cisco-annual-report-2021

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Item 8.Financial Statements and Supplementary DataIndex to Consolidated Financial StatementsReport of Independent Registered Public Accounting Firm 53Reports of Management 55Consolidated Balance Sheets 56Consolidated Statements of Operations 57Consolidated Statements of Comprehensive Income 58Consolidated Statements of Cash Flows 59Consolidated Statements of Equity 60Notes to Consolidated Financial Statements 61Note 1: Basis of Presentation 61Note 2: Summary of Significant Accounting Policies 61Note 3: Revenue 67Note 4: Acquisitions and Divestitures 69Note 5: Goodwill and Purchased Intangible Assets 70Note 6: Restructuring and Other Charges 71Note 7: Balance Sheet and Other Details 72Note 8: Leases 73Note 9: Financing Receivables 75Note 10: Available-for-Sale Debt and Equity Investments 78Note 11: Fair Value 80Note 12: Borrowings 81Note 13: Derivative Instruments 83Note 14: Commitments and Contingencies 85Note 15: Stockholders’ Equity 90Note 16: Employee Benefit Plans 90Note 17: Comprehensive Income (Loss) 94Note 18: Income Taxes 95Note 19: Segment Information and Major Customers 97Note 20: Net Income per Share 9952
Report of Independent Registered Public Accounting FirmTo the Board of Directors and Stockholders of Cisco Systems, IncOpinions on the Financial Statements and Internal Control over Financial ReportingWe have audited the accompanying consolidated balance sheets of Cisco Systems, Inc and its subsidiaries (the “Company”)as of July 31, 2021 and July 25, 2020, and the related consolidated statements of operations, comprehensive income, equity andcash flows for each of the three years in the period ended July 31, 2021, including the related notes and schedule of valuation andqualifying accounts for each of the three years in the period ended July 31, 2021 appearing under Item 15 (collectively referredto as the “consolidated financial statements”) We also have audited the Company’s internal control over financial reporting asof July 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee ofSponsoring Organizations of the Treadway Commission (COSO)In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financialposition of the Company as of July 31, 2021 and July 25, 2020, and the results of its operations and its cash flows for each of thethree years in the period ended July 31, 2021 in conformity with accounting principles generally accepted in the United Statesof America Also in our opinion, the Company maintained, in all material respects, effective internal control over financialreporting as of July 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSOChanges in Accounting PrinciplesAs discussed in Note 2 to the consolidated financial statements, the Company changed the manner in which it accounts forleases in 2020 and the manner in which it accounts for revenue from contracts with customers in 2019Basis for OpinionsThe Company’s management is responsible for these consolidated financial statements, for maintaining effective internal controlover financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in theaccompanying Management’s Report on Internal Control over Financial Reporting Our responsibility is to express opinionson the Company’s consolidated financial statements and on the Company’s internal control over financial reporting based onour audits We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States)(PCAOB) and are required to be independent with respect to the Company in accordance with the US federal securities lawsand the applicable rules and regulations of the Securities and Exchange Commission and the PCAOBWe conducted our audits in accordance with the standards of the PCAOB Those standards require that we plan and performthe audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement,whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respectsOur audits of the consolidated financial statements included performing procedures to assess the risks of material misstatementof the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risksSuch procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidatedfinancial statements Our audits also included evaluating the accounting principles used and significant estimates made bymanagement, as well as evaluating the overall presentation of the consolidated financial statements Our audit of internal controlover financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk thata material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on theassessed risk Our audits also included performing such other procedures as we considered necessary in the circumstances Webelieve that our audits provide a reasonable basis for our opinionsDefinition and Limitations of Internal Control over Financial ReportingA company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding thereliability of financial reporting and the preparation of financial statements for external purposes in accordance with generallyaccepted accounting principles A company’s internal control over financial reporting includes those policies and procedures that(i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositionsof the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparationof financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of thecompany are being made only in accordance with authorizations of management and directors of the company; and (iii) providereasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’sassets that could have a material effect on the financial statementsBecause of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements Also,projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequatebecause of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate53
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2021ANNUAL REPORTThe Future of Work
Page 3 and 4:
Introduction tosummary reportThis s
Page 5 and 6:
In collaboration, we continue to in
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Capital allocationDividends paid pe
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LeadershipCisco’s executive leade
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ExecutivecompensationOur pay practi
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The role of the Board of Directors
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Cisco’s efforts to deliver on our
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Cisco’s net zero goal will be sup
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(Mark One)orUNITED STATES SECURITIE
Page 21 and 22: This Annual Report on Form 10-K, in
Page 23 and 24: We introduced Cisco Silicon One, a
Page 25 and 26: range of devices and endpoints such
Page 27 and 28: For information regarding risks rel
Page 29 and 30: Research and DevelopmentWe regularl
Page 31 and 32: Inclusion & DiversityInclusion and
Page 33 and 34: Mr. Herren joined Cisco in December
Page 35 and 36: As a consequence, operating results
Page 37 and 38: We believe that we may be faced wit
Page 39 and 40: new competitors to enter the market
Page 41 and 42: assessments and decisions. Although
Page 43 and 44: components if a government body wer
Page 45 and 46: There can be no assurance that our
Page 47 and 48: Risks Related to Ownership of Our S
Page 49 and 50: Stock Performance GraphThe informat
Page 51 and 52: Fiscal 2021 Compared with Fiscal 20
Page 53 and 54: CRITICAL ACCOUNTING ESTIMATESThe pr
Page 55 and 56: Significant judgment is required in
Page 57 and 58: Product Revenue by SegmentThe follo
Page 59 and 60: Service Revenue by SegmentThe follo
Page 61 and 62: Research and Development (“R&D”
Page 63 and 64: Other Income (Loss), Net The compon
Page 65 and 66: We consider free cash flow to be a
Page 67 and 68: BorrowingsSenior Notes The followin
Page 69 and 70: commitments arising from these agre
Page 71: Foreign Currency Exchange RiskOur f
Page 75 and 76: Reports of ManagementStatement of M
Page 77 and 78: CISCO SYSTEMS, INC.Consolidated Sta
Page 79 and 80: CISCO SYSTEMS, INC.Consolidated Sta
Page 81 and 82: 1. Basis of PresentationCISCO SYSTE
Page 83 and 84: As a lessee, we determine if an arr
Page 85 and 86: We perform ongoing credit evaluatio
Page 87 and 88: (y) New Accounting Updates Recently
Page 89 and 90: 4. Acquisitions and Divestitures(a)
Page 91 and 92: July 25, 2020GrossAccumulatedAmorti
Page 93 and 94: Property and Equipment, NetJuly 31,
Page 95 and 96: We provide financing of certain equ
Page 97 and 98: The following tables present the ag
Page 99 and 100: The following tables present the br
Page 101 and 102: receivables and financed service co
Page 103 and 104: 13. Derivative Instruments(a)Summar
Page 105 and 106: (d)Interest Rate RiskWe hold intere
Page 107 and 108: It is not possible to determine the
Page 109 and 110: running royalty on future sales. Ra
Page 111 and 112: being exercised or settled, then th
Page 113 and 114: (f) Employee 401(k) PlansWe sponsor
Page 115 and 116: 18. Income Taxes(a) Provision for I
Page 117 and 118: The following table presents the co
Page 119 and 120: 20. Net Income per ShareThe followi
Page 121 and 122: Item 9B.Other InformationRequired D
Page 123 and 124:
INDEX TO EXHIBITSExhibitNumber Exhi
Page 125 and 126:
SIGNATURESPursuant to the requireme
Page 127 and 128:
Stockholder information andforward-
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