x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
California | 77-0059951 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) |
Large accelerated filer | x | Accelerated filer | o | ||||
Non-accelerated filer | o | (Do not check if a smaller reporting company) | Smaller reporting company | o |
Page | ||||
Part I | ||||
Item 1. | ||||
Item 2. | ||||
Item 3. | ||||
Item 4. | ||||
Part II. | ||||
Item 1. | ||||
Item 1A. | ||||
Item 2. | ||||
Item 3. | ||||
Item 4. | ||||
Item 5. | ||||
Item 6. | ||||
Item 1. | Financial Statements (Unaudited) |
January 27, 2018 | July 29, 2017 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 17,624 | $ | 11,708 | |||
Investments | 56,059 | 58,784 | |||||
Accounts receivable, net of allowance for doubtful accounts of $181 at January 27, 2018 and $211 at July 29, 2017 | 3,963 | 5,146 | |||||
Inventories | 1,896 | 1,616 | |||||
Financing receivables, net | 4,925 | 4,856 | |||||
Other current assets | 1,583 | 1,593 | |||||
Total current assets | 86,050 | 83,703 | |||||
Property and equipment, net | 3,113 | 3,322 | |||||
Financing receivables, net | 4,913 | 4,738 | |||||
Goodwill | 30,391 | 29,766 | |||||
Purchased intangible assets, net | 2,474 | 2,539 | |||||
Deferred tax assets | 3,097 | 4,239 | |||||
Other assets | 1,472 | 1,511 | |||||
TOTAL ASSETS | $ | 131,510 | $ | 129,818 | |||
LIABILITIES AND EQUITY | |||||||
Current liabilities: | |||||||
Short-term debt | $ | 13,741 | $ | 7,992 | |||
Accounts payable | 1,060 | 1,385 | |||||
Income taxes payable | 2,204 | 98 | |||||
Accrued compensation | 2,736 | 2,895 | |||||
Deferred revenue | 11,102 | 10,821 | |||||
Other current liabilities | 4,521 | 4,392 | |||||
Total current liabilities | 35,364 | 27,583 | |||||
Long-term debt | 25,625 | 25,725 | |||||
Income taxes payable | 9,185 | 1,250 | |||||
Deferred revenue | 7,686 | 7,673 | |||||
Other long-term liabilities | 1,668 | 1,450 | |||||
Total liabilities | 79,528 | 63,681 | |||||
Commitments and contingencies (Note 12) | |||||||
Equity: | |||||||
Cisco shareholders’ equity: | |||||||
Preferred stock, no par value: 5 shares authorized; none issued and outstanding | — | — | |||||
Common stock and additional paid-in capital, $0.001 par value: 20,000 shares authorized; 4,868 and 4,983 shares issued and outstanding at January 27, 2018 and July 29, 2017, respectively | 44,535 | 45,253 | |||||
Retained earnings | 7,364 | 20,838 | |||||
Accumulated other comprehensive income (loss) | 83 | 46 | |||||
Total equity | 51,982 | 66,137 | |||||
TOTAL LIABILITIES AND EQUITY | $ | 131,510 | $ | 129,818 |
Three Months Ended | Six Months Ended | ||||||||||||||
January 27, 2018 | January 28, 2017 | January 27, 2018 | January 28, 2017 | ||||||||||||
REVENUE: | |||||||||||||||
Product | $ | 8,709 | $ | 8,491 | $ | 17,763 | $ | 17,793 | |||||||
Service | 3,178 | 3,089 | 6,260 | 6,139 | |||||||||||
Total revenue | 11,887 | 11,580 | 24,023 | 23,932 | |||||||||||
COST OF SALES: | |||||||||||||||
Product | 3,354 | 3,305 | 6,969 | 6,708 | |||||||||||
Service | 1,035 | 999 | 2,129 | 2,064 | |||||||||||
Total cost of sales | 4,389 | 4,304 | 9,098 | 8,772 | |||||||||||
GROSS MARGIN | 7,498 | 7,276 | 14,925 | 15,160 | |||||||||||
OPERATING EXPENSES: | |||||||||||||||
Research and development | 1,549 | 1,508 | 3,116 | 3,053 | |||||||||||
Sales and marketing | 2,235 | 2,222 | 4,569 | 4,640 | |||||||||||
General and administrative | 483 | 456 | 1,040 | 1,011 | |||||||||||
Amortization of purchased intangible assets | 60 | 64 | 121 | 142 | |||||||||||
Restructuring and other charges | 98 | 133 | 250 | 544 | |||||||||||
Total operating expenses | 4,425 | 4,383 | 9,096 | 9,390 | |||||||||||
OPERATING INCOME | 3,073 | 2,893 | 5,829 | 5,770 | |||||||||||
Interest income | 396 | 329 | 775 | 624 | |||||||||||
Interest expense | (247 | ) | (222 | ) | (482 | ) | (420 | ) | |||||||
Other income (loss), net | 10 | (37 | ) | 72 | (58 | ) | |||||||||
Interest and other income (loss), net | 159 | 70 | 365 | 146 | |||||||||||
INCOME BEFORE PROVISION FOR INCOME TAXES | 3,232 | 2,963 | 6,194 | 5,916 | |||||||||||
Provision for income taxes | 12,010 | 615 | 12,578 | 1,246 | |||||||||||
NET INCOME (LOSS) | $ | (8,778 | ) | $ | 2,348 | $ | (6,384 | ) | $ | 4,670 | |||||
Net income (loss) per share: | |||||||||||||||
Basic | $ | (1.78 | ) | $ | 0.47 | $ | (1.29 | ) | $ | 0.93 | |||||
Diluted | $ | (1.78 | ) | $ | 0.47 | $ | (1.29 | ) | $ | 0.92 | |||||
Shares used in per-share calculation: | |||||||||||||||
Basic | 4,924 | 5,015 | 4,942 | 5,021 | |||||||||||
Diluted | 4,924 | 5,040 | 4,942 | 5,054 | |||||||||||
Cash dividends declared per common share | $ | 0.29 | $ | 0.26 | $ | 0.58 | $ | 0.52 |
Three Months Ended | Six Months Ended | ||||||||||||||
January 27, 2018 | January 28, 2017 | January 27, 2018 | January 28, 2017 | ||||||||||||
Net income (loss) | $ | (8,778 | ) | $ | 2,348 | $ | (6,384 | ) | $ | 4,670 | |||||
Available-for-sale investments: | |||||||||||||||
Change in net unrealized gains and losses, net of tax benefit (expense) of $1 and $(22) for the three and six months ended January 27, 2018, respectively, and $73 and $154 for the corresponding periods of fiscal 2017, respectively | (191 | ) | (276 | ) | (196 | ) | (397 | ) | |||||||
Net (gains) losses reclassified into earnings, net of tax (benefit) expense of $15 and $25 for the three and six months ended January 27, 2018, respectively, and $(11) and $(6) for the corresponding periods of fiscal 2017, respectively | (43 | ) | 19 | (66 | ) | 9 | |||||||||
(234 | ) | (257 | ) | (262 | ) | (388 | ) | ||||||||
Cash flow hedging instruments: | |||||||||||||||
Change in unrealized gains and losses, net of tax benefit (expense) of $(2) and $(3) for the three and six months ended January 27, 2018, respectively, and $1 and $4 for the corresponding periods of fiscal 2017, respectively | 28 | (1 | ) | 35 | (44 | ) | |||||||||
Net (gains) losses reclassified into earnings, net of tax (benefit) expense of $2 and $4 for the three and six months ended January 27, 2018, respectively, and $(2) and $(3) for the corresponding periods of fiscal 2017, respectively | (16 | ) | 25 | (27 | ) | 36 | |||||||||
12 | 24 | 8 | (8 | ) | |||||||||||
Net change in cumulative translation adjustment and actuarial gains and losses net of tax benefit (expense) of $(4) and $(6) for the three and six months ended January 27, 2018, respectively, and $0 and $(1) for the corresponding periods of fiscal 2017, respectively | 274 | (44 | ) | 291 | (71 | ) | |||||||||
Other comprehensive income (loss) | 52 | (277 | ) | 37 | (467 | ) | |||||||||
Comprehensive income (loss) | (8,726 | ) | 2,071 | (6,347 | ) | 4,203 | |||||||||
Comprehensive (income) loss attributable to noncontrolling interests | — | — | — | (8 | ) | ||||||||||
Comprehensive income (loss) attributable to Cisco Systems, Inc. | $ | (8,726 | ) | $ | 2,071 | $ | (6,347 | ) | $ | 4,195 |
Six Months Ended | |||||||
January 27, 2018 | January 28, 2017 | ||||||
Cash flows from operating activities: | |||||||
Net income (loss) | $ | (6,384 | ) | $ | 4,670 | ||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||
Depreciation, amortization, and other | 1,112 | 1,148 | |||||
Share-based compensation expense | 785 | 724 | |||||
Provision for receivables | (43 | ) | 4 | ||||
Deferred income taxes | 1,021 | (26 | ) | ||||
Excess tax benefits from share-based compensation | — | (101 | ) | ||||
(Gains) losses on divestitures, investments and other, net | (174 | ) | 79 | ||||
Change in operating assets and liabilities, net of effects of acquisitions and divestitures: | |||||||
Accounts receivable | 1,236 | 1,396 | |||||
Inventories | (276 | ) | (51 | ) | |||
Financing receivables | (156 | ) | (764 | ) | |||
Other assets | (15 | ) | 155 | ||||
Accounts payable | (338 | ) | (98 | ) | |||
Income taxes, net | 10,246 | (257 | ) | ||||
Accrued compensation | (189 | ) | (417 | ) | |||
Deferred revenue | 237 | 611 | |||||
Other liabilities | 88 | (571 | ) | ||||
Net cash provided by operating activities | 7,150 | 6,502 | |||||
Cash flows from investing activities: | |||||||
Purchases of investments | (13,954 | ) | (27,847 | ) | |||
Proceeds from sales of investments | 9,111 | 18,420 | |||||
Proceeds from maturities of investments | 7,365 | 5,245 | |||||
Acquisition of businesses, net of cash and cash equivalents acquired | (754 | ) | (251 | ) | |||
Proceeds from business divestitures | 27 | — | |||||
Purchases of investments in privately held companies | (89 | ) | (142 | ) | |||
Return of investments in privately held companies | 124 | 108 | |||||
Acquisition of property and equipment | (379 | ) | (526 | ) | |||
Proceeds from sales of property and equipment | 51 | 5 | |||||
Other | (7 | ) | 10 | ||||
Net cash provided by (used in) investing activities | 1,495 | (4,978 | ) | ||||
Cash flows from financing activities: | |||||||
Issuances of common stock | 302 | 386 | |||||
Repurchases of common stock—repurchase program | (5,457 | ) | (1,991 | ) | |||
Shares repurchased for tax withholdings on vesting of restricted stock units | (433 | ) | (432 | ) | |||
Short-term borrowings, original maturities of 90 days or less, net | 5,095 | 300 | |||||
Issuances of debt | 6,877 | 6,232 | |||||
Repayments of debt | (6,230 | ) | (1 | ) | |||
Excess tax benefits from share-based compensation | — | 101 | |||||
Dividends paid | (2,861 | ) | (2,612 | ) | |||
Other | (22 | ) | (240 | ) | |||
Net cash provided by (used in) financing activities | (2,729 | ) | 1,743 | ||||
Net increase (decrease) in cash and cash equivalents | 5,916 | 3,267 | |||||
Cash and cash equivalents, beginning of period | 11,708 | 7,631 | |||||
Cash and cash equivalents, end of period | $ | 17,624 | $ | 10,898 | |||
Supplemental cash flow information: | |||||||
Cash paid for interest | $ | 454 | $ | 419 | |||
Cash paid for income taxes, net | $ | 1,311 | $ | 1,529 |
Shares of Common Stock | Common Stock and Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total Cisco Shareholders’ Equity | Non-controlling Interests | Total Equity | ||||||||||||||||||||
BALANCE AT JULY 29, 2017 | 4,983 | $ | 45,253 | $ | 20,838 | $ | 46 | $ | 66,137 | $ | — | $ | 66,137 | |||||||||||||
Net income (loss) | (6,384 | ) | (6,384 | ) | (6,384 | ) | ||||||||||||||||||||
Other comprehensive income (loss) | 37 | 37 | 37 | |||||||||||||||||||||||
Issuance of common stock | 52 | 302 | 302 | 302 | ||||||||||||||||||||||
Repurchase of common stock | (154 | ) | (1,393 | ) | (4,238 | ) | (5,631 | ) | (5,631 | ) | ||||||||||||||||
Shares repurchased for tax withholdings on vesting of restricted stock units | (13 | ) | (433 | ) | (433 | ) | (433 | ) | ||||||||||||||||||
Cash dividends declared ($0.58 per common share) | (2,861 | ) | (2,861 | ) | (2,861 | ) | ||||||||||||||||||||
Cumulative effect of adoption of accounting standard | 9 | 9 | 9 | |||||||||||||||||||||||
Share-based compensation | 785 | 785 | 785 | |||||||||||||||||||||||
Purchase acquisitions and other | 21 | 21 | 21 | |||||||||||||||||||||||
BALANCE AT JANUARY 27, 2018 | 4,868 | $ | 44,535 | $ | 7,364 | $ | 83 | $ | 51,982 | $ | — | $ | 51,982 |
Shares of Common Stock | Common Stock and Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total Cisco Shareholders’ Equity | Non-controlling Interests | Total Equity | ||||||||||||||||||||
BALANCE AT JULY 30, 2016 | 5,029 | $ | 44,516 | $ | 19,396 | $ | (326 | ) | $ | 63,586 | $ | (1 | ) | $ | 63,585 | |||||||||||
Net income | 4,670 | 4,670 | 4,670 | |||||||||||||||||||||||
Other comprehensive income (loss) | (475 | ) | (475 | ) | 8 | (467 | ) | |||||||||||||||||||
Issuance of common stock | 57 | 386 | 386 | 386 | ||||||||||||||||||||||
Repurchase of common stock | (65 | ) | (575 | ) | (1,427 | ) | (2,002 | ) | (2,002 | ) | ||||||||||||||||
Shares repurchased for tax withholdings on vesting of restricted stock units | (14 | ) | (432 | ) | (432 | ) | (432 | ) | ||||||||||||||||||
Cash dividends declared ($0.52 per common share) | (2,612 | ) | (2,612 | ) | (2,612 | ) | ||||||||||||||||||||
Tax effects from employee stock incentive plans | (54 | ) | (54 | ) | (54 | ) | ||||||||||||||||||||
Share-based compensation | 738 | 738 | 738 | |||||||||||||||||||||||
Purchase acquisitions and other | 6 | 6 | 6 | |||||||||||||||||||||||
BALANCE AT JANUARY 28, 2017 | 5,007 | $ | 44,585 | $ | 20,027 | $ | (801 | ) | $ | 63,811 | $ | 7 | $ | 63,818 |
1. | Basis of Presentation |
2. | Recent Accounting Pronouncements |
Current Revenue Standard | New Revenue Standard | |||
Software arrangements: | ||||
Perpetual software licenses | Upfront | Upfront | ||
Term software licenses | Ratable | Upfront | ||
Security software licenses | Ratable | Ratable | ||
Enterprise license agreements | Ratable | Upfront | ||
Software support services | Ratable | Ratable | ||
Software-as-a-service | Ratable | Ratable | ||
Two-tier distribution | Sell-Through | Sell-In |
3. | Acquisitions and Divestitures |
Purchase Consideration | Net Tangible Assets Acquired (Liabilities Assumed) | Purchased Intangible Assets | Goodwill | ||||||||||||
Viptela | $ | 497 | $ | (18 | ) | $ | 180 | $ | 335 | ||||||
Springpath | 248 | (11 | ) | 160 | 99 | ||||||||||
Others (three in total) | 43 | (2 | ) | 21 | 24 | ||||||||||
Total | $ | 788 | $ | (31 | ) | $ | 361 | $ | 458 |
4. | Goodwill and Purchased Intangible Assets |
(a) | Goodwill |
Balance at | Balance at | ||||||||||||||
July 29, 2017 | Acquisitions | Other | January 27, 2018 | ||||||||||||
Americas | $ | 18,691 | $ | 337 | $ | 101 | $ | 19,129 | |||||||
EMEA | 7,057 | 93 | 42 | 7,192 | |||||||||||
APJC | 4,018 | 28 | 24 | 4,070 | |||||||||||
Total | $ | 29,766 | $ | 458 | $ | 167 | $ | 30,391 |
(b) | Purchased Intangible Assets |
FINITE LIVES | INDEFINITE LIVES | TOTAL | |||||||||||||||||||||||
TECHNOLOGY | CUSTOMER RELATIONSHIPS | OTHER | IPR&D | ||||||||||||||||||||||
Weighted- Average Useful Life (in Years) | Amount | Weighted- Average Useful Life (in Years) | Amount | Weighted- Average Useful Life (in Years) | Amount | Amount | Amount | ||||||||||||||||||
Viptela | 5.0 | $ | 144 | 6.0 | $ | 35 | 1.0 | $ | 1 | $ | — | $ | 180 | ||||||||||||
Springpath | 4.0 | 157 | 0.0 | — | 0.0 | — | 3 | 160 | |||||||||||||||||
Others (three in total) | 2.5 | 18 | 4.0 | 3 | 0.0 | — | — | 21 | |||||||||||||||||
Total | $ | 319 | $ | 38 | $ | 1 | $ | 3 | $ | 361 |
January 27, 2018 | Gross | Accumulated Amortization | Net | |||||||||
Purchased intangible assets with finite lives: | ||||||||||||
Technology | $ | 3,465 | $ | (1,659 | ) | $ | 1,806 | |||||
Customer relationships | 1,387 | (867 | ) | 520 | ||||||||
Other | 82 | (51 | ) | 31 | ||||||||
Total purchased intangible assets with finite lives | 4,934 | (2,577 | ) | 2,357 | ||||||||
In-process research and development, with indefinite lives | 117 | — | 117 | |||||||||
Total | $ | 5,051 | $ | (2,577 | ) | $ | 2,474 |
July 29, 2017 | Gross | Accumulated Amortization | Net | |||||||||
Purchased intangible assets with finite lives: | ||||||||||||
Technology | $ | 3,182 | $ | (1,386 | ) | $ | 1,796 | |||||
Customer relationships | 1,353 | (765 | ) | 588 | ||||||||
Other | 82 | (38 | ) | 44 | ||||||||
Total purchased intangible assets with finite lives | 4,617 | (2,189 | ) | 2,428 | ||||||||
In-process research and development, with indefinite lives | 111 | — | 111 | |||||||||
Total | $ | 4,728 | $ | (2,189 | ) | $ | 2,539 |
Three Months Ended | Six Months Ended | ||||||||||||||
January 27, 2018 | January 28, 2017 | January 27, 2018 | January 28, 2017 | ||||||||||||
Amortization of purchased intangible assets: | |||||||||||||||
Cost of sales | $ | 160 | $ | 124 | $ | 314 | $ | 253 | |||||||
Operating expenses | |||||||||||||||
Amortization of purchased intangible assets | 60 | 64 | 121 | 142 | |||||||||||
Restructuring and other charges | — | — | — | 38 | |||||||||||
Total | $ | 220 | $ | 188 | $ | 435 | $ | 433 |
Fiscal Year | Amount | ||
2018 (remaining six months) | $ | 431 | |
2019 | 781 | ||
2020 | 564 | ||
2021 | 364 | ||
2022 | 145 | ||
Thereafter | 72 | ||
Total | $ | 2,357 |
5. | Restructuring and Other Charges |
FISCAL 2017 PLAN | ||||||||||||
Employee Severance | Other | Total | ||||||||||
Liability as of July 29, 2017 | $ | 74 | $ | 43 | $ | 117 | ||||||
Charges | 223 | 27 | 250 | |||||||||
Cash payments | (213 | ) | (27 | ) | (240 | ) | ||||||
Non-cash items | 3 | (18 | ) | (15 | ) | |||||||
Liability as of January 27, 2018 | $ | 87 | $ | 25 | $ | 112 |
FISCAL 2017 AND PRIOR PLANS | ||||||||||||
Employee Severance | Other | Total | ||||||||||
Liability as of July 30, 2016 | $ | 21 | $ | 24 | $ | 45 | ||||||
Charges | 452 | 92 | 544 | |||||||||
Cash payments | (381 | ) | (7 | ) | (388 | ) | ||||||
Non-cash items | (6 | ) | (67 | ) | (73 | ) | ||||||
Liability as of January 28, 2017 | $ | 86 | $ | 42 | $ | 128 |
6. | Balance Sheet Details |
January 27, 2018 | July 29, 2017 | |||||||
Inventories: | ||||||||
Raw materials | $ | 385 | $ | 289 | ||||
Work in Process | — | 1 | ||||||
Finished goods: | ||||||||
Distributor inventory and deferred cost of sales | 465 | 451 | ||||||
Manufactured finished goods | 727 | 552 | ||||||
Total finished goods | 1,192 | 1,003 | ||||||
Service-related spares | 292 | 300 | ||||||
Demonstration systems | 27 | 23 | ||||||
Total | $ | 1,896 | $ | 1,616 |
Property and equipment, net: | ||||||||
Gross property and equipment: | ||||||||
Land, buildings, and building and leasehold improvements | $ | 4,790 | $ | 4,926 | ||||
Computer equipment and related software | 1,207 | 1,258 | ||||||
Production, engineering, and other equipment | 5,702 | 5,707 | ||||||
Operating lease assets | 364 | 356 | ||||||
Furniture and fixtures | 375 | 572 | ||||||
Total gross property and equipment | 12,438 | 12,819 | ||||||
Less: accumulated depreciation and amortization | (9,325 | ) | (9,497 | ) | ||||
Total | $ | 3,113 | $ | 3,322 |
Deferred revenue: | ||||||||
Service | $ | 10,963 | $ | 11,302 | ||||
Product: | ||||||||
Deferred revenue related to recurring software and subscription offers | 5,451 | 4,971 | ||||||
Other product deferred revenue | 2,374 | 2,221 | ||||||
Total product deferred revenue | 7,825 | 7,192 | ||||||
Total | $ | 18,788 | $ | 18,494 | ||||
Reported as: | ||||||||
Current | $ | 11,102 | $ | 10,821 | ||||
Noncurrent | 7,686 | 7,673 | ||||||
Total | $ | 18,788 | $ | 18,494 |
7. | Financing Receivables and Operating Leases |
(a) | Financing Receivables |
January 27, 2018 | Lease Receivables | Loan Receivables | Financed Service Contracts | Total | |||||||||||
Gross | $ | 2,762 | $ | 4,846 | $ | 2,479 | $ | 10,087 | |||||||
Residual value | 168 | — | — | 168 | |||||||||||
Unearned income | (145 | ) | — | — | (145 | ) | |||||||||
Allowance for credit loss | (165 | ) | (94 | ) | (13 | ) | (272 | ) | |||||||
Total, net | $ | 2,620 | $ | 4,752 | $ | 2,466 | $ | 9,838 | |||||||
Reported as: | |||||||||||||||
Current | $ | 1,222 | $ | 2,258 | $ | 1,445 | $ | 4,925 | |||||||
Noncurrent | 1,398 | 2,494 | 1,021 | 4,913 | |||||||||||
Total, net | $ | 2,620 | $ | 4,752 | $ | 2,466 | $ | 9,838 |
July 29, 2017 | Lease Receivables | Loan Receivables | Financed Service Contracts | Total | |||||||||||
Gross | $ | 2,784 | $ | 4,560 | $ | 2,517 | $ | 9,861 | |||||||
Residual value | 173 | — | — | 173 | |||||||||||
Unearned income | (145 | ) | — | — | (145 | ) | |||||||||
Allowance for credit loss | (162 | ) | (103 | ) | (30 | ) | (295 | ) | |||||||
Total, net | $ | 2,650 | $ | 4,457 | $ | 2,487 | $ | 9,594 | |||||||
Reported as: | |||||||||||||||
Current | $ | 1,301 | $ | 2,104 | $ | 1,451 | $ | 4,856 | |||||||
Noncurrent | 1,349 | 2,353 | 1,036 | 4,738 | |||||||||||
Total, net | $ | 2,650 | $ | 4,457 | $ | 2,487 | $ | 9,594 |
Fiscal Year | Amount | ||
2018 (remaining six months) | $ | 707 | |
2019 | 1,054 | ||
2020 | 602 | ||
2021 | 292 | ||
2022 | 98 | ||
Thereafter | 9 | ||
Total | $ | 2,762 |
(b) | Credit Quality of Financing Receivables |
INTERNAL CREDIT RISK RATING | |||||||||||||||
January 27, 2018 | 1 to 4 | 5 to 6 | 7 and Higher | Total | |||||||||||
Lease receivables | $ | 1,322 | $ | 1,244 | $ | 51 | $ | 2,617 | |||||||
Loan receivables | 3,054 | 1,716 | 76 | 4,846 | |||||||||||
Financed service contracts | 1,572 | 895 | 12 | 2,479 | |||||||||||
Total | $ | 5,948 | $ | 3,855 | $ | 139 | $ | 9,942 |
INTERNAL CREDIT RISK RATING | |||||||||||||||
July 29, 2017 | 1 to 4 | 5 to 6 | 7 and Higher | Total | |||||||||||
Lease receivables | $ | 1,408 | $ | 1,181 | $ | 50 | $ | 2,639 | |||||||
Loan receivables | 2,865 | 1,516 | 179 | 4,560 | |||||||||||
Financed service contracts | 1,593 | 902 | 22 | 2,517 | |||||||||||
Total | $ | 5,866 | $ | 3,599 | $ | 251 | $ | 9,716 |
DAYS PAST DUE (INCLUDES BILLED AND UNBILLED) | |||||||||||||||||||||||||||||||
January 27, 2018 | 31-60 | 61-90 | 91+ | Total Past Due | Current | Total | Nonaccrual Financing Receivables | Impaired Financing Receivables | |||||||||||||||||||||||
Lease receivables | $ | 98 | $ | 96 | $ | 278 | $ | 472 | $ | 2,145 | $ | 2,617 | $ | 19 | $ | 19 | |||||||||||||||
Loan receivables | 66 | 124 | 151 | 341 | 4,505 | 4,846 | 45 | 45 | |||||||||||||||||||||||
Financed service contracts | 54 | 85 | 414 | 553 | 1,926 | 2,479 | 2 | 2 | |||||||||||||||||||||||
Total | $ | 218 | $ | 305 | $ | 843 | $ | 1,366 | $ | 8,576 | $ | 9,942 | $ | 66 | $ | 66 |
DAYS PAST DUE (INCLUDES BILLED AND UNBILLED) | |||||||||||||||||||||||||||||||
July 29, 2017 | 31-60 | 61-90 | 91+ | Total Past Due | Current | Total | Nonaccrual Financing Receivables | Impaired Financing Receivables | |||||||||||||||||||||||
Lease receivables | $ | 160 | $ | 60 | $ | 216 | $ | 436 | $ | 2,203 | $ | 2,639 | $ | 14 | $ | 14 | |||||||||||||||
Loan receivables | 230 | 48 | 259 | 537 | 4,023 | 4,560 | 43 | 43 | |||||||||||||||||||||||
Financed service contracts | 160 | 77 | 523 | 760 | 1,757 | 2,517 | 18 | 2 | |||||||||||||||||||||||
Total | $ | 550 | $ | 185 | $ | 998 | $ | 1,733 | $ | 7,983 | $ | 9,716 | $ | 75 | $ | 59 |
(c) | Allowance for Credit Loss Rollforward |
Three months ended January 27, 2018 | CREDIT LOSS ALLOWANCES | ||||||||||||||
Lease Receivables | Loan Receivables | Financed Service Contracts | Total | ||||||||||||
Allowance for credit loss as of October 28, 2017 | $ | 160 | $ | 106 | $ | 23 | $ | 289 | |||||||
Provisions | 3 | (13 | ) | (10 | ) | (20 | ) | ||||||||
Foreign exchange and other | 2 | 1 | — | 3 | |||||||||||
Allowance for credit loss as of January 27, 2018 | $ | 165 | $ | 94 | $ | 13 | $ | 272 |
Six months ended January 27, 2018 | CREDIT LOSS ALLOWANCES | ||||||||||||||
Lease Receivables | Loan Receivables | Financed Service Contracts | Total | ||||||||||||
Allowance for credit loss as of July 29, 2017 | $ | 162 | $ | 103 | $ | 30 | $ | 295 | |||||||
Provisions | 1 | (11 | ) | (16 | ) | (26 | ) | ||||||||
Foreign exchange and other | 2 | 2 | (1 | ) | 3 | ||||||||||
Allowance for credit loss as of January 27, 2018 | $ | 165 | $ | 94 | $ | 13 | $ | 272 |
Three months ended January 28, 2017 | CREDIT LOSS ALLOWANCES | ||||||||||||||
Lease Receivables | Loan Receivables | Financed Service Contracts | Total | ||||||||||||
Allowance for credit loss as of October 29, 2016 | $ | 227 | $ | 111 | $ | 48 | $ | 386 | |||||||
Provisions | 2 | — | (1 | ) | 1 | ||||||||||
Recoveries (write-offs), net | (2 | ) | (4 | ) | — | (6 | ) | ||||||||
Foreign exchange and other | (2 | ) | (1 | ) | — | (3 | ) | ||||||||
Allowance for credit loss as of January 28, 2017 | $ | 225 | $ | 106 | $ | 47 | $ | 378 |
Six months ended January 28, 2017 | CREDIT LOSS ALLOWANCES | ||||||||||||||
Lease Receivables | Loan Receivables | Financed Service Contracts | Total | ||||||||||||
Allowance for credit loss as of July 30, 2016 | $ | 230 | $ | 97 | $ | 48 | $ | 375 | |||||||
Provisions | (2 | ) | 12 | (1 | ) | 9 | |||||||||
Recoveries (write-offs), net | (2 | ) | (4 | ) | — | (6 | ) | ||||||||
Foreign exchange and other | (1 | ) | 1 | — | — | ||||||||||
Allowance for credit loss as of January 28, 2017 | $ | 225 | $ | 106 | $ | 47 | $ | 378 |
(d) | Operating Leases |
January 27, 2018 | July 29, 2017 | ||||||
Operating lease assets | $ | 364 | $ | 356 | |||
Accumulated depreciation | (232 | ) | (212 | ) | |||
Operating lease assets, net | $ | 132 | $ | 144 |
Fiscal Year | Amount | ||
2018 (remaining six months) | $ | 103 | |
2019 | 137 | ||
2020 | 68 | ||
2021 | 15 | ||
Thereafter | 2 | ||
Total | $ | 325 |
8. | Investments |
(a) | Summary of Available-for-Sale Investments |
January 27, 2018 | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||
Fixed income securities: | |||||||||||||||
U.S. government securities | $ | 17,506 | $ | — | $ | (140 | ) | $ | 17,366 | ||||||
U.S. government agency securities | 1,722 | — | (10 | ) | 1,712 | ||||||||||
Non-U.S. government and agency securities | 340 | — | (1 | ) | 339 | ||||||||||
Corporate debt securities | 31,508 | 80 | (233 | ) | 31,355 | ||||||||||
U.S. agency mortgage-backed securities | 2,106 | — | (49 | ) | 2,057 | ||||||||||
Commercial paper | 1,414 | — | — | 1,414 | |||||||||||
Certificates of deposit | 196 | — | — | 196 | |||||||||||
Total fixed income securities | 54,792 | 80 | (433 | ) | 54,439 | ||||||||||
Publicly traded equity securities | 924 | 697 | (1 | ) | 1,620 | ||||||||||
Total (1) | $ | 55,716 | $ | 777 | $ | (434 | ) | $ | 56,059 |
July 29, 2017 | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||
Fixed income securities: | |||||||||||||||
U.S. government securities | $ | 19,880 | $ | 3 | $ | (60 | ) | $ | 19,823 | ||||||
U.S. government agency securities | 2,057 | — | (5 | ) | 2,052 | ||||||||||
Non-U.S. government and agency securities | 389 | — | (1 | ) | 388 | ||||||||||
Corporate debt securities | 31,626 | 202 | (93 | ) | 31,735 | ||||||||||
U.S. agency mortgage-backed securities | 2,037 | 3 | (17 | ) | 2,023 | ||||||||||
Commercial paper | 996 | — | — | 996 | |||||||||||
Certificates of deposit | 60 | — | — | 60 | |||||||||||
Total fixed income securities | 57,045 | 208 | (176 | ) | 57,077 | ||||||||||
Publicly traded equity securities | 1,180 | 554 | (27 | ) | 1,707 | ||||||||||
Total (1) | $ | 58,225 | $ | 762 | $ | (203 | ) | $ | 58,784 |
(b) | Gains and Losses on Available-for-Sale Investments |
Three Months Ended | Six Months Ended | ||||||||||||||
January 27, 2018 | January 28, 2017 | January 27, 2018 | January 28, 2017 | ||||||||||||
Gross realized gains | $ | 165 | $ | 18 | $ | 232 | $ | 48 | |||||||
Gross realized losses | (107 | ) | (48 | ) | (141 | ) | (63 | ) | |||||||
Total | $ | 58 | $ | (30 | ) | $ | 91 | $ | (15 | ) |
Three Months Ended | Six Months Ended | ||||||||||||||
January 27, 2018 | January 28, 2017 | January 27, 2018 | January 28, 2017 | ||||||||||||
Net gains (losses) on investments in publicly traded equity securities | $ | 154 | $ | 4 | $ | 183 | $ | 9 | |||||||
Net gains (losses) on investments in fixed income securities | (96 | ) | (34 | ) | (92 | ) | (24 | ) | |||||||
Total | $ | 58 | $ | (30 | ) | $ | 91 | $ | (15 | ) |
UNREALIZED LOSSES LESS THAN 12 MONTHS | UNREALIZED LOSSES 12 MONTHS OR GREATER | TOTAL | |||||||||||||||||||||
January 27, 2018 | Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | |||||||||||||||||
Fixed income securities: | |||||||||||||||||||||||
U.S. government securities | $ | 11,553 | $ | (96 | ) | $ | 5,804 | $ | (44 | ) | $ | 17,357 | $ | (140 | ) | ||||||||
U.S. government agency securities | 1,152 | (5 | ) | 559 | (5 | ) | 1,711 | (10 | ) | ||||||||||||||
Non-U.S. government and agency securities | 136 | — | 203 | (1 | ) | 339 | (1 | ) | |||||||||||||||
Corporate debt securities | 16,003 | (146 | ) | 4,287 | (87 | ) | 20,290 | (233 | ) | ||||||||||||||
U.S. agency mortgage-backed securities | 1,161 | (19 | ) | 876 | (30 | ) | 2,037 | (49 | ) | ||||||||||||||
Total fixed income securities | 30,005 | (266 | ) | 11,729 | (167 | ) | 41,734 | (433 | ) | ||||||||||||||
Publicly traded equity securities | 10 | (1 | ) | — | — | 10 | (1 | ) | |||||||||||||||
Total | $ | 30,015 | $ | (267 | ) | $ | 11,729 | $ | (167 | ) | $ | 41,744 | $ | (434 | ) |
UNREALIZED LOSSES LESS THAN 12 MONTHS | UNREALIZED LOSSES 12 MONTHS OR GREATER | TOTAL | |||||||||||||||||||||
July 29, 2017 | Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | |||||||||||||||||
Fixed income securities: | |||||||||||||||||||||||
U.S. government securities | $ | 14,962 | $ | (55 | ) | $ | 771 | $ | (5 | ) | $ | 15,733 | $ | (60 | ) | ||||||||
U.S. government agency securities | 1,791 | (4 | ) | 130 | (1 | ) | 1,921 | (5 | ) | ||||||||||||||
Non-U.S. government and agency securities | 368 | (1 | ) | — | — | 368 | (1 | ) | |||||||||||||||
Corporate debt securities | 9,487 | (92 | ) | 101 | (1 | ) | 9,588 | (93 | ) | ||||||||||||||
U.S. agency mortgage-backed securities | 1,485 | (16 | ) | 38 | (1 | ) | 1,523 | (17 | ) | ||||||||||||||
Total fixed income securities | 28,093 | (168 | ) | 1,040 | (8 | ) | 29,133 | (176 | ) | ||||||||||||||
Publicly traded equity securities | 122 | (27 | ) | — | — | 122 | (27 | ) | |||||||||||||||
Total | $ | 28,215 | $ | (195 | ) | $ | 1,040 | $ | (8 | ) | $ | 29,255 | $ | (203 | ) |
(c) | Maturities of Fixed Income Securities |
Amortized Cost | Fair Value | ||||||
Less than 1 year | $ | 15,881 | $ | 15,847 | |||
Due in 1 to 2 years | 12,267 | 12,188 | |||||
Due in 2 to 5 years | 22,095 | 21,926 | |||||
Due after 5 years | 2,443 | 2,421 | |||||
Mortgage-backed securities with no single maturity | 2,106 | 2,057 | |||||
Total | $ | 54,792 | $ | 54,439 |
(d) | Securities Lending |
(e) | Investments in Privately Held Companies |
January 27, 2018 | July 29, 2017 | ||||||
Equity method investments | $ | 121 | $ | 124 | |||
Cost method investments | 861 | 859 | |||||
Total | $ | 982 | $ | 983 |
9. | Fair Value |
(a) | Fair Value Hierarchy |
(b) | Assets and Liabilities Measured at Fair Value on a Recurring Basis |
JANUARY 27, 2018 FAIR VALUE MEASUREMENTS | JULY 29, 2017 FAIR VALUE MEASUREMENTS | ||||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total Balance | Level 1 | Level 2 | Level 3 | Total Balance | ||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||||
Cash equivalents: | |||||||||||||||||||||||||||||||
Money market funds | $ | 15,537 | $ | — | $ | — | $ | 15,537 | $ | 9,567 | $ | — | $ | — | $ | 9,567 | |||||||||||||||
U.S. government securities | — | — | — | — | — | 139 | — | 139 | |||||||||||||||||||||||
Commercial paper | — | 41 | — | 41 | — | 160 | — | 160 | |||||||||||||||||||||||
Certificates of deposit | — | — | — | — | — | 25 | — | 25 | |||||||||||||||||||||||
Available-for-sale investments: | |||||||||||||||||||||||||||||||
U.S. government securities | — | 17,366 | — | 17,366 | — | 19,823 | — | 19,823 | |||||||||||||||||||||||
U.S. government agency securities | — | 1,712 | — | 1,712 | — | 2,052 | — | 2,052 | |||||||||||||||||||||||
Non-U.S. government and agency securities | — | 339 | — | 339 | — | 388 | — | 388 | |||||||||||||||||||||||
Corporate debt securities | — | 31,355 | — | 31,355 | — | 31,735 | — | 31,735 | |||||||||||||||||||||||
U.S. agency mortgage-backed securities | — | 2,057 | — | 2,057 | — | 2,023 | — | 2,023 | |||||||||||||||||||||||
Commercial paper | — | 1,414 | — | 1,414 | — | 996 | — | 996 | |||||||||||||||||||||||
Certificates of deposit | — | 196 | — | 196 | — | 60 | — | 60 | |||||||||||||||||||||||
Publicly traded equity securities | 1,620 | — | — | 1,620 | 1,707 | — | — | 1,707 | |||||||||||||||||||||||
Derivative assets | — | 90 | — | 90 | — | 149 | — | 149 | |||||||||||||||||||||||
Total | $ | 17,157 | $ | 54,570 | $ | — | $ | 71,727 | $ | 11,274 | $ | 57,550 | $ | — | $ | 68,824 | |||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||||
Derivative liabilities | $ | — | $ | 76 | $ | — | $ | 76 | $ | — | $ | 4 | $ | — | $ | 4 | |||||||||||||||
Total | $ | — | $ | 76 | $ | — | $ | 76 | $ | — | $ | 4 | $ | — | $ | 4 |
(c) | Assets Measured at Fair Value on a Nonrecurring Basis |
TOTAL GAINS (LOSSES) FOR THE THREE MONTHS ENDED | TOTAL GAINS (LOSSES) FOR THE SIX MONTHS ENDED | ||||||||||||||
January 27, 2018 | January 28, 2017 | January 27, 2018 | January 28, 2017 | ||||||||||||
Investments in privately held companies (impaired) | $ | (18 | ) | $ | (64 | ) | $ | (39 | ) | $ | (111 | ) | |||
Purchased intangible assets (impaired) | — | — | — | (42 | ) | ||||||||||
Property held for sale—land and buildings | 20 | (24 | ) | 20 | (24 | ) | |||||||||
Total gains (losses) for nonrecurring measurements | $ | 2 | $ | (88 | ) | $ | (19 | ) | $ | (177 | ) |
10. | Borrowings |
(a) | Short-Term Debt |
January 27, 2018 | July 29, 2017 | ||||||||||||
Amount | Effective Rate | Amount | Effective Rate | ||||||||||
Current portion of long-term debt | $ | 4,749 | 1.78 | % | $ | 4,747 | 1.66 | % | |||||
Commercial paper | 8,992 | 1.51 | % | 3,245 | 1.16 | % | |||||||
Total short-term debt | $ | 13,741 | $ | 7,992 |
(b) | Long-Term Debt |
January 27, 2018 | July 29, 2017 | ||||||||||||
Maturity Date | Amount | Effective Rate | Amount | Effective Rate | |||||||||
Senior notes: | |||||||||||||
Floating-rate notes: | |||||||||||||
Three-month LIBOR plus 0.60% | February 21, 2018 | $ | 1,000 | 2.11% | $ | 1,000 | 1.84% | ||||||
Three-month LIBOR plus 0.31% | June 15, 2018 | 900 | 1.96% | 900 | 1.62% | ||||||||
Three-month LIBOR plus 0.50% | March 1, 2019 | 500 | 2.04% | 500 | 1.76% | ||||||||
Three-month LIBOR plus 0.34% | September 20, 2019 | 500 | 2.01% | 500 | 1.66% | ||||||||
Fixed-rate notes: | |||||||||||||
1.40% | February 28, 2018 | 1,250 | 1.47% | 1,250 | 1.47% | ||||||||
1.65% | June 15, 2018 | 1,600 | 1.72% | 1,600 | 1.72% | ||||||||
4.95% | February 15, 2019 | 2,000 | 5.04% | 2,000 | 4.96% | ||||||||
1.60% | February 28, 2019 | 1,000 | 1.67% | 1,000 | 1.67% | ||||||||
2.125% | March 1, 2019 | 1,750 | 2.18% | 1,750 | 1.84% | ||||||||
1.40% | September 20, 2019 | 1,500 | 1.48% | 1,500 | 1.48% | ||||||||
4.45% | January 15, 2020 | 2,500 | 4.11% | 2,500 | 3.84% | ||||||||
2.45% | June 15, 2020 | 1,500 | 2.54% | 1,500 | 2.54% | ||||||||
2.20% | February 28, 2021 | 2,500 | 2.30% | 2,500 | 2.30% | ||||||||
2.90% | March 4, 2021 | 500 | 2.34% | 500 | 2.00% | ||||||||
1.85% | September 20, 2021 | 2,000 | 1.90% | 2,000 | 1.90% | ||||||||
3.00% | June 15, 2022 | 500 | 2.60% | 500 | 2.26% | ||||||||
2.60% | February 28, 2023 | 500 | 2.68% | 500 | 2.68% | ||||||||
2.20% | September 20, 2023 | 750 | 2.27% | 750 | 2.27% | ||||||||
3.625% | March 4, 2024 | 1,000 | 2.46% | 1,000 | 2.12% | ||||||||
3.50% | June 15, 2025 | 500 | 2.76% | 500 | 2.43% | ||||||||
2.95% | February 28, 2026 | 750 | 3.01% | 750 | 3.01% | ||||||||
2.50% | September 20, 2026 | 1,500 | 2.55% | 1,500 | 2.55% | ||||||||
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% | ||||||||
Total | 30,500 | 30,500 | |||||||||||
Unaccreted discount/issuance costs | (125 | ) | (136 | ) | |||||||||
Hedge accounting fair value adjustments | (1 | ) | 108 | ||||||||||
Total | $ | 30,374 | $ | 30,472 | |||||||||
Reported as: | |||||||||||||
Current portion of long-term debt | $ | 4,749 | $ | 4,747 | |||||||||
Long-term debt | 25,625 | 25,725 | |||||||||||
Total | $ | 30,374 | $ | 30,472 |
Fiscal Year | Amount | ||
2018 (remaining six months) | $ | 4,750 | |
2019 | 5,250 | ||
2020 | 6,000 | ||
2021 | 3,000 | ||
2022 | 2,500 | ||
Thereafter | 9,000 | ||
Total | $ | 30,500 |
(c) | Credit Facilities |
11. | Derivative Instruments |
(a) | Summary of Derivative Instruments |
DERIVATIVE ASSETS | DERIVATIVE LIABILITIES | ||||||||||||||||||
Balance Sheet Line Item | January 27, 2018 | July 29, 2017 | Balance Sheet Line Item | January 27, 2018 | July 29, 2017 | ||||||||||||||
Derivatives designated as hedging instruments: | |||||||||||||||||||
Foreign currency derivatives | Other current assets | $ | 47 | $ | 46 | Other current liabilities | $ | — | $ | 1 | |||||||||
Equity derivatives | Other current assets | — | — | Other current liabilities | 49 | — | |||||||||||||
Interest rate derivatives | Other assets | 18 | 102 | Other long-term liabilities | 26 | — | |||||||||||||
Total | 65 | 148 | 75 | 1 | |||||||||||||||
Derivatives not designated as hedging instruments: | |||||||||||||||||||
Foreign currency derivatives | Other current assets | 24 | 1 | Other current liabilities | 1 | 3 | |||||||||||||
Total return swaps—deferred compensation | Other current assets | 1 | — | Other current liabilities | — | — | |||||||||||||
Total | 25 | 1 | 1 | 3 | |||||||||||||||
Total | $ | 90 | $ | 149 | $ | 76 | $ | 4 |
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) | |||||||||||||||||
January 27, 2018 | January 28, 2017 | Line Item in Statements of Operations | January 27, 2018 | January 28, 2017 | ||||||||||||||
Derivatives designated as cash flow hedging instruments: | ||||||||||||||||||
Foreign currency derivatives | $ | 30 | $ | (2 | ) | Operating expenses | $ | 14 | $ | (21 | ) | |||||||
Cost of sales—service | 4 | (6 | ) | |||||||||||||||
Total | $ | 30 | $ | (2 | ) | $ | 18 | $ | (27 | ) | ||||||||
Derivatives designated as net investment hedging instruments: | ||||||||||||||||||
Foreign currency derivatives | $ | (12 | ) | $ | (3 | ) | Other income (loss), net | $ | — | $ | — |
GAINS (LOSSES) RECOGNIZED IN OCI ON DERIVATIVES FOR THE SIX MONTHS ENDED (EFFECTIVE PORTION) | GAINS (LOSSES) RECLASSIFIED FROM AOCI INTO INCOME FOR THE SIX MONTHS ENDED (EFFECTIVE PORTION) | |||||||||||||||||
January 27, 2018 | January 28, 2017 | Line Item in Statements of Operations | January 27, 2018 | January 28, 2017 | ||||||||||||||
Derivatives designated as cash flow hedging instruments: | ||||||||||||||||||
Foreign currency derivatives | $ | 38 | $ | (48 | ) | Operating expenses | $ | 24 | $ | (30 | ) | |||||||
Cost of sales—service | 7 | (9 | ) | |||||||||||||||
Total | $ | 38 | $ | (48 | ) | $ | 31 | $ | (39 | ) | ||||||||
Derivatives designated as net investment hedging instruments: | ||||||||||||||||||
Foreign currency derivatives | $ | (17 | ) | $ | 6 | 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 | January 27, 2018 | January 28, 2017 | January 27, 2018 | January 28, 2017 | |||||||||||||
Interest rate derivatives | Interest expense | $ | (63 | ) | $ | (175 | ) | $ | 63 | $ | 172 | |||||||
Equity derivatives | Other income (loss), net | (35 | ) | — | 35 | — | ||||||||||||
Total | $ | (98 | ) | $ | (175 | ) | $ | 98 | $ | 172 |
GAINS (LOSSES) ON DERIVATIVE INSTRUMENTS FOR THE SIX MONTHS ENDED | GAINS (LOSSES) RELATED TO HEDGED ITEMS FOR THE SIX MONTHS ENDED | |||||||||||||||||
Derivatives Designated as Fair Value Hedging Instruments | Line Item in Statements of Operations | January 27, 2018 | January 28, 2017 | January 27, 2018 | January 28, 2017 | |||||||||||||
Interest rate derivatives | Interest expense | $ | (109 | ) | $ | (266 | ) | $ | 109 | $ | 262 | |||||||
Equity derivatives | Other income (loss), net | (49 | ) | — | 49 | — | ||||||||||||
Total | $ | (158 | ) | $ | (266 | ) | $ | 158 | $ | 262 |
GAINS (LOSSES) FOR THE THREE MONTHS ENDED | GAINS (LOSSES) FOR THE SIX MONTHS ENDED | |||||||||||||||||
Derivatives Not Designated as Hedging Instruments | Line Item in Statements of Operations | January 27, 2018 | January 28, 2017 | January 27, 2018 | January 28, 2017 | |||||||||||||
Foreign currency derivatives | Other income (loss), net | $ | 66 | $ | (20 | ) | $ | 73 | $ | (36 | ) | |||||||
Total return swaps—deferred compensation | Operating expenses | 41 | 26 | 57 | 23 | |||||||||||||
Equity derivatives | Other income (loss), net | 2 | 8 | 3 | 9 | |||||||||||||
Total | $ | 109 | $ | 14 | $ | 133 | $ | (4 | ) |
January 27, 2018 | July 29, 2017 | ||||||
Derivatives designated as hedging instruments: | |||||||
Foreign currency derivatives—cash flow hedges | $ | 792 | $ | 1,696 | |||
Interest rate derivatives | 6,750 | 6,750 | |||||
Net investment hedging instruments | 214 | 351 | |||||
Equity derivatives | 302 | — | |||||
Derivatives not designated as hedging instruments: | |||||||
Foreign currency derivatives | 3,072 | 2,258 | |||||
Total return swaps—deferred compensation | 590 | 535 | |||||
Total | $ | 11,720 | $ | 11,590 |
(b) | Offsetting of Derivative Instruments |
January 27, 2018 | |||||||||||||||||||||||
GROSS AMOUNTS OFFSET IN THE CONSOLIDATED BALANCE SHEETS | GROSS AMOUNTS NOT OFFSET IN THE CONSOLIDATED BALANCE SHEETS BUT WITH LEGAL RIGHTS TO OFFSET | ||||||||||||||||||||||
Gross Amounts Recognized | Gross Amounts Offset | Net Amounts Presented | Gross Derivative Amounts | Cash Collateral | Net Amount | ||||||||||||||||||
Derivatives assets | $ | 90 | $ | — | $ | 90 | $ | (32 | ) | $ | (18 | ) | $ | 40 | |||||||||
Derivatives liabilities | $ | 76 | $ | — | $ | 76 | $ | (32 | ) | $ | (18 | ) | $ | 26 |
July 29, 2017 | |||||||||||||||||||||||
GROSS AMOUNTS OFFSET IN THE CONSOLIDATED BALANCE SHEETS | GROSS AMOUNTS NOT OFFSET IN THE CONSOLIDATED BALANCE SHEETS BUT WITH LEGAL RIGHTS TO OFFSET | ||||||||||||||||||||||
Gross Amounts Recognized | Gross Amounts Offset | Net Amounts Presented | Gross Derivative Amounts | Cash Collateral | Net Amount | ||||||||||||||||||
Derivatives assets | $ | 149 | $ | — | $ | 149 | $ | (4 | ) | $ | (81 | ) | $ | 64 | |||||||||
Derivatives liabilities | $ | 4 | $ | — | $ | 4 | $ | (4 | ) | $ | — | $ | — |
(c) | Foreign Currency Exchange Risk |
(d) | Interest Rate Risk |
(e) | Equity Price Risk |
(f) | Hedge Effectiveness |
12. | Commitments and Contingencies |
(a) | Operating Leases |
Fiscal Year | Amount | ||
2018 (remaining six months) | $ | 220 | |
2019 | 323 | ||
2020 | 239 | ||
2021 | 147 | ||
2022 | 122 | ||
Thereafter | 178 | ||
Total | $ | 1,229 |
(b) | Purchase Commitments with Contract Manufacturers and Suppliers |
Commitments by Period | January 27, 2018 | July 29, 2017 | |||||
Less than 1 year | $ | 4,498 | $ | 4,620 | |||
1 to 3 years | 690 | 20 | |||||
3 to 5 years | 540 | — | |||||
Total | $ | 5,728 | $ | 4,640 |
(c) | Other Commitments |
Three Months Ended | Six Months Ended | ||||||||||||||
January 27, 2018 | January 28, 2017 | January 27, 2018 | January 28, 2017 | ||||||||||||
Compensation expense related to acquisitions | $ | 46 | $ | 73 | $ | 88 | $ | 137 |
(d) | Product Warranties |
Six Months Ended | |||||||
January 27, 2018 | January 28, 2017 | ||||||
Balance at beginning of period | $ | 407 | $ | 414 | |||
Provisions for warranty issued | 287 | 367 | |||||
Adjustments for pre-existing warranties | (21 | ) | (3 | ) | |||
Settlements | (292 | ) | (352 | ) | |||
Balance at end of period | $ | 381 | $ | 426 |
(e) | Financing and Other Guarantees |
January 27, 2018 | July 29, 2017 | ||||||
Maximum potential future payments relating to financing guarantees: | |||||||
Channel partner | $ | 288 | $ | 240 | |||
End user | 53 | 74 | |||||
Total | $ | 341 | $ | 314 | |||
Deferred revenue associated with financing guarantees: | |||||||
Channel partner | $ | (91 | ) | $ | (82 | ) | |
End user | (40 | ) | (52 | ) | |||
Total | $ | (131 | ) | $ | (134 | ) | |
Maximum potential future payments relating to financing guarantees, net of associated deferred revenue | $ | 210 | $ | 180 |
(f) | Supplier Component Remediation Liabilities |
(g) | Indemnifications |
(h) | Legal Proceedings |
13. | Shareholders’ Equity |
(a) | Cash Dividends on Shares of Common Stock |
(b) | Stock Repurchase Program |
Quarter Ended | Shares | Weighted-Average Price per Share | Amount | ||||||||
Fiscal 2018 | |||||||||||
January 27, 2018 | 103 | $ | 39.07 | $ | 4,011 | ||||||
October 28, 2017 | 51 | $ | 31.80 | $ | 1,620 | ||||||
Fiscal 2017 | |||||||||||
July 29, 2017 | 38 | $ | 31.61 | $ | 1,201 | ||||||
April 29, 2017 | 15 | $ | 33.71 | $ | 503 | ||||||
January 28, 2017 | 33 | $ | 30.33 | $ | 1,001 | ||||||
October 29, 2016 | 32 | $ | 31.12 | $ | 1,001 |
(c) | Restricted Stock Unit Withholdings |
14. | Employee Benefit Plans |
(a) | Employee Stock Incentive Plans |
(b) | Employee Stock Purchase Plan |
(c) | Summary of Share-Based Compensation Expense |
Three Months Ended | Six Months Ended | ||||||||||||||
January 27, 2018 | January 28, 2017 | January 27, 2018 | January 28, 2017 | ||||||||||||
Cost of sales—product | $ | 23 | $ | 19 | $ | 46 | $ | 40 | |||||||
Cost of sales—service | 31 | 34 | 65 | 67 | |||||||||||
Share-based compensation expense in cost of sales | 54 | 53 | 111 | 107 | |||||||||||
Research and development | 134 | 129 | 270 | 255 | |||||||||||
Sales and marketing | 135 | 125 | 270 | 265 | |||||||||||
General and administrative | 64 | 45 | 128 | 94 | |||||||||||
Restructuring and other charges | 12 | — | 18 | 3 | |||||||||||
Share-based compensation expense in operating expenses | 345 | 299 | 686 | 617 | |||||||||||
Total share-based compensation expense | $ | 399 | $ | 352 | $ | 797 | $ | 724 | |||||||
Income tax benefit for share-based compensation | $ | 96 | $ | 102 | $ | 271 | $ | 207 |
(d) | Share-Based Awards Available for Grant |
Share-Based Awards Available for Grant | ||
BALANCE AT JULY 30, 2016 | 242 | |
Restricted stock, stock units, and other share-based awards granted | (76 | ) |
Share-based awards canceled/forfeited/expired | 78 | |
Shares withheld for taxes and not issued | 28 | |
BALANCE AT JULY 29, 2017 | 272 | |
Restricted stock, stock units, and other share-based awards granted | (46 | ) |
Share-based awards canceled/forfeited/expired | 10 | |
Shares withheld for taxes and not issued | 18 | |
BALANCE AT JANUARY 27, 2018 | 254 |
(e) | Restricted Stock and Stock Unit Awards |
Restricted Stock/ Stock Units | Weighted-Average Grant Date Fair Value per Share | Aggregate Fair Value | ||||||||
UNVESTED BALANCE AT JULY 30, 2016 | 145 | $ | 24.26 | |||||||
Granted | 50 | 27.89 | ||||||||
Assumed from acquisitions | 15 | 32.21 | ||||||||
Vested | (54 | ) | 23.14 | $ | 1,701 | |||||
Canceled/forfeited | (15 | ) | 23.56 | |||||||
UNVESTED BALANCE AT JULY 29, 2017 | 141 | 26.94 | ||||||||
Granted | 31 | 33.30 | ||||||||
Assumed from acquisitions | 1 | 28.26 | ||||||||
Vested | (36 | ) | 25.21 | $ | 1,174 | |||||
Canceled/forfeited | (10 | ) | 27.83 | |||||||
UNVESTED BALANCE AT JANUARY 27, 2018 | 127 | $ | 28.90 |
(f) | Stock Option Awards |
STOCK OPTIONS OUTSTANDING | ||||||
Number Outstanding | Weighted-Average Exercise Price per Share | |||||
BALANCE AT JULY 30, 2016 | 73 | $ | 26.78 | |||
Assumed from acquisitions | 8 | 4.47 | ||||
Exercised | (14 | ) | 12.11 | |||
Canceled/forfeited/expired | (55 | ) | 31.83 | |||
BALANCE AT JULY 29, 2017 | 12 | 6.15 | ||||
Assumed from acquisitions | 3 | 8.20 | ||||
Exercised | (4 | ) | 5.28 | |||
BALANCE AT JANUARY 27, 2018 | 11 | $ | 7.03 |
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 – 35.00 | 11 | 6.5 | $ | 7.03 | $ | 380 | 5 | $ | 6.40 | $ | 194 |
(g) | Valuation of Employee Share-Based Awards |
RESTRICTED STOCK UNITS | PERFORMANCE BASED RESTRICTED STOCK UNITS | ||||||||||||||
Three Months Ended | January 27, 2018 | January 28, 2017 | January 27, 2018 | January 28, 2017 | |||||||||||
Number of shares granted (in millions) | 21 | 15 | — | 3 | |||||||||||
Grant date fair value per share | $ | 34.89 | $ | 27.68 | $ | 32.47 | $ | 27.90 | |||||||
Weighted-average assumptions/inputs: | |||||||||||||||
Expected dividend yield | 3.1 | % | 3.4 | % | 3.2 | % | 3.4 | % | |||||||
Range of risk-free interest rates | 0.0% – 2.1% | 0.0% – 1.5% | 1.0% – 1.8% | 0.3% – 1.5% | |||||||||||
Range of expected volatilities for index | N/A | N/A | 13.2% – 81.0% | N/A |
RESTRICTED STOCK UNITS | PERFORMANCE BASED RESTRICTED STOCK UNITS | ||||||||||||||
Six Months Ended | January 27, 2018 | January 28, 2017 | January 27, 2018 | January 28, 2017 | |||||||||||
Number of shares granted (in millions) | 28 | 23 | 3 | 6 | |||||||||||
Grant date fair value per share | $ | 33.50 | $ | 27.96 | $ | 31.31 | $ | 28.78 | |||||||
Weighted-average assumptions/inputs: | |||||||||||||||
Expected dividend yield | 3.2 | % | 3.4 | % | 3.6 | % | 3.4 | % | |||||||
Range of risk-free interest rates | 0.0% – 2.1% | 0.0% – 1.5% | 1.0% – 1.8% | 0.1% – 1.5% | |||||||||||
Range of expected volatilities for index | N/A | N/A | 13.2% – 81.0% | 16.7% – 46.8% |
15. | Comprehensive Income (Loss) |
Net Unrealized Gains (Losses) on Available-for-Sale Investments | Net Unrealized Gains (Losses) Cash Flow Hedging Instruments | Cumulative Translation Adjustment and Actuarial Gains (Losses) | Accumulated Other Comprehensive Income (Loss) | ||||||||||||
BALANCE AT JULY 29, 2017 | $ | 373 | $ | 32 | $ | (359 | ) | $ | 46 | ||||||
Other comprehensive income (loss) before reclassifications attributable to Cisco Systems, Inc. | (174 | ) | 38 | 292 | 156 | ||||||||||
(Gains) losses reclassified out of AOCI | (91 | ) | (31 | ) | 5 | (117 | ) | ||||||||
Tax benefit (expense) | 3 | 1 | (6 | ) | (2 | ) | |||||||||
BALANCE AT JANUARY 27, 2018 | $ | 111 | $ | 40 | $ | (68 | ) | $ | 83 |
Net Unrealized Gains (Losses) on Available-for-Sale Investments | Net Unrealized Gains (Losses) Cash Flow Hedging Instruments | Cumulative Translation Adjustment and Actuarial Gains (Losses) | Accumulated Other Comprehensive Income (Loss) | ||||||||||||
BALANCE AT JULY 30, 2016 | $ | 413 | $ | (59 | ) | $ | (680 | ) | $ | (326 | ) | ||||
Other comprehensive income (loss) before reclassifications attributable to Cisco Systems, Inc. | (559 | ) | (48 | ) | (69 | ) | (676 | ) | |||||||
(Gains) losses reclassified out of AOCI | 15 | 39 | (1 | ) | 53 | ||||||||||
Tax benefit (expense) | 148 | 1 | (1 | ) | 148 | ||||||||||
BALANCE AT JANUARY 28, 2017 | $ | 17 | $ | (67 | ) | $ | (751 | ) | $ | (801 | ) |
Three Months Ended | Six Months Ended | ||||||||||||||||
January 27, 2018 | January 28, 2017 | January 27, 2018 | January 28, 2017 | ||||||||||||||
Comprehensive Income Components | Income Before Taxes | Income Before Taxes | Line Item in Statements of Operations | ||||||||||||||
Net unrealized gains and losses on available-for-sale investments | $ | 58 | $ | (30 | ) | $ | 91 | $ | (15 | ) | Other income (loss), net | ||||||
Net unrealized gains and losses on cash flow hedging instruments | |||||||||||||||||
Foreign currency derivatives | 14 | (21 | ) | 24 | (30 | ) | Operating expenses | ||||||||||
Foreign currency derivatives | 4 | (6 | ) | 7 | (9 | ) | Cost of sales—service | ||||||||||
18 | (27 | ) | 31 | (39 | ) | ||||||||||||
Cumulative translation adjustment and actuarial gains and losses | (4 | ) | 1 | (5 | ) | 1 | Operating expenses | ||||||||||
Total amounts reclassified out of AOCI | $ | 72 | $ | (56 | ) | $ | 117 | $ | (53 | ) |
16. | Income Taxes |
Three Months Ended | Six Months Ended | ||||||||||||||
January 27, 2018 | January 28, 2017 | January 27, 2018 | January 28, 2017 | ||||||||||||
Income before provision for income taxes | $ | 3,232 | $ | 2,963 | $ | 6,194 | $ | 5,916 | |||||||
Provision for income taxes | $ | 12,010 | $ | 615 | $ | 12,578 | $ | 1,246 | |||||||
Effective tax rate | 371.6 | % | 20.8 | % | 203.1 | % | 21.1 | % |
17. | Segment Information and Major Customers |
(a) | Revenue and Gross Margin by Segment |
Three Months Ended | Six Months Ended | ||||||||||||||
January 27, 2018 | January 28, 2017 | January 27, 2018 | January 28, 2017 | ||||||||||||
Revenue: | |||||||||||||||
Americas | $ | 7,004 | $ | 6,660 | $ | 14,354 | $ | 14,103 | |||||||
EMEA | 3,062 | 3,065 | 5,971 | 6,078 | |||||||||||
APJC | 1,821 | 1,855 | 3,698 | 3,751 | |||||||||||
Total | $ | 11,887 | $ | 11,580 | $ | 24,023 | $ | 23,932 | |||||||
Gross margin: | |||||||||||||||
Americas | $ | 4,614 | $ | 4,288 | $ | 9,336 | $ | 9,121 | |||||||
EMEA | 1,977 | 2,012 | 3,816 | 4,025 | |||||||||||
APJC | 1,094 | 1,121 | 2,259 | 2,325 | |||||||||||
Segment total | 7,685 | 7,421 | 15,411 | 15,471 | |||||||||||
Unallocated corporate items | (187 | ) | (145 | ) | (486 | ) | (311 | ) | |||||||
Total | $ | 7,498 | $ | 7,276 | $ | 14,925 | $ | 15,160 |
(b) | Revenue for Groups of Similar Products and Services |
Three Months Ended | Six Months Ended | ||||||||||||||
January 27, 2018 | January 28, 2017 | January 27, 2018 | January 28, 2017 | ||||||||||||
Revenue: | |||||||||||||||
Infrastructure Platforms | $ | 6,694 | $ | 6,545 | $ | 13,664 | $ | 13,818 | |||||||
Applications | 1,184 | 1,116 | 2,387 | 2,252 | |||||||||||
Security | 558 | 528 | 1,143 | 1,068 | |||||||||||
Other Products | 273 | 302 | 569 | 655 | |||||||||||
Total Product | 8,709 | 8,491 | 17,763 | 17,793 | |||||||||||
Services | 3,178 | 3,089 | 6,260 | 6,139 | |||||||||||
Total | $ | 11,887 | $ | 11,580 | $ | 24,023 | $ | 23,932 |
(c) | Additional Segment Information |
January 27, 2018 | July 29, 2017 | ||||||
Property and equipment, net: | |||||||
United States | $ | 2,555 | $ | 2,711 | |||
International | 558 | 611 | |||||
Total | $ | 3,113 | $ | 3,322 |
18. | Net Income (Loss) per Share |
Three Months Ended | Six Months Ended | ||||||||||||||
January 27, 2018 | January 28, 2017 | January 27, 2018 | January 28, 2017 | ||||||||||||
Net income (loss) | $ | (8,778 | ) | $ | 2,348 | $ | (6,384 | ) | $ | 4,670 | |||||
Weighted-average shares—basic | 4,924 | 5,015 | 4,942 | 5,021 | |||||||||||
Effect of dilutive potential common shares | — | 25 | — | 33 | |||||||||||
Weighted-average shares—diluted | 4,924 | 5,040 | 4,942 | 5,054 | |||||||||||
Net income (loss) per share—basic | $ | (1.78 | ) | $ | 0.47 | $ | (1.29 | ) | $ | 0.93 | |||||
Net income (loss) per share—diluted | $ | (1.78 | ) | $ | 0.47 | $ | (1.29 | ) | $ | 0.92 |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||
January 27, 2018 | January 28, 2017 | Variance | January 27, 2018 | January 28, 2017 | Variance | ||||||||||||||||||
Revenue | $ | 11,887 | $ | 11,580 | 3 | % | $ | 24,023 | $ | 23,932 | — | % | |||||||||||
Gross margin percentage | 63.1 | % | 62.8 | % | 0.3 | pts | 62.1 | % | 63.3 | % | (1.2 | ) | pts | ||||||||||
Research and development | $ | 1,549 | $ | 1,508 | 3 | % | $ | 3,116 | $ | 3,053 | 2 | % | |||||||||||
Sales and marketing | $ | 2,235 | $ | 2,222 | 1 | % | $ | 4,569 | $ | 4,640 | (2 | )% | |||||||||||
General and administrative | $ | 483 | $ | 456 | 6 | % | $ | 1,040 | $ | 1,011 | 3 | % | |||||||||||
Total research and development, sales and marketing, general and administrative | $ | 4,267 | $ | 4,186 | 2 | % | $ | 8,725 | $ | 8,704 | — | % | |||||||||||
Total as a percentage of revenue | 35.9 | % | 36.1 | % | (0.2 | ) | pts | 36.3 | % | 36.4 | % | (0.1 | ) | pts | |||||||||
Amortization of purchased intangible assets included in operating expenses | $ | 60 | $ | 64 | (6 | )% | $ | 121 | $ | 142 | (15 | )% | |||||||||||
Restructuring and other charges included in operating expenses | $ | 98 | $ | 133 | (26 | )% | $ | 250 | $ | 544 | (54 | )% | |||||||||||
Operating income as a percentage of revenue | 25.9 | % | 25.0 | % | 0.9 | pts | 24.3 | % | 24.1 | % | 0.2 | pts | |||||||||||
Income tax percentage | 371.6 | % | 20.8 | % | 350.8 | pts | 203.1 | % | 21.1 | % | 182.0 | pts | |||||||||||
Net income (loss) | $ | (8,778 | ) | $ | 2,348 | (474 | )% | $ | (6,384 | ) | $ | 4,670 | (237 | )% | |||||||||
Net income (loss) as a percentage of revenue | (73.8 | )% | 20.3 | % | (94.1 | ) | pts | (26.6 | )% | 19.5 | % | (46.1 | ) | pts | |||||||||
Earnings (loss) per share | $ | (1.78 | ) | $ | 0.47 | (479 | )% | $ | (1.29 | ) | $ | 0.92 | (240 | )% |
January 27, 2018 | July 29, 2017 | |||||||
Cash and cash equivalents and investments | $ | 73,683 | $ | 70,492 | ||||
Deferred revenue | $ | 18,788 | $ | 18,494 | ||||
Inventories | $ | 1,896 | $ | 1,616 |
Six Months Ended | ||||||||
January 27, 2018 | January 28, 2017 | |||||||
Cash provided by operating activities | $ | 7,150 | $ | 6,502 | ||||
Repurchases of common stock—stock repurchase program | $ | 5,631 | $ | 2,002 | ||||
Dividends | $ | 2,861 | $ | 2,612 |
• | Persuasive evidence of an arrangement exists. Contracts, Internet commerce agreements, and customer purchase orders are generally used to determine the existence of an arrangement. |
• | Delivery has occurred. Shipping documents and customer acceptance, when applicable, are used to verify delivery. For software, delivery is considered to have occurred upon unrestricted license access and license term commencement, when applicable. |
• | The fee is fixed or determinable. We assess whether the fee is fixed or determinable based on the payment terms associated with the transaction and whether the sales price is subject to refund or adjustment. |
• | Collectibility is reasonably assured. We assess collectibility based primarily on the creditworthiness of the customer as determined by credit checks and analysis, as well as the customer’s payment history. |
January 27, 2018 | July 29, 2017 | |||||||
Allowance for doubtful accounts | $ | 181 | $ | 211 | ||||
Percentage of gross accounts receivable | 4.4 | % | 3.9 | % | ||||
Allowance for credit loss—lease receivables | $ | 165 | $ | 162 | ||||
Percentage of gross lease receivables(1) | 5.6 | % | 5.5 | % | ||||
Allowance for credit loss—loan receivables | $ | 94 | $ | 103 | ||||
Percentage of gross loan receivables | 1.9 | % | 2.3 | % |
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||
January 27, 2018 | January 28, 2017 | Variance in Dollars | Variance in Percent | January 27, 2018 | January 28, 2017 | Variance in Dollars | Variance in Percent | |||||||||||||||||||||||
Revenue: | ||||||||||||||||||||||||||||||
Product | $ | 8,709 | $ | 8,491 | $ | 218 | 3 | % | $ | 17,763 | $ | 17,793 | $ | (30 | ) | — | % | |||||||||||||
Percentage of revenue | 73.3 | % | 73.3 | % | 73.9 | % | 74.3 | % | ||||||||||||||||||||||
Service | 3,178 | 3,089 | 89 | 3 | % | 6,260 | 6,139 | 121 | 2 | % | ||||||||||||||||||||
Percentage of revenue | 26.7 | % | 26.7 | % | 26.1 | % | 25.7 | % | ||||||||||||||||||||||
Total | $ | 11,887 | $ | 11,580 | $ | 307 | 3 | % | $ | 24,023 | $ | 23,932 | $ | 91 | — | % |
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||
January 27, 2018 | January 28, 2017 | Variance in Dollars | Variance in Percent | January 27, 2018 | January 28, 2017 | Variance in Dollars | Variance in Percent | |||||||||||||||||||||||
Revenue: | ||||||||||||||||||||||||||||||
Americas | $ | 7,004 | $ | 6,660 | $ | 344 | 5 | % | $ | 14,354 | $ | 14,103 | $ | 251 | 2 | % | ||||||||||||||
Percentage of revenue | 58.9 | % | 57.5 | % | 59.7 | % | 58.9 | % | ||||||||||||||||||||||
EMEA | 3,062 | 3,065 | (3 | ) | — | % | 5,971 | 6,078 | (107 | ) | (2 | )% | ||||||||||||||||||
Percentage of revenue | 25.8 | % | 26.5 | % | 24.9 | % | 25.4 | % | ||||||||||||||||||||||
APJC | 1,821 | 1,855 | (34 | ) | (2 | )% | 3,698 | 3,751 | (53 | ) | (1 | )% | ||||||||||||||||||
Percentage of revenue | 15.3 | % | 16.0 | % | 15.4 | % | 15.7 | % | ||||||||||||||||||||||
Total | $ | 11,887 | $ | 11,580 | $ | 307 | 3 | % | $ | 24,023 | $ | 23,932 | $ | 91 | — | % |
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||
January 27, 2018 | January 28, 2017 | Variance in Dollars | Variance in Percent | January 27, 2018 | January 28, 2017 | Variance in Dollars | Variance in Percent | |||||||||||||||||||||||
Product revenue: | ||||||||||||||||||||||||||||||
Americas | $ | 4,988 | $ | 4,695 | $ | 293 | 6 | % | $ | 10,380 | $ | 10,175 | $ | 205 | 2 | % | ||||||||||||||
Percentage of product revenue | 57.3 | % | 55.3 | % | 58.4 | % | 57.2 | % | ||||||||||||||||||||||
EMEA | 2,375 | 2,392 | (17 | ) | (1 | )% | 4,614 | 4,756 | (142 | ) | (3 | )% | ||||||||||||||||||
Percentage of product revenue | 27.3 | % | 28.2 | % | 26.0 | % | 26.7 | % | ||||||||||||||||||||||
APJC | 1,346 | 1,404 | (58 | ) | (4 | )% | 2,769 | 2,862 | (93 | ) | (3 | )% | ||||||||||||||||||
Percentage of product revenue | 15.4 | % | 16.5 | % | 15.6 | % | 16.1 | % | ||||||||||||||||||||||
Total | $ | 8,709 | $ | 8,491 | $ | 218 | 3 | % | $ | 17,763 | $ | 17,793 | $ | (30 | ) | — | % |
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||
January 27, 2018 | January 28, 2017 | Variance in Dollars | Variance in Percent | January 27, 2018 | January 28, 2017 | Variance in Dollars | Variance in Percent | |||||||||||||||||||||||
Product revenue: | ||||||||||||||||||||||||||||||
Infrastructure Platforms | $ | 6,694 | $ | 6,545 | $ | 149 | 2 | % | $ | 13,664 | $ | 13,818 | $ | (154 | ) | (1 | )% | |||||||||||||
Applications | 1,184 | 1,116 | 68 | 6 | % | 2,387 | 2,252 | 135 | 6 | % | ||||||||||||||||||||
Security | 558 | 528 | 30 | 6 | % | 1,143 | 1,068 | 75 | 7 | % | ||||||||||||||||||||
Other Products | 273 | 302 | (29 | ) | (10 | )% | 569 | 655 | (86 | ) | (13 | )% | ||||||||||||||||||
Total | $ | 8,709 | $ | 8,491 | $ | 218 | 3 | % | $ | 17,763 | $ | 17,793 | $ | (30 | ) | — | % |
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||
January 27, 2018 | January 28, 2017 | Variance in Dollars | Variance in Percent | January 27, 2018 | January 28, 2017 | Variance in Dollars | Variance in Percent | |||||||||||||||||||||||
Service revenue: | ||||||||||||||||||||||||||||||
Americas | $ | 2,016 | $ | 1,965 | $ | 51 | 3 | % | $ | 3,974 | $ | 3,928 | $ | 46 | 1 | % | ||||||||||||||
Percentage of service revenue | 63.4 | % | 63.6 | % | 63.5 | % | 64.0 | % | ||||||||||||||||||||||
EMEA | 687 | 673 | 14 | 2 | % | 1,357 | 1,322 | 35 | 3 | % | ||||||||||||||||||||
Percentage of service revenue | 21.6 | % | 21.8 | % | 21.7 | % | 21.5 | % | ||||||||||||||||||||||
APJC | 475 | 451 | 24 | 5 | % | 929 | 889 | 40 | 4 | % | ||||||||||||||||||||
Percentage of service revenue | 15.0 | % | 14.6 | % | 14.8 | % | 14.5 | % | ||||||||||||||||||||||
Total | $ | 3,178 | $ | 3,089 | $ | 89 | 3 | % | $ | 6,260 | $ | 6,139 | $ | 121 | 2 | % |
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||
AMOUNT | PERCENTAGE | AMOUNT | PERCENTAGE | |||||||||||||||||||||||||
January 27, 2018 | January 28, 2017 | January 27, 2018 | January 28, 2017 | January 27, 2018 | January 28, 2017 | January 27, 2018 | January 28, 2017 | |||||||||||||||||||||
Gross margin: | ||||||||||||||||||||||||||||
Product | $ | 5,355 | $ | 5,186 | 61.5 | % | 61.1 | % | $ | 10,794 | $ | 11,085 | 60.8 | % | 62.3 | % | ||||||||||||
Service | 2,143 | 2,090 | 67.4 | % | 67.7 | % | 4,131 | 4,075 | 66.0 | % | 66.4 | % | ||||||||||||||||
Total | $ | 7,498 | $ | 7,276 | 63.1 | % | 62.8 | % | $ | 14,925 | $ | 15,160 | 62.1 | % | 63.3 | % |
Product Gross Margin Percentage | ||||||
Three Months Ended | Six Months Ended | |||||
Fiscal 2017 | 61.1 | % | 62.3 | % | ||
Product pricing | (1.3 | )% | (1.7 | )% | ||
Legal and indemnification settlements | — | % | (0.7 | )% | ||
Amortization of purchased intangibles | (0.4 | )% | (0.4 | )% | ||
Mix of products sold | 0.5 | % | 0.3 | % | ||
Productivity (1) | 1.7 | % | 0.9 | % | ||
Other | (0.1 | )% | 0.1 | % | ||
Fiscal 2018 | 61.5 | % | 60.8 | % |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||
AMOUNT | PERCENTAGE | AMOUNT | PERCENTAGE | ||||||||||||||||||||||||
January 27, 2018 | January 28, 2017 | January 27, 2018 | January 28, 2017 | January 27, 2018 | January 28, 2017 | January 27, 2018 | January 28, 2017 | ||||||||||||||||||||
Gross margin: | |||||||||||||||||||||||||||
Americas | $ | 4,614 | $ | 4,288 | 65.9 | % | 64.4 | % | $ | 9,336 | $ | 9,121 | 65.0 | % | 64.7 | % | |||||||||||
EMEA | 1,977 | 2,012 | 64.6 | % | 65.6 | % | 3,816 | 4,025 | 63.9 | % | 66.2 | % | |||||||||||||||
APJC | 1,094 | 1,121 | 60.1 | % | 60.4 | % | 2,259 | 2,325 | 61.1 | % | 62.0 | % | |||||||||||||||
Segment total | 7,685 | 7,421 | 64.7 | % | 64.1 | % | 15,411 | 15,471 | 64.2 | % | 64.6 | % | |||||||||||||||
Unallocated corporate items (1) | (187 | ) | (145 | ) | (486 | ) | (311 | ) | |||||||||||||||||||
Total | $ | 7,498 | $ | 7,276 | 63.1 | % | 62.8 | % | $ | 14,925 | $ | 15,160 | 62.1 | % | 63.3 | % | |||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||
January 27, 2018 | January 28, 2017 | Variance in Dollars | Variance in Percent | January 27, 2018 | January 28, 2017 | Variance in Dollars | Variance in Percent | ||||||||||||||||||||||
Research and development | $ | 1,549 | $ | 1,508 | $ | 41 | 3 | % | $ | 3,116 | $ | 3,053 | $ | 63 | 2 | % | |||||||||||||
Percentage of revenue | 13.0 | % | 13.0 | % | 13.0 | % | 12.8 | % | |||||||||||||||||||||
Sales and marketing | 2,235 | 2,222 | 13 | 1 | % | 4,569 | 4,640 | (71 | ) | (2 | )% | ||||||||||||||||||
Percentage of revenue | 18.8 | % | 19.2 | % | 19.0 | % | 19.4 | % | |||||||||||||||||||||
General and administrative | 483 | 456 | 27 | 6 | % | 1,040 | 1,011 | 29 | 3 | % | |||||||||||||||||||
Percentage of revenue | 4.1 | % | 3.9 | % | 4.3 | % | 4.2 | % | |||||||||||||||||||||
Total | $ | 4,267 | $ | 4,186 | $ | 81 | 2 | % | $ | 8,725 | $ | 8,704 | $ | 21 | — | % | |||||||||||||
Percentage of revenue | 35.9 | % | 36.1 | % | 36.3 | % | 36.4 | % |
Three Months Ended | Six Months Ended | |||||||||||||||
January 27, 2018 | January 28, 2017 | January 27, 2018 | January 28, 2017 | |||||||||||||
Cost of sales—product | $ | 23 | $ | 19 | $ | 46 | $ | 40 | ||||||||
Cost of sales—service | 31 | 34 | 65 | 67 | ||||||||||||
Share-based compensation expense in cost of sales | 54 | 53 | 111 | 107 | ||||||||||||
Research and development | 134 | 129 | 270 | 255 | ||||||||||||
Sales and marketing | 135 | 125 | 270 | 265 | ||||||||||||
General and administrative | 64 | 45 | 128 | 94 | ||||||||||||
Restructuring and other charges | 12 | — | 18 | 3 | ||||||||||||
Share-based compensation expense in operating expenses | 345 | 299 | 686 | 617 | ||||||||||||
Total share-based compensation expense | $ | 399 | $ | 352 | $ | 797 | $ | 724 |
Three Months Ended | Six Months Ended | |||||||||||||||
January 27, 2018 | January 28, 2017 | January 27, 2018 | January 28, 2017 | |||||||||||||
Amortization of purchased intangible assets: | ||||||||||||||||
Cost of sales | $ | 160 | $ | 124 | $ | 314 | $ | 253 | ||||||||
Operating expenses: | ||||||||||||||||
Amortization of purchased intangible assets | 60 | 64 | 121 | 142 | ||||||||||||
Restructuring and other charges | — | — | — | 38 | ||||||||||||
Total | $ | 220 | $ | 188 | $ | 435 | $ | 433 |
Three Months Ended | Six Months Ended | |||||||||||||||
January 27, 2018 | January 28, 2017 | January 27, 2018 | January 28, 2017 | |||||||||||||
Operating income | $ | 3,073 | $ | 2,893 | $ | 5,829 | $ | 5,770 | ||||||||
Operating income as a percentage of revenue | 25.9 | % | 25.0 | % | 24.3 | % | 24.1 | % |
Three Months Ended | Six Months Ended | |||||||||||||||||||||||
January 27, 2018 | January 28, 2017 | Variance in Dollars | January 27, 2018 | January 28, 2017 | Variance in Dollars | |||||||||||||||||||
Interest income | $ | 396 | $ | 329 | $ | 67 | $ | 775 | $ | 624 | $ | 151 | ||||||||||||
Interest expense | (247 | ) | (222 | ) | (25 | ) | (482 | ) | (420 | ) | (62 | ) | ||||||||||||
Interest income (expense), net | $ | 149 | $ | 107 | $ | 42 | $ | 293 | $ | 204 | $ | 89 |
Three Months Ended | Six Months Ended | |||||||||||||||||||||||
January 27, 2018 | January 28, 2017 | Variance in Dollars | January 27, 2018 | January 28, 2017 | Variance in Dollars | |||||||||||||||||||
Gains (losses) on investments, net: | ||||||||||||||||||||||||
Publicly traded equity securities | $ | 154 | $ | 4 | $ | 150 | $ | 183 | $ | 9 | $ | 174 | ||||||||||||
Fixed income securities | (96 | ) | (34 | ) | (62 | ) | (92 | ) | (24 | ) | (68 | ) | ||||||||||||
Total available-for-sale investments | 58 | (30 | ) | 88 | 91 | (15 | ) | 106 | ||||||||||||||||
Privately held companies | 2 | (3 | ) | 5 | 37 | (53 | ) | 90 | ||||||||||||||||
Net gains (losses) on investments | 60 | (33 | ) | 93 | 128 | (68 | ) | 196 | ||||||||||||||||
Other gains (losses), net | (50 | ) | (4 | ) | (46 | ) | (56 | ) | 10 | (66 | ) | |||||||||||||
Other income (loss), net | $ | 10 | $ | (37 | ) | $ | 47 | $ | 72 | $ | (58 | ) | $ | 130 |
January 27, 2018 | July 29, 2017 | Increase (Decrease) | |||||||||
Cash and cash equivalents | $ | 17,624 | $ | 11,708 | $ | 5,916 | |||||
Fixed income securities | 54,439 | 57,077 | (2,638 | ) | |||||||
Publicly traded equity securities | 1,620 | 1,707 | (87 | ) | |||||||
Total | $ | 73,683 | $ | 70,492 | $ | 3,191 |
Six Months Ended | |||||||
January 27, 2018 | January 28, 2017 | ||||||
Net cash provided by operating activities | $ | 7,150 | $ | 6,502 | |||
Acquisition of property and equipment | (379 | ) | (526 | ) | |||
Free cash flow | $ | 6,771 | $ | 5,976 |
DIVIDENDS | STOCK REPURCHASE PROGRAM | ||||||||||||||||||||||
Quarter Ended | Per Share | Amount | Shares | Weighted-Average Price per Share | Amount | TOTAL | |||||||||||||||||
Fiscal 2018 | |||||||||||||||||||||||
January 27, 2018 | $ | 0.29 | $ | 1,425 | 103 | $ | 39.07 | $ | 4,011 | $ | 5,436 | ||||||||||||
October 28, 2017 | $ | 0.29 | $ | 1,436 | 51 | $ | 31.80 | $ | 1,620 | $ | 3,056 | ||||||||||||
Fiscal 2017 | |||||||||||||||||||||||
July 29, 2017 | $ | 0.29 | $ | 1,448 | 38 | $ | 31.61 | $ | 1,201 | $ | 2,649 | ||||||||||||
April 29, 2017 | $ | 0.29 | $ | 1,451 | 15 | $ | 33.71 | $ | 503 | $ | 1,954 | ||||||||||||
January 28, 2017 | $ | 0.26 | $ | 1,304 | 33 | $ | 30.33 | $ | 1,001 | $ | 2,305 | ||||||||||||
October 29, 2016 | $ | 0.26 | $ | 1,308 | 32 | $ | 31.12 | $ | 1,001 | $ | 2,309 |
January 27, 2018 | July 29, 2017 | Increase (Decrease) | |||||||||
Accounts receivable, net | $ | 3,963 | $ | 5,146 | $ | (1,183 | ) |
January 27, 2018 | July 29, 2017 | Increase (Decrease) | |||||||||
Inventories | $ | 1,896 | $ | 1,616 | $ | 280 |
Commitments by Period | January 27, 2018 | July 29, 2017 | |||||
Less than 1 year | $ | 4,498 | $ | 4,620 | |||
1 to 3 years | 690 | 20 | |||||
3 to 5 years | 540 | — | |||||
Total | $ | 5,728 | $ | 4,640 |
January 27, 2018 | July 29, 2017 | Increase (Decrease) | |||||||||
Lease receivables, net | $ | 2,620 | $ | 2,650 | $ | (30 | ) | ||||
Loan receivables, net | 4,752 | 4,457 | 295 | ||||||||
Financed service contracts, net | 2,466 | 2,487 | (21 | ) | |||||||
Total, net | $ | 9,838 | $ | 9,594 | $ | 244 |
Maturity Date | January 27, 2018 | July 29, 2017 | |||||||
Senior notes: | |||||||||
Floating-rate notes: | |||||||||
Three-month LIBOR plus 0.60% | February 21, 2018 | $ | 1,000 | $ | 1,000 | ||||
Three-month LIBOR plus 0.31% | June 15, 2018 | 900 | 900 | ||||||
Three-month LIBOR plus 0.50% | March 1, 2019 | 500 | 500 | ||||||
Three-month LIBOR plus 0.34% | September 20, 2019 | 500 | 500 | ||||||
Fixed-rate notes: | |||||||||
1.40% | February 28, 2018 | 1,250 | 1,250 | ||||||
1.65% | June 15, 2018 | 1,600 | 1,600 | ||||||
4.95% | February 15, 2019 | 2,000 | 2,000 | ||||||
1.60% | February 28, 2019 | 1,000 | 1,000 | ||||||
2.125% | March 1, 2019 | 1,750 | 1,750 | ||||||
1.40% | September 20, 2019 | 1,500 | 1,500 | ||||||
4.45% | January 15, 2020 | 2,500 | 2,500 | ||||||
2.45% | June 15, 2020 | 1,500 | 1,500 | ||||||
2.20% | February 28, 2021 | 2,500 | 2,500 | ||||||
2.90% | March 4, 2021 | 500 | 500 | ||||||
1.85% | September 20, 2021 | 2,000 | 2,000 | ||||||
3.00% | June 15, 2022 | 500 | 500 | ||||||
2.60% | February 28, 2023 | 500 | 500 | ||||||
2.20% | September 20, 2023 | 750 | 750 | ||||||
3.625% | March 4, 2024 | 1,000 | 1,000 | ||||||
3.50% | June 15, 2025 | 500 | 500 | ||||||
2.95% | February 28, 2026 | 750 | 750 | ||||||
2.50% | September 20, 2026 | 1,500 | 1,500 | ||||||
5.90% | February 15, 2039 | 2,000 | 2,000 | ||||||
5.50% | January 15, 2040 | 2,000 | 2,000 | ||||||
Total | $ | 30,500 | $ | 30,500 |
January 27, 2018 | July 29, 2017 | Increase (Decrease) | |||||||||
Service | $ | 10,963 | $ | 11,302 | $ | (339 | ) | ||||
Product: | |||||||||||
Deferred revenue related to recurring software and subscription offers | 5,451 | 4,971 | 480 | ||||||||
Other product deferred revenue | 2,374 | 2,221 | 153 | ||||||||
Total product deferred revenue | 7,825 | 7,192 | 633 | ||||||||
Total | $ | 18,788 | $ | 18,494 | $ | 294 | |||||
Reported as: | |||||||||||
Current | $ | 11,102 | $ | 10,821 | $ | 281 | |||||
Noncurrent | 7,686 | 7,673 | 13 | ||||||||
Total | $ | 18,788 | $ | 18,494 | $ | 294 |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
VALUATION OF SECURITIES GIVEN AN X% DECREASE IN EACH STOCK’S PRICE | FAIR VALUE AS OF JANUARY 27, 2018 | VALUATION OF SECURITIES GIVEN AN X% INCREASE IN EACH STOCK’S PRICE | |||||||||||||||||||||||||
(30)% | (20)% | (10)% | 10% | 20% | 30% | ||||||||||||||||||||||
Publicly traded equity securities | $ | 888 | $ | 1,015 | $ | 1,142 | $ | 1,269 | $ | 1,396 | $ | 1,523 | $ | 1,650 |
VALUATION OF SECURITIES GIVEN AN X% DECREASE IN EACH STOCK’S PRICE | FAIR VALUE AS OF JULY 29, 2017 | VALUATION OF SECURITIES GIVEN AN X% INCREASE IN EACH STOCK’S PRICE | |||||||||||||||||||||||||
(30)% | (20)% | (10)% | 10% | 20% | 30% | ||||||||||||||||||||||
Publicly traded equity securities | $ | 1,195 | $ | 1,366 | $ | 1,536 | $ | 1,707 | $ | 1,878 | $ | 2,048 | $ | 2,219 |
January 27, 2018 | July 29, 2017 | ||||||||||||||
Notional Amount | Fair Value | Notional Amount | Fair Value | ||||||||||||
Forward contracts: | |||||||||||||||
Purchased | $ | 3,204 | $ | 64 | $ | 2,562 | $ | 39 | |||||||
Sold | $ | 506 | $ | — | $ | 729 | $ | (2 | ) | ||||||
Option contracts: | |||||||||||||||
Purchased | $ | 194 | $ | 6 | $ | 528 | $ | 7 | |||||||
Sold | $ | 174 | $ | — | $ | 486 | $ | (1 | ) |
Item 4. | Controls and Procedures |
Item 1. | Legal Proceedings |
Item 1A. | Risk Factors |
• | Fluctuations in demand for our products and services, especially with respect to service providers and Internet businesses, in part due to changes in the global economic environment |
• | Changes in sales and implementation cycles for our products and reduced visibility into our customers’ spending plans and associated revenue |
• | Our ability to maintain appropriate inventory levels and purchase commitments |
• | Price and product competition in the communications and networking industries, which can change rapidly due to technological innovation and different business models from various geographic regions |
• | The overall movement toward industry consolidation among both our competitors and our customers |
• | The introduction and market acceptance of new technologies and products, and our success in new and evolving markets, and in emerging technologies, as well as the adoption of new standards |
• | The transformation of our business to deliver more software and subscription offerings where revenue is recognized over time |
• | Variations in sales channels, product costs, mix of products sold, or mix of direct sales and indirect sales |
• | The timing, size, and mix of orders from customers |
• | Manufacturing and customer lead times |
• | Fluctuations in our gross margins, and the factors that contribute to such fluctuations, as described below |
• | The ability of our customers, channel partners, contract manufacturers and suppliers to obtain financing or to fund capital expenditures, especially during a period of global credit market disruption or in the event of customer, channel partner, contract manufacturer or supplier financial problems |
• | Actual events, circumstances, outcomes, and amounts differing from judgments, assumptions, and estimates used in determining the values of certain assets (including the amounts of related valuation allowances), liabilities, and other items reflected in our Consolidated Financial Statements |
• | How well we execute on our strategy and operating plans and the impact of changes in our business model that could result in significant restructuring charges |
• | Our ability to achieve targeted cost reductions |
• | Benefits anticipated from our investments in engineering, sales, service, and marketing |
• | Changes in tax laws or accounting rules, or interpretations thereof |
• | Reduced demand for our products as a result of continued constraints on IT-related capital spending by our customers, particularly service providers, and other customer markets as well |
• | Increased price competition for our products, not only from our competitors but also as a consequence of customers disposing of unutilized products |
• | Risk of excess and obsolete inventories |
• | Risk of supply constraints |
• | Risk of excess facilities and manufacturing capacity |
• | Higher overhead costs as a percentage of revenue and higher interest expense |
• | Changes in customer, geographic, or product mix, including mix of configurations within each product group |
• | Introduction of new products, including products with price-performance advantages, and new business models including the transformation of our business to deliver more software and subscription offerings |
• | Our ability to reduce production costs |
• | Entry into new markets or growth in lower margin markets, including markets with different pricing and cost structures, through acquisitions or internal development |
• | Sales discounts |
• | Increases in material, labor or other manufacturing-related costs, which could be significant especially during periods of supply constraints such as those impacting the market for memory components |
• | Excess inventory and inventory holding charges |
• | Obsolescence charges |
• | Changes in shipment volume |
• | The timing of revenue recognition and revenue deferrals |
• | Increased cost, loss of cost savings or dilution of savings due to changes in component pricing or charges incurred due to inventory holding periods if parts ordering does not correctly anticipate product demand or if the financial health of either contract manufacturers or suppliers deteriorates |
• | Lower than expected benefits from value engineering |
• | Increased price competition, including competitors from Asia, especially from China |
• | Changes in distribution channels |
• | Increased warranty costs |
• | Increased amortization of purchased intangible assets, especially from acquisitions |
• | How well we execute on our strategy and operating plans |
• | We compete with some of our channel partners, including through our direct sales, which may lead these channel partners to use other suppliers that do not directly sell their own products or otherwise compete with them |
• | Some of our channel partners may demand that we absorb a greater share of the risks that their customers may ask them to bear |
• | Some of our channel partners may have insufficient financial resources and may not be able to withstand changes and challenges in business conditions |
• | Revenue from indirect sales could suffer if our distributors’ financial condition or operations weaken |
• | The ability to sell successful business outcomes |
• | The ability to provide a broad range of networking and communications products and services |
• | Product performance |
• | Price |
• | The ability to introduce new products, including providing continuous new customer value and products with price-performance advantages |
• | The ability to reduce production costs |
• | The ability to provide value-added features such as security, reliability, and investment protection |
• | Conformance to standards |
• | Market presence |
• | The ability to provide financing |
• | Disruptive technology shifts and new business models |
• | Any financial problems of either contract manufacturers or component suppliers could either limit supply or increase costs |
• | Reservation of manufacturing capacity at our contract manufacturers by other companies, inside or outside of our industry, could either limit supply or increase costs |
• | Industry consolidation occurring within one or more component supplier markets, such as the semiconductor market, could either limit supply or increase costs |
• | New markets in which we participate may grow quickly, which may make it difficult to quickly obtain significant component capacity |
• | As we acquire companies and new technologies, we may be dependent, at least initially, on unfamiliar supply chains or relatively small supply partners |
• | We face competition for certain components that are supply-constrained, from existing competitors, and companies in other markets |
• | Difficulties in integrating the operations, systems, technologies, products, and personnel of the acquired companies, particularly companies with large and widespread operations and/or complex products |
• | Diversion of management’s attention from normal daily operations of the business and the challenges of managing larger and more widespread operations resulting from acquisitions |
• | Potential difficulties in completing projects associated with in-process research and development intangibles |
• | Difficulties in entering markets in which we have no or limited direct prior experience and where competitors in such markets have stronger market positions |
• | Initial dependence on unfamiliar supply chains or relatively small supply partners |
• | Insufficient revenue to offset increased expenses associated with acquisitions |
• | The potential loss of key employees, customers, distributors, vendors and other business partners of the companies we acquire following and continuing after announcement of acquisition plans |
• | Issue common stock that would dilute our current shareholders’ percentage ownership |
• | Use a substantial portion of our cash resources, or incur debt |
• | Significantly increase our interest expense, leverage and debt service requirements if we incur additional debt to pay for an acquisition |
• | Assume liabilities |
• | Record goodwill and intangible assets that are subject to impairment testing on a regular basis and potential periodic impairment charges |
• | Incur amortization expenses related to certain intangible assets |
• | Incur tax expenses related to the effect of acquisitions on our intercompany R&D cost sharing arrangement and legal structure |
• | Incur large and immediate write-offs and restructuring and other related expenses |
• | Become subject to intellectual property or other litigation |
• | Foreign currency exchange rates |
• | Political or social unrest |
• | Economic instability or weakness or natural disasters in a specific country or region, including the current economic challenges in China and global economic ramifications of Chinese economic difficulties; instability as a result of Brexit; environmental and trade protection measures and other legal and regulatory requirements, some of which may affect our ability to import our products, to export our products from, or sell our products in various countries |
• | Political considerations that affect service provider and government spending patterns |
• | Health or similar issues, such as a pandemic or epidemic |
• | Difficulties in staffing and managing international operations |
• | Adverse tax consequences, including imposition of withholding or other taxes on our global operations |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
(a) | None. |
(b) | None. |
(c) | Issuer Purchases of Equity Securities (in millions, except per-share amounts): |
Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs | |||||||||
October 29, 2017 to November 25, 2017 | 12 | $ | 35.06 | 12 | $ | 9,651 | |||||||
November 26, 2017 to December 23, 2017 | 30 | $ | 38.09 | 30 | $ | 8,508 | |||||||
December 24, 2017 to January 27, 2018 | 61 | $ | 40.36 | 61 | $ | 6,066 | |||||||
Total | 103 | $ | 39.07 | 103 |
Item 3. | Defaults Upon Senior Securities |
Item 4. | Mine Safety Disclosures |
Item 5. | Other Information |
Item 6. | Exhibits |
Exhibit Number | Exhibit Description | Incorporated by Reference | Filed Herewith | |||||||||
Form | File No. | Exhibit | Filing Date | |||||||||
10.1 | 8-K | 000-18225 | 10.1 | 12/12/2017 | ||||||||
10.2 | 8-K | 000-18225 | 10.2 | 12/12/2017 | ||||||||
31.1 | X | |||||||||||
31.2 | X | |||||||||||
32.1 | X | |||||||||||
32.2 | X | |||||||||||
101.INS | XBRL Instance Document | X | ||||||||||
101.SCH | XBRL Taxonomy Extension Schema Document | X | ||||||||||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | X | ||||||||||
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | X | ||||||||||
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | X | ||||||||||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | X |
Cisco Systems, Inc. | ||||||||
Date: | February 20, 2018 | By | /S/ Kelly A. Kramer | |||||
Kelly A. Kramer Executive Vice President and Chief Financial Officer (Principal Financial Officer and duly authorized signatory) |
/S/ Charles H. Robbins |
Charles H. Robbins |
Chairman and Chief Executive Officer |
(Principal Executive Officer) |
/S/ Kelly A. Kramer |
Kelly A. Kramer |
Executive Vice President and Chief Financial Officer (Principal Financial Officer) |
• | the Quarterly Report on Form 10-Q of the Company for the quarter ended January 27, 2018, as filed with the Securities and Exchange Commission (the “Report”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
• | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/S/ Charles H. Robbins |
Charles H. Robbins |
Chairman and Chief Executive Officer |
(Principal Executive Officer) |
• | the Quarterly Report on Form 10-Q of the Company for the quarter ended January 27, 2018, as filed with the Securities and Exchange Commission (the “Report”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
• | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/S/ Kelly A. Kramer |
Kelly A. Kramer |
Executive Vice President and Chief Financial Officer (Principal Financial Officer) |
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Document and Entity Information - shares |
6 Months Ended | |
---|---|---|
Jan. 27, 2018 |
Feb. 15, 2018 |
|
Document Documentand Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jan. 27, 2018 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2018 | |
Trading Symbol | CSCO | |
Entity Registrant Name | CISCO SYSTEMS, INC. | |
Entity Central Index Key | 0000858877 | |
Current Fiscal Year End Date | --07-28 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 4,817,517,410 |
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions |
Jan. 27, 2018 |
Jul. 29, 2017 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance for doubtful accounts | $ 181 | $ 211 |
Preferred stock, shares authorized (in shares) | 5,000,000 | 5,000,000 |
Preferred stock, issued (in shares) | 0 | 0 |
Preferred stock, outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 20,000,000,000 | 20,000,000,000 |
Common stock, shares issued (in shares) | 4,868,000,000 | 4,983,000,000 |
Common stock, shares outstanding (in shares) | 4,868,000,000 | 4,983,000,000 |
Consolidated Statements of Operations - USD ($) shares in Millions, $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jan. 27, 2018 |
Jan. 28, 2017 |
Jan. 27, 2018 |
Jan. 28, 2017 |
|
REVENUE: | ||||
Product | $ 8,709 | $ 8,491 | $ 17,763 | $ 17,793 |
Service | 3,178 | 3,089 | 6,260 | 6,139 |
Total revenue | 11,887 | 11,580 | 24,023 | 23,932 |
COST OF SALES: | ||||
Product | 3,354 | 3,305 | 6,969 | 6,708 |
Service | 1,035 | 999 | 2,129 | 2,064 |
Total cost of sales | 4,389 | 4,304 | 9,098 | 8,772 |
GROSS MARGIN | 7,498 | 7,276 | 14,925 | 15,160 |
OPERATING EXPENSES: | ||||
Research and development | 1,549 | 1,508 | 3,116 | 3,053 |
Sales and marketing | 2,235 | 2,222 | 4,569 | 4,640 |
General and administrative | 483 | 456 | 1,040 | 1,011 |
Amortization of purchased intangible assets | 60 | 64 | 121 | 142 |
Restructuring and other charges | 98 | 133 | 250 | 544 |
Total operating expenses | 4,425 | 4,383 | 9,096 | 9,390 |
OPERATING INCOME | 3,073 | 2,893 | 5,829 | 5,770 |
Interest income | 396 | 329 | 775 | 624 |
Interest expense | (247) | (222) | (482) | (420) |
Other income (loss), net | 10 | (37) | 72 | (58) |
Interest and other income (loss), net | 159 | 70 | 365 | 146 |
INCOME BEFORE PROVISION FOR INCOME TAXES | 3,232 | 2,963 | 6,194 | 5,916 |
Provision for income taxes | 12,010 | 615 | 12,578 | 1,246 |
NET INCOME (LOSS) | $ (8,778) | $ 2,348 | $ (6,384) | $ 4,670 |
Net income (loss) per share: | ||||
Basic (in dollars per share) | $ (1.78) | $ 0.47 | $ (1.29) | $ 0.93 |
Diluted (in dollars per share) | $ (1.78) | $ 0.47 | $ (1.29) | $ 0.92 |
Shares used in per-share calculation: | ||||
Basic (in shares) | 4,924 | 5,015 | 4,942 | 5,021 |
Diluted (in shares) | 4,924 | 5,040 | 4,942 | 5,054 |
Cash dividends declared per common share (in dollars per share) | $ 0.29 | $ 0.26 | $ 0.58 | $ 0.52 |
Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
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Jan. 27, 2018 |
Jan. 28, 2017 |
Jan. 27, 2018 |
Jan. 28, 2017 |
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Statement of Comprehensive Income [Abstract] | ||||
Change in net unrealized gains, tax benefit (expense) | $ 1 | $ 73 | $ (22) | $ 154 |
Net (gains) losses reclassified into earnings, tax expense (benefit) | 15 | (11) | 25 | (6) |
Change in unrealized gains and losses, tax benefit (expense) | (2) | 1 | (3) | 4 |
Net (gains) losses reclassified into earnings, tax expense (benefit) | 2 | (2) | 4 | (3) |
Net change in cumulative translation adjustment and actuarial gains and losses, tax benefit (expense) | $ (4) | $ 0 | $ (6) | $ (1) |
Consolidated Statements of Equity (Parenthetical) - $ / shares |
6 Months Ended | |
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Jan. 27, 2018 |
Jan. 28, 2017 |
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Statement of Stockholders' Equity [Abstract] | ||
Cash dividends declared (in dollars per share) | $ 0.58 | $ 0.52 |
Basis of Presentation |
6 Months Ended |
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Jan. 27, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The fiscal year for Cisco Systems, Inc. (the “Company” or “Cisco”) is the 52 or 53 weeks ending on the last Saturday in July. Fiscal 2018 and fiscal 2017 are each 52-week fiscal years. The Consolidated Financial Statements include the accounts of Cisco and its subsidiaries. All intercompany accounts and transactions have been eliminated. The Company conducts business globally and is primarily managed on a geographic basis in the following three geographic segments: the Americas; Europe, Middle East, and Africa (EMEA); and Asia Pacific, Japan, and China (APJC). The accompanying financial data as of January 27, 2018 and for the three and six months ended January 27, 2018 and January 28, 2017 has been prepared by the Company, without audit, pursuant to the rules and regulations of the U.S. Securities and Exchange Commission ("SEC"). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States ("GAAP") have been condensed or omitted pursuant to such rules and regulations. The July 29, 2017 Consolidated Balance Sheet was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States. However, the Company believes that the disclosures are adequate to make the information presented not misleading. These Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended July 29, 2017. The Company consolidates its investments in a venture fund managed by SOFTBANK Corp. and its affiliates (“SOFTBANK”) as this is a variable interest entity and the Company is the primary beneficiary. The noncontrolling interests attributed to SOFTBANK are presented as a separate component from the Company’s equity in the equity section of the Consolidated Balance Sheets. SOFTBANK’s share of the earnings in the venture fund are not presented separately in the Consolidated Statements of Operations as these amounts are not material for any of the fiscal periods presented. In the opinion of management, all normal recurring adjustments necessary to present fairly the consolidated balance sheet as of January 27, 2018; the results of operations and the statements of comprehensive income (loss) for the three and six months ended January 27, 2018 and January 28, 2017; the statements of cash flows and equity for the six months ended January 27, 2018 and January 28, 2017, as applicable, have been made. The results of operations for the three and six months ended January 27, 2018 are not necessarily indicative of the operating results for the full fiscal year or any future periods. Certain reclassifications have been made to the amounts in prior periods in order to conform to the current period’s presentation. The Company has evaluated subsequent events through the date that the financial statements were issued. |
Recent Accounting Pronouncements |
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Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Recent Accounting Pronouncements | Recent Accounting Pronouncements (a) New Accounting Updates Recently Adopted Share-Based Compensation In March 2016, the FASB issued an accounting standard update that impacts the accounting for share-based payment transactions, including income tax consequences, classification of awards as either equity or liabilities, and classification on the Consolidated Statements of Cash Flows. Cisco adopted this accounting standard update beginning the first quarter of fiscal 2018 on a prospective basis. This resulted in an overall decrease in the effective tax rate for the six months ended January 27, 2018 due to recognition of excess tax benefits from share-based compensation. The application of this accounting standard update did not have a material impact on the Company's Consolidated Financial Statements. (b) Recent Accounting Standards or Updates Not Yet Effective as of Period End Revenue Recognition In May 2014, the FASB issued a new accounting standard related to revenue recognition. The new standard will supersede nearly all U.S. GAAP on revenue recognition and eliminate industry-specific guidance. The underlying principle of the new standard is to recognize revenue when a customer obtains control of promised goods or services at an amount that reflects the consideration that is expected to be received in exchange for those goods or services. It also requires increased disclosures including the nature, amount, timing, and uncertainty of revenues and cash flows related to contracts with customers. The standard allows two methods of adoption: i) retrospectively to each prior period presented (“full retrospective method”), or ii) retrospectively with the cumulative effect recognized in retained earnings as of the date of adoption ("modified retrospective method"). Cisco will adopt the new standard using the modified retrospective method at the beginning of its first quarter of fiscal 2019. Cisco is on schedule in establishing new accounting policies, implementing systems and processes (including more extensive use of estimates), and internal controls necessary to support the requirements of the new standard. Cisco has completed its preliminary assessment of the financial statement impact of the new standard, as discussed below, and will continue to update that assessment as more information becomes available. The new standard will primarily impact Cisco’s revenue recognition for software arrangements and sales to two-tier distributors. In both areas, the new standard will accelerate the recognition of revenue. The table below details both the current and expected revenue recognition timing in these areas:
Cisco expects that the new standard will not have a material impact on total revenue in the year of adoption based on two factors: i) revenue will be accelerated consistent with the changes in timing as indicated in the preceding table, largely offset by ii) the reduction of revenue from software arrangements where revenue was previously deferred in prior periods and recognized ratably over time as required under the current standard. This preliminary assessment is based on the types and number of revenue arrangements currently in place. The exact impact of the new standard will be dependent on facts and circumstances at adoption and could vary from quarter to quarter. In addition to the above revenue recognition timing impacts, the new standard will require incremental contract acquisition costs (such as sales commissions) for customer contracts to be capitalized and amortized over the contract period. Currently, these costs are expensed as incurred. Cisco will be required to record cumulative effect adjustments to retained earnings (net of tax) upon adopting the new standard at the beginning of fiscal 2019. The most significant of these adjustments will be to reduce product deferred revenue and increase retained earnings at the date of adoption to reflect revenue that would have been already recognized under the new standard related to existing arrangements. There will also be an adjustment to increase accounts receivable and reduce inventories related to the changes in revenue recognition on sales to two-tier distributors. Lastly, an adjustment will be recorded to establish an asset and increase retained earnings related to the requirement to capitalize incremental contract acquisition costs for customer contracts. Financial Instruments In January 2016, the FASB issued an accounting standard update that changes the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. The accounting standard update will be effective for Cisco beginning in the first quarter of fiscal 2019, and early adoption is permitted. The most significant impact of this accounting standard update for Cisco is that it will require the remeasurement of investments that are not accounted for under the equity method at fair value at the end of each reporting period with the changes recorded to the income statement. While Cisco is currently evaluating the impact of this accounting standard update on its Consolidated Financial Statements, Cisco expects that this accounting standard update will increase the variability of other income (loss), net. Leases In February 2016, the FASB issued an accounting standard update related to leases requiring lessees to recognize operating and financing lease liabilities on the balance sheet, as well as corresponding right-of-use assets. The new lease standard also makes some changes to lessor accounting and aligns key aspects of the lessor accounting model with the revenue recognition standard. In addition, disclosures will be required to enable users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. The accounting standard update will be effective for Cisco beginning in the first quarter of fiscal 2020 on a modified retrospective basis, and early adoption is permitted. Cisco is currently evaluating the impact of this accounting standard update on its Consolidated Financial Statements. Credit Losses of Financial Instruments In June 2016, the FASB issued an accounting standard update that requires measurement and recognition of expected credit losses for financial assets held based on historical experience, current conditions, and reasonable and supportable forecasts that affect the collectibility of the reported amount. The accounting standard update will be effective for Cisco beginning in the first quarter of fiscal 2021 on a modified retrospective basis, and early adoption in fiscal 2020 is permitted. Cisco is currently evaluating the impact of this accounting standard update on its Consolidated Financial Statements. Classification of Cash Flow Elements In August 2016, the FASB issued an accounting standard update related to the classification of certain cash receipts and cash payments on the statement of cash flows. The accounting standard update will be effective for Cisco beginning in the first quarter of fiscal 2019 on a retrospective basis, and early adoption is permitted. Cisco is currently evaluating the impact of this accounting standard update on its Consolidated Statements of Cash Flows. Income Taxes on Intra-Entity Transfers of Assets In October 2016, the FASB issued an accounting standard update that requires recognition of the income tax consequences of intra-entity transfers of assets (other than inventory) at the transaction date. The accounting standard update will be effective for Cisco beginning in the first quarter of fiscal 2019 on a modified retrospective basis, and early adoption is permitted. Cisco is currently evaluating the impact of this accounting standard update on its Consolidated Financial Statements. Restricted Cash in Statement of Cash Flow In November 2016, the FASB issued an accounting standard update that provides guidance on the classification and presentation of changes in restricted cash and cash equivalents in the statement of cash flows. The accounting standard update will be effective for Cisco beginning in the first quarter of fiscal 2019 using a retrospective transition method to each period presented, and early adoption is permitted. Cisco does not expect that this accounting standard update will have a material impact on its Consolidated Statements of Cash Flows. Definition of a Business In January 2017, the FASB issued an accounting standard update that clarifies the definition of a business to help companies evaluate whether acquisition or disposal transactions should be accounted for as asset groups or as businesses. The accounting standard update will be effective for Cisco beginning in the first quarter of fiscal 2019 on a prospective basis. The impact of this accounting standard update will be fact dependent, but Cisco expects that some transactions that were previously accounted for as business combinations or disposal transactions will be accounted for as asset purchases or asset sales under the accounting standard update. Simplifying the Test for Goodwill Impairment In January 2017, the FASB issued an accounting standard update that removes Step 2 of the goodwill impairment test, which requires the assessment of fair value of individual assets and liabilities of a reporting unit to measure goodwill impairments. Goodwill impairment will now be the amount by which a reporting unit's carrying value exceeds its fair value. The accounting standard update will be effective for Cisco beginning in the first quarter of fiscal 2021 on a prospective basis, and early adoption is permitted. Cisco does not expect that this accounting standard update will impact its Consolidated Financial Statements. Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income In February 2018, the FASB issued a new accounting standard update that allows companies to reclassify from Accumulated Other Comprehensive Income to Retained Earnings stranded tax effects resulting from the enactment of the Tax Cuts and Jobs Act (the "Tax Act"). Cisco will adopt this accounting standard update in the third quarter of fiscal 2018 on a retrospective basis. The application of this accounting standard update will not have a material impact on the Company's Consolidated Financial Statements. |
Acquisitions and Divestitures |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisitions and Divestitures | Acquisitions and Divestitures The Company completed five acquisitions during the six months ended January 27, 2018. A summary of the allocation of the total purchase consideration is presented as follows (in millions):
On July 31, 2017, the Company completed its acquisition of privately held Viptela Inc. ("Viptela"), a provider of software-defined wide area networking products. Revenue from the Viptela acquisition has been included in the Company's Infrastructure Platforms product category. On September 22, 2017, the Company completed its acquisition of privately held Springpath, Inc. ("Springpath"), a hyperconvergence software company. Revenue from the Springpath acquisition has been included in the Company's Infrastructure Platforms product category. The total purchase consideration related to acquisitions completed during the six months ended January 27, 2018 consisted of cash consideration and vested share-based awards assumed. The total cash and cash equivalents acquired from these acquisitions was approximately $12 million. Total transaction costs related to acquisition activities were $14 million and $3 million for the six months ended January 27, 2018 and January 28, 2017, respectively. These transaction costs were expensed as incurred in general and administrative expenses ("G&A") in the Consolidated Statements of Operations. The Company recognized a gain of $46 million in the first quarter of fiscal 2018 in connection with a step acquisition. This gain was recognized in other income (loss), net in the Consolidated Statement of Operations. The purchase price allocation for acquisitions completed during recent periods is preliminary and subject to revision as additional information about fair value of assets and liabilities becomes available. Additional information that existed as of the acquisition date but at that time was unknown to the Company may become known to the Company during the remainder of the measurement period, a period not to exceed 12 months from the acquisition date. Adjustments in the purchase price allocation may require a recasting of the amounts allocated to goodwill retroactive to the period in which the acquisition occurred. The goodwill generated from acquisitions completed during the six months ended January 27, 2018 is primarily related to expected synergies. The goodwill is generally not deductible for income tax purposes. The Consolidated Financial Statements include the operating results of each acquisition from the date of acquisition. Pro forma results of operations for the acquisitions completed during the six months ended January 27, 2018 have not been presented because the effects of the acquisitions, individually and in the aggregate, were not material to the Company’s financial results. The Company completed two divestitures during the second quarter of fiscal 2018. The financial statement impact of these divestitures was not material for the three and six months ended January 27, 2018. Acquisition of BroadSoft On February 1, 2018, the Company completed its acquisition of BroadSoft, Inc. ("BroadSoft"), a cloud calling and contact center solutions company for total consideration of approximately $1.9 billion, net of cash and short-term investments. Revenue from the BroadSoft acquisition will be included in the Company's Applications product category. The Company expects that most of the purchase price will be allocated to goodwill and purchased intangible assets. |
Goodwill and Purchased Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Purchased Intangible Assets | Goodwill and Purchased Intangible Assets
The following table presents the goodwill allocated to the Company’s reportable segments as of and during the six months ended January 27, 2018 (in millions):
“Other” in the table above primarily consists of foreign currency translation, as well as immaterial purchase accounting adjustments.
The following table presents details of the Company’s intangible assets acquired through acquisitions completed during the six months ended January 27, 2018 (in millions, except years):
The following tables present details of the Company’s purchased intangible assets (in millions):
Purchased intangible assets include intangible assets acquired through acquisitions as well as through direct purchases or licenses. There were no impairment charges related to purchased intangible assets for the three and six months ended January 27, 2018. Impairment charges related to purchased intangible assets for the three and six months ended January 28, 2017 were zero and $42 million, respectively. Of these impairment charges, $38 million was recorded to restructuring and other charges in connection with the Company's decision to exit certain product lines, and the corresponding elimination of future associated cash flows. Impairment charges were primarily as a result of declines in estimated fair values of certain purchased intangible assets resulting from the reduction or elimination of expected future cash flows associated with certain of the Company’s technology and IPR&D intangible assets. The following table presents the amortization of purchased intangible assets, including impairment charges (in millions):
The estimated future amortization expense of purchased intangible assets with finite lives as of January 27, 2018 is as follows (in millions):
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Restructuring and Other Charges |
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Restructuring Charges [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Other Charges | Restructuring and Other Charges The Company began taking action under a restructuring plan in August 2016 (the "Fiscal 2017 Plan"), in order to reinvest in its key priority areas. In the first quarter of fiscal 2018, the Company extended the Fiscal 2017 Plan to include an additional $150 million of estimated additional pretax charges for employee severance and other one-time termination benefits. The Company has substantially completed the Fiscal 2017 Plan and has incurred cumulative charges of $1.0 billion. These aggregate pretax charges are primarily cash based and consist of employee severance and other one-time termination benefits, and other associated costs. In connection with this Plan, the Company incurred charges of $98 million and $133 million for the three months ended January 27, 2018 and January 28, 2017, respectively, and $250 million and $544 million for the six months ended January 27, 2018 and January 28, 2017, respectively. The following tables summarize the activities related to the restructuring and other charges (in millions):
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Balance Sheet Details |
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Jan. 27, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance Sheet Details | Balance Sheet Details The following tables provide details of selected balance sheet items (in millions):
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Financing Receivables and Operating Leases |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 27, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financing Receivables and Operating Leases | Financing Receivables and Operating Leases
Financing receivables primarily consist of lease receivables, loan receivables, and financed service contracts. Lease receivables represent sales-type and direct-financing leases resulting from the sale of the Company’s and complementary third-party products and are typically collateralized by a security interest in the underlying assets. Lease receivables consist of arrangements with terms of four years on average. Loan receivables represent financing arrangements related to the sale of the Company’s hardware, software, and services, which may include additional funding for other costs associated with network installation and integration of the Company’s products and services. Loan receivables generally have terms of up to three years. Financed service contracts include financing receivables related to technical support and advanced services. Revenue related to the technical support services is typically deferred and included in deferred service revenue and is recognized ratably over the period during which the related services are to be performed, which typically ranges from one to three years. A summary of the Company's financing receivables is presented as follows (in millions):
Future minimum lease payments to the Company on lease receivables as of January 27, 2018 are summarized as follows (in millions):
Actual cash collections may differ from the contractual maturities due to early customer buyouts, refinancings, or defaults.
Gross receivables, excluding residual value, less unearned income categorized by the Company’s internal credit risk rating as of January 27, 2018 and July 29, 2017 are summarized as follows (in millions):
The Company determines the adequacy of its allowance for credit loss by assessing the risks and losses inherent in its financing receivables by portfolio segment. The portfolio segment is based on the types of financing offered by the Company to its customers, which consist of the following: lease receivables, loan receivables, and financed service contracts. The Company’s internal credit risk ratings of 1 through 4 correspond to investment-grade ratings, while credit risk ratings of 5 and 6 correspond to non-investment grade ratings. Credit risk ratings of 7 and higher correspond to substandard ratings. In circumstances when collectibility is not deemed reasonably assured, the associated revenue is deferred in accordance with the Company’s revenue recognition policies, and the related allowance for credit loss, if any, is included in deferred revenue. The Company also records deferred revenue associated with financing receivables when there are remaining performance obligations, as it does for financed service contracts. The following tables present the aging analysis of gross receivables, excluding residual value and less unearned income as of January 27, 2018 and July 29, 2017 (in millions):
Past due financing receivables are those that are 31 days or more past due according to their contractual payment terms. The data in the preceding tables is presented by contract, and the aging classification of each contract is based on the oldest outstanding receivable, and therefore past due amounts also include unbilled and current receivables within the same contract. The balances of either unbilled or current financing receivables included in the category of 91 days plus past due for financing receivables were $462 million and $666 million as of January 27, 2018 and July 29, 2017, respectively. As of January 27, 2018, the Company had financing receivables of $358 million, net of unbilled or current receivables, that were in the category of 91 days plus past due but remained on accrual status as they are well secured and in the process of collection. Such balance was $315 million as of July 29, 2017.
The allowances for credit loss and the related financing receivables are summarized as follows (in millions):
The Company assesses the allowance for credit loss related to financing receivables on either an individual or a collective basis. The Company considers various factors in evaluating lease and loan receivables and the earned portion of financed service contracts for possible impairment on an individual basis. These factors include the Company’s historical experience, credit quality and age of the receivable balances, and economic conditions that may affect a customer’s ability to pay. When the evaluation indicates that it is probable that all amounts due pursuant to the contractual terms of the financing agreement, including scheduled interest payments, are unable to be collected, the financing receivable is considered impaired. All such outstanding amounts, including any accrued interest, will be assessed and fully reserved at the customer level. The Company’s internal credit risk ratings are categorized as 1 through 10, with the lowest credit risk rating representing the highest quality financing receivables. Typically, the Company also considers receivables with a risk rating of 8 or higher to be impaired and will include them in the individual assessment for allowance. These balances, as of January 27, 2018 and July 29, 2017, are presented under “(b) Credit Quality of Financing Receivables” above. The Company evaluates the remainder of its financing receivables portfolio for impairment on a collective basis and records an allowance for credit loss at the portfolio segment level. When evaluating the financing receivables on a collective basis, the Company uses expected default frequency rates published by a major third-party credit-rating agency as well as its own historical loss rate in the event of default, while also systematically giving effect to economic conditions, concentration of risk, and correlation.
The Company provides financing of certain equipment through operating leases, and the amounts are included in property and equipment in the Consolidated Balance Sheets. Amounts relating to equipment on operating lease assets and the associated accumulated depreciation are summarized as follows (in millions):
Minimum future rentals on noncancelable operating leases as of January 27, 2018 are summarized as follows (in millions):
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Investments |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments | Investments
The following tables summarize the Company’s available-for-sale investments (in millions):
(1) Includes investments that were pending settlement as of the respective fiscal years. The net unsettled investment purchases (sales) were $(3) million and $(30) million as of January 27, 2018 and July 29, 2017, respectively. Non-U.S. government and agency securities include agency and corporate debt securities that are guaranteed by non-U.S. governments.
The following table presents the gross realized gains and gross realized losses related to available-for-sale investments (in millions):
The following table presents the realized net gains (losses) related to available-for-sale investments by security type (in millions):
The following tables present the breakdown of the available-for-sale investments with gross unrealized losses and the duration that those losses had been unrealized at January 27, 2018 and July 29, 2017 (in millions):
The net realized losses related to the Company's available-for-sale investments included impairment charges of zero and $26 million for the three and six months ended January 27, 2018, respectively. These impairment charges related primarily to publicly traded equity securities and were due to a decline in the fair value of those securities below their cost basis that were determined to be other than temporary. There were no impairment charges on available-for-sale investments for the corresponding periods in fiscal 2017. As of January 27, 2018, for fixed income securities that were in unrealized loss positions, the Company has determined that (i) it does not have the intent to sell any of these investments and (ii) it is not more likely than not that it will be required to sell any of these investments before recovery of the entire amortized cost basis. In addition, as of January 27, 2018, the Company anticipates that it will recover the entire amortized cost basis of such fixed income securities and has determined that no other-than-temporary impairments associated with credit losses were required to be recognized during the six months ended January 27, 2018. The Company has evaluated its publicly traded equity securities as of January 27, 2018 and has determined that there were no additional other-than-temporary impairments in the respective categories of unrealized losses. This determination was based on several factors, which include the length of time and extent to which fair value has been less than the cost basis, the financial condition and near-term prospects of the issuer, and the Company’s intent and ability to hold the publicly traded equity securities for a period of time sufficient to allow for any anticipated recovery in market value.
The following table summarizes the maturities of the Company’s fixed income securities as of January 27, 2018 (in millions):
Actual maturities may differ from the contractual maturities because borrowers may have the right to call or prepay certain obligations.
The Company periodically engages in securities lending activities with certain of its available for sale investments. These transactions are accounted for as a secured lending of the securities, and the securities are typically loaned only on an overnight basis. The average daily balance of securities lending for the six months ended January 27, 2018 and January 28, 2017 was $0.4 billion and $0.9 billion, respectively. The Company requires collateral equal to at least 102% of the fair market value of the loaned security and that the collateral be in the form of cash or liquid, high-quality assets. The Company engages in these secured lending transactions only with highly creditworthy counterparties, and the associated portfolio custodian has agreed to indemnify the Company against collateral losses. The Company did not experience any losses in connection with the secured lending of securities during the periods presented. As of January 27, 2018 and July 29, 2017, the Company had no outstanding securities lending transactions.
The carrying value of the investments in privately held companies was included in other assets. For such investments that were accounted for under the equity and cost method as of January 27, 2018 and July 29, 2017, the amounts are summarized in the following table (in millions):
For additional information on impairment charges related to investments in privately held companies, see Note 9. Variable Interest Entities In the ordinary course of business, the Company has investments in privately held companies and provides financing to certain customers. These privately held companies and customers may be considered to be variable interest entities. The Company evaluates on an ongoing basis its investments in these privately held companies and its customer financings, and has determined that as of January 27, 2018, except as disclosed in Note 1, there were no significant variable interest entities required to be consolidated in the Company’s Consolidated Financial Statements. As of January 27, 2018, the carrying value of investments in privately held companies was $982 million, of which $528 million of such investments are considered to be in variable interest entities which are unconsolidated. In addition, the Company has additional funding commitments of $215 million related to these investments, some of which are based on the achievement of certain agreed-upon milestones, and some of which are required to be funded on demand. The carrying value of these investments and the additional funding commitments collectively represent the Company's maximum exposure related to these variable interest entities. |
Fair Value |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value | Fair Value Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be either recorded or disclosed at fair value, the Company considers the principal or most advantageous market in which it would transact, and it also considers assumptions that market participants would use when pricing the asset or liability.
The accounting guidance for fair value measurement requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is as follows: Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability, such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.
Assets and liabilities measured at fair value on a recurring basis as of January 27, 2018 and July 29, 2017 were as follows (in millions):
Level 1 publicly traded equity securities are determined by using quoted prices in active markets for identical assets. Level 2 fixed income securities are priced using quoted market prices for similar instruments or nonbinding market prices that are corroborated by observable market data. The Company uses inputs such as actual trade data, benchmark yields, broker/dealer quotes, and other similar data, which are obtained from quoted market prices, independent pricing vendors, or other sources, to determine the ultimate fair value of these assets and liabilities. The Company uses such pricing data as the primary input to make its assessments and determinations as to the ultimate valuation of its investment portfolio and has not made, during the periods presented, any material adjustments to such inputs. The Company is ultimately responsible for the financial statements and underlying estimates. The Company’s derivative instruments are primarily classified as Level 2, as they are not actively traded and are valued using pricing models that use observable market inputs. The Company did not have any transfers between Level 1 and Level 2 fair value measurements during the periods presented. Level 3 assets include certain derivative instruments, the values of which are determined based on discounted cash flow models using inputs that the Company could not corroborate with market data.
The following table presents the Company’s assets that were measured at fair value on a nonrecurring basis during the indicated periods and the related recognized gains and losses for the periods indicated (in millions):
These assets were measured at fair value due to events or circumstances the Company identified as having significant impact on their fair value during the respective periods. To arrive at the valuation of these assets, the Company considers any significant changes in the financial metrics and economic variables and also uses third-party valuation reports to assist in the valuation as necessary. The fair value measurement of the impaired investments was classified as Level 3 because significant unobservable inputs were used in the valuation due to the absence of quoted market prices and inherent lack of liquidity. Significant unobservable inputs, which included financial metrics of comparable private and public companies, financial condition and near-term prospects of the investees, recent financing activities of the investees, and the investees’ capital structure as well as other economic variables, reflected the assumptions market participants would use in pricing these assets. The impairment charges, representing the difference between the net book value and the fair value as a result of the evaluation, were recorded to other income (loss), net. The remaining carrying value of the investments that were impaired was $44 million as of each of January 27, 2018 and January 28, 2017. The fair value for purchased intangible assets measured at fair value on a nonrecurring basis was categorized as Level 3 due to the use of significant unobservable inputs in the valuation. Significant unobservable inputs that were used included expected revenues and net income related to the assets and the expected life of the assets. The difference between the estimated fair value and the carrying value of the assets was recorded as an impairment charge, which was included in product cost of sales and operating expenses as applicable. See Note 4. The remaining carrying value of the specific purchased intangible assets that were impaired was $9 million as of January 28, 2017. The fair value of property held for sale was measured with the assistance of third-party valuation models, which used discounted cash flow techniques as part of their analysis. The fair value measurement was categorized as Level 3, as significant unobservable inputs were used in the valuation report. The impairment charge as a result of the valuations, which represented the difference between the fair value less cost to sell and the carrying amount of the assets held for sale, was included in restructuring and other charges. The remaining carrying value of the property held for sale that was impaired was zero and $11 million as of January 27, 2018 and January 28, 2017, respectively. (d) Other Fair Value Disclosures The carrying value of investments in privately held companies that were accounted for under the cost method was $861 million and $859 million as of January 27, 2018 and July 29, 2017, respectively. It was not practicable to estimate the fair value of this portfolio. The fair value of short-term loan receivables and financed service contracts approximates their carrying value due to their short duration. The aggregate carrying value of long-term loan receivables and financed service contracts as of January 27, 2018 and July 29, 2017 was $3.5 billion and $3.4 billion, respectively. The estimated fair value of long-term loan receivables and financed service contracts approximates their carrying value. The Company uses significant unobservable inputs in determining discounted cash flows to estimate the fair value of its long-term loan receivables and financed service contracts, and therefore they are categorized as Level 3. As of January 27, 2018, the estimated fair value of the short-term debt approximates its carrying value due to the short maturities. As of January 27, 2018, the fair value of the Company’s senior notes and other long-term debt was $31.8 billion with a carrying amount of $30.4 billion. This compares to a fair value of $32.1 billion and a carrying amount of $30.5 billion as of July 29, 2017. The fair value of the senior notes and other long-term debt was determined based on observable market prices in a less active market and was categorized as Level 2 in the fair value hierarchy. |
Borrowings |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Borrowings | Borrowings
The following table summarizes the Company’s short-term debt (in millions, except percentages):
The Company has a short-term debt financing program of up to $10.0 billion through the issuance of commercial paper notes. The Company uses the proceeds from the issuance of commercial paper notes for general corporate purposes. The effective rates for the short- and long-term debt include the interest on the notes, the accretion of the discount, the issuance costs, and, if applicable, adjustments related to hedging.
The following table summarizes the Company’s long-term debt (in millions, except percentages):
The Company entered into interest rate swaps in prior periods with an aggregate notional amount of $6.75 billion designated as fair value hedges of certain of its fixed-rate senior notes. These swaps convert the fixed interest rates of the fixed-rate notes to floating interest rates based on the London InterBank Offered Rate ("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 11. Interest is payable semiannually on each class of the senior fixed-rate notes and payable quarterly on the floating-rate notes. Each of the senior fixed-rate notes is redeemable by the Company at any time, subject to a make-whole premium. The senior notes rank at par with the commercial paper notes that have been issued in the future pursuant to the Company’s short-term debt financing program, as discussed above under “(a) Short-Term Debt.” As of January 27, 2018, the Company was in compliance with all debt covenants. As of January 27, 2018, future principal payments for long-term debt, including the current portion, are summarized as follows (in millions):
On May 15, 2015, the Company entered into a credit agreement with certain institutional lenders that provides for a $3.0 billion unsecured revolving credit facility that is scheduled to expire on May 15, 2020. Any advances under the credit agreement will accrue interest at rates that are equal to, based on certain conditions, either (i) the highest of (a) the Federal Funds rate plus 0.50%, (b) Bank of America’s “prime rate” as announced from time to time, or (c) LIBOR, or a comparable or successor rate that is approved by the Administrative Agent (“Eurocurrency Rate”), for an interest period of one-month plus 1.00%, or (ii) the Eurocurrency Rate, plus a margin that is based on the Company’s 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 Eurocurrency Rate be less than zero. The Company 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/or extend the expiration date of the credit facility up to May 15, 2022. In addition, on March 30, 2017, the Company entered into a 364-Day credit agreement with certain institutional lenders that provides for a $2.0 billion unsecured revolving credit facility that is scheduled to expire on March 29, 2018. The credit agreement also provides the Company with the option to, for a fee, convert any borrowing outstanding thereunder on March 29, 2018 to a term loan maturing no later than March 29, 2019. The interest rate applicable to outstanding balances under the credit agreement will be based on either (i) the higher of (a) the rates on overnight Federal Funds transactions with members of the Federal Reserve System (i.e., Federal Funds rate) plus 0.50%, (b) Bank of America’s “prime rate” as announced from time to time or (c) LIBOR for an interest period of one month plus 1.00%, or (ii) LIBOR plus a margin that is based on the Company's senior debt credit ratings as published by S&P Global Rating, a business unit of Standard & Poor’s Financial Services LLC, and Moody’s Investors Service, Inc. These credit agreements require that the Company comply with certain covenants, including that the Company maintains an interest coverage ratio as defined in these agreements. As of January 27, 2018, the Company was in compliance with the required interest coverage ratios and the other covenants, and the Company had not borrowed any funds under these credit facilities. |
Derivative Instruments |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments | Derivative Instruments
The Company uses derivative instruments primarily to manage exposures to foreign currency exchange rate, interest rate, and equity price risks. The Company’s primary objective in holding derivatives is to reduce the volatility of earnings and cash flows associated with changes in foreign currency exchange rates, interest rates, and equity prices. The Company’s derivatives expose it to credit risk to the extent that the counterparties may be unable to meet the terms of the agreement. The Company does, however, seek to mitigate such risks by limiting its counterparties to major financial institutions. In addition, the potential risk of loss with any one counterparty resulting from this type of credit risk is monitored. Management does not expect material losses as a result of defaults by counterparties. The fair values of the Company’s derivative instruments and the line items on the Consolidated Balance Sheets to which they were recorded are summarized as follows (in millions):
The effects of the Company’s cash flow and net investment hedging instruments on other comprehensive income (OCI) and the Consolidated Statements of Operations are summarized as follows (in millions):
As of January 27, 2018, the Company estimates that approximately $56 million of net derivative gains related to its cash flow hedges included in accumulated other comprehensive income ("AOCI") will be reclassified into earnings within the next 12 months when the underlying hedged item impacts earnings. The effect on the Consolidated Statements of Operations of derivative instruments designated as fair value hedges and the underlying hedged items is summarized as follows (in millions):
The effect on the Consolidated Statements of Operations of derivative instruments not designated as hedges is summarized as follows (in millions):
The notional amounts of the Company’s outstanding derivatives are summarized as follows (in millions):
The Company presents its derivative instruments at gross fair values in the Consolidated Balance Sheets. However, the Company’s master netting and other similar arrangements with the respective counterparties allow for net settlement under certain conditions, which are designed to reduce credit risk by permitting net settlement with the same counterparty. To further limit credit risk, the Company also enters into collateral security arrangements related to certain derivative instruments whereby cash is posted as collateral between the counterparties based on the fair market value of the derivative instrument. Information related to these offsetting arrangements is summarized as follows (in millions):
The Company conducts business globally in numerous currencies. Therefore, it is exposed to adverse movements in foreign currency exchange rates. To limit the exposure related to foreign currency changes, the Company enters into foreign currency contracts. The Company does not enter into such contracts for speculative purposes. The Company hedges forecasted foreign currency transactions related to certain operating expenses and service cost of sales with currency options and forward contracts. These currency options and forward contracts, designated as cash flow hedges, generally have maturities of less than 24 months. The Company assesses effectiveness based on changes in total fair value of the derivatives. The effective portion of the derivative instrument’s gain or loss is initially reported as a component of AOCI and subsequently reclassified into earnings when the hedged exposure affects earnings. The ineffective portion, if any, of the gain or loss is reported in earnings immediately. During the periods presented, the Company did not discontinue any cash flow hedges for which it was probable that a forecasted transaction would not occur. The Company enters into foreign exchange forward and option contracts to reduce the short-term effects of foreign currency fluctuations on assets and liabilities such as foreign currency receivables, including long-term customer financings, investments, and payables. These derivatives are not designated as hedging instruments. Gains and losses on the contracts are included in other income (loss), net, and substantially offset foreign exchange gains and losses from the remeasurement of intercompany balances or other current assets, investments, or liabilities denominated in currencies other than the functional currency of the reporting entity. The Company hedges certain net investments in its foreign operations with forward contracts to reduce the effects of foreign currency fluctuations on the Company’s net investment in those foreign subsidiaries.
Interest Rate Derivatives, Investments The Company’s primary objective for holding fixed income securities is to achieve an appropriate investment return consistent with preserving principal and managing risk. To realize these objectives, the Company may utilize interest rate swaps or other derivatives designated as fair value or cash flow hedges. As of January 27, 2018 and July 29, 2017, the Company did not have any outstanding interest rate derivatives related to its fixed income securities. Interest Rate Derivatives Designated as Fair Value Hedges, Long-Term Debt In the six months ended January 27, 2018, the Company did not enter into any interest rate swaps. In prior fiscal years, the Company entered into interest rate swaps designated as fair value hedges related to fixed-rate senior notes that are due in fiscal 2019 through 2025. Under these interest rate swaps, the Company receives fixed-rate interest payments and makes interest payments based on LIBOR plus a fixed number of basis points. The effect of such swaps is to convert the fixed interest rates of the senior fixed-rate notes to floating interest rates based on LIBOR. The gains and losses related to changes in the fair value of the interest rate swaps are included in interest expense and 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. The fair value of the interest rate swaps was reflected in other current assets and other assets.
The Company may hold equity securities for strategic purposes or to diversify its overall investment portfolio. The publicly traded equity securities in the Company’s portfolio are subject to price risk. To manage its exposure to changes in the fair value of certain equity securities, the Company has periodically entered into equity derivatives that are designated as fair value hedges. The changes in the value of the hedging instruments are included in other income (loss), net, and offset the change in the fair value of the underlying hedged investment. In addition, the Company periodically enters into equity derivatives that are not designated as accounting hedges. The changes in the fair value of these derivatives are also included in other income (loss), net. The Company is also exposed to variability in compensation charges related to certain deferred compensation obligations to employees. Although not designated as accounting hedges, the Company utilizes derivatives such as total return swaps to economically hedge this exposure.
For the periods presented, amounts excluded from the assessment of hedge effectiveness were not material for fair value, cash flow, and net investment hedges. In addition, hedge ineffectiveness for fair value, cash flow, and net investment hedges was not material for any of the periods presented. |
Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies | Commitments and Contingencies
The Company leases office space in many U.S. locations. Outside the United States, larger leased sites include sites in Belgium, Canada, China, Germany, India, Israel, Japan, Mexico, Poland and the United Kingdom. The Company also leases equipment and vehicles. Future minimum lease payments under all noncancelable operating leases with an initial term in excess of one year as of January 27, 2018 are as follows (in millions):
The Company purchases components from a variety of suppliers and uses several contract manufacturers to provide manufacturing services for its products. During the normal course of business, in order to manage manufacturing lead times and help ensure adequate component supply, the Company enters into agreements with contract manufacturers and suppliers that either allow them to procure inventory based upon criteria as defined by the Company or establish the parameters defining the Company’s requirements. A significant portion of the Company’s reported purchase commitments arising from these agreements consists of firm, noncancelable, and unconditional commitments. Certain of these purchase commitments with contract manufacturers and suppliers relate to arrangements to secure long-term pricing for certain product components for multi-year periods. In certain instances, these agreements allow the Company the option to cancel, reschedule, and adjust the Company’s requirements based on its business needs prior to firm orders being placed. The following table summarizes the Company's purchase commitments with contract manufacturers and suppliers as of the respective period ends (in millions):
The Company records a liability for firm, noncancelable, and unconditional purchase commitments for quantities in excess of its future demand forecasts consistent with the valuation of the Company’s excess and obsolete inventory. As of January 27, 2018 and July 29, 2017, the liability for these purchase commitments was $159 million and $162 million, respectively, and was included in other current liabilities.
In connection with the Company’s acquisitions, the Company has agreed to pay certain additional amounts contingent upon the achievement of certain agreed-upon technology, development, product, or other milestones or upon the continued employment with the Company of certain employees of the acquired entities. The following table summarizes the compensation expense related to acquisitions (in millions):
As of January 27, 2018, the Company estimated that future cash compensation expense of up to $246 million may be required to be recognized pursuant to the applicable business combination agreements. Insieme Networks, Inc. In fiscal 2012, the Company made an investment in Insieme, an early stage company focused on research and development in the data center market. This investment included $100 million of funding and a license to certain of the Company’s technology. During fiscal 2014, the Company acquired the remaining interests in Insieme, at which time the former noncontrolling interest holders became eligible to receive up to two milestone payments, which were determined using agreed-upon formulas based primarily on revenue for certain of Insieme’s products. The former noncontrolling interest holders earned the maximum amount related to these two milestone payments and were paid approximately $422 million during the six months ended January 28, 2017. The Company recorded compensation expense of $12 million during the three months ended January 28, 2017, and $32 million during the six months ended January 28, 2017, related to these milestone payments. The Company does not expect a material amount of future compensation expense or further milestone payments related to this acquisition. The Company also has certain funding commitments, primarily related to its investments in privately held companies and venture funds, some of which are based on the achievement of certain agreed-upon milestones, and some of which are required to be funded on demand. The funding commitments were $215 million and $216 million as of January 27, 2018 and July 29, 2017, respectively.
The following table summarizes the activity related to the product warranty liability (in millions):
The Company accrues for warranty costs as part of its cost of sales based on associated material product costs, labor costs for technical support staff, and associated overhead. The Company’s products are generally covered by a warranty for periods ranging from 90 days to five years, and for some products the Company provides a limited lifetime warranty.
In the ordinary course of business, the Company provides financing guarantees for various third-party financing arrangements extended to channel partners and end-user customers. Payments under these financing guarantee arrangements were not material for the periods presented. Channel Partner Financing Guarantees The Company facilitates arrangements for third-party financing extended to channel partners, consisting of revolving short-term financing, generally with payment terms ranging from 60 to 90 days. These financing arrangements facilitate the working capital requirements of the channel partners, and, in some cases, the Company guarantees a portion of these arrangements. The volume of channel partner financing was $6.9 billion and $6.3 billion for the three months ended January 27, 2018 and January 28, 2017, respectively, and was $13.6 billion and $13.2 billion for the six months ended January 27, 2018 and January 28, 2017, respectively. The balance of the channel partner financing subject to guarantees was $1.0 billion as of each of January 27, 2018 and July 29, 2017. End-User Financing Guarantees The Company also provides financing guarantees for third-party financing arrangements extended to end-user customers related to leases and loans, which typically have terms of up to three years. The volume of financing provided by third parties for leases and loans as to which the Company had provided guarantees was $12 million and $30 million for the three months ended January 27, 2018 and January 28, 2017, respectively, and was $26 million and $36 million for the six months ended January 27, 2018 and January 28, 2017, respectively. Financing Guarantee Summary The aggregate amounts of financing guarantees outstanding at January 27, 2018 and July 29, 2017, representing the total maximum potential future payments under financing arrangements with third parties along with the related deferred revenue, are summarized in the following table (in millions):
Other Guarantees The Company’s other guarantee arrangements as of January 27, 2018 and July 29, 2017 that were subject to recognition and disclosure requirements were not material.
In fiscal 2014, the Company recorded a charge to product cost of sales of $655 million resulting from failures related to products containing memory components manufactured by a single supplier between 2005 and 2010. The Company performs regular assessments of the sufficiency of this liability and reduced the amount by $74 million and $164 million in fiscal 2016 and fiscal 2015, respectively based on updated analyses. During the second quarter of fiscal 2017, the Company further reduced the liability by $141 million to reflect lower than expected defects, actual usage history, and estimated lower future remediation costs as more of the impacted products age and near the end of the support period covered by the remediation program. In addition, during the second quarter of fiscal 2017, the Company recorded a charge to product cost of sales of $125 million related to the expected remediation costs for anticipated failures in future periods of a widely-used component sourced from a third party which is included in several of the Company’s products. The liabilities related to the supplier component remediation matters as of January 27, 2018 and July 29, 2017 were $120 million and $174 million, respectively.
In the normal course of business, the Company indemnifies other parties, including customers, lessors, and parties to other transactions with the Company, with respect to certain matters. The Company has agreed to hold such parties harmless against losses arising from a breach of representations or covenants or out of intellectual property infringement or other claims made against certain parties. These agreements may limit the time within which an indemnification claim can be made and the amount of the claim. The Company has been asked to indemnify certain of the Company’s service provider customers that have been subject to patent infringement claims asserted by Sprint Communications Company, L.P. in federal court in Kansas and Delaware. Sprint alleges that the service provider customers infringed Sprint’s patents by offering VoIP telephone services utilizing products provided by the Company generally in combination with those of other manufacturers. Sprint seeks monetary damages. Following a trial on March 3, 2017 against Time Warner Inc., a jury in Kansas found that Time Warner Cable willfully infringed five Sprint patents and awarded Sprint $139.8 million in damages. On March 14, 2017, the Kansas court declined Sprint's request for enhanced damages and entered judgment in favor of Sprint for $139.8 million plus 1.06% in post-judgment interest. On May 30, 2017, the Court awarded Sprint $20.3 million in pre-judgment interest and denied Time Warner Cable's post-trial motions. Time Warner Cable has appealed. On October 16, 2017, Sprint and Comcast Cable Communications, LLC reached resolution of the claims in Sprint's lawsuit against Comcast and, on October 19, 2017, the Kansas court dismissed Sprint's lawsuit. On December 6, 2017, Sprint and Cox Communications, Inc. reached resolution of the claims in Sprint's lawsuit against Cox, and the Delaware court dismissed Sprint's lawsuit against Cox on December 7, 2017. The Company believes that Time Warner Cable continues to have strong non-infringement and invalidity defenses and arguments and/or that Sprint’s damages claims are inconsistent with prevailing law at trial and/or on appeal. Due to the uncertainty surrounding the litigation process, the Company is unable to reasonably estimate the ultimate outcome of the Time Warner Cable litigation at this time. Should Sprint prevail in litigation, mediation, or settlement, the Company, in accordance with its agreements, may have an obligation to indemnify Time Warner Cable for damages, mediation awards, or settlement amounts arising from its use of Cisco products. On January 15, 2016, Huawei Technologies Co. Ltd. (“Huawei”) filed four patent infringement actions against T-Mobile US, Inc. and T-Mobile USA, Inc. (collectively, “T-Mobile”) in federal court in the Eastern District of Texas. Huawei alleged that T-Mobile’s use of 3GPP standards to implement its 3G and 4G cellular networks infringed 12 patents. Huawei's infringement allegations for some of the patents were based on T-Mobile's use of products provided by the Company in combination with those of other manufacturers. T-Mobile requested indemnity by the Company with respect to portions of the network that use the Company's equipment. On December 22, 2017, the Eastern District of Texas court dismissed Huawei's four lawsuits after the parties reached settlement, and T-Mobile's indemnity request was subsequently resolved. During the first six months of fiscal 2018, the Company recorded legal and indemnification settlement charges of $127 million to product cost of sales in relation to these matters. At this time, the Company does not anticipate that its obligations regarding the final outcome of the above matters would be material. In addition, the Company has entered into indemnification agreements with its officers and directors, and the Company’s Amended and Restated Bylaws contain similar indemnification obligations to the Company’s agents. It is not possible to determine the maximum potential amount under these indemnification agreements due to the Company’s limited history with prior indemnification claims and the unique facts and circumstances involved in each particular agreement. Historically, payments made by the Company under these agreements have not had a material effect on the Company’s operating results, financial position, or cash flows.
Brazil Brazilian authorities have investigated the Company’s Brazilian subsidiary and certain of its former employees, as well as a Brazilian importer of the Company’s products, and its affiliates and employees, relating to alleged evasion of import taxes and alleged improper transactions involving the subsidiary and the importer. Brazilian tax authorities have assessed claims against the Company’s Brazilian subsidiary based on a theory of joint liability with the Brazilian importer for import taxes, interest, and penalties. In addition to claims asserted by the Brazilian federal tax authorities in prior fiscal years, tax authorities from the Brazilian state of Sao Paulo have asserted similar claims on the same legal basis in prior fiscal years. The asserted claims by Brazilian federal tax authorities that remain are for calendar years 2003 through 2007, and the asserted claims by the tax authorities from the state of Sao Paulo are for calendar years 2005 through 2007. The total asserted claims by Brazilian state and federal tax authorities aggregate to $257 million for the alleged evasion of import and other taxes, $1.6 billion for interest, and $1.2 billion for various penalties, all determined using an exchange rate as of January 27, 2018. The Company has completed a thorough review of the matters and believes the asserted claims against the Company’s Brazilian subsidiary are without merit, and the Company is defending the claims vigorously. While the Company believes there is no legal basis for the alleged liability, due to the complexities and uncertainty surrounding the judicial process in Brazil and the nature of the claims asserting joint liability with the importer, the Company is unable to determine the likelihood of an unfavorable outcome against its Brazilian subsidiary and is unable to reasonably estimate a range of loss, if any. The Company does not expect a final judicial determination for several years. SRI International On September 4, 2013, SRI International, Inc. (“SRI”) asserted patent infringement claims against the Company in the U.S. District Court for the District of Delaware, accusing the Company's products and services in the area of network intrusion detection of infringing two U.S. patents. SRI sought monetary damages of at least a reasonable royalty and enhanced damages. The trial on these claims began on May 2, 2016 and on May 12, 2016, the jury returned a verdict finding willful infringement of the asserted patents. The jury awarded SRI damages of $23.7 million. On May 25, 2017, the Court awarded SRI enhanced damages and attorneys’ fees, entered judgment in the new amount of $57.0 million, and ordered an ongoing royalty of 3.5% through the expiration of the patents in 2018. The Company has appealed to the United States Court of Appeals for the Federal Circuit on various grounds. The Company believes it has strong arguments to overturn the jury verdict and/or reduce the damages award. While the ultimate outcome of the case may still result in a loss, the Company does not expect it to be material. SSL SSL Services, LLC (“SSL”) has asserted claims for patent infringement against the Company in the U.S. District Court for the Eastern District of Texas. The proceeding was instituted on March 25, 2015. SSL alleges that the Company's AnyConnect products that include Virtual Private Networking functions infringed a U.S. patent owned by SSL. SSL seeks money damages from the Company. On August 18, 2015, the Company petitioned the Patent Trial and Appeal Board (“PTAB”) of the United States Patent and Trademark Office to review whether the patent SSL has asserted against the Company is valid over prior art. On February 23, 2016, a PTAB multi-judge panel found a reasonable likelihood that the Company would prevail in showing that SSL’s patent claims are unpatentable and instituted proceedings. On June 28, 2016, in light of the PTAB’s decision to review the patent’s validity, the district court issued an order staying the district court case pending the final written decision from the PTAB. On February 22, 2017, following a hearing, the PTAB issued its Final Written Decision that the patent’s claims are unpatentable. SSL has appealed this decision to the Court of Appeals for the Federal Circuit. The Company believes it has strong arguments that the Company's products do not infringe and the patent is invalid. If the Company does not prevail and a jury were to find that the Company's AnyConnect products infringe, the Company believes damages, as appropriately measured, would be immaterial. Due to uncertainty surrounding patent litigation processes, the Company is unable to reasonably estimate the ultimate outcome of this litigation at this time. Straight Path On September 24, 2014, Straight Path IP Group, Inc. (“Straight Path”) asserted patent infringement claims against the Company in U.S. District Court for the Northern District of California, accusing the Company’s 9971 IP Phone, Unified Communications Manager working in conjunction with 9971 IP Phones, and Video Communication Server products of infringement. All of the asserted patents have expired and Straight Path was therefore limited to seeking monetary damages for the alleged past infringement. On November 13, 2017, the Court granted the Company's motion for summary judgment of non-infringement, thereby dismissing Straight Path's claims against the Company and cancelling a trial which had been set for March 12, 2018. On January 16, 2018, Straight Path appealed to the U.S. Court of Appeal for the Federal Circuit. DXC Technology On August 21, 2015, the Company and Cisco Systems Capital Corporation (“Cisco Capital”) filed an action in Santa Clara County Superior Court for declaratory judgment and breach of contract against HP Inc. (“HP”) regarding a services agreement for management services of a third party’s network. HP prepaid the service agreement through a financing arrangement with Cisco Capital. HP terminated its agreement with the Company, and pursuant to the terms of the service agreement with HP, the Company determined the credit HP was entitled to receive under the agreement. HP disputed the Company’s credit calculation and contended that the Company owes a larger credit to HP than the Company had calculated. In December 2015, the Company filed an amended complaint which dropped the breach of contract claim in light of HP’s continuing payments to Cisco Capital under the financing arrangement. On January 19, 2016, HP Inc. filed a counterclaim for breach of contract simultaneously with its answer to the amended complaint. DXC Technology Corporation (“DXC”) reported that it is the party in interest in this matter pursuant to the Separation and Distribution Agreement between the then Hewlett-Packard Co. and Hewlett Packard Enterprise Company (“HPE") and the subsequent Separation and Distribution Agreement between HPE and DXC. On January 8, 2018, the court continued the trial date from March 12, 2018 to June 11, 2018. The Company is unable to reasonably estimate the ultimate outcome of this litigation due to uncertainty surrounding the litigation process. However, the Company does not anticipate that its obligation, if any, regarding the final outcome of the dispute would be material. In addition, the Company is subject to legal proceedings, claims, and litigation arising in the ordinary course of business, including intellectual property litigation. While the outcome of these matters is currently not determinable, the Company does not expect that the ultimate costs to resolve these matters will have a material adverse effect on its consolidated financial position, results of operations, or cash flows. |
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Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shareholders' Equity | Shareholders’ Equity
During the six months ended January 27, 2018, the Company declared and paid cash dividends of $0.58 per common share, or $2.9 billion, on the Company’s outstanding common stock. During the six months ended January 28, 2017, the Company declared and paid cash dividends of $0.52 per common share, or $2.6 billion, on the Company’s outstanding common stock. On February 14, 2018, the Company’s Board of Directors declared a quarterly dividend of $0.33 per common share to be paid on April 25, 2018 to all shareholders of record as of the close of business on April 5, 2018. Any future dividends will be subject to the approval of the Company's Board of Directors.
In September 2001, the Company’s Board of Directors authorized a stock repurchase program. On February 14, 2018, the Company’s Board of Directors authorized a $25 billion increase to the stock repurchase program. The remaining authorized amount for stock repurchases under this program, including the additional authorization, is approximately $31 billion, with no termination date. A summary of the stock repurchase activity for fiscal year 2018 and 2017 under the stock repurchase program, reported based on the trade date, is summarized as follows (in millions, except per-share amounts):
There were $240 million stock repurchases pending settlement as of January 27, 2018. There were $66 million of stock repurchases that were pending settlement as of July 29, 2017. The purchase price for the shares of the Company’s stock repurchased is reflected as a reduction to shareholders’ equity. The Company is required to allocate the purchase price of the repurchased shares as (i) a reduction to retained earnings and (ii) a reduction of common stock and additional paid-in capital.
The Company repurchased approximately 13 million and 14 million shares, for the six months ended January 27, 2018 and January 28, 2017, or $433 million and $432 million of common stock, respectively, in settlement of employee tax withholding obligations due upon the vesting of restricted stock or stock units. (d) Preferred Stock Under the terms of the Company’s Articles of Incorporation, the Board of Directors may determine the rights, preferences, and terms of the Company’s authorized but unissued shares of preferred stock. |
Employee Benefit Plans |
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Employee Benefit Plans | Employee Benefit Plans
Stock Incentive Plan Program Description As of January 27, 2018, the Company had one stock incentive plan: the 2005 Stock Incentive Plan (the “2005 Plan”). In addition, the Company has, in connection with the acquisitions of various companies, assumed the share-based awards granted under stock incentive plans of the acquired companies or issued share-based awards in replacement thereof. Share-based awards are designed to reward employees for their long-term contributions to the Company and provide incentives for them to remain with the Company. The number and frequency of share-based awards are based on competitive practices, operating results of the Company, government regulations, and other factors. The Company’s primary stock incentive plan is summarized as follows: 2005 Plan As of January 27, 2018, the maximum number of shares issuable under the 2005 Plan over its term was 694 million shares, plus shares from certain previous plans that are forfeited or are terminated for any other reason before being exercised or settled. If any awards granted under the 2005 Plan are forfeited or are terminated for any other reason before being exercised or settled, the unexercised or unsettled shares underlying the awards will again be available under the 2005 Plan. In addition, starting November 19, 2013, shares withheld by the Company from an award other than a stock option or stock appreciation right to satisfy withholding tax liabilities resulting from such award will again be available for issuance, based on the fungible share ratio in effect on the date of grant. Pursuant to an amendment approved by the Company's shareholders on November 12, 2009, the number of shares available for issuance under the 2005 Plan is reduced by 1.5 shares for each share awarded as a stock grant or a stock unit, and any shares underlying awards outstanding from certain previous plans that expire unexercised at the end of their maximum terms become available for reissuance under the 2005 Plan. The 2005 Plan permits the granting of stock options, restricted stock, and restricted stock units ("RSUs"), the vesting of which may be performance-based or market-based along with the requisite service requirement, and stock appreciation rights to employees (including employee directors and officers), consultants of the Company and its subsidiaries and affiliates, and non-employee directors of the Company. Stock options and stock appreciation rights granted under the 2005 Plan have an exercise price of at least 100% of the fair market value of the underlying stock on the grant date. The expiration date for stock options and stock appreciation rights shall be no later than 10 years from the grant date. The stock options will generally become exercisable for 20% or 25% of the option shares one year from the date of grant and then ratably over the following 48 months or 36 months, respectively. Time-based stock grants and time-based RSUs will generally vest over a four year term. The majority of the performance-based and market-based RSUs vests at the end of the three-year requisite service period or earlier if the award recipient meets certain retirement eligibility conditions. Certain performance-based RSUs, that are based on the achievement of financial and/or non-financial operating goals, typically vest upon the achievement of milestones (and may require subsequent service periods), with overall vesting of the shares underlying the award ranging from six months to three years. The Compensation and Management Development Committee of the Board of Directors has the discretion to use different vesting schedules. Stock appreciation rights may be awarded in combination with stock options or stock grants, and such awards shall provide that the stock appreciation rights will not be exercisable unless the related stock options or stock grants are forfeited. Stock grants may be awarded in combination with non-statutory stock options, and such awards may provide that the stock grants will be forfeited in the event that the related non-statutory stock options are exercised.
The Company has an Employee Stock Purchase Plan, which includes its subplan named the International Employee Stock Purchase Plan (together, the “Purchase Plan”), under which 621 million shares of the Company’s common stock have been reserved for issuance as of January 27, 2018. Eligible employees are offered shares through a 24-month offering period, which consists of four consecutive 6-month purchase periods. Employees may purchase a limited number of shares of the Company’s stock at a discount of up to 15% of the lesser of the market value at the beginning of the offering period or the end of each 6-month purchase period. The Purchase Plan is scheduled to terminate on January 3, 2020. The Company issued 12 million shares under the Purchase Plan during the six months ended January 27, 2018 and January 28, 2017. As of January 27, 2018, 88 million shares were available for issuance under the Purchase Plan.
Share-based compensation expense consists primarily of expenses for stock options, stock purchase rights, restricted stock, and RSUs granted to employees. The following table summarizes share-based compensation expense (in millions):
As of January 27, 2018, the total compensation cost related to unvested share-based awards not yet recognized was $3.4 billion, which is expected to be recognized over approximately 2.6 years on a weighted-average basis.
A summary of share-based awards available for grant is as follows (in millions):
As reflected in the preceding table, for each share awarded as restricted stock or subject to a restricted stock unit award under the 2005 Plan, an equivalent of 1.5 shares was deducted from the available share-based award balance. For restricted stock units that were awarded with vesting contingent upon the achievement of future financial performance or market-based metrics, the maximum awards that can be achieved upon full vesting of such awards were reflected in the preceding table.
A summary of the restricted stock and stock unit activity, which includes time-based and performance-based or market-based RSUs, is as follows (in millions, except per-share amounts):
A summary of the stock option activity is as follows (in millions, except per-share amounts):
The following table summarizes significant ranges of outstanding and exercisable stock options as of January 27, 2018 (in millions, except years and share prices):
The aggregate intrinsic value in the preceding table represents the total pretax intrinsic value, based on the Company’s closing stock price of $42.56 as of January 26, 2018, that would have been received by the option holders had those option holders exercised their stock options as of that date. The total number of in-the-money stock options exercisable as of January 27, 2018 was 5 million. As of July 29, 2017, 6 million outstanding stock options were exercisable and the weighted-average exercise price was $5.61.
Time-based restricted stock units and performance-based restricted stock units ("PRSUs") that are based on the Company’s financial performance metrics or non-financial operating goals are valued using the market value of the Company’s common stock on the date of grant, discounted for the present value of expected dividends. On the date of grant, the Company estimated the fair value of the total shareholder return ("TSR") component of the PRSUs using a Monte Carlo simulation model. The assumptions for the valuation of time-based RSUs and PRSUs are summarized as follows:
The PRSUs granted during the periods presented are contingent on the achievement of the Company’s financial performance metrics, its comparative market-based returns, or the achievement of financial and non-financial operating goals. For the awards based on financial performance metrics or comparative market-based returns, generally 50% of the PRSUs are earned based on the average of annual operating cash flow and earnings per share goals established at the beginning of each fiscal year over a three-year performance period. Generally, the remaining 50% of the PRSUs are earned based on the Company’s TSR measured against the benchmark TSR of a peer group over the same period. Each PRSU recipient could vest in 0% to 150% of the target shares granted contingent on the achievement of the Company's financial performance metrics or its comparative market-based returns and 0% to 100% of the target shares granted contingent on the achievement of non-financial operating goals. |
Comprehensive Income (Loss) |
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Comprehensive Income | Comprehensive Income (Loss) The components of AOCI, net of tax, and the other comprehensive income (loss), excluding noncontrolling interest, for the six months ended January 27, 2018 and January 28, 2017 are summarized as follows (in millions):
The net gains (losses) reclassified out of AOCI into the Consolidated Statements of Operations, with line item location, during each period were as follows (in millions):
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Income Taxes |
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Income Taxes | Income Taxes The following table provides details of income taxes (in millions, except percentages):
On December 22, 2017, the Tax Act was enacted. The Tax Act significantly revises the U.S. corporate income tax by, among other things, lowering the statutory corporate income tax rate (“federal tax rate”) from 35% to 21% effective January 1, 2018, implementing a modified territorial tax system, and imposing a mandatory one-time transition tax on accumulated earnings of foreign subsidiaries. As a fiscal-year taxpayer, certain provisions of the Tax Act impact the Company in fiscal 2018, including the change in the federal tax rate and the one-time transition tax, while other provisions will be effective at the beginning of fiscal 2019, including the implementation of a modified territorial tax system and other changes to how foreign earnings are subject to U.S. tax, and elimination of the domestic manufacturing deduction. As a result of the decrease in the federal tax rate from 35% to 21% effective January 1, 2018, the Company has computed its income tax expense for the July 28, 2018 fiscal year using a blended federal tax rate of 27%. The 21% federal tax rate will apply to the Company’s fiscal year ending July 27, 2019 and each year thereafter. The Company must remeasure its deferred tax assets and liabilities ("DTA") using the federal tax rate that will apply when the related temporary differences are expected to reverse. As of January 27, 2018, the Company has approximately $75 billion in undistributed earnings for certain foreign subsidiaries. Substantially all of these undistributed earnings are subject to the U.S. mandatory one-time transition tax and are eligible to be repatriated to the U.S. without additional U.S. tax under the Tax Act. The Company has historically asserted its intention to indefinitely reinvest foreign earnings in certain foreign subsidiaries. The Company has reevaluated its historic assertion as a result of enactment of the Tax Act and no longer considers these earnings to be indefinitely reinvested in its foreign subsidiaries. As a result of this change in assertion, the Company has recorded a $1.2 billion tax expense for foreign withholding tax in the second quarter of fiscal 2018. In the third quarter of fiscal 2018, the Company anticipates repatriating $67 billion of foreign subsidiary earnings to the U.S. (in the form of cash, cash equivalents, or investments), of which $26 billion was repatriated to the U.S. in February 2018. During the three months ended January 27, 2018, the Company recorded a provisional tax expense of $11.1 billion related to the Tax Act, comprised of $9.0 billion of U.S. transition tax, $1.2 billion of foreign withholding tax (discussed above), and $0.9 billion re-measurement of net DTA. The Company plans to pay the transition tax in installments over eight years in accordance with the Tax Act. The $1.2 billion foreign withholding tax was paid in February 2018. In December 2017, the Securities and Exchange Commission staff issued Staff Accounting Bulletin No. 118, which addresses how a company recognizes provisional amounts when a company does not have the necessary information available, prepared or analyzed (including computations) in reasonable detail to complete its accounting for the effect of the changes in the Tax Act. The measurement period ends when a company has obtained, prepared, and analyzed the information necessary to finalize its accounting, but cannot extend beyond one year. The final impact of the Tax Act may differ from the above provisional amounts due to changes in interpretations of the Tax Act, any legislative action to address questions that arise because of the Tax Act, by changes in accounting standard for income taxes and related interpretations in response to the Tax Act, and any updates or changes to estimates used in the provisional amounts. The Company has determined that the $9.0 billion of tax expense for the U.S. transition tax on accumulated earnings of foreign subsidiaries, the $1.2 billion of foreign withholding tax, and the $0.9 billion of tax expense for DTA re-measurement were each provisional amounts and reasonable estimates as of January 27, 2018. Estimates used in the provisional amounts include: the anticipated reversal pattern of the gross DTAs; and earnings, cash positions, foreign taxes and withholding taxes attributable to foreign subsidiaries. As of January 27, 2018, the Company had $2.0 billion of unrecognized tax benefit, of which $1.6 billion, if recognized, would favorably impact the effective tax rate. The Company regularly engages in discussions and negotiations with tax authorities regarding tax matters in various jurisdictions. The Company believes it is reasonably possible that certain federal, foreign and state tax matters may be concluded in the next 12 months. Specific positions that may be resolved include issues involving transfer pricing and various other matters. The Company estimates that the unrecognized tax benefits at January 27, 2018 could be reduced by approximately $250 million in the next 12 months. |
Segment Information and Major Customers |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information and Major Customers | Segment Information and Major Customers
The Company conducts business globally and is primarily managed on a geographic basis consisting of three segments: the Americas, EMEA, and APJC. The Company’s management makes financial decisions and allocates resources based on the information it receives from its internal management system. Sales are attributed to a segment based on the ordering location of the customer. The Company does not allocate research and development, sales and marketing, or general and administrative expenses to its segments in this internal management system because management does not include the information in its measurement of the performance of the operating segments. In addition, the Company does not allocate amortization and impairment of acquisition-related intangible assets, share-based compensation expense, significant litigation settlements and other contingencies, charges related to asset impairments and restructurings, and certain other charges to the gross margin for each segment because management does not include this information in its measurement of the performance of the operating segments. Summarized financial information by segment for the three and six months ended January 27, 2018 and January 28, 2017, based on the Company’s internal management system and as utilized by the Company’s Chief Operating Decision Maker ("CODM"), is as follows (in millions):
Revenue in the United States was $6.1 billion and $5.9 billion for the three months ended January 27, 2018 and January 28, 2017, respectively, and was $12.6 billion and $12.5 billion for the six months ended January 27, 2018 and January 28, 2017, respectively.
The Company designs, manufactures, and sells Internet Protocol (IP)-based networking and other products related to the communications and IT industry and provides services associated with these products and their use. Effective in the first quarter of fiscal 2018, the Company began reporting its product and service revenue in the following five categories: Infrastructure Platforms, Applications, Security, Other Products, and Services. The change better aligns the Company's product categories with its evolving business model. Prior period amounts have been reclassified to conform to the current period's presentation. These products, primarily integrated by Cisco IOS Software, link geographically dispersed local-area networks (LANs), metropolitan-area networks (MANs), and wide-area networks (WANs). The following table presents revenue for groups of similar products and services (in millions):
The majority of the Company’s assets, excluding cash and cash equivalents and investments, was attributable to its U.S. operations as of each of January 27, 2018 and July 29, 2017. The Company’s total cash and cash equivalents and investments held by various foreign subsidiaries were $71.3 billion and $67.5 billion as of January 27, 2018 and July 29, 2017, respectively, and the remaining $2.4 billion and $3.0 billion at the respective period ends were available in the United States. Property and equipment information is based on the physical location of the assets. The following table presents property and equipment information for geographic areas (in millions):
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Net Income (Loss) per Share |
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Net Income per Share | Net Income (Loss) per Share The following table presents the calculation of basic and diluted net income (loss) per share (in millions, except per-share amounts):
Employee equity share options, unvested shares, and similar equity instruments are treated as potential common shares outstanding in computing diluted earnings per share. Diluted shares outstanding include the dilutive effect of in-the-money options, unvested restricted stock, and restricted stock units. The dilutive effect of such equity awards is calculated based on the average share price for each fiscal period using the treasury stock method. Under the treasury stock method, the amount the employee must pay for exercising stock options and the amount of compensation cost for future service that has not yet recognized would be recorded in additional paid-in capital when the award becomes deductible are collectively assumed to be used to repurchase shares. For the three and six months ended January 27, 2018, the Company excluded the impact of potentially dilutive common shares from the calculation of net income (loss) per share as the inclusion would have an antidilutive effect. The Company excluded antidilutive employee-share based awards of 20 million and 103 million for the three and six months ended January 28, 2017. |
Recent Accounting Pronouncements (Policies) |
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Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fiscal Period | The fiscal year for Cisco Systems, Inc. (the “Company” or “Cisco”) is the 52 or 53 weeks ending on the last Saturday in July. Fiscal 2018 and fiscal 2017 are each 52-week fiscal years. |
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Basis of Presentation | The Consolidated Financial Statements include the accounts of Cisco and its subsidiaries. All intercompany accounts and transactions have been eliminated. The Company conducts business globally and is primarily managed on a geographic basis in the following three geographic segments: the Americas; Europe, Middle East, and Africa (EMEA); and Asia Pacific, Japan, and China (APJC). The accompanying financial data as of January 27, 2018 and for the three and six months ended January 27, 2018 and January 28, 2017 has been prepared by the Company, without audit, pursuant to the rules and regulations of the U.S. Securities and Exchange Commission ("SEC"). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States ("GAAP") have been condensed or omitted pursuant to such rules and regulations. The July 29, 2017 Consolidated Balance Sheet was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States. However, the Company believes that the disclosures are adequate to make the information presented not misleading. These Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended July 29, 2017. The Company consolidates its investments in a venture fund managed by SOFTBANK Corp. and its affiliates (“SOFTBANK”) as this is a variable interest entity and the Company is the primary beneficiary. The noncontrolling interests attributed to SOFTBANK are presented as a separate component from the Company’s equity in the equity section of the Consolidated Balance Sheets. SOFTBANK’s share of the earnings in the venture fund are not presented separately in the Consolidated Statements of Operations as these amounts are not material for any of the fiscal periods presented. In the opinion of management, all normal recurring adjustments necessary to present fairly the consolidated balance sheet as of January 27, 2018; the results of operations and the statements of comprehensive income (loss) for the three and six months ended January 27, 2018 and January 28, 2017; the statements of cash flows and equity for the six months ended January 27, 2018 and January 28, 2017, as applicable, have been made. The results of operations for the three and six months ended January 27, 2018 are not necessarily indicative of the operating results for the full fiscal year or any future periods. |
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Reclassification | Certain reclassifications have been made to the amounts in prior periods in order to conform to the current period’s presentation. The Company has evaluated subsequent events through the date that the financial statements were issued. |
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New Accounting Updates Recently Adopted and Recent Accounting Standards or Updates Not Yet Effective as of Period End | (a) New Accounting Updates Recently Adopted Share-Based Compensation In March 2016, the FASB issued an accounting standard update that impacts the accounting for share-based payment transactions, including income tax consequences, classification of awards as either equity or liabilities, and classification on the Consolidated Statements of Cash Flows. Cisco adopted this accounting standard update beginning the first quarter of fiscal 2018 on a prospective basis. This resulted in an overall decrease in the effective tax rate for the six months ended January 27, 2018 due to recognition of excess tax benefits from share-based compensation. The application of this accounting standard update did not have a material impact on the Company's Consolidated Financial Statements. (b) Recent Accounting Standards or Updates Not Yet Effective as of Period End Revenue Recognition In May 2014, the FASB issued a new accounting standard related to revenue recognition. The new standard will supersede nearly all U.S. GAAP on revenue recognition and eliminate industry-specific guidance. The underlying principle of the new standard is to recognize revenue when a customer obtains control of promised goods or services at an amount that reflects the consideration that is expected to be received in exchange for those goods or services. It also requires increased disclosures including the nature, amount, timing, and uncertainty of revenues and cash flows related to contracts with customers. The standard allows two methods of adoption: i) retrospectively to each prior period presented (“full retrospective method”), or ii) retrospectively with the cumulative effect recognized in retained earnings as of the date of adoption ("modified retrospective method"). Cisco will adopt the new standard using the modified retrospective method at the beginning of its first quarter of fiscal 2019. Cisco is on schedule in establishing new accounting policies, implementing systems and processes (including more extensive use of estimates), and internal controls necessary to support the requirements of the new standard. Cisco has completed its preliminary assessment of the financial statement impact of the new standard, as discussed below, and will continue to update that assessment as more information becomes available. The new standard will primarily impact Cisco’s revenue recognition for software arrangements and sales to two-tier distributors. In both areas, the new standard will accelerate the recognition of revenue. The table below details both the current and expected revenue recognition timing in these areas:
Cisco expects that the new standard will not have a material impact on total revenue in the year of adoption based on two factors: i) revenue will be accelerated consistent with the changes in timing as indicated in the preceding table, largely offset by ii) the reduction of revenue from software arrangements where revenue was previously deferred in prior periods and recognized ratably over time as required under the current standard. This preliminary assessment is based on the types and number of revenue arrangements currently in place. The exact impact of the new standard will be dependent on facts and circumstances at adoption and could vary from quarter to quarter. In addition to the above revenue recognition timing impacts, the new standard will require incremental contract acquisition costs (such as sales commissions) for customer contracts to be capitalized and amortized over the contract period. Currently, these costs are expensed as incurred. Cisco will be required to record cumulative effect adjustments to retained earnings (net of tax) upon adopting the new standard at the beginning of fiscal 2019. The most significant of these adjustments will be to reduce product deferred revenue and increase retained earnings at the date of adoption to reflect revenue that would have been already recognized under the new standard related to existing arrangements. There will also be an adjustment to increase accounts receivable and reduce inventories related to the changes in revenue recognition on sales to two-tier distributors. Lastly, an adjustment will be recorded to establish an asset and increase retained earnings related to the requirement to capitalize incremental contract acquisition costs for customer contracts. Financial Instruments In January 2016, the FASB issued an accounting standard update that changes the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. The accounting standard update will be effective for Cisco beginning in the first quarter of fiscal 2019, and early adoption is permitted. The most significant impact of this accounting standard update for Cisco is that it will require the remeasurement of investments that are not accounted for under the equity method at fair value at the end of each reporting period with the changes recorded to the income statement. While Cisco is currently evaluating the impact of this accounting standard update on its Consolidated Financial Statements, Cisco expects that this accounting standard update will increase the variability of other income (loss), net. Leases In February 2016, the FASB issued an accounting standard update related to leases requiring lessees to recognize operating and financing lease liabilities on the balance sheet, as well as corresponding right-of-use assets. The new lease standard also makes some changes to lessor accounting and aligns key aspects of the lessor accounting model with the revenue recognition standard. In addition, disclosures will be required to enable users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. The accounting standard update will be effective for Cisco beginning in the first quarter of fiscal 2020 on a modified retrospective basis, and early adoption is permitted. Cisco is currently evaluating the impact of this accounting standard update on its Consolidated Financial Statements. Credit Losses of Financial Instruments In June 2016, the FASB issued an accounting standard update that requires measurement and recognition of expected credit losses for financial assets held based on historical experience, current conditions, and reasonable and supportable forecasts that affect the collectibility of the reported amount. The accounting standard update will be effective for Cisco beginning in the first quarter of fiscal 2021 on a modified retrospective basis, and early adoption in fiscal 2020 is permitted. Cisco is currently evaluating the impact of this accounting standard update on its Consolidated Financial Statements. Classification of Cash Flow Elements In August 2016, the FASB issued an accounting standard update related to the classification of certain cash receipts and cash payments on the statement of cash flows. The accounting standard update will be effective for Cisco beginning in the first quarter of fiscal 2019 on a retrospective basis, and early adoption is permitted. Cisco is currently evaluating the impact of this accounting standard update on its Consolidated Statements of Cash Flows. Income Taxes on Intra-Entity Transfers of Assets In October 2016, the FASB issued an accounting standard update that requires recognition of the income tax consequences of intra-entity transfers of assets (other than inventory) at the transaction date. The accounting standard update will be effective for Cisco beginning in the first quarter of fiscal 2019 on a modified retrospective basis, and early adoption is permitted. Cisco is currently evaluating the impact of this accounting standard update on its Consolidated Financial Statements. Restricted Cash in Statement of Cash Flow In November 2016, the FASB issued an accounting standard update that provides guidance on the classification and presentation of changes in restricted cash and cash equivalents in the statement of cash flows. The accounting standard update will be effective for Cisco beginning in the first quarter of fiscal 2019 using a retrospective transition method to each period presented, and early adoption is permitted. Cisco does not expect that this accounting standard update will have a material impact on its Consolidated Statements of Cash Flows. Definition of a Business In January 2017, the FASB issued an accounting standard update that clarifies the definition of a business to help companies evaluate whether acquisition or disposal transactions should be accounted for as asset groups or as businesses. The accounting standard update will be effective for Cisco beginning in the first quarter of fiscal 2019 on a prospective basis. The impact of this accounting standard update will be fact dependent, but Cisco expects that some transactions that were previously accounted for as business combinations or disposal transactions will be accounted for as asset purchases or asset sales under the accounting standard update. Simplifying the Test for Goodwill Impairment In January 2017, the FASB issued an accounting standard update that removes Step 2 of the goodwill impairment test, which requires the assessment of fair value of individual assets and liabilities of a reporting unit to measure goodwill impairments. Goodwill impairment will now be the amount by which a reporting unit's carrying value exceeds its fair value. The accounting standard update will be effective for Cisco beginning in the first quarter of fiscal 2021 on a prospective basis, and early adoption is permitted. Cisco does not expect that this accounting standard update will impact its Consolidated Financial Statements. Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income In February 2018, the FASB issued a new accounting standard update that allows companies to reclassify from Accumulated Other Comprehensive Income to Retained Earnings stranded tax effects resulting from the enactment of the Tax Cuts and Jobs Act (the "Tax Act"). Cisco will adopt this accounting standard update in the third quarter of fiscal 2018 on a retrospective basis. The application of this accounting standard update will not have a material impact on the Company's Consolidated Financial Statements. |
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Financing Receivables and Operating Leases | Financing receivables primarily consist of lease receivables, loan receivables, and financed service contracts. Lease receivables represent sales-type and direct-financing leases resulting from the sale of the Company’s and complementary third-party products and are typically collateralized by a security interest in the underlying assets. Lease receivables consist of arrangements with terms of four years on average. Loan receivables represent financing arrangements related to the sale of the Company’s hardware, software, and services, which may include additional funding for other costs associated with network installation and integration of the Company’s products and services. Loan receivables generally have terms of up to three years. Financed service contracts include financing receivables related to technical support and advanced services. Revenue related to the technical support services is typically deferred and included in deferred service revenue and is recognized ratably over the period during which the related services are to be performed, which typically ranges from one to three years. |
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Impairment of Financing Receivable | The Company assesses the allowance for credit loss related to financing receivables on either an individual or a collective basis. The Company considers various factors in evaluating lease and loan receivables and the earned portion of financed service contracts for possible impairment on an individual basis. These factors include the Company’s historical experience, credit quality and age of the receivable balances, and economic conditions that may affect a customer’s ability to pay. When the evaluation indicates that it is probable that all amounts due pursuant to the contractual terms of the financing agreement, including scheduled interest payments, are unable to be collected, the financing receivable is considered impaired. All such outstanding amounts, including any accrued interest, will be assessed and fully reserved at the customer level. The Company’s internal credit risk ratings are categorized as 1 through 10, with the lowest credit risk rating representing the highest quality financing receivables. Typically, the Company also considers receivables with a risk rating of 8 or higher to be impaired and will include them in the individual assessment for allowance. These balances, as of January 27, 2018 and July 29, 2017, are presented under “(b) Credit Quality of Financing Receivables” above. The Company evaluates the remainder of its financing receivables portfolio for impairment on a collective basis and records an allowance for credit loss at the portfolio segment level. When evaluating the financing receivables on a collective basis, the Company uses expected default frequency rates published by a major third-party credit-rating agency as well as its own historical loss rate in the event of default, while also systematically giving effect to economic conditions, concentration of risk, and correlation. |
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Fair Value Measurement | Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be either recorded or disclosed at fair value, the Company considers the principal or most advantageous market in which it would transact, and it also considers assumptions that market participants would use when pricing the asset or liability.
The accounting guidance for fair value measurement requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is as follows: Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability, such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. |
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Fair Value of Financial Instruments | These assets were measured at fair value due to events or circumstances the Company identified as having significant impact on their fair value during the respective periods. To arrive at the valuation of these assets, the Company considers any significant changes in the financial metrics and economic variables and also uses third-party valuation reports to assist in the valuation as necessary. The fair value measurement of the impaired investments was classified as Level 3 because significant unobservable inputs were used in the valuation due to the absence of quoted market prices and inherent lack of liquidity. Significant unobservable inputs, which included financial metrics of comparable private and public companies, financial condition and near-term prospects of the investees, recent financing activities of the investees, and the investees’ capital structure as well as other economic variables, reflected the assumptions market participants would use in pricing these assets. The impairment charges, representing the difference between the net book value and the fair value as a result of the evaluation, were recorded to other income (loss), net. The remaining carrying value of the investments that were impaired was $44 million as of each of January 27, 2018 and January 28, 2017. The fair value for purchased intangible assets measured at fair value on a nonrecurring basis was categorized as Level 3 due to the use of significant unobservable inputs in the valuation. Significant unobservable inputs that were used included expected revenues and net income related to the assets and the expected life of the assets. The difference between the estimated fair value and the carrying value of the assets was recorded as an impairment charge, which was included in product cost of sales and operating expenses as applicable. Level 1 publicly traded equity securities are determined by using quoted prices in active markets for identical assets. Level 2 fixed income securities are priced using quoted market prices for similar instruments or nonbinding market prices that are corroborated by observable market data. The Company uses inputs such as actual trade data, benchmark yields, broker/dealer quotes, and other similar data, which are obtained from quoted market prices, independent pricing vendors, or other sources, to determine the ultimate fair value of these assets and liabilities. The Company uses such pricing data as the primary input to make its assessments and determinations as to the ultimate valuation of its investment portfolio and has not made, during the periods presented, any material adjustments to such inputs. The Company is ultimately responsible for the financial statements and underlying estimates. The Company’s derivative instruments are primarily classified as Level 2, as they are not actively traded and are valued using pricing models that use observable market inputs. The Company did not have any transfers between Level 1 and Level 2 fair value measurements during the periods presented. Level 3 assets include certain derivative instruments, the values of which are determined based on discounted cash flow models using inputs that the Company could not corroborate with market data. |
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Derivatives | The Company uses derivative instruments primarily to manage exposures to foreign currency exchange rate, interest rate, and equity price risks. The Company’s primary objective in holding derivatives is to reduce the volatility of earnings and cash flows associated with changes in foreign currency exchange rates, interest rates, and equity prices. The Company’s derivatives expose it to credit risk to the extent that the counterparties may be unable to meet the terms of the agreement. The Company does, however, seek to mitigate such risks by limiting its counterparties to major financial institutions. In addition, the potential risk of loss with any one counterparty resulting from this type of credit risk is monitored. Management does not expect material losses as a result of defaults by counterparties. |
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Offsetting of Derivative Instruments | The Company presents its derivative instruments at gross fair values in the Consolidated Balance Sheets. However, the Company’s master netting and other similar arrangements with the respective counterparties allow for net settlement under certain conditions, which are designed to reduce credit risk by permitting net settlement with the same counterparty. To further limit credit risk, the Company also enters into collateral security arrangements related to certain derivative instruments whereby cash is posted as collateral between the counterparties based on the fair market value of the derivative instrument. |
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Hedging Derivatives | The Company conducts business globally in numerous currencies. Therefore, it is exposed to adverse movements in foreign currency exchange rates. To limit the exposure related to foreign currency changes, the Company enters into foreign currency contracts. The Company does not enter into such contracts for speculative purposes. The Company hedges forecasted foreign currency transactions related to certain operating expenses and service cost of sales with currency options and forward contracts. These currency options and forward contracts, designated as cash flow hedges, generally have maturities of less than 24 months. The Company assesses effectiveness based on changes in total fair value of the derivatives. The effective portion of the derivative instrument’s gain or loss is initially reported as a component of AOCI and subsequently reclassified into earnings when the hedged exposure affects earnings. The ineffective portion, if any, of the gain or loss is reported in earnings immediately. During the periods presented, the Company did not discontinue any cash flow hedges for which it was probable that a forecasted transaction would not occur. The Company enters into foreign exchange forward and option contracts to reduce the short-term effects of foreign currency fluctuations on assets and liabilities such as foreign currency receivables, including long-term customer financings, investments, and payables. These derivatives are not designated as hedging instruments. Gains and losses on the contracts are included in other income (loss), net, and substantially offset foreign exchange gains and losses from the remeasurement of intercompany balances or other current assets, investments, or liabilities denominated in currencies other than the functional currency of the reporting entity. The Company hedges certain net investments in its foreign operations with forward contracts to reduce the effects of foreign currency fluctuations on the Company’s net investment in those foreign subsidiaries.
Interest Rate Derivatives, Investments The Company’s primary objective for holding fixed income securities is to achieve an appropriate investment return consistent with preserving principal and managing risk. To realize these objectives, the Company may utilize interest rate swaps or other derivatives designated as fair value or cash flow hedges. As of January 27, 2018 and July 29, 2017, the Company did not have any outstanding interest rate derivatives related to its fixed income securities. Interest Rate Derivatives Designated as Fair Value Hedges, Long-Term Debt In the six months ended January 27, 2018, the Company did not enter into any interest rate swaps. In prior fiscal years, the Company entered into interest rate swaps designated as fair value hedges related to fixed-rate senior notes that are due in fiscal 2019 through 2025. Under these interest rate swaps, the Company receives fixed-rate interest payments and makes interest payments based on LIBOR plus a fixed number of basis points. The effect of such swaps is to convert the fixed interest rates of the senior fixed-rate notes to floating interest rates based on LIBOR. The gains and losses related to changes in the fair value of the interest rate swaps are included in interest expense and 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. The fair value of the interest rate swaps was reflected in other current assets and other assets.
The Company may hold equity securities for strategic purposes or to diversify its overall investment portfolio. The publicly traded equity securities in the Company’s portfolio are subject to price risk. To manage its exposure to changes in the fair value of certain equity securities, the Company has periodically entered into equity derivatives that are designated as fair value hedges. The changes in the value of the hedging instruments are included in other income (loss), net, and offset the change in the fair value of the underlying hedged investment. |
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Derivatives Not Designated as Hedges | In addition, the Company periodically enters into equity derivatives that are not designated as accounting hedges. The changes in the fair value of these derivatives are also included in other income (loss), net. The Company is also exposed to variability in compensation charges related to certain deferred compensation obligations to employees. Although not designated as accounting hedges, the Company utilizes derivatives such as total return swaps to economically hedge this exposure. |
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Hedge Effectiveness | For the periods presented, amounts excluded from the assessment of hedge effectiveness were not material for fair value, cash flow, and net investment hedges. In addition, hedge ineffectiveness for fair value, cash flow, and net investment hedges was not material for any of the periods presented. |
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Commitments and Contingencies | The Company records a liability for firm, noncancelable, and unconditional purchase commitments for quantities in excess of its future demand forecasts consistent with the valuation of the Company’s excess and obsolete inventory. The Company purchases components from a variety of suppliers and uses several contract manufacturers to provide manufacturing services for its products. During the normal course of business, in order to manage manufacturing lead times and help ensure adequate component supply, the Company enters into agreements with contract manufacturers and suppliers that either allow them to procure inventory based upon criteria as defined by the Company or establish the parameters defining the Company’s requirements. A significant portion of the Company’s reported purchase commitments arising from these agreements consists of firm, noncancelable, and unconditional commitments. Certain of these purchase commitments with contract manufacturers and suppliers relate to arrangements to secure long-term pricing for certain product components for multi-year periods. In certain instances, these agreements allow the Company the option to cancel, reschedule, and adjust the Company’s requirements based on its business needs prior to firm orders being placed |
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Indemnifications | In the normal course of business, the Company indemnifies other parties, including customers, lessors, and parties to other transactions with the Company, with respect to certain matters. The Company has agreed to hold such parties harmless against losses arising from a breach of representations or covenants or out of intellectual property infringement or other claims made against certain parties. These agreements may limit the time within which an indemnification claim can be made and the amount of the claim. |
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Segment Information | The Company conducts business globally and is primarily managed on a geographic basis consisting of three segments: the Americas, EMEA, and APJC. The Company’s management makes financial decisions and allocates resources based on the information it receives from its internal management system. Sales are attributed to a segment based on the ordering location of the customer. The Company does not allocate research and development, sales and marketing, or general and administrative expenses to its segments in this internal management system because management does not include the information in its measurement of the performance of the operating segments. In addition, the Company does not allocate amortization and impairment of acquisition-related intangible assets, share-based compensation expense, significant litigation settlements and other contingencies, charges related to asset impairments and restructurings, and certain other charges to the gross margin for each segment because management does not include this information in its measurement of the performance of the operating segments. |
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Net Income per Share | Employee equity share options, unvested shares, and similar equity instruments are treated as potential common shares outstanding in computing diluted earnings per share. Diluted shares outstanding include the dilutive effect of in-the-money options, unvested restricted stock, and restricted stock units. The dilutive effect of such equity awards is calculated based on the average share price for each fiscal period using the treasury stock method. Under the treasury stock method, the amount the employee must pay for exercising stock options and the amount of compensation cost for future service that has not yet recognized would be recorded in additional paid-in capital when the award becomes deductible are collectively assumed to be used to repurchase shares. |
Recent Accounting Pronouncements (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 27, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Current and Expected Revenue Recognition Timing | The table below details both the current and expected revenue recognition timing in these areas:
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Acquisitions and Divestitures (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 27, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Business Acquisitions, by Acquisition | A summary of the allocation of the total purchase consideration is presented as follows (in millions):
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Goodwill and Purchased Intangible Assets (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 27, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill by Reportable Segment | The following table presents the goodwill allocated to the Company’s reportable segments as of and during the six months ended January 27, 2018 (in millions):
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Schedule of Intangible Assets Acquired Through Business Combinations | The following table presents details of the Company’s intangible assets acquired through acquisitions completed during the six months ended January 27, 2018 (in millions, except years):
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Schedule of Purchased Intangible Assets | The following tables present details of the Company’s purchased intangible assets (in millions):
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Schedule of Amortization of Purchased Intangible Assets | The following table presents the amortization of purchased intangible assets, including impairment charges (in millions):
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Schedule of Estimated Future Amortization Expense of Purchased Intangible Assets | The estimated future amortization expense of purchased intangible assets with finite lives as of January 27, 2018 is as follows (in millions):
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Restructuring and Other Charges (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 27, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring Charges [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Liabilities Related to Restructuring and Other Charges | The following tables summarize the activities related to the restructuring and other charges (in millions):
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Balance Sheet Details (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 27, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories | The following tables provide details of selected balance sheet items (in millions):
For such investments that were accounted for under the equity and cost method as of January 27, 2018 and July 29, 2017, the amounts are summarized in the following table (in millions):
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Property and Equipment, Net |
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Deferred Revenue |
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Financing Receivables and Operating Leases (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 27, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financing Receivables | A summary of the Company's financing receivables is presented as follows (in millions):
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Contractual Maturities of the Gross Lease Receivables | Future minimum lease payments to the Company on lease receivables as of January 27, 2018 are summarized as follows (in millions):
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Schedule of Internal Credit Risk Rating for Each Portfolio Segment and Class | Gross receivables, excluding residual value, less unearned income categorized by the Company’s internal credit risk rating as of January 27, 2018 and July 29, 2017 are summarized as follows (in millions):
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Schedule of Financing Receivables by Portfolio Segment and Class Aging Analysis | The following tables present the aging analysis of gross receivables, excluding residual value and less unearned income as of January 27, 2018 and July 29, 2017 (in millions):
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Allowance for Credit Loss and Related Financing Receivables | The allowances for credit loss and the related financing receivables are summarized as follows (in millions):
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Schedule of Property Subject to or Available for Operating Lease | Amounts relating to equipment on operating lease assets and the associated accumulated depreciation are summarized as follows (in millions):
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Schedule of Future Minimum Rental Payments for Operating Leases | Minimum future rentals on noncancelable operating leases as of January 27, 2018 are summarized as follows (in millions):
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Investments (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 27, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Available-for-Sale Investments | The following tables summarize the Company’s available-for-sale investments (in millions):
(1) Includes investments that were pending settlement as of the respective fiscal years. The net unsettled investment purchases (sales) were $(3) million and $(30) million as of January 27, 2018 and July 29, 2017, respectively. |
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Gross Realized Gains and Gross Realized Losses Related to Available-for-Sale Investment | The following table presents the gross realized gains and gross realized losses related to available-for-sale investments (in millions):
The following table presents the realized net gains (losses) related to available-for-sale investments by security type (in millions):
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Available-for-Sale Investments with Gross Unrealized Losses | The following tables present the breakdown of the available-for-sale investments with gross unrealized losses and the duration that those losses had been unrealized at January 27, 2018 and July 29, 2017 (in millions):
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Maturities of Fixed Income Securities | The following table summarizes the maturities of the Company’s fixed income securities as of January 27, 2018 (in millions):
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Carrying Value of Investments | The following tables provide details of selected balance sheet items (in millions):
For such investments that were accounted for under the equity and cost method as of January 27, 2018 and July 29, 2017, the amounts are summarized in the following table (in millions):
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Fair Value (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 27, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | Assets and liabilities measured at fair value on a recurring basis as of January 27, 2018 and July 29, 2017 were as follows (in millions):
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Fair Value Measurements, Nonrecurring | The following table presents the Company’s assets that were measured at fair value on a nonrecurring basis during the indicated periods and the related recognized gains and losses for the periods indicated (in millions):
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Borrowings (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 27, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Short-Term Debt | The following table summarizes the Company’s short-term debt (in millions, except percentages):
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Schedule of Long-Term Debt | The following table summarizes the Company’s long-term debt (in millions, except percentages):
|
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Schedule of Principal Payments for Long-Term Debt | As of January 27, 2018, future principal payments for long-term debt, including the current portion, are summarized as follows (in millions):
|
Derivative Instruments (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 27, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivatives Recorded at Fair Value | The fair values of the Company’s derivative instruments and the line items on the Consolidated Balance Sheets to which they were recorded are summarized as follows (in millions):
|
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Gains and Losses on Derivatives Designated as Cash Flow Hedges | The effects of the Company’s cash flow and net investment hedging instruments on other comprehensive income (OCI) and the Consolidated Statements of Operations are summarized as follows (in millions):
|
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Schedule of Derivative Fair Value Hedge Instruments Gain Loss in Statement of Financial Performance | The effect on the Consolidated Statements of Operations of derivative instruments designated as fair value hedges and the underlying hedged items is summarized as follows (in millions):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Effect of Derivative Instruments Not Designated as Fair Value Hedges on Consolidated Statement of Operations Summary | The effect on the Consolidated Statements of Operations of derivative instruments not designated as hedges is summarized as follows (in millions):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Notional Amounts of Derivatives Outstanding | The notional amounts of the Company’s outstanding derivatives are summarized as follows (in millions):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Offsetting Assets and Liabilities | Information related to these offsetting arrangements is summarized as follows (in millions):
|
Commitments and Contingencies (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jan. 27, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Future Annual Minimum Lease Payments Under All Noncancelable Operating Leases | Future minimum lease payments under all noncancelable operating leases with an initial term in excess of one year as of January 27, 2018 are as follows (in millions):
|
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Schedule of Purchase Commitments | The following table summarizes the Company's purchase commitments with contract manufacturers and suppliers as of the respective period ends (in millions):
|
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Compensation expenses Related to Business Combinations | The following table summarizes the compensation expense related to acquisitions (in millions):
|
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Schedule of Product Warranty Liability | The following table summarizes the activity related to the product warranty liability (in millions):
|
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Schedule of Guarantor Obligations | The aggregate amounts of financing guarantees outstanding at January 27, 2018 and July 29, 2017, representing the total maximum potential future payments under financing arrangements with third parties along with the related deferred revenue, are summarized in the following table (in millions):
|
Shareholders' Equity (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 27, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Repurchase Program | A summary of the stock repurchase activity for fiscal year 2018 and 2017 under the stock repurchase program, reported based on the trade date, is summarized as follows (in millions, except per-share amounts):
|
Employee Benefit Plans (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 27, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Share-Based Compensation Expense | Share-based compensation expense consists primarily of expenses for stock options, stock purchase rights, restricted stock, and RSUs granted to employees. The following table summarizes share-based compensation expense (in millions):
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Summary of Share-Based Awards Available for Grant | A summary of share-based awards available for grant is as follows (in millions):
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Summary of Restricted Stock and Stock Unit Activity | A summary of the restricted stock and stock unit activity, which includes time-based and performance-based or market-based RSUs, is as follows (in millions, except per-share amounts):
|
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Summary of Stock Option Activity | A summary of the stock option activity is as follows (in millions, except per-share amounts):
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Summary of Significant Ranges of Outstanding and Exercisable Stock Options | The following table summarizes significant ranges of outstanding and exercisable stock options as of January 27, 2018 (in millions, except years and share prices):
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Schedule of Assumptions Used | The assumptions for the valuation of time-based RSUs and PRSUs are summarized as follows:
|
Comprehensive Income (Loss) (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 27, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Comprehensive Income [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of AOCI, Net of Tax | The components of AOCI, net of tax, and the other comprehensive income (loss), excluding noncontrolling interest, for the six months ended January 27, 2018 and January 28, 2017 are summarized as follows (in millions):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reclassification out of Accumulated Other Comprehensive Income | The net gains (losses) reclassified out of AOCI into the Consolidated Statements of Operations, with line item location, during each period were as follows (in millions):
|
Income Taxes (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jan. 27, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Provision | The following table provides details of income taxes (in millions, except percentages):
|
Segment Information and Major Customers (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 27, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reportable Segments | Summarized financial information by segment for the three and six months ended January 27, 2018 and January 28, 2017, based on the Company’s internal management system and as utilized by the Company’s Chief Operating Decision Maker ("CODM"), is as follows (in millions):
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Net Sales for Groups of Similar Products and Services | The following table presents revenue for groups of similar products and services (in millions):
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Property and Equipment Information for Geographical Area | The following table presents property and equipment information for geographic areas (in millions):
|
Net Income (Loss) per Share (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 27, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Calculation of Basic and Diluted Net Income per Share | The following table presents the calculation of basic and diluted net income (loss) per share (in millions, except per-share amounts):
|
Basis of Presentation (Details) |
6 Months Ended |
---|---|
Jan. 27, 2018
segment
| |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of geographic segments (segment) | 3 |
Acquisitions and Divestitures (Additional Information) (Details) $ in Millions |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Feb. 01, 2018
USD ($)
|
Jan. 27, 2018
divestiture
|
Oct. 28, 2017
USD ($)
|
Jan. 27, 2018
USD ($)
acquisition
|
Jan. 28, 2017
USD ($)
|
|
Supplementary Information [Line Items] | |||||
Number of business combinations (acquisition) | acquisition | 5 | ||||
Acquired cash and cash equivalents | $ 12 | ||||
Gains recognized from acquisitions | $ 46 | ||||
Purchase consideration | 788 | ||||
BroadSoft, Inc | Subsequent Event | |||||
Supplementary Information [Line Items] | |||||
Purchase consideration | $ 1,900 | ||||
Disposal Group, Disposed of by Sale, Not Discontinued Operations | |||||
Supplementary Information [Line Items] | |||||
Number of divestitures (divestiture) | divestiture | 2 | ||||
General and administrative | |||||
Supplementary Information [Line Items] | |||||
Acquisition related costs | $ 14 | $ 3 |
Acquisitions and Divestitures (Summary of Allocation of Total Purchase Consideration) (Details) $ in Millions |
6 Months Ended |
---|---|
Jan. 27, 2018
USD ($)
acquisition
| |
Business Acquisition [Line Items] | |
Purchase Consideration | $ 788 |
Net Tangible Assets Acquired (Liabilities Assumed) | (31) |
Purchased Intangible Assets | 361 |
Goodwill | $ 458 |
Number of business combinations (acquisition) | acquisition | 5 |
Viptela | |
Business Acquisition [Line Items] | |
Purchase Consideration | $ 497 |
Net Tangible Assets Acquired (Liabilities Assumed) | (18) |
Purchased Intangible Assets | 180 |
Goodwill | 335 |
Springpath | |
Business Acquisition [Line Items] | |
Purchase Consideration | 248 |
Net Tangible Assets Acquired (Liabilities Assumed) | (11) |
Purchased Intangible Assets | 160 |
Goodwill | 99 |
Others (three in total) | |
Business Acquisition [Line Items] | |
Purchase Consideration | 43 |
Net Tangible Assets Acquired (Liabilities Assumed) | (2) |
Purchased Intangible Assets | 21 |
Goodwill | $ 24 |
Number of business combinations (acquisition) | acquisition | 3 |
Goodwill and Purchased Intangible Assets (Schedule of Goodwill by Reportable Segments) (Details) $ in Millions |
6 Months Ended |
---|---|
Jan. 27, 2018
USD ($)
| |
Goodwill [Roll Forward] | |
Beginning Balance | $ 29,766 |
Acquisitions | 458 |
Other | 167 |
Ending Balance | 30,391 |
Americas | |
Goodwill [Roll Forward] | |
Beginning Balance | 18,691 |
Acquisitions | 337 |
Other | 101 |
Ending Balance | 19,129 |
EMEA | |
Goodwill [Roll Forward] | |
Beginning Balance | 7,057 |
Acquisitions | 93 |
Other | 42 |
Ending Balance | 7,192 |
APJC | |
Goodwill [Roll Forward] | |
Beginning Balance | 4,018 |
Acquisitions | 28 |
Other | 24 |
Ending Balance | $ 4,070 |
Goodwill and Purchased Intangible Assets (Additional Information) (Details) - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jan. 27, 2018 |
Jan. 28, 2017 |
Jan. 27, 2018 |
Jan. 28, 2017 |
|
Acquired Finite-Lived Intangible Assets [Line Items] | ||||
Purchased intangible assets impairment | $ 0 | $ 0 | $ 0 | $ 42,000,000 |
Impairment charges | 60,000,000 | 64,000,000 | 121,000,000 | 142,000,000 |
Restructuring and other charges | ||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||
Impairment charges | $ 0 | $ 0 | $ 0 | $ 38,000,000 |
Goodwill and Purchased Intangible Assets (Schedule of Amortization of Purchased Intangible Assets) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jan. 27, 2018 |
Jan. 28, 2017 |
Jan. 27, 2018 |
Jan. 28, 2017 |
|
Acquired Finite-Lived Intangible Assets [Line Items] | ||||
Amortization of purchased intangible assets | $ 60 | $ 64 | $ 121 | $ 142 |
Cost of sales | ||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||
Amortization of purchased intangible assets | 160 | 124 | 314 | 253 |
Amortization of purchased intangible assets | ||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||
Amortization of purchased intangible assets | 60 | 64 | 121 | 142 |
Restructuring and other charges | ||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||
Amortization of purchased intangible assets | 0 | 0 | 0 | 38 |
Total | ||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||
Amortization of purchased intangible assets | $ 220 | $ 188 | $ 435 | $ 433 |
Goodwill and Purchased Intangible Assets (Schedule of Estimated Future Amortization Expense of Purchased Intangible Assets) (Details) - USD ($) $ in Millions |
Jan. 27, 2018 |
Jul. 29, 2017 |
---|---|---|
Finite-Lived Intangible Assets, Future Amortization Expense [Abstract] | ||
2018 (remaining six months) | $ 431 | |
2019 | 781 | |
2020 | 564 | |
2021 | 364 | |
2022 | 145 | |
Thereafter | 72 | |
Total purchased intangible assets with finite lives, net | $ 2,357 | $ 2,428 |
Restructuring and Other Charges (Additional Information) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jan. 27, 2018 |
Jan. 28, 2017 |
Jan. 27, 2018 |
Jan. 28, 2017 |
Oct. 28, 2017 |
|
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring charges | $ 250 | $ 544 | |||
Fiscal 2017 Plan | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Expected restructuring charges | $ 150 | ||||
Cumulative restructuring charges incurred | $ 1,000 | 1,000 | |||
Restructuring charges | $ 98 | $ 133 | $ 250 | $ 544 |
Restructuring and Other Charges (Schedule of Activities Related to Restructuring and Other Charges) (Details) - USD ($) $ in Millions |
6 Months Ended | |
---|---|---|
Jan. 27, 2018 |
Jan. 28, 2017 |
|
Restructuring Reserve [Roll Forward] | ||
Liability as of beginning period | $ 117 | $ 45 |
Charges | 250 | 544 |
Cash payments | (240) | (388) |
Non-cash items | (15) | (73) |
Liability as of ending period | 112 | 128 |
FISCAL 2017 PLAN | Employee Severance | ||
Restructuring Reserve [Roll Forward] | ||
Liability as of beginning period | 74 | 21 |
Charges | 223 | 452 |
Cash payments | (213) | (381) |
Non-cash items | 3 | (6) |
Liability as of ending period | 87 | 86 |
FISCAL 2017 PLAN | Other | ||
Restructuring Reserve [Roll Forward] | ||
Liability as of beginning period | 43 | 24 |
Charges | 27 | 92 |
Cash payments | (27) | (7) |
Non-cash items | (18) | (67) |
Liability as of ending period | $ 25 | $ 42 |
Financing Receivables and Operating Leases (Additional Information) (Details) $ in Millions |
6 Months Ended | |
---|---|---|
Jan. 27, 2018
USD ($)
rating
|
Jul. 29, 2017
USD ($)
|
|
Financing Receivables And Guarantees [Line Items] | ||
Average lease term | 4 years | |
Threshold for past due receivables | 31 days | |
Unbilled or current financing receivables included in greater than 91 days plus past due | $ | $ 462 | $ 666 |
Financing receivable, 91 days past due and still accruing | $ | $ 358 | $ 315 |
Investment credit risk ratings range lowest | 1 | |
Highest rating when receivables are deemed impaired | 10 | |
Rating at or higher when receivables deemed impaired | 8 | |
Maximum | ||
Financing Receivables And Guarantees [Line Items] | ||
Loan receivables term | 3 years | |
Maximum | Financed Service Contracts | ||
Financing Receivables And Guarantees [Line Items] | ||
Financed service contracts term | 3 years | |
Minimum | Financed Service Contracts | ||
Financing Receivables And Guarantees [Line Items] | ||
Financed service contracts term | 1 year |
Financing Receivables and Operating Leases (Schedule of Contractual Maturities of Gross Lease Receivables) (Details) $ in Millions |
Jan. 27, 2018
USD ($)
|
---|---|
Receivables [Abstract] | |
2018 (remaining six months) | $ 707 |
2019 | 1,054 |
2020 | 602 |
2021 | 292 |
2022 | 98 |
Thereafter | 9 |
Total | $ 2,762 |
Financing Receivables and Operating Leases (Operating Lease Schedule) (Details) - USD ($) $ in Millions |
Jan. 27, 2018 |
Jul. 29, 2017 |
---|---|---|
Receivables [Abstract] | ||
Operating lease assets | $ 364 | $ 356 |
Accumulated depreciation | (232) | (212) |
Operating lease assets, net | $ 132 | $ 144 |
Financing Receivables and Operating Leases (Minimum Future Rental Payments) (Details) $ in Millions |
Jan. 27, 2018
USD ($)
|
---|---|
Receivables [Abstract] | |
2018 (remaining six months) | $ 103 |
2019 | 137 |
2020 | 68 |
2021 | 15 |
Thereafter | 2 |
Total | $ 325 |
Investments (Gross Realized Gains and Gross Realized Losses Related to Available-for-Sale Investment) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jan. 27, 2018 |
Jan. 28, 2017 |
Jan. 27, 2018 |
Jan. 28, 2017 |
|
Investments [Abstract] | ||||
Gross realized gains | $ 165 | $ 18 | $ 232 | $ 48 |
Gross realized losses | (107) | (48) | (141) | (63) |
Total | $ 58 | $ (30) | $ 91 | $ (15) |
Investments (Realized Net Gains (Losses) Related to Available-for-Sale Investments) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jan. 27, 2018 |
Jan. 28, 2017 |
Jan. 27, 2018 |
Jan. 28, 2017 |
|
Schedule of Investments [Line Items] | ||||
Total | $ 58 | $ (30) | $ 91 | $ (15) |
Net gains (losses) on investments in publicly traded equity securities | ||||
Schedule of Investments [Line Items] | ||||
Total | 154 | 4 | 183 | 9 |
Net gains (losses) on investments in fixed income securities | ||||
Schedule of Investments [Line Items] | ||||
Total | $ (96) | $ (34) | $ (92) | $ (24) |
Investments (Maturities of Fixed Income Securities) (Details) $ in Millions |
Jan. 27, 2018
USD ($)
|
---|---|
Schedule of Investments [Line Items] | |
Amortized Cost | $ 54,792 |
Fair Value | 54,439 |
Less than 1 year | |
Schedule of Investments [Line Items] | |
Amortized Cost | 15,881 |
Fair Value | 15,847 |
Due in 1 to 2 years | |
Schedule of Investments [Line Items] | |
Amortized Cost | 12,267 |
Fair Value | 12,188 |
Due in 2 to 5 years | |
Schedule of Investments [Line Items] | |
Amortized Cost | 22,095 |
Fair Value | 21,926 |
Due after 5 years | |
Schedule of Investments [Line Items] | |
Amortized Cost | 2,443 |
Fair Value | 2,421 |
Mortgage-backed securities with no single maturity | |
Schedule of Investments [Line Items] | |
Amortized Cost | 2,106 |
Fair Value | $ 2,057 |
Investments (Equity Method and Cost Method Investment) (Details) - USD ($) $ in Millions |
Jan. 27, 2018 |
Jul. 29, 2017 |
---|---|---|
Investments, Debt and Equity Securities [Abstract] | ||
Equity method investments | $ 121 | $ 124 |
Cost method investments | 861 | 859 |
Total | $ 982 | $ 983 |
Fair Value (Fair Value, Nonrecurring Measurement) (Details) - Fair Value, Measurements, Nonrecurring - Level 3 - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jan. 27, 2018 |
Jan. 28, 2017 |
Jan. 27, 2018 |
Jan. 28, 2017 |
|
Fair Value Assets And Liabilities Measured On Nonrecurring Basis [Line Items] | ||||
Total gains (losses) for nonrecurring measurements | $ 2 | $ (88) | $ (19) | $ (177) |
Investments in privately held companies (impaired) | ||||
Fair Value Assets And Liabilities Measured On Nonrecurring Basis [Line Items] | ||||
Total gains (losses) for nonrecurring measurements | (18) | (64) | (39) | (111) |
Purchased intangible assets (impaired) | ||||
Fair Value Assets And Liabilities Measured On Nonrecurring Basis [Line Items] | ||||
Total gains (losses) for nonrecurring measurements | 0 | 0 | 0 | (42) |
Property held for sale—land and buildings | ||||
Fair Value Assets And Liabilities Measured On Nonrecurring Basis [Line Items] | ||||
Total gains (losses) for nonrecurring measurements | $ 20 | $ (24) | $ 20 | $ (24) |
Borrowings (Schedule Of Short-Term Debt) (Details) - USD ($) $ in Millions |
Jan. 27, 2018 |
Jul. 29, 2017 |
---|---|---|
Short-term Debt [Line Items] | ||
Amount | $ 13,741 | $ 7,992 |
Current portion of long-term debt | ||
Short-term Debt [Line Items] | ||
Amount | $ 4,749 | $ 4,747 |
Effective Rate | 1.78% | 1.66% |
Commercial paper | ||
Short-term Debt [Line Items] | ||
Amount | $ 8,992 | $ 3,245 |
Effective Rate | 1.51% | 1.16% |
Borrowings (Schedule of Future Principal Payments for Long-Term Debt) (Details) - USD ($) $ in Millions |
Jan. 27, 2018 |
Jul. 29, 2017 |
---|---|---|
Debt Disclosure [Abstract] | ||
2018 (remaining six months) | $ 4,750 | |
2019 | 5,250 | |
2020 | 6,000 | |
2021 | 3,000 | |
2022 | 2,500 | |
Thereafter | 9,000 | |
Total | $ 30,500 | $ 30,500 |
Derivative Instruments (Additional Information) (Details) $ in Millions |
6 Months Ended | |
---|---|---|
Jan. 27, 2018
USD ($)
derivative
|
Jul. 29, 2017
derivative
|
|
Derivative [Line Items] | ||
Net derivative gains or losses to be reclassified from AOCI into earnings in next twelve months | $ | $ 56 | |
Fixed Income Securities | ||
Derivative [Line Items] | ||
Number of interest rate derivatives held (derivative) | derivative | 0 | 0 |
Derivatives designated as cash flow hedging instruments: | ||
Derivative [Line Items] | ||
Foreign currency cash flow hedges maturity period, maximum, months | 24 months |
Derivative Instruments (Effect of Derivative Instruments Not Designated as Hedges on Consolidated Statement of Operations Summary) (Details) - Derivatives not designated as hedging instruments: - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jan. 27, 2018 |
Jan. 28, 2017 |
Jan. 27, 2018 |
Jan. 28, 2017 |
|
Derivative Instruments, Gain (Loss) [Line Items] | ||||
GAINS (LOSSES) FOR THE PERIOD | $ 109 | $ 14 | $ 133 | $ (4) |
Foreign currency derivatives | Other income (loss), net | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
GAINS (LOSSES) FOR THE PERIOD | 66 | (20) | 73 | (36) |
Total return swaps—deferred compensation | Operating expenses | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
GAINS (LOSSES) FOR THE PERIOD | 41 | 26 | 57 | 23 |
Equity derivatives | Other income (loss), net | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
GAINS (LOSSES) FOR THE PERIOD | $ 2 | $ 8 | $ 3 | $ 9 |
Derivative Instruments (Offsetting of Derivative Assets and Liabilities) (Details) - USD ($) $ in Millions |
Jan. 27, 2018 |
Jul. 29, 2017 |
---|---|---|
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Gross Amount of Recognized, Assets | $ 90 | $ 149 |
Gross Amounts Offset, Assets | 0 | 0 |
Net Amounts Presented, Assets | 90 | 149 |
Gross Derivative Amounts, Assets | (32) | (4) |
Cash Collateral, Assets | (18) | (81) |
Net Amount, Assets | 40 | 64 |
Gross Amount of Recognized, Liabilities | 76 | 4 |
Gross Amounts Offset, Liabilities | 0 | 0 |
Net Amount Presented, Liabilities | 76 | 4 |
Gross Derivative Amounts, Liabilities | (32) | (4) |
Cash Collateral, Liabilities | (18) | 0 |
Net Amount, Liabilities | $ 26 | $ 0 |
Commitments and Contingencies (Schedule of Future Minimum Lease Payments Under All Noncancelable Operating Leases) (Details) $ in Millions |
Jan. 27, 2018
USD ($)
|
---|---|
Commitments and Contingencies Disclosure [Abstract] | |
2018 (remaining six months) | $ 220 |
2019 | 323 |
2020 | 239 |
2021 | 147 |
2022 | 122 |
Thereafter | 178 |
Total | $ 1,229 |
Commitments and Contingencies (Schedule of Purchase Commitments) (Details) - USD ($) $ in Millions |
Jan. 27, 2018 |
Jul. 29, 2017 |
---|---|---|
Commitments and Contingencies Disclosure [Abstract] | ||
Less than 1 year | $ 4,498 | $ 4,620 |
1 to 3 years | 690 | 20 |
3 to 5 years | 540 | 0 |
Total | $ 5,728 | $ 4,640 |
Commitments and Contingencies (Schedule of Other Commitments) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jan. 27, 2018 |
Jan. 28, 2017 |
Jan. 27, 2018 |
Jan. 28, 2017 |
|
Acquisition | ||||
Contingency [Line Items] | ||||
Compensation expense related to acquisitions | $ 46 | $ 73 | $ 88 | $ 137 |
Commitments and Contingencies (Schedule Of Product Warranty Liability) (Details) - USD ($) $ in Millions |
6 Months Ended | |
---|---|---|
Jan. 27, 2018 |
Jan. 28, 2017 |
|
Movement in Standard and Extended Product Warranty, Increase (Decrease) [Roll Forward] | ||
Balance at beginning of period | $ 407 | $ 414 |
Provisions for warranty issued | 287 | 367 |
Adjustments for pre-existing warranties | (21) | (3) |
Settlements | (292) | (352) |
Balance at end of period | $ 381 | $ 426 |
Commitments and Contingencies (Schedule of Financing Guarantees Outstanding) (Details) - USD ($) $ in Millions |
Jan. 27, 2018 |
Jul. 29, 2017 |
---|---|---|
Loss Contingencies [Line Items] | ||
Maximum potential future payments relating to financing guarantees: | $ 341 | $ 314 |
Deferred revenue associated with financing guarantees: | (131) | (134) |
Maximum potential future payments relating to financing guarantees, net of associated deferred revenue | 210 | 180 |
Channel partner | ||
Loss Contingencies [Line Items] | ||
Maximum potential future payments relating to financing guarantees: | 288 | 240 |
Deferred revenue associated with financing guarantees: | (91) | (82) |
End user | ||
Loss Contingencies [Line Items] | ||
Maximum potential future payments relating to financing guarantees: | 53 | 74 |
Deferred revenue associated with financing guarantees: | $ (40) | $ (52) |
Shareholders' Equity (Additional Information) (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions |
3 Months Ended | 6 Months Ended | |||||
---|---|---|---|---|---|---|---|
Apr. 25, 2018 |
Jan. 27, 2018 |
Jan. 28, 2017 |
Jan. 27, 2018 |
Jan. 28, 2017 |
Feb. 14, 2018 |
Jul. 29, 2017 |
|
Class of Stock [Line Items] | |||||||
Cash dividends paid per common share (in dollars per share) | $ 0.29 | $ 0.26 | $ 0.58 | $ 0.52 | |||
Payments of dividends | $ 2,861 | $ 2,612 | |||||
Remaining authorized repurchase amount | $ 31,000 | $ 31,000 | |||||
Shares repurchased for tax withholdings on vesting of restricted stock units (in shares) | 13 | 14 | |||||
Payments related to tax withholding for share-based compensation | $ 433 | $ 432 | |||||
Stock repurchase program | |||||||
Class of Stock [Line Items] | |||||||
Stock repurchases pending settlement | $ 240 | $ 240 | $ 66 | ||||
Subsequent Event | |||||||
Class of Stock [Line Items] | |||||||
Authorized additional repurchase amount | $ 25,000 | ||||||
Forecast | |||||||
Class of Stock [Line Items] | |||||||
Cash dividends paid per common share (in dollars per share) | $ 0.33 |
Shareholders' Equity (Stock Repurchase Program) (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions |
3 Months Ended | |||||
---|---|---|---|---|---|---|
Jan. 27, 2018 |
Oct. 28, 2017 |
Jul. 29, 2017 |
Apr. 29, 2017 |
Jan. 28, 2017 |
Oct. 29, 2016 |
|
Stockholders' Equity Note [Abstract] | ||||||
Repurchase of common stock under the stock repurchase program, Shares Repurchased (in shares) | 103 | 51 | 38 | 15 | 33 | 32 |
Repurchase of common stock under the stock repurchase program, Weighted-Average Price per Share (in dollars per share) | $ 39.07 | $ 31.80 | $ 31.61 | $ 33.71 | $ 30.33 | $ 31.12 |
Repurchase of common stock under the stock repurchase program, Amount Repurchased | $ 4,011 | $ 1,620 | $ 1,201 | $ 503 | $ 1,001 | $ 1,001 |
Employee Benefit Plans (Summary of Share-Based Awards available for Grant) (Details) - shares |
6 Months Ended | 12 Months Ended |
---|---|---|
Jan. 27, 2018 |
Jul. 29, 2017 |
|
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding [Roll Forward] | ||
Balance, beginning of period (in shares) | 272,000,000 | 242,000,000 |
Restricted stock, stock units, and other share-based awards granted (in shares) | (46,000,000) | (76,000,000) |
Share-based awards canceled/forfeited/expired (in shares) | 10,000,000 | 78,000,000 |
Shares withheld for taxes and not issued (in shares) | 18,000,000 | 28,000,000 |
Balance, end of period (in shares) | 254,000,000 | 272,000,000 |
Employee Benefit Plans (Summary Of Stock Option Activity) (Details) - $ / shares |
6 Months Ended | 12 Months Ended |
---|---|---|
Jan. 27, 2018 |
Jul. 29, 2017 |
|
Number Outstanding | ||
Beginning balance (in shares) | 12,000,000 | 73,000,000 |
Assumed from acquisitions (in shares) | 3,000,000 | 8,000,000 |
Exercised (in shares) | (4,000,000) | (14,000,000) |
Canceled/forfeited/expired (in shares) | (55,000,000) | |
Ending balance (in shares) | 11,000,000 | 12,000,000 |
Weighted-Average Exercise Price per Share | ||
Beginning balance (in dollars per share) | $ 6.15 | $ 26.78 |
Assumed from acquisitions (in dollars per share) | 8.20 | 4.47 |
Exercised (in dollars per share) | 5.28 | 12.11 |
Canceled/forfeited/expired (in dollars per share) | 31.83 | |
Ending Balance (in dollars per share) | $ 7.03 | $ 6.15 |
Income Taxes (Income Before Provision for Income Taxes) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jan. 27, 2018 |
Jan. 28, 2017 |
Jan. 27, 2018 |
Jan. 28, 2017 |
|
Income Tax Disclosure [Abstract] | ||||
Income before provision for income taxes | $ 3,232 | $ 2,963 | $ 6,194 | $ 5,916 |
Provision for income taxes | $ 12,010 | $ 615 | $ 12,578 | $ 1,246 |
Effective tax rate | 371.60% | 20.80% | 203.10% | 21.10% |
Segment Information and Major Customers (Additional Information) (Details) $ in Millions |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jan. 27, 2018
USD ($)
|
Jan. 28, 2017
USD ($)
|
Jan. 27, 2018
USD ($)
segment
|
Jan. 28, 2017
USD ($)
|
Jul. 29, 2017
USD ($)
|
|
Segment Reporting Information [Line Items] | |||||
Number of geographic segments (segment) | segment | 3 | ||||
Revenue, total | $ 11,887 | $ 11,580 | $ 24,023 | $ 23,932 | |
International | |||||
Segment Reporting Information [Line Items] | |||||
Cash and cash equivalents and investments | 71,300 | 71,300 | $ 67,500 | ||
United States | |||||
Segment Reporting Information [Line Items] | |||||
Revenue, total | 6,100 | $ 5,900 | 12,600 | $ 12,500 | |
Cash and cash equivalents and investments | $ 2,400 | $ 2,400 | $ 3,000 |
Segment Information and Major Customers (Summary of Reportable Segments) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jan. 27, 2018 |
Jan. 28, 2017 |
Jan. 27, 2018 |
Jan. 28, 2017 |
|
Segment Reporting Information [Line Items] | ||||
Revenue, total | $ 11,887 | $ 11,580 | $ 24,023 | $ 23,932 |
Gross margin | 7,498 | 7,276 | 14,925 | 15,160 |
Operating Segments | Americas | ||||
Segment Reporting Information [Line Items] | ||||
Revenue, total | 7,004 | 6,660 | 14,354 | 14,103 |
Gross margin | 4,614 | 4,288 | 9,336 | 9,121 |
Operating Segments | EMEA | ||||
Segment Reporting Information [Line Items] | ||||
Revenue, total | 3,062 | 3,065 | 5,971 | 6,078 |
Gross margin | 1,977 | 2,012 | 3,816 | 4,025 |
Operating Segments | APJC | ||||
Segment Reporting Information [Line Items] | ||||
Revenue, total | 1,821 | 1,855 | 3,698 | 3,751 |
Gross margin | 1,094 | 1,121 | 2,259 | 2,325 |
Segment Reconciling Items | ||||
Segment Reporting Information [Line Items] | ||||
Gross margin | 7,685 | 7,421 | 15,411 | 15,471 |
Intersegment Eliminations | ||||
Segment Reporting Information [Line Items] | ||||
Gross margin | $ (187) | $ (145) | $ (486) | $ (311) |
Segment Information and Major Customers (Summary of Net Revenue for Groups of Similar Products and Services) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jan. 27, 2018 |
Jan. 28, 2017 |
Jan. 27, 2018 |
Jan. 28, 2017 |
|
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||
Revenue, total | $ 11,887 | $ 11,580 | $ 24,023 | $ 23,932 |
Infrastructure Platforms | ||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||
Revenue, total | 6,694 | 6,545 | 13,664 | 13,818 |
Applications | ||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||
Revenue, total | 1,184 | 1,116 | 2,387 | 2,252 |
Security | ||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||
Revenue, total | 558 | 528 | 1,143 | 1,068 |
Other Products | ||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||
Revenue, total | 273 | 302 | 569 | 655 |
Total Product | ||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||
Revenue, total | 8,709 | 8,491 | 17,763 | 17,793 |
Service | ||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||
Revenue, total | $ 3,178 | $ 3,089 | $ 6,260 | $ 6,139 |
Segment Information and Major Customers (Property and Equipment Information for Geographic Areas) (Details) - USD ($) $ in Millions |
Jan. 27, 2018 |
Jul. 29, 2017 |
---|---|---|
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Property and equipment, net | $ 3,113 | $ 3,322 |
United States | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Property and equipment, net | 2,555 | 2,711 |
International | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Property and equipment, net | $ 558 | $ 611 |
Net Income (Loss) per Share (Calculation of Basic and Diluted Net Income per Share) (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jan. 27, 2018 |
Jan. 28, 2017 |
Jan. 27, 2018 |
Jan. 28, 2017 |
|
Earnings Per Share [Abstract] | ||||
Net income (loss) | $ (8,778) | $ 2,348 | $ (6,384) | $ 4,670 |
Weighted-average shares—basic (in shares) | 4,924 | 5,015 | 4,942 | 5,021 |
Effect of dilutive potential common shares (in shares) | 0 | 25 | 0 | 33 |
Weighted-average shares—diluted (in shares) | 4,924 | 5,040 | 4,942 | 5,054 |
Net income (loss) per share—basic (in dollars per share) | $ (1.78) | $ 0.47 | $ (1.29) | $ 0.93 |
Net income (loss) per share—diluted (in dollars per share) | $ (1.78) | $ 0.47 | $ (1.29) | $ 0.92 |
Net Income (Loss) per Share (Additional Information) (Details) - shares shares in Millions |
3 Months Ended | 6 Months Ended |
---|---|---|
Jan. 28, 2017 |
Jan. 28, 2017 |
|
Earnings Per Share [Abstract] | ||
Antidilutive employee share-based awards, excluded (in shares) | 20 | 103 |
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