let the witness ask for I1 : 3 1 9 at Cisco to reduce RMAs? 11 : 3 4

10 clarification . 10 A. Yes.

11 MR . LEE: IT object that the documents speak 11 Q. So this document refers to the program that we12 for themselves . 12 were discussing earlier in your testimony .13 THE WITNESS: Based on a one minute going 13 A. Yes .14 through, the words appear to he exactly the same, 11 :31 14 Q. So was the stated goal of the RMA reduction 11 : 3 5

15 Q. MR. Ol I S : All right . Thank you . I'll now 15 team to reduce RMAs by 50 percent ?16 show the witness which has been previously marked as 16 MR. ROCKEY : Objection, vague .

17 Exhibit 157. 17 THE WITNESS : The goal is there . Create a18 A. Okay . 18 program that reduced RMAs .19 Q. Do you recognize this document? 11 .32 19 Q. MR. OLTS : So was that the -- was the stated 11 .3 5

20 A. Yes. 20 goal of the RMA reduction team to reduce RMAs by21 Q. Where have you seen it before? 21 50 percent ?

22 A. Many times. 22 MR. ROCKEY : Objection, vague as to stated .

23 Q. Many times. Where specifically? 23 THE WITNESS : Hold on. If you go to 425, there

24 A. At Cisco . 11 :3 2 24 are the goals . 11 .3 525 Q. Did you create this document? 25 Q. MR. OLTS : So was it not the goal to reduce


EXHIBIT E

CONFIDENTIAL



----o0o---

In re: )

CISCO SYSTEMS, INC . ,

SECURITIES LITIGATION, )

--------------------------------

This Document relates .to: )

ALL ACTIONS . )

CONFIDENTIAL TESTIMONY

VIDEOTAPE DEPOSITION OF

PHUC TRAN

Friday, September 23, 2005

CO N FI D ENTIAL

No .

C-01-20418-JW

(PVT)

1

EASTWOOD-STEINDeposition Management (QUO) 514 -27I4

CONFIDENTIAL

6 8

1 .Q . And L? 1 A. I believe it was three or four hours. Might2 A . -- L Technologies, 2 have been less .3 Q, Did that stand for something? 3 Q. Did you review any documents to prepare for4 A. Heuristic Physics Lab. 4 this deposition?5 Q. And did you testify in that case in your 09 :08 :5 5 A. Yes. 09 :110 . 56 capacity as an auditor? 6 Q. And what did you review?7 MS. RYAN : Objection, vague . You mean give 7 MS . RYAN: Objection. I would instruct the8 testimony in deposition . 8 witness not to answer unless the document specificall y9 77iE W'1'1 NESS Okay . I was a staff auditor at 9 refreshed your recollection.

10 the time. 09 :09 :1 10 Q. MR. MONTGOMERY: Start over. Did any of the 09 :11 : 011 Q. MR. MONTGOMERY : Do you know if that case went 11 documents you looked at refresh your memory abou t12 to trial? 12 something that happened in the past?13 A . I'm not aware if it did or not . 13 A. Yes.14 Q . Have you ever given deposition testimony in any 14 Q. Which documents did that ?15 other cases? 0 9 : 0 9 : 3 15 A. I can't -- I can't physically remember exactly 09 :11 : 116 A. No. 16 what the document reference was . It was an account17 Q. All right . Well, since it's been a while, let 17 detail listing of transactions -- not transactions, bu t18 me go over a couple ground rules . Even though were in 18 a description of each account.19 a conference room, do you understand that the oath that 19 Q. And what memories did it refresh?20 you just took has the same force and effect that it 09 : 09 :4 20 A. Basically what I worked on at the time . 09 :11 : 321 would if you were in a court of law? 21 Q And what did you work on that you can recal l22 A. Yes. 22 from that document ?23 Q. All right . The lady to my left and your right 23 A. The allowance and returns reserve .2 .4 is a court reporter. She's going to be transcribing 24 Q. And was the document you looked at a work paper?5 everything that I ask and you say, all the objections of 0909 :5 25 concerning that reserve? 09 ; 11 : 5

7 9

1 the other counsel . Because she's transcribing 1 A. Yes.2 everything, it's important that you let me finish my 2 Q. Do you recall what year it was from ?3 question before you start answering, and I'll try not to 3 A. 2001 . That's fiscal year 2001 .4 speak over you . Do you understand? 4 Q. Did you look at any work papers from 2000 tha t5 A. Yes . 09 :10 :0 5 refreshed your memory? 09 :12 : 16 Q. Okay. To the extent that your counsel or 6 A. Not that I recall .7 Mr. Christy may interpose objections, it's important 7 Q. Other than refreshing your recollection about8 that you let them put their objection on the record, but 8 the fact that you worked on that particular reserve i n9 unless your counsel specifically instructs you not to 9 2001, did the work paper refresh your memory abou t

10 answer the question, then once the objection is on the 0 9 :10 .1 10 methodology of the reserve or anything else? 0 9 :12 : 311 record, you can go ahead and answer it . 11 A. The methodology, yes .12 Do you understand? 12 Q. Anything else?13 A. Yes. 13 A. Not specifically that I recall at this paint .14 Q. If you want to take a break at any point,1 14 Q. Could you state your home address, please ?15 don't imagine we're going to be here that long, but if 09 . 10, 2 15 A. Sure. 1049 Fox Chase Drive . 7bat's San lose, 09-13-0 ,16 you need to take a break, just let me know and I'll 16 California, zip code 95123 .17 finish up whatever line of questioning I'm on and we can 17 Q. Do you have a college degree?118 go off the record . 18 A. Yes.19 A. Okay. 19 Q. And what is it in?20 Q. Did you meet with your attorneys in preparation 09 . 10 :3 20 A . Accounting and computer information systems. 0 9 : 13 : 1

21 for this deposition? 21 Q When did you receive your degree?22 A. Yes. 22 A. '98. Mayof'98 .:3 Q. When did you do that? 23 Q. Do you have any graduate degrees?

24 A. Monday . 24 A, No.25 Q. And how long did that meeting take? 09 : 10 :4 25 Q. Do you have a CPA? '0 9 :13 : 3

EASTWOOD-STEINDeposition . Management ($00) 514-2714

CONFIDENTIAL

10

2 A . Yes .2 Q . Do you have any other professiona l3 certifi cations?

4 A . No.

5 Q. After you graduated from college, did you tak e6 ajob?

7 A. Yes .8 Q. And where did you go to work ?

9 A . I originally worked with Hannaford Brothers .10 Q . I'm sorry .

11 A . Hannaford Brothers.12 Q . Can you spell that ?13 A . Its H-a-n-n-a-f-o-r-d .14 Q . And what business are they in ?15 A. Grocery stores .16 Q. And what job did you have ?17 A. I was a computer programmer.18 Q. And approximately how long did you work there ?19 A. Nine months.

20 Q. And did you work as a computer programmer th e21 entire time?

22 A. Yes.23 Q. After that, did you take a job somewhere else ?24 A. Yes .25 Q. Where did you go ?

11

1 A. PriceWaterhouseCoopers.2 Q. Approximately what year was that?3 A. It was 1998 still . It was at the end of that4 year.

5 Q. And what job did you take with them ?

6 A . I was an auditor . Staff auditor.7 Q. And do you still work for8 Price WaterhouseCoopers today?9 A . No .

10 Q . How long did you work there ?11 A . Approximately four and a half years .12 Q . Till 2002 ?13 A . Yes.14 Q . At that point did you take a job somewhere15 else?

16 A . After,1 went to Plantronics .

17 Q . And what are they in the business of?18 A . They manufacture headsets .19 Q. And what job did you take there?

20 A . SEC reporting manager.

21 Q. Was Plantronies a PWC client ?

22 A . - Yes.23 Q. Did you work on the Plantronics audit when you24 were at PWC?

25 A . No.

12

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Q Did Plantronics' relationship with PWC somehowfacilitate your taking a position there ?A. No. I called them directly.Q. What were your responsibilities as an SEC

reporting manager?

A. Financial statements, 10K, IOQ filings and any

other securities fling.

Q. And how long did you do that?

A. Two years.Q. Through '04?A. Till May of this year.Q. And at that point did you take a different job?

A. Yes.

Q. What's that?A. I left the company and went to AdvancedAnalogic Technologies.Q. And what do they do?A. They are a semiconductor, semiconductormanufacturer.Q . And what position did you take with them?A. I am there pri marily for, again, filing of

securities - SEC filings and also general financial

governance of the company.

Q. What's your title?

A . Senior manager fmancia ] governance.

09 :16 :4 :

09 :16 :5 !

09 :17 :0 !

09 :17 :3 ,

09 :17 : 1

1 3

1 Q. And what does financial governance mean t2 A. Controls within the company, compliance with

3 Sarbanes-Oxley 404 and also just reviewing documents ,4 contracts and things like that.

09 ; 14 : 5 5 Q. And do you still have that position today? 09 : 18 :1 +6 A. Yes.7 Q. All right. So were you at8 PriceWaterhouseCoopers from '98 through 2002 ; is that9 right ?

09 : 15 :1 10 A. Correct. 09 : 18 .3 :11 Q. All right. During that time you said were you

12 a staff auditor to begin with, is that right ?

13 A. Yes.

14 Q. Did you have that same position the entire09 :15 :2 15 time? 09 :18 :4 :

16 A. I was a senior auditor at the time I left.

17 Q. Was there anything in between?18 A. I believe they only have associates and then

19 senior and then various levels in -- classifications i n09 :15 :5 20 between, but. . . 09 :19 :0 (

21 Q. There are various levels in between?22 A . There's a second year associate, first yea r

23 associate, first year senior.

24 Q. Approximately what year did you become a senio r09 :16 :1 25 auditor? 09 :19 :1 '

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CONFIDENTIAL

14 1 6

1 A. in 2001 . 1 on the team in October of 2000, correct ?2 Q. At the beginning of the year? 2 A, That's correct .3 A. Halfway . 3 Q. And that was part of Cisco's financial year4 Q. Around June? 4 2001 ; is that correct ?

5 A. Yes. 09 :19 . 2 5 A. That's correct. 09 :23 : 16 Q. And do the responsibilities of a staff auditor 6 Q. And what parts of the 2001 - scratch that.7 and a senior staff auditor differ? 7 In addition to audit work, did Cisco -- I'm8 A. Yes. 8 sorry - did PWC also perform interim reviews of Cisco' s9 Q. In what way? 9 accounting during that time period?

10 A. It involves a little bit. more reviewing 09-19 .4 10 A. Yes. D9 :23 : 311 associate's work and also mentoring and helping explain 11 Q. And how does an interim review differ from a n12 transactions to associates. 12 audit ?13 Q. During the time you were at PWC, did you 13 A. A review is less in scope . It doesn't entai l14 participate in audits of several public companies? 14 performing an audit per se, looking at various15 A. Yes . 09 : 2 0 : 1 15 documents, transactions and things of that nature . It . 09 :23 : 516 Q. Approximately how many? 16 is more an inquiry of Cisco management than an audit.17 A. Maybe -- the entire time I was at PWC? 17 Q. So for the part of financial year 2001 that yo u18 Q. Yeah . 18 worked on, did you participate in the interim reviews a s19 A. I would say around eight or ten. 19 well as the audit ?2,0 Q. Can you list as many of them for me as you can 09 :2 0 : 3 20 A. Yes . 09 :24 : 121 recall? 21 Q. And can you recall what parts of the compan y22 A. Aztec Technology Partners, Mold Flow. 22 you either audited or participated in the interim revie w

23 Q. Can you spell that? 23 of?

24 A. M-o-I-d F-1-o-w. Cisco, Integrated Device 24 A. I primarily looked at revenue .25 Technologies, Heuristic Physics Labs, HPL., Parametric 09 :20 :5S 25 Q. Anything else? 09 :24 :3 .

15 17

1 Technologies . I can't remember too many more after I A. I think that's primarily it.2 that . There were some smaller entities. I can't recall 2 Q. And when you say you looked at revenue, wer e3 the names . 3 you testing specific transactions?

4 Q. Would it be fair to say that a number of those 4 A. Yes.5 companies that you just listed are high technology 09 :21 :4 5 Q. Were you also testing or reviewing reserves as 09 : 24 : 5 ,'6 companies? 6 they related to revenue ?7 A. Yes. 7 A. Yes.8 Q. Other than Cisco, are any of the other 8 Q. In the course of your work for the financia l9 companies that you listed or that you can recall 9 year 2001 with Cisco, did you acquaint yourself with the

10 participating in the audits of networking companies? 09 :21 :5 10 Cisco's policies and procedures as they related to the 09 : 25 : 3 111 A. No. 11 areas that you were working on?12 Q. Of the audits that you can recall working on, 12 A. Yes.13 other than Cisco, were any of the companies in the 13 Q. Did you also acquaint yourself with an y14 business of providing financing )eases of their 14 relevant accounting standards ?15 equipment? 0 9 : 2 2 : 1 15 A. Yes. 09-25 :5 .16 A. No. 16 Q. During the course of your work, did you have17 Q. All right . You said you participated in the 17 occasion to create what were called work papers?18 Cisco audit at one point . Do you recall when you 18 A. Yes.19 started working on the Cisco audit team? 19 Q. And can you explain to me what a work paper is?20 A. I believe it was in October of 2000. Actually, 09 :22 :3 .20 A. It's a document showing -- describing 09-26 :0 '21 can I make a correction? I became a senior in 2000, not 21 procedures that were performed and other supporting22 2001 . 22 information, including descriptions of accounts .

3 Q. Sure. Prior to October of 2000? 23 Q. And were work papers created at the time --24 A. Yes. 24 sorry -- created by people actually performing the audit25 Q . All right . So you came -- you started working 09 :22 :5 25 or the interim reviews? 09 .216,3 1

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18

1 A. Yes.2 Q. And are they created at or around the time the

3 work is performed? .

4 A. Yes .

5 Q. And to your knowledge, did PWC attempt to

6 ensure that the information in the work papers was

7 accurate at the time they were made?

8 A. At the time they were made- they have to go

9 through a review process. So at that time they were

10 made, it could be a draft So it still could change.

11 So just to clarify that.12 Q. Sure. My question is just did PWC strive to

13 make the work papers as accurate as possible .14 A. In the end, yes .15 Q. And did the work papers memorialize everything

16 that PWC did either in the interim reviews or the audit?

17 MS. RYAN : Objection, vague and overbroad.

18 THE WITNESS: No, primarily the work papers

19 were made to support a conclusion .20 Q. MR. MONTGOMERY : So what sorts of information

21 was not included in the work papers ?22 MS. RYAN : Objection, vague and foundation.

23 THE WITNESS: It's a bit of a broad question to

24 really try to answer. If items didn't support the

25 conclusion or if transactions -- not transactions, but

2 0

1 Q. And what is a two tier return?

2 A. I cant remember exactly what it is at this3 point. I think it was a return that came from a second4 distributor.

09 :2 6 : 4 5 Q. And are you familiar with a non-two tier -

6 what were called non-two tier returns?7 A. No. I believe they were essentially returns8 outside of a two tier .9 Q. So returns from a customer that wasn't a

09 :27 :0 10 distributor; is that correct?

11 MS . RYAN : Objection, vague.12 THE WITNESS : Sorry . Can you be --

13 Q. MR. MONTGOMERY : So were non-two tier return s14 returns from a customer that was not a distributor ?

09 .27 .2', 15 A. No, it could still be a single tier retu n . So16 I'm not quite sure your question . I'm sorry.17 Q, Sure. Let's go back to two tier returns for a18 second . Is it correct to say that two tier returns wer e19 returns received from distributors ?

09 :27 :5 20 A. Yes .21 Q, Okay . And then were non-two tier returns22 received from end user customers instead of23 distributors ?

24 A . It could still come from a distributor because09 : 28 :2 2 5 two tier by nature is a second distributor . Could have

09 .30-

09 : 3 1 : (

09 :31 : ,

09 :31 : ]

09 :32 : 1

1.9 21

1 if things were draft in nature, they were excluded . 1 been a return from a first distributor.2 Q. MR. MONTGOMERY : When you began working on the 2 Q . And do you know whether or not Cisco's3 review of Cisco's revenue and revenue reserves in 3 distributors, generally speaking, had a right of return4 October of 2000, did you review the prior work papers 4 during financial year 2001 ?5 concerning the areas you were working on? 09 :28 .5, 5 MS . RYAN : Objection, vague . 09 .32 :3 '6 A. I looked at them I read through them . 6 THE WITNESS : Some may have . Some -- you would7 Q. And what was the purpose of that? 7 have to actually look at each individual distributor to8 A. To get myself familiar with the company . 8 actually answer the question .9 Q. Did you report to somebody else on the - well, 9 Q. MR. MONTGOMERY : So you don't know whether or

10 at PWC? 09 :29 :2 10 not there was a general policy one way or the other? 09 :3 2 : 4

11 A. Yes. 11 A. I don't recall at this point .12 Q. Who was that? 12 Q. Do you know whether or not with regard to sales13 A . Jim Sullivan . 13 to direct customers, not distributors, generall y14 Q. And was there anyone else working with you 14 speaking whether or not there was a right of return in15 specifically testing the revenue and revenue reserves at 09 :29 :3 15 financial year 2001 ? 09 .33 :0 ,16 the time you joined the audit team? 16 MS . RYAN : Objection, vague.17 A . There may have. I can't remember during the 17 THE WITNESS: I can't -- you'd have to look a t18 time period- 18 the individual customers and the contracts. I don't19 Q . During the course of your audit work, did you 19 know the answer to that.20 become familiar with Cisco's policies and procedures as 09 :30 :11 20 Q. MR. MONTGOMERY : Are you familiar with the term 09 :33 : 121 they related to product returns? 21 RMA ?22 A. Yes. 22 A. Yes.23 Q. And did you become familiar with the term two 23 Q. And what does that refer to?24 tier returns? 24 A . Returns materials authorization.25 A. Yes . 09 :30 : 2 2 5 Q . And what is a returns materials authorization? 09 :33 : 3 1


In Re Cisco Systems, Inc., Securities Litigation

ERRATA SHEET FOR THE DEPOSITION OF Phuc Tran

September 23, 200 5

Directions : Please indicate page and line numbers under the appropriateheadings . Under the "CORRECTIONS" heading , write down the incorrect passagefollowed by the corrected entry .

PAGE LINE CORRECTION S

5 18 defendants

Should Read: plaintiffs

is 24 didn' t

Should Read: weren't necessary to

71 7 115 3

Should Read : 11530

72 18-19 to the prior ,year

Should Read: in the prior

79 17 the accounting work s

Should Read : the way accounting works

95 22 carve out

Should Read: carve up

69 15 allowance and bad debt

Should Read: Allowance or bad debt

Date 1 ___

EXHIBIT F

CONFIDENTIA L



---000---

In re :

CISCO SYSTEMS, INC., }

SECURITIES LITIGATION )

This Document relates to : )

ALL ACTIONS .

CONFIDENIIAL

No . C-01-20418-JcT

(PVT )


VIDEOTAPE DEPOSITION OF RORY SNYDER

WEDNESDAY, APRIL 13, 2005

1

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CONFIDENTIAL

119 12 0

A Okay. 1:54 :56PM 1 Q What are soft costs? 1 :57 :26PM2 Q Is this type of report familiar to you? 2 A Like installation costs, actually, peopl e

3 A It is . 3 costs, so there is not a physical asset there .

4 Q And for convenience, can we just call 4 Q Would you look at the last page

5 these loan reserve reports? 1 :55 :06PM 5 Exhibit 43, please? 1 :57 :40PM

6 A We can . 6 A Yes .

7 Q What was the purpose of this type of 7 Q And is this page a detailed breakdown of8 report at Cisco Capital during the relevant period? 8 the reserve Cisco Capital was taking fo r

9 A This was -- the first page is a roll 9 non-equipment loans ?

10 forward of the reserve balance for loans, and then 1 :55 :18PM 10 A That's correct Yes. It supports the 1 :57 :56PMi 1 the rest of the report is -- well, is the 11 number on the front page.

12 calculation, and it's a more detailed -- more 12 Q In that first column, is that th e13 detailed that rolls rap to the first page . 13 different customers to whom Cisco had made

14 Q And what was this report -- type of report 14 non-equipment loans ?

15 used for"? 1:55:36PM 1 .5 A That's correct. 1:58:12PM1 G A l=or determining the reserve or €he -- ti€e 16 Q And then the next is the. reserve

ti. 7 re virtue that was being deferred and other reserves percentage applied to the. outstanding balance ; i s

18 being established for the loan portfolio . 1 8 that right ?19 Q And do you know who created this report? 19 MR . M1CHELS : Object as to form, as t o

20 A I don't know specifically. It was 1 :55 :51PM 20 date of this document with respect to his time at 1 :58 :20PM

21 probably -- it was probably somebody in my group . 21 the company .22 It could have been Sue . It could have been -- it 22 THE WITNESS : That's correct .

23 could have been Michael . It could have been Tamara 23 BY MR . MONTGOMERY :24 Booth, who wasn't in n€y group . So there were a few 24 Q Do you know how these percentages were

different people that it might have been . I don't 1 :56 :13PM 25 arrived at? 1 :58 :41 PM

119 12 1

1 know specifically who created it. 1:56 :14PM 1 MR . MICHELS : Sane objection . Form. 1 :58 :44PM

2 Q And who received these reports? 2 Foundation .

3 A Well, we would have used them within the 3 THE WITNESS : I believe. I recall that the y4 group . I think that Jonathan probably would have 4 were arrived at, again, through discussions with our

5 gotten this report, I think . I don't know if they 1 :56 :26PM 5 credit. people in terms of. you know, sort of the 1 :58 :55PM6 were part of our closing meeting or not . I don't 6 general risk associated here .

think they were . So I'm not exactly sure who the 7 BY MR. MONTGOMERY :

E distribution was, but it certainly would have -- I'm 8 Q Do you know why most of the reserve

°. pretty sure it would have at least gone to Jonathan . 9 percentages were the saute for each customer?

10 Q All right. 1:56 :46PM 10 MR . MICHELS : Same objection. 1 :59 :20P M

11 On the first page of Exhibit 43, do you 11 THE WITNESS : I believe because there wa s

12 see at the bottom under D where it says 12 sort of a general credit profile there, I believe .

13 "non-equipment loans"? 13 1 do notice AMC, although the percentage

14 A Yes . 14 says 25 percent, the amount is actually 75 percent,

15 Q And those are the same sort of 1 :56 :55PM 15 so I don't really remember the mechanics of what 1 :59 :41 PM

16 non-equipment loans you discussed earlier? 16 went on in this report but, you know, I believe tha t

17 A When did I discuss them earlier? 17 it was trying to establish a -- a reserve based o n

18 Q Okay. S 8 the general credit profile of this population of

19 Do you have an understanding of what 19 customers .

20 non-equipment loans means in that context? 1 :57 :06PM 20 BY MR. MONTGOMERY 2:00 :00PM

21 A Yes, I think I do, and I believe they are 21 Q That population was high credit risk ,

92 non-Cisco equipment . So they might be equipment, 22 correct ?but non-Cisco equipment or soft costs or other 23 MR. MICHELS : Objec€ion ; form an d

24 ancillary costs associated with installing a Cisco 24 foundation .

25 equipment or a Cisco network . 1 :57 :25PM 25 THE WITNESS : I would say yes, at the high 2 :00 :07PM


CONFIDENTIAL

1 122 12 4

end of the risk spectrum. 2:00:12PM 1 Q ['d like to show the witness what's 2 :05 :43P M2 BY MR, MONTGOMERY : 2 previously been marked as Exhibit 64 .3 Q 1'd like to ask the witness to look at 3 A Okay .

4 what has previously been marked as Exhibit 65 . 41 Q Is Exhibit 64 another contingent liabilit y5 A Okay. 2:02:38PM 5 report? 2:06 :19PM6 Q And is this form of report familiar to 6 A It is .7 you? 7 Q And is it from the month after Exhibit 65 78 A ' Yes . 8 A It is-9 Q What infortnation does it contain? 9 Q So that's November of 1999, correct' ?

10 A I can read the colummiis. 2:02 :55PM 10 A Correct. 2:06:29PM1,1 Q What was the purpose of the report? 11 Q And does Exhibit 64 indicate that Cisc o

12 A Okay. It was to identify our exposure to 12 Capital was taking reserves for the guarantees of13 Conlnleent liabilities, and that's what the summary 13 its leasing partners'.

14 did, was to identify our exposure to contingent 14 A It does . But it also shows, I believe, a t

15 liabilities. 2:03 :16PM 15 the bottom there is a reserve roll forward, and 2 :06 :42P M16 Q And looking at the first page, the first 16 there is a beginning reserve balance, which

17 four entries from "lease tech" down to "ING " were 1 1 indicates Wine that there was a reserve recorde d

18 those all leasing partners that Cisco -- for whom I B somewhere already, it just wasn't showing, lip on th e

19 Cisco guaranteed leases? 19 contingent liability report that you previousl y

20 A I believe, yes. The names are all 2 :03 :42PM 2 0 showed rite . So we may have Just improved the report . 2:t63:57PM21 familiar . 21 Q Now, in the -- under "program section" o f22 Q So is the nature of the contingent 22 the Exhibit 64 --23 liabilities as to those parties guarantees Cisco 23 A Yes.

24 made as to leases provided by those companies? 24 Q -- see where it says "lease pools " ?MR . MICHELS : Objection to forth. 2:03:57PM 25 A Yes. 2:07 :21 PM

123 12 5

1 THE WITNESS: Yeah, the contingent 2 :04 :00PM 1 Q And then it says "individual 2 :07 :21PM2 liability is that we have provided a guarantee on 2 transactions"?3 leases . 3 A Yes .4 BY MR. MONTGOMERY : 4 Q Do you know what. the phrase "lease pool "5 Q And this report is dated P3 financial year 2 :04 :14PM 5 means there? 2:07 :26PM6 2(M, correct? 6 A Yes. It was a -- we would provide a7 A Correct . 7 guarantee on a pool of transactions . So our risk of8 Q 'hat month is that? 8 loss was pooled, meaning that like in the firs t9 A I have to think for a minute. October of 9 case, it says, "This maximum funding of 50 million

10 1999, 1 believe. 2:04 :30PM 10 maximum, a guarantee of 12,500,000." 2 :07 :45PM11 Q As of that date, does this report indicate 11 It's not a good example because there were12 that Cisco was reserving -- taking any reserves for 12 no transactions this large, but let's say we had on e13 the liabilities associated with those guarantees? 13 $20 million transaction in that pool, we would - -14 MR. MICHELS: Object to form. 14 and we lost everything on that transaction, ou r15 THE WITNESS : This report does not 2 :05 :04PM 15 maximum exposure was 12 .5. 2:08 :05PM16 indicate that . And -- let inc just look. That one 16 I'm not saying this very well .17 doesn't either . Yeah, this report does not indicate 17 That 12 .5 is about -- that's 25 percent of18 that . 18 the total .

19 BY MR. MONTGOMERY : 19 So our guarantee wasn't -- in a pooled20 Q And -- 2:05:20PM 20 situation, our guarantee wasn't 25 percent of each 2 :09 :20PM21 A But I believe we were taking reserves . 1 21 transaction, it was 25 percent of the total pool .

don't know where they -- how they got reported . 1 22 So we could actually fund more than 25 percent of a ncan't remember. They are obviously not on either of 23 individual transaction, of a loss on an individua l

24 these reports, but I believe we were taking 24 transaction.25 reserves. 2:05:33PM 25 And then on the individual transaction 2 :08 :33PM

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EXHIBIT G


NORTHERN DISTRICT OF CALIFORNIA ,

SAN JOSE DIVISION

-_-000---

In re :



This document Relates to :

ALL ACTIONS .

Master File No .

C-01-20418

JW(PVT )

VIDEOTAPED DEPOSITION OF EDWARD R . KOZEL

THURSDAY, AUGUST 25, 2005

1


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acquisition of a ranch property plus the construction

of a new house .

The total cost will be somewhere around

15 million .

Q . Let me ask you, in the '99 to 2000 time 11 :40:17AM

frame approximately how much did you put into that

project?

A. Well, we acquired the land, which was

several pieces of property, so the direct -- again ,

these are rough figures, but the land acquisition 1 I :40 :34AM

costs were just under 7 million . Again, on all o f

this the specific detail is available to you .

We began various improvements and it has

unfortunately been a long, drawn-out process so, yo u

know, the improvements at that point in time were a 11 :41 :03AM

couple of million dollars but we began the planning,

the architectural process and al I of that for the

home. And so setting some money aside for that,

although it wasn't spent necessarily at that point i n

time, was definitely part of our thinking. 11 :41 :26AM

Q. And you talked about an investment into th e

Open Range Fund, right?

A. Yes.

Q. Approximately how much did you put into

that fund? 1 1 :41 :35A M

A. We set aside a fund that was -- again, the

specifics you'll have to go to the records for, but

generally speaking, it was to be a $17 million fund

split between two people . I don't believe we funded

it all because we picked a very bad time to make such 11 :41 :54AM

venture investments, and we realized after about a

year that it was a bad idea so we stopped investing .

But that was the initial fund size . So we had to set

that money aside as if we were going to commit it

all. 11:42 :17A M

We subsequently didn't commit it all, bu t

we did commit a lot of it and so, you know, it would

have been on the order of about 8 to $9 million was

what we were planning to set aside as our direct

investment. 11:42 :34AM

Q. And other than this ranch property and the

Open Range Fund, is it your recollection that the

rest of the proceeds were put into the open market --

open-market stock purchases ?

A . There was the purchase of the house in 11 :42:50AM

Europe which was a little over $2 million, but --

again, these are all rough numbers -- but the rest of

it was handled by our investment advisor so, you

know, it is a combination of everything .

MR . MONTGOMERY: I would ask the court 11 :43:29AM

60

1 reporter to mark what will be Exhibit 1385 .

2 (Whereupon, Exhibit 1385 was marked for

3 identification. )

4 (Witness reviews document . )

5 THE WITNESS: Very good. 11:44:41 AM6 BY MR. MONTGOMERY :7 Q. Is Exhibit 1385 an SEC Form 4 filed by you

8 and signed March 7, 2000?

9 A. (The witness indicated by nodding hi s

10 head.) I1:44:56AM11 Q. You have to say it orally --12 A. I'm sorry . It appears to be, yes .13 Q. Does it reflect transactions tha t

14 purportedly took place on February 17, 2000?15 A. Yes, It appears to be. 11:45 :08AM16 Q. To the extent that it reflects any sales ,17 would your testimony relating to the proceeds of

18 those sales be consistent with the testimony you

19 already gave regarding the other transactions tha t

20 occurred on that date'? 11 :45 :24AM21 A. Yes, that is correct .22 Q. It also lists certain transaction s

23 concerning a trust . Do you see the last three?

24 A. I do .

25 Q. Do you know what trust that refers to? 11 :45 :34AM

6 1

1 A. No, I don't exactly .2 Q. Do you understand what the purpose of that

3 trust was ?

4 A. Well, we had set. tip several trusts for our

5 children for family planning purposes, so I am 11 :45 :48AM

6 guessing that one of those trusts, you know, yielded7 some stock .8 MR. MONTGOMERY : Now I would like to ask

9 the court reporter to mark what will be Exhibit 1386 .

10 (Whereupon, Exhibit 1386 was marked fo r

11 identification. )12 (Witness reviews document.)

13 THE WITNESS: Very good .

14 BY MR. MONTGOMERY :

15 Q. Is Exhibit 1386 an e-mail from you to a 11 :47 :07AM

16 gentleman named Matt Kennedy dated August 24, 1999 ?

17 A. This appears to be that, yes .

18 Q. Is it in reply to an e-mail fro m

19 Mr. Kennedy to you dated earlier that day at the

20 bottom of the page? 11 :47:25AM

21 A. Yes ,

22 Q. The subject of these e-mails is the Mustang

23 acquisition; is that correct?

24 A. Yes .25 Q. Is that a code word for the Monterey 11 :47 :35AM

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acquisition?

A. I don't recall, but from the e-mail i t

appears that was the code name for Monterey .

Q . In this e-mail did you agree to increasin g

the purchase price of the Monterey acquisition? 11 :47 :53AM

MR. MICHELS : Object to form. Vague .

THE WITNESS : I agreed to the restructured

acquisition of Monterey, yes .

BY MR. MONTGOMERY :

Q. All right . If you could look at the fourldi 11 :48 :16AM

line down of the bottom e-mail, it refers to "We'v e

agreed to increase the purchase price ."

A . Uh-huh . Yes .

Q . So was the effect of the restructurin g

partially to increase the purchase price? 11 :48 :31 AM

A. Yes .

MR . MICHELS : Objection to form .

THE WITNESS : Yes .

BY MR. MONTGOMERY :Q. Why did Cisco agree to that? 11 :48 :36 .AM

MR . MICHELS : Objection to form .

Foundation, It calls for speculation .

THE WITNESS : Well, the -- I think the note

highlights the reasons, that the company was makin g

progress in its product development and it was 11 :48 :52AM

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getting closer to having the fi nal product, a working

product, in the competitive environment of this

company . It was going up against, I believe -- as I

recall, it was Ciena , and we were contemplating how

to get into this space, and there were only a couple 11 :49 :21AM

of suppliers . The market conditions at that tim e

were that the demand for such products was ve ry

strong and the valuations of the possible sources of

that technology were increasing almost -- quite

often, frequently. I €:49 :46AM

And so, as I mentioned earlier, as the

product got closer to actual completion, then the

investors in all of the potential acquisitions

started to have higher valuations on their minds .

BY MR. MONTGOMERY :

Q. Do you have any understanding as you sit

here today of the net effect or the net increase in

the purchase price that is referred to in this

e-mail ?

A. No. 11:50:10AM

MR. MONTGOMERY : I would like to ask the

court reporter to mark what will be Exhibit € 387 .

(Whereupon, Exhibit 1387 was marked for

identification .)

(Witness reviews document.) 11 :50 :45AM

64

1 THE WITNESS: Very good .


3 Q. Is Exhibit €387 a set of minutes of Cisco' s4 special acquisition committee dated October 6, 1999?

5 A. It appears to be. 11:51 :51 AM

6 Q. Do those minutes indicate that you wer e

7 present at that meeting ?8 A. I don't recall this meetin

g 9 MR. MICHELS: Objection to form .

10 THE WITNESS : -- but the minutes appear to 11 :51 :59AM

11 indicate that.


13 Q. Did you continue to participate as a member

14 of the special acquisition committee even after yo u

15 had stopped being a Cisco employee? 11 :52:25AM

16 A. Yes, for a period of time.

17 Q. But you were not -- it was not in your18 capacity as a director; is that correct ?19 A. It was in my capacity as a director becaus e20 1 was not involved with the business development I I :52 :38AM

21 function .

22 Q. And do you recall whether or not Cisco23 acquired a company called Netiverse which is

24 reflected or referred to in these minutes?

25 A. I have no recollection of this company 11 :52 :59AM

65

1 whatsoever.

2 Q. According to the minutes -- well, is i t

3 correct that the minutes show that you approved the

4 purchase of an option for Cisco to acquire or merge

5 with Netiverse? I 1 :53 :27AM

6 MR. MICHELS : Objection to form . Th e

7 document speaks for itself . Mischaracterizes the

8 document.

9 THE WITNESS: Again, I neither recall th e

10 meeting nor the company, and I think the document 11 :53 :44AM

1I says they are discussing a potential acquisition, bu t

12 I can't speak to this transaction at all .13 BY MR. MONTGOMERY :14 Q. Do you have any reason to believe that th e

15 minutes reflected in Exhibit 1387 or the exhibit are 11 :53 :59AM

16 incorrect or incomplete ?

17 MR. MICHELS : Objection to form .

18 Foundation . Argumentative.

19 THE WITNESS : I have no reason to think

20 that they are correct or incorrect. 11:54 :13AM

21 MR. MONTGOMERY: I would like to show the

22 witness what has previously been marked a s

23 Exhibit 785. You can look through the whole thing if

24 you want . I am only going to ask you about a fe w

25 pages so you might wart to identify it and then I'll 11 :54 :39A M

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EXHIBIT H



SAN JOSE DIVISION

---000-----

In re :

CISCO SYSTEMS, INC .r


This document Relates to : }

ALL ACTIONS. }

Master File No .

C-01-20418

JW(PVT )

VIDEOTAPED DEPOSITION. OF .MRINALINI INGRAM

WEDNESDAY, SEPTEMBER 14, 2005

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of the month ?A. That is when the review happens . That is

when we actually book the journal entry . The

activity happened, you know, as transactions happened

throughout the month. 03:58:12PM

MS. WEAVER : Okay. I will show you an

exhibit that was previously marked as Exhibit 63,

although I do not appear to have a marked copy .

MR. KRISTY: That's okay. We'll accep t

what you say. 03:58 :37PM

(Whereupon, Exhibit 63, having been

marked in a previous deposition, isattached hereto for reference purposes .)

(Witness reviews document.)

BY MS. WEAVER: 03:5$:44PM

Q. Do you recognize Exhibit 63 ?

A. Yes . I don't know if I remember this exact

one, but I know what these are .

Q. What is it ?

A. These are documents that are prepared by ©3 :59 :11 PM

the Cisco Capital accounting group that talks about

the reserve activity .Q. Are you aware that Doc Tran prepared this

document?

A. I believe so. 03:59 :22PM

Q. Did he prepare it at your direction ?

A. The documents that are here are ones thatare actually in the close binder so - and he also

reviewed these with us during our reserve meeting s

that happened before the end of the quarter, and then 03 :59 :38PM

they are updated to have the actual activity, an d

then he would review that with the people in the

close meeting .

Q. And is this your handwriting on the first

page of Exhibit 63? 03:59 :50PM

A. No .

Q . Do you know whose handwriting it is?

A. No .

Q . Looking at the bottom of Exhibit 63, can

you read the handwriting !here? 04 :00:00PM

A. Barely . Yeah. A little bit . Yeah .

Does it state there in the handwriting:

"Accounting for guarantees was

inappropriate. If guarantees are greater

than 10 percent of operating leases to a 04 :00 : 1 8PM

partner, then you can't recognize revenue. "

Do you see that?

A. I do.

Q. Do you think that's accurate' ?MR. KRISTY: Do you think that your reading 04:00 :27PM

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of that is accurate?MS. WEAVER : Yes . That that is what i t

says .

THE WITNESS : I think that's what it says .BY MS. WEAVER: 04:00 :33PM

Q. Do you see underneath that it says :

"Third party structure financing into

structured loan reserve instead of

contingencies . "

Do you believe that's what it says? 04 :00:43PM

A. I believe so.

Q. And then underneath it there is a notationthat ties up to the - the notation where it says

"Prior period catch up . "

And then do you see tlhat it provides : 04:0O:56PM

"Partner leasing reserves . Do as

contingent liability . Didn't reserve

enough . No prior period adjustment

but $148 million previously recognize das revenue now being reversed ." 04:01 : I OPM

Do you see that?

A. Yes .

Q. Do you have any recollection of the issues

that the handwritten notations are discussing ?

A. No. 04:01 :22PM

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MR. KRISTY: Object to the form .BY MS. WEAVER :

Q. Do you recall Cisco reversing $148 million

in revenue?

A. No. 04:01 :28PM

Q. Do you know if it happened ?

A. I really don't have any recollection on

this .Q. Who was responsible for these reserves, the

contingent liability reserve? 04:01 :39PM

A. This would be Sue Perkins and Doc Tran .

Q. Do you know if this is Doc Tran's

handwriting ?

A. That I don't know, either .

Q. Do you know if it is Sue Perkins' 04 :01 :48PM

handwriting?A- That I don't know, either .

MS. WEAVER : I will mark as Exhibit 1583 adocument bearing Bates No. CIS-PPNPF-0563027 through

029. 04:02:13PM(Whereupon, Exhibit 1583 was marked for

identification. )

BY MS. WEAVER:Q. Let me know when you've had a moment to

look at it 04:02:29PM


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LERACH COUGHLIN STOIA GELLERRUDMAN & ROBBINS LLP

WILLIAM S. LSRACH (68581)SPENCER A . BURKHOLZ (147029)DANIEL S . DROSMAN (200643)JONAH H. GOLDSTEIN (193777)MATTHEW P, MONTGOMERY (180196)LUCAS F. OLTS (234843 )JESSICA D . TALLY (234432)655 West Broadway, Suite 1900San Diego , CA 92101Telephone : 6191231-1058619/231-7423 (fax)

and -PATRICK J . COUGHLIN (111070)LESLEY E. WEAVER (191305)100 Pine Street , Suite 2600San Francisco , CA 94111Telephone : 4151288-4545415/288-4534 (fax)

I Co-Lead Counsel for Plaintiffs

LEVIN, PAPANTONIO, THOMAS, MITCHELL,ECHSNER & PROCTOR, P,A ,

TIMOTHY M. O'BRIEN (pro hac vice)316 South Baylen Street, Suite 600Pensacola, FL 3250 1Telephone : 8 5014 3 5-70008501497-7057 (fax)

[Additional counsel appear on signature page.)



SAN JOSE DIVISION

In re CISCO SYSTEMS, INC, SECURITIESLITIGATION

This Document Relatc;s To: )

ALL ACTIONS. )

Master File No, C-01-20418-JW(PVT)

CLASS ACTION

STIPULATION REGARDING THEAUTHENTICITY OF HANDWRITING ONEXHIBIT 63

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WHEREAS, plaintiffs introduced and marked Exhibit 63, CIS-PPNPF-0769390-CIS-

PPNPF-0769403, attached, at the deposition of Nghia Tran ;

WHEREAS, the Cisco Defendants do not dispute the authenticity of the handwriting on page

CIS-PPNPF-0769390 of Exhibit 63 ;

THEREFORE, plaintiffs and the Cisco Defendants, through their counsel, hereby stipulate

that the handwriting on Bates-numbered page CIS-PPNPF-0769390 ofExhibit 63 is the handwriting

of James MacCailtm and is authentic pursuant to Federal Rule of Evidence 901 .

IT IS SO STIPULATED.

DATED: October \ - , 2005 LERACH COUGHLIN STOIA GELLERRUDMAN & ROBBINS LLP

WILLIAM S . LERACHSPENCER A . BURKHOLZDANIEL S . DROSMANJONAH H. GOLDSTEINMATTHEW P. MONTGOMERYLUCAS F. OLTSJESSICA D. TALLY

ATT EW P. M ERY

655 West Broadway, 'te 1 9San Diego, CA 92101Telephone: 619/231-10586191231-7423 (fax)

STIPULATION REGARDING THE AUTHENTICITY OF HANDWRITING O NEXHIBIT 63 - C-01-20418-JW(PVT) - 1 -

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DATED : October t S 2005

LERACH COUGHLIN STOIA GELLERRUDMAN & ROBBINS LLP

PATRICK 1. COUGHLINLESLEY E. WEAVER100 Pine Street, Suite 2600San Francisco , CA 94111Telephone : 415/288A545415/288-4534 (fax)

LERACH COUGHLIN STOIA GELLERRUDMAN & R OBBINS LLP

SANDRA STEIN1845 Walnut Street, 25th FloorPhiladelphia, PA 19103Telephone : 215/988-95462151988-9885 (fax)

LEVIN, PAPANTONIO, THOMAS, MITCHELL,ECHSNER & PROCTOR, P .A.

TIMOTHY M . O'BRIE N316 South Baylen Street, Suite 600Pensacola, FL 3250 1Telephone: 854/435-7000850/497-7057 (fax)

Co-Lead Counsel for Plaintiffs

FENWICK & WEST LLPFELIX LEE

FELIX I~EE

275 Battery Street, Suite 1500San Francisco , CA 94111Telephone : 4151875-2300415/281-1350 (fax)

STIPULATION REGARDING THE AUTHENTICITY OF HANDWRITING O NEXHIBIT 63 - C- 01-20418-JW(PVI") -2-

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WINSTON & STRAWN LLPDAN K. WEBBROBERT Y . SPERLINGROBERT L . MICHELS35 West Wacker Drive, Suite 4200Chicago, IL 60601-9703Telephone: 312/558-56003121558-5700 (fax)

Attorneys for Defendants Cisco Systems, Inc ., JohnT. Chambers, Larry R. Canner, Carol A . Bartz,Steven M. West, Edward R. Kozel, Donald T .Valentine, Robert L. Puette, Judith L . Estrin, GaryJ. Daichendt, Donald J . Listwin, Carl Redfield andMichelangelo Volpi

( 5ACa5as1c[:co\s&0W024s68.ao c

STIPULATION REGARDING THE AUTHENTICITY OF HANDWRITING O NEXHIBIT 63 - C-0I-20418-JW(PVT) -3-

EXHIBIT J



SAN JOSE DIVISION

--- 000---

In re :



----------------------------

This Document Relates to: )

ALL ACTIONS .

)

Master File No .

C-01-20418

JW(PVT )

Videotaped deposition of

MICHAEL A. JEROME, taken on behalf of

Plaintiffs, at 100 Pine Street, Suite 2600,

San Francisco, California, commencing at

8 :05 a .m ., Friday, September 9, 2005, before

Deirdre F . Cram, C .S .R . 9339

1

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198

A. You started at 1511, so it wouldn't be the

third . All right . Okay .

Q. This is, once again, a work paper from the2000 audit ; correct?

A. It appears to be. 14:28 :35

Q. Okay. Would you turn to 635, please? At

the top of the page there is a paragraph entitled

"Partners ." Do you see that ?

A. I do .

Q. Okay. Would you read through that, 14 :28:55please ?

A. Okay.Q. Is that paragraph discussing the same

third-party leasing with associated guarantees that

we've just been discussing? 14:29:15

MS. THOMPSON: Objection . Foundation .

THE WITNESS : I didn't review it, but itappears to be similar, if not the same .

BY MR . MONTGOMERY :Q. And that paragraph mentions a contingency 14 :29:24

reserve taken against related revenue ; is tha tcorrect?

A. It does.Q. Does it mention anything about a revenu e

deferral similar to what we looked at i n t he p revi ous 1 4 :29 :40

199

exhibit?

A. It doesn't mention it, but Cisco's

reserves, revenue reserves are, in effect, a deferral

because of where the debits and credits go . So it's

tomato-tomato. I'm not sure how to say that in a 14 :30 :03deposition.

(Discussion off the record . )MR. MONTGOMERY: I'll ask you to take a

look at what's previously marked as Exhibit 64 .

(Previously marked Exhibit 64 was 14 :30:31shown to the witness . )

THE WITNESS: Okay .BY MR. MONTGOMERY :

Q. The first page of 64, is that a repor t

similar in format to the last page of 1523 that we 14 :31 :27

looked at before?

A. It appears similar.

Q. All right. Does it indicate that it's

from, in the upper left-hand comer, P4 FY00?

A. It does indicate that. 14:32:11Q. And is that the convention that Cisco used

meaning the fourth month of financial year 2000? -

A. That is a convention that Cisco uses . .

Q. Okay. I'd like you to take a look at the

column all the way to the right on 64 . 14:32:25

200

1 A. Okay .

2 Q. Reserve balances?

3 A. Okay .

4 Q. Do you see the column that says "Reserve

5 Balances"? 14:32 :356 A. I do.

7 Q. And do you see -- do the reserve balance s8 generally appear to be approximately 25 percent of

9 the current guarantees on the same line ?

10 MS. THOMPSON : Sorry. What was the 14:32:4811 question?12 MR. MONTGOMERY : Whether or not the13 reserves correspond to approximately 25 percent of

14 the guarantees .

15 THE WITNESS: They look like they roughly 14:33 :1316 do. I don't have a calculator out .17 BY MR. MONTGOMERY :18 Q. Is there any notation or other indication19 on this report that, aside from those approximatel y20 25-percent reserves, that Cisco or Cisco Capital was 14 :33 :2621 deferring any of the revenue associated with thes e

22 transactions?

23 A. I don't see any notation on this document.24 Q. Okay. Then I would also like you to tak e

25 a look at the l evel of the current guarantee listed 14 :33 :41

201

I in the document. Do you see that?

2 A. I do .

3 Q. And die total is approximately

4 104 million ; is that correct ?

5 A. That is correct. 14:33 :50

6 Q. And, then, next to that is the curren t

7 book value, which is 122 million approximately; is

8 that correct ?9 A. That is correct .10 Q. Based on that ratio, does that suggest to 14:34 :00

11 you that, pursuant to FAS 13, which we looked at

12 earlier, that substantial risk of ownership had not

13 passed as to most of that current book value ?14 A. Consistent with my prior response, I don' t15 know what the number is, but 104 compared to 122 14 :34 :15

16 looks like a big number, or a big percent, I guess ,

17 is how you'd say it .

is Q. Based upon that percentage, is it your

19 opinion that Cisco should have deferred all of th e

20 revenue associated with those transactions? 14 :34:3521 A. I'd want to actually review the additional

22 guidance before coming to a conclusion . I don't23 recall seeing this document before.24 Q. Did you review FAS 13 prior to or durin g25 the financial year 2000 audit of Cisco? 14:34:5 6


07-11-2005 14 .07 VAN- PR1CEWATERHOUSECOOPER5 +31-20-5887010 T-610 P . 00€/001 F-450

in Re Cisco System, Inc ., Securities Litigation

ERRATA SHEET FOR TAE DEPOSITION OF Michael A. Jerome

September 9, 2005

Directions : Please indicate page and line numbers under the appropriateheadings . Under the "CORRECTIONS" heading, write down the incorrect passagefollowed by the corrected entry.

PAGE SINE COMMONS

9 15 " . .reporting to a manager as an associate. More of thetime,"

Should Read : " . . repor ting to a manager. As enassociate more of the time . . . "

27 13 "They were quarterly "

Should Read : "There were quarterly "

181 10-12 "if you . only had one balance and it was really bigaud. that was your own emanate "

Should Read: If you only had one balance and itwas really big and that was your o qtly estimate "

190 12 '1 don't have the accounting ledger in front of me "

Should Read : "I don't have the accounting literatur ein from of me "

203 4 "If applicable material. F t

Should Read : If applicable and material. "

Date /ay-er1 7s Signed/ ~ t

EXHIBIT K

. ;t

I

CONFIDENTIAL



---000---

In re :



This document relates to )

ALL ACTIONS. )

CONFI DENT IALNo . C--01-20418-JW (PVT )

CONFIDENTIAL

VIDEOTAPE DEPOSITION OF BRIAN FUKUHARA

THURSDAY, APRIL 28, 2005

I 1

EASTWOODSTEINdeposition services & litigation sup port (800) 514-2714

ti

CONk IDENTIA L

14

service -- acting financial services manager for the. . western region?

3 A- It was about July of 1990.4 Q. And what were your responsibilities in thatS capacity? 10:20:1 16 A. My responsibilities were to oversee the overall

7 portfolio of the western region, not just my subpiece ;8 to develop and train the personnel under tha t

9 organization and to make sure that the compliance to th e10 policies and procedures were in line with the business 10 :20:3111 activity.

12 Q. And did you have any hand in crafting those

13 policies and procedures ?14 A. Not as the acting manager, no .15 Q, flow did -- well, did your responsibilities 10:20:4616 change when you became the official manager ?17 A. Yes. As the official manager of the wester n

18 region, I had full accountability for the western region19 and its personnel on a permanent basis from a full-time20 perspective including the adherence and management of 10 :21 :0621 policies, process and procedures .22 Q. At what time did you become involved in23 marketing, channel strategy and research ?24 A. I moved to that role around 1994. And25 origin al ly my responsibilities under the channel 10 :21 :31

15

1 strategy organization was market research ; that was2 further expanded over time to include pricing ,3 commissions, compensation, actual strategic development

4 with the director of channel strategies in terms o f

5 Apple use and market distribution strategies . So by the 10:21 :546 time I ended that role, it went from just -- from goin g

7 from being just channel research to a number of other

8 responsibilities.

9 Q. When you said before market research, what10 markets were you charged with researching? 10 :22 :1111 A. Markets within Apple USA, continental - well ,12 the United States .

13 Q. So all markets ?14 A. Yes, all markets, education, enterprise ,15 reseller channels, mail-order catalog, superstore, a 10 :22 :24

16 number of different types of distribution and markets i n17 terms of how Apple sold its product.18 Q. At some point did you leave Apple Computer?19 A. Yes, I left in 1989 .20 Q. In -- 10:22:4 421 A. I'm sorry, 1996. 1989 is when I left Sumitomo .22 1996.

Q. And at that point did you take another job?A. Yes. -

25 Q. And where was that? 10 :22:57

16

1 A. With Cisco Systems, Inc .2 Q. And what was your initial position at Cisco ?3 A. I was the worldwide financial services manager.4 Q. And what were your responsibilities in tha t5 capacity? 10:23 :086 A. My responsibilities were to develop a policy7 and oversee compliance to credit responsibilities for

8 Cisco, Inc. and its subsidiaries .9 Q. Did you say develop credit responsibilities ?10 A. Responsibilities and policy . So I had credit 10:23 :30

11 responsibilities for Cisco and its subsidiaries as wel l

12 as responsibility for overseeing the credit management,13 development of policy, implementation of policy,14 adherence to policy .15 Q. At that point were you responsible for the 10 :23 :4716 approval of credit, for granting credit ?17 A. Yes .18 Q. And was that done by your reports or indirect19 reports ?20 A. Both my indirect reports and cross-functionally 10 :24 :0421 there was originally a credit and collections group .

22 The credit function moved from that organization tome,23 so they had primary collection responsibility but 1

24 subdelegated to the collection manager a certain leve l25 of threshold to allow credit decisions. 10:24 :22

17

1 Q. And then above that level it became the2 responsibility of you and your group; is that correct?3 MR. MICifELS : Object to form, vague .J THE WITNESS, I'm sorry ?5 BY MR. MONTGOMERY: 10:24:346 Q. Above the level that you subdelegated to7 collections for credit approvals, then that's the8 responsibility of you and your group ?9 MR_ M1CHE1 S : Same objection.

10 THE WITNESS : So me and my group, meaning my 10:24 :4511 credit staff?12 BY MR . MONTGOMERY :

13 Q. Right .

14 A. My credit staff had responsibility fo r

15 evaluating creditworthiness of customers that Cisco was 10 :24:5216 doing business with .17 Q. And how long did you hold that position?18 A. I held the worldwide credit or chief credit19 officer position for approximately five years i n20 terms of being responsible for all of Cisco and its 10 :25 :0921 subsidiaries including Cisco Capital . And probably the22 last year and a half while I was at Cisco Capital, it

23 was solely with Cisco Capital in terms of my24 responsibilities for credit .25 Q. So when did you leave Cisco? 10:25 :3 1


CONFIDENTIA L

i8

A. I didn't leave Cisco.

- Q. I'm sorry. When you said the last year and a

3 half, do you mean --4 A. In my role at Cisco Capital .5 Q. So when did that year and a half end? 10 :25:436 A. I left in September of 2002 to the current rol e7 that I hold which is a Cisco, Inc. position.8 Q. And what position is that?9 A. I'm the Americas international theater

10 controller. 10:26 :03

11 Q. And what are your responsibilities in that

12 capacity?

13 A. As the Americas international theate r14 controller, I oversee the financial management an d15 support of the product sales organization that does 10 :26 :271 6 business in Americas international which include s17 budgets, forecasting, reporting, discount management ,18 expense management, compliance to GAAP, compliance to

19 Sarbanes-Oxley, certification internally to complianc e

20 with Sarbanes-Oxley, customer engagement with the sales 10;26:5521 team in terms of building Cisco relationships .22 Q. I want to try and clarify some of your previous23 testimony. Did you testify before that at some point24 you went from being responsible for the credit approva l

5 at all of Cisco to j ust approval at Cisco Capital? 10:27:23

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A. Yes .Q. And when was that ?

A . Best of my recollection is around the 2000,

calendar 2000 time frame .Q. And what precipitated that change? I0:27 :43A. From the standpoint of Cisco, Cisco created

separate companies to which they would manage the taxesand personnel . So Cisco Capital became a separatesubsidiary and employee base from Cisco, Inc . and myresponsibilities spanned two different corporations, but I0:28 :021 was tonically an employee of Cisco Capital. So from

a delegation of authority perspective, it created partlya conflict in that I was an employee of Cisco, Inc . butwas responsible for Cisco, Inc . credit decisions.

From my perspective of having developed the 10:28 :22credit organization, I felt that the operations, processand procedures around credit and collections was runningvery smoothly and the higher level of focus would be on

Cisco Capital activity where my expertise would be of

better value. 10:28:4 1Q. So did someone else take over credit

responsibilities at Cisco Systems?

A. Yes.Q. And who's that?

A. At the time it was John Della Marco, who was 10 :28:50

20

1 the credit and collections manager . And that

2 organization that ran credit and collections moved from

3 worldwide financial services to a different interna l4 finance organization so it was totally separated from5 Cisco Capital. 10:29 :096 Q. Was Cisco Capital created after you took your

7 position at Cisco Systems ?8 A. No.9 Q. It was already in operation ?10 A. It was founded in 1996, about three months 10 :29 :4111 prior. It was incorporated in the State of Nevad a12 1 think in April of 1996. 1 joined Cisco in August of13 1996 . So as a legal entity, it was here before I joined14 Cisco ,15 Q. Was there what was called a credit group within 10 :30:1316 Cisco Capital ?17 A. Can you give me a time perspective?18 Q. That's a good point. 't'hroughout the deposition

19 I'm going to ask a lot of questions in the past tense ,20 and when I do, generally speaking, I'm going to be 10:30 :2821 referring to what we call the relevant period which i s22 from August of 1998 through -- I'm sorry -- August of23 1999 through February of 2001 .24 A. Okay.25 Q. Now, if at any point that gets confusing or, in 10 :30 :42

2 1

1 this case, maybe it wasn't true for an entire period,

2 you can just ask me to clarify and we'll work on a3 different time period .

4 A. Okay .5 Q. At some point during your tenure at Cisco 10 :30:536 Capital, was something called a credit group created a t7 Cisco Capital?

8 A. Yes .9 Q. And when was that?

10 A. It was created in 1996 and continues to be a 10 :31 :0211 separate function today .12 Q. And at the time of its creation, what were the

13 responsibilities of the credit group?14 A. At the time, it was responsible for overseein g

15 the credit decisions around channel credit for Cisco, 10 :31 :2116 Inc . as well as evaluating Cisco Capital credi t17 decisions as it pertained to any of the direct funding

18 that Cisco Capital was doing at that time .19 Q. And did the responsibilities of the credi t20 group change after 1996? 10 :31 :4321 A. Yes .22 Q. And how did they change?23 A. So when the a -edit and collections group wer e24 delegated more authority by me, eventually I moved m y25 credit team from doing support of Cisco, Inc . credit to 10:31 :5 7


CONFIDENTIAL

218

ability to potentially sell those in the future.z Q. All right. Would you look at Exhibit 39 again,

3 please ?

4 A. Yes.5 Q. Then, in addition, I'd like to ask the court 17 :30:586 reporter to mark what will be Exhibit 399.7 (Exhibit 399 was marked8 for identification . )9 THE WITNESS: Okay-

10 BY NM MONTGOMERY: 17:32 :1311 • Q. Is Exhibit 399 another leasing reserve report ,12 this one from December of 2000?13 A. From this document, I can't tell if its14 actually a report, but it looks similar to the pas t15 exhibits so I'm not sure if it's a complete report or 17 :32 :3516 the final report,17 Q. I'd like you to take a look at the reserv e18 percentage for credit rating seven shown on Exhibit 399-19 A- Under which category ?20 Q. Finance Leases. 17:32:5821 A. Yes.22 Q. And do you see that that reserve percentage is23 25 percent?24 A. Yes-r, Q. And do you see in Exhibit 39 that exhibit -- 17 :33:04

1 I'm sorry -- that percentage is 15 percent?2 A. Yes .

3 Q. Do you have any understanding of why that

4 percentage increased ?5 MR. MICHELS : Object to form. 17:33 :266 THE WITNESS : Can you clarify what you mean by7 "understanding"? Is it -- I'm not clear what you're8 asking me .

9 BY MR. MONTGOMERY :10 Q. Do you know why the percentage increased? 17 :311 W. MICI~S : Object to form.

12 THE WITNESS : I can speculate. I don't know13 for sure at that point in time because I don't hav e14 enough documentation to recollect specifically why it15 changed. 17:33 :54

16 BY MR . MONTGOMERY :17 Q. Do you have any idea at all ?18 A. I have an idea . I believe at that time I wa s19 assessing again the portfolio and determining that w e20 needed to increase our reserve relative to grade seven 17 :321 as that was increasing in terms of the overal l

22 portfolio. Some of those were accounts that werepreviously maybe of a better credit quality thatdeteriorated to a level seven . So my speculation woul d

25 be that I believe that sevens had a higher risk 17:34:25

3 :3 6

4:05

22 0

1 probability and that to not have a delta to go from 15

2 to a hundred, to have another step in between there.3 Q. And the reason you believe that is true or tha t

4 that was done is because the exposure to customers rated5 seven increased? 17:34:496 MR MICHELS : Objection to form.7 THE WITNESS : I debt actually think the8 exposure to seven increased . I think that the number of

9 accounts that may have been a better credit quality wer e10 deteriorating and which would have moved them from, say, 17 :35 :0111 a six, which is investment grade single B or junk bon d12 level B, to a triple C credit and, therefore, I believe13 that as the direction was going down that they should be

14 reserved for at a higher percentage. I'm just

15 speculating on what I believe drove that change- 17 :35:1716 BY MR. MONTGOMERY :17 Q . Is there any evidence of that shift on

18 Exhibit 399 as compared to Exhibit 39 ?19 MR. MICHELS : Object to form .2 0 "THE WITNESS : I'm not clear on your question. 17:35 :3921 A shift in what ?22 BY MR . MONTGOMERY :23 Q. Well, as I understand what you're saying is

24 that some of your customers were deteriorating from25 credit level si x to credit le vel seven : is that correct? 17 :35 :49

221

1 MR. MICHELS: Object to form, misstates his

2 testimony .

3 TIE WITNESS: I indicated that it could be one4 of the reasons. I can't definitively say by looking at5 the summary sheets. You asked what my thoughts or 17:36 :016 opinion were as to why it changed so that's my opinio n7 and thought-8 BY MR MONTGOMERY:9 Q. And the reason I'm asking is that, at leas t

10 compared to two months before, it looks like the amounts 17 :36:1011 of exposure at credit rating six and credit rating seve n12 are approximately the same . -

13 A. Again, looking at it static --

14 MR- MICHE_LS. Excuse me- Object to form .15 There's no question pending there . 17:36:3016 Read back the last question, please, o r17 statement.

18 (Record read by the reporter19 as follows):

20 "QUES'T'ION : And the reason I'm 17:36 :0821 asking is that, at least compared22 to two months before, it looks

23 like the amounts of exposure at

24 'credit rating six and credi t25 rating seven are approximately 17:36:20


Errata Sheet

Page Line Change

8 20-21 from "Bachelor of science in agricultural and manageria leconomics" to "Bachelor of Science in Agricultural an dManagerial Economics"

9 15-16 from "financial services officer, loan officer, differentbranches as well as loan credit administrator" to "Financia lServices Officer, Loan Officer at different branches as wel las Loan Credit Administrator"

9 20-21 from "financial service officer" to "Financial ServicesOfficer"

11 1 from "headquarter" to "headquarters"

12 11, from "financial service manager" to "Financial Service sManager"

12 13-14 from "financial services manager" to "Financial Service sManager"

16 3 from "worldwide financial services manager" toWorldwide Financial Services Manager"

17 18-19 from "chief credit officer" to Chief Credit Officer"

18 9-10 from "Americas international theater controller" to"Americas international Theatre Controller"

18 13-14 from "Americas international theater controller" to"Americas International Theatre Controller"

18 16 from "Americas international" to "Americas International "

19 13 from "employee of Cisco, Inc ." to "employee of Cisc oCapital "

20 1 from "credit and collections manager . And that" to "Credi tand Collections Manager. And the"

30 9 from "clients of" to "clients "

C, , 6

34 20 from "to liquidity ratio" to "the liquidity ratio"

35 18 from "convert the warrants of common stock in thecompany" to "convert the warrants into common stock i nthe company"

40 7 from " is not a Cisco Capital " to "is not of Cisco Capital"

40 17 from "Chief credit officer worldwide" to "Chief Credi tOfficer , Worldwide "

41 10 from "credit matrices" to "credit matrix "

44 8 from "if financials required as a covenant , yes." to "iffinancials were required as a covenant, yes . "

45 I from "maintain spread" to "maintain and spread"

45 2 from " also allowed you to write distance rules to assess" to"also al lowed you to write decision rules to assess "

45 17 from "It was not available on" to "It was not available in"

53 25 from ",being CCx," to "being , CCEx, "

56 17 from "are offer or proposal of interest" to "are offers orproposals of interest"

57 24 from "document relative to dollars expended." to"document relative to dollars extended . "

57 6-7 from "Proposal or letter of interest or letter of intent, yes . "to "Proposal or Letter of Interest or Letter of Intent, yes . "

60 23 from "chief credit officers" to "Chief Credit Officers "

62 14 from ",CCx," to "CCEx, "

63 1 from "CCx ;" to CCEx; ,

68 13 from "CCx" to "CCEx"


2 ~/ ~~ S`

71 18-19 from "customer financial services group" to "CustomerFinancial Services group"

73 2& 15 from "CCx" to ,CCEx"

78 1 from "Pa rtly would" to "Partly it would"

79 1 from "carry class" to "Carrier-class "

82 15 from "NorTel" to "Norte]"

83 15 from "easily are assets conve rted to cash" to "easily currentassets are converted to cash "

84 11 from "Debt T&W" to "Debtfi'NW "


86 1 4 from "CCx" to "CCEx"

88 5 from "evaluate the number of items" to "evaluate a numberof items "

89 9 from "as to the ownership of an" to "as to the ownershipfrom an"

90 9 from "a 483 scale" to "a 4A3 scale "

90 22 from "CCx" to "CCEx "

95 18, 22& 24 from "CCx" to "CCEx"

96 5,16 from ,CCx,, to ,CCEx "

96 7 from "State" to "state "

97 2 from " in situ trends " to "insight to trends"

98 2 from "1500" to "150"

100 21 from "in December of 2004" to "in December 0-4"

101 8 from ,CCx,, to ,CCEx „

102 9, 10 from "CCx" to "CCEx"

107 16 from "grow,th model" to "growth models "


1.10 5 , 7 from "CCx" to "CCEx"

116 8 from "initials, those may also" to "it initially, they may be "

116 15 from "chief credit officer" to "Chief Credit Officer "

124 22 from "Evelyn " to "Evelyne"

124 25 from "Loan operations " to "Loan Operations "

131 22 from "determining this was that a factor " to "determiningthis, was that a factor"

133 4 from "how well funded were they ." to "how well funde dwere they? "

139 22 from "made a different than" to "made a difference than"

141 24-25 from "ranges of risk structure being what were they rate dand then make a determination " to "ranges of :riskstructure, being . . .what were they rated ? . . . and then mak ea determination. "

149 1 from "segregated by marking" to "segregated by market"

159 19 from "I believe to goes to specifically identified" to " Ibelieve it goes to specifically identified"

169 3 from "VCs" to "PCs "

170 22 from " Lucent and NorTel" to "Lucent and Nortel "

171. 2 from "Lucent and NorTel " to "Lucent and Nortel "

182 11 from " it was" to "it would"

182 24 from "In the form of a guarantee , yes ." to "In the form of aguaranty, yes ."

185 14 from "I believe they were one offer greater exposures" to " Ibelieve they were one-off or greater exposures "

~-c ~ _ 4 ~~ f '

190 7 from "extended terms was Deutsche Financial Services wasa" to "extended terms was . Deutsche Financial Service swas a"

191 18 from "in order to update extended" to "in order to utilize

extended" .

191 23 from ",the financor," to ",the financier "

199 25 from ",who's the general manager at that" to "who was th e

General Manager at that"

200 6-7 from "director of internal control services ." To "Director o fInternal Control Services . "

202 14 from ""there was records of credit" to "there were record sof credit"

202 16 from " "copy of the credit approval on file" to "copy of th ecredit approval in file "

206 4 from "CCx" to "CCEx "

208 4-5 from "chief credit officer" to "Chief Credit Officer"

208 11 from "chief credit officer" to "Chief Credit Officer "

208 12 from "president and general manager" to "President an dGeneral Manager"

209 5 from "were incomplete or inconsistent" to weren' tincomplete or inconsistent "

214 25 from "DMB" to "D&B"

217 23 from "had to be" to "have to be "

229 4 from "would have been that that" to " would have been tha tthe"

234 10 from "doesn't necessarily mean that they weren't" todoesn't necessarily mean that if they weren't"

239 14 from "it's here" to "it is here"

5 ~ ~ a

245 17 from "Was there compliance group? To "Was there acompliance group?

251 15 from "they categorize" to "they categorized "

251 23 from "surprised or not a surprise" to "surprised or notsurprised "

255 15-16 from "sent or I have no mention that they were necessarily.either other than some specific hand memos" to "sent ,nor a notion that they were necessarily, either . Other thansome specific hand memos"

256 23 from "I'm authorized" to "I'm an authorized"

256 24--25 from "chief credit officer" to "Chief Credit Office? '

257 17 from "president" to "President "

257 17 from "general manager" to "General Manager"

260 20 from "my viewpoint on that was continual product" to "m yviewpoint on that . . . was continual product "

260 24-25 from "make reference to what Cisco because it's an interna lissue in terms of where did the dollars" to "mak ereference to Cisco, because it's an internal issue . . . in term sof where did the dollars"

261 1 from "reside from a P L perspective ." to "reside, from a P& L perspective ."

261 16 from "according to what I'd seen here the resolution" to"according to what I'd seen here, the resolution"

262 22 from "Cy White" to "Si White "

263 1 from "Kevin Alan" to "Kevin Allen"

268 19 from "Cisco's board of directors" to "Cisco's Board ofDirectors"

268 20 from "board of directors" to "Board of Directors "

(,~Z s W,,, 6/~/-

268 21 from "board of directors" to "Board of Directors"

269 15 from "Cisco's board of directors" to "Cisco's Board ofDirectors"

269 24-25 from "Cisco's board of directors" to "Cisco's Board ofDirectors"

271 5 from "I can't ascertain if this is as" to I can't ascertain i fthis is, as "

275 4 from "outstanding according to this that new equity didn't"To "outstanding according to this, that new equity didn't "

279 14 from "other timing wise." To "other, timing-wise."

280 5 from "timing you're talking about what activities ma yhave" to "timing you're talking about, what activities mayhave"

280 17 from "recall the specific," to "recall the specifics, "

281 20 from "byproducts" to "by-products "

281 23 from "are two that I seem to recall were two" to "are tw othat I seem to recall, were two"

282 2 from "nonequipment was definition" to "non-equipmentwas a definition "

282 11 from "That's as much an authority as a commentary" to"Not so much an authority as a commentary "

283 13 from "we won't provide anymore and" to "we won'tprovide anymore. And, "

283 14 from "the rationale was that was what we were" to "th erationale was, that we were"

284 19 from "longer be competitive" to "be competitive "

284 21 from "access to capital so we were in" to "access to capital ,so we were in"

288 21 from "recall the bases" to "recall the basis"

288 25

290 24

292 23

from "from this exactly" to "from this, exactly"

from "NorTel" to "Nortel "

from "Noffel" to "Nortel "

eta; , 8

EXHIBIT L

11$0FENWICK & WEST LL P

EMBARCADE RQ CENTER WEST 1 275 BATTERY STREET I SAN FRANC SCO, CA 91,111.

TEL 415,875-2300 j FAY 4 :5 .2881350 ! WWAr,rLN,MCK .COM,

SE.f~,o PArZAL.e:,A!

November 2, 2005a.[k!F KA Y : JNGCYF NV0CKr-CoM

✓ ifi~, .? (i`;« 4 :̀5 8 75 2.4 4 1

VIA FEDERAL EXPRES S

Matt Montgomery , Esq .I.,erach Cou ghlin Stoia Geller Rudman & Robbins LLI'655 W. Broadway, Suite 1900San Diego , CA 92101

REC'D N OV - 3 2005Re: In re Cisco Systems Securities Litigatio n

Dear Matt :

Please find enclosed one CD containing documents encompassing the range of CIS-Pt'NPF-1140785 through CIS-PPNPF-1 140802 .

If you have any questions , please contact me .

Sincerely ,

FEN WICK & WEST ELF

Kevin Young

SILICON VALLEY 0 SAN FRANCISCO

EXHIBIT M

LERACHCOUGHLIN

STOJAGLLLFRRUDMANROBBINS t.t r

LeSksy E . Weaver

November 4, 2005

SAN DIEGO • SAN F ZANCISC_L)

W5 ANC£1.£S • NEW YORE • ROCA EATO NWASE4INCMN, 1X„ . E C US S)N

PtifiADEl PIM3 • SEATt[,iz

VIA FACSIMIL E

Felix LeeFENWICK & WESTEmbarcadero Center West275 Battery StreetSan Francisco, CA 94111415/281-1350

Re : In re Cisco Systems, Inc. Securities Litigatio n

Dear Felix :

On November 3, 2005, plaintiffs received documents from the Cisco defendantsbearing Bates numbers CIS-PPNPF-1 140785-1140802 . Please explain why these documentsare being produced long after the close of fact discovery, and long after plaintiffs' expertreports were due .

LEW :reg

T:iCasesSF4GuolCocreslLee„t 1405 .d c

100 Pine Street, 26t1i Floor • San Francisco, CA 9,111.1 • 115 . 2188 .4545 • Fax 41 .5 .288-4,534 ~ti~vtiv .lcracEtta},° .ccarrl

EXHIBIT N



SAN JOSE DIVISION

In re : Cisco Systems, Inc .)

Securities Litigation )

Master File No . 01-20418

Jw

VIDEOTAPED DEPOSITION OF CLIFFORD PIKE

MONDAY , FEBRUARY 27, 200 6

VOLUME I

1

EASTWOOD-STEINDeposition Management ( 800) 514-2714

26 2 8

1 Q Can you remember more specifically what 1 Q All right. In your opinion, did Cisco's2 planning sections? 2 accounting policies and procedures regarding - -3 A Well, they are in the AU3 series . I 3 I'm sorry, Cisco Capital accounting policies an d4 believe I discuss this in my report- If you give 4 procedures with regard to leases comply with GAA P5 me a minute -- 09:46 :19a 5 during that class period? 09:49 :25 a6 Q Sure. 6 A Yes.7 A -- I'll try to find it. 7 Q Do you have any criticisms of thos e8 Q I think it might be at page 13 of your 8 policies or procedures ?9 report . The last paragraph before Section 3 . 9 A I think they were appropriate for th e

10 A I thought I had called out those 09:46 :57a 10 time. GAAP is always evolving, as you may know . 09:49 :32a11 standards somewhere . Let me just look a bit 11 MR. MONTGOMERY : I would like to ask the12 more . 12 court reporter to mark what would be Exhibi t13 Yes, on page 7, in the third to the last 13 4226.14 paragraph. "AU Section 311, Planning and 14 (Exhibit 4226 was marked for identification .)

15 Supervision ; AU312, Audit Risk and Materiality; 09:47:33a 15 BY MR. MONTGOMERY: 09:50:30a16 AU3I6A, Consideration of Fraud in a Financial 16 Q For the record, Exhibit 4226 is a17 Statement Audit; AU Section 319, Consideration of 17 Leasing Reserve Report from Cisco Capital fro m18 Internal Control in a Financial Statement Audit.." 18 P12, financial year 2000, which is also July o f19 Q And you believe that all of those 19 the calendar year 2000 .20 sections authorize an auditor to rely on internal 09 :47:52a 20 A Yes. 09:50 :42a

21 controls as apposed to testing specific 21 MS . THOMPSON ., Do you know what th e

22 estimates? 22 marginalia is ?

23 A Yes . 23 MR. MONTGOMERY: I do not. It may be in som e24 Q All four of those sections you just 24 deposition somewhere, but I don't know .

25 listed? 09:48:09a 25 Q And for the purposes of my questioning, 09 :50 :53a

27 2 9

1 A All four of €hose sections taken 1 you can just ignore any notes on this .2 together. You have to read all of them together 2 A Okay .3 to get an understanding of the planning process. 3 Q Before we turn to the exhibit, are yo u4 Q Are you familiar with Cisco's accounting 4 familiar with the term "capital lease" as it wa s5 policies and procedures regarding leases during 09 :48 :22a 5 used by Cisco Capital during the class period? 09 :51 :03a6 the class period? 6 A Yes .7 A Yes . Cisco Capital? 7 Q And before October of 2000, can you tel l8 Q Yes . 8 me how Cisco Capital accounted for capita l9 A Yes . 9 Imes'?

10 Q And Cisco Capital's financials were 09 :48 :30a 10 A Cisco Capital would enter into lease 09 :51 :20a11 consolidated into Cisco's financial statements ; 11 agreements or would plan to enter into lease12 is that correct? 12 agreements . And based upon those terms, a

13 A Correct. 13 classification of the lease as either capital o r

14 Q Do you have any objection if we just use 14 operating would be required.

15 Cisco to refer to either one? 09 :48 :45a 15 There are six criteria that need to be 09:51 :35a16 A I would prefer to use Cisco Capital 16 examined which are set forth in paragraph 7 and 817 because I'm not aware of any leasing activity 17 of FAS 13 . And based upon the results of those18 that occurred in Cisco, Inc ., and I haven't 18 tests, the lease would be classified as an19 looked at any leasing activity that occurred in 19 operating lease or it would be classified as on e20 Cisco, Inc . I can only speak to what I saw in 09 :48 :58a 20 of two types of capital leases, one of which is a 09 :51 :56a21 the audit working papers about. Cisco Capital . 21 sales-type lease . The distinction there is tha t22 So I wouldn't want to misrepresent . what 22 a manufacturer or dealer's profit would be

23 1 know about Cisco Capital as relating to 23 recognized up front on that type of lease .

24 everything there might be anywhere in the world 24 And the other type would be a direct2 5 having to do with Cisco. 09:49 :11 a 25 finance lease where there would be no up front 09 :52 :12 a


222 22 4

1 Do you see that? 1 different borrowers had different amount of2 A I see that . It's under the heading of 2 assets ?

,3 "Non-Cisco equipment and working capital." So I 3. MS . THOMPSON : Object to form -4 think what that's talking about is the non-Cisco 4 MR, MONTGOMERY : Let me ask it again .5 equipment that was purchased with the B and C 05:30 :1 Op 5 Q Is it your understanding that the 05 :33 :14p6 loans . 6 different B and C borrowers during the clas s7 Q Right. My question to you is: Assuming 7 period had different amounts of assets?8 that that observation is true, would Cisco be 8 A I haven't done any kind of review of th e9 entitled to rely upon the value of that 9 financial statements of the various B and C

10 collateral in establishing its reserves for the 05 :30 :29p 10 borrowers, so I couldn't answer that question . 05:33 :30p11 loans? 11 It's possible .12 A Well, I think the question would be the 12 Q Is it your understanding that the size13 ability to recover not just the 13 and C loans but 13 of the loans, the B and C loans, were different ?14 the A loans as well . And the A loans, they are 14 A Yes. Not every loan was made for the15 comfortable that they can recover and there may 05:30 :49p 15 same amount- 05:33 :50p16 be some surplus even . 16 Q So how could the total assets of these17 Plus, as I mentioned earlier, this 17 various companies support a 25 percent reserv e18 doesn't discuss it but there s the alternative of 18 for totally different loan amounts?19 rather than a repossession of the equipment and a 19 MS . THOMPSON : Object to form .20 sale of it, rather a sale of the equipment in 05 :31 :0Sp 20 THE WITNESS : Well, I would think that if 05 :34 :12p21 place to a new buyer, which, you know, wouldn't 21 borrower A borrowed a million dollars and di d22 involve having to realize the value of the 22 improvements at two locations, and borrower B23 equipment individually . 23 borrowed $10 million and did improvements at 2024 Q And do you know of a single instance 24 locations, and each location had similar o r25 where that occurred with regard to a B and C loan 05 :31 :27p 25 relative value, then they would have similar 05 :34 .4-a p

223 225

1 customer during or after the class period? 1 relative risk profiles and a similar reserv e2 A I haven't analyzed that . I do know that 2 percentage would be appropriate.3 there have been a number of situations where 3 MR. MONTGOMERY: Can you read back tha t4 CLECs were acquired by other CLECs or by even 4 answer.5 II ..ECs . You know, during a period of time there 05 :31 :50p 5 (Record read as follows: Answer: 05:35:28 p6 was consolidation in the industry, and that was 6 Well, I would think that i f7 probably in the mid-2000 area, around the time of 7 borrower A borrowed a million8 Cisco's year end . 8 dollars and did improvements at9 Q Is it your understanding that the assets 9 two locations, and borrower B

10 of the different B and C borrower -- I'm sorry . 05 :32 :17p 10 borrowed $10 million and did 05,35:29p1I The assets of different B and C borrowers during 11 improvements at 20 locations, and12 the class period were worth different amounts? 12 each location had similar o r13 A Well, I would say that's a fair 13 relative value, then they woul d14 statement because you might have made different 14 have similar relative ris k15 amounts of loans to be used for such purposes . 05 :32 :37p 15 profiles and a similar reserve 05 :35 :29p16 So therefore, the borrower would use those .16 percentage would be appropriate . )17 proceeds that it receives . 17 BY MR. MONTGOMI~RY:18 So if one borrower receives ten million 18 Q And do you have any reason to believ e19 and another borrower receives one million and 19 that the assumptions underlying your analysi s20 they both use the proceeds to buy non-Cisco 05 :32:54p 20 there are actually borne out in fact? 05 :35:34p21 equipment, then there's going to be a difference 21 A I don't have any facts either way .22 in value between them . 22 _Q Is it correct that you earlier testified

'3 Q Well, aside from that difference, 23 that the 25 percent reserve for B and C loans was24 though, is it your understanding that the total 24 taken for the loan group as a whole withou t25 assets of these different companies, the 05 :33 :05p 25 regard to the credit quality of particular 05 36 :07p


226 22 8

1 customers? 1 that's the reserve percentage, is 56 .47 . But I2 A It's my understanding that a 25 percent 2 can't tell you whether this means that's th e3 reserve was established in connection with the 3 percentage reserve or whether it has some othe r4 loan itself. So when the loan was made, the 4 meaning .5 reserve was established at 25 percent of that 05 :36:24p 5 I think this gets back to the latter 05:40 :36p6 arnount . 6 half of this presentation where I said the goin g7 Q And was that reserve later adjusted 7 gets pretty heavy .8 depending on the credit worthiness of a 8 Q No, I'm not looking at the first line o f

9 particular borrower? 9 that, which is tranche A loan .

10 A Yes. 0536:37p 10 A Yeah. 05:40:50p11 Q And when did that happen'? 11 Q Let's look at the second line. It says

12 A I think that Cisco did periodic credit 12 -- it's a working capital loan, which is a

13 evaluations. I don't believe that, except in the 13 tranche B loan, correct?14 case of AMC, there were any adjustments to any of 14 A Uh-huh .15 the 13 and C loans as of July 2000, which was the 05:36 :56p 15 Q And the ending principal balance is 05 :40 :58p16 end of fiscal 2000 for Cisco . 16 467,000 and change; is that right ?

17 Subsequently, there were further 17 A Uh-huh.

18 adjustments which, as you indicated, perhaps 18 Q And the ending reserve is 116,000 an d

19 culminated in the end of Q2 with significant 19 change ; is that right?

20 increases in the reserves. 05:37 :24p 20 A Yes. 05:41 :08 p21 MR. MONTGOMERY : I would like to ask the 21 Q Is that approximately 25 percent?22 court reporter to mark Exhibit 4234. 22 A Yes .

23 THE WITNESS: I should say Q2/01, just to be 23 Q And for the tranche C loan below that ,

24 clear . 24 is that also -- does the reserve equa l

25 (Exhibit 4234 was marked for identification .) 05 :37 :52p 25 approximately 225 percent of the principal 05 :41 :24 p

227 229

1 BY MR. MONTGOMERY : 1 balance ?2 Q Do you want a minute to look through 2 A Yes .

3 it? 3 Q And what's the credit score for NetFone ?

4 A Yes, please . 4 A It looks like it's nine .

5 Q Let me know when you're ready . 05 :38 :25p 5 Q Then let's take a look at HarvardNet, 05:41 :40 p6 A Okay . 6 which is three customers down, still on the sam e7 Q Have you seen Exhibit 4234 before? 7 page.

8 A No. 8 A Okay .9 Q Does it appear to be a spreadsheet 9 Q And do you see there s a tranche 13 loa n

10 recording Cisco Capital's loan as of P3 financial 05:39:27p 10 for HarvardNet? 05 :41 : 52p11 year '01 ? 11 A Yes.12 A It appears to have something to do with 12 Q And is the reserve for that loa n13 that . I'm not sure if it's complete or if it's 13 approximately 29 -- I'm sorry, 25 percent of the

14 some subset . 14 ending balance?

15 Q And is P3 financial year'01, October of 05 :39 :40p 15 A Yes. But I can't tell you whether this 05 :42 :00 p16 calendar year 2000? 16 is the final reserve or whether this was some .

17 A Yes . 17 preliminary worksheet saying what was on th e

18 Q I would like to direct you to the 18 books before any reserve made in QI was recorded .

19 entries for the first company, NetFone . 19 Q And what is the credit score that' s

20 A Okay. 05:39:55p 20 indicated for HarvardNet at this tine? 05 :42:20 p21 Q And does this document show that the 21 A Seven .

22 reserves for the B and C loans as of this date - 22 Q Would you turn two pages, please ?

23 were 25 percent? 23 A (Witness complies .)

24 A Well, what NetFone reserve percentage 1 24 Q Actually, two more pages to page endin g

25 can see, net reserve ratio, I don't know whether 05:40:19p 25 561. 05:43 :07p


Errata Listing for Videotaped Deposition of Clifford PikeMonday and Tuesday February 27 and 28, 200 6

Volumes I and I I

Volume I

Page Line Deposition Text Corrected Text

11 25 1 moving management21 9-10 could be material to the financial

statements"could be material to the financia lstatements"

23 24 audit audito r24 22 when when25 13 estimate as an audit procedure, estimate, as an audit procedure ,32 2 0-

as i s46 11 them, thy;51 23 and i n65 15 com onentry comp nents72 22 Freei free81 3 scheduled schedul e81 22 negotiate a le ase which negotiate a lease, whic h88 17 1-1-5-3-2 1153291 10 It as provided How it was provided99 15 if either102 15 2000 200 1103 7 they are in a their108 15 15, 25, 15, and 100 . 15, 25, 50, and 100 .112 13 1-1-5-3-2 1153 2113 2 1- 1-5-3-2 1153 2114 23 1-1-5-3-2 1153 2119 10 2001 2000123 7 sales . Segment of total sales . sales segment of total sales .125 16 o inions volumes126 9 1 had documents to those I had documents, those135 11 closed close135 16 from that these from that, multiplied these135 17 multiplies multi lied137 6 income-statement-ca based income statement gaap based138 8 1-1-5-3-2 11532144 8 appreciate depreciate147 7 numerator denominato r156 24 nt of period,165 12 the that166 3 they are their166 4 effective effect i s173 4 That's the time That's at the tim e176 17 Keeble Thibaul t

I oft

Errata Listing for Videotaped Deposition of Clifford PikeMonday and Tuesday February 27 and 28, 200 6

Volumes I and 1 1

Page Line Deposition Text Corrected Text

176 25 1--1 EY177 6 change and practice change in practice181 25 re parer and a re arer and182 1 testing attesting183 22 any material immateria l199 3 a or203 24 is isn' t207 17 apposed opposed209 16 or of211 8 a million a hundred millio n214 23 made and installments made in installments219 8 "coloco" "colas"220 8 Companies that were Companies wer e

Volume 2

Page Lire Deposition Text Corrected Text-

27E F 16 Eapidjy ratabl y279

__12

_forecasting forecasted

289 25 on the margin at the E aril 0 at the margin on the E and 0294 11 or and

302 14 for €er310 8 through tota l

320 23 count account321 3 T12 Q1 P120 1343 8 Lybrandt Lybrand347 12 FAS SA S

CLIFF PIKE

2 oft

EXHIBIT 0



--- 000- ---

)

IN RE :

)

CISCO SYSTEMS, INC .

}


)

)

This document relates to: )

ALL ACTIONS .

)

No . C-O1-20418-1W (PVT )

VIDEOTAPED DEPOSITION OF ERIK ALBERTS

FRIDAY, SEPTEMBER 30, 2005

1

EAST WOOD-STEINDeposition Management (800) 514-2714

74 7 6

1 MR. LEE: Objection . Document speaks for 11 :50 :4 1 A. No, I haven't seen this. I don't recall 11 : 53 :0 1

2 itself. 11 :5 0-. 4 2 seeing this document before last week . 11 .53- 1

3 MR. ROCKEY : Objection . Calls for 11 :5 0 : 4 3 Q. Okay . I will mark as Exhibit 2185 a document 11 .53- .4 speculation . 11 : 50 .4 4 bearing Bates numbers CIS-PPNPF-0533420 through 441 . 11 : 53 :4 .

5 THE DEPONENT: Yeah. I mean, they look about 11 : 50 :4 5 (Exhibit No. 2185 was marked for 11-53 :5 1

6 the same height to me. 11 :50 :5 6 identification.) 11 : 53 -5 ,

7 BY MS. WEAVER : 11 : 50 - 5 7 MR. LEE : "2185," you said? 11 :53 : 5

8 Q. Okay. And do you ever recall having a 11 : 50 : 5 8 MS . WEAVER : Yes . 11 : 54 : 0

9 discussion with anyone regarding the fact that in the 11 :50 :5 9 BY MS . WEAVER: 11 :54 : 010 past Cisco had experienced a rate of return as a 11 : 50 . 5 10 Q. Have you had a chance to review the document? 11 .54-.0 ,11 percentage of bookings that was higher than it received 11 : 51 :0 11 A. Yes. 11 : 56 : 2

12 in the second quarter of 2001? 11 :51 :0 12 Q. Are you still looking? Just take your time . 11 : 56 . 4

13 A. No, I don't. 11 :51 :0 13 A. Okay. 11 :56 : 5

14 MR. LEE: Counsel, just for the record, there 11 :51 :1 14 Q. Are you ready? Do you recognize Exhibit 2185? 11 :5 6 : 5

15 is a particular mark on that chart at .Q3 '99 . I just 11 :51 :1 15 A. No . 11 : 58 :1 ,

16 want to make sure -- was that on the original or is that 11 : 51 :2 16 Q. Did you ever attend any presentations 11 : 58 .- 1

17 made by counsel before it was submitted? 11 : 51 :2 17 regarding the RMA Reduction Program? 11 : 58 . 2

18 MS_ WEAVER: I have no idea . I am assuming 11 :51 :2 18 A . I believe 1 may have attended one in my first 11 : 58 .2 .'

19 that is how we received it . 11 :51 :3 19 week or two at Cisco when they were introducing 11 :58 : 3

20 MR. LEE: Okay. I just want to note it for 11 :51 :3 20 themselves to myself and maybe one other new person . 11 : 58 :3 ,

21 the record, 11 :51 :3 21 Q. Do you believe that Exhibit 2185 is, in fact, 11 :58 : 4

22 MS . WEAVER: It is a tic mark . And I will 11 : 51 .3" 22 a Power Point presentation that was prepared at Cisco? 11 : 58 :4 :

23 note for the record that the tic mark has nothing to 11 : 51 :3 23 MR. LEE : Objection . Lacks foundation. 11 : 58 :4 '

24 do -- it does not intersect a line, 11 :51 :3 24 THE DEPONENT : Well, it looks like the 11 :58 : 4

25 MR. LEE: That is fine. I just wanted to see 11 :51 :3 2 5 pre-parer's name and date has been blocked out, but it 11 :58 : 5

75 77

1 if you knew . 11 :51 :4 1 has got the Cisco template and the Cisco label on it and 11 :58 : 5

2 BY MS . WEAVER: 11 :51 :4 2 it looks like a Power Point . 11 : 59 .-0 :

3 Q . Were you involved at any point in time in an 11 :51 :4 3 BY MS . WEAVER: 11 : 59 :0 :

4 audit of Cisco's returns process? 11 : 51 :4 4 Q . And why do you think the name and date has 11 : 59 : 0

5 A . No . 11 :51 :4 5 been blocked out? 11 :59 : 0

6 Q . Were you aware that internal audit conducted 1 1 : 5 1 : 4 6 A . I have no idea . 1 1 : 59 : 0

7 an audit of Cisco's return process? 1 1 :51 :5 7 Q. No. Why is it that you think the name and 11 .59-0 ,

8 A . I can't remember if I was aware of that or 11 :51 :5 8 date has been blocked out? 11 :59 .0 ,

9 not. 11 :51 :5 9 A. I don't know, 11 :59 : 1

10 Q . I will show you what was previously marked as 11 :51 :5 10 Q. Do -- you don't know why you think that? 11 :59 ..l :

11 Exhibit 908. And for the record, Exhibit 908 reads, "RM 11 :52 :0 11 A. Well, I think it is blocked out because there Ili 59 : 1

12 Process Review," and bears Bates number 11 .52 ., 1 12 is squares here where normally the name and date of the 11 : 59 : 1

13 CIS-PPNPF-HC-12323l through 243. Have you see Exhibit 11 :52 :1 13 presentation would be . 11 :59 : 1

14 908 before? 11 :52 :3 14 Q. Turning to the second page of the exhibit, do 11 : 59 :2 (

15 A . I have seen it before . The first time, 1 11 :52 :3 15 you see that Cin Smith's name appears in the lower 11 : 59 :2 :

16 believe, I saw this was last week when 1 reviewed with 11 : 52 :9 16 left-hand corner? 11 :59 .2 '

17 counsel- 11 :52 :4 17 A. Yes. 11 :59 : 2

18 Q . And do you have any recollection of anyone 11 :52 :4 18 Q. Do you believe Cin Smith prepared this? 11 :59 : 2

19 consulting you during the time you worked at Cisco -- 11 :52 :5 19 MR_ ROCKEY : Objection . Lack of foundation. 11 : 59 . 3

20 A. No. 1153 :0 20 T14E DEPONENT: I could also guess -- it could 11 :59 : 3

21 Q. I am sorry . Just let nie finish the question . 1153 :0 21 be someone else prepared it for her . 11 :5 9 : 3

22 I know that you know what the question is going to be . 1 1 : 5 3 :0 22 BY MS . WEAVER : 11 :59 : 3

23 Do you have any recollection of anyone 11 : 53 :0 23 Q. And turning to -- you know what? That's 11 : 59 :

24 consulting you with regard to any of the matters 11 53 : 0 24 fine, Turning to the page ending with Bates number 427, 11 : 59 : 4

25 contained in Exhibit 908? 1153 :0 25 do you see a chart there? 12 :00 . 0

EAST W OOD-STEINDeposition Management (800) 514-2714

78 8 a

1 A. "RMA Requested company-wide"? 12-00,01 1 MR. ROCKEY : Objection. Calls for 12-.03-.3 .'

2 Q. Yes. And do you see that this chart reflects 12 : 00 :1 2 speculation . 1203 : 3 '

3 that RMAs were increasing in the third quarter of 1999? 12 : 0 0 : 1 3 THE DEPONENT: Yeah. My guess would be 1203 :3 !

4 A. Yes, I see that . 12 :0 0 : 2 4 because two-tie s are distributors and not customers. 12 :03 ; 3

5 Q. And turning to the page ending with the number 12 :00 :2 5 BY MS . WEAVER : 12 :03 : 46 429, do you see it says, "RMAs requested," and under 12 :00 .2 6 Q . So that's why two-tiers are lower . Is that 12 ; 03 : 4

7 that there is a chart that gives actual fiscal year'99 12 -.00 :3 7 what you are saying? 12 :03 : 4

8 numbers and forecast fiscal year 2000 numbers? 12 :00 :3 8 A . I mean -- 12 :03 : 4

9 A. I see it . 12 : 00 : 3 9 Q . I ntean, it does reflect some two-tier returns 12 : 03 : 4

10 Q . Were you involved in forecasting RMAs? 1 2 : 0 0 : 4 10 due to order error, doesn't it? 12 :03 : 5

11 A. I was involved in forecasting adjustments to 12 :00 :4 11 A . I can see that, but I have no reason why -- or 12 :03 : 5

12 revenue- 12 : 00 : 4 1.2 no way to know why that would be in there . Again,1 12 :03 : 5

13 Q. And in order to forecast adjustments to 12 :00 :4 1 3

1

could only guess that is why order error customer 1204 : 0

14 revenue did you have to analyze data that included a 12 :00 :5 14 appears to have almost no two-tier, but -- very little . 12 : 04 : 0

15 forecast for RMAs? 12-00 :5- 15 Q . Okay. Thank you . I will now show you what 12 :04 : 0

16 A. No. 12 :01 :0 116 was previously marked as Exhibit 476, which is a 12 :04 : 2

17 Q. Prior to the time the future returns reserve 12 : 01 :0 17 document bearing Bates number CIS-PPNPF-0487815 through 12 .04 : 2

18 was created did you review forecasts for RMAs? 12 :01 :01 "118 827 . 12 :04 : 3

19 A. No. 12 :01 :1 19 MR . LEE: Should we break for lunch when we 12 :07 :0 1

20 Q. Do you know anyone who did? 12 .,01,1 -20 are done with this docunment? 12 : 07 : 1

21 A . Well, it appears that Cin Smith did. 12 :01 :1 21 MS . WEAVER : Sure. 12 :07 : 1

22 Q. Were you aware of anyone else reviewing 12 :01 :2 . 22 THE DEPONENT : All sei. 12 : 07 .2 '

23 forecasts for RMAs? 12 .01-2' 23 BY MS . WEAVER : 1207 : 2

24 A . I -- yes, I was probably aware that tier team 12 :01 :2 24 Q. Do you recognize Exhibit 476? 12 :07 : 2

.25 was forecasting RMAs at this aggregate level, 12 :01 :3 25 A . No . 12 :07 : 3

79 81

1 Q. Prior to the time the future returns reserve 12 :01 :4 1 Q. Were you aware of an RMA Reduction Program 12 :07 : 3

2 was created did you take forecasts for RMAs into account 12 :01 :5 2 order error-- regarding order error? 12 :07 :3 .

3 in creating any reserve? 12 : 01 :5 3 A. No. 12 : 0 7 :3 1

4 A. No . 1202 :0 4 Q . And turning to the fourth page of Exhibit 476, 12 :07 : 3

5 Q. Turning to the last page of the document, 12 : 02 :0 5 were you aware at any time during the relevant period 12 : 07 : 4

6 which ends with Bates number 441, do you see that this 12 : 02 : 1. 6 that the order error trend for non two-tier bookings was 12 : 07 : 5

7 is a chart that reflects RMA requests for two-tier and 12 : 02 :2 7 increasing over time? 12 : 07 -5 f

8 non two-tier shipments`? 12 : 02 :2 8 MR. LEE : Just for the record, you are looking 12 .07 :5 f

9 A . Actually, it appears to be a chart of RMAs 12 :02 :3 9 at the page ending 7818? 12 :08 : 010 requested, not shipments. I thought you said, 12 : 02 :4 10 THE DEPONENT : And just to refresh my memory, 12 .08 :0 211 "shipments." 12 :02 :4 11 the relevant period is from May of 2000 to November 12 ;08 :0 (12 Q. I said it reflects RMA requests for two-tier 12 : 02 :4 12 2001? So Q3 of'00 would have ended in April 2000 prior 12 .08-.1 (13 and non two-tier shipments . And your distinction is? 12t 02 : 5 13 to the relative period . 12 :0 8 : I

14 A. RIM requests -- not for the actual shipments . 12 :02 :5 14 BY MS . WEAVER: 12 : 0 8 . 1

15 It is the request to open an RMA . 12 : 0 2 : 5 15 Q . Right. But were you aware at any point during 12 :0 8 : 1

16 Q. And do you see that this chart reflects that 12 : 0 3 : 0 16 the relevant period of the order error trend for direct 12 :0 8 : 1.

17 for returns where there was order error by customer -- 12 : 03 : 0 17 shipments increasing? 12 :0 8 :2 1

18 that category is almost exclusively non two-tier 12 : 03 : 1 18 A . I was not . 12 :08 .2--

19 shipments? 12 : 03 : 1 19 Q . And when you were calculating the reserves 12 : 0 8 : 2

20 A. Yes, 12 .03 .2( 20 relating to returns did you ever take that into account 12 :08 : 2

21 Q. Do you have an understanding as to why that 12 :03 :2 21 prior to creating the future returns reserve? 12 : 0 8 : 3

22 might be? 12 :032 22 A. Do you mean the open RMA reserve? 12 :08 :3 423 A. I could venture a guess, but I don't know . 12 :03 :2 23 Q. No, I mean the future returns reserve . 12 :08 : 324 Q. Based on your experience at Cisco do you have

1

12 : 03 : 2 24 MR. LEE : Objection . Vague and ambiguous .

112 :08 : 4

25 an idea as to why that is? 12033 2 5 THE DEPONENT : Can you ask the question again, 12 :08 : 4


too Yd 190A : IsleWX"_ LgN8.10 J 1 rl iUN tK 1

NAME OF DLPI is Erik Ally

RIZ21 fi NOZ QO 9O-11 Ate 43AIBD 38

DATh OF U STON: 09130105

CASE NAME: In re Cisco System, Securities Mption

COURT: U.S. Dist rict C€ un, Northern District CASE NUMBER : C-O1-?A41 -. W ( 'VT)

MT)ILT DONS : Please note changes by listing the page and line number in the places indicated onthis sf and listing the changes in the right-hand column. Attach additional sheets as t ecesasry.When you have reviewed and corrected the entire tt sciipt. phase return these pages with thecorrections to us in the enclosed postage-paid envelope.

PAGENO.

LINENO.

CURRENTLY READS SHOULD READ

13 10 Bath with

22 2 Um-hutn Yes

22 13 In and

26 23 Schedule in a. waterfall Watinfall schedule

24 24 Urn-huts Yes

37 5, 15,20 GAP GAAP

38 9 GAP GAAP

44 13 Um-hutn Yes

71 7 Ur-hum Yes

97 4 Um-hum Yes

98 19 Han Hanh

102 22 Swart Suzanne

116

129

6

18

Um-hum

Revenue ReductionAccounting

Yes

Revenue Accounting

134 15 And then changnd thefoster

Arad then didn't change the f oter

151 25 Urn-hum Yes

151 13 Phuc Tron Phut Teen

152 12 Um-hur Yes

152 23 Um-h Yes

157 16 I never been I have. never been

Date: signature:Erik Alberts

24MI/M4Q1l3f iOMf

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EXHIBIT P

CONFIDENTIAL



--- 000---

In Re: }



---------------------------

This document relates to : )

ALL ACTIONS. )

cCNRDNIALNo . C-01-20418-J'W (PVT )

VOLUME _

CONFIDENTIAL

DEPOSITION OF KEVIN KENNEDY

THURSDAY, SEPTEMBER 15, 2005

1


CONFIDENTIAL

82 84

1 Q. During the relevant period, did you have 11 :00 .43 12 any shares of Cisco stock or options to purchase 11 :00:47 2

3 such stock? 11:00:50 34 A. Yes. 11:00 :51 45 Q . How many options did you have? 11 :00 :51 5

6 A. i cannot remember that. 11:00 :55 67 Q . Approximately? 11 :00 :57 78 A . Many, I think. Millions. 11:00 :58 8

9 Q. More than 5 million? 11 :01 :04 9

10 A . I believe so. 11:01 :07 1 011 Q. More than 10 million? 11 :01 :09 1 112 A . I don't believe that. 11:01 :11 1 213 Q . And what about stock? Did you have any 11 :01 :12 1 3

1.4 stock? .. 11:01 :15 1 415 A . The only stock I would have had would have 11 :01 :15 1 5

16 been probably ESPP or, you know, a savings program . 11 :01 :19 1 617 Q . And then during the relevant period, did 11 :01 :27 1 7

18 you exercise any of your options? 11 .01 :31 1 819 A . Not to my knowledge. 11:01 :33 1 9

20 Q . Did you sell any of your stock, your Cisco 11 :01 :34 2 021 stock, during the relevant period? 11 :01 :39 2 122 A. No. 11:01 :41 2 223 Q . During the relevant period, did you 11 :01 :41 2 324 mainta in a diary? 11 :01 :46 2425 A . No. 11:01 :47. 2 5

83 85

1 Q. What about an appointment book? 11 :01 :47 12 A. Not a handwritten one. There's a 11:01 :50 23 scheduling program that my administrator would have . 11 :01 :55 34 Q. What sched- -- is that the Meeting Maker 11 :02 :02 45 calendar system? 11 :02 :10 56 A. Yes. Yes. Whatever the executives used. 11 :02:11 67 Q. And you would receive bard copy printouts. 11 :02 :13 7

8 of that Meeting Maker calendar ? 11 :02 :18 89 A. Some years . Some years I just was 11 :02:20 9

10 paperless. 11:02 :24 1011 Q. We are just talking about the relevant 11 :02 :24 11

12 period. 11:02 :27 1213 A. I flip-flopped between paperless and 11 :02 :30 13

14 non- paperless during the relevant period . 11 :02 :33 14

15 Q. And did you maintain any phone message or 11 :02 :36 1516 message pad during the relevant period? 11 :02 :43 1617 A. No. 11:02 :45 1718 Q. Did your secretary maintain a diary for 11:02 :45 1819 you during the relevant period? 11 :02:51 19

20 A. No. 11:02 :52 2021 Q. What about an appointment book? 11 :02:53 21

22 A. Just the Meeting Maker that you mentioned . 11 :02 :55 2223 Q. During the relevant period, did you 11:02 :58 2324 maintain files regarding Cisco in your desk or 11 :03-02 24

2 5 office? 11:03:05 2S

A, Anything that was important for me to do 11 :03 :08work, yes. 11:03:1 3

Q. And did you have a computer during the 11 :03 :14relevant period? . 11 :03 :16

A. I did. 11:03 :1 6Q. How many? 11 :03 :17

MR. BETMAN: Object to form. 11:03:24THE WITNESS : At anyone point, in time,1 11 :03 :25

only had one. 11:03:27 .BY MR. DROSMAN: 11:03:2 8

Q. And during the relevant period, how many 11 :03 :28computers did you use during that period? 11 :03 :30

A. I have no recollection. 11:03 :32

Q. More than five? 11 :03 :34A. I truly have no recollection: 11:03:35.Q. Did you have a desktop or a laptop? 11 :03 :39A. A laptop. 11:03:4 1Q. And did you maintain files regarding Cisco 11 :03 :43

in your laptop computer during the relevant period? 11 :03 :47A. Yes. 11:03 :50Q. What did you do with that laptop? 11 :03 :50A. I gave it to, you know, Cisco and whoever 11 :03 :52

in preparation for this. 11:04:00Q. You gave it to Cisco when you left the 11 :04 :00

company, or you retained it? 11 :04 :04

A. I think I retained it, and then when I was 11 :04 :06

asked to hand it in for this purpose, I gave it to 11:04 :13them. 11:04 :1 7

Q. Did you give them the entire computer? 11 :04:17A. Yes. 11:04:20Q. And have you received it back? 11 :04:20

A. I don't recall. 11:04:22Q. And did you maintain files regarding Cisco 11 :04 :24

in your home during the relevant period? 11 :04 :29A. No. I had only one computer. 11:04:3 1Q. And no hard copy files regarding Cisco in 11 :04 :35

your home "during -- 11 :04:39

A. No, no, no. 11:04:40Q. Did you typically take antes at meetings 11 :04 :41

during the relevant period? 11 :04:47

A . That would be normal for me. 11:04:49Q. What did you do with those notes? 11 :04 :51

A. I would put them in binders . 11:04:54

Q. And you retained the binders? 11 :05 :00A. I would leave them in my office. 11 :05 :02

Q. What did you do with those binders when 11 :05 :05

you left the company? 11 :05 :07A. I left them in my office. 11:05:07Q. And again, you left the company in 11 :05 :09

August 2001? Is that accurate? 11 :05 :1 4


INSTRUCTIONS FOR READING/CORRECTING YOUR DEPOSITION

To assist you in making corrections to your deposition testimony, please follow the directionsbelow. If additional pages are necessary, please furnish them and attach the pages to the back ofthe errata sheet.


Please, read carefully . If yo ti find any errors or changes you wish to make, insert thecorrections on the errata sheet beside the page and line numbers .

If you are in possession of the original transcript, do NOT make any changes directly onthe transcript ,

Do NOT change any ofthe questions .

After completing your review, please sign the last page of the errata sheet, above thedesignated "signature" line and return the transcript to your attorney .

ERRATA SHEET

Page Line

70 3 Change: I.believe. in November 2001 .

Reason : Corrected date.

70 17 Change: I've served on the board since November 2001 .


72 6 Change: That's correct, as to November 2001 until I became CEQ

Reason: Corrected date .

72 10-11 Change: I believe it ma have been a supplier, just as many corn anies were . AndI became a board member in November 2001 .



No changes have been made . I certify that the transcript is true and correct .

(si .c atu-! -&s

(date)

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EXHIBIT Q

CONFIDENTIAL



---oOo----

In Re :



This document relates to :

ALL .ACTIONS .

CONFIDENTIALNo . C-01-20418-JYT (PVT )


VIDEOTAPE DEPOSITION OF RICHARD JUSTICE

THURSDAY, MAY 5, 200 5

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30 32

I. staff. But I'm not recalling the meeting, per se, as it I BY MR . DROSMAN :

2 relates to that forecast . 2 Q. Have you had discussions with anyone other tha n

3 Q. I'm not asking you s4 at you recall about a 3 your attorney concerning your deposition ?4 particular document or where -- what I'm asking you is, 4 A. No.

5 the documents that you reviewed, that may have had 10 :40:40AM 5 Q. Have you had discussions with anyone other than 10 :43 :16A M

6 forecast information in there yesterday -- 6 your counsel concerning the lawsuit . that we're here t o

`7 A . It wasn't yesterday . 7 discuss today ?8 Q. I'm sorry . . Tuesday, were X . And that's the 8 A . No .

9 information that I'm seeking. In other words, if you 9 Q . You haven't spoken to your wife about th e

10 recall a specific presentation that you reviewed, that's 10:40 :55AM 10 lawsuit? 10:43 :28A M

11 what I'm seeking . 11 A . I've spoken to my wife about the fact that I' m12 MR. MUCK : I'll object . That's been asked and 12 going to San Francisco today to do, this deposition .

13 answered. He said lie doesn't remember specific ones . 13 Okay . And - -

14 THE WITNESS : I don't recall specific 14 Q . But nobody else about the lawsuit ; is tha t

15 presentations . In a given day or given week, I may do 10 :41 :06AM 15 accurate'? 10:43 :44A M

16 ten presentations, talking to various people with 16 A . Well, I've spoken to the CEO of the company tha t

17 subsets of the same information . So obviously, you 17 I'm going to San Francisco to do this deposition today .

18 know, al I that information that was there was for me . 18 Q . Anybody else besides Mr . Chambers ?

19 Again, if I'm looking at things like that, my job is 19 A . That I was coming here to do this?

20 floods of information coming at me, scanning and trying 10:41 :28AM 20 Q, My question was broader. The question was; 10:43 :58AN'1

21 to understand trends and directions . That's flow 1 21 Have you spoken to anyone other than your counsel abou t

22 think . 22 tile lawsuit?

23 So I'rn not zeroing in on -- forecast was just so 23 In terns of having refe€enced the fact tha tA .

24 fundamental in my process, it's an ongoing regular 24 there is one?

5 thin', And that information would be provided in 10 :A 1 :46AM 25 Q, Correct. 10:44 :08A M

31 3 3

1 various formats to various people . 1 A . Well, have I ever made a statement about th e

2 That's what I'm telling you, that I saw some of 2 fact that there is a lawsuit against Cisco? Yes .

3 those forecasts . I don't remember specifically what 3 Q . And to whom did you speak, other than your

4 context they were in, There are lots of different 4 counsel, regarding the lawsuit ?

5 forecasts. The forecast, in our company, is a very, 10 :41 :57AM 5 A. Regarding any details of the lawsuit? 10:44 :26ANI

6 very important process ; it's done every week, month, 6 Q, Regarding the lawsuit .

7 quarter and for the year. And so as a consequence, this 7 MR. MUCK : The fact that there is a lawsuit ?

8 is not some isolated event that only happens once a 8 THE WITNESS : The fact that there was a lawsuit,

9 year. It's a continuous process . So that information 9 1 can't -- I'm trying to be totally open here . Lawsuit s

10 is continually updated and discussed by the executive 10 :42 :17AM 10 cone up in -- lawsuits come up in many discussions that 10:44 :43AM

11 team because, you know, it's a fundamental document -- 11 l might be involved in, and I can't pinpoint an y

12 it's not a document . It's fundamental information we 12 particular discussions ,

13 use to run our business . 13 BY MR. DROSMAN :

14 1 can tell you right now the numbers in the 14 Q_ Can you recall anybody that you spoke, to other

15 forecast -- well, 1 can't tell you because you would be 10 :42 :29AM 15 than your counsel, regarding the lawsuit that we're here 10 :44 :55A M

16 an insider -- of the forecast for the next quarter . 16 to discuss today'?

17 Those numbers are in my head . But once it's history, 17 A. In terms of the details of the lawsuit and what

18 it's history . Because there is so much information that 18 the premise was, I haven't spoken to anybody other tha n

19 comes my way, I am filling it up with the information 19 my counsel. In terms of the fact that it existed, I'v e

20 that is cur ent for the business . I have to flush the 10 :42 :48AM 20 probably spoken to many people, because that's pull is 10 :45 :14A M

21 registers and move forward . 21 information that people are aware of.

22 So I can visualize the document, but I can't 22 Q. Since August 1, 1999, have you maintained a

drill down into saying that was for this presentation 23 diary?

and this presentation, because I would be guessing, and 24 A. No .

25 1 don't think that's the right thin- to do here. 10:43 :02AM 25 Q. What about an appointment book? 10 :45 :26AM

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34 3 6

A . Well, you know, unfortunately, we have a system 1 lot of calls that come to me . Those are usually thingsr called Meeting Maker, which does not allow us to keep 2 that are set up by appointment, so it could conic in t o3 our diary- That is something that is a real issue for 3 my admin . It wou ld people who are trying to get to me ,4 rne. But I think after six months, because the storage 4 who have their reasons to get to me. But it may not b e5 requirements doesn't exist, its a very -- its not an 10 :45 :46AM 5 in line with our business priorities or administrative 10 :49 :09A M6 acceptable process, but that's the fact . And, you know, 6 assistants who were contacting her to set u p7 that's an issue for me, for a lot of reasons, in terms 7 discussions. That's most of € ie work that she does . O r8 of planning for the future. I'd like to know when my 8 customers .

9 son's basketball games were last year. I can't even do 9 Of course, if they are customers, that's a hig h10 that . And I don't have a backup handwritten system . 10:46 :08AM 10 priority, and customers wou€d always get through to me. 10:49 :25A M11 Q. Okay. So Meeting Maker lists, I guess, the 11 But there is no phone log, just not part of the culture ,12 data? 1.2 Q. Since August 1, € 999, who has been you r13 A . The data is retained for -- all I know is if 1 13 secretary at Cisco ?14 go back to May of 2004, there is nothing there. And 1 A . Joy Knoop, K-n-o-o-p.15 that is because of the system constraint, not because of 10 :46:25AM 15 Q. She has been your secretary for that entire 10 :49 :51 AM16 any desire on my part or anybody e€se . I would like to 16 period from August 1, 1999 to - -17 have a diary of how I spent my life . 17 A . She was there before me . She would prefer to be18 Q. What about a phone message or message pad . Have 18 called Executive Admin.

19 you maintained that since August 1, 1999? 19 Q, Is that her title, Executive Administrativ e2 0 A. We area company that obviously uses a lot of 10 :46 :48AM 20 Assistant? 10:50 :11 A M

21 e-mail and a lot of voice-mail . I -- in the field, I'm 21. A . Mirn-limm .22 a primary user of voice-mail, Just my process for 22 Q . And between August 1, 1999 and the end o f

23 communicating since. when 1 communicate, it usually goes 23 February 2001, did you maintain files regarding Cisco i n24 beyond the basis of just information, € er se . Eau[ also 24 your desk or office?

y I want to understand, when people are giving me a 10 :47 :13AM 25 A. Between when? 10:50 :23A M

35 3 7

1 forecast, the tone of their voice, their level of 1 Q . August 1, 1999 and --

2 confidence . 2 A . I had no specific process for files . 1 kept a

3 Q . What about a phone message or message pad, have 3 lot of things, and all those things have been reviewed4 you maintained one since August 1, 1999? 4 and collected .

5 A- I don't have one . Quite frankly, I don't answer 10 :47 :27AM 5 Q . Have they been provided to your counsel? tO :50:43AM6 the phone and take, you know, messages. I don't -- most 6 A- Mm-hmm .

7 of my communication is via voice-mai€ . It's generally 7 Q, Is that a yes?

8 not live. But I don't have -- you know, these calls 8 A . Yes . Sorry . I had the whole experience ,

9 came in at this point in time . I have no -- I have none 9 everything ; conic in, ripped apart . It was a lot of fun.

10 of that information. 10:47 :50AM 10 Q . Between August 1, 1999 and the end of February, 10 :50 :57A M11 Q. Since August 1, 1999, has your secretary 11 2001, did you maintain files regarding Cisco in you r

12 maintained a message pad, a phone message pad, for you? 12 computer ?

13 A. My secretary is the front end of the office and 13 A . Well, in my computer? Our systems are al l

14 most of the calls don't get to me . She maintains -- 1 1.4 integrated with the storage . I'm sure whateve r

15 don't know. She takes action items, she does things, 10 :48 :17AM 15 information was out there is available . But I didn't -- 10 :51 :18A M

16 But she doesn't keep a documented log of calls, because 16 1 mean, other people do that stuff for me, the I T

17 most of the calls I get are calls that are not relevant 1' department . Obviously, what is on my desktop gets

1.8 to our business, they are people that are trying to get 18 backed upon a regular basis.

19 to me to sell me something, get a job, So most of that 19 MR . MUCK : I think what he is asking is, i n

20 flows into other organisations. 10:48 :37AM 20 addition to hard copy documents, did you sometimes get €0 :51 :42A M

21 Q . I'm sorry. Does she maintain such a log for 21 electronic documents via your computer?

9,2 you? 22 Am I interpreting your question correctly ?

A . Not for me. Absolutely not . I've never sat 23 MR . DROSMAN : I[ is, Let me further clarify .

w 4 down and looked at a log of phone messages . There's a 24 THE WITNESS : The primary documents that I woul d

25 lot of phone traffic in nay office, but there aren't a 10 :48 :50AM 25 get would be via my computer. I mean, there's not a lot 10:51 :58A M

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run-~r uu iV .Wanm rnurrt-rnnw3ci% s nnnL LI [Man 410 t I E6bU I'^ZU5 P .HHUM 3 F-95 Z

CORRECTIONS TO DEPOSITION TRANSCRIP T

NAME OF DEPONENT : RICHARD JUSTICE DATE OF DEPOSITION: 05/05/05

CASE NAME: In re Cisco Systems, Inc. Securities Litigation

COURT: U.S. District Court, Northern District CASE NUMBER : C-01-20418-JW (PVT)

INSTRUCTIONS: Please note changes by listing the page and line number in the places indicated onthis sheet and listing the changes in the right hand column . Attach additional sheets as necessary :'When you have reviewed and corrected the entire transcript, please return these pages with thecorrections to us in the enclosed postage-paid envelope .

PAGENO.

LINENO.

SHOULD READ

9 15 change "Sarah" to "Serra"

48 18 change "scar ry" to "sca ry

49 25 delete "securities downloaded"

53 21 change "EMA" to "EMEA"

118 9 change "Volpe" to "Volpi"

130 19 change "presented" to "prepared"

185 24 change `persuasive' to `pervasive"

228 25 change "Chris ry' s" to "Christie's"

233 5 change "cert ifier" to "Service Provider"

249 3 change "lineary" to linearity"

249 5 change "lineary " to "linearity"

249 7 change "lineary" to "linearity"

270 12 change "No" to "Correct"

278 11 change "debt equity" to "debt or equity"

Date : (0-22-05 Signature : @ZW ~~Richard Justice

EXHIBIT R

CONFIDENTIAL



SAN JOSE DIVISION

}

In re CISCO SYSTEMS, INC .


-----------------------------

This Document Relates to : )

ALL ACTIONS . )

Master File No .

C-0l-20418-JW (PVT )

COtHDENT1A L

C--O-N-F- I-D-E--N-T-I-A- L

DEPOSITION OF MRINALINI INGRAM ,

Wednesday , December 8, 2004

100 Pine Street , Suite 260 0

San Francisco , Californi a, commencing at

10 :10 a .m., before Peggy D . Tiess, RPR,

CRR, CSR No . 7908

1

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CONFIDENTIAL

1 account for leases, how we ensure that, you I I think they're either the Tuesday or Wednesday

2 know, all the financial reporting of the 2 prior to the end of the quarter, but I don' t

3 business in Cisco Capital is done appropriately . 3 recall the exact date .

4 There is information on the website for that . 4 Q. So these were quarterly meetings?

5 And that's where people go to ensure that we are 10 :54 :28AM 5 A . Monthly. 10:56:25A M

6 accounting for the entire program accurately . 6 Q . Monthly.

7 11cy're not going to separate out revenue 7 A . Our month ends and our quarter ends -

8 recognition in a separate document. - 8 We follow the same procedures for every close .

9 Q . Who was tasked with the 4 Q . So it was always the Tuesday o r

10 responsibility of making sure that individuals 10 :54 :A2AM 10 Wednesday prior to the end of the month ; is that 10 .56 :42AM

11 at Cisco Capital complied with this policy that 11 right?

12 you're discussing? 12 A . Yes.

13 A . Yes . So Sue Perkins, who was the 13 Q . Who convened those meetings?

14 controller of the Cisco Capital area, 14 A . Me .

15 Q. And then yourself; is that correct? €0:54 :58AM 15 Q, And did you send an agenda? 10 :56:51 AM

16 A. Then myself after that . And Doe 16 A. No. What would happen in th e

17 ?ran, who was in our group, really maintained 17 meetings is that we would have different peopl e

18 that for me . 18 conic in for different slots . So I would have a

19 Q, What was Doc Tran's position? 19 separate Meeting Maker for each -- Meeting Make r

20 A . He was a manager of accounting in 10 :55 .07AM 20 is how we set up meetings -- and we would have a 10 :57 :0 6

21 Cisco Capital. 21 separate Meeting Maker inviting separate people.

22 Q . And he reported to you? 22 Q . For the record, can you describe wha t

23 A. H c reported to . . . uhntnt, yes, he did 23 "Meeting Maker" is .

24 report to me for the last couple of months . 24 A . Meeting Maker is a . . . its a too l

25 Q . And prior that he reported to Sue 10 :55 :16AM 25 that Cisco uses to be able to he able to ask 10 :57 :18A M

54 5 6

1 Perkins? 1 people to join a meeting, and its kind of like

2 A . Yes. 2 a calendar -- it is a ca€cndar .

3 Q. What did you do to ensure that 3 Q . And is it true that invitees ca n

4 individuals at Cisco Capital were complying with 4 either accept or decline?

5 Litepolicy that youwere discussing? €0:55 :24AM 5 A . Correct. 10:57 :30A M

6 A . We have meetings that are field prior 6 Q. Then does it show up on their

7 to quarter end or month end, I think they're 7 calendar as well ?

8 held usually the third or fourth day prior to 0 A . It would show upon their calendar a s

9 the end of the month . 71hesee are regularly 9 well ; correct .

10 scheduled meetings . And we have different 10 :55 :39Ah 10 Q . So these invitations are sent by 10 :57 :37AM

11 people collie in from all of the different reserve 11 e-mail ; is that correct ?

12 groups come in and talk about what is happening 12 A . No, by Mooing Maker . So you jus t

13 in the business, and they have to justify, to 13 invite them .

14 me, whether or not the reserves are adequately 14 Q . la's its own software?

15 stated or not. And so that is the meeting that 10 :55 :54AM 15 A . Kind of like Microsoft Outlook, 10 :57 :48A M

16 I would really dive into the adequacy ofthe 16 calendar similar to that.

17 reserves . 17 Q . When you sent the invitations, did

1 8 Q. What were those meetings cal led? 1 8 they outline what would be discussed at the

19 A . I don't know if they have a formal 19 meetings ?

20 name. Revenue recognition meetings . .. 10:56 :0$AM 20 A. No. 10:58 :03A M

21 potentially. 21 Q . Who was invited to those meetings'?

22 Q, Is that how you referred to theta? 22 A . So each one of the different groups

23 A . Yeah. 23 had different players. So for the two-tie r

24 Q . And when were they field specifically? 24 individuals it would have been -- and, again ,

25 A . The few days before the end of the -- 10 :56 :15AM 25 people rotate and change, so I can give you some 10 :58 :15A h

55 57

15 (Pages 54 to 57 )

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---000---

In re :

CISCO SYSTEMS, INC., )



)

ALL ACTIONS .

CONFIDENTIAL

No . C-01-20418-JW (PVT )

CONFIDENTIAL

VIDEOTAPE DEPOSITION OF DONALD J . LISTWIN


I


CONFIDENTIAL

58 6 0

1 Q. And where was the discussion? 12 A. At the Canary Fund fund-raiser Friday night . 23 Q. And what did you say? 34 A . I said, When are you being deposed'? 4

5 Q. And what did he say? 11 :05 :53 56 A. I don't recall . 6

7 Q. Any other discussion? 78 A. No. 89 Q. Did he ask you when you were being deposed? 9

10 A. I don't recall. 11:06 :02 1 0

11 Q. Did you discuss the case at all? 1 112 A. No . 1 213 Q, And how did you know that Kevin Denuccio was 1 314 being deposed? 1 415 A . I don't recall. 11:06 :15 1 516 Q. No other -- you didn't discuss this deposition 1 6

17 here today with any other nonlawyers? 1 718 A. Correct . 1 8

19 Q. This lawsuit that we're here today regarding, 1 9

20 did you -- have you had discussions with any non Iawyers 11 :06:32 2 0

21 about this lawsuit? 2 122 A. No. 2 223 Q. And since May 1, 1999 while you were executive 2 324 vice president, have you maintained a diary? 24

25 A. No. 11:06 :50 2 5

59 6 1

1 Q. While you were an executive vice president at 12 Cisco Systems did you maintain an appointment book? 23 A. An electronic calendar called Meeting Maker . 34 Q. What about a phone message or message pad? A5 A. No. 11:07:07 56 Q. And did you provide the Meeting Maker calendar 67 to your attorneys? 7

8 A. I didn't have it . 89 Q. And where was it? 9

10 A. Its a centralized server, its not a client 11 :07 :21 1 01 I technology so doesn't exist. 1 112 Q. Did you ever print out any hard copies of 1 213 Meeting Maker? 1 314 A. Sure . 1 415 Q. Did you retain those? 11 :07 :32 1 516 A. No . 1 617 Q. And while you were an executive vice president 1718 at Cisco did your secretary maintain a diary? 1 8

19 A . No . 1 920 Q. Who was your secretary? 11 :07:44 2 021 A . Mary Murillo . for a while, and Alicia Viega, 2 122 for a while, in the senior jobs . Many others that-I 2223 don't recall . 2 3

24 Q. I'm just talking about while you were an 24

25 executive VP. 11:07:58 25

A. Alicia Viega .Q . And did she maintain the Meeting Maker calendar

for you ?A. We did it together.Q. You would enter in items and she would enter in 11 :08 :08

items; is that accurate?

A. Correct.Q. And did she maintain a phone message or message

pad on your behalf?A. I don't recall how she managed phones . 11 :08 :20

Q. How did you receive messages that somebod y

called?A. By email .Q. While you were an executive vice president at

Cisco Systems, did you maintain files regarding Cisco in 11 :08 :34

your desk at Cisco Systems ?A. Yes .

Q. And at your office at Cisco Systems?

A. Yes.

Q. What did you do with those files when you left'? 11 :08 :44A. I left them .

Q. Do you know what happened to them?A. No .Q. And while you were an executive vice presiden t

at Cisco Systems, did you mai ntain files regarding Cisco 11 :08 :5 6

in your computer at Cisco Systems?A. Yes .Q. And what did you do with that computer when you

left?

A. I left it. 11:09 :0 5Q. And what about while you were an executive

vice president at Cisco Systems ; did you maintain files

regarding Cisco at your home ?

A. No .Q. What about on a laptop computer? 11 :09 :15A. Yes .Q . And what did you do with the laptop computer?A. I returned it to Cisco.

Q . Any other laptop computers that you maintainedfiles on beyond the one that you returned? 11 :09 :30

A. Personal files, yes .Q . I'm talking about files relating to your

position at Cisco Systems .A . No .

Q. Did you typically take notes at meetings? 11 :09 :42

A. No .Q. Did you ever take notes at meetings?A. Yes .Q. And what did you do with them?A. Generally, came back to my office and made the 11 :09 :5 3


EXHIBIT T

CONFIDENTIAL



--- 000---

In re :

}

CISCO SYSTEMS, INC ., }



ALL ACTIONS. }

CONFIDENTIA L

No . C-01-20418-JW (PVT )

CONFIDENTIAL

VIDEOTAPE DEPOSITION OF KEVIN A . DeNUCCIO


1


CONFIDENTIAL

42 44

1 Q. When did you exercise options? 12 A. I don't recall when . 2

3 Q. Approximately? 34 A. I really don't remember . 45 Q. Towards the beginning of the period or towards 10 :46 :59 5

6 the end of the period? _ 67 A. I don't recall . I mean, I would say generally 78 when there were open windows during that period of time 8

9 1 was usually diversifying. 910 Q. Going outside the relevant period, you left the 10 :47 :16 1011 company in approximately August of 2001 ; is that right? 11.

12 A. Yes . 1 213 Q. Did you exercise any options when you left the 1 314 company? 1 415 A. I don't recall exactly, but I probably had to 10 :47 :27 1 516 exercise some options upon leaving or lose them, I would 1 617 think. 1 718 Q. And what were the proceeds from your exercise 1 819 of options when you left the company? 1 920 A. I don't recall. 10:47 :38 2 021 Q. Do you recall the approximate amount? 2 122 A. No. 2223 Q. What did you do with the money that you 2 324 obtained through the exercise of options during the 242 5 relevant period? 10:47 :47 2 5

43 45

1 A. Probably purchased a home, made investments . 1

2 Q. You used the proceeds to purchase a home? 23 A. Yes . 3

4 Q. And what was the date of your home purchase? 45 A. Probably bought a home in '96, probably bought 10:48 :14 5

6 a borne in 2000 . 6

7 Q. What amount of money did you use from your 78 exercise of options to purchase the home in 2000? 89 A. Four million dollars . 9

10 Q. And you mentioned that you used other proceeds 10 :48 :53 1 011 for investments? 1 1

12 A. Yes . 1 2

13 Q. What investments? 1 314 A. Other kind of stock and bond investments . 1 415 Q. Since or during the relevant period did you 10:49 :09 1 516 maintain a diary? 1 617 A. No . 1 7

18 Q. Did you maintain an appointment book? 1819 A. No. 1 920 Q. During the relevant period did you maintain a 10:49 :18 2 021 calendar? 2 122 A. Yes . 2 223 Q. What did that calendar look like, was it 2 324 electronic or in written form? 2 425 A. Electronic. 10:49 :30 25

Q. Was it on the Meeting Maker system?A. Probably .

Q. Beyond the Meeting Maker calendar, did youmaintain any other calendars ?

A. No. 10:49:39Q. And during the relevant period did you maintain

a phone message or message pad ?

A. No .Q. Getting back to the Meeting Maker calendar, did

you ever print hard copies of your calendar? 10 :49:53A. Yes .Q. What did you do with those hard copies?A. Usually carry them with me and throw them away

when they were outdated .Q. And during the relevant period did your 10 :50 :07

secretary maintain a diary ?A. I don't know .Q. During the relevant period did your secretary

maintain an appointment book for you ?A. Calendar. 10:50:18Q. A calendar, like the Meeting Maker system?

A. Yes, on my calendar, yes.Q. Did she maintain any other calendar besides the

Meeting Maker calendar for you?A. Not that I'm aware of. 10:50:2 9

Q. And during the relevant period did you rsecretary maintain any phone message or message pad for

you?A. I believe so.

Q. And was that provided to your attorneys? 10:50 :37MS. GROVES : Objection ; calls for speculation .

THE WITNESS : I have no idea.BY MR . DROSMAN :

Q. Have you spoken to your secretary, the one you

had at Cisco? 10:50:4 8

A. No . Well --MS. GROVES : Objection ; vague as to time frame

but . . . .BY MR. DROSMAN :

Q. How about within the last six months ; have you 10:50:56spoken to your secretary ?

A. No .Q . During the relevant period did you maintain

files regarding Cisco in your desk or office ?

A. Yes. 10:51 :0 6Q. And when you left the company what did you do

with those files?A. I left them there.

Q. During the relevant period did you maintai n

files regarding Cisco in your computer? 10 :51 :1 6


CONFIDENTIAL

46

1 A. Yes . 12 Q. We'll talk about your -- you had a desktop 23 computer, I'm assuming ; is that correct? 34 A. No, laptop. 45 Q. You didn't have a desktop? 10:51 :26 56 A. Did not. 67 Q. What did you do with your laptop computer when 78 you left? 89 A. I returned it to the company . 9

10 Q. And during the relevant period did you [Maintain 10 :51 :33 1 011 files regarding Cisco at your home? 1 112 A. No, I don't believe so. 1 213 Q. Do you typically take notes or did you 1 314 typically take notes at meetings during the relevant 1 415 period? 10:51 :47 1 516 A. Yes . 1 6

17 Q. What did you do with those notes? 1 718 A. I don't know. 1 819 Q. Did you put them in a file in your office? 1 9

20 A, No, not usually. 10:52 :00 2 021 Q. What would you usually do? 2 122 A. I'd usually just keep a notebook of sorts, you 2 223 know, and carry it around with me, you know, just carry 2 324 a notebook with me . 2 4

Q. Sort of a running notepad? 10:52 :16 25

48

A. Yes.Q. And it was emailed to you every day; is that

correct ?A. I believe so, yes.Q. And what sort of information did the bookings 10 :53 :18

report contain ?

A. It had a list of the top orders from the daybefore, margins associated with them, and then various

totals cut in several different ways .Q. What sort of totals? 10 :53 :37A. You know, how much each -- I think it was each

segment of the business, of my business tracked againstforecast, you know.

Q . And when you say "each segment of th ebusiness," what were the segments? 10 :53 :57

A. Well, it varied from time to time, but the mostcommon way was by the different kinds of carriers . We

had classified carriers in different categories .Q . And how many categories of carriers were there?A. Usually about four- 10:54 :17Q. And what were they during the relevant period?A. Long distance carriers, the local RBOC, the

internet service providers . Those are the only threecategories I can remember, those are the three big ones .

Q. What about network providers ; was that a 10 :54 :49

47 4 9

1 A. Yes, kind of a running notepad, yes . 1 category or segment?2 Q. And when you finished, when you filled up a 2 A. Yes, it was.3 running notepad, assuming you filled up more than one, 3 Q. Is that a fourth segment?4 what would you do with that? 4 A. Yes, that could have been a fourth segment .5 A . Usually throw them away. 10:52 :26 5 Q. And you believe those were all the segments, 10 :54 :5 96 Q . Did you always throw them away? 6 the ones you've just listed ?7 A. I believe so . 7 A. I think so .8 Q . You never kept there ; is that correct? 8 Q. And you said it was compared to forecast ; i s9 A. Right. 9 that right?

10 Q. Let's talk about reports that you received 10 :52 :36 10 A. Yes. 10:55:1 011 during the relevant period while you were at Cisco . 11 Q. Did you have a forecast with respect to al l12 Did you receive any reports on a daily basis? 12 these four segments that you've listed ?13 And by "reports," I'm referring to anything in written 13 A. Yes.14 or electronic format. 14 Q. And the bookings report enabled you t o15 A. I believe so. 10:52 :47 15 determine each day whether you were over, under or at 10 :55:1 816 Q. What reports did you receive on a daily basis? 16 forecast for each of these four segments?17 A. I think I received a bookings report . 17 A. Yes.18 Q. Any other reports? 18 Q. And, of course, the forecast was for bookings ,19 A. That's the only one I can recall . 19 I'm assuming, based on the name of the report .20 Q. And how did you receive the bookings report? 10 :53 :01 20 A. Yes. 10:55 :3 721 A. It was -- I think -- during the relevant 21 Q. Okay. Any other information beyond that that22 period? 22 we've just talked about that was contained in th e23 Q. Correct . 23 bookings report?24 A. It was electronically. 24 A. Not that I remember.25 Q. Was it emailed to you? 10 :53 :12 25 Q. Did you have access to the EIS computer system? 10:55 :46
