cisco-annual-report-2021
17. Comprehensive Income (Loss)The components of AOCI, net of tax, and the other comprehensive income (loss) are summarized as follows (in millions):Net UnrealizedGains (Losses)on Availablefor-SaleInvestmentsNet UnrealizedGains (Losses)Cash FlowHedgingInstrumentsCumulativeTranslationAdjustment andActuarial Gainsand LossesAccumulatedOtherComprehensiveIncome (Loss)BALANCE AT JULY 28, 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (310) $ (11) $ (528) $ (849)Other comprehensive income (loss) before reclassifications. . . . 560 — (267) 293(Gains) losses reclassified out of AOCI. . . . . . . . . . . . . . . . . . . . 13 (3) 2 12Tax benefit (expense) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (95) — 15 (80)Total change for the period. . . . . . . . . . . . . . . . . . . . . . . . . . . 478 (3) (250) 225Effect of adoption of accounting standard. . . . . . . . . . . . . . . . . . (168) — — (168)BALANCE AT JULY 27, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (14) (778) (792)Other comprehensive income (loss) before reclassifications. . . . 420 7 (51) 376(Gains) losses reclassified out of AOCI. . . . . . . . . . . . . . . . . . . . (42) 1 6 (35)Tax benefit (expense) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (63) — (5) (68)BALANCE AT JULY 25, 2020. . . . . . . . . . . . . . . . . . . . . . . . . . . . 315 (6) (828) (519)Other comprehensive income (loss) beforereclassifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (141) 20 229 108(Gains) losses reclassified out of AOCI . . . . . . . . . . . . . . . . . . (53) (14) 3 (64)Tax benefit (expense) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 (1) (2) 58BALANCE AT JULY 31, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 182 $ (1) $ (598) $ (417)94
18. Income Taxes(a) Provision for Income TaxesThe provision for income taxes consists of the following (in millions):Years Ended July 31, 2021 July 25, 2020 July 27, 2019Federal:Current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,959 $ 1,101 $ 1,760Deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (203) (374) (84)1,756 727 1,676State:Current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 513 264 302Deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (46) 287 (2)467 551 300Foreign:Current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 583 1,429 1,238Deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (135) 49 (264)448 1,478 974Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,671 $ 2,756 $ 2,950Income before provision for income taxes consists of the following (in millions):Years Ended July 31, 2021 July 25, 2020 July 27, 2019United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 12,335 $ 7,534 $ 7,611International. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 927 6,436 6,960Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 13,262 $ 13,970 $ 14,571The items accounting for the difference between income taxes computed at the federal statutory rate and the provision forincome taxes consist of the following:Years Ended July 31, 2021 July 25, 2020 July 27, 2019Federal statutory rate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.0% 21.0% 21.0%Effect of:State taxes, net of federal tax benefit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.7 3.5 2.0Foreign income at other than U.S. rates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.5 (1.5) (4.5)Tax credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1.4) (0.9) (1.7)Foreign-derived intangible income deduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4.2) (2.6) (1.3)Stock-based compensation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.6 (0.1) (0.6)Impact of the Tax Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 6.1Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.1) 0.3 (0.8)Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.1% 19.7% 20.2%During fiscal 2019, we recorded an $872 million charge related to the Tax Act. This charge was the reversal of the previouslyrecorded benefit associated with the U.S. taxation of deemed foreign dividends recorded in fiscal 2018 because of a retroactivefinal U.S. Treasury regulation issued during fiscal 2019.During fiscal 2020, the Internal Revenue Service (IRS) and Cisco settled all outstanding items related to the audit of our federalincome tax returns for the fiscal year ended July 30, 2011 through July 27, 2013. As a result of the settlement, we recognized anet benefit to the provision for income taxes of $102 million, net of a reduction in interest expense of $4 million.Foreign taxes associated with the repatriation of earnings of foreign subsidiaries were not provided on a cumulative total of$6.5 billion of undistributed earnings for certain foreign subsidiaries as of the end of fiscal 2021. We intend to reinvest theseearnings indefinitely in such foreign subsidiaries. If these earnings were distributed in the form of dividends or otherwise, or ifthe shares of the relevant foreign subsidiaries were sold or otherwise transferred, we could be subject to additional income andwithholding taxes. The amount of potential unrecognized deferred income tax liability related to these earnings is approximately$681 million.95
- Page 63 and 64: Other Income (Loss), Net The compon
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- Page 67 and 68: BorrowingsSenior Notes The followin
- Page 69 and 70: commitments arising from these agre
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- Page 73 and 74: Report of Independent Registered Pu
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- Page 79 and 80: CISCO SYSTEMS, INC.Consolidated Sta
- Page 81 and 82: 1. Basis of PresentationCISCO SYSTE
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- Page 85 and 86: We perform ongoing credit evaluatio
- Page 87 and 88: (y) New Accounting Updates Recently
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- Page 91 and 92: July 25, 2020GrossAccumulatedAmorti
- Page 93 and 94: Property and Equipment, NetJuly 31,
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- Page 99 and 100: The following tables present the br
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- Page 105 and 106: (d)Interest Rate RiskWe hold intere
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- Page 109 and 110: running royalty on future sales. Ra
- Page 111 and 112: being exercised or settled, then th
- Page 113: (f) Employee 401(k) PlansWe sponsor
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18. Income Taxes
(a) Provision for Income Taxes
The provision for income taxes consists of the following (in millions):
Years Ended July 31, 2021 July 25, 2020 July 27, 2019
Federal:
Current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,959 $ 1,101 $ 1,760
Deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (203) (374) (84)
1,756 727 1,676
State:
Current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 513 264 302
Deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (46) 287 (2)
467 551 300
Foreign:
Current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 583 1,429 1,238
Deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (135) 49 (264)
448 1,478 974
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,671 $ 2,756 $ 2,950
Income before provision for income taxes consists of the following (in millions):
Years Ended July 31, 2021 July 25, 2020 July 27, 2019
United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 12,335 $ 7,534 $ 7,611
International. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 927 6,436 6,960
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 13,262 $ 13,970 $ 14,571
The items accounting for the difference between income taxes computed at the federal statutory rate and the provision for
income taxes consist of the following:
Years Ended July 31, 2021 July 25, 2020 July 27, 2019
Federal statutory rate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.0% 21.0% 21.0%
Effect of:
State taxes, net of federal tax benefit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.7 3.5 2.0
Foreign income at other than U.S. rates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.5 (1.5) (4.5)
Tax credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1.4) (0.9) (1.7)
Foreign-derived intangible income deduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4.2) (2.6) (1.3)
Stock-based compensation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.6 (0.1) (0.6)
Impact of the Tax Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 6.1
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.1) 0.3 (0.8)
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.1% 19.7% 20.2%
During fiscal 2019, we recorded an $872 million charge related to the Tax Act. This charge was the reversal of the previously
recorded benefit associated with the U.S. taxation of deemed foreign dividends recorded in fiscal 2018 because of a retroactive
final U.S. Treasury regulation issued during fiscal 2019.
During fiscal 2020, the Internal Revenue Service (IRS) and Cisco settled all outstanding items related to the audit of our federal
income tax returns for the fiscal year ended July 30, 2011 through July 27, 2013. As a result of the settlement, we recognized a
net benefit to the provision for income taxes of $102 million, net of a reduction in interest expense of $4 million.
Foreign taxes associated with the repatriation of earnings of foreign subsidiaries were not provided on a cumulative total of
$6.5 billion of undistributed earnings for certain foreign subsidiaries as of the end of fiscal 2021. We intend to reinvest these
earnings indefinitely in such foreign subsidiaries. If these earnings were distributed in the form of dividends or otherwise, or if
the shares of the relevant foreign subsidiaries were sold or otherwise transferred, we could be subject to additional income and
withholding taxes. The amount of potential unrecognized deferred income tax liability related to these earnings is approximately
$681 million.
95
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