Cisco is committed to employee welfare and helping families in need, and it's equally important to our employees. According to a 2003 study of high-tech companies by recruiting firm Towers Perrin, competitive healthcare benefits ranked number four among ages 19-29, number two among ages 30-44, and number one among ages 45-54.

We value an environment that helps employees balance work and family responsibilities while staying healthy. Such an environment allows us to efficiently meet our two key objectives:

• Keeping employees healthy
• Reducing the cost of medical claims

From a purely business perspective, Cisco's annual medical claims currently total more than $200 million. However, approximately 35 percent of these claims, equaling $72 million, are associated with preventable conditions. As our employees age, Cisco could potentially face rising healthcare costs. By helping employees manage their health, Cisco could save as much as $23 million a year in future claims expense. Keeping employees healthy also means that disability rates will not increase considerably. In the future, Cisco's goal is to save another $14.2 million in these two areas.

Equally important is the human perspective. Cisco continues to improve the way that healthcare is delivered to employees, their spouses, and families. In October 2005, Cisco began HealthConnections, a program for employees that combines our traditional health benefits with access to health enhancement tools. In this program, employees' identities are kept secure and Cisco does not have access to any medical information. All information is sent to a third-party vendor to ensure confidentiality.

The HealthConnections program invigorates and inspires employees and their families to enhance their health and well-being by providing an integrated network of healthcare providers, disability management, workplace resources, food services, fitness centers, and other resources. When employees voluntarily assess their health, two independent companies, WebMD and Ingenix, analyze the information, determining high health risk categories and recommend specific health programs to proactively address these risks (to maintain privacy, Cisco only receives information about employees in aggregate).

Two programs we're offering include Personal Health Manager and HealthConnections Live Webcasts.

Personal Health Manager

A service offered in partnership with WebMD, this is a highly secure, online portal where employees can identify health risks, evaluate their current health condition, and get personalized health improvement plans for themselves and their families.

Personal Health Manager helps employees:

• Assess health risks
• Improve their lifestyle
• Access specific information on men's and women's health, pregnancy, child health, and nutrition
• Analyze risks and benefits of medical procedures
• Make decisions about benefit changes during Open Enrollment periods
• Compare the coverage and cost of health plans
• Locate doctors who participate in specific plans
• Calculate potential tax savings from Flexible Spending Account contributions
• Stop smoking
• Set healthy goals and track their progress

HealthConnections Live

Employees can tune in to a quarterly CiscoTV Webcast in which Dr. Pamela Hymel, global medical director of integrated health for Cisco Systems, engages specialized health experts to discuss topics of interest to Cisco employees and their families. Employees who view the session live on their computers can submit questions throughout the broadcast. Employees who cannot view the session live can access a video-on-demand recording that is available following each event.

Additional HealthConnections Features:

• Easy access to information about calorie, fat, and sodium content in cafeteria offerings
• Flu shots
• Preventative health services, including mammograms and Pap smears
• Cholesterol monitoring
• Body mass index monitoring

Future Plans

In FY2007, Cisco plans to introduce personal health coaching, via phone, Web, or in person, to help employees focus on and improve their individual risk areas. Employees will also have access to a 24-hour nurse line to get immediate answers to their health questions. We will be introducing additional programs for specific health concerns.

Cisco will also begin the "Getting Back to Work" program, an integrated disability management program that streamlines the disability process. We will guide employees through the completion of all necessary, and sometimes confusing, paperwork associated with leaves of absence and other activities.