cisco-annual-report-2021

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LeaseReceivablesCREDIT LOSS ALLOWANCESLoanReceivablesFinanced ServiceContractsAllowance for credit loss as of July 28, 2018 . . . . . . . . . . . . . . . . . . . . . . . $ 135 $ 60 $ 10 $ 205Provisions (benefits) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (54) 11 27 (16)Recoveries (write-offs), net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (14) — (28) (42)Foreign exchange and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (21) — — (21)Allowance for credit loss as of July 27, 2019 . . . . . . . . . . . . . . . . . . . . . . . $ 46 $ 71 $ 9 $ 12610. Available-for-Sale Debt and Equity Investments(a) Summary of Available-for-Sale Debt InvestmentsThe following tables summarize our available-for-sale debt investments (in millions):July 31, 2021AmortizedCostGrossUnrealizedGainsGrossUnrealizedand CreditLossesU.S. government securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,773 $ 21 $ — $ 1,794U.S. government agency securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 152 — — 152Non-U.S. government and agency securities . . . . . . . . . . . . . . . . . . . . . . 3 — — 3Corporate debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,727 213 (30) 8,910U.S. agency mortgage-backed securities . . . . . . . . . . . . . . . . . . . . . . . . . 2,838 34 (10) 2,862Commercial paper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,190 — — 1,190Certificates of deposit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 295 — — 295Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 14,978 $ 268 $ (40) $ 15,206TotalFairValueJuly 25, 2020AmortizedCostGrossUnrealizedGainsGrossUnrealizedLossesU.S. government securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,614 $ 71 $ — $ 2,685U.S. government agency securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110 — — 110Corporate debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,549 334 (6) 11,877U.S. agency mortgage-backed securities. . . . . . . . . . . . . . . . . . . . . . . . . . . 1,987 49 (1) 2,035Commercial paper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 727 — — 727Certificates of deposit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 176 — — 176Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 17,163 $ 454 $ (7) $ 17,610The following table presents the gross realized gains and gross realized losses related to available-for-sale debt investments(in millions):Years Ended July 31, 2021 July 25, 2020 July 27, 2019Gross realized gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 55 $ 70 $ 17Gross realized losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2) (28) (30)Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 53 $ 42 $ (13)FairValue78
The following tables present the breakdown of the available-for-sale debt investments with gross unrealized losses and theduration that those losses had been unrealized at July 31, 2021 and July 25, 2020 (in millions):July 31, 2021UNREALIZED LOSSESLESS THAN 12 MONTHSGrossUnrealizedFair Value LossesUNREALIZED LOSSES12 MONTHS OR GREATER TOTALGrossGrossUnrealizedUnrealizedFair Value Losses Fair Value LossesU.S. government securities . . . . . . . . . . . . . . $ 468 $ — $ — $ — $ 468 $ —U.S. government agency securities . . . . . . . . 26 — — — 26 —Corporate debt securities . . . . . . . . . . . . . . . 1,086 (5) 6 — 1,092 (5)U.S. agency mortgage-backed securities . . . 1,293 (10) 13 — 1,306 (10)Commercial paper . . . . . . . . . . . . . . . . . . . . . 37 — — — 37 —Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,910 $ (15) $ 19 $ — $ 2,929 $ (15)July 25, 2020UNREALIZED LOSSESLESS THAN 12 MONTHSGrossUnrealizedFair Value LossesUNREALIZED LOSSES12 MONTHS OR GREATER TOTALFair ValueGrossUnrealizedLossesFair ValueGrossUnrealizedLossesU.S. government agency securities . . . . . . . . . $ 33 $ — $ — $ — $ 33 $ —Corporate debt securities . . . . . . . . . . . . . . . . . 1,060 (6) 3 — 1,063 (6)U.S. agency mortgage-backed securities. . . . . 265 (1) — — 265 (1)Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,358 $ (7) $ 3 $ — $ 1,361 $ (7)The following table summarizes the maturities of our available-for-sale debt investments as of July 31, 2021 (in millions):Amortized CostFair ValueWithin 1 year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,981 $ 4,976After 1 year through 5 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,517 6,677After 5 years through 10 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 637 685After 10 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 6Mortgage-backed securities with no single maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,838 2,862Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 14,978 $ 15,206Actual maturities may differ from the contractual maturities because borrowers may have the right to call or prepay certainobligations.(b) Summary of Equity InvestmentsWe recognized a net unrealized gain during fiscal 2021 on our marketable securities still held as of the reporting date of$8 million. Our net adjustments to non-marketable equity securities measured using the measurement alternative still held wasa net gain of $39 million and a net loss of $13 million for fiscal 2021 and 2020, respectively. We held equity interests in certainprivate equity funds of $0.9 billion and $0.7 billion as of July 31, 2021 and July 25, 2020, respectively, which are accounted forunder the NAV practical expedient.In the ordinary course of business, we have investments in privately held companies and provide financing to certain customers.These privately held companies and customers are evaluated for consolidation under the variable interest or voting interestentity models. We evaluate on an ongoing basis our investments in these privately held companies and our customer financings,and have determined that as of July 31, 2021, there were no significant variable interest or voting interest entities required to beconsolidated in our Consolidated Financial Statements.As of July 31, 2021, the carrying value of our investments in privately held companies was $1.5 billion. Of the total carryingvalue of our investments in privately held companies as of July 31, 2021, $0.9 billion of such investments are considered to bein variable interest entities which are unconsolidated. We have total funding commitments of $0.2 billion related to privatelyheld investments, some of which may be based on the achievement of certain agreed-upon milestones, and some of which arerequired to be funded on demand. The carrying value of these investments and the additional funding commitments collectivelyrepresent our maximum exposure related to privately held investments.79
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2021ANNUAL REPORTThe Future of Work
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Introduction tosummary reportThis s
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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
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This Annual Report on Form 10-K, in
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We introduced Cisco Silicon One, a
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range of devices and endpoints such
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For information regarding risks rel
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Research and DevelopmentWe regularl
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Inclusion & DiversityInclusion and
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Mr. Herren joined Cisco in December
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As a consequence, operating results
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We believe that we may be faced wit
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new competitors to enter the market
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assessments and decisions. Although
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components if a government body wer
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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 and 72: Foreign Currency Exchange RiskOur f
Page 73 and 74: Report of Independent Registered Pu
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: The following tables present the ag
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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