cisco-annual-report-2021

We have entered into interest rate swaps in prior periods with an aggregate notional amount of $2.0 billion designated as fair
value hedges of certain of our fixed-rate senior notes. These swaps convert the fixed interest rates of the fixed-rate notes to
floating interest rates based on the LIBOR. The gains and losses related to changes in the fair value of the interest rate swaps
substantially offset changes in the fair value of the hedged portion of the underlying debt that are attributable to the changes in
market interest rates. For additional information, see Note 13.
Interest is payable semiannually on each class of the senior fixed-rate notes. Each of the senior fixed-rate notes is redeemable
by us at any time, subject to a make-whole premium. The senior notes rank at par with the commercial paper notes that may be
issued in the future pursuant to our short-term debt financing program, as discussed above under “(a) Short-Term Debt.” As of
July 31, 2021, we were in compliance with all debt covenants.
As of July 31, 2021, future principal payments for long-term debt, including the current portion, are summarized as follows (in
millions):
Fiscal Year
Amount
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,500
2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,750
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 750
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,500
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 11,500
Our $2.0 billion senior fixed-rate notes with a maturity date of September 20, 2021 were redeemed on August 20, 2021, pursuant
to our par call redemption option. The redemption price was equal to 100% of the principal amount plus any accrued and unpaid
interest to, but excluding, August 20, 2021.
(c) Credit Facility
On May 13, 2021, we entered into a 5-year credit agreement with certain institutional lenders that provides for a $3.0 billion
unsecured revolving credit facility that is scheduled to expire on May 13, 2026. The credit agreement is structured as an
amendment and restatement of our 364-day credit agreement, which would have terminated on May 14, 2021. As of July 31,
2021, we were in compliance with the required interest coverage ratio and the other covenants, and we had not borrowed any
funds under the credit agreement.
Any advances under the 5-year credit agreement will accrue interest at rates that are equal to, based on certain conditions, either
(a) with respect to loans in U.S. dollars, (i) LIBOR or (ii) the Base Rate (to be defined as the highest of (x) the Bank of America
prime rate, (y) the Federal Funds rate plus 0.50% and (z) a daily rate equal to one-month LIBOR plus 1.0%), (b) with respect to
loans in Euros, EURIBOR, (c) with respect to loans in Yen, TIBOR and (d) with respect to loans in Pounds Sterling, SONIA
plus a credit spread adjustment, plus a margin that is based on our senior debt credit ratings as published by Standard & Poor’s
Financial Services, LLC and Moody’s Investors Service, Inc., provided that in no event will the interest rate be less than 0.0%.
We will pay a quarterly commitment fee during the term of the 5-year credit agreement which may vary depending on our senior
debt credit ratings. In addition, the 5-year credit agreement incorporates certain sustainability-linked metrics. Specifically, our
applicable interest rate and commitment fee are subject to upward or downward adjustments if we achieve, or fail to achieve,
certain specified targets based on two key performance indicator metrics: (i) social impact and (ii) foam reduction. We may also,
upon the agreement of either the then-existing lenders or additional lenders not currently parties to the agreement, increase the
commitments under the credit facility by up to an additional $2.0 billion and, at our option, extend the maturity of the facility
for an additional year up to two times. The credit agreement requires that we comply with certain covenants, including that we
maintain an interest coverage ratio as defined in the agreement.
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