As technology innovation shortens product cycles, the volume of electronic waste increases. To tackle this, governments worldwide are requiring manufacturers of electronic equipment to be more environmentally responsible, encouraging them to extend the life of their equipment, and to take back and reuse or recycle equipment at the end of its life.

Cisco has a long-established approach to waste minimization by incorporating modularity and upgradability in our products. Rather than replacing the whole product, individual components can be progressively upgraded or replaced over time.

Cisco has also established programs to recover equipment at end of life in order to reduce its environmental impact. During FY2006, we stopped outsourcing and brought in house the management of take-back and recycling to:

• Gain greater coordination of worldwide programs
• Accelerate recovery rates
• Help ensure that recyclers are meeting Cisco standards for managing equipment waste and minimizing disposal to landfill
• Control unauthorized resale of products

During FY2006, Cisco recovered and processed 4,516 tons of equipment. This includes equipment recovered from customers and our internal operations. The majority of this equipment was recycled, with only 40 tons, or 0.9 percent, sent to landfill.

Design for Upgradability and Extended Life

Cisco's networking equipment has an average installed life of more than seven years. Compared to personal computers and other consumer electronics with a typically shorter lifecycle, networking equipment generates less waste over time.

Our strategy for maximizing product life includes:

• Designing our products to be highly modular so components can be upgraded rather than replaced
• Implementing compatibility with previous iterations as well as future planned versions to minimize product obsolescence
• Conforming to standard dimensions for chassis systems, so equipment racks do not need to be replaced

Trade-In and Take-Back Options

Cisco offers a range of trade-in and take-back programs to our customers:

• Cisco Technology Migration Plan: This program allows customers to trade in old Cisco products for credit toward the purchase of new Cisco products. The program is a first for a network products manufacturer and encourages customers to return used equipment to Cisco for recovery or recycling during network upgrades. Through this program, customers with no plans to purchase new Cisco products or to use trade-in credits can still send equipment to Cisco for proper treatment, recovery, recycling, and environmentally sound disposal.
• Take-back and Recycling: This program, now available in 30 countries worldwide, enables customers to return Cisco equipment at end of life.
• Service and Warranty Returns: Cisco equipment is covered by warranties that enable customers to return damaged or defective parts for repair. Returned goods are refurbished and redistributed back to customers, or they are made available for philanthropic activities or for internal departments. Through this program, during FY2006, more than 65 percent of the parts shipped back to customers were refurbished parts.

Recovery and Recycling of Our Own Electronic Equipment

Cisco launched the Surplus Product Utilization and Reclamation (SPUR) program in 2005 in order to manage the redeployment of recovered equipment, either "as is" or refurbished. SPUR coordinates a comprehensive range of initiatives targeting more environmentally responsible ways of managing:

• Stock rotations
• Equipment take-back and trade-ins
• Waste collection bins
• Office and data center equipment reuse and recycling
• Products recovered during electronic waste events on Earth Day and America Recycles Day

Equipment that cannot be redeployed is recycled in an environmentally sound manner, so that the materials, such as steel, aluminum, mixed plastics, copper, cardboard, pallets, and ground printed circuit boards, are recovered for reuse.

Compliance Programs

In the past five years there has been an increase in the establishment of regulations designed to prevent electronics product disposal in landfills and to encourage reuse. These regulations, broadly referred to as "take-back regulations," call for electronic equipment manufacturers to make provisions for their products at the end of product life.

Cisco actively contributes to this effort and will comply with these emerging take-back regulations worldwide.

During FY2006, our focus has been to comply with the EU's Waste Electrical and Electronic Equipment (WEEE) directive. Despite the variety of legislative approaches taken by EU member states and ongoing uncertainty as to the final requirements, we are on target to comply with WEEE requirements. Our proactive approach means that we have systems in place to address any future changes in European regulations, as well as other emerging take-back regulations worldwide.