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Shares of Common Stock | Common Stock and Additional Paid-In Capital | Retained Earnings | Total Cisco Shareholders’ Equity | |||||||||||
Repurchases of common stock under the repurchase program | 4,329 | $ | 21,662 | $ | 67,796 | $ | 89,458 |
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1. | Basis of Presentation |
|
2. | Recent Accounting Pronouncements |
(a) | New Accounting Updates Recently Adopted |
(b) | Recent Accounting Standards or Updates Not Yet Effective |
|
3. | Business Combinations |
Purchase Consideration | Net Liabilities Assumed | Purchased Intangible Assets | Goodwill | ||||||||||||
Metacloud, Inc. | $ | 149 | $ | (7 | ) | $ | 29 | $ | 127 | ||||||
Other | 38 | (10 | ) | 29 | 19 | ||||||||||
Total acquisitions | $ | 187 | $ | (17 | ) | $ | 58 | $ | 146 |
|
4. | Goodwill and Purchased Intangible Assets |
(a) | Goodwill |
Balance at July 26, 2014 | Acquisitions | Other | Balance at October 25, 2014 | ||||||||||||
Americas | $ | 15,080 | $ | 75 | $ | (11 | ) | $ | 15,144 | ||||||
EMEA | 5,715 | 60 | (6 | ) | 5,769 | ||||||||||
APJC | 3,444 | 11 | (4 | ) | 3,451 | ||||||||||
Total | $ | 24,239 | $ | 146 | $ | (21 | ) | $ | 24,364 |
(b) | Purchased Intangible Assets |
FINITE LIVES | INDEFINITE LIVES | TOTAL | |||||||||||||||||
TECHNOLOGY | CUSTOMER RELATIONSHIPS | IPR&D | |||||||||||||||||
Weighted- Average Useful Life (in Years) | Amount | Weighted- Average Useful Life (in Years) | Amount | Amount | Amount | ||||||||||||||
Metacloud, Inc. | 3.0 | $ | 24 | 5.0 | $ | 3 | $ | 2 | $ | 29 | |||||||||
Other | 5.0 | 21 | 5.0 | 4 | 4 | 29 | |||||||||||||
Total | $ | 45 | $ | 7 | $ | 6 | $ | 58 |
October 25, 2014 | Gross | Accumulated Amortization | Net | |||||||||
Purchased intangible assets with finite lives: | ||||||||||||
Technology | $ | 4,150 | $ | (2,166 | ) | $ | 1,984 | |||||
Customer relationships | 1,713 | (788 | ) | 925 | ||||||||
Other | 51 | (16 | ) | 35 | ||||||||
Total purchased intangible assets with finite lives | 5,914 | (2,970 | ) | 2,944 | ||||||||
In-process research and development, with indefinite lives | 122 | — | 122 | |||||||||
Total | $ | 6,036 | $ | (2,970 | ) | $ | 3,066 |
July 26, 2014 | Gross | Accumulated Amortization | Net | |||||||||
Purchased intangible assets with finite lives: | ||||||||||||
Technology | $ | 4,100 | $ | (1,976 | ) | $ | 2,124 | |||||
Customer relationships | 1,706 | (720 | ) | 986 | ||||||||
Other | 51 | (13 | ) | 38 | ||||||||
Total purchased intangible assets with finite lives | 5,857 | (2,709 | ) | 3,148 | ||||||||
In-process research and development, with indefinite lives | 132 | — | 132 | |||||||||
Total | $ | 5,989 | $ | (2,709 | ) | $ | 3,280 |
Three Months Ended | ||||||||
October 25, 2014 | October 26, 2013 | |||||||
Amortization of purchased intangible assets: | ||||||||
Cost of sales | $ | 189 | $ | 174 | ||||
Operating expenses | 71 | 65 | ||||||
Total | $ | 260 | $ | 239 |
Fiscal Year | Amount | ||
2015 (remaining nine months) | $ | 728 | |
2016 | 754 | ||
2017 | 580 | ||
2018 | 421 | ||
2019 | 315 | ||
Thereafter | 146 | ||
Total | $ | 2,944 |
|
5. | Restructuring and Other Charges |
Fiscal 2014 and Prior Plans | Fiscal 2015 Plan | |||||||||||||||||||
Employee Severance | Other | Employee Severance | Other | Total | ||||||||||||||||
Liability as of July 26, 2014 | $ | 40 | $ | 29 | $ | — | $ | — | $ | 69 | ||||||||||
Gross charges in fiscal 2015 | — | — | 322 | (4 | ) | 318 | ||||||||||||||
Cash payments | (13 | ) | — | (142 | ) | — | (155 | ) | ||||||||||||
Non-cash items | — | (4 | ) | — | 4 | — | ||||||||||||||
Liability as of October 25, 2014 | $ | 27 | $ | 25 | $ | 180 | $ | — | $ | 232 |
|
6. | Balance Sheet Details |
October 25, 2014 | July 26, 2014 | |||||||
Inventories: | ||||||||
Raw materials | $ | 173 | $ | 77 | ||||
Work in process | 3 | 5 | ||||||
Finished goods: | ||||||||
Distributor inventory and deferred cost of sales | 654 | 595 | ||||||
Manufactured finished goods | 535 | 606 | ||||||
Total finished goods | 1,189 | 1,201 | ||||||
Service-related spares | 275 | 273 | ||||||
Demonstration systems | 36 | 35 | ||||||
Total | $ | 1,676 | $ | 1,591 |
Property and equipment, net: | ||||||||
Land, buildings, and building and leasehold improvements | $ | 4,471 | $ | 4,468 | ||||
Computer equipment and related software | 1,423 | 1,425 | ||||||
Production, engineering, and other equipment | 5,728 | 5,756 | ||||||
Operating lease assets | 349 | 362 | ||||||
Furniture and fixtures | 498 | 509 | ||||||
12,469 | 12,520 | |||||||
Less accumulated depreciation and amortization | (9,236 | ) | (9,268 | ) | ||||
Total | $ | 3,233 | $ | 3,252 |
Other assets: | ||||||||
Deferred tax assets | $ | 1,553 | $ | 1,700 | ||||
Investments in privately held companies | 886 | 899 | ||||||
Other | 789 | 732 | ||||||
Total | $ | 3,228 | $ | 3,331 |
Deferred revenue: | ||||||||
Service | $ | 9,029 | $ | 9,640 | ||||
Product: | ||||||||
Unrecognized revenue on product shipments and other deferred revenue | 4,056 | 3,924 | ||||||
Cash receipts related to unrecognized revenue from two-tier distributors | 659 | 578 | ||||||
Total product deferred revenue | 4,715 | 4,502 | ||||||
Total | $ | 13,744 | $ | 14,142 | ||||
Reported as: | ||||||||
Current | $ | 9,449 | $ | 9,478 | ||||
Noncurrent | 4,295 | 4,664 | ||||||
Total | $ | 13,744 | $ | 14,142 |
|
7. | Financing Receivables and Operating Leases |
(a) | Financing Receivables |
October 25, 2014 | Lease Receivables | Loan Receivables | Financed Service Contracts and Other | Total | |||||||||||
Gross | $ | 3,498 | $ | 1,744 | $ | 3,071 | $ | 8,313 | |||||||
Residual value | 234 | — | — | 234 | |||||||||||
Unearned income | (223 | ) | — | — | (223 | ) | |||||||||
Allowance for credit loss | (248 | ) | (84 | ) | (36 | ) | (368 | ) | |||||||
Total, net | $ | 3,261 | $ | 1,660 | $ | 3,035 | $ | 7,956 | |||||||
Reported as: | |||||||||||||||
Current | $ | 1,496 | $ | 827 | $ | 1,942 | $ | 4,265 | |||||||
Noncurrent | 1,765 | 833 | 1,093 | 3,691 | |||||||||||
Total, net | $ | 3,261 | $ | 1,660 | $ | 3,035 | $ | 7,956 |
July 26, 2014 | Lease Receivables | Loan Receivables | Financed Service Contracts and Other | Total | |||||||||||
Gross | $ | 3,532 | $ | 1,683 | $ | 3,210 | $ | 8,425 | |||||||
Residual value | 233 | — | — | 233 | |||||||||||
Unearned income | (238 | ) | — | — | (238 | ) | |||||||||
Allowance for credit loss | (233 | ) | (98 | ) | (18 | ) | (349 | ) | |||||||
Total, net | $ | 3,294 | $ | 1,585 | $ | 3,192 | $ | 8,071 | |||||||
Reported as: | |||||||||||||||
Current | $ | 1,476 | $ | 728 | $ | 1,949 | $ | 4,153 | |||||||
Noncurrent | 1,818 | 857 | 1,243 | 3,918 | |||||||||||
Total, net | $ | 3,294 | $ | 1,585 | $ | 3,192 | $ | 8,071 |
Fiscal Year | Amount | ||
2015 (remaining nine months) | $ | 1,303 | |
2016 | 1,144 | ||
2017 | 681 | ||
2018 | 281 | ||
2019 | 87 | ||
Thereafter | 2 | ||
Total | $ | 3,498 |
(b) | Credit Quality of Financing Receivables |
INTERNAL CREDIT RISK RATING | |||||||||||||||
October 25, 2014 | 1 to 4 | 5 to 6 | 7 and Higher | Total | |||||||||||
Lease receivables | $ | 1,665 | $ | 1,482 | $ | 128 | $ | 3,275 | |||||||
Loan receivables | 953 | 637 | 154 | 1,744 | |||||||||||
Financed service contracts and other | 1,677 | 1,296 | 98 | 3,071 | |||||||||||
Total | $ | 4,295 | $ | 3,415 | $ | 380 | $ | 8,090 |
INTERNAL CREDIT RISK RATING | |||||||||||||||
July 26, 2014 | 1 to 4 | 5 to 6 | 7 and Higher | Total | |||||||||||
Lease receivables | $ | 1,615 | $ | 1,538 | $ | 141 | $ | 3,294 | |||||||
Loan receivables | 953 | 593 | 137 | 1,683 | |||||||||||
Financed service contracts and other | 1,744 | 1,367 | 99 | 3,210 | |||||||||||
Total | $ | 4,312 | $ | 3,498 | $ | 377 | $ | 8,187 |
DAYS PAST DUE (INCLUDES BILLED AND UNBILLED) | |||||||||||||||||||||||||||||||
October 25, 2014 | 31-60 | 61-90 | 91+ | Total Past Due | Current | Total | Nonaccrual Financing Receivables | Impaired Financing Receivables | |||||||||||||||||||||||
Lease receivables | $ | 80 | $ | 54 | $ | 196 | $ | 330 | $ | 2,945 | $ | 3,275 | $ | 47 | $ | 39 | |||||||||||||||
Loan receivables | 17 | 41 | 89 | 147 | 1,597 | 1,744 | 41 | 37 | |||||||||||||||||||||||
Financed service contracts and other | 144 | 163 | 532 | 839 | 2,232 | 3,071 | 12 | 7 | |||||||||||||||||||||||
Total | $ | 241 | $ | 258 | $ | 817 | $ | 1,316 | $ | 6,774 | $ | 8,090 | $ | 100 | $ | 83 |
DAYS PAST DUE (INCLUDES BILLED AND UNBILLED) | |||||||||||||||||||||||||||||||
July 26, 2014 | 31-60 | 61-90 | 91+ | Total Past Due | Current | Total | Nonaccrual Financing Receivables | Impaired Financing Receivables | |||||||||||||||||||||||
Lease receivables | $ | 104 | $ | 43 | $ | 165 | $ | 312 | $ | 2,982 | $ | 3,294 | $ | 48 | $ | 41 | |||||||||||||||
Loan receivables | 2 | 1 | 16 | 19 | 1,664 | 1,683 | 19 | 19 | |||||||||||||||||||||||
Financed service contracts and other | 301 | 238 | 230 | 769 | 2,441 | 3,210 | 12 | 9 | |||||||||||||||||||||||
Total | $ | 407 | $ | 282 | $ | 411 | $ | 1,100 | $ | 7,087 | $ | 8,187 | $ | 79 | $ | 69 |
(c) | Allowance for Credit Loss Rollforward |
CREDIT LOSS ALLOWANCES | |||||||||||||||
Three Months Ended October 25, 2014 | Lease Receivables | Loan Receivables | Financed Service Contracts and Other | Total | |||||||||||
Allowance for credit loss as of July 26, 2014 | $ | 233 | $ | 98 | $ | 18 | $ | 349 | |||||||
Provisions | 22 | (13 | ) | 19 | 28 | ||||||||||
Recoveries (write-offs), net | (4 | ) | 1 | — | (3 | ) | |||||||||
Foreign exchange and other | (3 | ) | (2 | ) | (1 | ) | (6 | ) | |||||||
Allowance for credit loss as of October 25, 2014 | $ | 248 | $ | 84 | $ | 36 | $ | 368 | |||||||
Financing receivables as of October 25, 2014 (1) | $ | 3,509 | $ | 1,744 | $ | 3,071 | $ | 8,324 |
CREDIT LOSS ALLOWANCES | |||||||||||||||
Three Months Ended October 26, 2013 | Lease Receivables | Loan Receivables | Financed Service Contracts and Other | Total | |||||||||||
Allowance for credit loss as of July 27, 2013 | $ | 238 | $ | 86 | $ | 20 | $ | 344 | |||||||
Provisions | (3 | ) | 6 | — | 3 | ||||||||||
Foreign exchange and other | 2 | 1 | — | 3 | |||||||||||
Allowance for credit loss as of October 26, 2013 | $ | 237 | $ | 93 | $ | 20 | $ | 350 | |||||||
Financing receivables as of October 26, 2013 (1) | $ | 3,549 | $ | 1,808 | $ | 3,018 | $ | 8,375 |
(d) | Operating Leases |
October 25, 2014 | July 26, 2014 | ||||||
Operating lease assets | $ | 349 | $ | 362 | |||
Accumulated depreciation | (197 | ) | (202 | ) | |||
Operating lease assets, net | $ | 152 | $ | 160 |
|
8. | Investments |
(a) | Summary of Available-for-Sale Investments |
October 25, 2014 | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||
Fixed income securities: | |||||||||||||||
U.S. government securities | $ | 32,343 | $ | 71 | $ | — | $ | 32,414 | |||||||
U.S. government agency securities | 1,338 | 3 | — | 1,341 | |||||||||||
Non-U.S. government and agency securities | 1,049 | 2 | — | 1,051 | |||||||||||
Corporate debt securities | 10,170 | 73 | (10 | ) | 10,233 | ||||||||||
U.S. agency mortgage-backed securities | 875 | 9 | — | 884 | |||||||||||
Total fixed income securities | 45,775 | 158 | (10 | ) | 45,923 | ||||||||||
Publicly traded equity securities | 1,263 | 545 | (11 | ) | 1,797 | ||||||||||
Total | $ | 47,038 | $ | 703 | $ | (21 | ) | $ | 47,720 | ||||||
July 26, 2014 | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||
Fixed income securities: | |||||||||||||||
U.S. government securities | $ | 31,717 | $ | 29 | $ | (12 | ) | $ | 31,734 | ||||||
U.S. government agency securities | 1,062 | 1 | — | 1,063 | |||||||||||
Non-U.S. government and agency securities | 860 | 2 | (1 | ) | 861 | ||||||||||
Corporate debt securities | 9,092 | 74 | (7 | ) | 9,159 | ||||||||||
U.S. agency mortgage-backed securities | 574 | 5 | — | 579 | |||||||||||
Total fixed income securities | 43,305 | 111 | (20 | ) | 43,396 | ||||||||||
Publicly traded equity securities | 1,314 | 648 | (10 | ) | 1,952 | ||||||||||
Total | $ | 44,619 | $ | 759 | $ | (30 | ) | $ | 45,348 |
(b) | Gains and Losses on Available-for-Sale Investments |
Three Months Ended | |||||||
October 25, 2014 | October 26, 2013 | ||||||
Gross realized gains | $ | 21 | $ | 95 | |||
Gross realized losses | (14 | ) | (12 | ) | |||
Total | $ | 7 | $ | 83 |
Three Months Ended | |||||||
October 25, 2014 | October 26, 2013 | ||||||
Net gains (losses) on investments in publicly traded equity securities | $ | (4 | ) | $ | 75 | ||
Net gains on investments in fixed income securities | 11 | 8 | |||||
Total | $ | 7 | $ | 83 |
UNREALIZED LOSSES LESS THAN 12 MONTHS | UNREALIZED LOSSES 12 MONTHS OR GREATER | TOTAL | |||||||||||||||||||||
October 25, 2014 | Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | |||||||||||||||||
Fixed income securities: | |||||||||||||||||||||||
Corporate debt securities | $ | 2,491 | $ | (8 | ) | $ | 383 | $ | (2 | ) | $ | 2,874 | $ | (10 | ) | ||||||||
Total fixed income securities | 2,491 | (8 | ) | 383 | (2 | ) | 2,874 | (10 | ) | ||||||||||||||
Publicly traded equity securities | 131 | (11 | ) | 1 | — | 132 | (11 | ) | |||||||||||||||
Total | $ | 2,622 | $ | (19 | ) | $ | 384 | $ | (2 | ) | $ | 3,006 | $ | (21 | ) |
UNREALIZED LOSSES LESS THAN 12 MONTHS | UNREALIZED LOSSES 12 MONTHS OR GREATER | TOTAL | |||||||||||||||||||||
July 26, 2014 | Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | |||||||||||||||||
Fixed income securities: | |||||||||||||||||||||||
U.S. government securities | $ | 7,676 | $ | (12 | ) | $ | 45 | $ | — | $ | 7,721 | $ | (12 | ) | |||||||||
Non-U.S. government and agency securities | 361 | (1 | ) | 22 | — | 383 | (1 | ) | |||||||||||||||
Corporate debt securities | 1,875 | (3 | ) | 491 | (4 | ) | 2,366 | (7 | ) | ||||||||||||||
Total fixed income securities | 9,912 | (16 | ) | 558 | (4 | ) | 10,470 | (20 | ) | ||||||||||||||
Publicly traded equity securities | 132 | (10 | ) | — | — | 132 | (10 | ) | |||||||||||||||
Total | $ | 10,044 | $ | (26 | ) | $ | 558 | $ | (4 | ) | $ | 10,602 | $ | (30 | ) |
(c) | Maturities of Fixed Income Securities |
Amortized Cost | Fair Value | ||||||
Less than 1 year | $ | 16,643 | $ | 16,656 | |||
Due in 1 to 2 years | 14,222 | 14,270 | |||||
Due in 2 to 5 years | 13,884 | 13,957 | |||||
Due after 5 years | 1,026 | 1,040 | |||||
Total | $ | 45,775 | $ | 45,923 |
(d) | Securities Lending |
(e) | Investments in Privately Held Companies |
October 25, 2014 | July 26, 2014 | ||||||
Equity method investments | $ | 559 | $ | 630 | |||
Cost method investments | 327 | 269 | |||||
Total | $ | 886 | $ | 899 |
|
(a) | Fair Value Hierarchy |
(b) | Assets and Liabilities Measured at Fair Value on a Recurring Basis |
OCTOBER 25, 2014 FAIR VALUE MEASUREMENTS | JULY 26, 2014 FAIR VALUE MEASUREMENTS | ||||||||||||||||||||||||||
Level 1 | Level 2 | Total Balance | Level 1 | Level 2 | Level 3 | Total Balance | |||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||
Cash equivalents: | |||||||||||||||||||||||||||
Money market funds | $ | 2,461 | $ | — | $ | 2,461 | $ | 4,935 | $ | — | $ | — | $ | 4,935 | |||||||||||||
Available-for-sale investments: | |||||||||||||||||||||||||||
U.S. government securities | — | 32,414 | 32,414 | — | 31,734 | — | 31,734 | ||||||||||||||||||||
U.S. government agency securities | — | 1,341 | 1,341 | — | 1,063 | — | 1,063 | ||||||||||||||||||||
Non-U.S. government and agency securities | — | 1,051 | 1,051 | — | 861 | — | 861 | ||||||||||||||||||||
Corporate debt securities | — | 10,233 | 10,233 | — | 9,159 | — | 9,159 | ||||||||||||||||||||
U.S. agency mortgage-backed securities | — | 884 | 884 | — | 579 | — | 579 | ||||||||||||||||||||
Publicly traded equity securities | 1,797 | — | 1,797 | 1,952 | — | — | 1,952 | ||||||||||||||||||||
Derivative assets | — | 227 | 227 | — | 158 | 2 | 160 | ||||||||||||||||||||
Total | $ | 4,258 | $ | 46,150 | $ | 50,408 | $ | 6,887 | $ | 43,554 | $ | 2 | $ | 50,443 | |||||||||||||
Liabilities: | |||||||||||||||||||||||||||
Derivative liabilities | $ | — | $ | 99 | $ | 99 | $ | — | $ | 67 | $ | — | $ | 67 | |||||||||||||
Total | $ | — | $ | 99 | $ | 99 | $ | — | $ | 67 | $ | — | $ | 67 |
(c) | Assets Measured at Fair Value on a Nonrecurring Basis |
(d) | Other Fair Value Disclosures |
|
10. | Borrowings |
(a) | Short-Term Debt |
October 25, 2014 | July 26, 2014 | ||||||||||||
Amount | Effective Rate | Amount | Effective Rate | ||||||||||
Current portion of long-term debt | $ | 1,350 | 1.38 | % | $ | 500 | 3.11 | % | |||||
Other short-term debt | 7 | 2.76 | % | 8 | 2.67 | % | |||||||
Total short-term debt | $ | 1,357 | $ | 508 |
(b) | Long-Term Debt |
October 25, 2014 | July 26, 2014 | ||||||||||||
Maturity Date | Amount | Effective Rate | Amount | Effective Rate | |||||||||
Senior notes: | |||||||||||||
Floating-rate notes: | |||||||||||||
Three-month LIBOR plus 0.05% | September 3, 2015 | $ | 850 | 0.36% | $ | 850 | 0.35% | ||||||
Three-month LIBOR plus 0.28% | March 3, 2017 | 1,000 | 0.57% | 1,000 | 0.56% | ||||||||
Three-month LIBOR plus 0.50% | March 1, 2019 | 500 | 0.79% | 500 | 0.78% | ||||||||
Fixed-rate notes: | |||||||||||||
2.90% | November 17, 2014 | 500 | 3.11% | 500 | 3.11% | ||||||||
5.50% | February 22, 2016 | 3,000 | 3.05% | 3,000 | 3.04% | ||||||||
1.10% | March 3, 2017 | 2,400 | 0.55% | 2,400 | 0.56% | ||||||||
3.15% | March 14, 2017 | 750 | 0.80% | 750 | 0.79% | ||||||||
4.95% | February 15, 2019 | 2,000 | 4.69% | 2,000 | 4.69% | ||||||||
2.125% | March 1, 2019 | 1,750 | 0.77% | 1,750 | 0.77% | ||||||||
4.45% | January 15, 2020 | 2,500 | 2.98% | 2,500 | 2.98% | ||||||||
2.90% | March 4, 2021 | 500 | 0.93% | 500 | 0.93% | ||||||||
3.625% | March 4, 2024 | 1,000 | 1.04% | 1,000 | 1.05% | ||||||||
5.90% | February 15, 2039 | 2,000 | 6.11% | 2,000 | 6.11% | ||||||||
5.50% | January 15, 2040 | 2,000 | 5.67% | 2,000 | 5.67% | ||||||||
Other long-term debt | 2 | 2.08% | 4 | 2.39% | |||||||||
Total | 20,752 | 20,754 | |||||||||||
Unaccreted discount | (62 | ) | (63 | ) | |||||||||
Hedge accounting fair value adjustments | 275 | 210 | |||||||||||
Total | $ | 20,965 | $ | 20,901 | |||||||||
Reported as: | |||||||||||||
Current portion of long-term debt | $ | 1,350 | $ | 500 | |||||||||
Long-term debt | 19,615 | 20,401 | |||||||||||
Total | $ | 20,965 | $ | 20,901 |
Fiscal Year | Amount | ||
2015 (remaining nine months) | $ | 500 | |
2016 | 3,851 | ||
2017 | 4,151 | ||
2018 | — | ||
2019 | 4,250 | ||
Thereafter | 8,000 | ||
Total | $ | 20,752 |
(c) | Credit Facility |
|
11. | Derivative Instruments |
(a) | Summary of Derivative Instruments |
DERIVATIVE ASSETS | DERIVATIVE LIABILITIES | ||||||||||||||||||
Balance Sheet Line Item | October 25, 2014 | July 26, 2014 | Balance Sheet Line Item | October 25, 2014 | July 26, 2014 | ||||||||||||||
Derivatives designated as hedging instruments: | |||||||||||||||||||
Foreign currency derivatives | Other current assets | $ | 8 | $ | 7 | Other current liabilities | $ | 46 | $ | 6 | |||||||||
Interest rate derivatives | Other assets | 217 | 148 | Other long-term liabilities | — | 3 | |||||||||||||
Equity derivatives | Other current assets | — | — | Other current liabilities | 50 | 56 | |||||||||||||
Total | 225 | 155 | 96 | 65 | |||||||||||||||
Derivatives not designated as hedging instruments: | |||||||||||||||||||
Foreign currency derivatives | Other current assets | 2 | 3 | Other current liabilities | 3 | 2 | |||||||||||||
Equity derivatives | Other assets | — | 2 | Other long-term liabilities | — | — | |||||||||||||
Total | 2 | 5 | 3 | 2 | |||||||||||||||
Total | $ | 227 | $ | 160 | $ | 99 | $ | 67 |
GAINS (LOSSES) RECOGNIZED IN OCI ON DERIVATIVES FOR THE THREE MONTHS ENDED (EFFECTIVE PORTION) | GAINS (LOSSES) RECLASSIFIED FROM AOCI INTO INCOME FOR THE THREE MONTHS ENDED (EFFECTIVE PORTION) | |||||||||||||||||
October 25, 2014 | October 26, 2013 | Line Item in Statements of Operations | October 25, 2014 | October 26, 2013 | ||||||||||||||
Derivatives designated as cash flow hedging instruments: | ||||||||||||||||||
Foreign currency derivatives | $ | (56 | ) | $ | 38 | Operating expenses | $ | (3 | ) | $ | 7 | |||||||
Cost of sales—service | (1 | ) | 2 | |||||||||||||||
Total | $ | (56 | ) | $ | 38 | $ | (4 | ) | $ | 9 | ||||||||
Derivatives designated as net investment hedging instruments: | ||||||||||||||||||
Foreign currency derivatives | $ | 20 | $ | (19 | ) | Other income (loss), net | $ | — | $ | — |
GAINS (LOSSES) ON DERIVATIVE INSTRUMENTS FOR THE THREE MONTHS ENDED | GAINS (LOSSES) RELATED TO HEDGED ITEMS FOR THE THREE MONTHS ENDED | |||||||||||||||||
Derivatives Designated as Fair Value Hedging Instruments | Line Item in Statements of Operations | October 25, 2014 | October 26, 2013 | October 25, 2014 | October 26, 2013 | |||||||||||||
Equity derivatives | Other income (loss), net | $ | 6 | $ | (35 | ) | $ | (6 | ) | $ | 35 | |||||||
Interest rate derivatives | Interest expense | 70 | 18 | (73 | ) | (20 | ) | |||||||||||
Total | $ | 76 | $ | (17 | ) | $ | (79 | ) | $ | 15 |
GAINS (LOSSES) FOR THE THREE MONTHS ENDED | ||||||||||
Derivatives Not Designated as Hedging Instruments | Line Item in Statements of Operations | October 25, 2014 | October 26, 2013 | |||||||
Foreign currency derivatives | Other income (loss), net | $ | (58 | ) | $ | 43 | ||||
Total return swaps—deferred compensation | Operating expenses | (13 | ) | 17 | ||||||
Equity derivatives | Other income (loss), net | (4 | ) | 11 | ||||||
Total | $ | (75 | ) | $ | 71 |
October 25, 2014 | July 26, 2014 | ||||||
Derivatives designated as hedging instruments: | |||||||
Foreign currency derivatives—cash flow hedges | $ | 2,614 | $ | 1,618 | |||
Interest rate derivatives | 10,400 | 10,400 | |||||
Net investment hedging instruments | 372 | 345 | |||||
Equity derivatives | 238 | 238 | |||||
Derivatives not designated as hedging instruments: | |||||||
Foreign currency derivatives | 2,445 | 2,528 | |||||
Total return swaps—deferred compensation | 438 | 428 | |||||
Total | $ | 16,507 | $ | 15,557 |
(b) | Offsetting of Derivative Instruments |
OFFSETTING OF DERIVATIVE ASSETS | |||||||||||||||||||||||
Gross Amounts Offset in Consolidated Balance Sheets | Gross Amounts Not Offset in the Consolidated Balance Sheets, but with Legal Rights to Offset | ||||||||||||||||||||||
October 25, 2014 | Gross Amount of Recognized Assets | Gross Amounts Offset in Consolidated Balance Sheets | Net Amount Presented on Consolidated Balance Sheets | Gross Derivative Amounts with Legal Rights to Offset | Cash Collateral Received | Net Amount | |||||||||||||||||
Derivatives | $ | 227 | $ | — | $ | 227 | $ | (59 | ) | $ | (115 | ) | $ | 53 |
OFFSETTING OF DERIVATIVE LIABILITIES | |||||||||||||||||||||||
Gross Amounts Offset in Consolidated Balance Sheets | Gross Amounts Not Offset in the Consolidated Balance Sheets, but with Legal Rights to Offset | ||||||||||||||||||||||
October 25, 2014 | Gross Amount of Recognized Liabilities | Gross Amounts Offset in Consolidated Balance Sheets | Net Amount Presented on Consolidated Balance Sheets | Gross Derivative Amounts with Legal Rights to Offset | Cash Collateral Pledged | Net Amount | |||||||||||||||||
Derivatives | $ | 99 | $ | — | $ | 99 | $ | (59 | ) | $ | — | $ | 40 |
OFFSETTING OF DERIVATIVE ASSETS | |||||||||||||||||||||||
Gross Amounts Offset in Consolidated Balance Sheets | Gross Amounts Not Offset in the Consolidated Balance Sheets, but with Legal Rights to Offset | ||||||||||||||||||||||
July 26, 2014 | Gross Amount of Recognized Assets | Gross Amounts Offset in Consolidated Balance Sheets | Net Amount Presented on Consolidated Balance Sheets | Gross Derivative Amounts with Legal Rights to Offset | Cash Collateral Received | Net Amount | |||||||||||||||||
Derivatives | $ | 160 | $ | — | $ | 160 | $ | (39 | ) | $ | (60 | ) | $ | 61 |
OFFSETTING OF DERIVATIVE LIABILITIES | |||||||||||||||||||||||
Gross Amounts Offset in Consolidated Balance Sheets | Gross Amounts Not Offset in the Consolidated Balance Sheets, but with Legal Rights to Offset | ||||||||||||||||||||||
July 26, 2014 | Gross Amount of Recognized Liabilities | Gross Amounts Offset in Consolidated Balance Sheets | Net Amount Presented on Consolidated Balance Sheets | Gross Derivative Amounts with Legal Rights to Offset | Cash Collateral Pledged | Net Amount | |||||||||||||||||
Derivatives | $ | 67 | $ | — | $ | 67 | $ | (39 | ) | $ | (1 | ) | $ | 27 |
(c) | Foreign Currency Exchange Risk |
(d) | Interest Rate Risk |
(e) | Equity Price Risk |
(f) | Hedge Effectiveness |
(g) | Collateral and Credit-Risk-Related Contingent Features |
|
12. | Commitments and Contingencies |
(a) | Operating Leases |
Fiscal Year | Amount | ||
2015 (remaining nine months) | $ | 292 | |
2016 | 282 | ||
2017 | 185 | ||
2018 | 132 | ||
2019 | 65 | ||
Thereafter | 183 | ||
Total | $ | 1,139 |
(b) | Purchase Commitments with Contract Manufacturers and Suppliers |
(c) | Other Commitments |
Three Months Ended | |||||||
October 25, 2014 | October 26, 2013 | ||||||
Compensation expense related to acquisitions | $ | 98 | $ | 304 |
(d) | Product Warranties |
Three Months Ended | |||||||
October 25, 2014 | October 26, 2013 | ||||||
Balance at beginning of period | $ | 446 | $ | 402 | |||
Provision for warranties issued | 143 | 196 | |||||
Payments | (153 | ) | (169 | ) | |||
Balance at end of period | $ | 436 | $ | 429 |
(e) | Financing and Other Guarantees |
October 25, 2014 | July 26, 2014 | ||||||
Maximum potential future payments relating to financing guarantees: | |||||||
Channel partner | $ | 285 | $ | 263 | |||
End user | 161 | 202 | |||||
Total | $ | 446 | $ | 465 | |||
Deferred revenue associated with financing guarantees: | |||||||
Channel partner | $ | (126 | ) | $ | (127 | ) | |
End user | (130 | ) | (166 | ) | |||
Total | $ | (256 | ) | $ | (293 | ) | |
Maximum potential future payments relating to financing guarantees, net of associated deferred revenue | $ | 190 | $ | 172 |
(f) | Supplier Component Remediation Liability |
(g) | Indemnifications |
(h) | Legal Proceedings |
|
14. | Employee Benefit Plans |
(a) | Employee Stock Incentive Plans |
(b) | Employee Stock Purchase Plan |
(c) | Summary of Share-Based Compensation Expense |
Three Months Ended | |||||||
October 25, 2014 | October 26, 2013 | ||||||
Cost of sales—product | $ | 11 | $ | 10 | |||
Cost of sales—service | 37 | 33 | |||||
Share-based compensation expense in cost of sales | 48 | 43 | |||||
Research and development | 119 | 92 | |||||
Sales and marketing | 147 | 123 | |||||
General and administrative | 59 | 54 | |||||
Restructuring and other charges | (4 | ) | (3 | ) | |||
Share-based compensation expense in operating expenses | 321 | 266 | |||||
Total share-based compensation expense | $ | 369 | $ | 309 | |||
Income tax benefit for share-based compensation | $ | 94 | $ | 78 |
(d) | Share-Based Awards Available for Grant |
Share-Based Awards Available for Grant | ||
BALANCE AT July 27, 2013 | 228 | |
Restricted stock, stock units, and other share-based awards granted | (98 | ) |
Share-based awards canceled/forfeited/expired | 36 | |
Additional shares reserved | 135 | |
Shares withheld for taxes and not issued | 6 | |
Other | 3 | |
BALANCE AT July 26, 2014 | 310 | |
Restricted stock, stock units, and other share-based awards granted | (27 | ) |
Share-based awards canceled/forfeited/expired | 16 | |
Shares withheld for taxes and not issued | 20 | |
BALANCE AT October 25, 2014 | 319 |
(e) | Restricted Stock and Stock Unit Awards |
Restricted Stock/ Stock Units | Weighted-Average Grant Date Fair Value per Share | Aggregated Fair Market Value | ||||||||
UNVESTED BALANCE AT JULY 27, 2013 | 143 | $ | 18.80 | |||||||
Granted and assumed | 72 | 20.85 | ||||||||
Vested | (53 | ) | 19.55 | $ | 1,229 | |||||
Canceled/forfeited | (13 | ) | 18.61 | |||||||
UNVESTED BALANCE AT JULY 26, 2014 | 149 | 19.54 | ||||||||
Granted and assumed | 15 | 23.17 | ||||||||
Vested | (38 | ) | 19.51 | $ | 968 | |||||
Canceled/forfeited | (6 | ) | 19.48 | |||||||
UNVESTED BALANCE AT OCTOBER 25, 2014 | 120 | $ | 20.02 |
(f) | Stock Option Awards |
STOCK OPTIONS OUTSTANDING | ||||||
Number Outstanding | Weighted-Average Exercise Price per Share | |||||
BALANCE AT JULY 27, 2013 | 276 | $ | 24.44 | |||
Assumed from acquisitions | 6 | 3.60 | ||||
Exercised | (78 | ) | 18.30 | |||
Canceled/forfeited/expired | (17 | ) | 27.53 | |||
BALANCE AT JULY 26, 2014 | 187 | 26.03 | ||||
Assumed from acquisitions | 1 | 2.72 | ||||
Exercised | (19 | ) | 18.66 | |||
Canceled/forfeited/expired | (6 | ) | 29.05 | |||
BALANCE AT OCTOBER 25, 2014 | 163 | $ | 26.63 |
STOCK OPTIONS OUTSTANDING | STOCK OPTIONS EXERCISABLE | |||||||||||||||||||||||
Range of Exercise Prices | Number Outstanding | Weighted- Average Remaining Contractual Life (in Years) | Weighted- Average Exercise Price per Share | Aggregate Intrinsic Value | Number Exercisable | Weighted- Average Exercise Price per Share | Aggregate Intrinsic Value | |||||||||||||||||
$ 0.01 – 15.00 | 7 | 5.3 | $ | 4.07 | $ | 145 | 4 | $ | 5.41 | $ | 74 | |||||||||||||
15.01 – 18.00 | 1 | 1.0 | 17.32 | 7 | 1 | 17.32 | 7 | |||||||||||||||||
18.01 – 20.00 | 2 | 0.5 | 19.60 | 9 | 2 | 19.60 | 9 | |||||||||||||||||
20.01 – 25.00 | 55 | 1.0 | 22.87 | 51 | 54 | 22.87 | 51 | |||||||||||||||||
25.01 – 30.00 | 26 | 1.7 | 26.59 | — | 26 | 26.59 | — | |||||||||||||||||
30.01 – 35.00 | 72 | 1.8 | 32.16 | — | 72 | 32.16 | — | |||||||||||||||||
Total | 163 | 1.6 | $ | 26.63 | $ | 212 | 159 | $ | 27.13 | $ | 141 |
(g) | Valuation of Employee Share-Based Awards |
RESTRICTED STOCK UNITS | PERFORMANCE RESTRICTED STOCK UNITS | ||||||||||||||
Three Months Ended | October 25, 2014 | October 26, 2013 | October 25, 2014 | October 26, 2013 | |||||||||||
Number of shares granted (in millions) | 9 | 10 | 6 | 4 | |||||||||||
Grant date fair value per share | $ | 23.10 | $ | 23.11 | $ | 23.31 | $ | 22.70 | |||||||
Weighted-average assumptions/inputs: | |||||||||||||||
Expected dividend yield | 3.0 | % | 2.7 | % | 3.0 | % | 2.3 | % | |||||||
Range of risk-free interest rates | 0.0% – 1.8% | 0.0% – 1.4% | 0.0% – 1.8% | 0.0% – 1.4% | |||||||||||
Range of expected volatilities for index | N/A | N/A | 15.1% – 70.0% | 17.4% – 70.5% |
|
15. | Comprehensive Income |
October 25, 2014 | Net Unrealized Gains on Investments | Net Unrealized Gains (Losses) Cash Flow Hedging Instruments | Cumulative Translation Adjustment and Other | Accumulated Other Comprehensive Income | |||||||||||
BALANCE AT JULY 26, 2014 | $ | 424 | $ | (12 | ) | $ | 265 | $ | 677 | ||||||
Other comprehensive income (loss) before reclassifications attributable to Cisco Systems, Inc. | (36 | ) | (56 | ) | (161 | ) | (253 | ) | |||||||
(Gains) losses reclassified out of other comprehensive income | (7 | ) | 4 | — | (3 | ) | |||||||||
Tax benefit (expense) | 16 | 3 | 11 | 30 | |||||||||||
BALANCE AT OCTOBER 25, 2014 | $ | 397 | $ | (61 | ) | $ | 115 | $ | 451 |
October 26, 2013 | Net Unrealized Gains on Investments | Net Unrealized Gains (Losses) Cash Flow Hedging Instruments | Cumulative Translation Adjustment and Other | Accumulated Other Comprehensive Income | |||||||||||
BALANCE AT JULY 27, 2013 | $ | 379 | $ | 8 | $ | 221 | $ | 608 | |||||||
Other comprehensive income (loss) before reclassifications attributable to Cisco Systems, Inc. | 170 | 38 | 76 | 284 | |||||||||||
(Gains) losses reclassified out of other comprehensive income | (83 | ) | (9 | ) | — | (92 | ) | ||||||||
Tax benefit (expense) | (22 | ) | (3 | ) | (3 | ) | (28 | ) | |||||||
BALANCE AT OCTOBER 26, 2013 | $ | 444 | $ | 34 | $ | 294 | $ | 772 |
Three Months Ended | ||||||||||
October 25, 2014 | October 26, 2013 | |||||||||
Comprehensive Income Components | Income Before Taxes | Line Item in Statements of Operations | ||||||||
Net unrealized gains on available-for-sale investments | ||||||||||
$ | 7 | $ | 83 | Other income (loss), net | ||||||
Net unrealized gains and (losses) on cash flow hedging instruments: | ||||||||||
Foreign currency derivatives | (3 | ) | 7 | Operating expenses | ||||||
Foreign currency derivatives | (1 | ) | 2 | Cost of sales—service | ||||||
(4 | ) | 9 | ||||||||
Total amounts reclassified out of other comprehensive income | $ | 3 | $ | 92 |
|
16. | Income Taxes |
Three Months Ended | |||||||
October 25, 2014 | October 26, 2013 | ||||||
Income before provision for income taxes | $ | 2,360 | $ | 2,540 | |||
Provision for income taxes | $ | 532 | $ | 544 | |||
Effective tax rate | 22.5 | % | 21.4 | % |
|
17. | Segment Information and Major Customers |
(a) | Revenue and Gross Margin by Segment |
Three Months Ended | |||||||
October 25, 2014 | October 26, 2013 | ||||||
Revenue: | |||||||
Americas | $ | 7,501 | $ | 7,316 | |||
EMEA | 3,002 | 2,933 | |||||
APJC | 1,742 | 1,836 | |||||
Total | $ | 12,245 | $ | 12,085 | |||
Gross margin: | |||||||
Americas | $ | 4,810 | $ | 4,650 | |||
EMEA | 1,915 | 1,888 | |||||
APJC | 1,025 | 1,079 | |||||
Segment total | 7,750 | 7,617 | |||||
Unallocated corporate items | (417 | ) | (210 | ) | |||
Total | $ | 7,333 | $ | 7,407 |
(b) | Revenue for Groups of Similar Products and Services |
Three Months Ended | |||||||
October 25, 2014 | October 26, 2013 | ||||||
Revenue: | |||||||
Switching | $ | 3,846 | $ | 3,740 | |||
NGN Routing | 1,949 | 2,026 | |||||
Collaboration | 949 | 1,051 | |||||
Service Provider Video | 871 | 987 | |||||
Data Center | 693 | 601 | |||||
Wireless | 605 | 547 | |||||
Security | 455 | 365 | |||||
Other | 67 | 80 | |||||
Product | 9,435 | 9,397 | |||||
Service | 2,810 | 2,688 | |||||
Total | $ | 12,245 | $ | 12,085 |
(c) | Additional Segment Information |
October 25, 2014 | July 26, 2014 | ||||||
Property and equipment, net: | |||||||
United States | $ | 2,687 | $ | 2,697 | |||
International | 546 | 555 | |||||
Total | $ | 3,233 | $ | 3,252 |
|
(a) | Fair Value Hierarchy |
|
Shares of Common Stock | Common Stock and Additional Paid-In Capital | Retained Earnings | Total Cisco Shareholders’ Equity | |||||||||||
Repurchases of common stock under the repurchase program | 4,329 | $ | 21,662 | $ | 67,796 | $ | 89,458 |
|
Purchase Consideration | Net Liabilities Assumed | Purchased Intangible Assets | Goodwill | ||||||||||||
Metacloud, Inc. | $ | 149 | $ | (7 | ) | $ | 29 | $ | 127 | ||||||
Other | 38 | (10 | ) | 29 | 19 | ||||||||||
Total acquisitions | $ | 187 | $ | (17 | ) | $ | 58 | $ | 146 |
|
Balance at July 26, 2014 | Acquisitions | Other | Balance at October 25, 2014 | ||||||||||||
Americas | $ | 15,080 | $ | 75 | $ | (11 | ) | $ | 15,144 | ||||||
EMEA | 5,715 | 60 | (6 | ) | 5,769 | ||||||||||
APJC | 3,444 | 11 | (4 | ) | 3,451 | ||||||||||
Total | $ | 24,239 | $ | 146 | $ | (21 | ) | $ | 24,364 |
FINITE LIVES | INDEFINITE LIVES | TOTAL | |||||||||||||||||
TECHNOLOGY | CUSTOMER RELATIONSHIPS | IPR&D | |||||||||||||||||
Weighted- Average Useful Life (in Years) | Amount | Weighted- Average Useful Life (in Years) | Amount | Amount | Amount | ||||||||||||||
Metacloud, Inc. | 3.0 | $ | 24 | 5.0 | $ | 3 | $ | 2 | $ | 29 | |||||||||
Other | 5.0 | 21 | 5.0 | 4 | 4 | 29 | |||||||||||||
Total | $ | 45 | $ | 7 | $ | 6 | $ | 58 |
October 25, 2014 | Gross | Accumulated Amortization | Net | |||||||||
Purchased intangible assets with finite lives: | ||||||||||||
Technology | $ | 4,150 | $ | (2,166 | ) | $ | 1,984 | |||||
Customer relationships | 1,713 | (788 | ) | 925 | ||||||||
Other | 51 | (16 | ) | 35 | ||||||||
Total purchased intangible assets with finite lives | 5,914 | (2,970 | ) | 2,944 | ||||||||
In-process research and development, with indefinite lives | 122 | — | 122 | |||||||||
Total | $ | 6,036 | $ | (2,970 | ) | $ | 3,066 |
July 26, 2014 | Gross | Accumulated Amortization | Net | |||||||||
Purchased intangible assets with finite lives: | ||||||||||||
Technology | $ | 4,100 | $ | (1,976 | ) | $ | 2,124 | |||||
Customer relationships | 1,706 | (720 | ) | 986 | ||||||||
Other | 51 | (13 | ) | 38 | ||||||||
Total purchased intangible assets with finite lives | 5,857 | (2,709 | ) | 3,148 | ||||||||
In-process research and development, with indefinite lives | 132 | — | 132 | |||||||||
Total | $ | 5,989 | $ | (2,709 | ) | $ | 3,280 |
Three Months Ended | ||||||||
October 25, 2014 | October 26, 2013 | |||||||
Amortization of purchased intangible assets: | ||||||||
Cost of sales | $ | 189 | $ | 174 | ||||
Operating expenses | 71 | 65 | ||||||
Total | $ | 260 | $ | 239 |
Fiscal Year | Amount | ||
2015 (remaining nine months) | $ | 728 | |
2016 | 754 | ||
2017 | 580 | ||
2018 | 421 | ||
2019 | 315 | ||
Thereafter | 146 | ||
Total | $ | 2,944 |
|
Fiscal 2014 and Prior Plans | Fiscal 2015 Plan | |||||||||||||||||||
Employee Severance | Other | Employee Severance | Other | Total | ||||||||||||||||
Liability as of July 26, 2014 | $ | 40 | $ | 29 | $ | — | $ | — | $ | 69 | ||||||||||
Gross charges in fiscal 2015 | — | — | 322 | (4 | ) | 318 | ||||||||||||||
Cash payments | (13 | ) | — | (142 | ) | — | (155 | ) | ||||||||||||
Non-cash items | — | (4 | ) | — | 4 | — | ||||||||||||||
Liability as of October 25, 2014 | $ | 27 | $ | 25 | $ | 180 | $ | — | $ | 232 |
|
October 25, 2014 | July 26, 2014 | |||||||
Inventories: | ||||||||
Raw materials | $ | 173 | $ | 77 | ||||
Work in process | 3 | 5 | ||||||
Finished goods: | ||||||||
Distributor inventory and deferred cost of sales | 654 | 595 | ||||||
Manufactured finished goods | 535 | 606 | ||||||
Total finished goods | 1,189 | 1,201 | ||||||
Service-related spares | 275 | 273 | ||||||
Demonstration systems | 36 | 35 | ||||||
Total | $ | 1,676 | $ | 1,591 |
Property and equipment, net: | ||||||||
Land, buildings, and building and leasehold improvements | $ | 4,471 | $ | 4,468 | ||||
Computer equipment and related software | 1,423 | 1,425 | ||||||
Production, engineering, and other equipment | 5,728 | 5,756 | ||||||
Operating lease assets | 349 | 362 | ||||||
Furniture and fixtures | 498 | 509 | ||||||
12,469 | 12,520 | |||||||
Less accumulated depreciation and amortization | (9,236 | ) | (9,268 | ) | ||||
Total | $ | 3,233 | $ | 3,252 |
Other assets: | ||||||||
Deferred tax assets | $ | 1,553 | $ | 1,700 | ||||
Investments in privately held companies | 886 | 899 | ||||||
Other | 789 | 732 | ||||||
Total | $ | 3,228 | $ | 3,331 |
Deferred revenue: | ||||||||
Service | $ | 9,029 | $ | 9,640 | ||||
Product: | ||||||||
Unrecognized revenue on product shipments and other deferred revenue | 4,056 | 3,924 | ||||||
Cash receipts related to unrecognized revenue from two-tier distributors | 659 | 578 | ||||||
Total product deferred revenue | 4,715 | 4,502 | ||||||
Total | $ | 13,744 | $ | 14,142 | ||||
Reported as: | ||||||||
Current | $ | 9,449 | $ | 9,478 | ||||
Noncurrent | 4,295 | 4,664 | ||||||
Total | $ | 13,744 | $ | 14,142 |
|
October 25, 2014 | Lease Receivables | Loan Receivables | Financed Service Contracts and Other | Total | |||||||||||
Gross | $ | 3,498 | $ | 1,744 | $ | 3,071 | $ | 8,313 | |||||||
Residual value | 234 | — | — | 234 | |||||||||||
Unearned income | (223 | ) | — | — | (223 | ) | |||||||||
Allowance for credit loss | (248 | ) | (84 | ) | (36 | ) | (368 | ) | |||||||
Total, net | $ | 3,261 | $ | 1,660 | $ | 3,035 | $ | 7,956 | |||||||
Reported as: | |||||||||||||||
Current | $ | 1,496 | $ | 827 | $ | 1,942 | $ | 4,265 | |||||||
Noncurrent | 1,765 | 833 | 1,093 | 3,691 | |||||||||||
Total, net | $ | 3,261 | $ | 1,660 | $ | 3,035 | $ | 7,956 |
July 26, 2014 | Lease Receivables | Loan Receivables | Financed Service Contracts and Other | Total | |||||||||||
Gross | $ | 3,532 | $ | 1,683 | $ | 3,210 | $ | 8,425 | |||||||
Residual value | 233 | — | — | 233 | |||||||||||
Unearned income | (238 | ) | — | — | (238 | ) | |||||||||
Allowance for credit loss | (233 | ) | (98 | ) | (18 | ) | (349 | ) | |||||||
Total, net | $ | 3,294 | $ | 1,585 | $ | 3,192 | $ | 8,071 | |||||||
Reported as: | |||||||||||||||
Current | $ | 1,476 | $ | 728 | $ | 1,949 | $ | 4,153 | |||||||
Noncurrent | 1,818 | 857 | 1,243 | 3,918 | |||||||||||
Total, net | $ | 3,294 | $ | 1,585 | $ | 3,192 | $ | 8,071 |
Fiscal Year | Amount | ||
2015 (remaining nine months) | $ | 1,303 | |
2016 | 1,144 | ||
2017 | 681 | ||
2018 | 281 | ||
2019 | 87 | ||
Thereafter | 2 | ||
Total | $ | 3,498 |
INTERNAL CREDIT RISK RATING | |||||||||||||||
October 25, 2014 | 1 to 4 | 5 to 6 | 7 and Higher | Total | |||||||||||
Lease receivables | $ | 1,665 | $ | 1,482 | $ | 128 | $ | 3,275 | |||||||
Loan receivables | 953 | 637 | 154 | 1,744 | |||||||||||
Financed service contracts and other | 1,677 | 1,296 | 98 | 3,071 | |||||||||||
Total | $ | 4,295 | $ | 3,415 | $ | 380 | $ | 8,090 |
INTERNAL CREDIT RISK RATING | |||||||||||||||
July 26, 2014 | 1 to 4 | 5 to 6 | 7 and Higher | Total | |||||||||||
Lease receivables | $ | 1,615 | $ | 1,538 | $ | 141 | $ | 3,294 | |||||||
Loan receivables | 953 | 593 | 137 | 1,683 | |||||||||||
Financed service contracts and other | 1,744 | 1,367 | 99 | 3,210 | |||||||||||
Total | $ | 4,312 | $ | 3,498 | $ | 377 | $ | 8,187 |
DAYS PAST DUE (INCLUDES BILLED AND UNBILLED) | |||||||||||||||||||||||||||||||
October 25, 2014 | 31-60 | 61-90 | 91+ | Total Past Due | Current | Total | Nonaccrual Financing Receivables | Impaired Financing Receivables | |||||||||||||||||||||||
Lease receivables | $ | 80 | $ | 54 | $ | 196 | $ | 330 | $ | 2,945 | $ | 3,275 | $ | 47 | $ | 39 | |||||||||||||||
Loan receivables | 17 | 41 | 89 | 147 | 1,597 | 1,744 | 41 | 37 | |||||||||||||||||||||||
Financed service contracts and other | 144 | 163 | 532 | 839 | 2,232 | 3,071 | 12 | 7 | |||||||||||||||||||||||
Total | $ | 241 | $ | 258 | $ | 817 | $ | 1,316 | $ | 6,774 | $ | 8,090 | $ | 100 | $ | 83 |
DAYS PAST DUE (INCLUDES BILLED AND UNBILLED) | |||||||||||||||||||||||||||||||
July 26, 2014 | 31-60 | 61-90 | 91+ | Total Past Due | Current | Total | Nonaccrual Financing Receivables | Impaired Financing Receivables | |||||||||||||||||||||||
Lease receivables | $ | 104 | $ | 43 | $ | 165 | $ | 312 | $ | 2,982 | $ | 3,294 | $ | 48 | $ | 41 | |||||||||||||||
Loan receivables | 2 | 1 | 16 | 19 | 1,664 | 1,683 | 19 | 19 | |||||||||||||||||||||||
Financed service contracts and other | 301 | 238 | 230 | 769 | 2,441 | 3,210 | 12 | 9 | |||||||||||||||||||||||
Total | $ | 407 | $ | 282 | $ | 411 | $ | 1,100 | $ | 7,087 | $ | 8,187 | $ | 79 | $ | 69 |
CREDIT LOSS ALLOWANCES | |||||||||||||||
Three Months Ended October 25, 2014 | Lease Receivables | Loan Receivables | Financed Service Contracts and Other | Total | |||||||||||
Allowance for credit loss as of July 26, 2014 | $ | 233 | $ | 98 | $ | 18 | $ | 349 | |||||||
Provisions | 22 | (13 | ) | 19 | 28 | ||||||||||
Recoveries (write-offs), net | (4 | ) | 1 | — | (3 | ) | |||||||||
Foreign exchange and other | (3 | ) | (2 | ) | (1 | ) | (6 | ) | |||||||
Allowance for credit loss as of October 25, 2014 | $ | 248 | $ | 84 | $ | 36 | $ | 368 | |||||||
Financing receivables as of October 25, 2014 (1) | $ | 3,509 | $ | 1,744 | $ | 3,071 | $ | 8,324 |
CREDIT LOSS ALLOWANCES | |||||||||||||||
Three Months Ended October 26, 2013 | Lease Receivables | Loan Receivables | Financed Service Contracts and Other | Total | |||||||||||
Allowance for credit loss as of July 27, 2013 | $ | 238 | $ | 86 | $ | 20 | $ | 344 | |||||||
Provisions | (3 | ) | 6 | — | 3 | ||||||||||
Foreign exchange and other | 2 | 1 | — | 3 | |||||||||||
Allowance for credit loss as of October 26, 2013 | $ | 237 | $ | 93 | $ | 20 | $ | 350 | |||||||
Financing receivables as of October 26, 2013 (1) | $ | 3,549 | $ | 1,808 | $ | 3,018 | $ | 8,375 |
October 25, 2014 | July 26, 2014 | ||||||
Operating lease assets | $ | 349 | $ | 362 | |||
Accumulated depreciation | (197 | ) | (202 | ) | |||
Operating lease assets, net | $ | 152 | $ | 160 |
|
October 25, 2014 | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||
Fixed income securities: | |||||||||||||||
U.S. government securities | $ | 32,343 | $ | 71 | $ | — | $ | 32,414 | |||||||
U.S. government agency securities | 1,338 | 3 | — | 1,341 | |||||||||||
Non-U.S. government and agency securities | 1,049 | 2 | — | 1,051 | |||||||||||
Corporate debt securities | 10,170 | 73 | (10 | ) | 10,233 | ||||||||||
U.S. agency mortgage-backed securities | 875 | 9 | — | 884 | |||||||||||
Total fixed income securities | 45,775 | 158 | (10 | ) | 45,923 | ||||||||||
Publicly traded equity securities | 1,263 | 545 | (11 | ) | 1,797 | ||||||||||
Total | $ | 47,038 | $ | 703 | $ | (21 | ) | $ | 47,720 | ||||||
July 26, 2014 | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||
Fixed income securities: | |||||||||||||||
U.S. government securities | $ | 31,717 | $ | 29 | $ | (12 | ) | $ | 31,734 | ||||||
U.S. government agency securities | 1,062 | 1 | — | 1,063 | |||||||||||
Non-U.S. government and agency securities | 860 | 2 | (1 | ) | 861 | ||||||||||
Corporate debt securities | 9,092 | 74 | (7 | ) | 9,159 | ||||||||||
U.S. agency mortgage-backed securities | 574 | 5 | — | 579 | |||||||||||
Total fixed income securities | 43,305 | 111 | (20 | ) | 43,396 | ||||||||||
Publicly traded equity securities | 1,314 | 648 | (10 | ) | 1,952 | ||||||||||
Total | $ | 44,619 | $ | 759 | $ | (30 | ) | $ | 45,348 |
Three Months Ended | |||||||
October 25, 2014 | October 26, 2013 | ||||||
Gross realized gains | $ | 21 | $ | 95 | |||
Gross realized losses | (14 | ) | (12 | ) | |||
Total | $ | 7 | $ | 83 |
Three Months Ended | |||||||
October 25, 2014 | October 26, 2013 | ||||||
Net gains (losses) on investments in publicly traded equity securities | $ | (4 | ) | $ | 75 | ||
Net gains on investments in fixed income securities | 11 | 8 | |||||
Total | $ | 7 | $ | 83 |
UNREALIZED LOSSES LESS THAN 12 MONTHS | UNREALIZED LOSSES 12 MONTHS OR GREATER | TOTAL | |||||||||||||||||||||
October 25, 2014 | Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | |||||||||||||||||
Fixed income securities: | |||||||||||||||||||||||
Corporate debt securities | $ | 2,491 | $ | (8 | ) | $ | 383 | $ | (2 | ) | $ | 2,874 | $ | (10 | ) | ||||||||
Total fixed income securities | 2,491 | (8 | ) | 383 | (2 | ) | 2,874 | (10 | ) | ||||||||||||||
Publicly traded equity securities | 131 | (11 | ) | 1 | — | 132 | (11 | ) | |||||||||||||||
Total | $ | 2,622 | $ | (19 | ) | $ | 384 | $ | (2 | ) | $ | 3,006 | $ | (21 | ) |
UNREALIZED LOSSES LESS THAN 12 MONTHS | UNREALIZED LOSSES 12 MONTHS OR GREATER | TOTAL | |||||||||||||||||||||
July 26, 2014 | Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | |||||||||||||||||
Fixed income securities: | |||||||||||||||||||||||
U.S. government securities | $ | 7,676 | $ | (12 | ) | $ | 45 | $ | — | $ | 7,721 | $ | (12 | ) | |||||||||
Non-U.S. government and agency securities | 361 | (1 | ) | 22 | — | 383 | (1 | ) | |||||||||||||||
Corporate debt securities | 1,875 | (3 | ) | 491 | (4 | ) | 2,366 | (7 | ) | ||||||||||||||
Total fixed income securities | 9,912 | (16 | ) | 558 | (4 | ) | 10,470 | (20 | ) | ||||||||||||||
Publicly traded equity securities | 132 | (10 | ) | — | — | 132 | (10 | ) | |||||||||||||||
Total | $ | 10,044 | $ | (26 | ) | $ | 558 | $ | (4 | ) | $ | 10,602 | $ | (30 | ) |
Amortized Cost | Fair Value | ||||||
Less than 1 year | $ | 16,643 | $ | 16,656 | |||
Due in 1 to 2 years | 14,222 | 14,270 | |||||
Due in 2 to 5 years | 13,884 | 13,957 | |||||
Due after 5 years | 1,026 | 1,040 | |||||
Total | $ | 45,775 | $ | 45,923 |
October 25, 2014 | July 26, 2014 | ||||||
Equity method investments | $ | 559 | $ | 630 | |||
Cost method investments | 327 | 269 | |||||
Total | $ | 886 | $ | 899 |
|
OCTOBER 25, 2014 FAIR VALUE MEASUREMENTS | JULY 26, 2014 FAIR VALUE MEASUREMENTS | ||||||||||||||||||||||||||
Level 1 | Level 2 | Total Balance | Level 1 | Level 2 | Level 3 | Total Balance | |||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||
Cash equivalents: | |||||||||||||||||||||||||||
Money market funds | $ | 2,461 | $ | — | $ | 2,461 | $ | 4,935 | $ | — | $ | — | $ | 4,935 | |||||||||||||
Available-for-sale investments: | |||||||||||||||||||||||||||
U.S. government securities | — | 32,414 | 32,414 | — | 31,734 | — | 31,734 | ||||||||||||||||||||
U.S. government agency securities | — | 1,341 | 1,341 | — | 1,063 | — | 1,063 | ||||||||||||||||||||
Non-U.S. government and agency securities | — | 1,051 | 1,051 | — | 861 | — | 861 | ||||||||||||||||||||
Corporate debt securities | — | 10,233 | 10,233 | — | 9,159 | — | 9,159 | ||||||||||||||||||||
U.S. agency mortgage-backed securities | — | 884 | 884 | — | 579 | — | 579 | ||||||||||||||||||||
Publicly traded equity securities | 1,797 | — | 1,797 | 1,952 | — | — | 1,952 | ||||||||||||||||||||
Derivative assets | — | 227 | 227 | — | 158 | 2 | 160 | ||||||||||||||||||||
Total | $ | 4,258 | $ | 46,150 | $ | 50,408 | $ | 6,887 | $ | 43,554 | $ | 2 | $ | 50,443 | |||||||||||||
Liabilities: | |||||||||||||||||||||||||||
Derivative liabilities | $ | — | $ | 99 | $ | 99 | $ | — | $ | 67 | $ | — | $ | 67 | |||||||||||||
Total | $ | — | $ | 99 | $ | 99 | $ | — | $ | 67 | $ | — | $ | 67 |
|
October 25, 2014 | July 26, 2014 | ||||||||||||
Amount | Effective Rate | Amount | Effective Rate | ||||||||||
Current portion of long-term debt | $ | 1,350 | 1.38 | % | $ | 500 | 3.11 | % | |||||
Other short-term debt | 7 | 2.76 | % | 8 | 2.67 | % | |||||||
Total short-term debt | $ | 1,357 | $ | 508 |
October 25, 2014 | July 26, 2014 | ||||||||||||
Maturity Date | Amount | Effective Rate | Amount | Effective Rate | |||||||||
Senior notes: | |||||||||||||
Floating-rate notes: | |||||||||||||
Three-month LIBOR plus 0.05% | September 3, 2015 | $ | 850 | 0.36% | $ | 850 | 0.35% | ||||||
Three-month LIBOR plus 0.28% | March 3, 2017 | 1,000 | 0.57% | 1,000 | 0.56% | ||||||||
Three-month LIBOR plus 0.50% | March 1, 2019 | 500 | 0.79% | 500 | 0.78% | ||||||||
Fixed-rate notes: | |||||||||||||
2.90% | November 17, 2014 | 500 | 3.11% | 500 | 3.11% | ||||||||
5.50% | February 22, 2016 | 3,000 | 3.05% | 3,000 | 3.04% | ||||||||
1.10% | March 3, 2017 | 2,400 | 0.55% | 2,400 | 0.56% | ||||||||
3.15% | March 14, 2017 | 750 | 0.80% | 750 | 0.79% | ||||||||
4.95% | February 15, 2019 | 2,000 | 4.69% | 2,000 | 4.69% | ||||||||
2.125% | March 1, 2019 | 1,750 | 0.77% | 1,750 | 0.77% | ||||||||
4.45% | January 15, 2020 | 2,500 | 2.98% | 2,500 | 2.98% | ||||||||
2.90% | March 4, 2021 | 500 | 0.93% | 500 | 0.93% | ||||||||
3.625% | March 4, 2024 | 1,000 | 1.04% | 1,000 | 1.05% | ||||||||
5.90% | February 15, 2039 | 2,000 | 6.11% | 2,000 | 6.11% | ||||||||
5.50% | January 15, 2040 | 2,000 | 5.67% | 2,000 | 5.67% | ||||||||
Other long-term debt | 2 | 2.08% | 4 | 2.39% | |||||||||
Total | 20,752 | 20,754 | |||||||||||
Unaccreted discount | (62 | ) | (63 | ) | |||||||||
Hedge accounting fair value adjustments | 275 | 210 | |||||||||||
Total | $ | 20,965 | $ | 20,901 | |||||||||
Reported as: | |||||||||||||
Current portion of long-term debt | $ | 1,350 | $ | 500 | |||||||||
Long-term debt | 19,615 | 20,401 | |||||||||||
Total | $ | 20,965 | $ | 20,901 |
Fiscal Year | Amount | ||
2015 (remaining nine months) | $ | 500 | |
2016 | 3,851 | ||
2017 | 4,151 | ||
2018 | — | ||
2019 | 4,250 | ||
Thereafter | 8,000 | ||
Total | $ | 20,752 |
|
DERIVATIVE ASSETS | DERIVATIVE LIABILITIES | ||||||||||||||||||
Balance Sheet Line Item | October 25, 2014 | July 26, 2014 | Balance Sheet Line Item | October 25, 2014 | July 26, 2014 | ||||||||||||||
Derivatives designated as hedging instruments: | |||||||||||||||||||
Foreign currency derivatives | Other current assets | $ | 8 | $ | 7 | Other current liabilities | $ | 46 | $ | 6 | |||||||||
Interest rate derivatives | Other assets | 217 | 148 | Other long-term liabilities | — | 3 | |||||||||||||
Equity derivatives | Other current assets | — | — | Other current liabilities | 50 | 56 | |||||||||||||
Total | 225 | 155 | 96 | 65 | |||||||||||||||
Derivatives not designated as hedging instruments: | |||||||||||||||||||
Foreign currency derivatives | Other current assets | 2 | 3 | Other current liabilities | 3 | 2 | |||||||||||||
Equity derivatives | Other assets | — | 2 | Other long-term liabilities | — | — | |||||||||||||
Total | 2 | 5 | 3 | 2 | |||||||||||||||
Total | $ | 227 | $ | 160 | $ | 99 | $ | 67 |
GAINS (LOSSES) RECOGNIZED IN OCI ON DERIVATIVES FOR THE THREE MONTHS ENDED (EFFECTIVE PORTION) | GAINS (LOSSES) RECLASSIFIED FROM AOCI INTO INCOME FOR THE THREE MONTHS ENDED (EFFECTIVE PORTION) | |||||||||||||||||
October 25, 2014 | October 26, 2013 | Line Item in Statements of Operations | October 25, 2014 | October 26, 2013 | ||||||||||||||
Derivatives designated as cash flow hedging instruments: | ||||||||||||||||||
Foreign currency derivatives | $ | (56 | ) | $ | 38 | Operating expenses | $ | (3 | ) | $ | 7 | |||||||
Cost of sales—service | (1 | ) | 2 | |||||||||||||||
Total | $ | (56 | ) | $ | 38 | $ | (4 | ) | $ | 9 | ||||||||
Derivatives designated as net investment hedging instruments: | ||||||||||||||||||
Foreign currency derivatives | $ | 20 | $ | (19 | ) | Other income (loss), net | $ | — | $ | — |
GAINS (LOSSES) ON DERIVATIVE INSTRUMENTS FOR THE THREE MONTHS ENDED | GAINS (LOSSES) RELATED TO HEDGED ITEMS FOR THE THREE MONTHS ENDED | |||||||||||||||||
Derivatives Designated as Fair Value Hedging Instruments | Line Item in Statements of Operations | October 25, 2014 | October 26, 2013 | October 25, 2014 | October 26, 2013 | |||||||||||||
Equity derivatives | Other income (loss), net | $ | 6 | $ | (35 | ) | $ | (6 | ) | $ | 35 | |||||||
Interest rate derivatives | Interest expense | 70 | 18 | (73 | ) | (20 | ) | |||||||||||
Total | $ | 76 | $ | (17 | ) | $ | (79 | ) | $ | 15 |
GAINS (LOSSES) FOR THE THREE MONTHS ENDED | ||||||||||
Derivatives Not Designated as Hedging Instruments | Line Item in Statements of Operations | October 25, 2014 | October 26, 2013 | |||||||
Foreign currency derivatives | Other income (loss), net | $ | (58 | ) | $ | 43 | ||||
Total return swaps—deferred compensation | Operating expenses | (13 | ) | 17 | ||||||
Equity derivatives | Other income (loss), net | (4 | ) | 11 | ||||||
Total | $ | (75 | ) | $ | 71 |
October 25, 2014 | July 26, 2014 | ||||||
Derivatives designated as hedging instruments: | |||||||
Foreign currency derivatives—cash flow hedges | $ | 2,614 | $ | 1,618 | |||
Interest rate derivatives | 10,400 | 10,400 | |||||
Net investment hedging instruments | 372 | 345 | |||||
Equity derivatives | 238 | 238 | |||||
Derivatives not designated as hedging instruments: | |||||||
Foreign currency derivatives | 2,445 | 2,528 | |||||
Total return swaps—deferred compensation | 438 | 428 | |||||
Total | $ | 16,507 | $ | 15,557 |
OFFSETTING OF DERIVATIVE ASSETS | |||||||||||||||||||||||
Gross Amounts Offset in Consolidated Balance Sheets | Gross Amounts Not Offset in the Consolidated Balance Sheets, but with Legal Rights to Offset | ||||||||||||||||||||||
October 25, 2014 | Gross Amount of Recognized Assets | Gross Amounts Offset in Consolidated Balance Sheets | Net Amount Presented on Consolidated Balance Sheets | Gross Derivative Amounts with Legal Rights to Offset | Cash Collateral Received | Net Amount | |||||||||||||||||
Derivatives | $ | 227 | $ | — | $ | 227 | $ | (59 | ) | $ | (115 | ) | $ | 53 |
OFFSETTING OF DERIVATIVE LIABILITIES | |||||||||||||||||||||||
Gross Amounts Offset in Consolidated Balance Sheets | Gross Amounts Not Offset in the Consolidated Balance Sheets, but with Legal Rights to Offset | ||||||||||||||||||||||
October 25, 2014 | Gross Amount of Recognized Liabilities | Gross Amounts Offset in Consolidated Balance Sheets | Net Amount Presented on Consolidated Balance Sheets | Gross Derivative Amounts with Legal Rights to Offset | Cash Collateral Pledged | Net Amount | |||||||||||||||||
Derivatives | $ | 99 | $ | — | $ | 99 | $ | (59 | ) | $ | — | $ | 40 |
OFFSETTING OF DERIVATIVE ASSETS | |||||||||||||||||||||||
Gross Amounts Offset in Consolidated Balance Sheets | Gross Amounts Not Offset in the Consolidated Balance Sheets, but with Legal Rights to Offset | ||||||||||||||||||||||
July 26, 2014 | Gross Amount of Recognized Assets | Gross Amounts Offset in Consolidated Balance Sheets | Net Amount Presented on Consolidated Balance Sheets | Gross Derivative Amounts with Legal Rights to Offset | Cash Collateral Received | Net Amount | |||||||||||||||||
Derivatives | $ | 160 | $ | — | $ | 160 | $ | (39 | ) | $ | (60 | ) | $ | 61 |
OFFSETTING OF DERIVATIVE LIABILITIES | |||||||||||||||||||||||
Gross Amounts Offset in Consolidated Balance Sheets | Gross Amounts Not Offset in the Consolidated Balance Sheets, but with Legal Rights to Offset | ||||||||||||||||||||||
July 26, 2014 | Gross Amount of Recognized Liabilities | Gross Amounts Offset in Consolidated Balance Sheets | Net Amount Presented on Consolidated Balance Sheets | Gross Derivative Amounts with Legal Rights to Offset | Cash Collateral Pledged | Net Amount | |||||||||||||||||
Derivatives | $ | 67 | $ | — | $ | 67 | $ | (39 | ) | $ | (1 | ) | $ | 27 |
|
Fiscal Year | Amount | ||
2015 (remaining nine months) | $ | 292 | |
2016 | 282 | ||
2017 | 185 | ||
2018 | 132 | ||
2019 | 65 | ||
Thereafter | 183 | ||
Total | $ | 1,139 |
Three Months Ended | |||||||
October 25, 2014 | October 26, 2013 | ||||||
Compensation expense related to acquisitions | $ | 98 | $ | 304 |
Three Months Ended | |||||||
October 25, 2014 | October 26, 2013 | ||||||
Balance at beginning of period | $ | 446 | $ | 402 | |||
Provision for warranties issued | 143 | 196 | |||||
Payments | (153 | ) | (169 | ) | |||
Balance at end of period | $ | 436 | $ | 429 |
October 25, 2014 | July 26, 2014 | ||||||
Maximum potential future payments relating to financing guarantees: | |||||||
Channel partner | $ | 285 | $ | 263 | |||
End user | 161 | 202 | |||||
Total | $ | 446 | $ | 465 | |||
Deferred revenue associated with financing guarantees: | |||||||
Channel partner | $ | (126 | ) | $ | (127 | ) | |
End user | (130 | ) | (166 | ) | |||
Total | $ | (256 | ) | $ | (293 | ) | |
Maximum potential future payments relating to financing guarantees, net of associated deferred revenue | $ | 190 | $ | 172 |
|
Three Months Ended | |||||||
October 25, 2014 | October 26, 2013 | ||||||
Cost of sales—product | $ | 11 | $ | 10 | |||
Cost of sales—service | 37 | 33 | |||||
Share-based compensation expense in cost of sales | 48 | 43 | |||||
Research and development | 119 | 92 | |||||
Sales and marketing | 147 | 123 | |||||
General and administrative | 59 | 54 | |||||
Restructuring and other charges | (4 | ) | (3 | ) | |||
Share-based compensation expense in operating expenses | 321 | 266 | |||||
Total share-based compensation expense | $ | 369 | $ | 309 | |||
Income tax benefit for share-based compensation | $ | 94 | $ | 78 |
Share-Based Awards Available for Grant | ||
BALANCE AT July 27, 2013 | 228 | |
Restricted stock, stock units, and other share-based awards granted | (98 | ) |
Share-based awards canceled/forfeited/expired | 36 | |
Additional shares reserved | 135 | |
Shares withheld for taxes and not issued | 6 | |
Other | 3 | |
BALANCE AT July 26, 2014 | 310 | |
Restricted stock, stock units, and other share-based awards granted | (27 | ) |
Share-based awards canceled/forfeited/expired | 16 | |
Shares withheld for taxes and not issued | 20 | |
BALANCE AT October 25, 2014 | 319 |
Restricted Stock/ Stock Units | Weighted-Average Grant Date Fair Value per Share | Aggregated Fair Market Value | ||||||||
UNVESTED BALANCE AT JULY 27, 2013 | 143 | $ | 18.80 | |||||||
Granted and assumed | 72 | 20.85 | ||||||||
Vested | (53 | ) | 19.55 | $ | 1,229 | |||||
Canceled/forfeited | (13 | ) | 18.61 | |||||||
UNVESTED BALANCE AT JULY 26, 2014 | 149 | 19.54 | ||||||||
Granted and assumed | 15 | 23.17 | ||||||||
Vested | (38 | ) | 19.51 | $ | 968 | |||||
Canceled/forfeited | (6 | ) | 19.48 | |||||||
UNVESTED BALANCE AT OCTOBER 25, 2014 | 120 | $ | 20.02 |
STOCK OPTIONS OUTSTANDING | ||||||
Number Outstanding | Weighted-Average Exercise Price per Share | |||||
BALANCE AT JULY 27, 2013 | 276 | $ | 24.44 | |||
Assumed from acquisitions | 6 | 3.60 | ||||
Exercised | (78 | ) | 18.30 | |||
Canceled/forfeited/expired | (17 | ) | 27.53 | |||
BALANCE AT JULY 26, 2014 | 187 | 26.03 | ||||
Assumed from acquisitions | 1 | 2.72 | ||||
Exercised | (19 | ) | 18.66 | |||
Canceled/forfeited/expired | (6 | ) | 29.05 | |||
BALANCE AT OCTOBER 25, 2014 | 163 | $ | 26.63 |
STOCK OPTIONS OUTSTANDING | STOCK OPTIONS EXERCISABLE | |||||||||||||||||||||||
Range of Exercise Prices | Number Outstanding | Weighted- Average Remaining Contractual Life (in Years) | Weighted- Average Exercise Price per Share | Aggregate Intrinsic Value | Number Exercisable | Weighted- Average Exercise Price per Share | Aggregate Intrinsic Value | |||||||||||||||||
$ 0.01 – 15.00 | 7 | 5.3 | $ | 4.07 | $ | 145 | 4 | $ | 5.41 | $ | 74 | |||||||||||||
15.01 – 18.00 | 1 | 1.0 | 17.32 | 7 | 1 | 17.32 | 7 | |||||||||||||||||
18.01 – 20.00 | 2 | 0.5 | 19.60 | 9 | 2 | 19.60 | 9 | |||||||||||||||||
20.01 – 25.00 | 55 | 1.0 | 22.87 | 51 | 54 | 22.87 | 51 | |||||||||||||||||
25.01 – 30.00 | 26 | 1.7 | 26.59 | — | 26 | 26.59 | — | |||||||||||||||||
30.01 – 35.00 | 72 | 1.8 | 32.16 | — | 72 | 32.16 | — | |||||||||||||||||
Total | 163 | 1.6 | $ | 26.63 | $ | 212 | 159 | $ | 27.13 | $ | 141 |
RESTRICTED STOCK UNITS | PERFORMANCE RESTRICTED STOCK UNITS | ||||||||||||||
Three Months Ended | October 25, 2014 | October 26, 2013 | October 25, 2014 | October 26, 2013 | |||||||||||
Number of shares granted (in millions) | 9 | 10 | 6 | 4 | |||||||||||
Grant date fair value per share | $ | 23.10 | $ | 23.11 | $ | 23.31 | $ | 22.70 | |||||||
Weighted-average assumptions/inputs: | |||||||||||||||
Expected dividend yield | 3.0 | % | 2.7 | % | 3.0 | % | 2.3 | % | |||||||
Range of risk-free interest rates | 0.0% – 1.8% | 0.0% – 1.4% | 0.0% – 1.8% | 0.0% – 1.4% | |||||||||||
Range of expected volatilities for index | N/A | N/A | 15.1% – 70.0% | 17.4% – 70.5% |
|
October 25, 2014 | Net Unrealized Gains on Investments | Net Unrealized Gains (Losses) Cash Flow Hedging Instruments | Cumulative Translation Adjustment and Other | Accumulated Other Comprehensive Income | |||||||||||
BALANCE AT JULY 26, 2014 | $ | 424 | $ | (12 | ) | $ | 265 | $ | 677 | ||||||
Other comprehensive income (loss) before reclassifications attributable to Cisco Systems, Inc. | (36 | ) | (56 | ) | (161 | ) | (253 | ) | |||||||
(Gains) losses reclassified out of other comprehensive income | (7 | ) | 4 | — | (3 | ) | |||||||||
Tax benefit (expense) | 16 | 3 | 11 | 30 | |||||||||||
BALANCE AT OCTOBER 25, 2014 | $ | 397 | $ | (61 | ) | $ | 115 | $ | 451 |
Three Months Ended | ||||||||||
October 25, 2014 | October 26, 2013 | |||||||||
Comprehensive Income Components | Income Before Taxes | Line Item in Statements of Operations | ||||||||
Net unrealized gains on available-for-sale investments | ||||||||||
$ | 7 | $ | 83 | Other income (loss), net | ||||||
Net unrealized gains and (losses) on cash flow hedging instruments: | ||||||||||
Foreign currency derivatives | (3 | ) | 7 | Operating expenses | ||||||
Foreign currency derivatives | (1 | ) | 2 | Cost of sales—service | ||||||
(4 | ) | 9 | ||||||||
Total amounts reclassified out of other comprehensive income | $ | 3 | $ | 92 |
|
Three Months Ended | |||||||
October 25, 2014 | October 26, 2013 | ||||||
Income before provision for income taxes | $ | 2,360 | $ | 2,540 | |||
Provision for income taxes | $ | 532 | $ | 544 | |||
Effective tax rate | 22.5 | % | 21.4 | % |
|
Three Months Ended | |||||||
October 25, 2014 | October 26, 2013 | ||||||
Revenue: | |||||||
Americas | $ | 7,501 | $ | 7,316 | |||
EMEA | 3,002 | 2,933 | |||||
APJC | 1,742 | 1,836 | |||||
Total | $ | 12,245 | $ | 12,085 | |||
Gross margin: | |||||||
Americas | $ | 4,810 | $ | 4,650 | |||
EMEA | 1,915 | 1,888 | |||||
APJC | 1,025 | 1,079 | |||||
Segment total | 7,750 | 7,617 | |||||
Unallocated corporate items | (417 | ) | (210 | ) | |||
Total | $ | 7,333 | $ | 7,407 |
Three Months Ended | |||||||
October 25, 2014 | October 26, 2013 | ||||||
Revenue: | |||||||
Switching | $ | 3,846 | $ | 3,740 | |||
NGN Routing | 1,949 | 2,026 | |||||
Collaboration | 949 | 1,051 | |||||
Service Provider Video | 871 | 987 | |||||
Data Center | 693 | 601 | |||||
Wireless | 605 | 547 | |||||
Security | 455 | 365 | |||||
Other | 67 | 80 | |||||
Product | 9,435 | 9,397 | |||||
Service | 2,810 | 2,688 | |||||
Total | $ | 12,245 | $ | 12,085 |
October 25, 2014 | July 26, 2014 | ||||||
Property and equipment, net: | |||||||
United States | $ | 2,687 | $ | 2,697 | |||
International | 546 | 555 | |||||
Total | $ | 3,233 | $ | 3,252 |
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