10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_____________________________________

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April 27, 2019

or

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 0-18225 

_____________________________________

CISCO SYSTEMS, INC.

(Exact name of registrant as specified in its charter)

California	77-0059951
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

170 West Tasman Drive

San Jose, California 95134

(Address of principal executive office and zip code)

(408) 526-4000

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and formal fiscal year, if changed since last report.)

_____________________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001 per share	CSCO	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes x   No  o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes x    No  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	x	Accelerated filer	o
Non-accelerated filer	o	Smaller reporting company	o
		Emerging growth company	o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes ¨  No  x

Number of shares of the registrant’s common stock outstanding as of May 16, 2019: 4,280,733,008

____________________________________ 

1

Cisco Systems, Inc.

Form 10-Q for the Quarter Ended April 27, 2019

INDEX

		Page
Part I	Financial Information	3
Item 1.	Financial Statements (Unaudited)	3
	Consolidated Balance Sheets at April 27, 2019 and July 28, 2018	3
	Consolidated Statements of Operations for the Three and Nine Months Ended April 27, 2019 and April 28, 2018	4
	Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended April 27, 2019 and April 28, 2018	5
	Consolidated Statements of Cash Flows for the Nine Months Ended April 27, 2019 and April 28, 2018	6
	Consolidated Statements of Equity for the Three and Nine Months Ended April 27, 2019 and April 28, 2018	7
	Notes to Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	49
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	72
Item 4.	Controls and Procedures	74
Part II.	Other Information	74
Item 1.	Legal Proceedings	74
Item 1A.	Risk Factors	75
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	92
Item 3.	Defaults Upon Senior Securities	92
Item 4.	Mine Safety Disclosures	92
Item 5.	Other Information	92
Item 6.	Exhibits	93
	Signature	94

2

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

CISCO SYSTEMS, INC.

CONSOLIDATED BALANCE SHEETS

(in millions, except par value)

(Unaudited)

	April 27, 2019			July 28, 2018
ASSETS
Current assets:
Cash and cash equivalents	$	10,251		$	8,934
Investments	24,392			37,614
Accounts receivable, net of allowance for doubtful accounts of $124 at April 27, 2019 and $129 at July 28, 2018	3,795			5,554
Inventories	1,513			1,846
Financing receivables, net	5,029			4,949
Other current assets	2,331			2,940
Total current assets	47,311			61,837
Property and equipment, net	2,834			3,006
Financing receivables, net	4,862			4,882
Goodwill	33,544			31,706
Purchased intangible assets, net	2,398			2,552
Deferred tax assets	4,023			3,219
Other assets	2,315			1,582
TOTAL ASSETS	$	97,287		$	108,784
LIABILITIES AND EQUITY
Current liabilities:
Short-term debt	$	7,777		$	5,238
Accounts payable	2,022			1,904
Income taxes payable	953			1,004
Accrued compensation	2,872			2,986
Deferred revenue	10,117			11,490
Other current liabilities	4,172			4,413
Total current liabilities	27,913			27,035
Long-term debt	15,921			20,331
Income taxes payable	8,038			8,585
Deferred revenue	7,339			8,195
Other long-term liabilities	1,272			1,434
Total liabilities	60,483			65,580
Commitments and contingencies (Note 13)
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; 4,313 and 4,614 shares issued and outstanding at April 27, 2019 and July 28, 2018, respectively	40,577			42,820
(Accumulated deficit) Retained earnings	(2,877		)	1,233
Accumulated other comprehensive income (loss)	(896		)	(849		)
Total equity	36,804			43,204
TOTAL LIABILITIES AND EQUITY	$	97,287		$	108,784

See Notes to Consolidated Financial Statements.

3

CISCO SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions, except per-share amounts)

(Unaudited) 

	Three Months Ended						Nine Months Ended
	April 27, 2019			April 28, 2018			April 27, 2019			April 28, 2018
REVENUE:
Product	$	9,722		$	9,304		$	28,885		$	27,067
Service	3,236			3,159			9,591			9,419
Total revenue	12,958			12,463			38,476			36,486
COST OF SALES:
Product	3,693			3,625			11,106			10,594
Service	1,092			1,079			3,278			3,208
Total cost of sales	4,785			4,704			14,384			13,802
GROSS MARGIN	8,173			7,759			24,092			22,684
OPERATING EXPENSES:
Research and development	1,659			1,590			4,824			4,706
Sales and marketing	2,403			2,325			7,084			6,894
General and administrative	541			561			1,261			1,601
Amortization of purchased intangible assets	39			67			112			188
Restructuring and other charges	18			82			282			332
Total operating expenses	4,660			4,625			13,563			13,721
OPERATING INCOME	3,513			3,134			10,529			8,963
Interest income	331			380			1,003			1,155
Interest expense	(211		)	(237		)	(655		)	(719		)
Other income (loss), net	(18		)	(24		)	(10		)	48
Interest and other income (loss), net	102			119			338			484
INCOME BEFORE PROVISION FOR INCOME TAXES	3,615			3,253			10,867			9,447
Provision for income taxes	571			562			1,452			13,140
NET INCOME (LOSS)	$	3,044		$	2,691		$	9,415		$	(3,693	)
Net income (loss) per share:
Basic	$	0.70		$	0.56		$	2.11		$	(0.76	)
Diluted	$	0.69		$	0.56		$	2.09		$	(0.76	)
Shares used in per-share calculation:
Basic	4,370			4,791			4,468			4,892
Diluted	4,415			4,844			4,509			4,892

See Notes to Consolidated Financial Statements.

4

CISCO SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in millions)

(Unaudited)

	Three Months Ended						Nine Months Ended
	April 27, 2019			April 28, 2018			April 27, 2019			April 28, 2018
Net income (loss)	$	3,044		$	2,691		$	9,415		$	(3,693	)
Available-for-sale investments:
Change in net unrealized gains and losses, net of tax benefit (expense) of $(64) and $(63) for the third quarter and first nine months of fiscal 2019, respectively, and $18 and $(4) for the corresponding periods of fiscal 2018, respectively	232			(428		)	319			(624		)
Net (gains) losses reclassified into earnings, net of tax (benefit) expense of $5 and $4 for the third quarter and first nine months of fiscal 2019, respectively, and $3 and $28 for the corresponding periods of fiscal 2018, respectively	12			(14		)	22			(80		)
	244			(442		)	341			(704		)
Cash flow hedging instruments:
Change in unrealized gains and losses, net of tax benefit (expense) of $(2) and $0 for the third quarter and first nine months of fiscal 2019, respectively, and $0 and $(3) for the corresponding periods of fiscal 2018, respectively	10			(10		)	3			25
Net (gains) losses reclassified into earnings, net of tax (benefit) expense of $0 for each of the third quarter and first nine months of fiscal 2019, and $3 and $7 for the corresponding periods of fiscal 2018, respectively	—			(25		)	(1		)	(52		)
	10			(35		)	2			(27		)
Net change in cumulative translation adjustment and actuarial gains and losses net of tax benefit (expense) of $(1)and $(2) for the third quarter and first nine months of fiscal 2019, respectively, and $3 and $(3) for the corresponding periods of fiscal 2018, respectively	(40		)	(255		)	(222		)	36
Other comprehensive income (loss)	214			(732		)	121			(695		)
Comprehensive income (loss)	3,258			1,959			9,536			(4,388		)
Comprehensive (income) loss attributable to noncontrolling interests	—			—			—			—
Comprehensive income (loss) attributable to Cisco Systems, Inc.	$	3,258		$	1,959		$	9,536		$	(4,388	)

See Notes to Consolidated Financial Statements.

5

CISCO SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

(Unaudited)

	Nine Months Ended
	April 27, 2019			April 28, 2018
Cash flows from operating activities:
Net income (loss)	$	9,415		$	(3,693	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation, amortization, and other	1,433			1,676
Share-based compensation expense	1,166			1,184
Provision (benefit) for receivables	32			(104		)
Deferred income taxes	(281		)	1,013
(Gains) losses on divestitures, investments and other, net	(79		)	(159		)
Change in operating assets and liabilities, net of effects of acquisitions and divestitures:
Accounts receivable	1,560			1,064
Inventories	(1		)	(289		)
Financing receivables	(112		)	(165		)
Other assets	(736		)	(135		)
Accounts payable	52			148
Income taxes, net	(759		)	8,795
Accrued compensation	(68		)	53
Deferred revenue	421			415
Other liabilities	(154		)	(237		)
Net cash provided by operating activities	11,889			9,566
Cash flows from investing activities:
Purchases of investments	(1,176		)	(14,132		)
Proceeds from sales of investments	5,391			12,422
Proceeds from maturities of investments	10,797			12,259
Acquisitions and divestitures	(2,175		)	(2,762		)
Purchases of investments in privately held companies	(118		)	(126		)
Return of investments in privately held companies	127			163
Acquisition of property and equipment	(701		)	(620		)
Proceeds from sales of property and equipment	15			54
Other	(12		)	(16		)
Net cash provided by investing activities	12,148			7,242
Cash flows from financing activities:
Issuances of common stock	321			318
Repurchases of common stock—repurchase program	(16,042		)	(11,562		)
Shares repurchased for tax withholdings on vesting of restricted stock units	(601		)	(541		)
Short-term borrowings, original maturities of 90 days or less, net	1,723			(2,502		)
Issuances of debt	1,530			6,877
Repayments of debt	(5,250		)	(9,875		)
Dividends paid	(4,489		)	(4,433		)
Other	51			(92		)
Net cash used in financing activities	(22,757		)	(21,810		)
Net increase in cash, cash equivalents, and restricted cash	1,280			(5,002		)
Cash, cash equivalents, and restricted cash, beginning of period	8,993			11,773
Cash, cash equivalents, and restricted cash, end of period	$	10,273		$	6,771
Supplemental cash flow information:
Cash paid for interest	$	690		$	739
Cash paid for income taxes, net	$	2,491		$	3,332

See Notes to Consolidated Financial Statements.

6

CISCO SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF EQUITY

(in millions, except per-share amounts)

(Unaudited)

Three Months Ended April 27, 2019	Shares of Common Stock		Common Stock and Additional Paid-In Capital			Retained Earnings (Accumulated Deficit)			Accumulated Other Comprehensive Income (Loss)			Total Cisco Shareholders’ Equity			Non-controlling Interests		Total Equity
BALANCE AT JANUARY 26, 2019	4,424		$	41,361		$	538		$	(1,110	)	$	40,789		$	—	$	40,789
Net income						3,044						3,044					3,044
Other comprehensive income (loss)									214			214					214
Issuance of common stock	7		9									9					9
Repurchase of common stock	(116	)	(1,080		)	(4,940		)				(6,020		)			(6,020		)
Shares repurchased for tax withholdings on vesting of restricted stock units	(2	)	(87		)							(87		)			(87		)
Cash dividends declared ($0.35 per common share)						(1,519		)				(1,519		)			(1,519		)
Share-based compensation			374									374					374
BALANCE AT APRIL 27, 2019	4,313		$	40,577		$	(2,877	)	$	(896	)	$	36,804		$	—	$	36,804

Nine Months Ended April 27, 2019	Shares of Common Stock		Common Stock and Additional Paid-In Capital			Retained Earnings (Accumulated Deficit)			Accumulated Other Comprehensive Income (Loss)			Total Cisco Shareholders’ Equity			Non-controlling Interests		Total Equity
BALANCE AT JULY 28, 2018	4,614		$	42,820		$	1,233		$	(849	)	$	43,204		$	—	$	43,204
Net income						9,415						9,415					9,415
Other comprehensive income (loss)									121			121					121
Issuance of common stock	48		321									321					321
Repurchase of common stock	(336	)	(3,129		)	(12,933		)				(16,062		)			(16,062		)
Shares repurchased for tax withholdings on vesting of restricted stock units	(13	)	(601		)							(601		)			(601		)
Cash dividends declared ($1.01 per common share)						(4,489		)				(4,489		)			(4,489		)
Effect of adoption of accounting standards						3,897			(168		)	3,729					3,729
Share-based compensation			1,166									1,166					1,166
BALANCE AT APRIL 27, 2019	4,313		$	40,577		$	(2,877	)	$	(896	)	$	36,804		$	—	$	36,804

7

CISCO SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF EQUITY

(in millions, except per-share amounts)

(Unaudited)

Three Months Ended April 28, 2018	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 JANUARY 27, 2018	4,868		$	44,535		$	7,364		$	83		$	51,982		$	—	$	51,982
Net income						2,691						2,691					2,691
Other comprehensive income (loss)									(732		)	(732		)	—		(732		)
Issuance of common stock	9		16									16					16
Repurchase of common stock	(140	)	(1,286		)	(4,729		)				(6,015		)			(6,015		)
Shares repurchased for tax withholdings on vesting of restricted stock units	(3	)	(108		)							(108		)			(108		)
Cash dividends declared ($0.33 per common share)						(1,572		)				(1,572		)			(1,572		)
Effect of adoption of accounting standards						(45		)	45			—					—
Share-based compensation			399									399					399
Purchase acquisitions and other												—					—
BALANCE AT APRIL 28, 2018	4,734		$	43,556		$	3,709		$	(604	)	$	46,661		$	—	$	46,661

Nine Months Ended April 28, 2018	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 loss						(3,693		)				(3,693		)			(3,693		)
Other comprehensive income (loss)									(695		)	(695		)			(695		)
Issuance of common stock	61		318									318					318
Repurchase of common stock	(294	)	(2,679		)	(8,967		)				(11,646		)			(11,646		)
Shares repurchased for tax withholdings on vesting of restricted stock units	(16	)	(541		)							(541		)			(541		)
Cash dividends declared ($0.91 per common share)						(4,433		)				(4,433		)			(4,433		)
Effect of adoption of accounting standards						(36		)	45			9					9
Share-based compensation			1,184									1,184					1,184
Purchase acquisitions and other			21									21					21
BALANCE AT APRIL 28, 2018	4,734		$	43,556		$	3,709		$	(604	)	$	46,661		$	—	$	46,661

See Notes to Consolidated Financial Statements.

8

CISCO SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Basis of Presentation

The fiscal year for Cisco Systems, Inc. (the “Company,” “Cisco,” “we,” “us,” or “our”) is the 52 or 53 weeks ending on the last Saturday in July. Fiscal 2019 and fiscal 2018 are each 52-week fiscal years. The Consolidated Financial Statements include our accounts and those of our subsidiaries. All intercompany accounts and transactions have been eliminated. We conduct business globally and are 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).

We have prepared the accompanying financial data as of April 27, 2019 and for the third quarter and first nine months of fiscal 2019 and fiscal 2018, 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 28, 2018 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, we believe 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 our Annual Report on Form 10-K for the fiscal year ended July 28, 2018.

Our consolidated financial statements include our accounts and entities consolidated under the variable interest and voting models. The noncontrolling interests attributed to these investments, if any, are presented as a separate component from our equity in the equity section of the Consolidated Balance Sheets. The share of earnings attributable to the noncontrolling interests 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 April 27, 2019; the results of operations and the statements of comprehensive income (loss) for the third quarter and first nine months of fiscal 2019 and fiscal 2018; the statements of cash flows for the first nine months of fiscal 2019 and fiscal 2018; and the statements of equity for the third quarter and first nine months of fiscal 2019 and fiscal 2018, as applicable, have been made. The results of operations for the third quarter and first nine months of fiscal 2019 and fiscal 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. We have evaluated subsequent events through the date that the financial statements were issued.

2. Recent Accounting Pronouncements

(a) New Accounting Updates Recently Adopted

Revenue Recognition In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers, a new accounting standard related to revenue recognition. ASC 606 supersedes nearly all U.S. GAAP on revenue recognition and eliminated industry-specific guidance. The underlying principle of ASC 606 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.

ASC 606 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"). At the beginning of the first quarter of fiscal 2019, we adopted ASC 606 using the modified retrospective method to those contracts that were not completed as of July 28, 2018. Refer to Opening Balance Adjustments below for the impact of adoption on our Consolidated Financial Statements.

We have implemented new accounting policies, systems, processes, and internal controls necessary to support the requirements of ASC 606.

ASC 606 primarily impacts our revenue recognition for software arrangements and sales to two-tier distributors. In both areas, the new standard accelerates the recognition of revenue.

9

CISCO SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

The table below details the timing of when revenue was typically recognized under the prior revenue standard compared to the timing of when revenue is typically recognized under ASC 606 for these major areas:

	Prior Revenue Standard	ASC 606
Software arrangements:
Perpetual software licenses	Upfront	Upfront
Term software licenses	Ratable	Upfront
Security software licenses	Ratable	Ratable
Enterprise license agreements (software licenses)	Ratable	Upfront
Software support (maintenance)	Ratable	Ratable
Software-as-a-service	Ratable	Ratable
Two-tier distribution	Sell-Through	Sell-In

In addition to the above revenue recognition timing impacts, ASC 606 requires incremental contract acquisition costs (such as sales commissions) for customer contracts to be capitalized and amortized on a systematic basis that is consistent with the transfer to the customer of the goods or services to which the assets relates.

We enter into contracts with customers that can include various combinations of products and services which are generally distinct and accounted for as separate performance obligations. As a result, our contracts may contain multiple performance obligations. We determine whether arrangements are distinct based on whether the customer can benefit from the product or service on its own or together with other resources that are readily available and whether our commitment to transfer the product or service to the customer is separately identifiable from other obligations in the contract. We classify our hardware, perpetual software licenses, and software-as-a-service (SaaS) as distinct performance obligations. Term software licenses represent multiple obligations, which include software licenses and software maintenance. In transactions where we deliver hardware or software, we are typically the principal and we record revenue and costs of goods sold on a gross basis. We refer to our term software licenses, security software licenses, SaaS, and associated service arrangements as subscription offers.

We recognize revenue upon transfer of control of promised goods or services in a contract with a customer in an amount that reflects the consideration we expect to receive in exchange for those products or services. Transfer of control occurs once the customer has the contractual right to use the product, generally upon shipment or once delivery and risk of loss has transferred to the customer. Transfer of control can also occur over time for software maintenance and services as the customer receives the benefit over the contract term. Our hardware and perpetual software licenses are distinct performance obligations where revenue is recognized upfront upon transfer of control. Term software licenses include multiple performance obligations where the term licenses are recognized upfront upon transfer of control, with the associated software maintenance revenue recognized ratably over the contract term as services and software updates are provided. SaaS arrangements have one distinct performance obligation which is satisfied over time with revenue recognized ratably over the contract term as the customer consumes the services. On our product sales, we record consideration from shipping and handling on a gross basis within net product sales. We record our revenue net of any associated sales taxes.

Significant Judgments

Revenue is allocated among these performance obligations in a manner that reflects the consideration that we expect to be entitled to for the promised goods or services based on standalone selling prices (SSP). SSP is estimated for each distinct performance obligation and judgment may be required in their determination. The best evidence of SSP is the observable price of a product or service when we sell the goods separately in similar circumstances and to similar customers. In instances where SSP is not directly observable, we determine SSP using information that may include market conditions and other observable inputs.

We apply judgment in determining the transaction price as we may be required to estimate variable consideration when determining the amount of revenue to recognize. Variable consideration includes various rebate, cooperative marketing, and other incentive programs that we offer to our distributors, partners and customers. When determining the amount of revenue to recognize, we estimate the expected usage of these programs, applying the expected value or most likely estimate and update the estimate at each reporting period as actual utilization becomes available. We also consider the customers' right of return in determining the transaction price, where applicable.

We assess certain software licenses, such as for security software, that contain critical updates or upgrades which customers can download throughout the contract term. Without these updates or upgrades, the functionality of the software would diminish over a relatively short time period. These updates or upgrades provide the customer the full functionality of the purchased security software licenses and are required to maintain the security license's utility as the risks and threats in the environment are rapidly

10

CISCO SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

changing. In these circumstances, the revenue from these software arrangements is recognized as a distinct performance obligation satisfied over the contract term.

For the additional disclosures required as part of ASC 606 see Note 3.

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 most significant impact of this accounting standard update is that it requires the remeasurement of investments not accounted for under the equity method to be recorded at fair value through the Consolidated Statement of Operations at the end of each reporting period. The application of this accounting standard update increases the variability of other income (loss), net.

Our equity investments are accounted for as follows:

• Marketable equity securities have readily determinable fair value (RDFV) that are measured and recorded at fair value.

• Non-marketable equity securities do not have RDFV and are measured using a measurement alternative recorded at cost less any impairment, plus or minus changes resulting from qualifying observable price changes. For certain of these securities, we have elected to apply the net asset value (NAV) practical expedient. The NAV is the estimated fair value of these investments.

• Equity method investments are securities we do not control, but are able to exert significant influence over the investee. These investments are measured at cost less any impairment, plus or minus our share of equity method investee income or loss.

We adopted this accounting standard update beginning the first quarter of fiscal 2019. The standard was adopted using the modified retrospective method for our marketable equity securities and non-marketable equity securities measured using the NAV practical expedient. For our non-marketable equity securities measured using the measurement alternative, we applied the prospective method. Refer to Opening Balance Adjustments below for the impact of adoption on our Consolidated Balance Sheet.

Income Taxes on Intra-Entity Transfers of AssetsIn 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. We adopted this accounting standard update beginning in the first quarter of fiscal 2019 on a modified retrospective basis. The ongoing impact of this standard will be facts and circumstances dependent on any transactions within its scope. Refer to Opening Balance Adjustments below for the impact of adoption on our Consolidated Balance Sheet.

Classification of Cash Flow ElementsIn 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. We adopted this accounting standard update beginning in the first quarter of fiscal 2019 on a retrospective basis. The application of this accounting standard update did not have an impact on our Consolidated Statements of Cash Flows.

Restricted Cash in Statement of Cash Flows 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. We adopted this accounting standard update beginning in the first quarter of fiscal 2019 using a retrospective transition method to each period presented. The application of this accounting standard update did not have a material impact on our Consolidated Statements of Cash Flows. Prior period information has been retrospectively adjusted due to the adoption of ASU 2016-18, Statement of Cash Flows, Restricted Cash at the beginning of the first quarter of fiscal 2019.

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. We early adopted this accounting standard update beginning in the first quarter of fiscal 2019 on a prospective basis. The application of this accounting standard update did not have any impact on our Consolidated Financial Statements.

Definition of a BusinessIn 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. We adopted this accounting standard update beginning in the first quarter of fiscal 2019 on a prospective basis. The impact of this accounting standard update will be fact dependent, but we expect 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.

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(Unaudited)

Opening Balance Adjustments

The following table summarizes the cumulative effect of the changes made to the Consolidated Balance Sheet for the adoption of ASC 606, ASU 2016-01, Financial Instruments, and ASU 2016-16, Intra-Entity Transfers of Assets Other than Inventory (in millions):

Line Item in Consolidated Balance Sheet:	Balance at July 28, 2018			New Revenue Recognition Standard				New Financial Instruments Standard				New Intra-Entity Transfers Standard				Adjusted Balance at July 29, 2018
ASSETS
Accounts receivable, net	$	5,554		$	(104	)	(1)	$	—			$	—			$	5,450
Inventories	$	1,846		$	(302	)	(2)	$	—			$	—			$	1,544
Other current assets (includes capitalized contract acquisition costs)	$	2,940		$	371		(3), (4)	$	—			$	(25	)	(3)	$	3,286
Deferred tax assets	$	3,219		$	(624	)	(3)	$	(15	)	(3)	$	1,415		(8)	$	3,995
Other assets (includes capitalized contract acquisition costs)	$	1,582		$	327		(4)	$	136		(7)	$	(91	)	(3)	$	1,954
TOTAL ASSETS	$	108,784		$	(332	)		$	121			$	1,299			$	109,872
LIABILITIES AND EQUITY
Income taxes payable	$	1,004		$	—			$	—			$	11		(3)	$	1,015
Deferred revenue — current	$	11,490		$	(1,702	)	(5)	$	—			$	—			$	9,788
Other current liabilities	$	4,413		$	33		(6)	$	—			$	—			$	4,446
Deferred revenue — non-current	$	8,195		$	(1,081	)	(5)	$	—			$	—			$	7,114
Other long-term liabilities	$	1,434		$	85		(3)	$	13		(3)	$	—			$	1,532
Retained earnings	$	1,233		$	2,333		(10)	$	283		(10)	$	1,281		(10)	$	5,130
Accumulated other comprehensive income (loss)	$	(849	)	$	—			$	(175	)	(9)	$	7		(3)	$	(1,017	)
TOTAL LIABILITIES AND EQUITY	$	108,784		$	(332	)		$	121			$	1,299			$	109,872

⁽¹⁾ Primarily represents the decrease to accounts receivable related to the change in recognizing revenue on sales to two-tier distributors from a sell-through to a sell-in basis

⁽²⁾ Primarily represents the reduction of inventory for the change from recognizing revenue on sales to two-tier distributors from a sell-through to a sell-in basis

⁽³⁾ Includes the impacts to deferred tax assets, liabilities and other income tax balances

⁽⁴⁾ Primarily represents capitalized contract acquisition costs (e.g. commissions)

⁽⁵⁾ Primarily represents deferred revenue adjusted to retained earnings primarily due to the change in revenue recognition for certain software arrangements from ratable to upfront, recognizing revenue on sales to two-tier distributors from a sell-through to a sell-in basis. Of this total $2.8 billion adjustment, $2.6 billion related to product deferred revenue, of which $1.3 billion relates to our recurring software and subscription offers, $0.6 billion relates to two-tier distribution, and the remainder relates to non-recurring software and other adjustments.

⁽⁶⁾ Primarily represents the reclassification of accounts receivable contra balances to other current liabilities, adjustments to rebate liabilities for the change from recognizing revenue on sales to two-tier distributors from a sell-through to a sell-in basis, and reclassifications from other current liabilities for amounts that are not contract liabilities under ASC 606

⁽⁷⁾ Represents the adjustment due to the remeasurement of non-marketable equity investments at fair value

⁽⁸⁾ Primarily represents the change in net deferred tax assets related to unrecognized income tax effects of intra-entity asset transfers

⁽⁹⁾ Represents the reclassification of net unrealized gains from accumulated other comprehensive income (loss) to retained earnings

⁽¹⁰⁾ Retained earnings impact from the adjustments noted above

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(Unaudited)

Impact of ASC 606 Adoption

The application of ASC 606 increased our total revenue by $146 million and $662 million in the third quarter and first nine months of fiscal 2019, respectively. The application of ASC 606 did not have a material impact to either our cost of sales or our operating expenses in the third quarter and first nine months of fiscal 2019. We recognized a $152 million benefit to our provision for income taxes relating to indirect effects from the adoption of ASC 606 in the first quarter of fiscal 2019. For additional information regarding ASC 606, see Note 3 to the Consolidated Financial Statements.

In connection with the adoption of ASC 606, we recorded a transition adjustment to increase retained earnings by $2.3 billion. See above for the transition impact of ASC 606 by balance sheet line item. As of April 27, 2019, the balance sheet changes attributable to ASC 606 related to accounts receivable, inventories, and deferred revenue were not materially different than the impacts upon adoption. In connection with the adoption of ASC 606, we established contract assets for unbilled receivables. As of April 27, 2019, we had total contract assets of $637 million, of which $254 million was recorded in other current assets and $383 million was recorded in other assets. As of April 27, 2019, we had total capitalized contract acquisition costs of $705 million, of which $390 million was recorded in other current assets and $315 million was recorded in other assets. The adoption of ASC 606 did not have any impact on net cash provided by operating activities.

(b) Recent Accounting Standards or Updates Not Yet Effective

Leases In February 2016, the FASB issued an accounting standard update and subsequent amendments 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 us beginning in the first quarter of fiscal 2020 and early adoption is permitted. We expect to adopt this accounting standard update on a modified retrospective basis in the first quarter of fiscal 2020, and we are currently evaluating the impact of this accounting standard update on our 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 us beginning in the first quarter of fiscal 2021 and early adoption in fiscal 2020 is permitted. We expect to adopt this accounting standard update on a modified retrospective basis in the first quarter of fiscal 2021, and we are currently evaluating the impact of this accounting standard update on our Consolidated Financial Statements.

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(Unaudited)

3. Revenue

(a) Disaggregation of Revenue

We disaggregate our revenue into groups of similar products and services that depict the nature, amount, and timing of revenue and cash flows for our various offerings. The sales cycle, contractual obligations, customer requirements, and go-to-market strategies differ for each of our product categories, resulting in different economic risk profiles for each category. The following table presents this disaggregation of revenue (in millions):

	Three Months Ended				Nine Months Ended
	April 27, 2019		April 28, 2018		April 27, 2019		April 28, 2018
Revenue:
Infrastructure Platforms	$	7,545	$	7,180	$	22,315	$	20,870
Applications	1,431		1,310		4,315		3,697
Security	707		583		2,016		1,725
Other Products	39		231		239		775
Total Product	9,722		9,304		28,885		27,067
Services	3,236		3,159		9,591		9,419
Total (1)	$	12,958	$	12,463	$	38,476	$	36,486

Amounts may not sum due to rounding.

⁽¹⁾ During the second quarter of fiscal 2019, we completed the divestiture of the Service Provider Video Software Solutions ("SPVSS") business. Total revenue includes SPVSS business revenue of $0 and $219 million for the third quarter of fiscal 2019 and 2018, respectively, and $168 million and $697 million for the first nine months of fiscal 2019 and 2018, respectively.

Infrastructure Platforms consist of our core networking technologies of switching, routing, data center products, and wireless that are designed to work together to deliver networking capabilities and transport and/or store data. These technologies consist of both hardware and software offerings, including software licenses and software-as-a-service (SaaS), that help our customers build networks, automate, orchestrate, integrate, and digitize data. We are shifting and expanding more of our business to software and subscriptions across our core networking portfolio. Our hardware and perpetual software in this category are distinct performance obligations where revenue is recognized upfront upon transfer of control. Term software licenses are multiple performance obligations where the term license is recognized upfront upon transfer of control with the associated software maintenance revenue recognized ratably over the contract term. SaaS arrangements in this category have one distinct performance obligation which is satisfied over time with revenue recognized ratably over the contract term.

Applications consists of offerings that utilize the core networking and data center platforms to provide their functions. The products consist primarily of software offerings, including software licenses and SaaS, as well as hardware. Our perpetual software and hardware in this category are distinct performance obligations where revenue is recognized upfront upon transfer of control. Term software licenses are multiple performance obligations where the term license is recognized upfront upon transfer of control with the associated software maintenance revenue recognized ratably over the contract term. SaaS arrangements in this category have one distinct performance obligation which is satisfied over time with revenue recognized ratably over the contract term.

Security primarily includes our unified threat management, advanced threat security, and web security products. These products consist of both hardware and software offerings, including software licenses and SaaS. Updates and upgrades for the term software licenses are critical for our software to perform its intended commercial purpose because of the continuous need for our software to secure our customers' network environments against frequent threats. Therefore, security software licenses are generally represented by a single distinct performance obligation with revenue recognized ratably over the contract term. Our hardware and perpetual software in this category are distinct performance obligations where revenue is recognized upfront upon transfer of control. SaaS arrangements in this category have one distinct performance obligation which is satisfied over time with revenue recognized ratably over the contract term.

Other Products primarily include our Service Provider Video Software Solutions and cloud and system management products. On May 1, 2018, we announced a definitive agreement to sell the SPVSS business. The sale closed on October 28, 2018. These products include both hardware and software licenses. Our offerings in this category are distinct performance obligations where revenue is recognized upfront upon transfer of control.

In addition to our product offerings, we provide a broad range of service and support options for our customers, including technical support services and advanced services. Technical support services represent the majority of these offerings which are distinct

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(Unaudited)

performance obligations that are satisfied over time with revenue recognized ratably over the contract term. Advanced services are distinct performance obligations that are satisfied over time with revenue recognized as services are delivered.

The sales arrangements as discussed above are typically made pursuant to customer purchase orders based on master purchase or partner agreements. Cash is received based on our standard payment terms which is typically 30 days. We provide financing arrangements to customers for all of our hardware, software and service offerings. Refer to Note 8 for additional information. For these arrangements, cash is typically received over time.

(b) Contract Balances

Accounts receivable, net was $3.8 billion as of April 27, 2019 compared to $5.6 billion as of July 28, 2018, as reported on the Consolidated Balance Sheet.

Contract assets consist of unbilled receivables and are recorded when revenue is recognized in advance of scheduled billings to our customers. These amounts are primarily related to software and service arrangements where transfer of control has occurred but we have not yet invoiced. As of April 27, 2019 and July 29, 2018, our contract assets for these unbilled receivables were $637 millionand $122 million,respectively, and were included in other current assets and other assets.

Contract liabilities consist of deferred revenue. Deferred revenue was $17.5 billion as of April 27, 2019 compared to $19.7 billion as of July 28, 2018. In connection with the adoption of ASC 606, we recorded an adjustment to retained earnings to reduce deferred revenue by $2.8 billion. We recognized approximately $2.0 billion and $8.0 billion of revenue during the third quarter and first nine months of fiscal 2019, respectively, that was included in the deferred revenue balance at July 29, 2018.

(c) Remaining Performance Obligations

Remaining Performance Obligations (RPO) are comprised of deferred revenue plus unbilled contract revenue. As of April 27, 2019, the aggregate amount of RPO was $23.0 billion, comprised of $17.5 billion of deferred revenue and $5.5 billion of unbilled contract revenue. We expect approximately 56% of this amount to be recognized as revenue over the next year. Unbilled contract revenue represents non-cancelable contracts for which we have not invoiced, have an obligation to perform, and revenue has not yet been recognized in the financial statements.

(d) Capitalized Contract Acquisition Costs

In connection with the adoption of ASC 606, we began to capitalize direct and incremental costs incurred to acquire contracts, primarily sales commissions, for which the associated revenue is expected to be recognized in future periods. We incur these costs in connection with both initial contracts and renewals. These costs are initially deferred and typically amortized over the term of the customer contract which corresponds to the period of benefit. Deferred sales commissions were $705 million and $644 million as of April 27, 2019 and July 29, 2018, respectively, and were included in other current assets and other assets. The amortization expense associated with these costs was $124 million and $349 million for the third quarter and first nine months of fiscal 2019, respectively, and was included in sales and marketing expenses.

4. Acquisitions and Divestitures

We completed five acquisitions during the first nine months of fiscal 2019. A summary of the allocation of the total purchase consideration is presented as follows (in millions):

	Purchase Consideration		Net Tangible Assets Acquired (Liabilities Assumed)			Purchased Intangible Assets		Goodwill
Duo	$	2,025	$	(57	)	$	342	$	1,740
Luxtera	596		(19		)	319		296
Others (three in total)	65		2			11		52
Total	$	2,686	$	(74	)	$	672	$	2,088

On September 28, 2018, we completed our acquisition of privately held Duo Security, Inc. ("Duo"), a leading provider of unified access security and multi-factor authentication delivered through the cloud. Revenue from the Duo acquisition has been included in our Security product category.

On February 6, 2019, we completed our acquisition of Luxtera, Inc. ("Luxtera"), a privately held semiconductor company. Revenue from the Luxtera acquisition has been included in our Infrastructure Platforms product category.

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(Unaudited)

The total purchase consideration related to acquisitions completed during the first nine months of fiscal 2019 consisted of cash consideration. The total cash and cash equivalents acquired from these acquisitions was approximately $100 million. Total transaction costs related to acquisition and divestiture activities were $15 million and $25 million for the first nine months of fiscal 2019 and 2018, respectively. These transaction costs were expensed as incurred in general and administrative expenses ("G&A") in the Consolidated Statements of Operations.

The goodwill generated from acquisitions completed during the first nine months of fiscal 2019 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 and the revenue and net income subsequent to the acquisition date for the acquisitions completed during the first nine months of fiscal 2019 have not been presented because the effects of the acquisitions, individually and in the aggregate, were not material to our financial results.

Divestiture of Service Provider Video Software Solutions On October 28, 2018, we completed the sale of the Service Provider Video Software Solutions business. This business had tangible assets of approximately $160 million (primarily comprised of accounts receivables, inventories and various other current and long-term assets) and net intangible assets and goodwill (based on relative fair value) of $340 million. In addition, the business had total liabilities of approximately $200 million (primarily comprised of deferred revenue and various other current and long-term liabilities). We recognized an immaterial gain from this transaction in the first nine months of fiscal 2019.

We completed two divestitures during the second quarter of fiscal 2018. The financial statement impact of these divestitures was not material for the first nine months of fiscal 2018.

5. Goodwill and Purchased Intangible Assets

(a) Goodwill

The following table presents the goodwill allocated to our reportable segments as of April 27, 2019 and during the first nine months of fiscal 2019 (in millions):

	Balance at July 28, 2018		Acquisitions & Divestitures		Other			Balance at April 27, 2019
Americas	$	19,998	$	1,240	$	(109	)	$	21,129
EMEA	7,529		486		(33		)	7,982
APJC	4,179		274		(20		)	4,433
Total	$	31,706	$	2,000	$	(162	)	$	33,544

“Other” in the table above primarily consists of foreign currency translation as well as immaterial purchase accounting adjustments.

(b) Purchased Intangible Assets

The following table presents details of our intangible assets acquired through acquisitions completed during the first nine months of fiscal 2019 (in millions, except years):

	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
Duo	5.0	$	153	5.0	$	94	2.5	$	18	$	77	$	342
Luxtera	4.0	2		5.0	58		1.6	3		256		319
Others (three in total)	4.4	11		—	—		—	—		—		11
Total		$	166		$	152		$	21	$	333	$	672

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

The following tables present details of our purchased intangible assets (in millions):

April 27, 2019	Gross		Accumulated Amortization			Net
Purchased intangible assets with finite lives:
Technology	$	3,169	$	(1,775	)	$	1,394
Customer relationships	840		(296		)	544
Other	41		(18		)	23
Total purchased intangible assets with finite lives	4,050		(2,089		)	1,961
In-process research and development, with indefinite lives	437		—			437
Total	$	4,487	$	(2,089	)	$	2,398

July 28, 2018	Gross		Accumulated Amortization			Net
Purchased intangible assets with finite lives:
Technology	$	3,711	$	(1,888	)	$	1,823
Customer relationships	1,538		(937		)	601
Other	63		(38		)	25
Total purchased intangible assets with finite lives	5,312		(2,863		)	2,449
In-process research and development, with indefinite lives	103		—			103
Total	$	5,415	$	(2,863	)	$	2,552

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 third quarter and first nine months of fiscal 2019. Impairment charges related to purchased intangible assets for the third quarter and first nine months of fiscal 2018 were $1 million. Impairment charges are primarily 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 our technology and in-process research and development (IPR&D) intangible assets.

The following table presents the amortization of purchased intangible assets, including impairment charges (in millions):

	Three Months Ended				Nine Months Ended
	April 27, 2019		April 28, 2018		April 27, 2019		April 28, 2018
Amortization of purchased intangible assets:
Cost of sales	$	157	$	177	$	464	$	491
Operating expenses	39		67		112		188
Total	$	196	$	244	$	576	$	679

The estimated future amortization expense of purchased intangible assets with finite lives as of April 27, 2019 is as follows (in millions):

Fiscal Year	Amount
2019 (remaining three months)	$	194
2020	$	741
2021	$	543
2022	$	287
2023	$	145
Thereafter	$	51

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(Unaudited)

6. Restructuring and Other Charges

We initiated a restructuring plan during fiscal 2018 (the "Fiscal 2018 Plan") in order to realign the organization and enable further investment in key priority areas with estimated pretax charges of approximately $600 million. 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 the Fiscal 2018 Plan, we have incurred charges of $18 million and $282 million for the third quarter and first nine months of fiscal 2019, respectively, and have incurred cumulative charges of $390 million. We expect the Fiscal 2018 Plan to be substantially completed in the first half of fiscal 2020.

We announced a restructuring plan in August 2016 (the "Fiscal 2017 Plan"), in order to reinvest in our key priority areas. In connection with the Fiscal 2017 Plan, we incurred cumulative charges of approximately $1.0 billion, which were primarily cash-based and consisted of employee severance and other one-time termination benefits, and other associated costs. We completed the Fiscal 2017 Plan in fiscal 2018.

The following tables summarize the activities related to the restructuring and other charges (in millions):

	FISCAL 2017 AND PRIOR PLANS						FISCAL 2018 PLAN
	Employee Severance			Other			Employee Severance			Other			Total
Liability as of July 28, 2018	$	41		$	13		$	19		$	—		$	73
Charges	—			(1		)	232			51			282
Cash payments	(34		)	(7		)	(232		)	(2		)	(275		)
Non-cash items	—			—			—			(46		)	(46		)
Liability as of April 27, 2019	$	7		$	5		$	19		$	3		$	34

	FISCAL 2017 AND PRIOR PLANS						FISCAL 2018 PLAN
	Employee Severance			Other			Employee Severance			Other			Total
Liability as of July 29, 2017	$	74		$	43		$	—		$	—		$	117
Charges	223			27			75			7			332
Cash payments	(245		)	(30		)	(49		)	(1		)	(325		)
Non-cash items	4			(18		)	—			(6		)	(20		)
Liability as of April 28, 2018	$	56		$	22		$	26		$	—		$	104

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(Unaudited)

7. Balance Sheet Details

The following tables provide details of selected balance sheet items (in millions):

	April 27, 2019		July 28, 2018
Cash and cash equivalents	$	10,251	$	8,934
Restricted cash included in other current assets	21		32
Restricted cash included in other assets	1		27
Total cash, cash equivalents, and restricted cash	$	10,273	$	8,993

Inventories:
Raw materials	$	398	$	423
Work in process	12		—
Finished goods:
Deferred cost of sales and distributor inventory	77		443
Manufactured finished goods	787		689
Total finished goods	864		1,132
Service-related spares	217		258
Demonstration systems	22		33
Total	$	1,513	$	1,846

Property and equipment, net:
Gross property and equipment:
Land, buildings, and building and leasehold improvements	$	4,554		$	4,710
Computer equipment and related software	941			1,085
Production, engineering, and other equipment	5,688			5,734
Operating lease assets	562			356
Furniture and fixtures	370			358
Total gross property and equipment	12,115			12,243
Less: accumulated depreciation and amortization	(9,281		)	(9,237		)
Total	$	2,834		$	3,006

Deferred revenue:
Service	$	11,297	$	11,431
Product	6,159		8,254
Total	$	17,456	$	19,685
Reported as:
Current	$	10,117	$	11,490
Noncurrent	7,339		8,195
Total	$	17,456	$	19,685

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(Unaudited)

8. Financing Receivables and Operating Leases

(a) Financing Receivables

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 Cisco’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 our hardware, software, and services, which may include additional funding for other costs associated with network installation and integration of our 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 our financing receivables is presented as follows (in millions):

April 27, 2019	Lease Receivables			Loan Receivables			Financed Service Contracts			Total
Gross	$	2,442		$	5,240		$	2,349		$	10,031
Residual value	152			—			—			152
Unearned income	(139		)	—			—			(139		)
Allowance for credit loss	(68		)	(77		)	(8		)	(153		)
Total, net	$	2,387		$	5,163		$	2,341		$	9,891
Reported as:
Current	$	1,033		$	2,632		$	1,364		$	5,029
Noncurrent	1,354			2,531			977			4,862
Total, net	$	2,387		$	5,163		$	2,341		$	9,891

July 28, 2018	Lease Receivables			Loan Receivables			Financed Service Contracts			Total
Gross	$	2,688		$	4,999		$	2,326		$	10,013
Residual value	164			—			—			164
Unearned income	(141		)	—			—			(141		)
Allowance for credit loss	(135		)	(60		)	(10		)	(205		)
Total, net	$	2,576		$	4,939		$	2,316		$	9,831
Reported as:
Current	$	1,249		$	2,376		$	1,324		$	4,949
Noncurrent	1,327			2,563			992			4,882
Total, net	$	2,576		$	4,939		$	2,316		$	9,831

Future minimum lease payments to Cisco on lease receivables as of April 27, 2019 are summarized as follows (in millions):

Fiscal Year	Amount
2019 (remaining three months)	$	308
2020	984
2021	632
2022	341
2023	147
Thereafter	30
Total	$	2,442

Actual cash collections may differ from the contractual maturities due to early customer buyouts, refinancings, or defaults.

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(Unaudited)

(b) Credit Quality of Financing Receivables

Gross receivables, excluding residual value, less unearned income categorized by our internal credit risk rating as of April 27, 2019 and July 28, 2018 are summarized as follows (in millions):

	INTERNAL CREDIT RISK RATING
April 27, 2019	1 to 4		5 to 6		7 and Higher		Total
Lease receivables	$	1,235	$	1,029	$	39	$	2,303
Loan receivables	3,187		1,890		163		5,240
Financed service contracts	1,351		984		14		2,349
Total	$	5,773	$	3,903	$	216	$	9,892

	INTERNAL CREDIT RISK RATING
July 28, 2018	1 to 4		5 to 6		7 and Higher		Total
Lease receivables	$	1,294	$	1,199	$	54	$	2,547
Loan receivables	3,184		1,752		63		4,999
Financed service contracts	1,468		835		23		2,326
Total	$	5,946	$	3,786	$	140	$	9,872

We determine the adequacy of our allowance for credit loss by assessing the risks and losses inherent in our financing receivables by portfolio segment. The portfolio segment is based on the types of financing offered by us to our customers, which consist of the following: lease receivables, loan receivables, and financed service contracts.

Our 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.

The following tables present the aging analysis of gross receivables, excluding residual value and less unearned income as of April 27, 2019 and July 28, 2018 (in millions):

	DAYS PAST DUE (INCLUDES BILLED AND UNBILLED)
April 27, 2019	31-60		61-90		91+		Total Past Due		Current		Total		Nonaccrual Financing Receivables		Impaired Financing Receivables
Lease receivables	$	79	$	36	$	114	$	229	$	2,074	$	2,303	$	18	$	18
Loan receivables	108		81		255		444		4,796		5,240		30		30
Financed service contracts	75		113		471		659		1,690		2,349		4		4
Total	$	262	$	230	$	840	$	1,332	$	8,560	$	9,892	$	52	$	52

	DAYS PAST DUE (INCLUDES BILLED AND UNBILLED)
July 28, 2018	31-60		61-90		91+		Total Past Due		Current		Total		Nonaccrual Financing Receivables		Impaired Financing Receivables
Lease receivables	$	72	$	27	$	155	$	254	$	2,293	$	2,547	$	9	$	9
Loan receivables	104		55		252		411		4,588		4,999		30		30
Financed service contracts	138		78		304		520		1,806		2,326		3		3
Total	$	314	$	160	$	711	$	1,185	$	8,687	$	9,872	$	42	$	42

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 $249 million and $503 million as of April 27, 2019 and July 28, 2018, respectively.

As of April 27, 2019, we had financing receivables of $231 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 $182 million as of July 28, 2018.

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(Unaudited)

(c) Allowance for Credit Loss Rollforward

The allowances for credit loss and the related financing receivables are summarized as follows (in millions):

Three months ended April 27, 2019	CREDIT LOSS ALLOWANCES
	Lease Receivables			Loan Receivables		Financed Service Contracts			Total
Allowance for credit loss as of January 26, 2019	$	127		$	64	$	9		$	200
Provisions (benefits)	(41		)	13		27			(1		)
Recoveries (write-offs), net	2			—		(28		)	(26		)
Foreign exchange and other	(20		)	—		—			(20		)
Allowance for credit loss as of April 27, 2019	$	68		$	77	$	8		$	153

Nine months ended April 27, 2019	CREDIT LOSS ALLOWANCES
	Lease Receivables			Loan Receivables		Financed Service Contracts			Total
Allowance for credit loss as of July 28, 2018	$	135		$	60	$	10		$	205
Provisions (benefits)	(48		)	17		26			(5		)
Recoveries (write-offs), net	2			—		(28		)	(26		)
Foreign exchange and other	(21		)	—		—			(21		)
Allowance for credit loss as of April 27, 2019	$	68		$	77	$	8		$	153

Three months ended April 28, 2018	CREDIT LOSS ALLOWANCES
	Lease Receivables			Loan Receivables			Financed Service Contracts			Total
Allowance for credit loss as of January 27, 2018	$	165		$	94		$	13		$	272
Provisions (benefits)	1			(8		)	(1		)	(8		)
Foreign exchange and other	(1		)	(1		)	—			(2		)
Allowance for credit loss as of April 28, 2018	$	165		$	85		$	12		$	262

Nine months ended April 28, 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 (benefits)	2		(19		)	(17		)	(34		)
Foreign exchange and other	1		1			(1		)	1
Allowance for credit loss as of April 28, 2018	$	165	$	85		$	12		$	262

We assess the allowance for credit loss related to financing receivables on either an individual or a collective basis. We consider 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 our 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. Our internal credit risk ratings are categorized as 1 through 10, with the lowest credit risk rating representing the highest quality financing receivables.

Typically, we also consider 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 April 27, 2019 and July 28, 2018, are presented under “(b) Credit Quality of Financing Receivables” above.

We evaluate the remainder of our financing receivables portfolio for impairment on a collective basis and record an allowance for credit loss at the portfolio segment level. When evaluating the financing receivables on a collective basis, we use expected default

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(Unaudited)

frequency rates published by a major third-party credit-rating agency as well as our own historical loss rate in the event of default, while also systematically giving effect to economic conditions, concentration of risk, and correlation.

(d) Operating Leases

We provide 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):

	April 27, 2019			July 28, 2018
Operating lease assets	$	562		$	356
Accumulated depreciation	(382		)	(238		)
Operating lease assets, net	$	180		$	118

Minimum future rentals on noncancelable operating leases as of April 27, 2019 are summarized as follows (in millions):

Fiscal Year	Amount
2019 (remaining three months)	$	42
2020	120
2021	58
2022	12
Total	$	232

9. Available-for-Sale Debt Investments and Equity Investments

The following table summarizes our available-for-sale debt investments and equity investments (in millions):

	April 27, 2019		July 28, 2018
Available-for-sale debt investments	$	24,387	$	37,009
Marketable equity securities	5		605
Total investments	24,392		37,614
Non-marketable equity securities included in other assets (1)	1,135		978
Equity method investments included in other assets	115		118
Total	$	25,642	$	38,710

⁽¹⁾ We held equity interests in certain private equity funds of $0.6 billion as of April 27, 2019 which are accounted for under the NAV practical expedient following the adoption of ASU 2016-01, Financial Instruments, in the first quarter of fiscal 2019.

(a) Summary of Available-for-Sale Debt Investments

The following tables summarize our available-for-sale debt investments (in millions):

April 27, 2019	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. government securities	$	1,455	$	1	$	(4	)	$	1,452
U.S. government agency securities	264		—		(1		)	263
Corporate debt securities	21,307		40		(115		)	21,232
U.S. agency mortgage-backed securities	1,465		3		(28		)	1,440
Total (1)	$	24,491	$	44	$	(148	)	$	24,387

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(Unaudited)

July 28, 2018	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. government securities	$	7,318	$	—	$	(43	)	$	7,275
U.S. government agency securities	732		—		(5		)	727
Non-U.S. government and agency securities	209		—		(1		)	208
Corporate debt securities	27,765		44		(445		)	27,364
U.S. agency mortgage-backed securities	1,488		—		(53		)	1,435
Total (1)	$	37,512	$	44	$	(547	)	$	37,009

⁽¹⁾ Net unsettled investment purchases were $1 million and net unsettled investment sales were $1.5 billion as of April 27, 2019 and July 28, 2018, respectively and were included in other current assets and other current liabilities.

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 debt investments (in millions):

	Three Months Ended						Nine Months Ended
	April 27, 2019			April 28, 2018			April 27, 2019			April 28, 2018
Gross realized gains	$	7		$	1		$	10		$	15
Gross realized losses	(14		)	(40		)	(28		)	(146		)
Total	$	(7	)	$	(39	)	$	(18	)	$	(131	)

The following tables present the breakdown of the available-for-sale debt investments with gross unrealized losses and the duration that those losses had been unrealized at April 27, 2019 and July 28, 2018 (in millions):

	UNREALIZED LOSSES LESS THAN 12 MONTHS					UNREALIZED LOSSES 12 MONTHS OR GREATER					TOTAL
April 27, 2019	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross  Unrealized  Losses
U.S. government securities	$	8	$	—		$	1,409	$	(4	)	$	1,417	$	(4	)
U.S. government agency securities	—		—			263		(1		)	263		(1		)
Corporate debt securities	1,851		(7		)	12,662		(108		)	14,513		(115		)
U.S. agency mortgage-backed securities	48		—			1,155		(28		)	1,203		(28		)
Total	$	1,907	$	(7	)	$	15,489	$	(141	)	$	17,396	$	(148	)

	UNREALIZED LOSSES LESS THAN 12 MONTHS					UNREALIZED LOSSES 12 MONTHS OR GREATER					TOTAL
July 28, 2018	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross  Unrealized  Losses
U.S. government securities	$	2,966	$	(20	)	$	4,303	$	(23	)	$	7,269	$	(43	)
U.S. government agency securities	206		(2		)	521		(3		)	727		(5		)
Non-U.S. government and agency securities	105		(1		)	103		—			208		(1		)
Corporate debt securities	16,990		(344		)	3,511		(101		)	20,501		(445		)
U.S. agency mortgage-backed securities	826		(24		)	581		(29		)	1,407		(53		)
Total	$	21,093	$	(391	)	$	9,019	$	(156	)	$	30,112	$	(547	)

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(Unaudited)

There were no impairment charges related to our available-for-sale debt investments for the third quarter and first nine months of fiscal 2019, and for the corresponding periods of fiscal 2018. For available-for-sale debt investments that were in an unrealized loss position as of April 27, 2019, we have determined that no other-than-temporary impairments were required to be recognized.

The following table summarizes the maturities of our available-for-sale debt investments as of April 27, 2019 (in millions):

	Amortized Cost		Fair Value
Within 1 year	$	7,363	$	7,353
After 1 year through 5 years	13,892		13,826
After 5 years through 10 years	1,760		1,756
After 10 years	11		12
Mortgage-backed securities with no single maturity	1,465		1,440
Total	$	24,491	$	24,387

Actual maturities may differ from the contractual maturities because borrowers may have the right to call or prepay certain obligations.

(b) Summary of Equity Investments

We recorded adjustments to the carrying value of our non-marketable equity securities measured using the measurement alternative during the third quarter and first nine months of fiscal 2019 as follows (in millions):

	Three Months Ended			Nine Months Ended
	April 27, 2019			April 27, 2019
Adjustments to non-marketable equity securities measured using the measurement alternative:
Upward adjustments	$	9		$	33
Downward adjustments, including impairments	(4		)	(22		)
Net upward adjustments	$	5		$	11

Gains and losses recognized on our marketable and non-marketable equity securities for the third quarter and first nine months of fiscal 2019 are summarized below (in millions):

	Three Months Ended			Nine Months Ended
	April 27, 2019			April 27, 2019
Net gains and losses recognized during the period on equity investments	$	3		$	78
Less: Net gains and losses recognized on equity investments sold	(44		)	(51		)
Unrealized gains and losses recognized during reporting period on equity securities still held at the reporting date	$	(41	)	$	27

(c) Securities Lending

We periodically engage in securities lending activities with certain of our available-for-sale debt 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 was $1.3 billion and $0.3 billion for the first nine months of fiscal 2019 and 2018, respectively. We require 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. We engage in these secured lending transactions only with highly creditworthy counterparties, and the associated portfolio custodian has agreed to indemnify us against collateral losses. We did not experience any losses in connection with the secured lending of securities during the periods presented. As of April 27, 2019 and July 28, 2018, we had no outstanding securities lending transactions.

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(Unaudited)

(d) Variable Interest Entities

In the ordinary course of business, we have investments in privately held companies and provide financing to certain customers. These privately held companies and customers are evaluated for consolidation under the variable interest or voting interest entity models. We evaluate on an ongoing basis our investments in these privately held companies and our customer financings, and have determined that as of April 27, 2019, there were no significant variable interest or voting interest entities required to be consolidated in our Consolidated Financial Statements.

As of April 27, 2019, the carrying value of investments in privately held companies was $1.3 billion. $683 million of such investments are considered to be in variable interest entities which are unconsolidated. We have total funding commitments of $345 million related to these privately held 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 our maximum exposure related to these privately held investments.

10. 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, we consider the principal or most advantageous market in which we would transact, and we also consider assumptions that market participants would use when pricing the asset or liability.

(a) Fair Value Hierarchy

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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(Unaudited)

(b) Assets and Liabilities Measured at Fair Value on a Recurring Basis

Assets and liabilities measured at fair value on a recurring basis were as follows (in millions):

	APRIL 27, 2019 FAIR VALUE MEASUREMENTS						JULY 28, 2018 FAIR VALUE MEASUREMENTS
	Level 1		Level 2		Total Balance		Level 1		Level 2		Total Balance
Assets:
Cash equivalents:
Money market funds	$	8,283	$	—	$	8,283	$	6,890	$	—	$	6,890
Available-for-sale debt investments:
U.S. government securities	—		1,452		1,452		—		7,275		7,275
U.S. government agency securities	—		263		263		—		727		727
Non-U.S. government and agency securities	—		—		—		—		208		208
Corporate debt securities	—		21,232		21,232		—		27,364		27,364
U.S. agency mortgage-backed securities	—		1,440		1,440		—		1,435		1,435
Equity investments:
Marketable equity securities	5		—		5		605		—		605
Derivative assets	—		36		36		—		2		2
Total	$	8,288	$	24,423	$	32,711	$	7,495	$	37,011	$	44,506
Liabilities:
Derivative liabilities	$	—	$	20	$	20	$	—	$	74	$	74
Total	$	—	$	20	$	20	$	—	$	74	$	74

Level 1 marketable equity securities are determined by using quoted prices in active markets for identical assets. Level 2 available-for-sale debt investments are priced using quoted market prices for similar instruments or nonbinding market prices that are corroborated by observable market data. We use 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. We use such pricing data as the primary input to make our assessments and determinations as to the ultimate valuation of our investment portfolio and have not made, during the periods presented, any material adjustments to such inputs. We are ultimately responsible for the financial statements and underlying estimates. Our 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. We did not have any transfers between Level 1 and Level 2 fair value measurements during the periods presented.

(c) Assets Measured at Fair Value on a Nonrecurring Basis

The following table presents gains and losses on assets that were measured at fair value on a nonrecurring basis (in millions):

	TOTAL GAINS (LOSSES) FOR THE THREE MONTHS ENDED						TOTAL GAINS (LOSSES) FOR THE NINE MONTHS ENDED
	April 27, 2019			April 28, 2018			April 27, 2019		April 28, 2018
Non-marketable equity securities and equity method investments	$	(3	)	$	(17	)	$	3	$	(56	)
Purchased intangible assets (impaired)	—			(1		)	—		(1		)
Property held for sale—land and buildings	—			—			—		20
Total gains (losses) for nonrecurring measurements	$	(3	)	$	(18	)	$	3	$	(37	)

These assets were measured at fair value due to events or circumstances we identified as having significant impact on their fair value during the respective periods. The carrying value of our non-marketable equity securities recorded to fair value on a non-recurring basis is adjusted for observable transactions for identical or similar investments of the same issuer or impairment. These securities are classified as Level 3 in the fair value hierarchy because we estimate the value based on valuation methods using the

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(Unaudited)

observable transaction price at the transaction date and other unobservable inputs such as volatility, rights, and obligations of the securities we hold.

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 5. The remaining carrying value of the specific purchased intangible assets that were impaired was zero as of April 28, 2018.

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 property held for sale that was impaired was zero as of April 28, 2018.

(d) Other Fair Value Disclosures

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 April 27, 2019 and July 28, 2018 was $3.5 billion and $3.6 billion, respectively. The estimated fair value of long-term loan receivables and financed service contracts approximates their carrying value. We use significant unobservable inputs in determining discounted cash flows to estimate the fair value of our long-term loan receivables and financed service contracts, and therefore they are categorized as Level 3.

As of April 27, 2019, the estimated fair value of our short-term debt approximates its carrying value due to the short maturities. As of April 27, 2019, the fair value of our senior notes and other long-term debt was $21.6 billion with a carrying amount of $20.4 billion. This compares to a fair value of $26.4 billion and a carrying amount of $25.6 billion as of July 28, 2018. 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.

11. Borrowings

(a) Short-Term Debt

The following table summarizes our short-term debt (in millions, except percentages):

	April 27, 2019				July 28, 2018
	Amount		Effective Rate		Amount		Effective Rate
Current portion of long-term debt	$	4,494	3.52	%	$	5,238	3.46	%
Commercial paper	3,283		2.53	%	—		—	%
Total short-term debt	$	7,777			$	5,238

We have a short-term debt financing program of up to $10.0 billion through the issuance of commercial paper notes. We use 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.

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(Unaudited)

(b) Long-Term Debt

The following table summarizes our long-term debt (in millions, except percentages):

		April 27, 2019				July 28, 2018
	Maturity Date	Amount			Effective Rate	Amount			Effective Rate
Senior notes:
Floating-rate notes:
Three-month LIBOR plus 0.50%	March 1, 2019	$	—		—%	$	500		2.86%
Three-month LIBOR plus 0.34%	September 20, 2019	500			3.01%	500			2.71%
Fixed-rate notes:
4.95%	February 15, 2019	—			—%	2,000			5.17%
1.60%	February 28, 2019	—			—%	1,000			1.67%
2.125%	March 1, 2019	—			—%	1,750			2.71%
1.40%	September 20, 2019	1,500			1.48%	1,500			1.48%
4.45%	January 15, 2020	2,500			4.84%	2,500			4.52%
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			3.25%	500			2.86%
1.85%	September 20, 2021	2,000			1.90%	2,000			1.90%
3.00%	June 15, 2022	500			3.51%	500			3.11%
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			3.37%	1,000			2.98%
3.50%	June 15, 2025	500			3.67%	500			3.27%
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		20,500				25,750
Unaccreted discount/issuance costs		(103		)		(116		)
Hedge accounting fair value adjustments		18				(65		)
Total		$	20,415			$	25,569
Reported as:
Current portion of long-term debt		$	4,494			$	5,238
Long-term debt		15,921				20,331
Total		$	20,415			$	25,569

We entered into interest rate swaps in prior periods with an aggregate notional amount of $4.5 billion designated as fair value hedges of certain of our fixed-rate senior notes. These swaps convert the fixed interest rates of the fixed-rate notes to floating interest rates based on the 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 12.

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 us at any time, subject to a make-whole premium. The senior notes rank at par with the commercial paper notes that may be issued in the future pursuant to our short-term debt financing program, as discussed above under “(a) Short-Term Debt.” As of April 27, 2019, we werein compliance with all debt covenants.

29

CISCO SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

As of April 27, 2019, future principal payments for long-term debt, including the current portion, are summarized as follows (in millions):

Fiscal Year	Amount
2019 (remaining three months)	$	—
2020	6,000
2021	3,000
2022	2,500
2023	500
Thereafter	8,500
Total	$	20,500

(c) Credit Facility

On May 15, 2015, we 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 our senior debt credit ratings as published by Standard & Poor’s Financial Services, LLC and Moody’s Investors Service, Inc., provided that in no event will the Eurocurrency Rate be less than zero. We may also, upon the agreement of either the then-existing lenders or additional lenders not currently parties to the agreement, increase the commitments under the credit facility by up to an additional $2.0 billion and/or extend the expiration date of the credit facility up to May 15, 2022.

This credit agreement requires that we comply with certain covenants, including that we maintain an interest coverage ratio as defined in the agreement. As of April 27, 2019, we were in compliance with the required interest coverage ratio and the other covenants, and we had not borrowed any funds under this credit facility.

30

CISCO SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

12. Derivative Instruments

(a) Summary of Derivative Instruments

We use derivative instruments primarily to manage exposures to foreign currency exchange rate, interest rate, and equity price risks. Our 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. Our derivatives expose us to credit risk to the extent that the counterparties may be unable to meet the terms of the agreement. We do, however, seek to mitigate such risks by limiting our 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 our derivative instruments and the line items on the Consolidated Balance Sheets to which they were recorded are summarized as follows (in millions):

	DERIVATIVE ASSETS					DERIVATIVE LIABILITIES
	Balance Sheet Line Item	April 27, 2019		July 28, 2018		Balance Sheet Line Item	April 27, 2019		July 28, 2018
Derivatives designated as hedging instruments:
Foreign currency derivatives	Other current assets	$	5	$	1	Other current liabilities	$	3	$	—
Interest rate derivatives	Other current assets	—		—		Other current liabilities	7		10
Interest rate derivatives	Other assets	27		—		Other long-term liabilities	4		62
Total		32		1			14		72
Derivatives not designated as hedging instruments:
Foreign currency derivatives	Other current assets	4		1		Other current liabilities	6		2
Total		4		1			6		2
Total		$	36	$	2		$	20	$	74

The effects of our cash flow and net investment hedging instruments on other comprehensive income (OCI) and the Consolidated Statements of Operations are summarized as follows (in millions):

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)
	April 27, 2019		April 28, 2018			Line Item in Statements of Operations	April 27, 2019			April 28, 2018
Derivatives designated as cash flow hedging instruments:
Foreign currency derivatives	$	12	$	(10	)	Revenue — product	$	(1	)	$	—
						Revenue — service	1			—
						Cost of sales — service	—			7
						Operating expenses	—			21
Total	$	12	$	(10	)		$	—		$	28
Derivatives designated as net investment hedging instruments:
Foreign currency derivatives	$	—	$	7		Other income (loss), net	$	—		$	—

31

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

GAINS (LOSSES) RECOGNIZED IN OCI ON DERIVATIVES FOR THE NINE MONTHS ENDED (EFFECTIVE PORTION)						GAINS (LOSSES) RECLASSIFIED FROM AOCI INTO INCOME FOR THE NINE MONTHS ENDED (EFFECTIVE PORTION)
	April 27, 2019		April 28, 2018			Line Item in Statements of Operations	April 27, 2019			April 28, 2018
Derivatives designated as cash flow hedging instruments:
Foreign currency derivatives	$	2	$	28		Revenue — product	$	—		$	—
						Revenue — service	3			—
						Cost of sales — service	(1		)	14
						Operating expenses	(1		)	45
Total	$	2	$	28			$	1		$	59
Derivatives designated as net investment hedging instruments:
Foreign currency derivatives	$	3	$	(10	)	Other income (loss), net	$	—		$	—

As of April 27, 2019, we estimate that approximately $3 million of net derivative gains related to our 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):

		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	April 27, 2019		April 28, 2018			April 27, 2019			April 28, 2018
Interest rate derivatives	Interest expense	$	33	$	(59	)	$	(31	)	$	58
Equity derivatives	Other income (loss), net	—		25			—			(25		)
Total		$	33	$	(34	)	$	(31	)	$	33

		GAINS (LOSSES) ON DERIVATIVE INSTRUMENTS FOR THE NINE MONTHS ENDED					GAINS (LOSSES) RELATED TO HEDGED ITEMS FOR THE NINE MONTHS ENDED
Derivatives Designated as Fair Value Hedging Instruments	Line Item in Statements of Operations	April 27, 2019		April 28, 2018			April 27, 2019			April 28, 2018
Interest rate derivatives	Interest expense	$	88	$	(168	)	$	(83	)	$	167
Equity derivatives	Other income (loss), net	—		(24		)	—			24
Total		$	88	$	(192	)	$	(83	)	$	191

The effect on the Consolidated Statements of Operations of derivative instruments not designated as hedges is summarized as follows (in millions):

		GAINS (LOSSES) FOR THE THREE MONTHS ENDED						GAINS (LOSSES) FOR THE NINE MONTHS ENDED
Derivatives Not Designated as Hedging Instruments	Line Item in Statements of Operations	April 27, 2019			April 28, 2018			April 27, 2019			April 28, 2018
Foreign currency derivatives	Other income (loss), net	$	(29	)	$	(53	)	$	(57	)	$	20
Total return swaps—deferred compensation	Operating expenses	42			(26		)	9			28
	Cost of sales — product	2			(1		)	1			—
	Cost of sales — service	2			(1		)	—			1
	Other income (loss), net	(4		)	(3		)	(12		)	(8		)
Equity derivatives	Other income (loss), net	1			(7		)	2			(4		)
Total		$	14		$	(91	)	$	(57	)	$	37

32

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

The notional amounts of our outstanding derivatives are summarized as follows (in millions):

	April 27, 2019		July 28, 2018
Derivatives designated as hedging instruments:
Foreign currency derivatives—cash flow hedges	$	623	$	147
Interest rate derivatives	4,500		6,750
Net investment hedging instruments	363		250
Derivatives not designated as hedging instruments:
Foreign currency derivatives	2,760		2,298
Total return swaps—deferred compensation	572		566
Total	$	8,818	$	10,011

(b) Offsetting of Derivative Instruments

We present our derivative instruments at gross fair values in the Consolidated Balance Sheets. However, our 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, we also enter 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):

	April 27, 2019
	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	$	36	$	—	$	36	$	(10	)	$	(26	)	$	—
Derivatives liabilities	$	20	$	—	$	20	$	(10	)	$	(5	)	$	5

	July 28, 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	$	2	$	—	$	2	$	(2	)	$	—		$	—
Derivatives liabilities	$	74	$	—	$	74	$	(2	)	$	(53	)	$	19

(c) Foreign Currency Exchange Risk

We conduct business globally in numerous currencies. Therefore, we are exposed to adverse movements in foreign currency exchange rates. To limit the exposure related to foreign currency changes, we enter into foreign currency contracts. We do not enter into such contracts for speculative purposes.

We hedge forecasted foreign currency transactions related to certain revenues, 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. We assess 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, we did not discontinue any cash flow hedges for which it was probable that a forecasted transaction would not occur.

33

CISCO SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

We enter 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.

We hedge certain net investments in our foreign operations with forward contracts to reduce the effects of foreign currency fluctuations on our net investment in those foreign subsidiaries. These derivative instruments generally have maturities of up to six months.

(d) Interest Rate Risk

Interest Rate Derivatives, Investments   Our primary objective for holding available-for-sale debt investments is to achieve an appropriate investment return consistent with preserving principal and managing risk. To realize these objectives, we may utilize interest rate swaps or other derivatives designated as fair value or cash flow hedges. As of April 27, 2019 and July 28, 2018, we did not have any outstanding interest rate derivatives related to our available-for-sale debt investments.

Interest Rate Derivatives Designated as Fair Value Hedges, Long-Term Debt In the first nine months of fiscal 2019, we did not enter into any interest rate swaps. In prior fiscal years, we entered into interest rate swaps designated as fair value hedges related to fixed-rate senior notes that are due in fiscal 2020through 2025. Under these interest rate swaps, we receive fixed-rate interest payments and make 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 assets and other current and long-term liabilities.

(e) Equity Price Risk

We may hold equity securities for strategic purposes or to diversify our overall investment portfolio. The marketable equity securities in our portfolio are subject to price risk. To manage our exposure to changes in the fair value of certain equity securities, we have 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, we periodically enter 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.

We are also exposed to variability in compensation charges related to certain deferred compensation obligations to employees. Although not designated as accounting hedges, we utilize derivatives such as total return swaps to economically hedge this exposure.

(f) 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.

34

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

13. Commitments and Contingencies

(a) Operating Leases

We lease office space in many U.S. locations. Outside the United States, larger leased sites include sites in Australia, Belgium, Canada, China, Germany, India, Japan, Mexico, Poland and the United Kingdom. We also lease equipment and vehicles. Future minimum lease payments under all noncancelable operating leases with an initial term in excess of one year as of April 27, 2019 are as follows (in millions):

Fiscal Year	Amount
2019 (remaining three months)	$	111
2020	372
2021	257
2022	177
2023	112
Thereafter	121
Total	$	1,150

(b) Purchase Commitments with Contract Manufacturers and Suppliers

We purchase components from a variety of suppliers and use several contract manufacturers to provide manufacturing services for our products. During the normal course of business, in order to manage manufacturing lead times and help ensure adequate component supply, we enter into agreements with contract manufacturers and suppliers that either allow them to procure inventory based upon criteria as defined by us or establish the parameters defining our requirements. A significant portion of our 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 us the option to cancel, reschedule, and adjust our requirements based on our business needs prior to firm orders being placed.

The following table summarizes our purchase commitments with contract manufacturers and suppliers (in millions):

Commitments by Period	April 27, 2019		July 28, 2018
Less than 1 year	$	4,738	$	5,407
1 to 3 years	734		710
3 to 5 years	90		360
Total	$	5,562	$	6,477

We record a liability for firm, noncancelable, and unconditional purchase commitments for quantities in excess of our future demand forecasts consistent with the valuation of our excess and obsolete inventory. As of April 27, 2019 and July 28, 2018, the liability for these purchase commitments was $129 million and $159 million, respectively, and was included in other current liabilities.

(c) Other Commitments

In connection with our acquisitions, we have 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 Cisco of certain employees of the acquired entities.

The following table summarizes the compensation expense related to acquisitions (in millions):

	Three Months Ended				Nine Months Ended
	April 27, 2019		April 28, 2018		April 27, 2019		April 28, 2018
Compensation expense related to acquisitions	$	76	$	53	$	251	$	141

As of April 27, 2019, we estimated that future cash compensation expense of up to $512 million may be required to be recognized pursuant to the applicable business combination agreements.

35

CISCO SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

We also have certain funding commitments, primarily related to our non-marketable equity and other 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 funding commitments were $345 million and $223 million as of April 27, 2019 and July 28, 2018, respectively.

(d) Product Warranties

The following table summarizes the activity related to the product warranty liability (in millions):

	Nine Months Ended
	April 27, 2019			April 28, 2018
Balance at beginning of period	$	359		$	407
Provisions for warranties issued	447			431
Adjustments for pre-existing warranties	(6		)	(32		)
Settlements	(449		)	(441		)
Acquisitions and divestitures	(2		)	—
Balance at end of period	$	349		$	365

We accrue for warranty costs as part of our cost of sales based on associated material product costs, labor costs for technical support staff, and associated overhead. Our products are generally covered by a warranty for periods ranging from 90 days to five years, and for some products we provide a limited lifetime warranty.

(e) Financing and Other Guarantees

In the ordinary course of business, we provide 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   We facilitate 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, we guarantee a portion of these arrangements. The volume of channel partner financing was $7.2 billion and $7.1 billion for the third quarter of fiscal 2019 and 2018, respectively, and was $21.7 billion and $20.7 billion for the first nine months of fiscal 2019 and 2018, respectively. The balance of the channel partner financing subject to guarantees was $1.3 billion and $1.0 billion as of April 27, 2019 and July 28, 2018, respectively.

End-User Financing Guarantees   We also provide 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 we had provided guarantees was $1 million and $3 million for the third quarter of fiscal 2019 and 2018, respectively, and was $11 million and $29 million for the first nine months of fiscal 2019 and 2018, respectively.

Financing Guarantee Summary   The aggregate amounts of financing guarantees outstanding at April 27, 2019 and July 28, 2018, 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):

	April 27, 2019			July 28, 2018
Maximum potential future payments relating to financing guarantees:
Channel partner	$	221		$	277
End user	19			31
Total	$	240		$	308
Deferred revenue associated with financing guarantees:
Channel partner	$	(63	)	$	(94	)
End user	(18		)	(28		)
Total	$	(81	)	$	(122	)
Maximum potential future payments relating to financing guarantees, net of associated deferred revenue	$	159		$	186

36

CISCO SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Other Guarantees Our other guarantee arrangements as of April 27, 2019 and July 28, 2018 that were subject to recognition and disclosure requirements were not material.

(f) Indemnifications

In the normal course of business, we indemnify other parties, including customers, lessors, and parties to other transactions with us, with respect to certain matters. We have agreed to indemnify 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.

We have been asked to indemnify Time Warner Cable (“TWC”) for patent infringement claims asserted against it by Sprint Communications Company, L.P. (“Sprint”) in federal court in Kansas. Sprint alleges that TWC infringed certain Sprint patents by offering VoIP telephone services utilizing products provided by us generally in combination with those of other manufacturers. Sprint seeks monetary damages. Following a trial on March 3, 2017, a jury in Kansas found that TWC 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 TWC's post-trial motions. TWC appealed to the U.S. Court of Appeals for the Federal Circuit, and, on November 30, 2018, a panel of the court affirmed the judgment. TWC filed a petition for rehearing en banc on January 29, 2019, which was denied on March 19, 2019. At this time, we do not believe that our indemnity obligations under our agreement would be material.

During the first nine months of fiscal 2018, we recorded legal and indemnification settlement charges of $127 million to product cost of sales related to prior indemnification matters resolved in fiscal 2018.

In addition, we have entered into indemnification agreements with our officers and directors, and our Amended and Restated Bylaws contain similar indemnification obligations to our agents.

It is not possible to determine the maximum potential amount under these indemnification agreements due to our limited history with prior indemnification claims and the unique facts and circumstances involved in each particular agreement. Historically, payments made by us under these agreements have not had a material effect on our operating results, financial position, or cash flows.

(g) Legal Proceedings

BrazilBrazilian authorities have investigated our Brazilian subsidiary and certain of our former employees, as well as a Brazilian importer of our 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 our 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 $206 million for the alleged evasion of import and other taxes, $1.3 billion for interest, and $1.0 billion for various penalties, all determined using an exchange rate as of April 27, 2019. We have completed a thorough review of the matters and believe the asserted claims against our Brazilian subsidiary are without merit, and we are defending the claims vigorously. While we believe 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, we are unable to determine the likelihood of an unfavorable outcome against our Brazilian subsidiary and are unable to reasonably estimate a range of loss, if any. We do not expect a final judicial determination for several years.

SRI International On September 4, 2013, SRI International, Inc. (“SRI”) asserted patent infringement claims against us in the U.S. District Court for the District of Delaware, accusing our 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. We appealed to the United States Court of Appeals for the Federal Circuit on various grounds. On March 20, 2019, the Federal Circuit vacated the enhanced damages award; vacated and remanded in part the willful infringement finding; and affirmed the district court's other findings. Cisco filed a petition for rehearing with the Federal Circuit on May 10, 2019. While the ultimate outcome of the case may still result in a loss, we do not expect it to be material.

37

CISCO SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Straight Path On September 24, 2014, Straight Path IP Group, Inc. (“Straight Path”) asserted patent infringement claims against us in the U.S. District Court for the Northern District of California, accusing our 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 our motion for summary judgment of non-infringement, thereby dismissing Straight Path's claims against us and cancelling a trial which had been set for March 12, 2018. Straight Path appealed to the U.S. Court of Appeal for the Federal Circuit, and, on January 23, 2019, the court summarily affirmed the finding of non-infringement.

Arista Networks, Inc. As reported in our Form 10-K for the fiscal year ended July 28, 2018 we received a payment of $400 million from Arista Networks, Inc. ("Arista") in connection with the settlement of litigation. The payment was recognized in general and administrative expenses in our first quarter of fiscal 2019.

Oyster Optics On November 24, 2016, Oyster Optics, LLC (“Oyster”) asserted patent infringement claims against us in the U.S. District Court for the Eastern District of Texas. Oyster alleges that certain Cisco ONS 15454 and NCS 2000 line cards infringe U.S. Patent No. 7,620,327 (“the ‘327 Patent”). Oyster seeks monetary damages. Oyster filed infringement claims based on the ‘327 Patent against other defendants, including ZTE, Nokia, NEC, Infinera, Huawei, Ciena, Alcatel-Lucent, and Fujitsu, and the court consolidated the cases alleging infringement of the ‘327 Patent. Oyster's cases against some of the defendants were resolved. The court vacated the November 4, 2018 trial date set for Oyster's claims against Cisco and one other remaining defendant, pending resolution of Oyster's appeal of the court's summary judgment ruling dismissing certain of Oyster's claims. Oyster appealed the summary judgment ruling on December 6, 2018. While we believe that we have strong non-infringement arguments and that the patent is invalid, if we do not prevail in the District Court, we believe damages ultimately assessed would not be material. Due to uncertainty surrounding patent litigation processes, we are unable to reasonably estimate the ultimate outcome of this litigation at this time. However, we do not anticipate that any final outcome of the dispute would be material.

In addition, we are 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, we do not expect that the ultimate costs to resolve these matters will have a material adverse effect on our consolidated financial position, results of operations, or cash flows. For additional information regarding intellectual property litigation, see “Part II, Item 1A. Risk Factors-We may be found to infringe on intellectual property rights of others” herein. 

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(Unaudited)

14. Shareholders’ Equity

(a) Cash Dividends on Shares of Common Stock

We declared and paid cash dividends of $0.35 and $0.33 per common share, or $1.5 billion and $1.6 billion, on our outstanding common stock for the third quarter of fiscal 2019 and fiscal 2018, respectively. We declared and paid cash dividends of $1.01 and $0.91 per common share, or $4.5 billion and $4.4 billion, on our outstanding common stock for the first nine months of fiscal 2019 and fiscal 2018, respectively.

(b) Stock Repurchase Program

In September 2001, our Board of Directors authorized a stock repurchase program. On February 13, 2019, our Board of Directors authorized a $15 billion increase to the stock repurchase program. The remaining authorized amount for stock repurchases under this program, including the additional authorization, is approximately $18 billion with no termination date. A summary of the stock repurchase activity for fiscal 2019 and 2018 under the stock repurchase program, reported based on the trade date, is summarized as follows (in millions, except per-share amounts):

Quarter Ended	Shares	Weighted-Average Price per Share		Amount
Fiscal 2019
April 27, 2019	116	$	52.14	$	6,020
January 26, 2019	111	$	45.09	$	5,016
October 27, 2018	109	$	46.01	$	5,026
Fiscal 2018
July 28, 2018	138	$	43.58	$	6,015
April 28, 2018	140	$	42.83	$	6,015
January 27, 2018	103	$	39.07	$	4,011
October 28, 2017	51	$	31.80	$	1,620

There were $200 million and $180 million of stock repurchases that were pending settlement as of April 27, 2019 and July 28, 2018, respectively.

The purchase price for the shares of our stock repurchased is reflected as a reduction to shareholders’ equity. We are 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.

(c) Preferred Stock

Under the terms of our Articles of Incorporation, the Board of Directors may determine the rights, preferences, and terms of our authorized but unissued shares of preferred stock.

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(Unaudited)

15. Employee Benefit Plans

(a) Employee Stock Incentive Plans

Stock Incentive Plan Program Description    As of April 27, 2019, we had one stock incentive plan: the 2005 Stock Incentive Plan (the “2005 Plan”). In addition, we have, in connection with our 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 us and provide incentives for them to remain with Cisco. The number and frequency of share-based awards are based on competitive practices, operating results of Cisco, government regulations, and other factors. Our primary stock incentive plan is summarized as follows:

2005 Plan As of April 27, 2019, 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 Cisco 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 our 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 Cisco and its subsidiaries and affiliates, and non-employee directors of Cisco. 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 our 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.

(b) Employee Stock Purchase Plan

We have an Employee Stock Purchase Plan, which includes its subplan named the International Employee Stock Purchase Plan (together, the “Purchase Plan”), under which 721 million shares of our common stock have been reserved for issuance as of April 27, 2019. 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 our 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 the earlier of (i) January 3, 2030 and (ii) the date on which all shares available for issuance under the Purchase Plan are sold pursuant to exercised purchase rights. No shares were issued under the Purchase Plan during each of the third quarters of fiscal 2019 and 2018. We issued 9 million and 12 million shares during the first nine months of fiscal 2019 and 2018, respectively. As of April 27, 2019, 169 million shares were available for issuance under the Purchase Plan.

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(Unaudited)

(c) 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):

	Three Months Ended				Nine Months Ended
	April 27, 2019		April 28, 2018		April 27, 2019		April 28, 2018
Cost of sales—product	$	22	$	24	$	67	$	70
Cost of sales—service	32		33		96		98
Share-based compensation expense in cost of sales	54		57		163		168
Research and development	135		139		398		409
Sales and marketing	124		142		386		412
General and administrative	63		61		190		189
Restructuring and other charges	3		6		45		24
Share-based compensation expense in operating expenses	325		348		1,019		1,034
Total share-based compensation expense	$	379	$	405	$	1,182	$	1,202
Income tax benefit for share-based compensation	$	98	$	140	$	389	$	411

As of April 27, 2019, the total compensation cost related to unvested share-based awards not yet recognized was $2.9 billion which is expected to be recognized over approximately 2.8 years on a weighted-average basis.

(d) Share-Based Awards Available for Grant

A summary of share-based awards available for grant is as follows (in millions):

	Share-Based Awards Available for Grant
BALANCE AT JULY 29, 2017	272
Restricted stock, stock units, and other share-based awards granted	(70	)
Share-based awards canceled/forfeited/expired	18
Shares withheld for taxes and not issued	25
BALANCE AT JULY 28, 2018	245
Restricted stock, stock units, and other share-based awards granted	(41	)
Share-based awards canceled/forfeited/expired	16
Shares withheld for taxes and not issued	17
Other	1
BALANCE AT APRIL 27, 2019	238

For each share awarded as restricted stock or a restricted stock unit award under the 2005 Plan, 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.

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(Unaudited)

(e) Restricted Stock and Stock Unit Awards

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):

	Restricted Stock/ Stock Units		Weighted-Average Grant Date Fair Value per Share		Aggregate Fair  Value
UNVESTED BALANCE AT JULY 29, 2017	141		$	26.94
Granted	46		35.62
Assumed from acquisitions	1		28.26
Vested	(53	)	26.02		$	1,909
Canceled/forfeited/other	(16	)	28.37
UNVESTED BALANCE AT JULY 28, 2018	119		30.56
Granted	27		45.01
Vested	(36	)	28.30		$	1,698
Canceled/forfeited/other	(12	)	31.39
UNVESTED BALANCE AT APRIL 27, 2019	98		$	35.30

(f) Stock Option Awards

A summary of the stock option activity is as follows (in millions, except per-share amounts):

	STOCK OPTIONS OUTSTANDING
	Number Outstanding		Weighted-Average Exercise Price per Share
BALANCE AT JULY 29, 2017	12		$	6.15
Assumed from acquisitions	3		8.20
Exercised	(8	)	5.77
Canceled/forfeited/expired	(1	)	8.75
BALANCE AT JULY 28, 2018	6		7.18
Exercised	(3	)	6.88
BALANCE AT APRIL 27, 2019	3		$	7.35

The following table summarizes significant ranges of outstanding and exercisable stock options as of April 27, 2019 (in millions, except years and share prices):

	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	3	5.3	$	7.35	$	141	2	$	7.22	$	117

The aggregate intrinsic value in the preceding table represents the total pretax intrinsic value, based on our closing stock price of $55.88 as of April 26, 2019. The total number of in-the-money stock options exercisable as of April 27, 2019 was 2 million. As of July 28, 2018, 4 million outstanding stock options were exercisable and the weighted-average exercise price was $6.84.

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(Unaudited)

(g) Valuation of Employee Share-Based Awards

Time-based restricted stock units and performance-based restricted stock units ("PRSUs") that are based on our financial performance metrics or non-financial operating goals are valued using the market value of our common stock on the date of grant, discounted for the present value of expected dividends. On the date of grant, we 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:

	RESTRICTED STOCK UNITS						PERFORMANCE BASED RESTRICTED STOCK UNITS
Three Months Ended	April 27, 2019			April 28, 2018			April 27, 2019	April 28, 2018
Number of shares granted (in millions)	2			2			—	—
Grant date fair value per share	$	48.17		$	39.31		N/A	$	43.44
Weighted-average assumptions/inputs:
Expected dividend yield	2.7		%	2.9		%	N/A	3.0		%
Range of risk-free interest rates	2.2% – 2.6%			0.0% – 2.6%			N/A	1.5%-2.5%
Range of expected volatilities for index	N/A			N/A			N/A	12.5%-82.8%

	RESTRICTED STOCK UNITS						PERFORMANCE BASED RESTRICTED STOCK UNITS
Nine Months Ended	April 27, 2019			April 28, 2018			April 27, 2019			April 28, 2018
Number of shares granted (in millions)	25			30			2			3
Grant date fair value per share	$	44.84		$	33.97		$	47.00		$	31.96
Weighted-average assumptions/inputs:
Expected dividend yield	2.8		%	3.2		%	2.8		%	3.5		%
Range of risk-free interest rates	0.0% – 2.9%			0.0% – 2.6%			2.1% – 3.0%			1.0%-2.5%
Range of expected volatilities for index	N/A			N/A			13.0% – 65.2%			12.5%-82.8%

The PRSUs granted during the periods presented are contingent on the achievement of our financial performance metrics, our 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 our 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 our financial performance metrics or our comparative market-based returns and 0% to 100% of the target shares granted contingent on the achievement of non-financial operating goals.

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(Unaudited)

16. Comprehensive Income (Loss)

The components of AOCI, net of tax, and the other comprehensive income (loss), excluding noncontrolling interest, for the first nine months of fiscal 2019 and 2018 are summarized as follows (in millions):

	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 28, 2018	$	(310	)	$	(11	)	$	(528	)	$	(849	)
Other comprehensive income (loss) before reclassifications attributable to Cisco Systems, Inc.	382			3			(224		)	161
(Gains) losses reclassified out of AOCI	18			(1		)	4			21
Tax benefit (expense)	(59		)	—			(2		)	(61		)
Total change for the period	341			2			(222		)	121
Effect of adoption of accounting standards	(168		)	—			—			(168		)
BALANCE AT APRIL 27, 2019	$	(137	)	$	(9	)	$	(750	)	$	(896	)

	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.	(620		)	28			34			(558		)
(Gains) losses reclassified out of AOCI	(108		)	(59		)	5			(162		)
Tax benefit (expense)	24			4			(3		)	25
Total change for the period	(704		)	(27		)	36			(695		)
Effect of adoption of accounting standard	54			—			(9		)	45
BALANCE AT APRIL 28, 2018	$	(277	)	$	5		$	(332	)	$	(604	)

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(Unaudited)

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):

	Three Months Ended					Nine Months Ended
	April 27, 2019			April 28, 2018		April 27, 2019			April 28, 2018
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	$	(7	)	$	17	$	(18	)	$	108		Other income (loss), net
Net unrealized gains and losses on cash flow hedging instruments
Foreign currency derivatives	(1		)	—		—			—			Revenue—product
Foreign currency derivatives	1			—		3			—			Revenue—service
Foreign currency derivatives	—			7		(1		)	14			Cost of sales—service
Foreign currency derivatives	—			21		(1		)	45			Operating expenses
	—			28		1			59
Cumulative translation adjustment and actuarial gains and losses	—			—		—			(5		)	Operating expenses
Cumulative translation adjustment and actuarial gains and losses	(1		)	—		(4		)	—			Other income (loss), net
Total amounts reclassified out of AOCI	$	(8	)	$	45	$	(21	)	$	162

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(Unaudited)

17. Income Taxes

The following table provides details of income taxes (in millions, except percentages):

	Three Months Ended						Nine Months Ended
	April 27, 2019			April 28, 2018			April 27, 2019			April 28, 2018
Income before provision for income taxes	$	3,615		$	3,253		$	10,867		$	9,447
Provision for income taxes	$	571		$	562		$	1,452		$	13,140
Effective tax rate	15.8		%	17.3		%	13.4		%	139.1		%

The effective tax rate for the first nine months of fiscal 2019 includes a $152 million tax benefit relating to indirect effects from adoption of ASC 606 at the beginning of fiscal 2019.

On December 22, 2017, the Tax Cuts and Jobs Act (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. The enactment of the Tax Act resulted in us recording a provisional tax expense of $10.4 billion in fiscal 2018. In the second quarter of fiscal 2019, we completed our accounting relating to the Tax Act and recorded an additional $58 million of tax expense. The total tax charge as a result of the Tax Act was $10.5 billion, consisting of $8.2 billion of tax expense for the U.S. transition tax on accumulated earnings of foreign subsidiaries, $1.2 billion of foreign withholding tax and $1.1 billion of tax expense for DTA re-measurement. The tax expense related to the U.S. transition tax on accumulated earnings in foreign subsidiaries is net of a $0.9 billion benefit related to U.S. taxation of deemed foreign dividends in the transition fiscal year. This benefit may be reduced or eliminated in future legislation. If such legislation is enacted, we will record the impact of the legislation in the quarter of enactment.

The Tax Act includes a Global Intangible Low-Taxed Income ("GILTI") provision that imposes U.S. tax on certain foreign subsidiary income in the year it is earned. Our accounting policy is to treat tax on GILTI as a current period cost included in tax expense in the year incurred.

As of April 27, 2019, we had $1.8 billion of unrecognized tax benefit, of which $1.6 billion, if recognized, would favorably impact the effective tax rate. We regularly engage in discussions and negotiations with tax authorities regarding tax matters in various jurisdictions. We believe 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. We estimate that the unrecognized tax benefits at April 27, 2019 could be reduced by approximately $50 million in the next 12 months.

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(Unaudited)

18. Segment Information and Major Customers

(a) Revenue and Gross Margin by Segment

We conduct business globally and are primarily managed on a geographic basis consisting of three segments: the Americas, EMEA, and APJC. Our management makes financial decisions and allocates resources based on the information it receives from our internal management system. Sales are attributed to a segment based on the ordering location of the customer. We do not allocate research and development, sales and marketing, or general and administrative expenses to our segments in this internal management system because management does not include the information in our measurement of the performance of the operating segments. In addition, we do 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 our measurement of the performance of the operating segments.

Summarized financial information by segment for the third quarter and the first nine months of fiscal 2019 and2018, based on our internal management system and as utilized by our Chief Operating Decision Maker ("CODM"), is as follows (in millions):

	Three Months Ended						Nine Months Ended
	April 27, 2019			April 28, 2018			April 27, 2019			April 28, 2018
Revenue:
Americas	$	7,695		$	7,161		$	22,798		$	21,515
EMEA	3,356			3,281			9,803			9,252
APJC	1,907			2,021			5,875			5,719
Total	$	12,958		$	12,463		$	38,476		$	36,486
Gross margin:
Americas	$	5,046		$	4,614		$	14,911		$	13,950
EMEA	2,166			2,109			6,307			5,925
APJC	1,158			1,247			3,467			3,506
Segment total	8,370			7,970			24,686			23,381
Unallocated corporate items	(197		)	(211		)	(594		)	(697		)
Total	$	8,173		$	7,759		$	24,092		$	22,684

Amounts may not sum and percentages may not recalculate due to rounding.

Revenue in the United States was $6.8 billion and $6.2 billion for the third quarter of fiscal 2019 and 2018, respectively, and $20.2 billion and $18.8 billion for the first nine months of fiscal 2019 and 2018, respectively.

(b) Revenue for Groups of Similar Products and Services

We design, manufacture, and sell Internet Protocol (IP)-based networking and other products related to the communications and information technology (IT) industry and provide services associated with these products and their use.

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(Unaudited)

The following table presents revenue for groups of similar products and services (in millions):

	Three Months Ended				Nine Months Ended
	April 27, 2019		April 28, 2018		April 27, 2019		April 28, 2018
Revenue:
Infrastructure Platforms	$	7,545	$	7,180	$	22,315	$	20,870
Applications	1,431		1,310		4,315		3,697
Security	707		583		2,016		1,725
Other Products	39		231		239		775
Total Product	9,722		9,304		28,885		27,067
Services	3,236		3,159		9,591		9,419
Total (1)	$	12,958	$	12,463	$	38,476	$	36,486

⁽¹⁾ Includes SPVSS business revenue of $0 and $219 million for the third quarter of fiscal 2019 and 2018, respectively, and $168 million and $697 million for the first nine months of fiscal 2019 and 2018, respectively.

(c) Additional Segment Information

The majority of our assets was attributable to our U.S. operations as of each of April 27, 2019 and July 28, 2018.

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):

	April 27, 2019		July 28, 2018
Property and equipment, net:
United States	$	2,297	$	2,487
International	537		519
Total	$	2,834	$	3,006

19. 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):

	Three Months Ended				Nine Months Ended
	April 27, 2019		April 28, 2018		April 27, 2019		April 28, 2018
Net income (loss)	$	3,044	$	2,691	$	9,415	$	(3,693	)
Weighted-average shares—basic	4,370		4,791		4,468		4,892
Effect of dilutive potential common shares	45		53		41		—
Weighted-average shares—diluted	4,415		4,844		4,509		4,892
Net income (loss) per share—basic	$	0.70	$	0.56	$	2.11	$	(0.76	)
Net income (loss) per share—diluted	$	0.69	$	0.56	$	2.09	$	(0.76	)

Employee equity share options, unvested shares, and similar equity instruments granted and assumed by Cisco 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 are collectively assumed to be used to repurchase shares.

We excluded antidilutive employee-share based awards of 5 million for each of the third quarters of fiscal 2019 and 2018, and 32 million for the first nine months of fiscal 2019. For the first nine months of fiscal 2018, we excluded the impact of potential common shares from the calculation of net income (loss) per share as the inclusion would have had an antidilutive effect.

48

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

This Quarterly Report on Form 10-Q, including this Management’s Discussion and Analysis of Financial Condition and Results of Operations, contains forward-looking statements regarding future events and our future results that are subject to the safe harbors created under the Securities Act of 1933 (the “Securities Act”) and the Securities Exchange Act of 1934 (the “Exchange Act”). All statements other than statements of historical facts are statements that could be deemed forward-looking statements. These statements are based on current expectations, estimates, forecasts, and projections about the industries in which we operate and the beliefs and assumptions of our management. Words such as “expects,” “anticipates,” “targets,” “goals,” “projects,” “intends,” “plans,” “believes,” "momentum," “seeks,” “estimates,” “continues,” “endeavors,” “strives,” “may,” variations of such words, and similar expressions are intended to identify such forward-looking statements. In addition, any statements that refer to projections of our future financial performance, our anticipated growth and trends in our businesses, and other characterizations of future events or circumstances are forward-looking statements. Readers are cautioned that these forward-looking statements are only predictions and are subject to risks, uncertainties, and assumptions that are difficult to predict, including those under “Part II, Item 1A. Risk Factors,” and elsewhere herein. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. We undertake no obligation to revise or update any forward-looking statements for any reason.

OVERVIEW

Cisco designs and sells a broad range of technologies that have been powering the Internet since 1984. Across networking, security, collaboration, applications and the cloud, our evolving intent-based technologies are constantly learning and adapting to provide customers with a highly secure, intelligent platform for their digital business. A summary of our results is as follows (in millions, except percentages and per-share amounts):

	Three Months Ended									Nine Months Ended
	April 27, 2019			April 28, 2018			% Variance			April 27, 2019			April 28, 2018			% Variance
Revenue (1)	$	12,958		$	12,463		4	%		$	38,476		$	36,486		5	%
Gross margin percentage	63.1		%	62.3		%	0.8		pts	62.6		%	62.2		%	0.4		pts
Research and development	$	1,659		$	1,590		4	%		$	4,824		$	4,706		3	%
Sales and marketing	$	2,403		$	2,325		3	%		$	7,084		$	6,894		3	%
General and administrative	$	541		$	561		(4	)%		$	1,261		$	1,601		(21	)%
Total research and development, sales and marketing, general and administrative	$	4,603		$	4,476		3	%		$	13,169		$	13,201		—	%
Total as a percentage of revenue	35.5		%	35.9		%	(0.4	)	pts	34.2		%	36.2		%	(2.0	)	pts
Amortization of purchased intangible assets included in operating expenses	$	39		$	67		(42	)%		$	112		$	188		(40	)%
Restructuring and other charges included in operating expenses	$	18		$	82		(78	)%		$	282		$	332		(15	)%
Operating income as a percentage of revenue	27.1		%	25.1		%	2.0		pts	27.4		%	24.6		%	2.8		pts
Interest and other income (loss), net	$	102		$	119		(14	)%		$	338		$	484		(30	)%
Income tax percentage (2)	15.8		%	17.3		%	(1.5	)	pts	13.4		%	139.1		%	NM
Net income (loss) (2)	$	3,044		$	2,691		13	%		$	9,415		$	(3,693	)	NM
Net income (loss) as a percentage of revenue (2)	23.5		%	21.6		%	1.9		pts	24.5		%	(10.1		)%	NM
Earnings (loss) per share—diluted (2)	$	0.69		$	0.56		23	%		$	2.09		$	(0.76	)	NM

NM - Not meaningful; we recognized a net loss for the first nine months of fiscal 2018 related to the enactment of the Tax Cuts and Jobs Act.

We adopted ASC 606 in the first quarter of fiscal 2019 using the modified retrospective method. See Note 2 to the Consolidated Financial Statements for impact of this adoption on our operating results for the third quarter and first nine months of fiscal 2019.

⁽¹⁾ During the second quarter of fiscal 2019, we completed the sale of our Service Provider Video Software Solutions (“SPVSS”) business. As a result, revenue from this business will not recur in future periods. Includes SPVSS business revenue of $0 and $219 million for the third quarter of fiscal 2019 and 2018, respectively, and $168 million and $697 million for the first nine months of fiscal 2019 and 2018, respectively.

⁽²⁾ The first nine months of fiscal 2018 results include an $11.1 billion charge related to the enactment of the Tax Cuts and Jobs Act.

49

CISCO SYSTEMS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Three Months Ended April 27, 2019 Compared with Three Months Ended April 28, 2018

In the third quarter of fiscal 2019, we had strong performance across the business and delivered strong revenue growth, margins and operating cash flow. We remain focused on accelerating innovation across our portfolio, and we believe that we have made continued progress on our strategic priorities. Our product revenue reflected growth in Infrastructure Platforms, Applications and Security, and we continued to make progress in the transition of our business model to increased software and subscriptions. Notwithstanding the third quarterfiscal 2019 results, we continue to operate in a challenging and highly competitive environment. While the overall environment remains uncertain, we continue to aggressively invest in priority areas with the objective of driving profitable growth over the long term.

Total revenue increased by 4% compared with the third quarter of fiscal 2018. Within total revenue, product revenue increased by 4% and service revenue increased by 2%. In the second quarter of fiscal 2019, on October 28, 2018, we completed the sale of our SPVSS business. Total revenue for the third quarter of fiscal 2019 increased 6% not including revenue from the SPVSS business in the prior year period. Total gross margin increased by 0.8 percentage points, driven by productivity improvements partially offset by unfavorable impacts from pricing and mix. Our gross margin also benefited from the sale of our lower margin SPVSS business during the second quarter of fiscal 2019. As a percentage of revenue, research and development, sales and marketing, and general and administrative expenses decreased by 0.4 percentage points. Operating income as a percentage of revenue increased by 2.0 percentage points. Diluted earnings per share increased by 23%, driven by a 13% increase in net income and a decrease in diluted share count of 429 million shares.

In terms of our geographic segments, revenue from the Americas increased $534 million, driven in large part by product revenue growth in the United States. EMEA revenue increased by $75 million, led by a product revenue growth in the United Kingdom. Revenue in our APJC segment decreased by $114 million, led by a product revenue decline in China. The “BRICM” countries experienced a product revenue decline of 15% in the aggregate, driven by decreased product revenue in the emerging countries of Russia, China, India, Mexico and Brazil of 25%, 21%, 10%, 6% and 5%, respectively.

From a customer market standpoint, we experienced product revenue growth in the public sector, enterprise and commercial markets, partially offset by a product revenue decline in the service provider market.

From a product category perspective, total product revenue, not including SPVSS products in the prior year period, increased 7% year over year. The increase was driven by a 5% product revenue increase in Infrastructure Platforms, solid product revenue growth in Applications of 9%, and strong growth in Security of 21%.

50

CISCO SYSTEMS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Nine Months Ended April 27, 2019 Compared with Nine Months Ended April 28, 2018

Total revenue increased 5%, with product revenue increasing 7% and service revenue increasing 2%. Total gross margin increased by 0.4 percentage points. As a percentage of revenue, research and development, sales and marketing, and general and administrative expenses collectively decreased by 2.0 percentage points due to lower general and administrative expenses. General and administrative expenses decreased due to a benefit from the $400 million litigation settlement with Arista in the first quarter of fiscal 2019. Operating income as a percentage of revenue increased by 2.8 percentage points.The net loss and net loss per share in the prior year period were driven by the one-time transition tax on accumulated earnings of foreign subsidiaries, foreign withholding taxes, and re-measurement of net deferred tax assets and liabilities recorded during the first nine months of fiscal 2018 as related to the Tax Cuts and Jobs Act.

Strategy and Priorities

As our customers add billions of new connections to their enterprises, and as more applications move to a multi-cloud environment, we believe the network continues to be extremely critical. We believe that our customers are looking for intent-based networks that provide meaningful business value through automation, security, and analytics across private, hybrid, and multi-cloud environments. Our vision is to deliver highly secure, software-defined, automated and intelligent platforms for our customers. Our strategic priorities include the following: accelerating our pace of innovation, increasing the value of the network, and transforming our business model.

For additional discussion of our strategy and priorities, see Item 1. Business in our Annual Report on Form 10-K for the year ended July 28, 2018.

Other Key Financial Measures

The following is a summary of our other key financial measures for the third quarter and first nine months of fiscal 2019 (in millions):

	April 27, 2019		July 28, 2018
Cash and cash equivalents and investments	$	34,643	$	46,548
Deferred revenue	$	17,456	$	19,685
Inventories	$	1,513	$	1,846

	Nine Months Ended
	April 27, 2019		April 28, 2018
Cash provided by operating activities	$	11,889	$	9,566
Repurchases of common stock—stock repurchase program	$	16,062	$	11,646
Dividends	$	4,489	$	4,433

51

CISCO SYSTEMS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

CRITICAL ACCOUNTING ESTIMATES

The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States requires us to make judgments, assumptions, and estimates that affect the amounts reported in the Consolidated Financial Statements and accompanying notes. Note 2 to the Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended July 28, 2018, as updated as applicable in Note 2 to the Consolidated Financial Statements herein, describes the significant accounting policies and methods used in the preparation of the Consolidated Financial Statements. The accounting policies described below are significantly affected by critical accounting estimates. Such accounting policies require significant judgments, assumptions, and estimates used in the preparation of the Consolidated Financial Statements, and actual results could differ materially from the amounts reported based on these policies.

Revenue Recognition

In May 2014, the FASB issued ASC 606, Revenue from Contracts with Customers, a new accounting standard related to revenue recognition. ASC 606 supersedes nearly all U.S. GAAP on revenue recognition and eliminated industry-specific guidance. The underlying principle of ASC 606 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.

ASC 606 allowed 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”). At the beginning of our first quarter of fiscal 2019, we adopted ASC 606 using the modified retrospective method to those contracts that were not completed as of July 28, 2018.

ASC 606 primarily impacted our revenue recognition for software arrangements and sales to two-tier distributors. In both areas, the new standard accelerates the recognition of revenue.

We enter into contracts with customers that can include various combinations of products and services which are generally distinct and accounted for as separate performance obligations. As a result, our contracts may contain multiple performance obligations. We determine whether arrangements are distinct based on whether the customer can benefit from the product or service on its own or together with other resources that are readily available and whether our commitment to transfer the product or service to the customer is separately identifiable from other obligations in the contract. We classify our hardware, perpetual software licenses, and SaaS as distinct performance obligations. Term software licenses represent multiple obligations, which include software licenses and software maintenance. In transactions where we deliver hardware or software, we are typically the principal and we record revenue and costs of goods sold on a gross basis.

We recognize revenue upon transfer of control of promised goods or services in a contract with a customer in an amount that reflects the consideration we expect to receive in exchange for those products or services. Transfer of control occurs once the customer has the contractual right to use the product, generally upon shipment or once delivery and risk of loss has transferred to the customer. Transfer of control can also occur over time for software maintenance and services as the customer receives the benefit over the contract term. Our hardware and perpetual software licenses are distinct performance obligations where revenue is recognized upfront upon transfer of control. Term software licenses include multiple performance obligations where the term licenses are recognized upfront upon transfer of control, with the associated software maintenance revenue recognized ratably over the contract term as services and software updates are provided. SaaS arrangements have one distinct performance obligation which is satisfied over time with revenue recognized ratably over the contract term as the customer consumes the services. On our product sales, we record consideration from shipping and handling on a gross basis within net product sales. We record our revenue net of any associated sales taxes.

Revenue is allocated among these performance obligations in a manner that reflects the consideration that we expect to be entitled to for the promised goods or services based on standalone selling prices (SSP). SSP is estimated for each distinct performance obligation and judgment may be required in their determination. The best evidence of SSP is the observable price of a product or service when we sell the goods separately in similar circumstances and to similar customers. In instances where SSP is not directly observable, we determine SSP using information that may include market conditions and other observable inputs.

We apply judgment in determining the transaction price as we may be required to estimate variable consideration when determining the amount of revenue to recognize. Variable consideration includes various rebate, cooperative marketing, and other incentive programs that we offer to our distributors, partners and customers. When determining the amount of revenue to recognize, we estimate the expected usage of these programs, applying the expected value or most likely estimate and update the estimate at each reporting period as actual utilization becomes available. We also consider the customers' right of return in determining the transaction price, where applicable. If actual credits received by distributors under these programs were to deviate significantly from our estimates, which are based on historical experience, our revenue could be adversely affected.

See Notes 2 and 3 to the Consolidated Financial Statements for more details.

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CISCO SYSTEMS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Allowances for Receivables and Sales Returns

The allowances for receivables were as follows (in millions, except percentages):

	April 27, 2019			July 28, 2018
Allowance for doubtful accounts	$	124		$	129
Percentage of gross accounts receivable	3.2		%	2.3		%
Allowance for credit loss—lease receivables	$	68		$	135
Percentage of gross lease receivables(1)	2.6		%	4.7		%
Allowance for credit loss—loan receivables	$	77		$	60
Percentage of gross loan receivables	1.5		%	1.2		%

⁽¹⁾Calculated as allowance for credit loss on lease receivables as a percentage of gross lease receivables and residual value before unearned income.

The allowance for doubtful accounts is based on our assessment of the collectibility of customer accounts. We regularly review the adequacy of these allowances by considering internal factors such as historical experience, credit quality and age of the receivable balances as well as external factors such as economic conditions that may affect a customer’s ability to pay as well as historical and expected default frequency rates, which are published by major third-party credit-rating agencies and are updated on a quarterly basis. We also consider the concentration of receivables outstanding with a particular customer in assessing the adequacy of our allowances for doubtful accounts. If a major customer’s creditworthiness deteriorates, if actual defaults are higher than our historical experience, or if other circumstances arise, our estimates of the recoverability of amounts due to us could be overstated, and additional allowances could be required, which could have an adverse impact on our operating results.

The allowance for credit loss on financing receivables is also based on the assessment of collectibility of customer accounts. We regularly review the adequacy of the credit allowances determined either on an individual or a collective basis. When evaluating the financing receivables on an individual basis, we consider historical experience, credit quality and age of receivable balances, and economic conditions that may affect a customer’s ability to pay. When evaluating financing receivables on a collective basis, we use expected default frequency rates published by a major third-party credit-rating agency as well as our own historical loss rate in the event of default, while also systematically giving effect to economic conditions, concentration of risk and correlation. Determining expected default frequency rates and loss factors associated with internal credit risk ratings, as well as assessing factors such as economic conditions, concentration of risk, and correlation, are complex and subjective. Our ongoing consideration of all these factors could result in an increase in our allowance for credit loss in the future, which could adversely affect our operating results. Both accounts receivable and financing receivables are charged off at the point when they are considered uncollectible.

A reserve for future sales returns is established based on historical trends in product return rates. The reserve for future sales returns as of April 27, 2019 and July 28, 2018 was $82 million and $123 million, respectively, and was recorded as a reduction of our accounts receivable and revenue. If the actual future returns were to deviate from the historical data on which the reserve had been established, our revenue could be adversely affected.

Inventory Valuation and Liability for Purchase Commitments with Contract Manufacturers and Suppliers

Inventory is written down based on excess and obsolete inventories, determined primarily by future demand forecasts. Inventory write-downs are measured as the difference between the cost of the inventory and market, based upon assumptions about future demand, and are charged to the provision for inventory, which is a component of our cost of sales. At the point of the loss recognition, a new, lower cost basis for that inventory is established, and subsequent changes in facts and circumstances do not result in the restoration or increase in that newly established cost basis.

We record a liability for firm, noncancelable, and unconditional purchase commitments with contract manufacturers and suppliers for quantities in excess of our future demand forecasts consistent with the valuation of our excess and obsolete inventory.

Our provision for inventory was $55 million and $42 million for the first nine months of fiscal 2019 and 2018, respectively. The provision for the liability related to purchase commitments with contract manufacturers and suppliers was $65 million and $77 million for the first nine months of fiscal 2019 and 2018, respectively. If there were to be a sudden and significant decrease in demand for our products, or if there were a higher incidence of inventory obsolescence because of rapidly changing technology and customer requirements, we could be required to increase our inventory write-downs, and our liability for purchase commitments with contract manufacturers and suppliers, and accordingly our profitability, could be adversely affected. We regularly evaluate our exposure for inventory write-downs and the adequacy of our liability for purchase commitments.

53

CISCO SYSTEMS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Loss Contingencies and Product Warranties

We are subject to the possibility of various losses arising in the ordinary course of business. We consider the likelihood of impairment of an asset or the incurrence of a liability, as well as our ability to reasonably estimate the amount of loss, in determining loss contingencies. An estimated loss contingency is accrued when it is probable that an asset has been impaired or a liability has been incurred and the amount of loss can be reasonably estimated. We regularly evaluate information available to us to determine whether such accruals should be made or adjusted and whether new accruals are required.

Third parties, including customers, have in the past and may in the future assert claims or initiate litigation related to exclusive patent, copyright, trademark, and other intellectual property rights to technologies and related standards that are relevant to us. These assertions have increased over time as a result of our growth and the general increase in the pace of patent claims assertions, particularly in the United States. If any infringement or other intellectual property claim made against us by any third party is successful, or if we fail to develop non-infringing technology or license the proprietary rights on commercially reasonable terms and conditions, our business, operating results, and financial condition could be materially and adversely affected.

Our products are generally covered by a warranty for periods ranging from 90 days to five years, and for some products we provide a limited lifetime warranty. We accrue for warranty costs as part of our cost of sales based on associated material costs, technical support labor costs, and associated overhead. Material cost is estimated based primarily upon historical trends in the volume of product returns within the warranty period and the cost to repair or replace the equipment. Technical support labor cost is estimated based primarily upon historical trends in the rate of customer cases and the cost to support the customer cases within the warranty period. Overhead cost is applied based on estimated time to support warranty activities.

If we experience an increase in warranty claims compared with our historical experience, or if the cost of servicing warranty claims is greater than expected, our profitability could be adversely affected.

Impairment of Investments

We recognize an impairment charge when the declines in the fair values of our available-for-sale debt investments below their cost basis are judged to be other than temporary. The ultimate value realized on these securities, to the extent unhedged, is subject to market price volatility until they are sold.

If the fair value of a debt security is less than its amortized cost, we assess whether the impairment is other than temporary. An impairment is considered other than temporary if (i) we have the intent to sell the security, (ii) it is more likely than not that we will be required to sell the security before recovery of its entire amortized cost basis, or (iii) we do not expect to recover the entire amortized cost of the security. If an impairment is considered other than temporary based on (i) or (ii) described in the prior sentence, the entire difference between the amortized cost and the fair value of the security is recognized in earnings. If an impairment is considered other than temporary based on condition (iii), the amount representing credit loss, defined as the difference between the present value of the cash flows expected to be collected and the amortized cost basis of the debt security, will be recognized in earnings, and the amount relating to all other factors will be recognized in other comprehensive income (OCI). In estimating the amount and timing of cash flows expected to be collected, we consider all available information, including past events, current conditions, the remaining payment terms of the security, the financial condition of the issuer, expected defaults, and the value of underlying collateral.

We hold non-marketable equity and other investments, some of which are in the startup or development stages. As of April 27, 2019, our non-marketable equity and other investmentswere $1.3 billion, compared with $1.1 billion as of July 28, 2018, and were included in other assets. We monitor these investments for events or circumstances indicative of potential impairment, and we make appropriate reductions in carrying values if we determine that an impairment charge is required, based primarily on the financial condition and near-term prospects of these companies. These investments are inherently risky because the markets for the technologies or products these companies are developing are typically in the early stages and may never materialize.

Goodwill and Purchased Intangible Asset Impairments

Our methodology for allocating the purchase price relating to purchase acquisitions is determined through established valuation techniques. Goodwill represents a residual value as of the acquisition date, which in most cases results in measuring goodwill as an excess of the purchase consideration transferred plus the fair value of any noncontrolling interest in the acquired company over the fair value of net assets acquired, including contingent consideration. We perform goodwill impairment tests on an annual basis in the fourth fiscal quarter and between annual tests in certain circumstances for each reporting unit. The assessment of fair value for goodwill and purchased intangible assets is based on factors that market participants would use in an orderly transaction in accordance with the new accounting guidance for the fair value measurement of nonfinancial assets.

54

CISCO SYSTEMS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

The goodwill recorded in the Consolidated Balance Sheets as of April 27, 2019 and July 28, 2018 was $33.5 billion and $31.7 billion, respectively. In response to changes in industry and market conditions, we could be required to strategically realign our resources and consider restructuring, disposing of, or otherwise exiting businesses, which could result in an impairment of goodwill. There was no impairment of goodwill in each of the first nine months of fiscal 2019 and 2018.

The fair value of acquired technology and patents, as well as acquired technology under development, is determined at acquisition date primarily using the income approach, which discounts expected future cash flows to present value. The discount rates used in the present value calculations are typically derived from a weighted-average cost of capital analysis and then adjusted to reflect risks inherent in the development lifecycle as appropriate. We consider the pricing model for products related to these acquisitions to be standard within the high-technology communications industry, and the applicable discount rates represent the rates that market participants would use for valuation of such intangible assets.

We make judgments about the recoverability of purchased intangible assets with finite lives whenever events or changes in circumstances indicate that an impairment may exist. Recoverability of purchased intangible assets with finite lives is measured by comparing the carrying amount of the asset to the future undiscounted cash flows the asset is expected to generate. We review indefinite-lived intangible assets for impairment annually or whenever events or changes in circumstances indicate that the asset might be impaired. If the asset is considered to be impaired, the amount of any impairment is measured as the difference between the carrying value and the fair value of the impaired asset. Assumptions and estimates about future values and remaining useful lives of our purchased intangible assets are complex and subjective. They can be affected by a variety of factors, including external factors such as industry and economic trends, and internal factors such as changes in our business strategy and our internal forecasts.

There were no impairment charges related to purchased intangible assets for the first nine months of fiscal 2019 and $1 million of such impairment charges for the first nine months of fiscal 2018. Our ongoing consideration of all the factors described previously could result in additional impairment charges in the future, which could adversely affect our net income.

Income Taxes

We are subject to income taxes in the United States and numerous foreign jurisdictions. Our effective tax rates differ from the statutory rate, primarily due to the tax impact of state taxes, foreign operations, R&D tax credits, domestic manufacturing deductions, foreign-derived intangible income deductions, global intangible low-taxed income, tax audit settlements, nondeductible compensation, international realignments, and transfer pricing adjustments. Our effective tax rate was 15.8% and 17.3% in the third quarter of fiscal 2019 and 2018, respectively. Our effective tax rate was 13.4% and 139.1% in the first nine months of fiscal 2019 and 2018, respectively.

On December 22, 2017, the Tax Cuts and Jobs Act (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 result of the Tax Act enactment, we recorded a provisional tax expense of $10.4 billion in fiscal 2018. In the second quarter of fiscal 2019, we completed our accounting relating to the Tax Act and recorded an additional $58 million tax expense. The total tax charge as the result of the Tax Act is $10.5 billion, consisting of $8.2 billion of tax expense for the U.S. transition tax on accumulated earnings of foreign subsidiaries, $1.2 billion of foreign withholding tax, and $1.1 billion of tax expense for DTA re-measurement. The tax expense related to the U.S. transition tax on accumulated earnings in foreign subsidiaries is net of a $0.9 billion benefit related to U.S. taxation of deemed foreign dividends in the transition fiscal year. This benefit may be reduced or eliminated in future legislation. If such legislation is enacted, we will record the impact of the legislation in the quarter of enactment.

Significant judgment is required in evaluating our uncertain tax positions and determining our provision for income taxes. Although we believe our reserves are reasonable, no assurance can be given that the final tax outcome of these matters will not be different from that which is reflected in our historical income tax provisions and accruals. We adjust these reserves in light of changing facts and circumstances, such as the closing of a tax audit or the refinement of an estimate. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will impact the provision for income taxes in the period in which such determination is made. The provision for income taxes includes the impact of reserve provisions and changes to reserves that are considered appropriate, as well as the related net interest and penalties.

Significant judgment is also required in determining any valuation allowance recorded against deferred tax assets. In assessing the need for a valuation allowance, we consider all available evidence, including past operating results, estimates of future taxable income, and the feasibility of tax planning strategies. In the event that we change our determination as to the amount of deferred tax assets that can be realized, we will adjust our valuation allowance with a corresponding impact to the provision for income taxes in the period in which such determination is made.

55

CISCO SYSTEMS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Our provision for income taxes is subject to volatility and could be adversely impacted by earnings being lower than anticipated in countries that have lower tax rates and higher than anticipated in countries that have higher tax rates; by changes in the valuation of our deferred tax assets and liabilities; by changes to domestic manufacturing deduction, foreign-derived intangible income, global intangible low-tax income and base erosion and anti-abuse tax laws, regulations, or interpretations thereof; by expiration of or lapses in tax incentives; by transfer pricing adjustments, including the effect of acquisitions on our legal structure; by tax effects of nondeductible compensation; by tax costs related to intercompany realignments; by changes in accounting principles; or by changes in tax laws and regulations, treaties, or interpretations thereof, including changes to the taxation of earnings of our foreign subsidiaries, the deductibility of expenses attributable to foreign income, and the foreign tax credit rules. Significant judgment is required to determine the recognition and measurement attributes prescribed in the accounting guidance for uncertainty in income taxes. The Organisation for Economic Co-operation and Development (OECD), an international association comprised of 36 countries, including the United States, has made changes to numerous long-standing tax principles. There can be no assurance that these changes, once adopted by countries, will not have an adverse impact on our provision for income taxes. As a result of certain of our ongoing employment and capital investment actions and commitments, our income in certain countries is subject to reduced tax rates. Our failure to meet these commitments could adversely impact our provision for income taxes. In addition, we are subject to the continuous examination of our income tax returns by the Internal Revenue Service (IRS) and other tax authorities. We regularly assess the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of our provision for income taxes. There can be no assurance that the outcomes from these continuous examinations will not have an adverse impact on our operating results and financial condition.

56

CISCO SYSTEMS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

RESULTS OF OPERATIONS

Revenue

The following table presents the breakdown of revenue between product and service (in millions, except percentages):

	Three Months Ended (1)										Nine Months Ended
	April 27, 2019			April 28, 2018			Variance in Dollars		Variance in Percent		April 27, 2019			April 28, 2018			Variance in Dollars		Variance in Percent
Revenue:
Product	$	9,722		$	9,304		$	418	4	%	$	28,885		$	27,067		$	1,818	7	%
Percentage of revenue	75.0		%	74.7		%					75.1		%	74.2		%
Service	3,236			3,159			77		2	%	9,591			9,419			172		2	%
Percentage of revenue	25.0		%	25.3		%					24.9		%	25.8		%
Total	$	12,958		$	12,463		$	495	4	%	$	38,476		$	36,486		$	1,990	5	%

⁽¹⁾ Total revenue, product revenue and service revenue not including the SPVSS business in the prior year period increased 6%, 7% and 3%, respectively.

We manage our business primarily on a geographic basis, organized into three geographic segments. Our revenue, which includes product and service for each segment, is summarized in the following table (in millions, except percentages):

	Three Months Ended											Nine Months Ended
	April 27, 2019			April 28, 2018			Variance in Dollars			Variance in Percent		April 27, 2019			April 28, 2018			Variance in Dollars		Variance in Percent
Revenue:
Americas	$	7,695		$	7,161		$	534		7	%	$	22,798		$	21,515		$	1,283	6	%
Percentage of revenue	59.4		%	57.5		%						59.2		%	59.0		%
EMEA	3,356			3,281			75			2	%	9,803			9,252			551		6	%
Percentage of revenue	25.9		%	26.3		%						25.5		%	25.3		%
APJC	1,907			2,021			(114		)	(6	)%	5,875			5,719			156		3	%
Percentage of revenue	14.7		%	16.2		%						15.3		%	15.7		%
Total	$	12,958		$	12,463		$	495		4	%	$	38,476		$	36,486		$	1,990	5	%

Amounts may not sum and percentages may not recalculate due to rounding.

Three Months Ended April 27, 2019 Compared with Three Months Ended April 28, 2018

Total revenue increased by 4%. Product revenue increased by 4% and service revenue increased by 2%. Total revenue reflected growth in the Americas and EMEA segments while revenue declined in the APJC segment. Product revenue for the emerging countries of BRICM, in the aggregate, experienced a 15% product revenue decline, with decreases across each of these countries.

In addition to the impact of macroeconomic factors, including a reduced IT spending environment and reductions in spending by government entities, revenue by segment in a particular period may be significantly impacted by several factors related to revenue recognition, including the complexity of transactions such as multiple performance obligations; the mix of financing arrangements provided to channel partners and customers; and final acceptance of the product, system, or solution, among other factors. In addition, certain customers tend to make large and sporadic purchases, and the revenue related to these transactions may also be affected by the timing of revenue recognition, which in turn would impact the revenue of the relevant segment. As has been the case in certain emerging countries from time to time, certain customers require greater levels of financing arrangements, service, and support, and these activities may occur in future periods, which may also impact the timing of the recognition of revenue.

Nine Months Ended April 27, 2019 Compared with Nine Months Ended April 28, 2018

Total revenue increased by 5%. Product revenue increased by 7% and service revenue increased by 2%. Our total revenue reflected growth across each of our geographic segments. Product revenue for the emerging countries of BRICM, in the aggregate, experienced 5% product revenue growth, with increases in Mexico, India, and Brazil, partially offset by a decrease in China. Product revenue in Russia was flat.

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Product Revenue by Segment

The following table presents the breakdown of product revenue by segment (in millions, except percentages):

	Three Months Ended											Nine Months Ended
	April 27, 2019			April 28, 2018			Variance in Dollars			Variance in Percent		April 27, 2019			April 28, 2018			Variance in Dollars		Variance in Percent
Product revenue:
Americas	$	5,658		$	5,167		$	491		10	%	$	16,719		$	15,547		$	1,172	8	%
Percentage of product revenue	58.2		%	55.5		%						57.9		%	57.5		%
EMEA	2,642			2,594			48			2	%	7,681			7,208			473		7	%
Percentage of product revenue	27.2		%	27.9		%						26.6		%	26.6		%
APJC	1,422			1,543			(121		)	(8	)%	4,486			4,312			174		4	%
Percentage of product revenue	14.6		%	16.6		%						15.5		%	15.9		%
Total	$	9,722		$	9,304		$	418		4	%	$	28,885		$	27,067		$	1,818	7	%

Amounts may not sum and percentages may not recalculate due to rounding.

Americas

Three Months Ended April 27, 2019 Compared with Three Months Ended April 28, 2018

Product revenue in the Americas segment increased by 10%, led by growth in the enterprise, public sector and commercial markets, partially offset by a decline in the service provider market. From a country perspective, product revenue increased by 12% in the United States while product revenue in Canada, Mexico and Brazil decreased by 8%, 6% and 5%, respectively.

Nine Months Ended April 27, 2019 Compared with Nine Months Ended April 28, 2018

The increase in product revenue in the Americas segment was led by growth in the enterprise, public sector and commercial markets. These increases were partially offset by a product revenue decline in the service provider market. From a country perspective, product revenue increased by 9% in the United States, 32% in Mexico, 7% in Canada and 3% in Brazil.

EMEA

Three Months Ended April 27, 2019 Compared with Three Months Ended April 28, 2018

Product revenue in the EMEA segment increased by 2%, with growth in the public sector and enterprise markets partially offset by declines in the service provider and commercial markets. From a country perspective, product revenue growth was driven by a 13% increase in the United Kingdom. Product revenue from emerging countries within EMEA increased by 10% while product revenue for the remainder of the EMEA segment, which primarily consists of countries in Western Europe, was flat.

Nine Months Ended April 27, 2019 Compared with Nine Months Ended April 28, 2018

Product revenue in the EMEA segment increased by 7%, with growth in the public sector and enterprise markets partially offset by declines in the service provider and commercial markets. Product revenue from emerging countries within EMEA increased by 7%, and product revenue for the remainder of the EMEA segment also increased by 7%.

APJC

Three Months Ended April 27, 2019 Compared with Three Months Ended April 28, 2018

Product revenue in the APJC segment decreased by 8%, driven by declines in the commercial, service provider and enterprise markets, partially offset by growth in the public sector market. From a country perspective, the product revenue decline was driven by a 21% decrease in China. We also saw decreases of 18% in Australia and 10% in India, partially offset by a product revenue increase in Japan of 6%.

Nine Months Ended April 27, 2019 Compared with Nine Months Ended April 28, 2018

Product revenue in the APJC segment increased 4%, with growth in the public sector, enterprise and commercial markets partially offset by a decline in the service provider market. From a country perspective, product revenue increased by 18% in India and 10% in Japan, while product revenue in China decreased by 12%.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Product Revenue by Groups of Similar Products

In addition to the primary view on a geographic basis, we also prepare financial information related to groups of similar products and customer markets for various purposes. We report our product revenue in the following categories: Infrastructure Platforms, Applications, Security, and Other Products. This aligns our product categories with our evolving business model. Prior period amounts have been reclassified to conform to the current period’s presentation.

The following table presents revenue for groups of similar products (in millions, except percentages):

	Three Months Ended									Nine Months Ended
	April 27, 2019		April 28, 2018		Variance in Dollars			Variance in Percent		April 27, 2019		April 28, 2018		Variance in Dollars			Variance in Percent
Product revenue:
Infrastructure Platforms	$	7,545	$	7,180	$	365		5	%	$	22,315	$	20,870	$	1,445		7	%
Applications	1,431		1,310		121			9	%	4,315		3,697		618			17	%
Security	707		583		124			21	%	2,016		1,725		291			17	%
Other Products	39		231		(192		)	(83	)%	239		775		(536		)	(69	)%
Total	$	9,722	$	9,304	$	418		4	%	$	28,885	$	27,067	$	1,818		7	%

Amounts may not sum and percentages may not recalculate due to rounding.

Infrastructure Platforms

Three Months Ended April 27, 2019 Compared with Three Months Ended April 28, 2018

The Infrastructure Platforms product category represents our core networking offerings related to switching, routing, wireless, and the data center. Infrastructure Platforms revenue increased by 5%, or $365 million, with solid growth across the portfolio. The growth in switching was driven by an increase in sales of our intent-based networking Catalyst 9000 Series and strength in our Application Centric Infrastructure (ACI) portfolio. Revenue from our routing products increased driven by growth in our software-defined wide area network (SD-WAN) products. We experienced solid revenue growth from wireless products driven by growth across the portfolio. Revenue from data center also increased driven by higher sales of our hyperconverged data center offering, HyperFlex, and our server products.

Nine Months Ended April 27, 2019 Compared with Nine Months Ended April 28, 2018

Revenue from the Infrastructure Platforms product category increased 7%, or $1,445 million, with growth across the portfolio. Switching had solid growth, with solid revenue growth in campus switching driven by an increase in sales of our intent-based networking Catalyst 9000 Series, and with revenue growth in data center switching driven by increased revenue from our ACI portfolio. Routing experienced revenue growth driven by an increase in sales of SD-WAN products. We experienced double digit revenue growth from wireless products driven by growth across the portfolio. Revenue from data center increased driven by higher sales of HyperFlex and our server products.

Applications

Three Months Ended April 27, 2019 Compared with Three Months Ended April 28, 2018

The Applications product category includes our collaboration offerings (unified communications, Cisco TelePresence and conferencing) as well as the Internet of Things (IoT) and analytics software offerings from Jasper and AppDynamics, respectively. Revenue in our Applications product category increased by 9%, or $121 million, with growth across all of the business. We had solid revenue growth in unified communications software, TelePresence and analytics from AppDynamics.

Nine Months Ended April 27, 2019 Compared with Nine Months Ended April 28, 2018

Revenue in our Applications product category increased by 17%, or $618 million, with strong revenue growth in unified communications, TelePresence and analytics from AppDynamics.

Security

Three Months Ended April 27, 2019 Compared with Three Months Ended April 28, 2018

Revenue in our Security product category increased 21%, or $124 million, driven by strong sales of our identity and access, advanced threat security and unified threat management products. The acquisition of Duo Security in the first quarter of fiscal 2019 also contributed to the revenue increase in this product category.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Nine Months Ended April 27, 2019 Compared with Nine Months Ended April 28, 2018

Revenue in our Security product category increased 17%, or $291 million, driven by higher sales of identity and access, advanced threat security, unified threat management and web security products. The acquisition of Duo Security in the first quarter of fiscal 2019 also contributed to the revenue increase in this product category.

Other Products

The decrease in revenue from our Other Products category for the third quarter and first nine months of fiscal 2019, compared to the corresponding periods of fiscal 2018, was primarily driven by a decrease in revenue from the SPVSS business which we divested on October 28, 2018.

Service Revenue by Segment

The following table presents the breakdown of service revenue by segment (in millions, except percentages):

	Three Months Ended										Nine Months Ended
	April 27, 2019			April 28, 2018			Variance in Dollars		Variance in Percent		April 27, 2019			April 28, 2018			Variance in Dollars			Variance in Percent
Service revenue:
Americas	$	2,036		$	1,994		$	42	2	%	$	6,079		$	5,968		$	111		2	%
Percentage of service revenue	62.9		%	63.1		%					63.4		%	63.4		%
EMEA	715			687			28		4	%	2,123			2,044			79			4	%
Percentage of service revenue	22.1		%	21.8		%					22.1		%	21.7		%
APJC	485			478			7		2	%	1,389			1,407			(18		)	(1	)%
Percentage of service revenue	15.0		%	15.1		%					14.5		%	14.9		%
Total	$	3,236		$	3,159		$	77	2	%	$	9,591		$	9,419		$	172		2	%

Amounts may not sum and percentages may not recalculate due to rounding.

Three Months Ended April 27, 2019 Compared with Three Months Ended April 28, 2018

Service revenue increased 2%, driven by an increase in software and solution support offerings. Service revenue not including the SPVSS business in the prior year period increased by 3%. Service revenue increased across all geographic segments.

Nine Months Ended April 27, 2019 Compared with Nine Months Ended April 28, 2018

Service revenue increased 2%, driven by an increase in software and solution support offerings. Service revenue increased in the Americas and EMEA segments, partially offset by decreased revenue in our APJC segment.

Gross Margin

The following table presents the gross margin for products and services (in millions, except percentages):

	Three Months Ended								Nine Months Ended
	AMOUNT				PERCENTAGE				AMOUNT				PERCENTAGE
	April 27, 2019		April 28, 2018		April 27, 2019		April 28, 2018		April 27, 2019		April 28, 2018		April 27, 2019		April 28, 2018
Gross margin:
Product	$	6,029	$	5,679	62.0	%	61.0	%	$	17,779	$	16,473	61.6	%	60.9	%
Service	2,144		2,080		66.3	%	65.8	%	6,313		6,211		65.8	%	65.9	%
Total	$	8,173	$	7,759	63.1	%	62.3	%	$	24,092	$	22,684	62.6	%	62.2	%

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Product Gross Margin

The following table summarizes the key factors that contributed to the change in product gross margin percentage for the third quarter and first nine months of fiscal 2019, as compared with the corresponding prior year periods:

	Product Gross Margin Percentage
	Three Months Ended		Nine Months Ended
Fiscal 2018	61.0	%	60.9	%
Productivity (1)	1.9	%	1.5	%
Product pricing	(1.1	)%	(1.3	)%
Mix of products sold	(0.7	)%	(0.5	)%
Impact from divestiture of SPVSS business	0.7	%	0.6	%
Legal and indemnification settlements	—	%	0.4	%
Other	0.2	%	—	%
Fiscal 2019	62.0	%	61.6	%

⁽¹⁾Productivity includes overall manufacturing-related costs, such as component costs, warranty expense, provision for inventory, freight, logistics, shipment volume, and other items not categorized elsewhere.

Three Months Ended April 27, 2019 Compared with Three Months Ended April 28, 2018

Product gross margin increased by 1.0 percentage point driven by productivity improvements, partially offset by unfavorable impacts from product pricing and product mix. Our product gross margin also benefited from the sale of our lower margin SPVSS business during the second quarter of fiscal 2019.

Productivity improvements were driven by cost reductions including value engineering efforts (e.g. component redesign, board configuration, test processes and transformation processes) and continued operational efficiency in manufacturing operations. The negative pricing impact, which was lower than the year-over-year impact we experienced in the third quarter of fiscal 2018, was driven by typical market factors and impacted each of our geographic segments and customer markets. The unfavorable product mix impact was driven by our products within the Infrastructure Platforms product category. Our product gross margin also benefited from lower amortization expense from purchased intangible assets related to the divestiture of the SPVSS business on October 28, 2018.

Nine Months Ended April 27, 2019 Compared with Nine Months Ended April 28, 2018

Product gross margin increased by 0.7 percentage points driven by productivity improvements, partially offset by unfavorable impacts from product pricing and product mix. Our product gross margin also benefited from the sale of our lower margin SPVSS business during the second quarter of fiscal 2019. A charge of $127 million to product cost of sales recorded in the first nine months of fiscal 2018 related to legal and indemnification settlements also contributed to the increase.

Service Gross Margin

Three Months Ended April 27, 2019 Compared with Three Months Ended April 28, 2018

Our service gross margin percentage increased by 0.5 percentage points due to higher sales volume, partially offset by increased delivery costs.

Our service gross margin normally experiences some fluctuations due to various factors such as the timing of contract initiations and renewals, our strategic investments in headcount, and the resources we deploy to support the overall service business. Another factor is the mix of service offerings, as the gross margin from our advanced services is typically lower than the gross margin from technical support services.

Nine Months Ended April 27, 2019 Compared with Nine Months Ended April 28, 2018

Service gross margin percentage decreased by 0.1 percentage points due to increased headcount-related costs and increased delivery costs. These cost impacts were partially offset by the resulting benefit to gross margin of higher sales volume.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Gross Margin by Segment

The following table presents the total gross margin for each segment (in millions, except percentages):

	Three Months Ended										Nine Months Ended
	AMOUNT						PERCENTAGE				AMOUNT						PERCENTAGE
	April 27, 2019			April 28, 2018			April 27, 2019		April 28, 2018		April 27, 2019			April 28, 2018			April 27, 2019		April 28, 2018
Gross margin:
Americas	$	5,046		$	4,614		65.6	%	64.4	%	$	14,911		$	13,950		65.4	%	64.8	%
EMEA	2,166			2,109			64.5	%	64.3	%	6,307			5,925			64.3	%	64.0	%
APJC	1,158			1,247			60.7	%	61.7	%	3,467			3,506			59.0	%	61.3	%
Segment total	8,370			7,970			64.6	%	63.9	%	24,686			23,381			64.2	%	64.1	%
Unallocated corporate items (1)	(197		)	(211		)					(594		)	(697		)
Total	$	8,173		$	7,759		63.1	%	62.3	%	$	24,092		$	22,684		62.6	%	62.2	%

⁽¹⁾The unallocated corporate items include the effects of amortization and impairments 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. We do not allocate these items to the gross margin for each segment because management does not include such information in measuring the performance of the operating segments.

Amounts may not sum and percentages may not recalculate due to rounding.

Three Months Ended April 27, 2019 Compared with Three Months Ended April 28, 2018

We experienced a gross margin percentage increase in our Americas segment due to productivity improvements partially offset by unfavorable impacts from pricing and mix. The unfavorable product mix impact was driven by our products within the Infrastructure Platforms product category.

Product gross margin in our EMEA segment increased due to productivity improvements, partially offset by negative impacts from pricing and mix.

The APJC segment gross margin percentage decrease was due to negative impacts from pricing, partially offset by productivity improvements.

The gross margin percentage for a particular segment may fluctuate, and period-to-period changes in such percentages may or may not be indicative of a trend for that segment.

Nine Months Ended April 27, 2019 Compared with Nine Months Ended April 28, 2018

The Americas segment had a gross margin percentage increase driven by productivity improvements, partially offset by unfavorable impacts from pricing and mix.

The gross margin percentage increase in our EMEA segment was due to productivity improvements, partially offset by negative impacts from pricing.

The APJC segment gross margin percentage decrease was due to negative impacts from pricing.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Research and Development (“R&D”), Sales and Marketing, and General and Administrative (“G&A”) Expenses

R&D, sales and marketing, and G&A expenses are summarized in the following table (in millions, except percentages):

	Three Months Ended											Nine Months Ended
	April 27, 2019			April 28, 2018			Variance in Dollars			Variance in Percent		April 27, 2019			April 28, 2018			Variance in Dollars			Variance in Percent
Research and development	$	1,659		$	1,590		$	69		4	%	$	4,824		$	4,706		$	118		3	%
Percentage of revenue	12.8		%	12.8		%						12.5		%	12.9		%
Sales and marketing	2,403			2,325			78			3	%	7,084			6,894			190			3	%
Percentage of revenue	18.5		%	18.7		%						18.4		%	18.9		%
General and administrative	541			561			(20		)	(4	)%	1,261			1,601			(340		)	(21	)%
Percentage of revenue	4.2		%	4.5		%						3.3		%	4.4		%
Total	$	4,603		$	4,476		$	127		3	%	$	13,169		$	13,201		$	(32	)	—	%
Percentage of revenue	35.5		%	35.9		%						34.2		%	36.2		%

R&D Expenses

Three Months Ended April 27, 2019 Compared with Three Months Ended April 28, 2018

R&D expenses increased primarily due to increases in headcount-related expenses, acquisition-related/divestiture costs, contracted services and discretionary spending. These increases were partially offset by lower share-based compensation expense.

We continue to invest in R&D in order to bring a broad range of products to market in a timely fashion. If we believe that we are unable to enter a particular market in a timely manner with internally developed products, we may purchase or license technology from other businesses, or we may partner with or acquire businesses as an alternative to internal R&D.

Nine Months Ended April 27, 2019 Compared with Nine Months Ended April 28, 2018

R&D expenses increased due to higher headcount-related expenses, contracted services and acquisition-related/divestiture costs. These increases were partially offset by lower share-based compensation expense and discretionary spending.

Sales and Marketing Expenses

Three Months Ended April 27, 2019 Compared with Three Months Ended April 28, 2018

Sales and marketing expenses increased due to higher headcount-related expenses and higher discretionary spending, partially offset by lower share-based compensation expense.

Nine Months Ended April 27, 2019 Compared with Nine Months Ended April 28, 2018

Sales and marketing expenses increased due to higher discretionary spending, higher headcount-related expenses and, to a lesser extent, higher contracted services and higher acquisition-related/divestiture costs, partially offset by lower share-based compensation expense.

G&A Expenses

Three Months Ended April 27, 2019 Compared with Three Months Ended April 28, 2018

G&A expenses decreased due to lower contracted services and lower acquisition-related/divestiture costs, partially offset by higher discretionary spending and, to a lesser extent, higher headcount-related expenses.

Nine Months Ended April 27, 2019 Compared with Nine Months Ended April 28, 2018

G&A expenses decreased due to a benefit from the $400 million litigation settlement with Arista and lower contracted services, partially offset by higher discretionary spending and higher headcount-related expenses.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Effect of Foreign Currency

In the third quarter of fiscal 2019, foreign currency fluctuations, net of hedging, decreased the combined R&D, sales and marketing, and G&A expenses by approximately $78 million, or 1.7%, compared with the third quarter of fiscal 2018.

In the first nine months of fiscal 2019, foreign currency fluctuations, net of hedging, decreased the combined R&D, sales and marketing, and G&A expenses by approximately $180 million, or 1.4%, compared with the first nine months of fiscal 2018.

Share-Based Compensation Expense

The following table presents share-based compensation expense (in millions):

	Three Months Ended				Nine Months Ended
	April 27, 2019		April 28, 2018		April 27, 2019		April 28, 2018
Cost of sales—product	$	22	$	24	$	67	$	70
Cost of sales—service	32		33		96		98
Share-based compensation expense in cost of sales	54		57		163		168
Research and development	135		139		398		409
Sales and marketing	124		142		386		412
General and administrative	63		61		190		189
Restructuring and other charges	3		6		45		24
Share-based compensation expense in operating expenses	325		348		1,019		1,034
Total share-based compensation expense	$	379	$	405	$	1,182	$	1,202

Three Months Ended April 27, 2019 Compared with Three Months Ended April 28, 2018

The decrease in share-based compensation expense was due primarily to higher forfeitures.

Nine Months Ended April 27, 2019 Compared with Nine Months Ended April 28, 2018

The decrease in share-based compensation expense was due primarily to higher forfeitures, partially offset by higher restructuring charges.

Amortization of Purchased Intangible Assets

The following table presents the amortization of purchased intangible assets including impairment charges (in millions):

	Three Months Ended				Nine Months Ended
	April 27, 2019		April 28, 2018		April 27, 2019		April 28, 2018
Amortization of purchased intangible assets:
Cost of sales	$	157	$	177	$	464	$	491
Operating expenses	39		67		112		188
Total	$	196	$	244	$	576	$	679

The decrease in amortization of purchased intangible assets in the third quarter and first nine months of fiscal 2019, as compared with the corresponding periods of fiscal 2018, was due largely to the purchased intangible assets related to the divestiture of SPVSS business on October 28, 2018, partially offset by amortization from our recent acquisitions.

Restructuring and Other Charges

We initiated a restructuring plan during fiscal 2018 in order to realign our organization and enable further investment in key priority areas, with estimated pretax charges of approximately $600 million. In connection with this restructuring plan, we incurred charges of $18 million and $282 million for the third quarter and first nine months of fiscal 2019, respectively, and have incurred cumulative charges of $390 million since inception. We expect this restructuring plan to be substantially completed in the first half of fiscal 2020.

We incurred restructuring and other charges of $82 million and $332 million for the third quarter and first nine months of fiscal 2018, respectively, in connection with restructuring plans initiated during fiscal 2018 and fiscal 2017.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

These charges were primarily cash-based and consisted of employee severance and other one-time termination benefits, and other associated costs. We expect to reinvest substantially all of the cost savings from these restructuring actions in our key priority areas. As a result, the overall cost savings from these restructuring actions are not expected to be material for future periods.

Operating Income

The following table presents our operating income and our operating income as a percentage of revenue (in millions, except percentages):

	Three Months Ended						Nine Months Ended
	April 27, 2019			April 28, 2018			April 27, 2019			April 28, 2018
Operating income	$	3,513		$	3,134		$	10,529		$	8,963
Operating income as a percentage of revenue	27.1		%	25.1		%	27.4		%	24.6		%

Three Months Ended April 27, 2019 Compared with Three Months Ended April 28, 2018

Operating income increased by 12%, and as a percentage of revenue operating income increased by 2.0 percentage points. These increases resulted primarily from: a revenue increase, a gross margin percentage increase (driven by productivity improvements and sale of our lower margin SPVSS business during the second quarter of fiscal 2019, partially offset by unfavorable impacts from pricing and mix), and lower restructuring and other charges.

Nine Months Ended April 27, 2019 Compared with Nine Months Ended April 28, 2018

Operating income increased by 17% and as a percentage of revenue operating income increased by 2.8 percentage points. These increases resulted primarily from: a revenue increase, a gross margin percentage increase, a benefit from the $400 million litigation settlement with Arista in the first quarter of fiscal 2019, and lower restructuring and other charges.

Interest and Other Income (Loss), Net

Interest Income (Expense), Net   The following table summarizes interest income and interest expense (in millions):

	Three Months Ended									Nine Months Ended
	April 27, 2019			April 28, 2018			Variance in Dollars			April 27, 2019			April 28, 2018			Variance in Dollars
Interest income	$	331		$	380		$	(49	)	$	1,003		$	1,155		$	(152	)
Interest expense	(211		)	(237		)	26			(655		)	(719		)	64
Interest income (expense), net	$	120		$	143		$	(23	)	$	348		$	436		$	(88	)

Interest income decreased, driven by a decrease in the average balance of cash and available-for-sale debt investments. The decrease in interest expense was driven by a lower average debt balance, partially offset by the impact of higher effective interest rates.

Other Income (Loss), Net The components of other income (loss), net, are summarized as follows (in millions):

	Three Months Ended									Nine Months Ended
	April 27, 2019			April 28, 2018			Variance in Dollars			April 27, 2019			April 28, 2018			Variance in Dollars
Gains (losses) on investments, net:
Available-for-sale debt investments	$	(7	)	$	(39	)	$	32		$	(18	)	$	(131	)	$	113
Marketable equity investments	(57		)	56			(113		)	—			239			(239		)
Non-marketable equity and other investments	58			(11		)	69			59			26			33
Net gains (losses) on investments	(6		)	6			(12		)	41			134			(93		)
Other gains (losses), net	(12		)	(30		)	18			(51		)	(86		)	35
Other income (loss), net	$	(18	)	$	(24	)	$	6		$	(10	)	$	48		$	(58	)

65

CISCO SYSTEMS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Three Months Ended April 27, 2019 Compared with Three Months Ended April 28, 2018

The total change in net gains (losses) on available-for-sale debt investments was primarily attributable to lower realized losses as a result of market conditions, and the timing of sales of these investments.

The total change in net gains (losses) on marketable equity investments was attributable to market value fluctuations and the timing of recognition of gains and losses.

The change in net gains (losses) on non-marketable equity and other investments was primarily due to higher realized and unrealized gains and lower impairment charges.

The change in other gains (losses), net was primarily driven by higher donation expense in the prior year, partially offset by net unfavorable foreign exchange impacts.

Nine Months Ended April 27, 2019 Compared with Nine Months Ended April 28, 2018

The total change in net gains (losses) on available-for-sale debt investments was primarily attributable to lower realized losses as a result of market conditions, and the timing of sales of these investments.

The total change in net gains (losses) on marketable equity investments was attributable to market value fluctuations and the timing of recognition of gains and losses.

The change in net gains (losses) on non-marketable equity and other investments was primarily due to higher unrealized gains and lower impairment charges partially offset by lower realized gains.

The change in other gains (losses), net was driven by higher donation expense in the prior year, and favorable foreign exchange impacts.

Provision for Income Taxes

Three Months Ended April 27, 2019 Compared with Three Months Ended April 28, 2018

The provision for income taxes resulted in an effective tax rate of 15.8% for the third quarter of fiscal 2019 compared with 17.3% for the third quarter of fiscal 2018. The decrease in the effective tax rate was primarily due to a decrease in the U.S. federal tax rate from 27% to 21% as the result of enactment of Tax Act, partially offset by a provisional tax adjustment recorded in the third quarter of fiscal 2018 relating to U.S transition tax on accumulated earnings of foreign subsidiaries and re-measurement of net DTA.

Our effective tax rate will increase or decrease based upon the tax effect of the difference between the share-based compensation expenses and the benefits taken on the company's tax returns. We recognize excess tax benefits on a discrete basis and therefore anticipate the effective tax rate to vary from quarter to quarter depending on our share price in each period.

Nine Months Ended April 27, 2019 Compared with Nine Months Ended April 28, 2018

The provision for income taxes resulted in an effective tax rate of 13.4% for the first nine months of fiscal 2019 compared with 139.1% for the first nine months of fiscal 2018. The decrease in the effective tax rate was primarily due to the one-time transition tax on accumulated earnings of foreign subsidiaries, foreign withholding tax, and DTA re-measurement recorded during the first nine months of fiscal 2018.

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CISCO SYSTEMS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

LIQUIDITY AND CAPITAL RESOURCES

The following sections discuss the effects of changes in our balance sheet, our capital allocation strategy including stock repurchase program and dividends, our contractual obligations, and certain other commitments and activities on our liquidity and capital resources.

Balance Sheet and Cash Flows

Cash and Cash Equivalents and Investments  The following table summarizes our cash and cash equivalents and investments (in millions):

	April 27, 2019		July 28, 2018		Increase (Decrease)
Cash and cash equivalents	$	10,251	$	8,934	$	1,317
Available-for-sale debt investments	24,387		37,009		(12,622		)
Marketable equity securities	5		605		(600		)
Total	$	34,643	$	46,548	$	(11,905	)

The decrease in cash and cash equivalents and investments in the first nine months of fiscal 2019 was primarily driven by cash returned to shareholders in the form of repurchases of common stock of $16.0 billion under the stock repurchase program and cash dividends of $4.5 billion; net cash paid for acquisitions and divestitures of $2.2 billion; a net decrease in debt of $2.0 billion and capital expenditures of $0.7 billion. These uses of cash were partially offset by cash provided by operating activities of $11.9 billion and timing of settlements of investments and other of $1.8 billion.

In addition to cash requirements in the normal course of business, approximately $0.7 billion of the U.S. transition tax on accumulated earnings for foreign subsidiaries is payable in less than one year. Additionally, $4.5 billion of long-term debt and approximately $3.3 billion of commercial paper notes outstanding at April 27, 2019 will mature within the next 12 months from the balance sheet date. See further discussion of liquidity under “Liquidity and Capital Resource Requirements” below.

We maintain an investment portfolio of various holdings, types, and maturities. We classify our investments as short-term investments based on their nature and their availability for use in current operations. We believe the overall credit quality of our portfolio is strong, with our cash equivalents and our available-for-sale debt investment portfolio consisting primarily of high quality investment-grade securities. We believe that our strong cash and cash equivalents and investments position allows us to use our cash resources for strategic investments to gain access to new technologies, for acquisitions, for customer financing activities, for working capital needs, and for the repurchase of shares of common stock and payment of dividends as discussed below.

Free Cash Flow and Capital Allocation As part of our capital allocation strategy, we intend to return a minimum of 50% of our free cash flow annually to our shareholders through cash dividends and repurchases of common stock.

We define free cash flow as net cash provided by operating activities less cash used to acquire property and equipment. The following table reconciles our net cash provided by operating activities to free cash flow (in millions):

	Nine Months Ended
	April 27, 2019			April 28, 2018
Net cash provided by operating activities	$	11,889		$	9,566
Acquisition of property and equipment	(701		)	(620		)
Free cash flow	$	11,188		$	8,946

We expect that cash provided by operating activities may fluctuate in future periods as a result of a number of factors, including fluctuations in our operating results, the rate at which products are shipped during the quarter (which we refer to as shipment linearity), the timing and collection of accounts receivable and financing receivables, inventory and supply chain management, deferred revenue, and the timing and amount of tax and other payments. For additional discussion, see “Part II, Item 1A. Risk Factors” in this report.

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CISCO SYSTEMS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

We consider free cash flow to be a liquidity measure that provides useful information to management and investors because of our intent to return a stated percentage of free cash flow to shareholders in the form of dividends and stock repurchases. We further regard free cash flow as a useful measure because it reflects cash that can be used to, among other things, invest in our business, make strategic acquisitions, repurchase common stock, and pay dividends on our common stock, after deducting capital investments. A limitation of the utility of free cash flow as a measure of financial performance and liquidity is that the free cash flow does not represent the total increase or decrease in our cash balance for the period. In addition, we have other required uses of cash, including repaying the principal of our outstanding indebtedness. Free cash flow is not a measure calculated in accordance with U.S. generally accepted accounting principles and should not be regarded in isolation or as an alternative for net cash provided by operating activities or any other measure calculated in accordance with such principles, and other companies may calculate free cash flow in a different manner than we do.

The following table summarizes the dividends paid and stock repurchases (in millions, except per-share amounts):

	DIVIDENDS				STOCK REPURCHASE PROGRAM
Quarter Ended	Per Share		Amount		Shares	Weighted-Average Price per Share		Amount		TOTAL
Fiscal 2019
April 27, 2019	$	0.35	$	1,519	116	$	52.14	$	6,020	$	7,539
January 26, 2019	$	0.33	$	1,470	111	$	45.09	$	5,016	$	6,486
October 27, 2018	$	0.33	$	1,500	109	$	46.01	$	5,026	$	6,526
Fiscal 2018
July 28, 2018	$	0.33	$	1,535	138	$	43.58	$	6,015	$	7,550
April 28, 2018	$	0.33	$	1,572	140	$	42.83	$	6,015	$	7,587
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

On February 13, 2019, our Board of Directors authorized a $15 billion increase to the stock repurchase program. The remaining authorized amount for stock repurchases under this program, including the additional authorization, is approximately $18 billion, with no termination date.

The purchase price for the shares of our stock repurchased is reflected as a reduction to shareholders’ equity. We are required to allocate the purchase price of the repurchased shares as (i) a reduction to retained earnings/increase to accumulated deficit and (ii) a reduction of common stock and additional paid-in capital. As a result of future stock repurchases, we may continue to report an accumulated deficit in future periods in shareholders’ equity.

Accounts Receivable, Net The following table summarizes our accounts receivable, net (in millions):

	April 27, 2019		July 28, 2018		Increase (Decrease)
Accounts receivable, net	$	3,795	$	5,554	$	(1,759	)

Our accounts receivable net, as of April 27, 2019 decreased by approximately 32%, as compared with the end of fiscal 2018, primarily due to product and service billings being more linear in the third quarter of fiscal 2019 compared with the fourth quarter of fiscal 2018.

Inventory Supply Chain  The following table summarizes our inventories and purchase commitments with contract manufacturers and suppliers (in millions):

	April 27, 2019		July 28, 2018		Increase (Decrease)
Inventories	$	1,513	$	1,846	$	(333	)

Inventory as of April 27, 2019 decreased by 18% from our inventory balance at the end of fiscal 2018. The decrease in inventory was due primarily to lower deferred cost of sales related to the adoption of ASC 606 in the beginning of our first quarter of fiscal 2019.

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CISCO SYSTEMS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

We purchase components from a variety of suppliers and use several contract manufacturers to provide manufacturing services for our products. During the normal course of business, in order to manage manufacturing lead times and help ensure adequate component supply, we enter into agreements with contract manufacturers and suppliers that allow them to procure inventory based upon criteria as defined by us or that establish the parameters defining our requirements and our commitment to securing manufacturing capacity.

Our purchase commitments are for short-term product manufacturing requirements as well as for commitments to suppliers to secure manufacturing capacity. Certain of our purchase commitments with contract manufacturers and suppliers relate to arrangements to secure long-term pricing for certain product components for multi-year periods. A significant portion of our reported purchase commitments arising from these agreements are firm, noncancelable, and unconditional commitments. In certain instances, these agreements allow us the option to cancel, reschedule, and adjust our requirements based on our business needs prior to firm orders being placed. We believe our inventory and purchase commitments levels are in line with our current demand forecasts. The following table summarizes our purchase commitments with contract manufacturers and suppliers as of the respective period ends (in millions):

Commitments by Period	April 27, 2019		July 28, 2018
Less than 1 year	$	4,738	$	5,407
1 to 3 years	734		710
3 to 5 years	90		360
Total	$	5,562	$	6,477

Purchase commitments with contract manufacturers and suppliers decreased 14% compared to the end of fiscal 2018. On a combined basis, inventories and purchase commitments with contract manufacturers and suppliers decreased by 15% compared with the end of fiscal 2018.

Inventory and supply chain management remain areas of focus as we balance the need to maintain supply chain flexibility to help ensure competitive lead times with the risk of inventory obsolescence because of rapidly changing technology and customer requirements. We believe the amount of our inventory and purchase commitments is appropriate for our revenue levels.

Financing Receivables and Guarantees The following table summarizes our financing receivables (in millions):

	April 27, 2019		July 28, 2018		Increase (Decrease)
Lease receivables, net	$	2,387	$	2,576	$	(189	)
Loan receivables, net	5,163		4,939		224
Financed service contracts, net	2,341		2,316		25
Total, net	$	9,891	$	9,831	$	60

Financing ReceivablesOur financing arrangements include leases, loans, and financed service contracts. Lease receivables include sales-type and direct-financing leases. Arrangements related to leases are generally collateralized by a security interest in the underlying assets. Our loan receivables include customer financing for purchases of our hardware, software and services and also may include additional funds for other costs associated with network installation and integration of our products and services. We also provide financing to certain qualified customers for long-term service contracts, which primarily relate to technical support services. The majority of the revenue from these financed service contracts is deferred and is recognized ratably over the period during which the services are performed. Financing receivables increased by 1%. We expect to continue to expand the use of our financing programs in the near term.

Financing GuaranteesIn the normal course of business, third parties may provide financing arrangements to our customers and channel partners under financing programs. The financing arrangements to customers provided by third parties are related to leases and loans and typically have terms of up to three years. In some cases, we provide guarantees to third parties for these lease and loan arrangements. The financing arrangements to channel partners consist of revolving short-term financing provided by third parties, generally with payment terms ranging from 60 to 90 days. In certain instances, these financing arrangements result in a transfer of our receivables to the third party. The receivables are derecognized upon transfer, as these transfers qualify as true sales, and we receive payments for the receivables from the third party based on our standard payment terms.

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CISCO SYSTEMS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

The volume of channel partner financing was $21.7 billion and $20.7 billion for the first nine months of fiscal 2019 and 2018, respectively. These financing arrangements facilitate the working capital requirements of the channel partners, and in some cases, we guarantee a portion of these arrangements. The balance of the channel partner financing subject to guarantees was $1.3 billion and $1.0 billion as of April 27, 2019 and July 28, 2018, respectively. We could be called upon to make payments under these guarantees in the event of nonpayment by the channel partners or end-user customers. Historically, our payments under these arrangements have been immaterial. Where we provide a guarantee, we defer the revenue associated with the channel partner and end-user financing arrangement in accordance with revenue recognition policies, or we record a liability for the fair value of the guarantees. In either case, the deferred revenue is recognized as revenue when the guarantee is removed. As of April 27, 2019, the total maximum potential future payments related to these guarantees was approximately $240 million, of which approximately $81 million was recorded as deferred revenue.

Borrowings

Senior NotesThe following table summarizes the principal amount of our senior notes (in millions):

	Maturity Date	April 27, 2019		July 28, 2018
Senior notes:
Floating-rate notes:
Three-month LIBOR plus 0.50%	March 1, 2019	$	—	$	500
Three-month LIBOR plus 0.34%	September 20, 2019	500		500
Fixed-rate notes:
4.95%	February 15, 2019	—		2,000
1.60%	February 28, 2019	—		1,000
2.125%	March 1, 2019	—		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		$	20,500	$	25,750

Interest is payable semiannually on each class of the senior fixed-rate notes, each of which is redeemable by us at any time, subject to a make-whole premium. Interest is payable quarterly on the floating-rate notes. We were in compliance with all debt covenants as of April 27, 2019.

Commercial Paper We have a short-term debt financing program in which up to $10.0 billion is available through the issuance of commercial paper notes. We use the proceeds from the issuance of commercial paper notes for general corporate purposes. We had $3.3 billion in commercial paper notes outstanding as of April 27, 2019 and no commercial paper notes outstanding as of July 28, 2018.

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CISCO SYSTEMS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Credit FacilityOn May 15, 2015, we 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 our senior debt credit ratings as published by Standard & Poor’s Financial Services, LLC and Moody’s Investors Service, Inc., provided that in no event will the Eurocurrency Rate be less than zero. We may also, upon the agreement of either the then-existing lenders or additional lenders not currently parties to the agreement, increase the commitments under the credit facility by up to an additional $2.0 billion and/or extend the expiration date of the credit facility up to May 15, 2022. This credit agreement requires that we comply with certain covenants, including that we maintain an interest coverage ratio as defined in the agreement. As of April 27, 2019, we were in compliance with the required interest coverage ratio and the other covenants, and we had not borrowed any funds under the credit facility.

Deferred Revenue   The following table presents the breakdown of deferred revenue (in millions):

	April 27, 2019		July 28, 2018		Increase (Decrease)
Service	$	11,297	$	11,431	$	(134	)
Product	6,159		8,254		(2,095		)
Total	$	17,456	$	19,685	$	(2,229	)
Reported as:
Current	$	10,117	$	11,490	$	(1,373	)
Noncurrent	7,339		8,195		(856		)
Total	$	17,456	$	19,685	$	(2,229	)

Deferred revenue decreased primarily due to the adoption of ASC 606 in the beginning of our first quarter of fiscal 2019. Of the total deferred revenue decrease related to ASC 606 of $2.8 billion, $2.6 billion relates to deferred product revenue and $0.2 billion relates to deferred service revenue. Of the adjustment to deferred product revenue, $1.3 billion related to our recurring software and subscription offers, $0.6 billion related to two-tier distribution, and the remainder related to non-recurring software and other adjustments.

Contractual Obligations

Operating Leases

We lease office space in many U.S. locations. Outside the United States, larger leased sites include sites in Australia, Belgium, Canada, China, Germany, India, Japan, Mexico, Poland and the United Kingdom. We also lease equipment and vehicles. The future minimum lease payments under all of our noncancelable operating leases with an initial term in excess of one year as of April 27, 2019 were $1.2 billion.

Transition Tax Payable

The income tax payable outstanding as of April 27, 2019 for the U.S. transition tax on accumulated earnings for foreign subsidiaries is $7.4 billion. Approximately $0.7 billion is payable in less than one year; $1.3 billion is payable between 1 to 3 years; $1.9 billion is payable between 3 to 5 years; and the remaining $3.5 billion is payable in more than 5 years. See Note 17 to the Consolidated Financial Statements.

Other Commitments

In connection with our acquisitions, we have agreed to pay certain additional amounts contingent upon the achievement of certain agreed-upon technology, development, product, or other milestones or the continued employment with us of certain employees of the acquired entities. See Note 13 to the Consolidated Financial Statements.

Other Funding Commitments We also have certain funding commitments primarily related to our non-marketable equity and other 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 funding commitments were $345 million as of April 27, 2019, compared with $223 million as of July 28, 2018.

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CISCO SYSTEMS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Off-Balance Sheet Arrangements

We consider our investments in unconsolidated variable interest entities to be off-balance sheet arrangements. In the ordinary course of business, we have non-marketable equity and other investments and provide financing to certain customers. Certain of these investments are considered to be variable interest entities. We evaluate on an ongoing basis our non-marketable equity and other investments and customer financings, and we have determined that as of April 27, 2019 there were no material unconsolidated variable interest entities.

On an ongoing basis, we reassess our non-marketable equity and other investments and customer financings to determine if they are variable interest entities and if we would be regarded as the primary beneficiary pursuant to the applicable accounting guidance. As a result of this ongoing assessment, we may be required to make additional disclosures or consolidate these entities. Because we may not control these entities, we may not have the ability to influence these events.

We provide financing guarantees, which are generally for various third-party financing arrangements extended to our channel partners and end-user customers. We could be called upon to make payments under these guarantees in the event of nonpayment by the channel partners or end-user customers. See the previous discussion of these financing guarantees under “Financing Receivables and Guarantees.”

Liquidity and Capital Resource Requirements

Based on past performance and current expectations, we believe our cash and cash equivalents, investments, cash generated from operations, and ability to access capital markets and committed credit lines will satisfy, through at least the next 12 months, our liquidity requirements, both in total and domestically, including the following: working capital needs, capital expenditures, investment requirements, stock repurchases, cash dividends, contractual obligations, commitments, principal and interest payments on debt, pending acquisitions, future customer financings, and other liquidity requirements associated with our operations. There are no other transactions, arrangements, or relationships with unconsolidated entities or other persons that are reasonably likely to materially affect the liquidity and the availability of, as well as our requirements for, capital resources.  

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Our financial position is exposed to a variety of risks, including interest rate risk, equity price risk, and foreign currency exchange risk.

Interest Rate Risk

Available-for-Sale Debt Investments We maintain an investment portfolio of various holdings, types, and maturities. Our primary objective for holding available-for-sale debt investments is to achieve an appropriate investment return consistent with preserving principal and managing risk. At any time, a sharp rise in market interest rates could have a material adverse impact on the fair value of our available-for-sale debt investment portfolio. Conversely, declines in interest rates, including the impact from lower credit spreads, could have a material adverse impact on interest income for our investment portfolio. We may utilize derivative instruments designated as hedging instruments to achieve our investment objectives. We had no outstanding hedging instruments for our available-for-sale debt investments as of April 27, 2019. Our available-for-sale debt investments are held for purposes other than trading. Our available-for-sale debt investments are not leveraged as of April 27, 2019. We monitor our interest rate and credit risks, including our credit exposures to specific rating categories and to individual issuers. We believe the overall credit quality of our portfolio is strong.

Financing Receivables As of April 27, 2019, our financing receivables had a carrying value of $9.9 billion, compared with $9.8 billion as of July 28, 2018. As of April 27, 2019, a hypothetical 50 basis points (“BPS”) increase or decrease in market interest rates would change the fair value of our financing receivables by a decrease or increase of approximately $0.1 billion, respectively.

Debt As of April 27, 2019, we had $20.5 billion in principal amount of senior notes outstanding, which consisted of $0.5 billion floating-rate notes and $20.0 billion fixed-rate notes. The carrying amount of the senior notes was $20.4 billion, and the related fair value based on market prices was $21.6 billion. As of April 27, 2019, a hypothetical 50 BPS increase or decrease in market interest rates would change the fair value of the fixed-rate debt, excluding the $4.5 billion of hedged debt, by a decrease or increase of approximately $0.5 billion, respectively. However, this hypothetical change in interest rates would not impact the interest expense on the fixed-rate debt that is not hedged.

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Equity Price Risk

Marketable Equity Investments.The fair value of our marketable equity investments is subject to market price volatility. We may hold equity securities for strategic purposes or to diversify our overall investment portfolio. These equity securities are held for purposes other than trading. To manage our exposure to changes in the fair value of certain equity securities, we may enter into equity derivatives designated as hedging instruments. As of April 27, 2019, the total fair value of our investments in marketable equity securities was $5 million.

Non-marketable Equity and Other Investments These investments are recorded in other assets in our Consolidated Balance Sheets. As of April 27, 2019, the total carrying amount of our investments in non-marketable equity and other investments was $1.3 billion, compared with $1.1 billion at July 28, 2018. Some of these companies in which we invested are in the startup or development stages. These investments are inherently risky because the markets for the technologies or products these companies are developing are typically in the early stages and may never materialize. We could lose our entire investment in these companies. Our evaluation of non-marketable equity and other investments is based on the fundamentals of the businesses invested in, including, among other factors, the nature of their technologies and potential for financial return.

Foreign Currency Exchange Risk

Our foreign exchange forward and option contracts outstanding as of the respective period-ends are summarized in U.S. dollar equivalents as follows (in millions):

	April 27, 2019					July 28, 2018
	Notional Amount		Fair Value			Notional Amount		Fair Value
Forward contracts:
Purchased	$	2,259	$	4		$	1,850	$	(2	)
Sold	$	1,408	$	(4	)	$	845	$	2
Option contracts:
Purchased	$	40	$	—		$	—	$	—
Sold	$	39	$	—		$	—	$	—

We conduct business globally in numerous currencies. The direct effect of foreign currency fluctuations on revenue has not been material because our revenue is primarily denominated in U.S. dollars. However, if the U.S. dollar strengthens relative to other currencies, such strengthening could have an indirect effect on our revenue to the extent it raises the cost of our products to non-U.S. customers and thereby reduces demand. A weaker U.S. dollar could have the opposite effect. However, the precise indirect effect of currency fluctuations is difficult to measure or predict because our revenue is influenced by many factors in addition to the impact of such currency fluctuations.

Approximately 70% of our operating expenses are U.S.-dollar denominated. In the first nine months of fiscal 2019, foreign currency fluctuations, net of hedging, decreased our combined R&D, sales and marketing, and G&A expenses by approximately $180 million, or 1.4%, compared with the first nine months of fiscal 2018. To reduce variability in operating expenses and service cost of sales caused by non-U.S.-dollar denominated operating expenses and costs, we may hedge certain forecasted foreign currency transactions with currency options and forward contracts. These hedging programs are not designed to provide foreign currency protection over long time horizons. In designing a specific hedging approach, we consider several factors, including offsetting exposures, significance of exposures, costs associated with entering into a particular hedge instrument, and potential effectiveness of the hedge. The gains and losses on foreign exchange contracts mitigate the effect of currency movements on our operating expenses and service cost of sales.

We also enter into foreign exchange forward and option contracts to reduce the short-term effects of foreign currency fluctuations on receivables and payables that are denominated in currencies other than the functional currencies of the entities. The market risks associated with these foreign currency receivables, investments, and payables relate primarily to variances from our forecasted foreign currency transactions and balances. We do not enter into foreign exchange forward or option contracts for speculative purposes.

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Item 4. Controls and Procedures

Evaluation of disclosure controls and procedures. Based on our management’s evaluation (with the participation of our principal executive officer and principal financial officer), as of the end of the period covered by this report, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, (the “Exchange Act”)) are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms and is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in internal control over financial reporting. There was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during our third quarter of fiscal 2019 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

For a description of our material pending legal proceedings, see Note 13 "Commitments and Contingencies—(g) Legal Proceedings" of the Notes to Consolidated Financial Statements included in Item 1 of this Form 10-Q.

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Item 1A. Risk Factors

Set forth below and elsewhere in this report and in other documents we file with the SEC are descriptions of the risks and uncertainties that could cause our actual results to differ materially from the results contemplated by the forward-looking statements contained in this report. The descriptions below include any material changes to and supersede the description of the risk factors affecting our business previously disclosed in “Part I, Item 1A. Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended July 28, 2018.

OUR OPERATING RESULTS MAY FLUCTUATE IN FUTURE PERIODS, WHICH MAY ADVERSELY AFFECT OUR STOCK PRICE

Our operating results have been in the past, and will continue to be, subject to quarterly and annual fluctuations as a result of numerous factors, some of which may contribute to more pronounced fluctuations in an uncertain global economic environment. These factors include:

• 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

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As a consequence, operating results for a particular future period are difficult to predict, and, therefore, prior results are not necessarily indicative of results to be expected in future periods. Any of the foregoing factors, or any other factors discussed elsewhere herein, could have a material adverse effect on our business, results of operations, and financial condition that could adversely affect our stock price.

OUR OPERATING RESULTS MAY BE ADVERSELY AFFECTED BY UNFAVORABLE ECONOMIC AND MARKET CONDITIONS AND THE UNCERTAIN GEOPOLITICAL ENVIRONMENT

Challenging economic conditions worldwide have from time to time contributed, and may continue to contribute, to slowdowns in the communications and networking industries at large, as well as in specific segments and markets in which we operate, resulting in:

• 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

The global macroeconomic environment has been challenging and inconsistent. Instability in the global credit markets, the impact of uncertainty regarding global central bank monetary policy, the instability in the geopolitical environment in many parts of the world including as a result of the pending United Kingdom “Brexit” withdrawal from the European Union, the current economic challenges in China, including global economic ramifications of Chinese economic difficulties, and other disruptions may continue to put pressure on global economic conditions. If global economic and market conditions, or economic conditions in key markets, remain uncertain or deteriorate further, we may experience material impacts on our business, operating results, and financial condition.

Our operating results in one or more segments may also be affected by uncertain or changing economic conditions particularly germane to that segment or to particular customer markets within that segment. For example, emerging countries in the aggregate experienced a decline in product orders in certain prior periods.

In addition, reports of certain intelligence gathering methods of the U.S. government could affect customers’ perception of the products of IT companies which design and manufacture products in the United States. Trust and confidence in us as an IT supplier is critical to the development and growth of our markets. Impairment of that trust, or foreign regulatory actions taken in response to reports of certain intelligence gathering methods of the U.S. government, could affect the demand for our products from customers outside of the United States and could have an adverse effect on our operating results.

WE HAVE BEEN INVESTING AND EXPECT TO CONTINUE TO INVEST IN KEY PRIORITY AND GROWTH AREAS AS WELL AS MAINTAINING LEADERSHIP IN INFRASTRUCTURE PLATFORMS AND IN SERVICES, AND IF THE RETURN ON THESE INVESTMENTS IS LOWER OR DEVELOPS MORE SLOWLY THAN WE EXPECT, OUR OPERATING RESULTS MAY BE HARMED

We expect to realign and dedicate resources into key priority and growth areas, such as Security and Applications, while also focusing on maintaining leadership in Infrastructure Platforms and in Services. However, the return on our investments may be lower, or may develop more slowly, than we expect. If we do not achieve the benefits anticipated from these investments (including if our selection of areas for investment does not play out as we expect), or if the achievement of these benefits is delayed, our operating results may be adversely affected.

OUR REVENUE FOR A PARTICULAR PERIOD IS DIFFICULT TO PREDICT, AND A SHORTFALL IN REVENUE MAY HARM OUR OPERATING RESULTS

As a result of a variety of factors discussed in this report, our revenue for a particular quarter is difficult to predict, especially in light of a challenging and inconsistent global macroeconomic environment and related market uncertainty.

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Our revenue may grow at a slower rate than in past periods or decline as it did in the first quarter of fiscal 2018, and in certain prior periods on a year-over-year basis. Our ability to meet financial expectations could also be adversely affected if the nonlinear sales pattern seen in some of our past quarters recurs in future periods. We have experienced periods of time during which shipments have exceeded net bookings or manufacturing issues have delayed shipments, leading to nonlinearity in shipping patterns. In addition to making it difficult to predict revenue for a particular period, nonlinearity in shipping can increase costs, because irregular shipment patterns result in periods of underutilized capacity and periods in which overtime expenses may be incurred, as well as in potential additional inventory management-related costs. In addition, to the extent that manufacturing issues and any related component shortages result in delayed shipments in the future, and particularly in periods in which our contract manufacturers are operating at higher levels of capacity, it is possible that revenue for a quarter could be adversely affected if such matters occur and are not remediated within the same quarter.

The timing of large orders can also have a significant effect on our business and operating results from quarter to quarter, primarily in the United States and in emerging countries. From time to time, we receive large orders that have a significant effect on our operating results in the period in which the order is recognized as revenue. The timing of such orders is difficult to predict, and the timing of revenue recognition from such orders may affect period to period changes in revenue. As a result, our operating results could vary materially from quarter to quarter based on the receipt of such orders and their ultimate recognition as revenue.

Inventory management remains an area of focus. We have experienced longer than normal manufacturing lead times in the past which have caused some customers to place the same order multiple times within our various sales channels and to cancel the duplicative orders upon receipt of the product, or to place orders with other vendors with shorter manufacturing lead times. Such multiple ordering (along with other factors) or risk of order cancellation may cause difficulty in predicting our revenue and, as a result, could impair our ability to manage parts inventory effectively. In addition, our efforts to improve manufacturing lead-time performance may result in corresponding reductions in order backlog. A decline in backlog levels could result in more variability and less predictability in our quarter-to-quarter revenue and operating results. In addition, when facing component supply-related challenges we have increased our efforts in procuring components in order to meet customer expectations, which in turn contribute to an increase in purchase commitments. Increases in our purchase commitments to shorten lead times could also lead to excess and obsolete inventory charges if the demand for our products is less than our expectations.

We plan our operating expense levels based primarily on forecasted revenue levels. These expenses and the impact of long-term commitments are relatively fixed in the short term. A shortfall in revenue could lead to operating results being below expectations because we may not be able to quickly reduce these fixed expenses in response to short-term business changes.

Any of the above factors could have a material adverse impact on our operations and financial results.

WE EXPECT GROSS MARGIN TO VARY OVER TIME, AND OUR LEVEL OF PRODUCT GROSS MARGIN MAY NOT BE SUSTAINABLE

Our product gross margins declined in the second quarter of fiscal 2019 and in certain prior periods on a year-over-year basis, and could decline in future quarters due to adverse impacts from various factors, including:

• 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

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• The timing of revenue recognition and revenue deferrals

• Increased cost (including those caused by tariffs), 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

Changes in service gross margin may result from various factors such as changes in the mix between technical support services and advanced services, as well as the timing of technical support service contract initiations and renewals and the addition of personnel and other resources to support higher levels of service business in future periods.

SALES TO THE SERVICE PROVIDER MARKET ARE ESPECIALLY VOLATILE, AND WEAKNESS IN ORDERS FROM THIS INDUSTRY MAY HARM OUR OPERATING RESULTS AND FINANCIAL CONDITION

Sales to the service provider market have been characterized by large and sporadic purchases, especially relating to our router sales and sales of certain other Infrastructure Platforms and Applications products, in addition to longer sales cycles. Service provider product orders decreased in the third quarter of fiscal 2019, and in certain prior periods, and at various times in the past we have experienced significant weakness in product orders from service providers. Product orders from the service provider market could continue to decline and, as has been the case in the past, such weakness could persist over extended periods of time given fluctuating market conditions. Sales activity in this industry depends upon the stage of completion of expanding network infrastructures; the availability of funding; and the extent to which service providers are affected by regulatory, economic, and business conditions in the country of operations. Weakness in orders from this industry, including as a result of any slowdown in capital expenditures by service providers (which may be more prevalent during a global economic downturn, or periods of economic, political or regulatory uncertainty), could have a material adverse effect on our business, operating results, and financial condition. Such slowdowns may continue or recur in future periods. Orders from this industry could decline for many reasons other than the competitiveness of our products and services within their respective markets. For example, in the past, many of our service provider customers have been materially and adversely affected by slowdowns in the general economy, by overcapacity, by changes in the service provider market, by regulatory developments, and by constraints on capital availability, resulting in business failures and substantial reductions in spending and expansion plans. These conditions have materially harmed our business and operating results in the past, and some of these or other conditions in the service provider market could affect our business and operating results in any future period. Finally, service provider customers typically have longer implementation cycles; require a broader range of services, including design services; demand that vendors take on a larger share of risks; often require acceptance provisions, which can lead to a delay in revenue recognition; and expect financing from vendors. All these factors can add further risk to business conducted with service providers.

DISRUPTION OF OR CHANGES IN OUR DISTRIBUTION MODEL COULD HARM OUR SALES AND MARGINS

If we fail to manage distribution of our products and services properly, or if our distributors’ financial condition or operations weaken, our revenue and gross margins could be adversely affected.

A substantial portion of our products and services is sold through our channel partners, and the remainder is sold through direct sales. Our channel partners include systems integrators, service providers, other resellers, and distributors. Systems integrators and service providers typically sell directly to end users and often provide system installation, technical support, professional services, and other support services in addition to network equipment sales. Systems integrators also typically integrate our products into an overall solution, and a number of service providers are also systems integrators. Distributors stock inventory and typically sell to systems integrators, service providers, and other resellers. We refer to sales through distributors as our two-tier system of sales to the end customer. These distributors are generally given business terms that allow them to return a portion of inventory, receive credits for changes in selling prices, and participate in various cooperative marketing programs. If sales through indirect channels increase, this may lead to greater difficulty in forecasting the mix of our products and, to a degree, the timing of orders from our customers.

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Historically, we have seen fluctuations in our gross margins based on changes in the balance of our distribution channels. Although variability to date has not been significant, there can be no assurance that changes in the balance of our distribution model in future periods would not have an adverse effect on our gross margins and profitability.

Some factors could result in disruption of or changes in our distribution model, which could harm our sales and margins, including the following:

• 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

In addition, we depend on our channel partners globally to comply with applicable regulatory requirements. To the extent that they fail to do so, that could have a material adverse effect on our business, operating results, and financial condition. Further, sales of our products outside of agreed territories can result in disruption to our distribution channels.

THE MARKETS IN WHICH WE COMPETE ARE INTENSELY COMPETITIVE, WHICH COULD ADVERSELY AFFECT OUR ACHIEVEMENT OF REVENUE GROWTH

The markets in which we compete are characterized by rapid change, converging technologies, and a migration to networking and communications solutions that offer relative advantages. These market factors represent a competitive threat to us. We compete with numerous vendors in each product category. The overall number of our competitors providing niche product solutions may increase. Also, the identity and composition of competitors may change as we increase our activity in newer product areas, and in key priority and growth areas. For example, as products related to network programmability, such as SDN products, become more prevalent, we expect to face increased competition from companies that develop networking products based on commoditized hardware, referred to as "white box" hardware, to the extent customers decide to purchase those product offerings instead of ours. In addition, the growth in demand for technology delivered as a service enables new competitors to enter the market.

As we continue to expand globally, we may see new competition in different geographic regions. In particular, we have experienced price-focused competition from competitors in Asia, especially from China, and we anticipate this will continue. Our competitors include Amazon Web Services LLC; Arista Networks, Inc.; ARRIS Group, Inc.; Check Point Software Technologies Ltd.; Dell Technologies Inc.; Extreme Networks, Inc.; F5 Networks, Inc.; FireEye, Inc.; Fortinet, Inc.; Hewlett-Packard Enterprise Company; Huawei Technologies Co., Ltd.; Juniper Networks, Inc.; Lenovo Group Limited; LogMeIn, Inc.; Microsoft Corporation; New Relic, Inc.; Nokia Corporation; Nutanix, Inc.; Palo Alto Networks, Inc.; Symantec Corporation; Ubiquiti Networks, Inc.; VMware, Inc. and Zoom Video Communications, Inc.; among others.

Some of our competitors compete across many of our product lines, while others are primarily focused in a specific product area. Barriers to entry are relatively low, and new ventures to create products that do or could compete with our products are regularly formed. In addition, some of our competitors may have greater resources, including technical and engineering resources, than we do. As we expand into new markets, we will face competition not only from our existing competitors but also from other competitors, including existing companies with strong technological, marketing, and sales positions in those markets. We also sometimes face competition from resellers and distributors of our products. Companies with which we have strategic alliances in some areas may be competitors in other areas, and in our view this trend may increase.

For example, the enterprise data center is undergoing a fundamental transformation arising from the convergence of technologies, including computing, networking, storage, and software, that previously were segregated. Due to several factors, including the availability of highly scalable and general purpose microprocessors, ASICs offering advanced services, standards based protocols, cloud computing and virtualization, the convergence of technologies within the enterprise data center is spanning multiple, previously independent, technology segments. Also, some of our current and potential competitors for enterprise data center business have made acquisitions, or announced new strategic alliances, designed to position them to provide end-to-end technology solutions for the enterprise data center. As a result of all of these developments, we face greater competition in the development and sale of enterprise data center technologies, including competition from entities that are among our long-term strategic alliance partners. Companies that are strategic alliance partners in some areas of our business may acquire or form alliances with our competitors, thereby reducing their business with us.

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The principal competitive factors in the markets in which we presently compete and may compete in the future include:

• 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

We also face competition from customers to which we license or supply technology and suppliers from which we transfer technology. The inherent nature of networking requires interoperability. As such, we must cooperate and at the same time compete with many companies. Any inability to effectively manage these complicated relationships with customers, suppliers, and strategic alliance partners could have a material adverse effect on our business, operating results, and financial condition and accordingly affect our chances of success.

OUR INVENTORY MANAGEMENT RELATING TO OUR SALES TO OUR TWO-TIER DISTRIBUTION CHANNEL IS COMPLEX, AND EXCESS INVENTORY MAY HARM OUR GROSS MARGINS

We must manage our inventory relating to sales to our distributors effectively, because inventory held by them could affect our results of operations. Our distributors may increase orders during periods of product shortages, cancel orders if their inventory is too high, or delay orders in anticipation of new products. They also may adjust their orders in response to the supply of our products and the products of our competitors that are available to them, and in response to seasonal fluctuations in end-user demand. Our distributors are generally given business terms that allow them to return a portion of inventory, receive credits for changes in selling price, and participate in various cooperative marketing programs. Inventory management remains an area of focus as we balance the need to maintain strategic inventory levels to ensure competitive lead times against the risk of inventory obsolescence because of rapidly changing technology and customer requirements. When facing component supply-related challenges, we have increased our efforts in procuring components in order to meet customer expectations. If we ultimately determine that we have excess inventory, we may have to reduce our prices and write down inventory, which in turn could result in lower gross margins.

SUPPLY CHAIN ISSUES, INCLUDING FINANCIAL PROBLEMS OF CONTRACT MANUFACTURERS OR COMPONENT SUPPLIERS, OR A SHORTAGE OF ADEQUATE COMPONENT SUPPLY OR MANUFACTURING CAPACITY THAT INCREASED OUR COSTS OR CAUSED A DELAY IN OUR ABILITY TO FULFILL ORDERS, COULD HAVE AN ADVERSE IMPACT ON OUR BUSINESS AND OPERATING RESULTS, AND OUR FAILURE TO ESTIMATE CUSTOMER DEMAND PROPERLY MAY RESULT IN EXCESS OR OBSOLETE COMPONENT SUPPLY, WHICH COULD ADVERSELY AFFECT OUR GROSS MARGINS

The fact that we do not own or operate the bulk of our manufacturing facilities and that we are reliant on our extended supply chain could have an adverse impact on the supply of our products and on our business and operating results:

• Any financial problems of either contract manufacturers or component suppliers could either limit supply or increase costs

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• 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

A reduction or interruption in supply; a significant increase in the price of one or more components; a failure to adequately authorize procurement of inventory by our contract manufacturers; a failure to appropriately cancel, reschedule, or adjust our requirements based on our business needs; or a decrease in demand for our products could materially adversely affect our business, operating results, and financial condition and could materially damage customer relationships. Furthermore, as a result of binding price or purchase commitments with suppliers, we may be obligated to purchase components at prices that are higher than those available in the current market. In the event that we become committed to purchase components at prices in excess of the current market price when the components are actually used, our gross margins could decrease. We have experienced longer than normal lead times in the past. Although we have generally secured additional supply or taken other mitigation actions when significant disruptions have occurred, if similar situations occur in the future, they could have a material adverse effect on our business, results of operations, and financial condition. See the risk factor above entitled “Our revenue for a particular period is difficult to predict, and a shortfall in revenue may harm our operating results.”

Our growth and ability to meet customer demands depend in part on our ability to obtain timely deliveries of parts from our suppliers and contract manufacturers. We have experienced component shortages in the past, including shortages caused by manufacturing process issues, that have affected our operations. We may in the future experience a shortage of certain component parts as a result of our own manufacturing issues, manufacturing issues at our suppliers or contract manufacturers, capacity problems experienced by our suppliers or contract manufacturers including capacity or cost problems resulting from industry consolidation, or strong demand in the industry for those parts. Growth in the economy is likely to create greater pressures on us and our suppliers to accurately project overall component demand and component demands within specific product categories and to establish optimal component levels and manufacturing capacity, especially for labor-intensive components, components for which we purchase a substantial portion of the supply, or the re-ramping of manufacturing capacity for highly complex products. During periods of shortages or delays the price of components may increase, or the components may not be available at all, and we may also encounter shortages if we do not accurately anticipate our needs. We may not be able to secure enough components at reasonable prices or of acceptable quality to build new products in a timely manner in the quantities or configurations needed. Accordingly, our revenue and gross margins could suffer until other sources can be developed. Our operating results would also be adversely affected if, anticipating greater demand than actually develops, we commit to the purchase of more components than we need, which is more likely to occur in a period of demand uncertainties such as we are currently experiencing. There can be no assurance that we will not encounter these problems in the future. Although in many cases we use standard parts and components for our products, certain components are presently available only from a single source or limited sources, and a global economic downturn and related market uncertainty could negatively impact the availability of components from one or more of these sources, especially during times such as we have recently seen when there are supplier constraints based on labor and other actions taken during economic downturns. We may not be able to diversify sources in a timely manner, which could harm our ability to deliver products to customers and seriously impact present and future sales.

We believe that we may be faced with the following challenges in the future:

• 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

Manufacturing capacity and component supply constraints could continue to be significant issues for us. We purchase components from a variety of suppliers and use several contract manufacturers to provide manufacturing services for our products. During the normal course of business, in order to improve manufacturing lead-time performance and to help ensure adequate component supply, we enter into agreements with contract manufacturers and suppliers that either allow them to procure inventory based upon criteria as defined by us or that establish the parameters defining our requirements. In certain instances, these agreements allow us the option to cancel, reschedule, and adjust our requirements based on our business needs prior to firm orders being placed. When facing component supply-related challenges we have increased our efforts in procuring components in order to meet customer expectations, which in turn contributes to an increase in purchase commitments. Increases in our purchase commitments to shorten lead times could also lead to excess and obsolete inventory charges if the demand for our products is less than our expectations.

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If we fail to anticipate customer demand properly, an oversupply of parts could result in excess or obsolete components that could adversely affect our gross margins. For additional information regarding our purchase commitments with contract manufacturers and suppliers, see Note 13 to the Consolidated Financial Statements.

WE DEPEND UPON THE DEVELOPMENT OF NEW PRODUCTS AND ENHANCEMENTS TO EXISTING PRODUCTS, AND IF WE FAIL TO PREDICT AND RESPOND TO EMERGING TECHNOLOGICAL TRENDS AND CUSTOMERS’ CHANGING NEEDS, OUR OPERATING RESULTS AND MARKET SHARE MAY SUFFER

The markets for our products are characterized by rapidly changing technology, evolving industry standards, new product introductions, and evolving methods of building and operating networks. Our operating results depend on our ability to develop and introduce new products into existing and emerging markets and to reduce the production costs of existing products. Many of our strategic initiatives and investments we have made, and our architectural approach, are designed to enable the increased use of the network as the platform for automating, orchestrating, integrating, and delivering an ever-increasing array of IT-based products and services. For example, in June 2017 we announced our Catalyst 9000 series of switches which represent the initial foundation of our intent-based networking capabilities. Other current initiatives include our focus on security; the market transition related to digital transformation and IoT; the transition in cloud; and the move towards more programmable, flexible and virtual networks.

The process of developing new technology, including intent-based networking, more programmable, flexible and virtual networks, and technology related to other market transitions— such as security, digital transformation and IoT, and cloud— is complex and uncertain, and if we fail to accurately predict customers’ changing needs and emerging technological trends our business could be harmed. We must commit significant resources, including the investments we have been making in our priorities to developing new products before knowing whether our investments will result in products the market will accept. In particular, if our model of the evolution of networking does not emerge as we believe it will, or if the industry does not evolve as we believe it will, or if our strategy for addressing this evolution is not successful, many of our strategic initiatives and investments may be of no or limited value. For example, if we do not introduce products related to network programmability, such as software-defined-networking products, in a timely fashion, or if product offerings in this market that ultimately succeed are based on technology, or an approach to technology, that differs from ours, such as, for example, networking products based on “white box” hardware, our business could be harmed. Similarly, our business could be harmed if we fail to develop, or fail to develop in a timely fashion, offerings to address other transitions, or if the offerings addressing these other transitions that ultimately succeed are based on technology, or an approach to technology, different from ours. In addition, our business could be adversely affected in periods surrounding our new product introductions if customers delay purchasing decisions to qualify or otherwise evaluate the new product offerings.

Our strategy is to lead our customers in their digital transition with solutions that deliver greater agility, productivity, security and other advanced network capabilities, and that intelligently connect nearly everything that can be connected. Over the last few years, we have been transforming our business to move from selling individual products and services to selling products and services integrated into architectures and solutions, and we are seeking to meet the evolving needs of customers which include offering our products and solutions in the manner in which customers wish to consume them. As a part of this transformation, we continue to make changes to how we are organized and how we build and deliver our technology, including changes in our business models with customers. If our strategy for addressing our customer needs, or the architectures and solutions we develop do not meet those needs, or the changes we are making in how we are organized and how we build and deliver or technology is incorrect or ineffective, our business could be harmed.

Furthermore, we may not execute successfully on our vision or strategy because of challenges with regard to product planning and timing, technical hurdles that we fail to overcome in a timely fashion, or a lack of appropriate resources. This could result in competitors, some of which may also be our strategic alliance partners, providing those solutions before we do and loss of market share, revenue, and earnings. In addition, the growth in demand for technology delivered as a service enables new competitors to enter the market. The success of new products depends on several factors, including proper new product definition, component costs, timely completion and introduction of these products, differentiation of new products from those of our competitors, and market acceptance of these products. There can be no assurance that we will successfully identify new product opportunities, develop and bring new products to market in a timely manner, or achieve market acceptance of our products or that products and technologies developed by others will not render our products or technologies obsolete or noncompetitive. The products and technologies in our other product categories and key priority and growth areas may not prove to have the market success we anticipate, and we may not successfully identify and invest in other emerging or new products.

CHANGES IN INDUSTRY STRUCTURE AND MARKET CONDITIONS COULD LEAD TO CHARGES RELATED TO DISCONTINUANCES OF CERTAIN OF OUR PRODUCTS OR BUSINESSES, ASSET IMPAIRMENTS AND WORKFORCE REDUCTIONS OR RESTRUCTURINGS

In response to changes in industry and market conditions, we may be required to strategically realign our resources and to consider restructuring, disposing of, or otherwise exiting businesses. Any resource realignment, or decision to limit investment in or dispose

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of or otherwise exit businesses, may result in the recording of special charges, such as inventory and technology-related write-offs, workforce reduction or restructuring costs, charges relating to consolidation of excess facilities, or claims from third parties who were resellers or users of discontinued products. Our estimates with respect to the useful life or ultimate recoverability of our carrying basis of assets, including purchased intangible assets, could change as a result of such assessments and decisions. Although in certain instances our supply agreements allow us the option to cancel, reschedule, and adjust our requirements based on our business needs prior to firm orders being placed, our loss contingencies may include liabilities for contracts that we cannot cancel with contract manufacturers and suppliers. Further, our estimates relating to the liabilities for excess facilities are affected by changes in real estate market conditions. Additionally, we are required to perform goodwill impairment tests on an annual basis and between annual tests in certain circumstances, and future goodwill impairment tests may result in a charge to earnings.

We initiated a restructuring plan in the third quarter of fiscal 2018 and expanded it in the first quarter of fiscal 2019. The implementation of this restructuring plan may be disruptive to our business, and following completion of the restructuring plan our business may not be more efficient or effective than prior to implementation of the plan. Our restructuring activities, including any related charges and the impact of the related headcount restructurings, could have a material adverse effect on our business, operating results, and financial condition.

OVER THE LONG TERM WE INTEND TO INVEST IN ENGINEERING, SALES, SERVICE AND MARKETING ACTIVITIES, AND THESE INVESTMENTS MAY ACHIEVE DELAYED, OR LOWER THAN EXPECTED, BENEFITS WHICH COULD HARM OUR OPERATING RESULTS

While we intend to focus on managing our costs and expenses, over the long term, we also intend to invest in personnel and other resources related to our engineering, sales, service and marketing functions as we realign and dedicate resources on key priority and growth areas, such as Security and Applications, and we also intend to focus on maintaining leadership in Infrastructure Platforms and in Services. We are likely to recognize the costs associated with these investments earlier than some of the anticipated benefits, and the return on these investments may be lower, or may develop more slowly, than we expect. If we do not achieve the benefits anticipated from these investments, or if the achievement of these benefits is delayed, our operating results may be adversely affected.

OUR BUSINESS SUBSTANTIALLY DEPENDS UPON THE CONTINUED GROWTH OF THE INTERNET AND INTERNET-BASED SYSTEMS

A substantial portion of our business and revenue depends on growth and evolution of the Internet, including the continued development of the Internet and the anticipated market transitions, and on the deployment of our products by customers who depend on such continued growth and evolution. To the extent that an economic slowdown or uncertainty and related reduction in capital spending adversely affect spending on Internet infrastructure, including spending or investment related to anticipated market transitions, we could experience material harm to our business, operating results, and financial condition.

Because of the rapid introduction of new products and changing customer requirements related to matters such as cost-effectiveness and security, we believe that there could be performance problems with Internet communications in the future, which could receive a high degree of publicity and visibility. Because we are a large supplier of networking products, our business, operating results, and financial condition may be materially adversely affected, regardless of whether or not these problems are due to the performance of our own products. Such an event could also result in a material adverse effect on the market price of our common stock independent of direct effects on our business.

WE HAVE MADE AND EXPECT TO CONTINUE TO MAKE ACQUISITIONS THAT COULD DISRUPT OUR OPERATIONS AND HARM OUR OPERATING RESULTS

Our growth depends upon market growth, our ability to enhance our existing products, and our ability to introduce new products on a timely basis. We intend to continue to address the need to develop new products and enhance existing products through acquisitions of other companies, product lines, technologies, and personnel. Acquisitions involve numerous risks, including the following:

• 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

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• 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

Acquisitions may also cause us to:

• 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 legal structure

• Incur large and immediate write-offs and restructuring and other related expenses

• Become subject to intellectual property or other litigation

Mergers and acquisitions of high-technology companies are inherently risky and subject to many factors outside of our control, and no assurance can be given that our previous or future acquisitions will be successful and will not materially adversely affect our business, operating results, or financial condition. Failure to manage and successfully integrate acquisitions could materially harm our business and operating results. Prior acquisitions have resulted in a wide range of outcomes, from successful introduction of new products and technologies to a failure to do so. Even when an acquired company has already developed and marketed products, there can be no assurance that product enhancements will be made in a timely fashion or that pre-acquisition due diligence will have identified all possible issues that might arise with respect to such products.

From time to time, we have made acquisitions that resulted in charges in an individual quarter. These charges may occur in any particular quarter, resulting in variability in our quarterly earnings. In addition, our effective tax rate for future periods is uncertain and could be impacted by mergers and acquisitions. Risks related to new product development also apply to acquisitions. See the risk factors above, including the risk factor entitled “We depend upon the development of new products and enhancements to existing products, and if we fail to predict and respond to emerging technological trends and customers’ changing needs, our operating results and market share may suffer” for additional information.

ENTRANCE INTO NEW OR DEVELOPING MARKETS EXPOSES US TO ADDITIONAL COMPETITION AND WILL LIKELY INCREASE DEMANDS ON OUR SERVICE AND SUPPORT OPERATIONS

As we focus on new market opportunities and key priority and growth areas, we will increasingly compete with large telecommunications equipment suppliers as well as startup companies. Several of our competitors may have greater resources, including technical and engineering resources, than we do. Additionally, as customers in these markets complete infrastructure deployments, they may require greater levels of service, support, and financing than we have provided in the past, especially in emerging countries. Demand for these types of service, support, or financing contracts may increase in the future. There can be no assurance that we can provide products, service, support, and financing to effectively compete for these market opportunities.

Further, provision of greater levels of services, support and financing by us may result in a delay in the timing of revenue recognition. In addition, entry into other markets has subjected and will subject us to additional risks, particularly to those markets, including the effects of general market conditions and reduced consumer confidence. For example, as we add direct selling capabilities globally to meet changing customer demands, we will face increased legal and regulatory requirements.

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INDUSTRY CONSOLIDATION MAY LEAD TO INCREASED COMPETITION AND MAY HARM OUR OPERATING RESULTS

There has been a trend toward industry consolidation in our markets for several years. We expect this trend to continue as companies attempt to strengthen or hold their market positions in an evolving industry and as companies are acquired or are unable to continue operations. For example, some of our current and potential competitors for enterprise data center business have made acquisitions, or announced new strategic alliances, designed to position them with the ability to provide end-to-end technology solutions for the enterprise data center. Companies that are strategic alliance partners in some areas of our business may acquire or form alliances with our competitors, thereby reducing their business with us. We believe that industry consolidation may result in stronger competitors that are better able to compete as sole-source vendors for customers. This could lead to more variability in our operating results and could have a material adverse effect on our business, operating results, and financial condition. Furthermore, particularly in the service provider market, rapid consolidation will lead to fewer customers, with the effect that loss of a major customer could have a material impact on results not anticipated in a customer marketplace composed of more numerous participants.

PRODUCT QUALITY PROBLEMS COULD LEAD TO REDUCED REVENUE, GROSS MARGINS, AND NET INCOME

We produce highly complex products that incorporate leading-edge technology, including both hardware and software. Software typically contains bugs that can unexpectedly interfere with expected operations. There can be no assurance that our pre-shipment testing programs will be adequate to detect all defects, either ones in individual products or ones that could affect numerous shipments, which might interfere with customer satisfaction, reduce sales opportunities, or affect gross margins. From time to time, we have had to replace certain components and provide remediation in response to the discovery of defects or bugs in products that we had shipped. There can be no assurance that such remediation, depending on the product involved, would not have a material impact. An inability to cure a product defect could result in the failure of a product line, temporary or permanent withdrawal from a product or market, damage to our reputation, inventory costs, or product reengineering expenses, any of which could have a material impact on our revenue, margins, and net income. For example, in the second quarter of fiscal 2017 we 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 our products, and in the second quarter of fiscal 2014 we recorded a pre-tax charge of $655 million related to the expected remediation costs for certain products sold in prior fiscal years containing memory components manufactured by a single supplier between 2005 and 2010.

DUE TO THE GLOBAL NATURE OF OUR OPERATIONS, POLITICAL OR ECONOMIC CHANGES OR OTHER FACTORS IN A SPECIFIC COUNTRY OR REGION COULD HARM OUR OPERATING RESULTS AND FINANCIAL CONDITION

We conduct significant sales and customer support operations in countries around the world. As such, our growth depends in part on our increasing sales into emerging countries. We also depend on non-U.S. operations of our contract manufacturers, component suppliers and distribution partners. Our business in emerging countries in the aggregate experienced a decline in orders in certain prior periods. We continue to assess the sustainability of any improvements in our business in these countries and there can be no assurance that our investments in these countries will be successful. Our future results could be materially adversely affected by a variety of political, economic or other factors relating to our operations inside and outside the United States, including impacts from global central bank monetary policy; issues related to the political relationship between the United States and other countries that can affect the willingness of customers in those countries to purchase products from companies headquartered in the United States or affect our ability to procure components if a government body were to deny us access to those components; government-related disruptions or shutdowns; and the challenging and inconsistent global macroeconomic environment, any or all of which could have a material adverse effect on our operating results and financial condition, including, among others, the following:

• 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 protection measures, trade protection measures such as tariffs, 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 or affect our ability to procure components

• Political considerations that affect service provider and government spending patterns

• Health or similar issues, such as a pandemic or epidemic

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• Difficulties in staffing and managing international operations

• Adverse tax consequences, including imposition of withholding or other taxes on our global operations

WE ARE EXPOSED TO THE CREDIT RISK OF SOME OF OUR CUSTOMERS AND TO CREDIT EXPOSURES IN WEAKENED MARKETS, WHICH COULD RESULT IN MATERIAL LOSSES

Most of our sales are on an open credit basis, with typical payment terms of 30 days in the United States and, because of local customs or conditions, longer in some markets outside the United States. We monitor individual customer payment capability in granting such open credit arrangements, seek to limit such open credit to amounts we believe the customers can pay, and maintain reserves we believe are adequate to cover exposure for doubtful accounts. Beyond our open credit arrangements, we have also experienced demands for customer financing and facilitation of leasing arrangements. We expect demand for customer financing to continue, and recently we have been experiencing an increase in this demand as the credit markets have been impacted by the challenging and inconsistent global macroeconomic environment, including increased demand from customers in certain emerging countries.

We believe customer financing is a competitive factor in obtaining business, particularly in serving customers involved in significant infrastructure projects. Our loan financing arrangements may include not only financing the acquisition of our products and services but also providing additional funds for other costs associated with network installation and integration of our products and services.

Our exposure to the credit risks relating to our financing activities described above may increase if our customers are adversely affected by a global economic downturn or periods of economic uncertainty. Although we have programs in place that are designed to monitor and mitigate the associated risk, including monitoring of particular risks in certain geographic areas, there can be no assurance that such programs will be effective in reducing our credit risks.

In the past, there have been significant bankruptcies among customers both on open credit and with loan or lease financing arrangements, particularly among Internet businesses and service providers, causing us to incur economic or financial losses. There can be no assurance that additional losses will not be incurred. Although these losses have not been material to date, future losses, if incurred, could harm our business and have a material adverse effect on our operating results and financial condition. A portion of our sales is derived through our distributors. These distributors are generally given business terms that allow them to return a portion of inventory, receive credits for changes in selling prices, and participate in various cooperative marketing programs. We maintain estimated accruals and allowances for such business terms. However, distributors tend to have more limited financial resources than other resellers and end-user customers and therefore represent potential sources of increased credit risk, because they may be more likely to lack the reserve resources to meet payment obligations. Additionally, to the degree that turmoil in the credit markets makes it more difficult for some customers to obtain financing, those customers’ ability to pay could be adversely impacted, which in turn could have a material adverse impact on our business, operating results, and financial condition.

WE ARE EXPOSED TO FLUCTUATIONS IN THE MARKET VALUES OF OUR PORTFOLIO INVESTMENTS AND IN INTEREST RATES; IMPAIRMENT OF OUR INVESTMENTS COULD HARM OUR EARNINGS

We maintain an investment portfolio of various holdings, types, and maturities. Our portfolio includes available-for-sale debt investments and equity investments, the values of which are subject to market price volatility to the extent unhedged. Available-for-sale debt investments are recorded on our Consolidated Balance Sheets at fair value with unrealized gains or losses reported as a component of accumulated other comprehensive income (loss), net of tax. If such investments suffer market price declines, as we experienced with some of our investments in the past, we may recognize in earnings the decline in the fair value of our investments below their cost basis when the decline is judged to be other than temporary. Securities classified as marketable equity are recorded on our Consolidated Balance Sheets at fair value with gains or losses recorded to interest and other income (loss), net. Our non-marketable equity and other investments are subject to risk of loss of investment capital. These investments are inherently risky because the markets for the technologies or products they have under development are typically in the early stages and may never materialize. We could lose our entire investment in these companies. For information regarding the market risks associated with the fair value of portfolio investments and interest rates, refer to the section titled “Quantitative and Qualitative Disclosures About Market Risk.”

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WE ARE EXPOSED TO FLUCTUATIONS IN CURRENCY EXCHANGE RATES THAT COULD NEGATIVELY IMPACT OUR FINANCIAL RESULTS AND CASH FLOWS

Because a significant portion of our business is conducted outside the United States, we face exposure to adverse movements in foreign currency exchange rates. These exposures may change over time as business practices evolve, and they could have a material adverse impact on our financial results and cash flows. Historically, our primary exposures have related to nondollar-denominated sales in Japan, Canada, and Australia and certain nondollar-denominated operating expenses and service cost of sales in Europe, Latin America, and Asia, where we sell primarily in U.S. dollars. Additionally, we have exposures to emerging market currencies, which can have extreme currency volatility. An increase in the value of the dollar could increase the real cost to our customers of our products in those markets outside the United States where we sell in dollars and a weakened dollar could increase the cost of local operating expenses and procurement of raw materials to the extent that we must purchase components in foreign currencies.

Currently, we enter into foreign exchange forward contracts and options to reduce the short-term impact of foreign currency fluctuations on certain foreign currency receivables, investments, and payables. In addition, we periodically hedge anticipated foreign currency cash flows. Our attempts to hedge against these risks may result in an adverse impact on our net income.

OUR PROPRIETARY RIGHTS MAY PROVE DIFFICULT TO ENFORCE

We generally rely on patents, copyrights, trademarks, and trade secret laws to establish and maintain proprietary rights in our technology and products. Although we have been issued numerous patents and other patent applications are currently pending, there can be no assurance that any of these patents or other proprietary rights will not be challenged, invalidated, or circumvented or that our rights will, in fact, provide competitive advantages to us. Furthermore, many key aspects of networking technology are governed by industrywide standards, which are usable by all market entrants. In addition, there can be no assurance that patents will be issued from pending applications or that claims allowed on any patents will be sufficiently broad to protect our technology. In addition, the laws of some foreign countries may not protect our proprietary rights to the same extent as do the laws of the United States. The outcome of any actions taken in these foreign countries may be different than if such actions were determined under the laws of the United States. Although we are not dependent on any individual patents or group of patents for particular segments of the business for which we compete, if we are unable to protect our proprietary rights to the totality of the features (including aspects of products protected other than by patent rights) in a market, we may find ourselves at a competitive disadvantage to others who need not incur the substantial expense, time, and effort required to create innovative products that have enabled us to be successful.

WE MAY BE FOUND TO INFRINGE ON INTELLECTUAL PROPERTY RIGHTS OF OTHERS

Third parties, including customers, have in the past and may in the future assert claims or initiate litigation related to exclusive patent, copyright, trademark, and other intellectual property rights to technologies and related standards that are relevant to us. These assertions have increased over time as a result of our growth and the general increase in the pace of patent claims assertions, particularly in the United States. Because of the existence of a large number of patents in the networking field, the secrecy of some pending patents, and the rapid rate of issuance of new patents, it is not economically practical or even possible to determine in advance whether a product or any of its components infringes or will infringe on the patent rights of others. The asserted claims and/or initiated litigation can include claims against us or our manufacturers, suppliers, or customers, alleging infringement of their proprietary rights with respect to our existing or future products or components of those products. Regardless of the merit of these claims, they can be time-consuming, result in costly litigation and diversion of technical and management personnel, or require us to develop a non-infringing technology or enter into license agreements. Where claims are made by customers, resistance even to unmeritorious claims could damage customer relationships. There can be no assurance that licenses will be available on acceptable terms and conditions, if at all, or that our indemnification by our suppliers will be adequate to cover our costs if a claim were brought directly against us or our customers. Furthermore, because of the potential for high court awards that are not necessarily predictable, it is not unusual to find even arguably unmeritorious claims settled for significant amounts. If any infringement or other intellectual property claim made against us by any third party is successful, if we are required to indemnify a customer with respect to a claim against the customer, or if we fail to develop non-infringing technology or license the proprietary rights on commercially reasonable terms and conditions, our business, operating results, and financial condition could be materially and adversely affected. For additional information regarding our indemnification obligations, see Note 13(f) to the Consolidated Financial Statements contained in this report.

Our exposure to risks associated with the use of intellectual property may be increased as a result of acquisitions, as we have a lower level of visibility into the development process with respect to such technology or the care taken to safeguard against infringement risks. Further, in the past, third parties have made infringement and similar claims after we have acquired technology that had not been asserted prior to our acquisition.

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WE RELY ON THE AVAILABILITY OF THIRD-PARTY LICENSES

Many of our products are designed to include software or other intellectual property licensed from third parties. It may be necessary in the future to seek or renew licenses relating to various aspects of these products. There can be no assurance that the necessary licenses would be available on acceptable terms, if at all. The inability to obtain certain licenses or other rights or to obtain such licenses or rights on favorable terms, or the need to engage in litigation regarding these matters, could have a material adverse effect on our business, operating results, and financial condition. Moreover, the inclusion in our products of software or other intellectual property licensed from third parties on a nonexclusive basis could limit our ability to protect our proprietary rights in our products.

OUR OPERATING RESULTS MAY BE ADVERSELY AFFECTED AND DAMAGE TO OUR REPUTATION MAY OCCUR DUE TO PRODUCTION AND SALE OF COUNTERFEIT VERSIONS OF OUR PRODUCTS

As is the case with leading products around the world, our products are subject to efforts by third parties to produce counterfeit versions of our products. While we work diligently with law enforcement authorities in various countries to block the manufacture of counterfeit goods and to interdict their sale, and to detect counterfeit products in customer networks, and have succeeded in prosecuting counterfeiters and their distributors, resulting in fines, imprisonment and restitution to us, there can be no guarantee that such efforts will succeed. While counterfeiters often aim their sales at customers who might not have otherwise purchased our products due to lack of verifiability of origin and service, such counterfeit sales, to the extent they replace otherwise legitimate sales, could adversely affect our operating results.

OUR OPERATING RESULTS AND FUTURE PROSPECTS COULD BE MATERIALLY HARMED BY UNCERTAINTIES OF REGULATION OF THE INTERNET

Currently, few laws or regulations apply directly to access or commerce on the Internet. We could be materially adversely affected by regulation of the Internet and Internet commerce in any country where we operate. Such regulations could include matters such as voice over the Internet or using IP, encryption technology, sales or other taxes on Internet product or service sales, and access charges for Internet service providers. The adoption of regulation of the Internet and Internet commerce could decrease demand for our products and, at the same time, increase the cost of selling our products, which could have a material adverse effect on our business, operating results, and financial condition.

CHANGES IN TELECOMMUNICATIONS REGULATION AND TARIFFS COULD HARM OUR PROSPECTS AND FUTURE SALES

Changes in telecommunications requirements, or regulatory requirements in other industries in which we operate, in the United States or other countries could affect the sales of our products. In particular, we believe that there may be future changes in U.S. telecommunications regulations that could slow the expansion of the service providers’ network infrastructures and materially adversely affect our business, operating results, and financial condition, including "net neutrality" rules to the extent they impact decisions on investment in network infrastructure.

Future changes in tariffs by regulatory agencies or application of tariff requirements to currently untariffed services could affect the sales of our products for certain classes of customers. Additionally, in the United States, our products must comply with various requirements and regulations of the Federal Communications Commission and other regulatory authorities. In countries outside of the United States, our products must meet various requirements of local telecommunications and other industry authorities. Changes in tariffs or failure by us to obtain timely approval of products could have a material adverse effect on our business, operating results, and financial condition.

FAILURE TO RETAIN AND RECRUIT KEY PERSONNEL WOULD HARM OUR ABILITY TO MEET KEY OBJECTIVES

Our success has always depended in large part on our ability to attract and retain highly skilled technical, managerial, sales, and marketing personnel. Competition for these personnel is intense, especially in the Silicon Valley area of Northern California. Stock incentive plans are designed to reward employees for their long-term contributions and provide incentives for them to remain with us. Volatility or lack of positive performance in our stock price or equity incentive awards, or changes to our overall compensation program, including our stock incentive program, resulting from the management of share dilution and share-based compensation expense or otherwise, may also adversely affect our ability to retain key employees. As a result of one or more of these factors, we may increase our hiring in geographic areas outside the United States, which could subject us to additional geopolitical and exchange rate risk. The loss of services of any of our key personnel; the inability to retain and attract qualified personnel in the future; or delays in hiring required personnel, particularly engineering and sales personnel, could make it difficult to meet key objectives, such as timely and effective product introductions. In addition, companies in our industry whose employees accept positions with competitors frequently claim that competitors have engaged in improper hiring practices. We have received these claims in the past and may receive additional claims to this effect in the future.

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ADVERSE RESOLUTION OF LITIGATION OR GOVERNMENTAL INVESTIGATIONS MAY HARM OUR OPERATING RESULTS OR FINANCIAL CONDITION

We are a party to lawsuits in the normal course of our business. Litigation can be expensive, lengthy, and disruptive to normal business operations. Moreover, the results of complex legal proceedings are difficult to predict. For example, Brazilian authorities have investigated our Brazilian subsidiary and certain of its former employees, as well as a Brazilian importer of our 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 our Brazilian subsidiary based on a theory of joint liability with the Brazilian importer for import taxes, interest, and penalties. The asserted claims by Brazilian federal tax authorities which 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 $206 million for the alleged evasion of import and other taxes, $1.3 billion for interest, and $1.0 billion for various penalties, all determined using an exchange rate as of April 27, 2019. We have completed a thorough review of the matters and believe the asserted claims against our Brazilian subsidiary are without merit, and we are defending the claims vigorously. While we believe 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, we are unable to determine the likelihood of an unfavorable outcome against our Brazilian subsidiary and are unable to reasonably estimate a range of loss, if any. We do not expect a final judicial determination for several years. An unfavorable resolution of lawsuits or governmental investigations could have a material adverse effect on our business, operating results, or financial condition. For additional information regarding certain of the matters in which we are involved, see Note 13 to the Consolidated Financial Statements, subsection (g) “Legal Proceedings.”

CHANGES IN OUR PROVISION FOR INCOME TAXES OR ADVERSE OUTCOMES RESULTING FROM EXAMINATION OF OUR INCOME TAX RETURNS COULD ADVERSELY AFFECT OUR RESULTS

Our provision for income taxes is subject to volatility and could be adversely affected by earnings being lower than anticipated in countries that have lower tax rates and higher than anticipated in countries that have higher tax rates; by changes in the valuation of our deferred tax assets and liabilities; by changes to domestic manufacturing deduction, foreign-derived intangible income, global intangible low-tax income and base erosion and anti-abuse tax laws, regulations, or interpretations thereof; by expiration of or lapses in tax incentives; by transfer pricing adjustments, including the effect of acquisitions on our legal structure; by tax effects of nondeductible compensation; by tax costs related to intercompany realignments; by changes in accounting principles; or by changes in tax laws and regulations, treaties, or interpretations thereof, including changes to the taxation of earnings of our foreign subsidiaries, the deductibility of expenses attributable to foreign income, and the foreign tax credit rules. Significant judgment is required to determine the recognition and measurement attribute prescribed in the accounting guidance for uncertainty in income taxes. The Organisation for Economic Co-operation and Development (OECD), an international association comprised of 36 countries, including the United States, has made changes to numerous long-standing tax principles. There can be no assurance that these changes, once adopted by countries, will not have an adverse impact on our provision for income taxes. Further, as a result of certain of our ongoing employment and capital investment actions and commitments, our income in certain countries is subject to reduced tax rates. Our failure to meet these commitments could adversely impact our provision for income taxes. In addition, we are subject to the continuous examination of our income tax returns by the Internal Revenue Service and other tax authorities. We regularly assess the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of our provision for income taxes. There can be no assurance that the outcomes from these continuous examinations will not have an adverse effect on our operating results and financial condition.

OUR BUSINESS AND OPERATIONS ARE ESPECIALLY SUBJECT TO THE RISKS OF EARTHQUAKES, FLOODS, AND OTHER NATURAL CATASTROPHIC EVENTS

Our corporate headquarters, including certain of our research and development operations are located in the Silicon Valley area of Northern California, a region known for seismic activity. Additionally, a certain number of our facilities are located near rivers that have experienced flooding in the past. Also certain of our suppliers and logistics centers are located in regions that have been or may be affected by earthquake, tsunami and flooding activity which in the past has disrupted, and in the future could disrupt, the flow of components and delivery of products. A significant natural disaster, such as an earthquake, a hurricane, volcano, or a flood, could have a material adverse impact on our business, operating results, and financial condition.

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CYBER-ATTACKS, DATA BREACHES OR MALWARE MAY DISRUPT OUR OPERATIONS, HARM OUR OPERATING RESULTS AND FINANCIAL CONDITION, AND DAMAGE OUR REPUTATION, AND CYBER-ATTACKS OR DATA BREACHES ON OUR CUSTOMERS’ NETWORKS, OR IN CLOUD-BASED SERVICES PROVIDED BY OR ENABLED BY US, COULD RESULT IN CLAIMS OF LIABILITY AGAINST US, DAMAGE OUR REPUTATION OR OTHERWISE HARM OUR BUSINESS

Despite our implementation of security measures, the products and services we sell to customers, and our servers, data centers and the cloud-based solutions on which our data, and data of our customers, suppliers and business partners are stored, are vulnerable to cyber-attacks, data breaches, malware, and similar disruptions from unauthorized access or tampering by malicious actors or inadvertent error. Any such event could compromise our products, services, and networks or those of our customers, and the information stored on our systems or those of our customers could be improperly accessed, processed, disclosed, lost or stolen, which could subject us to liability to our customers, suppliers, business partners and others, give rise to legal/regulatory action, and could have a material adverse effect on our business, operating results, and financial condition and may cause damage to our reputation. Efforts to limit the ability of malicious actors to disrupt the operations of the Internet or undermine our own security efforts may be costly to implement and meet with resistance, and may not be successful. Breaches of security in our customers’ networks, or in cloud-based services provided by or enabled by us, regardless of whether the breach is attributable to a vulnerability in our products or services, could result in claims of liability against us, damage our reputation or otherwise harm our business.

VULNERABILITIES AND CRITICAL SECURITY DEFECTS, PRIORITIZATION DECISIONS REGARDING REMEDYING VULNERABILITIES OR SECURITY DEFECTS, FAILURE OF THIRD PARTY PROVIDERS TO REMEDY VULNERABILITIES OR SECURITY DEFECTS, OR CUSTOMERS NOT DEPLOYING SECURITY RELEASES OR DECIDING NOT TO UPGRADE PRODUCTS, SERVICES OR SOLUTIONS COULD RESULT IN CLAIMS OF LIABILITY AGAINST US, DAMAGE OUR REPUTATION OR OTHERWISE HARM OUR BUSINESS

The products and services we sell to customers, and our cloud-based solutions, inevitably contain vulnerabilities or critical security defects which have not been remedied and cannot be disclosed without compromising security. We may also make prioritization decisions in determining which vulnerabilities or security defects to fix, and the timing of these fixes, which could result in an exploit which compromises security. Customers also need to test security releases before they can be deployed which can delay implementation. In addition, we rely on third-party providers of software and cloud-based service and we cannot control the rate at which they remedy vulnerabilities. Customers may also not deploy a security release, or decide not to upgrade to the latest versions of our products, services or cloud-based solutions containing the release, leaving them vulnerable. Vulnerabilities and critical security defects, prioritization errors in remedying vulnerabilities or security defects, failure of third-party providers to remedy vulnerabilities or security defects, or customers not deploying security releases or deciding not to upgrade products, services or solutions could result in claims of liability against us, damage our reputation or otherwise harm our business.

TERRORISM AND OTHER EVENTS MAY HARM OUR BUSINESS, OPERATING RESULTS AND FINANCIAL CONDITION

The continued threat of terrorism and heightened security and military action in response to this threat, or any future acts of terrorism, may cause further disruptions to the economies of the United States and other countries and create further uncertainties or otherwise materially harm our business, operating results, and financial condition. Likewise, events such as loss of infrastructure and utilities services such as energy, transportation, or telecommunications could have similar negative impacts. To the extent that such disruptions or uncertainties result in delays or cancellations of customer orders or the manufacture or shipment of our products, our business, operating results, and financial condition could be materially and adversely affected.

IF WE DO NOT SUCCESSFULLY MANAGE OUR STRATEGIC ALLIANCES, WE MAY NOT REALIZE THE EXPECTED BENEFITS FROM SUCH ALLIANCES AND WE MAY EXPERIENCE INCREASED COMPETITION OR DELAYS IN PRODUCT DEVELOPMENT

We have several strategic alliances with large and complex organizations and other companies with which we work to offer complementary products and services and in the past have established a joint venture to market services associated with our Cisco Unified Computing System products. These arrangements are generally limited to specific projects, the goal of which is generally to facilitate product compatibility and adoption of industry standards. There can be no assurance we will realize the expected benefits from these strategic alliances or from the joint venture. If successful, these relationships may be mutually beneficial and result in industry growth. However, alliances carry an element of risk because, in most cases, we must compete in some business areas with a company with which we have a strategic alliance and, at the same time, cooperate with that company in other business areas. Also, if these companies fail to perform or if these relationships fail to materialize as expected, we could suffer delays in product development or other operational difficulties. Joint ventures can be difficult to manage, given the potentially different interests of joint venture partners.

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OUR STOCK PRICE MAY BE VOLATILE

Historically, our common stock has experienced substantial price volatility, particularly as a result of variations between our actual financial results and the published expectations of analysts and as a result of announcements by our competitors and us. Furthermore, speculation in the press or investment community about our strategic position, financial condition, results of operations, business, security of our products, or significant transactions can cause changes in our stock price. In addition, the stock market has experienced extreme price and volume fluctuations that have affected the market price of many technology companies, in particular, and that have often been unrelated to the operating performance of these companies. These factors, as well as general economic and political conditions and the announcement of proposed and completed acquisitions or other significant transactions, or any difficulties associated with such transactions, by us or our current or potential competitors, may materially adversely affect the market price of our common stock in the future. Additionally, volatility, lack of positive performance in our stock price or changes to our overall compensation program, including our stock incentive program, may adversely affect our ability to retain key employees, virtually all of whom are compensated, in part, based on the performance of our stock price.

THERE CAN BE NO ASSURANCE THAT OUR OPERATING RESULTS AND FINANCIAL CONDITION WILL NOT BE ADVERSELY AFFECTED BY OUR INCURRENCE OF DEBT

As of the end of the third quarter of fiscal 2019, we have senior unsecured notes outstanding in an aggregate principal amount of $20.5 billion that mature at specific dates from calendar year 2019 through 2040. We have also established a commercial paper program under which we may issue short-term, unsecured commercial paper notes on a private placement basis up to a maximum aggregate amount outstanding at any time of $10.0 billion, and we had $3.3 billion in commercial paper notes outstanding under this program as of April 27, 2019. The outstanding senior unsecured notes bear fixed-rate interest payable semiannually, except $0.5 billion of the notes which bears interest at a floating rate payable quarterly. The fair value of the long-term debt is subject to market interest rate volatility. The instruments governing the senior unsecured notes contain certain covenants applicable to us and our wholly-owned subsidiaries that may adversely affect our ability to incur certain liens or engage in certain types of sale and leaseback transactions. In addition, we will be required to have available in the United States sufficient cash to service the interest on our debt and repay all of our notes on maturity. There can be no assurance that our incurrence of this debt or any future debt will be a better means of providing liquidity to us than would our use of our existing cash resources. Further, we cannot be assured that our maintenance of this indebtedness or incurrence of future indebtedness will not adversely affect our operating results or financial condition. In addition, changes by any rating agency to our credit rating can negatively impact the value and liquidity of both our debt and equity securities, as well as the terms upon which we may borrow under our commercial paper program or future debt issuances.

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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
January 27, 2019 to February 23, 2019	32	$	47.74	32	$	22,475
February 24, 2019 to March 23, 2019	40	$	52.15	40	$	20,400
March 24, 2019 to April 27, 2019	44	$	55.31	44	$	17,974
Total	116	$	52.14	116

On September 13, 2001, we announced that our Board of Directors had authorized a stock repurchase program. On February 13, 2019, our Board of Directors authorized a $15 billion increase to the stock repurchase program. The remaining authorized amount for stock repurchases under this program, including the additional authorization, is approximately $18 billion, with no termination date.

For the majority of restricted stock units granted, the number of shares issued on the date the restricted stock units vest is net of shares withheld to meet applicable tax withholding requirements. Although these withheld shares are not issued or considered common stock repurchases under our stock repurchase program and therefore are not included in the preceding table, they are treated as common stock repurchases in our financial statements as they reduce the number of shares that would have been issued upon vesting (see Note 14 to the Consolidated Financial Statements).

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

92

Item 6. Exhibits

The following documents are filed as exhibits to this report:

Exhibit Number	Exhibit Description	Incorporated by Reference				Filed Herewith
		Form	File No.	Exhibit	Filing Date
31.1	Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer					X
31.2	Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer					X
32.1	Section 1350 Certification of Principal Executive Officer					X
32.2	Section 1350 Certification of Principal Financial Officer					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

93

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		Cisco Systems, Inc.
Date:	May 21, 2019	By	/S/ Kelly A. Kramer
			Kelly A. Kramer Executive Vice President and Chief Financial Officer (Principal Financial Officer and duly authorized signatory)

94

EX-31.1

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO

EXCHANGE ACT RULE 13a-14(a)/15d-14(a)

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Charles H. Robbins, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Cisco Systems, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 21, 2019

/S/ Charles H. Robbins

Charles H. Robbins

Chairman and Chief Executive Officer

(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO

EXCHANGE ACT RULE 13a-14(a)/15d-14(a)

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Kelly A. Kramer, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Cisco Systems, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 21, 2019

/S/ Kelly A. Kramer

Kelly A. Kramer

Executive Vice President and Chief Financial Officer
(Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Charles H. Robbins, do hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

• the Quarterly Report on Form 10-Q of the Company for the quarter ended April 27, 2019, 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.

Date: May 21, 2019

/S/ Charles H. Robbins

Charles H. Robbins

Chairman and Chief Executive Officer

(Principal Executive Officer)

EX-32.2

Exhibit 32.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Kelly A. Kramer, do hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

• the Quarterly Report on Form 10-Q of the Company for the quarter ended April 27, 2019, 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.

Date: May 21, 2019

/S/ Kelly A. Kramer

Kelly A. Kramer

Executive Vice President and Chief Financial Officer
(Principal Financial Officer)

XML

Document and Entity Information - shares	9 Months Ended
	Apr. 27, 2019	May 16, 2019
Document Documentand Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Apr. 27, 2019
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2019
Trading Symbol	CSCO
Entity Registrant Name	CISCO SYSTEMS, INC.
Entity Central Index Key	0000858877
Current Fiscal Year End Date	--07-27
Entity Filer Category	Large Accelerated Filer
Entity Emerging Growth Company	false
Entity Small Business	false
Entity Common Stock, Shares Outstanding (in shares)		4,280,733,008

XML

Consolidated Balance Sheets - USD ($) $ in Millions	Apr. 27, 2019	Jul. 28, 2018
Current assets:
Cash and cash equivalents	$ 10,251	$ 8,934
Investments	24,392	37,614
Accounts receivable, net of allowance for doubtful accounts of $124 at April 27, 2019 and $129 at July 28, 2018	3,795	5,554
Inventories	1,513	1,846
Financing receivables, net	5,029	4,949
Other current assets	2,331	2,940
Total current assets	47,311	61,837
Property and equipment, net	2,834	3,006
Financing receivables, net	4,862	4,882
Goodwill	33,544	31,706
Purchased intangible assets, net	2,398	2,552
Deferred tax assets	4,023	3,219
Other assets	2,315	1,582
TOTAL ASSETS	97,287	108,784
Current liabilities:
Short-term debt	7,777	5,238
Accounts payable	2,022	1,904
Income taxes payable	953	1,004
Accrued compensation	2,872	2,986
Deferred revenue	10,117	11,490
Other current liabilities	4,172	4,413
Total current liabilities	27,913	27,035
Long-term debt	15,921	20,331
Income taxes payable	8,038	8,585
Deferred revenue	7,339	8,195
Other long-term liabilities	1,272	1,434
Total liabilities	60,483	65,580
Commitments and contingencies (Note 13)
Cisco shareholders’ equity:
Preferred stock, no par value: 5 shares authorized; none issued and outstanding	0	0
Common stock and additional paid-in capital, $0.001 par value: 20,000 shares authorized; 4,313 and 4,614 shares issued and outstanding at April 27, 2019 and July 28, 2018, respectively	40,577	42,820
(Accumulated deficit) Retained earnings	(2,877)	1,233
Accumulated other comprehensive income (loss)	(896)	(849)
Total equity	36,804	43,204
TOTAL LIABILITIES AND EQUITY	$ 97,287	$ 108,784

XML

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions	Apr. 27, 2019	Jul. 28, 2018
Statement of Financial Position [Abstract]
Accounts receivable, allowance for doubtful accounts	$ 124	$ 129
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)	4,313,000,000	4,614,000,000
Common stock, shares outstanding (in shares)	4,313,000,000	4,614,000,000

XML

Consolidated Statements of Operations - USD ($) shares in Millions, $ in Millions	3 Months Ended		9 Months Ended
	Apr. 27, 2019	Apr. 28, 2018	Apr. 27, 2019	Apr. 28, 2018
REVENUE:
Revenue	$ 12,958	$ 12,463	$ 38,476	$ 36,486
COST OF SALES:
Total cost of sales	4,785	4,704	14,384	13,802
GROSS MARGIN	8,173	7,759	24,092	22,684
OPERATING EXPENSES:
Research and development	1,659	1,590	4,824	4,706
Sales and marketing	2,403	2,325	7,084	6,894
General and administrative	541	561	1,261	1,601
Amortization of purchased intangible assets	39	67	112	188
Restructuring and other charges	18	82	282	332
Total operating expenses	4,660	4,625	13,563	13,721
OPERATING INCOME	3,513	3,134	10,529	8,963
Interest income	331	380	1,003	1,155
Interest expense	(211)	(237)	(655)	(719)
Other income (loss), net	(18)	(24)	(10)	48
Interest and other income (loss), net	102	119	338	484
INCOME BEFORE PROVISION FOR INCOME TAXES	3,615	3,253	10,867	9,447
Provision for income taxes	571	562	1,452	13,140
NET INCOME (LOSS)	$ 3,044	$ 2,691	$ 9,415	$ (3,693)
Net income (loss) per share:
Basic (in dollars per share)	$ 0.70	$ 0.56	$ 2.11	$ (0.76)
Diluted (in dollars per share)	$ 0.69	$ 0.56	$ 2.09	$ (0.76)
Shares used in per-share calculation:
Basic (in shares)	4,370	4,791	4,468	4,892
Diluted (in shares)	4,415	4,844	4,509	4,892
Product
REVENUE:
Revenue	$ 9,722	$ 9,304	$ 28,885	$ 27,067
COST OF SALES:
Total cost of sales	3,693	3,625	11,106	10,594
Service
REVENUE:
Revenue	3,236	3,159	9,591	9,419
COST OF SALES:
Total cost of sales	$ 1,092	$ 1,079	$ 3,278	$ 3,208

XML

Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Apr. 27, 2019	Apr. 28, 2018	Apr. 27, 2019	Apr. 28, 2018
Statement of Comprehensive Income [Abstract]
Net income (loss)	$ 3,044	$ 2,691	$ 9,415	$ (3,693)
Available-for-sale investments:
Change in net unrealized gains and losses, net of tax benefit (expense) of $(64) and $(63) for the third quarter and first nine months of fiscal 2019, respectively, and $18 and $(4) for the corresponding periods of fiscal 2018, respectively	232	(428)	319	(624)
Net (gains) losses reclassified into earnings, net of tax (benefit) expense of $5 and $4 for the third quarter and first nine months of fiscal 2019, respectively, and $3 and $28 for the corresponding periods of fiscal 2018, respectively	12	(14)	22	(80)
Total- Available-for-sale investments	244	(442)	341	(704)
Cash flow hedging instruments:
Change in unrealized gains and losses, net of tax benefit (expense) of $(2) and $0 for the third quarter and first nine months of fiscal 2019, respectively, and $0 and $(3) for the corresponding periods of fiscal 2018, respectively	10	(10)	3	25
Net (gains) losses reclassified into earnings, net of tax (benefit) expense of $0 for each of the third quarter and first nine months of fiscal 2019, and $3 and $7 for the corresponding periods of fiscal 2018, respectively	0	(25)	(1)	(52)
Total- Cash flow hedging instruments	10	(35)	2	(27)
Net change in cumulative translation adjustment and actuarial gains and losses net of tax benefit (expense) of $(1) and $(2) for the third quarter and first nine months of fiscal 2019, respectively, and $3 and $(3) for the corresponding periods of fiscal 2018, respectively	(40)	(255)	(222)	36
Other comprehensive income (loss)	214	(732)	121	(695)
Comprehensive income (loss)	3,258	1,959	9,536	(4,388)
Comprehensive (income) loss attributable to noncontrolling interests	0	0	0	0
Comprehensive income (loss) attributable to Cisco Systems, Inc.	$ 3,258	$ 1,959	$ 9,536	$ (4,388)

XML

Consolidated Statements of Comprehensive Income (Loss) (Parenthetical) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Apr. 27, 2019	Apr. 28, 2018	Apr. 27, 2019	Apr. 28, 2018
Statement of Comprehensive Income [Abstract]
Change in net unrealized gains, tax benefit (expense)	$ (64)	$ 18	$ (63)	$ (4)
Net (gains) losses reclassified into earnings, tax expense (benefit)	5	3	4	28
Change in unrealized gains and losses, tax benefit (expense)	(2)	0	0	(3)
Net (gains) losses reclassified into earnings, tax expense (benefit)	0	3	0	7
Net change in cumulative translation adjustment and actuarial gains and losses, tax benefit (expense)	$ (1)	$ 3	$ (2)	$ (3)

XML

Consolidated Statements of Cash Flows - USD ($) $ in Millions	9 Months Ended
	Apr. 27, 2019	Apr. 28, 2018
Cash flows from operating activities:
Net income	$ 9,415	$ (3,693)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation, amortization, and other	1,433	1,676
Share-based compensation expense	1,166	1,184
Provision (benefit) for receivables	32	(104)
Deferred income taxes	(281)	1,013
(Gains) losses on divestitures, investments and other, net	(79)	(159)
Change in operating assets and liabilities, net of effects of acquisitions and divestitures:
Accounts receivable	1,560	1,064
Inventories	(1)	(289)
Financing receivables	(112)	(165)
Other assets	(736)	(135)
Accounts payable	52	148
Income taxes, net	(759)	8,795
Accrued compensation	(68)	53
Deferred revenue	421	415
Other liabilities	(154)	(237)
Net cash provided by operating activities	11,889	9,566
Cash flows from investing activities:
Purchases of investments	(1,176)	(14,132)
Proceeds from sales of investments	5,391	12,422
Proceeds from maturities of investments	10,797	12,259
Acquisitions and divestitures	(2,175)	(2,762)
Purchases of investments in privately held companies	(118)	(126)
Return of investments in privately held companies	127	163
Acquisition of property and equipment	(701)	(620)
Proceeds from sales of property and equipment	15	54
Other	(12)	(16)
Net cash provided by investing activities	12,148	7,242
Cash flows from financing activities:
Issuances of common stock	321	318
Repurchases of common stock—repurchase program	(16,042)	(11,562)
Shares repurchased for tax withholdings on vesting of restricted stock units	(601)	(541)
Short-term borrowings, original maturities of 90 days or less, net	1,723	(2,502)
Issuances of debt	1,530	6,877
Repayments of debt	(5,250)	(9,875)
Dividends paid	(4,489)	(4,433)
Other	51	(92)
Net cash used in financing activities	(22,757)	(21,810)
Net increase in cash, cash equivalents, and restricted cash	1,280	(5,002)
Cash, cash equivalents, and restricted cash, beginning of period	8,993	11,773
Cash, cash equivalents, and restricted cash, end of period	10,273	6,771
Supplemental cash flow information:
Cash paid for interest	690	739
Cash paid for income taxes, net	$ 2,491	$ 3,332

XML

Consolidated Statements of Equity - USD ($) shares in Millions, $ in Millions	Total	Shares of Common Stock	Common Stock and Additional Paid-In Capital	Retained Earnings (Accumulated Deficit)	Accumulated Other Comprehensive Income (Loss)	Total Cisco Shareholders’ Equity	Non-controlling Interests
Beginning balance (in shares) at Jul. 29, 2017		4,983
Beginning balance at Jul. 29, 2017	$ 66,137		$ 45,253	$ 20,838	$ 46	$ 66,137	$ 0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	(3,693)			(3,693)		(3,693)
Other comprehensive income (loss)	(695)				(695)	(695)
Issuance of common stock (in shares)		61
Issuance of common stock	318		318			318
Repurchase of common stock (in shares)		(294)
Repurchase of common stock	(11,646)		(2,679)	(8,967)		(11,646)
Shares repurchased for tax withholdings on vesting of restricted stock units (in shares)		(16)
Shares repurchased for tax withholdings on vesting of restricted stock units	(541)		(541)			(541)
Cash dividends declared	(4,433)			(4,433)		(4,433)
Effect of adoption of accounting standards	9			(36)	45	9
Share-based compensation	1,184		1,184			1,184
Purchase acquisitions and other	21		21			21
Ending Balance (in shares) at Apr. 28, 2018		4,734
Ending Balance at Apr. 28, 2018	46,661		43,556	3,709	(604)	46,661	0
Beginning balance (in shares) at Jan. 27, 2018		4,868
Beginning balance at Jan. 27, 2018	51,982		44,535	7,364	83	51,982	0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	2,691			2,691		2,691
Other comprehensive income (loss)	(732)				(732)	(732)	0
Issuance of common stock (in shares)		9
Issuance of common stock	$ 16		16			16
Repurchase of common stock (in shares)	(140)	(140)
Repurchase of common stock	$ (6,015)		(1,286)	(4,729)		(6,015)
Shares repurchased for tax withholdings on vesting of restricted stock units (in shares)		(3)
Shares repurchased for tax withholdings on vesting of restricted stock units	(108)		(108)			(108)
Cash dividends declared	(1,572)			(1,572)		(1,572)
Effect of adoption of accounting standards	0			(45)	45
Share-based compensation	399		399			399
Purchase acquisitions and other	0					0
Ending Balance (in shares) at Apr. 28, 2018		4,734
Ending Balance at Apr. 28, 2018	$ 46,661		43,556	3,709	(604)	46,661	0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Repurchase of common stock (in shares)	(138)
Ending Balance (in shares) at Jul. 28, 2018		4,614
Ending Balance at Jul. 28, 2018	$ 43,204		42,820	1,233	(849)	43,204	0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	9,415			9,415		9,415
Other comprehensive income (loss)	121				121	121
Issuance of common stock (in shares)		48
Issuance of common stock	321		321			321
Repurchase of common stock (in shares)		(336)
Repurchase of common stock	(16,062)		(3,129)	(12,933)		(16,062)
Shares repurchased for tax withholdings on vesting of restricted stock units (in shares)		(13)
Shares repurchased for tax withholdings on vesting of restricted stock units	(601)		(601)			(601)
Cash dividends declared	(4,489)			(4,489)		(4,489)
Effect of adoption of accounting standards	3,729			3,897	(168)	3,729
Share-based compensation	1,166		1,166			1,166
Ending Balance (in shares) at Apr. 27, 2019		4,313
Ending Balance at Apr. 27, 2019	36,804		40,577	(2,877)	(896)	36,804	0
Beginning balance (in shares) at Jan. 26, 2019		4,424
Beginning balance at Jan. 26, 2019	40,789		41,361	538	(1,110)	40,789	0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	3,044			3,044		3,044
Other comprehensive income (loss)	214				214	214
Issuance of common stock (in shares)		7
Issuance of common stock	$ 9		9			9
Repurchase of common stock (in shares)	(116)	(116)
Repurchase of common stock	$ (6,020)		(1,080)	(4,940)		(6,020)
Shares repurchased for tax withholdings on vesting of restricted stock units (in shares)		(2)
Shares repurchased for tax withholdings on vesting of restricted stock units	(87)		(87)			(87)
Cash dividends declared	(1,519)			(1,519)		(1,519)
Share-based compensation	374		374			374
Ending Balance (in shares) at Apr. 27, 2019		4,313
Ending Balance at Apr. 27, 2019	$ 36,804		$ 40,577	$ (2,877)	$ (896)	$ 36,804	$ 0

XML

Consolidated Statements of Equity (Parenthetical) - $ / shares	3 Months Ended		9 Months Ended
	Apr. 27, 2019	Apr. 28, 2018	Apr. 27, 2019	Apr. 28, 2018
Statement of Stockholders' Equity [Abstract]
Cash dividends declared (in dollars per share)	$ 0.35	$ 0.33	$ 1.01	$ 0.91

XML

Basis of Presentation

9 Months Ended

Apr. 27, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Basis of Presentation

The fiscal year for Cisco Systems, Inc. (the “Company,” “Cisco,” “we,” “us,” or “our”) is the 52 or 53 weeks ending on the last Saturday in July. Fiscal 2019 and fiscal 2018 are each 52-week fiscal years. The Consolidated Financial Statements include our accounts and those of our subsidiaries. All intercompany accounts and transactions have been eliminated. We conduct business globally and are 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).

We have prepared the accompanying financial data as of April 27, 2019 and for the third quarter and first nine months of fiscal 2019 and fiscal 2018, 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 28, 2018 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, we believe 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 our Annual Report on Form 10-K for the fiscal year ended July 28, 2018.

Our consolidated financial statements include our accounts and entities consolidated under the variable interest and voting models. The noncontrolling interests attributed to these investments, if any, are presented as a separate component from our equity in the equity section of the Consolidated Balance Sheets. The share of earnings attributable to the noncontrolling interests 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 April 27, 2019; the results of operations and the statements of comprehensive income (loss) for the third quarter and first nine months of fiscal 2019 and fiscal 2018; the statements of cash flows for the first nine months of fiscal 2019 and fiscal 2018; and the statements of equity for the third quarter and first nine months of fiscal 2019 and fiscal 2018, as applicable, have been made. The results of operations for the third quarter and first nine months of fiscal 2019 and fiscal 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. We have evaluated subsequent events through the date that the financial statements were issued.

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Recent Accounting Pronouncements

9 Months Ended

Apr. 27, 2019

Accounting Policies [Abstract]

Recent Accounting Pronouncements

Recent Accounting Pronouncements

(a) New Accounting Updates Recently Adopted

Revenue Recognition In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers, a new accounting standard related to revenue recognition. ASC 606 supersedes nearly all U.S. GAAP on revenue recognition and eliminated industry-specific guidance. The underlying principle of ASC 606 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.

ASC 606 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"). At the beginning of the first quarter of fiscal 2019, we adopted ASC 606 using the modified retrospective method to those contracts that were not completed as of July 28, 2018. Refer to Opening Balance Adjustments below for the impact of adoption on our Consolidated Financial Statements.

We have implemented new accounting policies, systems, processes, and internal controls necessary to support the requirements of ASC 606.

ASC 606 primarily impacts our revenue recognition for software arrangements and sales to two-tier distributors. In both areas, the new standard accelerates the recognition of revenue.

The table below details the timing of when revenue was typically recognized under the prior revenue standard compared to the timing of when revenue is typically recognized under ASC 606 for these major areas:

	Prior Revenue Standard	ASC 606
Software arrangements:
Perpetual software licenses	Upfront	Upfront
Term software licenses	Ratable	Upfront
Security software licenses	Ratable	Ratable
Enterprise license agreements (software licenses)	Ratable	Upfront
Software support (maintenance)	Ratable	Ratable
Software-as-a-service	Ratable	Ratable
Two-tier distribution	Sell-Through	Sell-In

In addition to the above revenue recognition timing impacts, ASC 606 requires incremental contract acquisition costs (such as sales commissions) for customer contracts to be capitalized and amortized on a systematic basis that is consistent with the transfer to the customer of the goods or services to which the assets relates.

We enter into contracts with customers that can include various combinations of products and services which are generally distinct and accounted for as separate performance obligations. As a result, our contracts may contain multiple performance obligations. We determine whether arrangements are distinct based on whether the customer can benefit from the product or service on its own or together with other resources that are readily available and whether our commitment to transfer the product or service to the customer is separately identifiable from other obligations in the contract. We classify our hardware, perpetual software licenses, and software-as-a-service (SaaS) as distinct performance obligations. Term software licenses represent multiple obligations, which include software licenses and software maintenance. In transactions where we deliver hardware or software, we are typically the principal and we record revenue and costs of goods sold on a gross basis. We refer to our term software licenses, security software licenses, SaaS, and associated service arrangements as subscription offers.

We recognize revenue upon transfer of control of promised goods or services in a contract with a customer in an amount that reflects the consideration we expect to receive in exchange for those products or services. Transfer of control occurs once the customer has the contractual right to use the product, generally upon shipment or once delivery and risk of loss has transferred to the customer. Transfer of control can also occur over time for software maintenance and services as the customer receives the benefit over the contract term. Our hardware and perpetual software licenses are distinct performance obligations where revenue is recognized upfront upon transfer of control. Term software licenses include multiple performance obligations where the term licenses are recognized upfront upon transfer of control, with the associated software maintenance revenue recognized ratably over the contract term as services and software updates are provided. SaaS arrangements have one distinct performance obligation which is satisfied over time with revenue recognized ratably over the contract term as the customer consumes the services. On our product sales, we record consideration from shipping and handling on a gross basis within net product sales. We record our revenue net of any associated sales taxes.

Significant Judgments

Revenue is allocated among these performance obligations in a manner that reflects the consideration that we expect to be entitled to for the promised goods or services based on standalone selling prices (SSP). SSP is estimated for each distinct performance obligation and judgment may be required in their determination. The best evidence of SSP is the observable price of a product or service when we sell the goods separately in similar circumstances and to similar customers. In instances where SSP is not directly observable, we determine SSP using information that may include market conditions and other observable inputs.

We apply judgment in determining the transaction price as we may be required to estimate variable consideration when determining the amount of revenue to recognize. Variable consideration includes various rebate, cooperative marketing, and other incentive programs that we offer to our distributors, partners and customers. When determining the amount of revenue to recognize, we estimate the expected usage of these programs, applying the expected value or most likely estimate and update the estimate at each reporting period as actual utilization becomes available. We also consider the customers' right of return in determining the transaction price, where applicable.

We assess certain software licenses, such as for security software, that contain critical updates or upgrades which customers can download throughout the contract term. Without these updates or upgrades, the functionality of the software would diminish over a relatively short time period. These updates or upgrades provide the customer the full functionality of the purchased security software licenses and are required to maintain the security license's utility as the risks and threats in the environment are rapidlychanging. In these circumstances, the revenue from these software arrangements is recognized as a distinct performance obligation satisfied over the contract term.

For the additional disclosures required as part of ASC 606 see Note 3.

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 most significant impact of this accounting standard update is that it requires the remeasurement of investments not accounted for under the equity method to be recorded at fair value through the Consolidated Statement of Operations at the end of each reporting period. The application of this accounting standard update increases the variability of other income (loss), net.

Our equity investments are accounted for as follows:

• Marketable equity securities have readily determinable fair value (RDFV) that are measured and recorded at fair value.

• Non-marketable equity securities do not have RDFV and are measured using a measurement alternative recorded at cost less any impairment, plus or minus changes resulting from qualifying observable price changes. For certain of these securities, we have elected to apply the net asset value (NAV) practical expedient. The NAV is the estimated fair value of these investments.

• Equity method investments are securities we do not control, but are able to exert significant influence over the investee. These investments are measured at cost less any impairment, plus or minus our share of equity method investee income or loss.

We adopted this accounting standard update beginning the first quarter of fiscal 2019. The standard was adopted using the modified retrospective method for our marketable equity securities and non-marketable equity securities measured using the NAV practical expedient. For our non-marketable equity securities measured using the measurement alternative, we applied the prospective method. Refer to Opening Balance Adjustments below for the impact of adoption on our Consolidated Balance Sheet.

Income Taxes on Intra-Entity Transfers of AssetsIn 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. We adopted this accounting standard update beginning in the first quarter of fiscal 2019 on a modified retrospective basis. The ongoing impact of this standard will be facts and circumstances dependent on any transactions within its scope. Refer to Opening Balance Adjustments below for the impact of adoption on our Consolidated Balance Sheet.

Classification of Cash Flow ElementsIn 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. We adopted this accounting standard update beginning in the first quarter of fiscal 2019 on a retrospective basis. The application of this accounting standard update did not have an impact on our Consolidated Statements of Cash Flows.

Restricted Cash in Statement of Cash Flows 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. We adopted this accounting standard update beginning in the first quarter of fiscal 2019 using a retrospective transition method to each period presented. The application of this accounting standard update did not have a material impact on our Consolidated Statements of Cash Flows. Prior period information has been retrospectively adjusted due to the adoption of ASU 2016-18, Statement of Cash Flows, Restricted Cash at the beginning of the first quarter of fiscal 2019.

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. We early adopted this accounting standard update beginning in the first quarter of fiscal 2019 on a prospective basis. The application of this accounting standard update did not have any impact on our Consolidated Financial Statements.

Definition of a BusinessIn 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. We adopted this accounting standard update beginning in the first quarter of fiscal 2019 on a prospective basis. The impact of this accounting standard update will be fact dependent, but we expect 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.

Opening Balance Adjustments

The following table summarizes the cumulative effect of the changes made to the Consolidated Balance Sheet for the adoption of ASC 606, ASU 2016-01, Financial Instruments, and ASU 2016-16, Intra-Entity Transfers of Assets Other than Inventory (in millions):

Line Item in Consolidated Balance Sheet:	Balance at July 28, 2018			New Revenue Recognition Standard				New Financial Instruments Standard				New Intra-Entity Transfers Standard				Adjusted Balance at July 29, 2018
ASSETS
Accounts receivable, net	$	5,554		$	(104	)	(1)	$	—			$	—			$	5,450
Inventories	$	1,846		$	(302	)	(2)	$	—			$	—			$	1,544
Other current assets (includes capitalized contract acquisition costs)	$	2,940		$	371		(3), (4)	$	—			$	(25	)	(3)	$	3,286
Deferred tax assets	$	3,219		$	(624	)	(3)	$	(15	)	(3)	$	1,415		(8)	$	3,995
Other assets (includes capitalized contract acquisition costs)	$	1,582		$	327		(4)	$	136		(7)	$	(91	)	(3)	$	1,954
TOTAL ASSETS	$	108,784		$	(332	)		$	121			$	1,299			$	109,872
LIABILITIES AND EQUITY
Income taxes payable	$	1,004		$	—			$	—			$	11		(3)	$	1,015
Deferred revenue — current	$	11,490		$	(1,702	)	(5)	$	—			$	—			$	9,788
Other current liabilities	$	4,413		$	33		(6)	$	—			$	—			$	4,446
Deferred revenue — non-current	$	8,195		$	(1,081	)	(5)	$	—			$	—			$	7,114
Other long-term liabilities	$	1,434		$	85		(3)	$	13		(3)	$	—			$	1,532
Retained earnings	$	1,233		$	2,333		(10)	$	283		(10)	$	1,281		(10)	$	5,130
Accumulated other comprehensive income (loss)	$	(849	)	$	—			$	(175	)	(9)	$	7		(3)	$	(1,017	)
TOTAL LIABILITIES AND EQUITY	$	108,784		$	(332	)		$	121			$	1,299			$	109,872

⁽¹⁾ Primarily represents the decrease to accounts receivable related to the change in recognizing revenue on sales to two-tier distributors from a sell-through to a sell-in basis

⁽²⁾ Primarily represents the reduction of inventory for the change from recognizing revenue on sales to two-tier distributors from a sell-through to a sell-in basis

⁽³⁾ Includes the impacts to deferred tax assets, liabilities and other income tax balances

⁽⁴⁾ Primarily represents capitalized contract acquisition costs (e.g. commissions)

⁽⁵⁾ Primarily represents deferred revenue adjusted to retained earnings primarily due to the change in revenue recognition for certain software arrangements from ratable to upfront, recognizing revenue on sales to two-tier distributors from a sell-through to a sell-in basis. Of this total $2.8 billion adjustment, $2.6 billion related to product deferred revenue, of which $1.3 billion relates to our recurring software and subscription offers, $0.6 billion relates to two-tier distribution, and the remainder relates to non-recurring software and other adjustments.

⁽⁶⁾ Primarily represents the reclassification of accounts receivable contra balances to other current liabilities, adjustments to rebate liabilities for the change from recognizing revenue on sales to two-tier distributors from a sell-through to a sell-in basis, and reclassifications from other current liabilities for amounts that are not contract liabilities under ASC 606

⁽⁷⁾ Represents the adjustment due to the remeasurement of non-marketable equity investments at fair value

⁽⁸⁾ Primarily represents the change in net deferred tax assets related to unrecognized income tax effects of intra-entity asset transfers

⁽⁹⁾ Represents the reclassification of net unrealized gains from accumulated other comprehensive income (loss) to retained earnings

⁽¹⁰⁾ Retained earnings impact from the adjustments noted above

Impact of ASC 606 Adoption

The application of ASC 606 increased our total revenue by $146 million and $662 million in the third quarter and first nine months of fiscal 2019, respectively. The application of ASC 606 did not have a material impact to either our cost of sales or our operating expenses in the third quarter and first nine months of fiscal 2019. We recognized a $152 million benefit to our provision for income taxes relating to indirect effects from the adoption of ASC 606 in the first quarter of fiscal 2019. For additional information regarding ASC 606, see Note 3 to the Consolidated Financial Statements.

In connection with the adoption of ASC 606, we recorded a transition adjustment to increase retained earnings by $2.3 billion. See above for the transition impact of ASC 606 by balance sheet line item. As of April 27, 2019, the balance sheet changes attributable to ASC 606 related to accounts receivable, inventories, and deferred revenue were not materially different than the impacts upon adoption. In connection with the adoption of ASC 606, we established contract assets for unbilled receivables. As of April 27, 2019, we had total contract assets of $637 million, of which $254 million was recorded in other current assets and $383 million was recorded in other assets. As of April 27, 2019, we had total capitalized contract acquisition costs of $705 million, of which $390 million was recorded in other current assets and $315 million was recorded in other assets. The adoption of ASC 606 did not have any impact on net cash provided by operating activities.

(b) Recent Accounting Standards or Updates Not Yet Effective

Leases In February 2016, the FASB issued an accounting standard update and subsequent amendments 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 us beginning in the first quarter of fiscal 2020 and early adoption is permitted. We expect to adopt this accounting standard update on a modified retrospective basis in the first quarter of fiscal 2020, and we are currently evaluating the impact of this accounting standard update on our 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 us beginning in the first quarter of fiscal 2021 and early adoption in fiscal 2020 is permitted. We expect to adopt this accounting standard update on a modified retrospective basis in the first quarter of fiscal 2021, and we are currently evaluating the impact of this accounting standard update on our Consolidated Financial Statements.

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Revenue

9 Months Ended

Apr. 27, 2019

Revenue from Contract with Customer [Abstract]

Revenue

Revenue

(a) Disaggregation of Revenue

We disaggregate our revenue into groups of similar products and services that depict the nature, amount, and timing of revenue and cash flows for our various offerings. The sales cycle, contractual obligations, customer requirements, and go-to-market strategies differ for each of our product categories, resulting in different economic risk profiles for each category. The following table presents this disaggregation of revenue (in millions):

	Three Months Ended				Nine Months Ended
	April 27, 2019		April 28, 2018		April 27, 2019		April 28, 2018
Revenue:
Infrastructure Platforms	$	7,545	$	7,180	$	22,315	$	20,870
Applications	1,431		1,310		4,315		3,697
Security	707		583		2,016		1,725
Other Products	39		231		239		775
Total Product	9,722		9,304		28,885		27,067
Services	3,236		3,159		9,591		9,419
Total (1)	$	12,958	$	12,463	$	38,476	$	36,486

Amounts may not sum due to rounding.

⁽¹⁾ During the second quarter of fiscal 2019, we completed the divestiture of the Service Provider Video Software Solutions ("SPVSS") business. Total revenue includes SPVSS business revenue of $0 and $219 million for the third quarter of fiscal 2019 and 2018, respectively, and $168 million and $697 million for the first nine months of fiscal 2019 and 2018, respectively.

Infrastructure Platforms consist of our core networking technologies of switching, routing, data center products, and wireless that are designed to work together to deliver networking capabilities and transport and/or store data. These technologies consist of both hardware and software offerings, including software licenses and software-as-a-service (SaaS), that help our customers build networks, automate, orchestrate, integrate, and digitize data. We are shifting and expanding more of our business to software and subscriptions across our core networking portfolio. Our hardware and perpetual software in this category are distinct performance obligations where revenue is recognized upfront upon transfer of control. Term software licenses are multiple performance obligations where the term license is recognized upfront upon transfer of control with the associated software maintenance revenue recognized ratably over the contract term. SaaS arrangements in this category have one distinct performance obligation which is satisfied over time with revenue recognized ratably over the contract term.

Applications consists of offerings that utilize the core networking and data center platforms to provide their functions. The products consist primarily of software offerings, including software licenses and SaaS, as well as hardware. Our perpetual software and hardware in this category are distinct performance obligations where revenue is recognized upfront upon transfer of control. Term software licenses are multiple performance obligations where the term license is recognized upfront upon transfer of control with the associated software maintenance revenue recognized ratably over the contract term. SaaS arrangements in this category have one distinct performance obligation which is satisfied over time with revenue recognized ratably over the contract term.

Security primarily includes our unified threat management, advanced threat security, and web security products. These products consist of both hardware and software offerings, including software licenses and SaaS. Updates and upgrades for the term software licenses are critical for our software to perform its intended commercial purpose because of the continuous need for our software to secure our customers' network environments against frequent threats. Therefore, security software licenses are generally represented by a single distinct performance obligation with revenue recognized ratably over the contract term. Our hardware and perpetual software in this category are distinct performance obligations where revenue is recognized upfront upon transfer of control. SaaS arrangements in this category have one distinct performance obligation which is satisfied over time with revenue recognized ratably over the contract term.

Other Products primarily include our Service Provider Video Software Solutions and cloud and system management products. On May 1, 2018, we announced a definitive agreement to sell the SPVSS business. The sale closed on October 28, 2018. These products include both hardware and software licenses. Our offerings in this category are distinct performance obligations where revenue is recognized upfront upon transfer of control.

In addition to our product offerings, we provide a broad range of service and support options for our customers, including technical support services and advanced services. Technical support services represent the majority of these offerings which are distinct performance obligations that are satisfied over time with revenue recognized ratably over the contract term. Advanced services are distinct performance obligations that are satisfied over time with revenue recognized as services are delivered.

The sales arrangements as discussed above are typically made pursuant to customer purchase orders based on master purchase or partner agreements. Cash is received based on our standard payment terms which is typically 30 days. We provide financing arrangements to customers for all of our hardware, software and service offerings. Refer to Note 8 for additional information. For these arrangements, cash is typically received over time.

(b) Contract Balances

Accounts receivable, net was $3.8 billion as of April 27, 2019 compared to $5.6 billion as of July 28, 2018, as reported on the Consolidated Balance Sheet.

Contract assets consist of unbilled receivables and are recorded when revenue is recognized in advance of scheduled billings to our customers. These amounts are primarily related to software and service arrangements where transfer of control has occurred but we have not yet invoiced. As of April 27, 2019 and July 29, 2018, our contract assets for these unbilled receivables were $637 millionand $122 million,respectively, and were included in other current assets and other assets.

Contract liabilities consist of deferred revenue. Deferred revenue was $17.5 billion as of April 27, 2019 compared to $19.7 billion as of July 28, 2018. In connection with the adoption of ASC 606, we recorded an adjustment to retained earnings to reduce deferred revenue by $2.8 billion. We recognized approximately $2.0 billion and $8.0 billion of revenue during the third quarter and first nine months of fiscal 2019, respectively, that was included in the deferred revenue balance at July 29, 2018.

(c) Remaining Performance Obligations

Remaining Performance Obligations (RPO) are comprised of deferred revenue plus unbilled contract revenue. As of April 27, 2019, the aggregate amount of RPO was $23.0 billion, comprised of $17.5 billion of deferred revenue and $5.5 billion of unbilled contract revenue. We expect approximately 56% of this amount to be recognized as revenue over the next year. Unbilled contract revenue represents non-cancelable contracts for which we have not invoiced, have an obligation to perform, and revenue has not yet been recognized in the financial statements.

(d) Capitalized Contract Acquisition Costs

In connection with the adoption of ASC 606, we began to capitalize direct and incremental costs incurred to acquire contracts, primarily sales commissions, for which the associated revenue is expected to be recognized in future periods. We incur these costs in connection with both initial contracts and renewals. These costs are initially deferred and typically amortized over the term of the customer contract which corresponds to the period of benefit. Deferred sales commissions were $705 million and $644 million as of April 27, 2019 and July 29, 2018, respectively, and were included in other current assets and other assets. The amortization expense associated with these costs was $124 million and $349 million for the third quarter and first nine months of fiscal 2019, respectively, and was included in sales and marketing expenses.

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Acquisitions and Divestitures

9 Months Ended

Apr. 27, 2019

Business Combinations [Abstract]

Acquisitions and Divestitures

Acquisitions and Divestitures

We completed five acquisitions during the first nine months of fiscal 2019. A summary of the allocation of the total purchase consideration is presented as follows (in millions):

	Purchase Consideration		Net Tangible Assets Acquired (Liabilities Assumed)			Purchased Intangible Assets		Goodwill
Duo	$	2,025	$	(57	)	$	342	$	1,740
Luxtera	596		(19		)	319		296
Others (three in total)	65		2			11		52
Total	$	2,686	$	(74	)	$	672	$	2,088

On September 28, 2018, we completed our acquisition of privately held Duo Security, Inc. ("Duo"), a leading provider of unified access security and multi-factor authentication delivered through the cloud. Revenue from the Duo acquisition has been included in our Security product category.

On February 6, 2019, we completed our acquisition of Luxtera, Inc. ("Luxtera"), a privately held semiconductor company. Revenue from the Luxtera acquisition has been included in our Infrastructure Platforms product category.

The total purchase consideration related to acquisitions completed during the first nine months of fiscal 2019 consisted of cash consideration. The total cash and cash equivalents acquired from these acquisitions was approximately $100 million. Total transaction costs related to acquisition and divestiture activities were $15 million and $25 million for the first nine months of fiscal 2019 and 2018, respectively. These transaction costs were expensed as incurred in general and administrative expenses ("G&A") in the Consolidated Statements of Operations.

The goodwill generated from acquisitions completed during the first nine months of fiscal 2019 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 and the revenue and net income subsequent to the acquisition date for the acquisitions completed during the first nine months of fiscal 2019 have not been presented because the effects of the acquisitions, individually and in the aggregate, were not material to our financial results.

Divestiture of Service Provider Video Software Solutions On October 28, 2018, we completed the sale of the Service Provider Video Software Solutions business. This business had tangible assets of approximately $160 million (primarily comprised of accounts receivables, inventories and various other current and long-term assets) and net intangible assets and goodwill (based on relative fair value) of $340 million. In addition, the business had total liabilities of approximately $200 million (primarily comprised of deferred revenue and various other current and long-term liabilities). We recognized an immaterial gain from this transaction in the first nine months of fiscal 2019.

We completed two divestitures during the second quarter of fiscal 2018. The financial statement impact of these divestitures was not material for the first nine months of fiscal 2018.

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Goodwill and Purchased Intangible Assets

9 Months Ended

Apr. 27, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Purchased Intangible Assets

Goodwill and Purchased Intangible Assets

(a) Goodwill

The following table presents the goodwill allocated to our reportable segments as of April 27, 2019 and during the first nine months of fiscal 2019 (in millions):

	Balance at July 28, 2018		Acquisitions & Divestitures		Other			Balance at April 27, 2019
Americas	$	19,998	$	1,240	$	(109	)	$	21,129
EMEA	7,529		486		(33		)	7,982
APJC	4,179		274		(20		)	4,433
Total	$	31,706	$	2,000	$	(162	)	$	33,544

“Other” in the table above primarily consists of foreign currency translation as well as immaterial purchase accounting adjustments.

(b) Purchased Intangible Assets

The following table presents details of our intangible assets acquired through acquisitions completed during the first nine months of fiscal 2019 (in millions, except years):

	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
Duo	5.0	$	153	5.0	$	94	2.5	$	18	$	77	$	342
Luxtera	4.0	2		5.0	58		1.6	3		256		319
Others (three in total)	4.4	11		—	—		—	—		—		11
Total		$	166		$	152		$	21	$	333	$	672

The following tables present details of our purchased intangible assets (in millions):

April 27, 2019	Gross		Accumulated Amortization			Net
Purchased intangible assets with finite lives:
Technology	$	3,169	$	(1,775	)	$	1,394
Customer relationships	840		(296		)	544
Other	41		(18		)	23
Total purchased intangible assets with finite lives	4,050		(2,089		)	1,961
In-process research and development, with indefinite lives	437		—			437
Total	$	4,487	$	(2,089	)	$	2,398

July 28, 2018	Gross		Accumulated Amortization			Net
Purchased intangible assets with finite lives:
Technology	$	3,711	$	(1,888	)	$	1,823
Customer relationships	1,538		(937		)	601
Other	63		(38		)	25
Total purchased intangible assets with finite lives	5,312		(2,863		)	2,449
In-process research and development, with indefinite lives	103		—			103
Total	$	5,415	$	(2,863	)	$	2,552

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 third quarter and first nine months of fiscal 2019. Impairment charges related to purchased intangible assets for the third quarter and first nine months of fiscal 2018 were $1 million. Impairment charges are primarily 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 our technology and in-process research and development (IPR&D) intangible assets.

The following table presents the amortization of purchased intangible assets, including impairment charges (in millions):

	Three Months Ended				Nine Months Ended
	April 27, 2019		April 28, 2018		April 27, 2019		April 28, 2018
Amortization of purchased intangible assets:
Cost of sales	$	157	$	177	$	464	$	491
Operating expenses	39		67		112		188
Total	$	196	$	244	$	576	$	679

The estimated future amortization expense of purchased intangible assets with finite lives as of April 27, 2019 is as follows (in millions):

Fiscal Year	Amount
2019 (remaining three months)	$	194
2020	$	741
2021	$	543
2022	$	287
2023	$	145
Thereafter	$	51

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Restructuring and Other Charges

9 Months Ended

Apr. 27, 2019

Restructuring Charges [Abstract]

Restructuring and Other Charges

Restructuring and Other Charges

We initiated a restructuring plan during fiscal 2018 (the "Fiscal 2018 Plan") in order to realign the organization and enable further investment in key priority areas with estimated pretax charges of approximately $600 million. 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 the Fiscal 2018 Plan, we have incurred charges of $18 million and $282 million for the third quarter and first nine months of fiscal 2019, respectively, and have incurred cumulative charges of $390 million. We expect the Fiscal 2018 Plan to be substantially completed in the first half of fiscal 2020.

We announced a restructuring plan in August 2016 (the "Fiscal 2017 Plan"), in order to reinvest in our key priority areas. In connection with the Fiscal 2017 Plan, we incurred cumulative charges of approximately $1.0 billion, which were primarily cash-based and consisted of employee severance and other one-time termination benefits, and other associated costs. We completed the Fiscal 2017 Plan in fiscal 2018.

The following tables summarize the activities related to the restructuring and other charges (in millions):

	FISCAL 2017 AND PRIOR PLANS						FISCAL 2018 PLAN
	Employee Severance			Other			Employee Severance			Other			Total
Liability as of July 28, 2018	$	41		$	13		$	19		$	—		$	73
Charges	—			(1		)	232			51			282
Cash payments	(34		)	(7		)	(232		)	(2		)	(275		)
Non-cash items	—			—			—			(46		)	(46		)
Liability as of April 27, 2019	$	7		$	5		$	19		$	3		$	34

	FISCAL 2017 AND PRIOR PLANS						FISCAL 2018 PLAN
	Employee Severance			Other			Employee Severance			Other			Total
Liability as of July 29, 2017	$	74		$	43		$	—		$	—		$	117
Charges	223			27			75			7			332
Cash payments	(245		)	(30		)	(49		)	(1		)	(325		)
Non-cash items	4			(18		)	—			(6		)	(20		)
Liability as of April 28, 2018	$	56		$	22		$	26		$	—		$	104

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Balance Sheet Details

9 Months Ended

Apr. 27, 2019

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):

	April 27, 2019		July 28, 2018
Cash and cash equivalents	$	10,251	$	8,934
Restricted cash included in other current assets	21		32
Restricted cash included in other assets	1		27
Total cash, cash equivalents, and restricted cash	$	10,273	$	8,993

Inventories:
Raw materials	$	398	$	423
Work in process	12		—
Finished goods:
Deferred cost of sales and distributor inventory	77		443
Manufactured finished goods	787		689
Total finished goods	864		1,132
Service-related spares	217		258
Demonstration systems	22		33
Total	$	1,513	$	1,846

Property and equipment, net:
Gross property and equipment:
Land, buildings, and building and leasehold improvements	$	4,554		$	4,710
Computer equipment and related software	941			1,085
Production, engineering, and other equipment	5,688			5,734
Operating lease assets	562			356
Furniture and fixtures	370			358
Total gross property and equipment	12,115			12,243
Less: accumulated depreciation and amortization	(9,281		)	(9,237		)
Total	$	2,834		$	3,006

Deferred revenue:
Service	$	11,297	$	11,431
Product	6,159		8,254
Total	$	17,456	$	19,685
Reported as:
Current	$	10,117	$	11,490
Noncurrent	7,339		8,195
Total	$	17,456	$	19,685

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Financing Receivables and Operating Leases

9 Months Ended

Apr. 27, 2019

Receivables [Abstract]

Financing Receivables and Operating Leases

Financing Receivables and Operating Leases

(a) Financing Receivables

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 Cisco’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 our hardware, software, and services, which may include additional funding for other costs associated with network installation and integration of our 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 our financing receivables is presented as follows (in millions):

April 27, 2019	Lease Receivables			Loan Receivables			Financed Service Contracts			Total
Gross	$	2,442		$	5,240		$	2,349		$	10,031
Residual value	152			—			—			152
Unearned income	(139		)	—			—			(139		)
Allowance for credit loss	(68		)	(77		)	(8		)	(153		)
Total, net	$	2,387		$	5,163		$	2,341		$	9,891
Reported as:
Current	$	1,033		$	2,632		$	1,364		$	5,029
Noncurrent	1,354			2,531			977			4,862
Total, net	$	2,387		$	5,163		$	2,341		$	9,891

July 28, 2018	Lease Receivables			Loan Receivables			Financed Service Contracts			Total
Gross	$	2,688		$	4,999		$	2,326		$	10,013
Residual value	164			—			—			164
Unearned income	(141		)	—			—			(141		)
Allowance for credit loss	(135		)	(60		)	(10		)	(205		)
Total, net	$	2,576		$	4,939		$	2,316		$	9,831
Reported as:
Current	$	1,249		$	2,376		$	1,324		$	4,949
Noncurrent	1,327			2,563			992			4,882
Total, net	$	2,576		$	4,939		$	2,316		$	9,831

Future minimum lease payments to Cisco on lease receivables as of April 27, 2019 are summarized as follows (in millions):

Fiscal Year	Amount
2019 (remaining three months)	$	308
2020	984
2021	632
2022	341
2023	147
Thereafter	30
Total	$	2,442

Actual cash collections may differ from the contractual maturities due to early customer buyouts, refinancings, or defaults.

(b) Credit Quality of Financing Receivables

Gross receivables, excluding residual value, less unearned income categorized by our internal credit risk rating as of April 27, 2019 and July 28, 2018 are summarized as follows (in millions):

	INTERNAL CREDIT RISK RATING
April 27, 2019	1 to 4		5 to 6		7 and Higher		Total
Lease receivables	$	1,235	$	1,029	$	39	$	2,303
Loan receivables	3,187		1,890		163		5,240
Financed service contracts	1,351		984		14		2,349
Total	$	5,773	$	3,903	$	216	$	9,892

	INTERNAL CREDIT RISK RATING
July 28, 2018	1 to 4		5 to 6		7 and Higher		Total
Lease receivables	$	1,294	$	1,199	$	54	$	2,547
Loan receivables	3,184		1,752		63		4,999
Financed service contracts	1,468		835		23		2,326
Total	$	5,946	$	3,786	$	140	$	9,872

We determine the adequacy of our allowance for credit loss by assessing the risks and losses inherent in our financing receivables by portfolio segment. The portfolio segment is based on the types of financing offered by us to our customers, which consist of the following: lease receivables, loan receivables, and financed service contracts.

Our 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.

The following tables present the aging analysis of gross receivables, excluding residual value and less unearned income as of April 27, 2019 and July 28, 2018 (in millions):

	DAYS PAST DUE (INCLUDES BILLED AND UNBILLED)
April 27, 2019	31-60		61-90		91+		Total Past Due		Current		Total		Nonaccrual Financing Receivables		Impaired Financing Receivables
Lease receivables	$	79	$	36	$	114	$	229	$	2,074	$	2,303	$	18	$	18
Loan receivables	108		81		255		444		4,796		5,240		30		30
Financed service contracts	75		113		471		659		1,690		2,349		4		4
Total	$	262	$	230	$	840	$	1,332	$	8,560	$	9,892	$	52	$	52

	DAYS PAST DUE (INCLUDES BILLED AND UNBILLED)
July 28, 2018	31-60		61-90		91+		Total Past Due		Current		Total		Nonaccrual Financing Receivables		Impaired Financing Receivables
Lease receivables	$	72	$	27	$	155	$	254	$	2,293	$	2,547	$	9	$	9
Loan receivables	104		55		252		411		4,588		4,999		30		30
Financed service contracts	138		78		304		520		1,806		2,326		3		3
Total	$	314	$	160	$	711	$	1,185	$	8,687	$	9,872	$	42	$	42

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 $249 million and $503 million as of April 27, 2019 and July 28, 2018, respectively.

As of April 27, 2019, we had financing receivables of $231 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 $182 million as of July 28, 2018.

(c) Allowance for Credit Loss Rollforward

The allowances for credit loss and the related financing receivables are summarized as follows (in millions):

Three months ended April 27, 2019	CREDIT LOSS ALLOWANCES
	Lease Receivables			Loan Receivables		Financed Service Contracts			Total
Allowance for credit loss as of January 26, 2019	$	127		$	64	$	9		$	200
Provisions (benefits)	(41		)	13		27			(1		)
Recoveries (write-offs), net	2			—		(28		)	(26		)
Foreign exchange and other	(20		)	—		—			(20		)
Allowance for credit loss as of April 27, 2019	$	68		$	77	$	8		$	153

Nine months ended April 27, 2019	CREDIT LOSS ALLOWANCES
	Lease Receivables			Loan Receivables		Financed Service Contracts			Total
Allowance for credit loss as of July 28, 2018	$	135		$	60	$	10		$	205
Provisions (benefits)	(48		)	17		26			(5		)
Recoveries (write-offs), net	2			—		(28		)	(26		)
Foreign exchange and other	(21		)	—		—			(21		)
Allowance for credit loss as of April 27, 2019	$	68		$	77	$	8		$	153

Three months ended April 28, 2018	CREDIT LOSS ALLOWANCES
	Lease Receivables			Loan Receivables			Financed Service Contracts			Total
Allowance for credit loss as of January 27, 2018	$	165		$	94		$	13		$	272
Provisions (benefits)	1			(8		)	(1		)	(8		)
Foreign exchange and other	(1		)	(1		)	—			(2		)
Allowance for credit loss as of April 28, 2018	$	165		$	85		$	12		$	262

Nine months ended April 28, 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 (benefits)	2		(19		)	(17		)	(34		)
Foreign exchange and other	1		1			(1		)	1
Allowance for credit loss as of April 28, 2018	$	165	$	85		$	12		$	262

We assess the allowance for credit loss related to financing receivables on either an individual or a collective basis. We consider 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 our 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. Our internal credit risk ratings are categorized as 1 through 10, with the lowest credit risk rating representing the highest quality financing receivables.

Typically, we also consider 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 April 27, 2019 and July 28, 2018, are presented under “(b) Credit Quality of Financing Receivables” above.

We evaluate the remainder of our financing receivables portfolio for impairment on a collective basis and record an allowance for credit loss at the portfolio segment level. When evaluating the financing receivables on a collective basis, we use expected default frequency rates published by a major third-party credit-rating agency as well as our own historical loss rate in the event of default, while also systematically giving effect to economic conditions, concentration of risk, and correlation.

(d) Operating Leases

We provide 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):

	April 27, 2019			July 28, 2018
Operating lease assets	$	562		$	356
Accumulated depreciation	(382		)	(238		)
Operating lease assets, net	$	180		$	118

Minimum future rentals on noncancelable operating leases as of April 27, 2019 are summarized as follows (in millions):

Fiscal Year	Amount
2019 (remaining three months)	$	42
2020	120
2021	58
2022	12
Total	$	232

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Available-for-Sale Debt Investments and Equity Investments

9 Months Ended

Apr. 27, 2019

Investments, Debt and Equity Securities [Abstract]

Available-for-Sale Debt Investments and Equity Investments

Available-for-Sale Debt Investments and Equity Investments

The following table summarizes our available-for-sale debt investments and equity investments (in millions):

	April 27, 2019		July 28, 2018
Available-for-sale debt investments	$	24,387	$	37,009
Marketable equity securities	5		605
Total investments	24,392		37,614
Non-marketable equity securities included in other assets (1)	1,135		978
Equity method investments included in other assets	115		118
Total	$	25,642	$	38,710

⁽¹⁾ We held equity interests in certain private equity funds of $0.6 billion as of April 27, 2019 which are accounted for under the NAV practical expedient following the adoption of ASU 2016-01, Financial Instruments, in the first quarter of fiscal 2019.

(a) Summary of Available-for-Sale Debt Investments

The following tables summarize our available-for-sale debt investments (in millions):

April 27, 2019	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. government securities	$	1,455	$	1	$	(4	)	$	1,452
U.S. government agency securities	264		—		(1		)	263
Corporate debt securities	21,307		40		(115		)	21,232
U.S. agency mortgage-backed securities	1,465		3		(28		)	1,440
Total (1)	$	24,491	$	44	$	(148	)	$	24,387

July 28, 2018	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. government securities	$	7,318	$	—	$	(43	)	$	7,275
U.S. government agency securities	732		—		(5		)	727
Non-U.S. government and agency securities	209		—		(1		)	208
Corporate debt securities	27,765		44		(445		)	27,364
U.S. agency mortgage-backed securities	1,488		—		(53		)	1,435
Total (1)	$	37,512	$	44	$	(547	)	$	37,009

⁽¹⁾ Net unsettled investment purchases were $1 million and net unsettled investment sales were $1.5 billion as of April 27, 2019 and July 28, 2018, respectively and were included in other current assets and other current liabilities.

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 debt investments (in millions):

	Three Months Ended						Nine Months Ended
	April 27, 2019			April 28, 2018			April 27, 2019			April 28, 2018
Gross realized gains	$	7		$	1		$	10		$	15
Gross realized losses	(14		)	(40		)	(28		)	(146		)
Total	$	(7	)	$	(39	)	$	(18	)	$	(131	)

The following tables present the breakdown of the available-for-sale debt investments with gross unrealized losses and the duration that those losses had been unrealized at April 27, 2019 and July 28, 2018 (in millions):

	UNREALIZED LOSSES LESS THAN 12 MONTHS					UNREALIZED LOSSES 12 MONTHS OR GREATER					TOTAL
April 27, 2019	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross  Unrealized  Losses
U.S. government securities	$	8	$	—		$	1,409	$	(4	)	$	1,417	$	(4	)
U.S. government agency securities	—		—			263		(1		)	263		(1		)
Corporate debt securities	1,851		(7		)	12,662		(108		)	14,513		(115		)
U.S. agency mortgage-backed securities	48		—			1,155		(28		)	1,203		(28		)
Total	$	1,907	$	(7	)	$	15,489	$	(141	)	$	17,396	$	(148	)

	UNREALIZED LOSSES LESS THAN 12 MONTHS					UNREALIZED LOSSES 12 MONTHS OR GREATER					TOTAL
July 28, 2018	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross  Unrealized  Losses
U.S. government securities	$	2,966	$	(20	)	$	4,303	$	(23	)	$	7,269	$	(43	)
U.S. government agency securities	206		(2		)	521		(3		)	727		(5		)
Non-U.S. government and agency securities	105		(1		)	103		—			208		(1		)
Corporate debt securities	16,990		(344		)	3,511		(101		)	20,501		(445		)
U.S. agency mortgage-backed securities	826		(24		)	581		(29		)	1,407		(53		)
Total	$	21,093	$	(391	)	$	9,019	$	(156	)	$	30,112	$	(547	)

There were no impairment charges related to our available-for-sale debt investments for the third quarter and first nine months of fiscal 2019, and for the corresponding periods of fiscal 2018. For available-for-sale debt investments that were in an unrealized loss position as of April 27, 2019, we have determined that no other-than-temporary impairments were required to be recognized.

The following table summarizes the maturities of our available-for-sale debt investments as of April 27, 2019 (in millions):

	Amortized Cost		Fair Value
Within 1 year	$	7,363	$	7,353
After 1 year through 5 years	13,892		13,826
After 5 years through 10 years	1,760		1,756
After 10 years	11		12
Mortgage-backed securities with no single maturity	1,465		1,440
Total	$	24,491	$	24,387

Actual maturities may differ from the contractual maturities because borrowers may have the right to call or prepay certain obligations.

(b) Summary of Equity Investments

We recorded adjustments to the carrying value of our non-marketable equity securities measured using the measurement alternative during the third quarter and first nine months of fiscal 2019 as follows (in millions):

	Three Months Ended			Nine Months Ended
	April 27, 2019			April 27, 2019
Adjustments to non-marketable equity securities measured using the measurement alternative:
Upward adjustments	$	9		$	33
Downward adjustments, including impairments	(4		)	(22		)
Net upward adjustments	$	5		$	11

Gains and losses recognized on our marketable and non-marketable equity securities for the third quarter and first nine months of fiscal 2019 are summarized below (in millions):

	Three Months Ended			Nine Months Ended
	April 27, 2019			April 27, 2019
Net gains and losses recognized during the period on equity investments	$	3		$	78
Less: Net gains and losses recognized on equity investments sold	(44		)	(51		)
Unrealized gains and losses recognized during reporting period on equity securities still held at the reporting date	$	(41	)	$	27

(c) Securities Lending

We periodically engage in securities lending activities with certain of our available-for-sale debt 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 was $1.3 billion and $0.3 billion for the first nine months of fiscal 2019 and 2018, respectively. We require 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. We engage in these secured lending transactions only with highly creditworthy counterparties, and the associated portfolio custodian has agreed to indemnify us against collateral losses. We did not experience any losses in connection with the secured lending of securities during the periods presented. As of April 27, 2019 and July 28, 2018, we had no outstanding securities lending transactions.

(d) Variable Interest Entities

In the ordinary course of business, we have investments in privately held companies and provide financing to certain customers. These privately held companies and customers are evaluated for consolidation under the variable interest or voting interest entity models. We evaluate on an ongoing basis our investments in these privately held companies and our customer financings, and have determined that as of April 27, 2019, there were no significant variable interest or voting interest entities required to be consolidated in our Consolidated Financial Statements.

As of April 27, 2019, the carrying value of investments in privately held companies was $1.3 billion. $683 million of such investments are considered to be in variable interest entities which are unconsolidated. We have total funding commitments of $345 million related to these privately held 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 our maximum exposure related to these privately held investments.

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Fair Value

9 Months Ended

Apr. 27, 2019

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, we consider the principal or most advantageous market in which we would transact, and we also consider assumptions that market participants would use when pricing the asset or liability.

(a) Fair Value Hierarchy

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.

(b) Assets and Liabilities Measured at Fair Value on a Recurring Basis

Assets and liabilities measured at fair value on a recurring basis were as follows (in millions):

	APRIL 27, 2019 FAIR VALUE MEASUREMENTS						JULY 28, 2018 FAIR VALUE MEASUREMENTS
	Level 1		Level 2		Total Balance		Level 1		Level 2		Total Balance
Assets:
Cash equivalents:
Money market funds	$	8,283	$	—	$	8,283	$	6,890	$	—	$	6,890
Available-for-sale debt investments:
U.S. government securities	—		1,452		1,452		—		7,275		7,275
U.S. government agency securities	—		263		263		—		727		727
Non-U.S. government and agency securities	—		—		—		—		208		208
Corporate debt securities	—		21,232		21,232		—		27,364		27,364
U.S. agency mortgage-backed securities	—		1,440		1,440		—		1,435		1,435
Equity investments:
Marketable equity securities	5		—		5		605		—		605
Derivative assets	—		36		36		—		2		2
Total	$	8,288	$	24,423	$	32,711	$	7,495	$	37,011	$	44,506
Liabilities:
Derivative liabilities	$	—	$	20	$	20	$	—	$	74	$	74
Total	$	—	$	20	$	20	$	—	$	74	$	74

Level 1 marketable equity securities are determined by using quoted prices in active markets for identical assets. Level 2 available-for-sale debt investments are priced using quoted market prices for similar instruments or nonbinding market prices that are corroborated by observable market data. We use 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. We use such pricing data as the primary input to make our assessments and determinations as to the ultimate valuation of our investment portfolio and have not made, during the periods presented, any material adjustments to such inputs. We are ultimately responsible for the financial statements and underlying estimates. Our 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. We did not have any transfers between Level 1 and Level 2 fair value measurements during the periods presented.

(c) Assets Measured at Fair Value on a Nonrecurring Basis

The following table presents gains and losses on assets that were measured at fair value on a nonrecurring basis (in millions):

	TOTAL GAINS (LOSSES) FOR THE THREE MONTHS ENDED						TOTAL GAINS (LOSSES) FOR THE NINE MONTHS ENDED
	April 27, 2019			April 28, 2018			April 27, 2019		April 28, 2018
Non-marketable equity securities and equity method investments	$	(3	)	$	(17	)	$	3	$	(56	)
Purchased intangible assets (impaired)	—			(1		)	—		(1		)
Property held for sale—land and buildings	—			—			—		20
Total gains (losses) for nonrecurring measurements	$	(3	)	$	(18	)	$	3	$	(37	)

These assets were measured at fair value due to events or circumstances we identified as having significant impact on their fair value during the respective periods. The carrying value of our non-marketable equity securities recorded to fair value on a non-recurring basis is adjusted for observable transactions for identical or similar investments of the same issuer or impairment. These securities are classified as Level 3 in the fair value hierarchy because we estimate the value based on valuation methods using the observable transaction price at the transaction date and other unobservable inputs such as volatility, rights, and obligations of the securities we hold.

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 5. The remaining carrying value of the specific purchased intangible assets that were impaired was zero as of April 28, 2018.

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 property held for sale that was impaired was zero as of April 28, 2018.

(d) Other Fair Value Disclosures

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 April 27, 2019 and July 28, 2018 was $3.5 billion and $3.6 billion, respectively. The estimated fair value of long-term loan receivables and financed service contracts approximates their carrying value. We use significant unobservable inputs in determining discounted cash flows to estimate the fair value of our long-term loan receivables and financed service contracts, and therefore they are categorized as Level 3.

As of April 27, 2019, the estimated fair value of our short-term debt approximates its carrying value due to the short maturities. As of April 27, 2019, the fair value of our senior notes and other long-term debt was $21.6 billion with a carrying amount of $20.4 billion. This compares to a fair value of $26.4 billion and a carrying amount of $25.6 billion as of July 28, 2018. 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.

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Borrowings

9 Months Ended

Apr. 27, 2019

Debt Disclosure [Abstract]

Borrowings

Borrowings

(a) Short-Term Debt

The following table summarizes our short-term debt (in millions, except percentages):

	April 27, 2019				July 28, 2018
	Amount		Effective Rate		Amount		Effective Rate
Current portion of long-term debt	$	4,494	3.52	%	$	5,238	3.46	%
Commercial paper	3,283		2.53	%	—		—	%
Total short-term debt	$	7,777			$	5,238

We have a short-term debt financing program of up to $10.0 billion through the issuance of commercial paper notes. We use 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.

(b) Long-Term Debt

The following table summarizes our long-term debt (in millions, except percentages):

		April 27, 2019				July 28, 2018
	Maturity Date	Amount			Effective Rate	Amount			Effective Rate
Senior notes:
Floating-rate notes:
Three-month LIBOR plus 0.50%	March 1, 2019	$	—		—%	$	500		2.86%
Three-month LIBOR plus 0.34%	September 20, 2019	500			3.01%	500			2.71%
Fixed-rate notes:
4.95%	February 15, 2019	—			—%	2,000			5.17%
1.60%	February 28, 2019	—			—%	1,000			1.67%
2.125%	March 1, 2019	—			—%	1,750			2.71%
1.40%	September 20, 2019	1,500			1.48%	1,500			1.48%
4.45%	January 15, 2020	2,500			4.84%	2,500			4.52%
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			3.25%	500			2.86%
1.85%	September 20, 2021	2,000			1.90%	2,000			1.90%
3.00%	June 15, 2022	500			3.51%	500			3.11%
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			3.37%	1,000			2.98%
3.50%	June 15, 2025	500			3.67%	500			3.27%
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		20,500				25,750
Unaccreted discount/issuance costs		(103		)		(116		)
Hedge accounting fair value adjustments		18				(65		)
Total		$	20,415			$	25,569
Reported as:
Current portion of long-term debt		$	4,494			$	5,238
Long-term debt		15,921				20,331
Total		$	20,415			$	25,569

We entered into interest rate swaps in prior periods with an aggregate notional amount of $4.5 billion designated as fair value hedges of certain of our fixed-rate senior notes. These swaps convert the fixed interest rates of the fixed-rate notes to floating interest rates based on the 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 12.

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 us at any time, subject to a make-whole premium. The senior notes rank at par with the commercial paper notes that may be issued in the future pursuant to our short-term debt financing program, as discussed above under “(a) Short-Term Debt.” As of April 27, 2019, we werein compliance with all debt covenants.

As of April 27, 2019, future principal payments for long-term debt, including the current portion, are summarized as follows (in millions):

Fiscal Year	Amount
2019 (remaining three months)	$	—
2020	6,000
2021	3,000
2022	2,500
2023	500
Thereafter	8,500
Total	$	20,500

(c) Credit Facility

On May 15, 2015, we 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 our senior debt credit ratings as published by Standard & Poor’s Financial Services, LLC and Moody’s Investors Service, Inc., provided that in no event will the Eurocurrency Rate be less than zero. We may also, upon the agreement of either the then-existing lenders or additional lenders not currently parties to the agreement, increase the commitments under the credit facility by up to an additional $2.0 billion and/or extend the expiration date of the credit facility up to May 15, 2022.

This credit agreement requires that we comply with certain covenants, including that we maintain an interest coverage ratio as defined in the agreement. As of April 27, 2019, we were in compliance with the required interest coverage ratio and the other covenants, and we had not borrowed any funds under this credit facility.

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Derivative Instruments

9 Months Ended

Apr. 27, 2019

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments

Derivative Instruments

(a) Summary of Derivative Instruments

We use derivative instruments primarily to manage exposures to foreign currency exchange rate, interest rate, and equity price risks. Our 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. Our derivatives expose us to credit risk to the extent that the counterparties may be unable to meet the terms of the agreement. We do, however, seek to mitigate such risks by limiting our 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 our derivative instruments and the line items on the Consolidated Balance Sheets to which they were recorded are summarized as follows (in millions):

	DERIVATIVE ASSETS					DERIVATIVE LIABILITIES
	Balance Sheet Line Item	April 27, 2019		July 28, 2018		Balance Sheet Line Item	April 27, 2019		July 28, 2018
Derivatives designated as hedging instruments:
Foreign currency derivatives	Other current assets	$	5	$	1	Other current liabilities	$	3	$	—
Interest rate derivatives	Other current assets	—		—		Other current liabilities	7		10
Interest rate derivatives	Other assets	27		—		Other long-term liabilities	4		62
Total		32		1			14		72
Derivatives not designated as hedging instruments:
Foreign currency derivatives	Other current assets	4		1		Other current liabilities	6		2
Total		4		1			6		2
Total		$	36	$	2		$	20	$	74

The effects of our cash flow and net investment hedging instruments on other comprehensive income (OCI) and the Consolidated Statements of Operations are summarized as follows (in millions):

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)
	April 27, 2019		April 28, 2018			Line Item in Statements of Operations	April 27, 2019			April 28, 2018
Derivatives designated as cash flow hedging instruments:
Foreign currency derivatives	$	12	$	(10	)	Revenue — product	$	(1	)	$	—
						Revenue — service	1			—
						Cost of sales — service	—			7
						Operating expenses	—			21
Total	$	12	$	(10	)		$	—		$	28
Derivatives designated as net investment hedging instruments:
Foreign currency derivatives	$	—	$	7		Other income (loss), net	$	—		$	—

GAINS (LOSSES) RECOGNIZED IN OCI ON DERIVATIVES FOR THE NINE MONTHS ENDED (EFFECTIVE PORTION)						GAINS (LOSSES) RECLASSIFIED FROM AOCI INTO INCOME FOR THE NINE MONTHS ENDED (EFFECTIVE PORTION)
	April 27, 2019		April 28, 2018			Line Item in Statements of Operations	April 27, 2019			April 28, 2018
Derivatives designated as cash flow hedging instruments:
Foreign currency derivatives	$	2	$	28		Revenue — product	$	—		$	—
						Revenue — service	3			—
						Cost of sales — service	(1		)	14
						Operating expenses	(1		)	45
Total	$	2	$	28			$	1		$	59
Derivatives designated as net investment hedging instruments:
Foreign currency derivatives	$	3	$	(10	)	Other income (loss), net	$	—		$	—

As of April 27, 2019, we estimate that approximately $3 million of net derivative gains related to our 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):

		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	April 27, 2019		April 28, 2018			April 27, 2019			April 28, 2018
Interest rate derivatives	Interest expense	$	33	$	(59	)	$	(31	)	$	58
Equity derivatives	Other income (loss), net	—		25			—			(25		)
Total		$	33	$	(34	)	$	(31	)	$	33

		GAINS (LOSSES) ON DERIVATIVE INSTRUMENTS FOR THE NINE MONTHS ENDED					GAINS (LOSSES) RELATED TO HEDGED ITEMS FOR THE NINE MONTHS ENDED
Derivatives Designated as Fair Value Hedging Instruments	Line Item in Statements of Operations	April 27, 2019		April 28, 2018			April 27, 2019			April 28, 2018
Interest rate derivatives	Interest expense	$	88	$	(168	)	$	(83	)	$	167
Equity derivatives	Other income (loss), net	—		(24		)	—			24
Total		$	88	$	(192	)	$	(83	)	$	191

The effect on the Consolidated Statements of Operations of derivative instruments not designated as hedges is summarized as follows (in millions):

		GAINS (LOSSES) FOR THE THREE MONTHS ENDED						GAINS (LOSSES) FOR THE NINE MONTHS ENDED
Derivatives Not Designated as Hedging Instruments	Line Item in Statements of Operations	April 27, 2019			April 28, 2018			April 27, 2019			April 28, 2018
Foreign currency derivatives	Other income (loss), net	$	(29	)	$	(53	)	$	(57	)	$	20
Total return swaps—deferred compensation	Operating expenses	42			(26		)	9			28
	Cost of sales — product	2			(1		)	1			—
	Cost of sales — service	2			(1		)	—			1
	Other income (loss), net	(4		)	(3		)	(12		)	(8		)
Equity derivatives	Other income (loss), net	1			(7		)	2			(4		)
Total		$	14		$	(91	)	$	(57	)	$	37

The notional amounts of our outstanding derivatives are summarized as follows (in millions):

	April 27, 2019		July 28, 2018
Derivatives designated as hedging instruments:
Foreign currency derivatives—cash flow hedges	$	623	$	147
Interest rate derivatives	4,500		6,750
Net investment hedging instruments	363		250
Derivatives not designated as hedging instruments:
Foreign currency derivatives	2,760		2,298
Total return swaps—deferred compensation	572		566
Total	$	8,818	$	10,011

(b) Offsetting of Derivative Instruments

We present our derivative instruments at gross fair values in the Consolidated Balance Sheets. However, our 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, we also enter 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):

	April 27, 2019
	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	$	36	$	—	$	36	$	(10	)	$	(26	)	$	—
Derivatives liabilities	$	20	$	—	$	20	$	(10	)	$	(5	)	$	5

	July 28, 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	$	2	$	—	$	2	$	(2	)	$	—		$	—
Derivatives liabilities	$	74	$	—	$	74	$	(2	)	$	(53	)	$	19

(c) Foreign Currency Exchange Risk

We conduct business globally in numerous currencies. Therefore, we are exposed to adverse movements in foreign currency exchange rates. To limit the exposure related to foreign currency changes, we enter into foreign currency contracts. We do not enter into such contracts for speculative purposes.

We hedge forecasted foreign currency transactions related to certain revenues, 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. We assess 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, we did not discontinue any cash flow hedges for which it was probable that a forecasted transaction would not occur.

We enter 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.

We hedge certain net investments in our foreign operations with forward contracts to reduce the effects of foreign currency fluctuations on our net investment in those foreign subsidiaries. These derivative instruments generally have maturities of up to six months.

(d) Interest Rate Risk

Interest Rate Derivatives, Investments   Our primary objective for holding available-for-sale debt investments is to achieve an appropriate investment return consistent with preserving principal and managing risk. To realize these objectives, we may utilize interest rate swaps or other derivatives designated as fair value or cash flow hedges. As of April 27, 2019 and July 28, 2018, we did not have any outstanding interest rate derivatives related to our available-for-sale debt investments.

Interest Rate Derivatives Designated as Fair Value Hedges, Long-Term Debt In the first nine months of fiscal 2019, we did not enter into any interest rate swaps. In prior fiscal years, we entered into interest rate swaps designated as fair value hedges related to fixed-rate senior notes that are due in fiscal 2020through 2025. Under these interest rate swaps, we receive fixed-rate interest payments and make 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 assets and other current and long-term liabilities.

(e) Equity Price Risk

We may hold equity securities for strategic purposes or to diversify our overall investment portfolio. The marketable equity securities in our portfolio are subject to price risk. To manage our exposure to changes in the fair value of certain equity securities, we have 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, we periodically enter 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.

We are also exposed to variability in compensation charges related to certain deferred compensation obligations to employees. Although not designated as accounting hedges, we utilize derivatives such as total return swaps to economically hedge this exposure.

(f) 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

9 Months Ended

Apr. 27, 2019

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

(a) Operating Leases

We lease office space in many U.S. locations. Outside the United States, larger leased sites include sites in Australia, Belgium, Canada, China, Germany, India, Japan, Mexico, Poland and the United Kingdom. We also lease equipment and vehicles. Future minimum lease payments under all noncancelable operating leases with an initial term in excess of one year as of April 27, 2019 are as follows (in millions):

Fiscal Year	Amount
2019 (remaining three months)	$	111
2020	372
2021	257
2022	177
2023	112
Thereafter	121
Total	$	1,150

(b) Purchase Commitments with Contract Manufacturers and Suppliers

We purchase components from a variety of suppliers and use several contract manufacturers to provide manufacturing services for our products. During the normal course of business, in order to manage manufacturing lead times and help ensure adequate component supply, we enter into agreements with contract manufacturers and suppliers that either allow them to procure inventory based upon criteria as defined by us or establish the parameters defining our requirements. A significant portion of our 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 us the option to cancel, reschedule, and adjust our requirements based on our business needs prior to firm orders being placed.

The following table summarizes our purchase commitments with contract manufacturers and suppliers (in millions):

Commitments by Period	April 27, 2019		July 28, 2018
Less than 1 year	$	4,738	$	5,407
1 to 3 years	734		710
3 to 5 years	90		360
Total	$	5,562	$	6,477

We record a liability for firm, noncancelable, and unconditional purchase commitments for quantities in excess of our future demand forecasts consistent with the valuation of our excess and obsolete inventory. As of April 27, 2019 and July 28, 2018, the liability for these purchase commitments was $129 million and $159 million, respectively, and was included in other current liabilities.

(c) Other Commitments

In connection with our acquisitions, we have 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 Cisco of certain employees of the acquired entities.

The following table summarizes the compensation expense related to acquisitions (in millions):

	Three Months Ended				Nine Months Ended
	April 27, 2019		April 28, 2018		April 27, 2019		April 28, 2018
Compensation expense related to acquisitions	$	76	$	53	$	251	$	141

As of April 27, 2019, we estimated that future cash compensation expense of up to $512 million may be required to be recognized pursuant to the applicable business combination agreements.

We also have certain funding commitments, primarily related to our non-marketable equity and other 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 funding commitments were $345 million and $223 million as of April 27, 2019 and July 28, 2018, respectively.

(d) Product Warranties

The following table summarizes the activity related to the product warranty liability (in millions):

	Nine Months Ended
	April 27, 2019			April 28, 2018
Balance at beginning of period	$	359		$	407
Provisions for warranties issued	447			431
Adjustments for pre-existing warranties	(6		)	(32		)
Settlements	(449		)	(441		)
Acquisitions and divestitures	(2		)	—
Balance at end of period	$	349		$	365

We accrue for warranty costs as part of our cost of sales based on associated material product costs, labor costs for technical support staff, and associated overhead. Our products are generally covered by a warranty for periods ranging from 90 days to five years, and for some products we provide a limited lifetime warranty.

(e) Financing and Other Guarantees

In the ordinary course of business, we provide 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   We facilitate 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, we guarantee a portion of these arrangements. The volume of channel partner financing was $7.2 billion and $7.1 billion for the third quarter of fiscal 2019 and 2018, respectively, and was $21.7 billion and $20.7 billion for the first nine months of fiscal 2019 and 2018, respectively. The balance of the channel partner financing subject to guarantees was $1.3 billion and $1.0 billion as of April 27, 2019 and July 28, 2018, respectively.

End-User Financing Guarantees   We also provide 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 we had provided guarantees was $1 million and $3 million for the third quarter of fiscal 2019 and 2018, respectively, and was $11 million and $29 million for the first nine months of fiscal 2019 and 2018, respectively.

Financing Guarantee Summary   The aggregate amounts of financing guarantees outstanding at April 27, 2019 and July 28, 2018, 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):

	April 27, 2019			July 28, 2018
Maximum potential future payments relating to financing guarantees:
Channel partner	$	221		$	277
End user	19			31
Total	$	240		$	308
Deferred revenue associated with financing guarantees:
Channel partner	$	(63	)	$	(94	)
End user	(18		)	(28		)
Total	$	(81	)	$	(122	)
Maximum potential future payments relating to financing guarantees, net of associated deferred revenue	$	159		$	186

Other Guarantees Our other guarantee arrangements as of April 27, 2019 and July 28, 2018 that were subject to recognition and disclosure requirements were not material.

(f) Indemnifications

In the normal course of business, we indemnify other parties, including customers, lessors, and parties to other transactions with us, with respect to certain matters. We have agreed to indemnify 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.

We have been asked to indemnify Time Warner Cable (“TWC”) for patent infringement claims asserted against it by Sprint Communications Company, L.P. (“Sprint”) in federal court in Kansas. Sprint alleges that TWC infringed certain Sprint patents by offering VoIP telephone services utilizing products provided by us generally in combination with those of other manufacturers. Sprint seeks monetary damages. Following a trial on March 3, 2017, a jury in Kansas found that TWC 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 TWC's post-trial motions. TWC appealed to the U.S. Court of Appeals for the Federal Circuit, and, on November 30, 2018, a panel of the court affirmed the judgment. TWC filed a petition for rehearing en banc on January 29, 2019, which was denied on March 19, 2019. At this time, we do not believe that our indemnity obligations under our agreement would be material.

During the first nine months of fiscal 2018, we recorded legal and indemnification settlement charges of $127 million to product cost of sales related to prior indemnification matters resolved in fiscal 2018.

In addition, we have entered into indemnification agreements with our officers and directors, and our Amended and Restated Bylaws contain similar indemnification obligations to our agents.

It is not possible to determine the maximum potential amount under these indemnification agreements due to our limited history with prior indemnification claims and the unique facts and circumstances involved in each particular agreement. Historically, payments made by us under these agreements have not had a material effect on our operating results, financial position, or cash flows.

(g) Legal Proceedings

BrazilBrazilian authorities have investigated our Brazilian subsidiary and certain of our former employees, as well as a Brazilian importer of our 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 our 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 $206 million for the alleged evasion of import and other taxes, $1.3 billion for interest, and $1.0 billion for various penalties, all determined using an exchange rate as of April 27, 2019. We have completed a thorough review of the matters and believe the asserted claims against our Brazilian subsidiary are without merit, and we are defending the claims vigorously. While we believe 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, we are unable to determine the likelihood of an unfavorable outcome against our Brazilian subsidiary and are unable to reasonably estimate a range of loss, if any. We do not expect a final judicial determination for several years.

SRI International On September 4, 2013, SRI International, Inc. (“SRI”) asserted patent infringement claims against us in the U.S. District Court for the District of Delaware, accusing our 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. We appealed to the United States Court of Appeals for the Federal Circuit on various grounds. On March 20, 2019, the Federal Circuit vacated the enhanced damages award; vacated and remanded in part the willful infringement finding; and affirmed the district court's other findings. Cisco filed a petition for rehearing with the Federal Circuit on May 10, 2019. While the ultimate outcome of the case may still result in a loss, we do not expect it to be material.

Straight Path On September 24, 2014, Straight Path IP Group, Inc. (“Straight Path”) asserted patent infringement claims against us in the U.S. District Court for the Northern District of California, accusing our 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 our motion for summary judgment of non-infringement, thereby dismissing Straight Path's claims against us and cancelling a trial which had been set for March 12, 2018. Straight Path appealed to the U.S. Court of Appeal for the Federal Circuit, and, on January 23, 2019, the court summarily affirmed the finding of non-infringement.

Arista Networks, Inc. As reported in our Form 10-K for the fiscal year ended July 28, 2018 we received a payment of $400 million from Arista Networks, Inc. ("Arista") in connection with the settlement of litigation. The payment was recognized in general and administrative expenses in our first quarter of fiscal 2019.

Oyster Optics On November 24, 2016, Oyster Optics, LLC (“Oyster”) asserted patent infringement claims against us in the U.S. District Court for the Eastern District of Texas. Oyster alleges that certain Cisco ONS 15454 and NCS 2000 line cards infringe U.S. Patent No. 7,620,327 (“the ‘327 Patent”). Oyster seeks monetary damages. Oyster filed infringement claims based on the ‘327 Patent against other defendants, including ZTE, Nokia, NEC, Infinera, Huawei, Ciena, Alcatel-Lucent, and Fujitsu, and the court consolidated the cases alleging infringement of the ‘327 Patent. Oyster's cases against some of the defendants were resolved. The court vacated the November 4, 2018 trial date set for Oyster's claims against Cisco and one other remaining defendant, pending resolution of Oyster's appeal of the court's summary judgment ruling dismissing certain of Oyster's claims. Oyster appealed the summary judgment ruling on December 6, 2018. While we believe that we have strong non-infringement arguments and that the patent is invalid, if we do not prevail in the District Court, we believe damages ultimately assessed would not be material. Due to uncertainty surrounding patent litigation processes, we are unable to reasonably estimate the ultimate outcome of this litigation at this time. However, we do not anticipate that any final outcome of the dispute would be material.

In addition, we are 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, we do not expect that the ultimate costs to resolve these matters will have a material adverse effect on our consolidated financial position, results of operations, or cash flows. For additional information regarding intellectual property litigation, see “Part II, Item 1A. Risk Factors-We may be found to infringe on intellectual property rights of others” herein.

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Shareholders' Equity

9 Months Ended

Apr. 27, 2019

Stockholders' Equity Note [Abstract]

Shareholders' Equity

Shareholders’ Equity

(a) Cash Dividends on Shares of Common Stock

We declared and paid cash dividends of $0.35 and $0.33 per common share, or $1.5 billion and $1.6 billion, on our outstanding common stock for the third quarter of fiscal 2019 and fiscal 2018, respectively. We declared and paid cash dividends of $1.01 and $0.91 per common share, or $4.5 billion and $4.4 billion, on our outstanding common stock for the first nine months of fiscal 2019 and fiscal 2018, respectively.

(b) Stock Repurchase Program

In September 2001, our Board of Directors authorized a stock repurchase program. On February 13, 2019, our Board of Directors authorized a $15 billion increase to the stock repurchase program. The remaining authorized amount for stock repurchases under this program, including the additional authorization, is approximately $18 billion with no termination date. A summary of the stock repurchase activity for fiscal 2019 and 2018 under the stock repurchase program, reported based on the trade date, is summarized as follows (in millions, except per-share amounts):

Quarter Ended	Shares	Weighted-Average Price per Share		Amount
Fiscal 2019
April 27, 2019	116	$	52.14	$	6,020
January 26, 2019	111	$	45.09	$	5,016
October 27, 2018	109	$	46.01	$	5,026
Fiscal 2018
July 28, 2018	138	$	43.58	$	6,015
April 28, 2018	140	$	42.83	$	6,015
January 27, 2018	103	$	39.07	$	4,011
October 28, 2017	51	$	31.80	$	1,620

There were $200 million and $180 million of stock repurchases that were pending settlement as of April 27, 2019 and July 28, 2018, respectively.

The purchase price for the shares of our stock repurchased is reflected as a reduction to shareholders’ equity. We are 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.

(c) Preferred Stock

Under the terms of our Articles of Incorporation, the Board of Directors may determine the rights, preferences, and terms of our authorized but unissued shares of preferred stock.

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Employee Benefit Plans

9 Months Ended

Apr. 27, 2019

Retirement Benefits [Abstract]

Employee Benefit Plans

Employee Benefit Plans

(a) Employee Stock Incentive Plans

Stock Incentive Plan Program Description    As of April 27, 2019, we had one stock incentive plan: the 2005 Stock Incentive Plan (the “2005 Plan”). In addition, we have, in connection with our 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 us and provide incentives for them to remain with Cisco. The number and frequency of share-based awards are based on competitive practices, operating results of Cisco, government regulations, and other factors. Our primary stock incentive plan is summarized as follows:

2005 Plan As of April 27, 2019, 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 Cisco 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 our 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 Cisco and its subsidiaries and affiliates, and non-employee directors of Cisco. 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 our 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.

(b) Employee Stock Purchase Plan

We have an Employee Stock Purchase Plan, which includes its subplan named the International Employee Stock Purchase Plan (together, the “Purchase Plan”), under which 721 million shares of our common stock have been reserved for issuance as of April 27, 2019. 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 our 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 the earlier of (i) January 3, 2030 and (ii) the date on which all shares available for issuance under the Purchase Plan are sold pursuant to exercised purchase rights. No shares were issued under the Purchase Plan during each of the third quarters of fiscal 2019 and 2018. We issued 9 million and 12 million shares during the first nine months of fiscal 2019 and 2018, respectively. As of April 27, 2019, 169 million shares were available for issuance under the Purchase Plan.

(c) 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):

	Three Months Ended				Nine Months Ended
	April 27, 2019		April 28, 2018		April 27, 2019		April 28, 2018
Cost of sales—product	$	22	$	24	$	67	$	70
Cost of sales—service	32		33		96		98
Share-based compensation expense in cost of sales	54		57		163		168
Research and development	135		139		398		409
Sales and marketing	124		142		386		412
General and administrative	63		61		190		189
Restructuring and other charges	3		6		45		24
Share-based compensation expense in operating expenses	325		348		1,019		1,034
Total share-based compensation expense	$	379	$	405	$	1,182	$	1,202
Income tax benefit for share-based compensation	$	98	$	140	$	389	$	411

As of April 27, 2019, the total compensation cost related to unvested share-based awards not yet recognized was $2.9 billion which is expected to be recognized over approximately 2.8 years on a weighted-average basis.

(d) Share-Based Awards Available for Grant

A summary of share-based awards available for grant is as follows (in millions):

	Share-Based Awards Available for Grant
BALANCE AT JULY 29, 2017	272
Restricted stock, stock units, and other share-based awards granted	(70	)
Share-based awards canceled/forfeited/expired	18
Shares withheld for taxes and not issued	25
BALANCE AT JULY 28, 2018	245
Restricted stock, stock units, and other share-based awards granted	(41	)
Share-based awards canceled/forfeited/expired	16
Shares withheld for taxes and not issued	17
Other	1
BALANCE AT APRIL 27, 2019	238

For each share awarded as restricted stock or a restricted stock unit award under the 2005 Plan, 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.

(e) Restricted Stock and Stock Unit Awards

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):

	Restricted Stock/ Stock Units		Weighted-Average Grant Date Fair Value per Share		Aggregate Fair  Value
UNVESTED BALANCE AT JULY 29, 2017	141		$	26.94
Granted	46		35.62
Assumed from acquisitions	1		28.26
Vested	(53	)	26.02		$	1,909
Canceled/forfeited/other	(16	)	28.37
UNVESTED BALANCE AT JULY 28, 2018	119		30.56
Granted	27		45.01
Vested	(36	)	28.30		$	1,698
Canceled/forfeited/other	(12	)	31.39
UNVESTED BALANCE AT APRIL 27, 2019	98		$	35.30

(f) Stock Option Awards

A summary of the stock option activity is as follows (in millions, except per-share amounts):

	STOCK OPTIONS OUTSTANDING
	Number Outstanding		Weighted-Average Exercise Price per Share
BALANCE AT JULY 29, 2017	12		$	6.15
Assumed from acquisitions	3		8.20
Exercised	(8	)	5.77
Canceled/forfeited/expired	(1	)	8.75
BALANCE AT JULY 28, 2018	6		7.18
Exercised	(3	)	6.88
BALANCE AT APRIL 27, 2019	3		$	7.35

The following table summarizes significant ranges of outstanding and exercisable stock options as of April 27, 2019 (in millions, except years and share prices):

	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	3	5.3	$	7.35	$	141	2	$	7.22	$	117

The aggregate intrinsic value in the preceding table represents the total pretax intrinsic value, based on our closing stock price of $55.88 as of April 26, 2019. The total number of in-the-money stock options exercisable as of April 27, 2019 was 2 million. As of July 28, 2018, 4 million outstanding stock options were exercisable and the weighted-average exercise price was $6.84.

(g) Valuation of Employee Share-Based Awards

Time-based restricted stock units and performance-based restricted stock units ("PRSUs") that are based on our financial performance metrics or non-financial operating goals are valued using the market value of our common stock on the date of grant, discounted for the present value of expected dividends. On the date of grant, we 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:

	RESTRICTED STOCK UNITS						PERFORMANCE BASED RESTRICTED STOCK UNITS
Three Months Ended	April 27, 2019			April 28, 2018			April 27, 2019	April 28, 2018
Number of shares granted (in millions)	2			2			—	—
Grant date fair value per share	$	48.17		$	39.31		N/A	$	43.44
Weighted-average assumptions/inputs:
Expected dividend yield	2.7		%	2.9		%	N/A	3.0		%
Range of risk-free interest rates	2.2% – 2.6%			0.0% – 2.6%			N/A	1.5%-2.5%
Range of expected volatilities for index	N/A			N/A			N/A	12.5%-82.8%

	RESTRICTED STOCK UNITS						PERFORMANCE BASED RESTRICTED STOCK UNITS
Nine Months Ended	April 27, 2019			April 28, 2018			April 27, 2019			April 28, 2018
Number of shares granted (in millions)	25			30			2			3
Grant date fair value per share	$	44.84		$	33.97		$	47.00		$	31.96
Weighted-average assumptions/inputs:
Expected dividend yield	2.8		%	3.2		%	2.8		%	3.5		%
Range of risk-free interest rates	0.0% – 2.9%			0.0% – 2.6%			2.1% – 3.0%			1.0%-2.5%
Range of expected volatilities for index	N/A			N/A			13.0% – 65.2%			12.5%-82.8%

The PRSUs granted during the periods presented are contingent on the achievement of our financial performance metrics, our 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 our 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 our financial performance metrics or our comparative market-based returns and 0% to 100% of the target shares granted contingent on the achievement of non-financial operating goals.

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Comprehensive Income (Loss)

9 Months Ended

Apr. 27, 2019

Comprehensive Income [Abstract]

Comprehensive Income (Loss)

Comprehensive Income (Loss)

The components of AOCI, net of tax, and the other comprehensive income (loss), excluding noncontrolling interest, for the first nine months of fiscal 2019 and 2018 are summarized as follows (in millions):

	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 28, 2018	$	(310	)	$	(11	)	$	(528	)	$	(849	)
Other comprehensive income (loss) before reclassifications attributable to Cisco Systems, Inc.	382			3			(224		)	161
(Gains) losses reclassified out of AOCI	18			(1		)	4			21
Tax benefit (expense)	(59		)	—			(2		)	(61		)
Total change for the period	341			2			(222		)	121
Effect of adoption of accounting standards	(168		)	—			—			(168		)
BALANCE AT APRIL 27, 2019	$	(137	)	$	(9	)	$	(750	)	$	(896	)

	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.	(620		)	28			34			(558		)
(Gains) losses reclassified out of AOCI	(108		)	(59		)	5			(162		)
Tax benefit (expense)	24			4			(3		)	25
Total change for the period	(704		)	(27		)	36			(695		)
Effect of adoption of accounting standard	54			—			(9		)	45
BALANCE AT APRIL 28, 2018	$	(277	)	$	5		$	(332	)	$	(604	)

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):

	Three Months Ended					Nine Months Ended
	April 27, 2019			April 28, 2018		April 27, 2019			April 28, 2018
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	$	(7	)	$	17	$	(18	)	$	108		Other income (loss), net
Net unrealized gains and losses on cash flow hedging instruments
Foreign currency derivatives	(1		)	—		—			—			Revenue—product
Foreign currency derivatives	1			—		3			—			Revenue—service
Foreign currency derivatives	—			7		(1		)	14			Cost of sales—service
Foreign currency derivatives	—			21		(1		)	45			Operating expenses
	—			28		1			59
Cumulative translation adjustment and actuarial gains and losses	—			—		—			(5		)	Operating expenses
Cumulative translation adjustment and actuarial gains and losses	(1		)	—		(4		)	—			Other income (loss), net
Total amounts reclassified out of AOCI	$	(8	)	$	45	$	(21	)	$	162

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Income Taxes

9 Months Ended

Apr. 27, 2019

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The following table provides details of income taxes (in millions, except percentages):

	Three Months Ended						Nine Months Ended
	April 27, 2019			April 28, 2018			April 27, 2019			April 28, 2018
Income before provision for income taxes	$	3,615		$	3,253		$	10,867		$	9,447
Provision for income taxes	$	571		$	562		$	1,452		$	13,140
Effective tax rate	15.8		%	17.3		%	13.4		%	139.1		%

The effective tax rate for the first nine months of fiscal 2019 includes a $152 million tax benefit relating to indirect effects from adoption of ASC 606 at the beginning of fiscal 2019.

On December 22, 2017, the Tax Cuts and Jobs Act (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. The enactment of the Tax Act resulted in us recording a provisional tax expense of $10.4 billion in fiscal 2018. In the second quarter of fiscal 2019, we completed our accounting relating to the Tax Act and recorded an additional $58 million of tax expense. The total tax charge as a result of the Tax Act was $10.5 billion, consisting of $8.2 billion of tax expense for the U.S. transition tax on accumulated earnings of foreign subsidiaries, $1.2 billion of foreign withholding tax and $1.1 billion of tax expense for DTA re-measurement. The tax expense related to the U.S. transition tax on accumulated earnings in foreign subsidiaries is net of a $0.9 billion benefit related to U.S. taxation of deemed foreign dividends in the transition fiscal year. This benefit may be reduced or eliminated in future legislation. If such legislation is enacted, we will record the impact of the legislation in the quarter of enactment.

The Tax Act includes a Global Intangible Low-Taxed Income ("GILTI") provision that imposes U.S. tax on certain foreign subsidiary income in the year it is earned. Our accounting policy is to treat tax on GILTI as a current period cost included in tax expense in the year incurred.

As of April 27, 2019, we had $1.8 billion of unrecognized tax benefit, of which $1.6 billion, if recognized, would favorably impact the effective tax rate. We regularly engage in discussions and negotiations with tax authorities regarding tax matters in various jurisdictions. We believe 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. We estimate that the unrecognized tax benefits at April 27, 2019 could be reduced by approximately $50 million in the next 12 months.

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Segment Information and Major Customers

9 Months Ended

Apr. 27, 2019

Segment Reporting [Abstract]

Segment Information and Major Customers

Segment Information and Major Customers

(a) Revenue and Gross Margin by Segment

We conduct business globally and are primarily managed on a geographic basis consisting of three segments: the Americas, EMEA, and APJC. Our management makes financial decisions and allocates resources based on the information it receives from our internal management system. Sales are attributed to a segment based on the ordering location of the customer. We do not allocate research and development, sales and marketing, or general and administrative expenses to our segments in this internal management system because management does not include the information in our measurement of the performance of the operating segments. In addition, we do 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 our measurement of the performance of the operating segments.

Summarized financial information by segment for the third quarter and the first nine months of fiscal 2019 and2018, based on our internal management system and as utilized by our Chief Operating Decision Maker ("CODM"), is as follows (in millions):

	Three Months Ended						Nine Months Ended
	April 27, 2019			April 28, 2018			April 27, 2019			April 28, 2018
Revenue:
Americas	$	7,695		$	7,161		$	22,798		$	21,515
EMEA	3,356			3,281			9,803			9,252
APJC	1,907			2,021			5,875			5,719
Total	$	12,958		$	12,463		$	38,476		$	36,486
Gross margin:
Americas	$	5,046		$	4,614		$	14,911		$	13,950
EMEA	2,166			2,109			6,307			5,925
APJC	1,158			1,247			3,467			3,506
Segment total	8,370			7,970			24,686			23,381
Unallocated corporate items	(197		)	(211		)	(594		)	(697		)
Total	$	8,173		$	7,759		$	24,092		$	22,684

Amounts may not sum and percentages may not recalculate due to rounding.

Revenue in the United States was $6.8 billion and $6.2 billion for the third quarter of fiscal 2019 and 2018, respectively, and $20.2 billion and $18.8 billion for the first nine months of fiscal 2019 and 2018, respectively.

(b) Revenue for Groups of Similar Products and Services

We design, manufacture, and sell Internet Protocol (IP)-based networking and other products related to the communications and information technology (IT) industry and provide services associated with these products and their use.

The following table presents revenue for groups of similar products and services (in millions):

	Three Months Ended				Nine Months Ended
	April 27, 2019		April 28, 2018		April 27, 2019		April 28, 2018
Revenue:
Infrastructure Platforms	$	7,545	$	7,180	$	22,315	$	20,870
Applications	1,431		1,310		4,315		3,697
Security	707		583		2,016		1,725
Other Products	39		231		239		775
Total Product	9,722		9,304		28,885		27,067
Services	3,236		3,159		9,591		9,419
Total (1)	$	12,958	$	12,463	$	38,476	$	36,486

⁽¹⁾ Includes SPVSS business revenue of $0 and $219 million for the third quarter of fiscal 2019 and 2018, respectively, and $168 million and $697 million for the first nine months of fiscal 2019 and 2018, respectively.

(c) Additional Segment Information

The majority of our assets was attributable to our U.S. operations as of each of April 27, 2019 and July 28, 2018.

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):

	April 27, 2019		July 28, 2018
Property and equipment, net:
United States	$	2,297	$	2,487
International	537		519
Total	$	2,834	$	3,006

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Net Income (Loss) per Share

9 Months Ended

Apr. 27, 2019

Earnings Per Share [Abstract]

Net Income (Loss) 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):

	Three Months Ended				Nine Months Ended
	April 27, 2019		April 28, 2018		April 27, 2019		April 28, 2018
Net income (loss)	$	3,044	$	2,691	$	9,415	$	(3,693	)
Weighted-average shares—basic	4,370		4,791		4,468		4,892
Effect of dilutive potential common shares	45		53		41		—
Weighted-average shares—diluted	4,415		4,844		4,509		4,892
Net income (loss) per share—basic	$	0.70	$	0.56	$	2.11	$	(0.76	)
Net income (loss) per share—diluted	$	0.69	$	0.56	$	2.09	$	(0.76	)

Employee equity share options, unvested shares, and similar equity instruments granted and assumed by Cisco 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 are collectively assumed to be used to repurchase shares.

We excluded antidilutive employee-share based awards of 5 million for each of the third quarters of fiscal 2019 and 2018, and 32 million for the first nine months of fiscal 2019. For the first nine months of fiscal 2018, we excluded the impact of potential common shares from the calculation of net income (loss) per share as the inclusion would have had an antidilutive effect.

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Recent Accounting Pronouncements (Policies)

9 Months Ended

Apr. 27, 2019

Accounting Policies [Abstract]

Fiscal Period

The fiscal year for Cisco Systems, Inc. (the “Company,” “Cisco,” “we,” “us,” or “our”) is the 52 or 53 weeks ending on the last Saturday in July. Fiscal 2019 and fiscal 2018 are each 52-week fiscal years.

Basis of Presentation

The Consolidated Financial Statements include our accounts and those of our subsidiaries. All intercompany accounts and transactions have been eliminated. We conduct business globally and are 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).

We have prepared the accompanying financial data as of April 27, 2019 and for the third quarter and first nine months of fiscal 2019 and fiscal 2018, 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 28, 2018 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, we believe 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 our Annual Report on Form 10-K for the fiscal year ended July 28, 2018.

Our consolidated financial statements include our accounts and entities consolidated under the variable interest and voting models. The noncontrolling interests attributed to these investments, if any, are presented as a separate component from our equity in the equity section of the Consolidated Balance Sheets. The share of earnings attributable to the noncontrolling interests 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 April 27, 2019; the results of operations and the statements of comprehensive income (loss) for the third quarter and first nine months of fiscal 2019 and fiscal 2018; the statements of cash flows for the first nine months of fiscal 2019 and fiscal 2018; and the statements of equity for the third quarter and first nine months of fiscal 2019 and fiscal 2018, as applicable, have been made. The results of operations for the third quarter and first nine months of fiscal 2019 and fiscal 2018 are not necessarily indicative of the operating results for the full fiscal year or any future periods.

Reclassification

Certain reclassifications have been made to the amounts in prior periods in order to conform to the current period’s presentation. We have evaluated subsequent events through the date that the financial statements were issued.

New Accounting Updates Recently Adopted and Recent Accounting Standards or Updates Not Yet Effective

New Accounting Updates Recently Adopted

Revenue Recognition In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers, a new accounting standard related to revenue recognition. ASC 606 supersedes nearly all U.S. GAAP on revenue recognition and eliminated industry-specific guidance. The underlying principle of ASC 606 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.

ASC 606 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"). At the beginning of the first quarter of fiscal 2019, we adopted ASC 606 using the modified retrospective method to those contracts that were not completed as of July 28, 2018. Refer to Opening Balance Adjustments below for the impact of adoption on our Consolidated Financial Statements.

We have implemented new accounting policies, systems, processes, and internal controls necessary to support the requirements of ASC 606.

ASC 606 primarily impacts our revenue recognition for software arrangements and sales to two-tier distributors. In both areas, the new standard accelerates the recognition of revenue.

The table below details the timing of when revenue was typically recognized under the prior revenue standard compared to the timing of when revenue is typically recognized under ASC 606 for these major areas:

	Prior Revenue Standard	ASC 606
Software arrangements:
Perpetual software licenses	Upfront	Upfront
Term software licenses	Ratable	Upfront
Security software licenses	Ratable	Ratable
Enterprise license agreements (software licenses)	Ratable	Upfront
Software support (maintenance)	Ratable	Ratable
Software-as-a-service	Ratable	Ratable
Two-tier distribution	Sell-Through	Sell-In

In addition to the above revenue recognition timing impacts, ASC 606 requires incremental contract acquisition costs (such as sales commissions) for customer contracts to be capitalized and amortized on a systematic basis that is consistent with the transfer to the customer of the goods or services to which the assets relates.

We enter into contracts with customers that can include various combinations of products and services which are generally distinct and accounted for as separate performance obligations. As a result, our contracts may contain multiple performance obligations. We determine whether arrangements are distinct based on whether the customer can benefit from the product or service on its own or together with other resources that are readily available and whether our commitment to transfer the product or service to the customer is separately identifiable from other obligations in the contract. We classify our hardware, perpetual software licenses, and software-as-a-service (SaaS) as distinct performance obligations. Term software licenses represent multiple obligations, which include software licenses and software maintenance. In transactions where we deliver hardware or software, we are typically the principal and we record revenue and costs of goods sold on a gross basis. We refer to our term software licenses, security software licenses, SaaS, and associated service arrangements as subscription offers.

We recognize revenue upon transfer of control of promised goods or services in a contract with a customer in an amount that reflects the consideration we expect to receive in exchange for those products or services. Transfer of control occurs once the customer has the contractual right to use the product, generally upon shipment or once delivery and risk of loss has transferred to the customer. Transfer of control can also occur over time for software maintenance and services as the customer receives the benefit over the contract term. Our hardware and perpetual software licenses are distinct performance obligations where revenue is recognized upfront upon transfer of control. Term software licenses include multiple performance obligations where the term licenses are recognized upfront upon transfer of control, with the associated software maintenance revenue recognized ratably over the contract term as services and software updates are provided. SaaS arrangements have one distinct performance obligation which is satisfied over time with revenue recognized ratably over the contract term as the customer consumes the services. On our product sales, we record consideration from shipping and handling on a gross basis within net product sales. We record our revenue net of any associated sales taxes.

Significant Judgments

Revenue is allocated among these performance obligations in a manner that reflects the consideration that we expect to be entitled to for the promised goods or services based on standalone selling prices (SSP). SSP is estimated for each distinct performance obligation and judgment may be required in their determination. The best evidence of SSP is the observable price of a product or service when we sell the goods separately in similar circumstances and to similar customers. In instances where SSP is not directly observable, we determine SSP using information that may include market conditions and other observable inputs.

We apply judgment in determining the transaction price as we may be required to estimate variable consideration when determining the amount of revenue to recognize. Variable consideration includes various rebate, cooperative marketing, and other incentive programs that we offer to our distributors, partners and customers. When determining the amount of revenue to recognize, we estimate the expected usage of these programs, applying the expected value or most likely estimate and update the estimate at each reporting period as actual utilization becomes available. We also consider the customers' right of return in determining the transaction price, where applicable.

We assess certain software licenses, such as for security software, that contain critical updates or upgrades which customers can download throughout the contract term. Without these updates or upgrades, the functionality of the software would diminish over a relatively short time period. These updates or upgrades provide the customer the full functionality of the purchased security software licenses and are required to maintain the security license's utility as the risks and threats in the environment are rapidlychanging. In these circumstances, the revenue from these software arrangements is recognized as a distinct performance obligation satisfied over the contract term.

For the additional disclosures required as part of ASC 606 see Note 3.

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 most significant impact of this accounting standard update is that it requires the remeasurement of investments not accounted for under the equity method to be recorded at fair value through the Consolidated Statement of Operations at the end of each reporting period. The application of this accounting standard update increases the variability of other income (loss), net.

Our equity investments are accounted for as follows:

• Marketable equity securities have readily determinable fair value (RDFV) that are measured and recorded at fair value.

• Non-marketable equity securities do not have RDFV and are measured using a measurement alternative recorded at cost less any impairment, plus or minus changes resulting from qualifying observable price changes. For certain of these securities, we have elected to apply the net asset value (NAV) practical expedient. The NAV is the estimated fair value of these investments.

• Equity method investments are securities we do not control, but are able to exert significant influence over the investee. These investments are measured at cost less any impairment, plus or minus our share of equity method investee income or loss.

We adopted this accounting standard update beginning the first quarter of fiscal 2019. The standard was adopted using the modified retrospective method for our marketable equity securities and non-marketable equity securities measured using the NAV practical expedient. For our non-marketable equity securities measured using the measurement alternative, we applied the prospective method. Refer to Opening Balance Adjustments below for the impact of adoption on our Consolidated Balance Sheet.

Income Taxes on Intra-Entity Transfers of AssetsIn 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. We adopted this accounting standard update beginning in the first quarter of fiscal 2019 on a modified retrospective basis. The ongoing impact of this standard will be facts and circumstances dependent on any transactions within its scope. Refer to Opening Balance Adjustments below for the impact of adoption on our Consolidated Balance Sheet.

Classification of Cash Flow ElementsIn 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. We adopted this accounting standard update beginning in the first quarter of fiscal 2019 on a retrospective basis. The application of this accounting standard update did not have an impact on our Consolidated Statements of Cash Flows.

Restricted Cash in Statement of Cash Flows 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. We adopted this accounting standard update beginning in the first quarter of fiscal 2019 using a retrospective transition method to each period presented. The application of this accounting standard update did not have a material impact on our Consolidated Statements of Cash Flows. Prior period information has been retrospectively adjusted due to the adoption of ASU 2016-18, Statement of Cash Flows, Restricted Cash at the beginning of the first quarter of fiscal 2019.

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. We early adopted this accounting standard update beginning in the first quarter of fiscal 2019 on a prospective basis. The application of this accounting standard update did not have any impact on our Consolidated Financial Statements.

Definition of a BusinessIn 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. We adopted this accounting standard update beginning in the first quarter of fiscal 2019 on a prospective basis. The impact of this accounting standard update will be fact dependent, but we expect 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.

Opening Balance Adjustments

The following table summarizes the cumulative effect of the changes made to the Consolidated Balance Sheet for the adoption of ASC 606, ASU 2016-01, Financial Instruments, and ASU 2016-16, Intra-Entity Transfers of Assets Other than Inventory (in millions):

Line Item in Consolidated Balance Sheet:	Balance at July 28, 2018			New Revenue Recognition Standard				New Financial Instruments Standard				New Intra-Entity Transfers Standard				Adjusted Balance at July 29, 2018
ASSETS
Accounts receivable, net	$	5,554		$	(104	)	(1)	$	—			$	—			$	5,450
Inventories	$	1,846		$	(302	)	(2)	$	—			$	—			$	1,544
Other current assets (includes capitalized contract acquisition costs)	$	2,940		$	371		(3), (4)	$	—			$	(25	)	(3)	$	3,286
Deferred tax assets	$	3,219		$	(624	)	(3)	$	(15	)	(3)	$	1,415		(8)	$	3,995
Other assets (includes capitalized contract acquisition costs)	$	1,582		$	327		(4)	$	136		(7)	$	(91	)	(3)	$	1,954
TOTAL ASSETS	$	108,784		$	(332	)		$	121			$	1,299			$	109,872
LIABILITIES AND EQUITY
Income taxes payable	$	1,004		$	—			$	—			$	11		(3)	$	1,015
Deferred revenue — current	$	11,490		$	(1,702	)	(5)	$	—			$	—			$	9,788
Other current liabilities	$	4,413		$	33		(6)	$	—			$	—			$	4,446
Deferred revenue — non-current	$	8,195		$	(1,081	)	(5)	$	—			$	—			$	7,114
Other long-term liabilities	$	1,434		$	85		(3)	$	13		(3)	$	—			$	1,532
Retained earnings	$	1,233		$	2,333		(10)	$	283		(10)	$	1,281		(10)	$	5,130
Accumulated other comprehensive income (loss)	$	(849	)	$	—			$	(175	)	(9)	$	7		(3)	$	(1,017	)
TOTAL LIABILITIES AND EQUITY	$	108,784		$	(332	)		$	121			$	1,299			$	109,872

⁽¹⁾ Primarily represents the decrease to accounts receivable related to the change in recognizing revenue on sales to two-tier distributors from a sell-through to a sell-in basis

⁽²⁾ Primarily represents the reduction of inventory for the change from recognizing revenue on sales to two-tier distributors from a sell-through to a sell-in basis

⁽³⁾ Includes the impacts to deferred tax assets, liabilities and other income tax balances

⁽⁴⁾ Primarily represents capitalized contract acquisition costs (e.g. commissions)

⁽⁵⁾ Primarily represents deferred revenue adjusted to retained earnings primarily due to the change in revenue recognition for certain software arrangements from ratable to upfront, recognizing revenue on sales to two-tier distributors from a sell-through to a sell-in basis. Of this total $2.8 billion adjustment, $2.6 billion related to product deferred revenue, of which $1.3 billion relates to our recurring software and subscription offers, $0.6 billion relates to two-tier distribution, and the remainder relates to non-recurring software and other adjustments.

⁽⁶⁾ Primarily represents the reclassification of accounts receivable contra balances to other current liabilities, adjustments to rebate liabilities for the change from recognizing revenue on sales to two-tier distributors from a sell-through to a sell-in basis, and reclassifications from other current liabilities for amounts that are not contract liabilities under ASC 606

⁽⁷⁾ Represents the adjustment due to the remeasurement of non-marketable equity investments at fair value

⁽⁸⁾ Primarily represents the change in net deferred tax assets related to unrecognized income tax effects of intra-entity asset transfers

⁽⁹⁾ Represents the reclassification of net unrealized gains from accumulated other comprehensive income (loss) to retained earnings

⁽¹⁰⁾ Retained earnings impact from the adjustments noted above

Impact of ASC 606 Adoption

The application of ASC 606 increased our total revenue by $146 million and $662 million in the third quarter and first nine months of fiscal 2019, respectively. The application of ASC 606 did not have a material impact to either our cost of sales or our operating expenses in the third quarter and first nine months of fiscal 2019. We recognized a $152 million benefit to our provision for income taxes relating to indirect effects from the adoption of ASC 606 in the first quarter of fiscal 2019. For additional information regarding ASC 606, see Note 3 to the Consolidated Financial Statements.

In connection with the adoption of ASC 606, we recorded a transition adjustment to increase retained earnings by $2.3 billion. See above for the transition impact of ASC 606 by balance sheet line item. As of April 27, 2019, the balance sheet changes attributable to ASC 606 related to accounts receivable, inventories, and deferred revenue were not materially different than the impacts upon adoption. In connection with the adoption of ASC 606, we established contract assets for unbilled receivables. As of April 27, 2019, we had total contract assets of $637 million, of which $254 million was recorded in other current assets and $383 million was recorded in other assets. As of April 27, 2019, we had total capitalized contract acquisition costs of $705 million, of which $390 million was recorded in other current assets and $315 million was recorded in other assets. The adoption of ASC 606 did not have any impact on net cash provided by operating activities.

(b) Recent Accounting Standards or Updates Not Yet Effective

Leases In February 2016, the FASB issued an accounting standard update and subsequent amendments 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 us beginning in the first quarter of fiscal 2020 and early adoption is permitted. We expect to adopt this accounting standard update on a modified retrospective basis in the first quarter of fiscal 2020, and we are currently evaluating the impact of this accounting standard update on our 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 us beginning in the first quarter of fiscal 2021 and early adoption in fiscal 2020 is permitted. We expect to adopt this accounting standard update on a modified retrospective basis in the first quarter of fiscal 2021, and we are currently evaluating the impact of this accounting standard update on our Consolidated Financial Statements.

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 Cisco’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 our hardware, software, and services, which may include additional funding for other costs associated with network installation and integration of our 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.

Impairment of Financing Receivable

We assess the allowance for credit loss related to financing receivables on either an individual or a collective basis. We consider 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 our 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. Our internal credit risk ratings are categorized as 1 through 10, with the lowest credit risk rating representing the highest quality financing receivables.

Typically, we also consider 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 April 27, 2019 and July 28, 2018, are presented under “(b) Credit Quality of Financing Receivables” above.

We evaluate the remainder of our financing receivables portfolio for impairment on a collective basis and record an allowance for credit loss at the portfolio segment level. When evaluating the financing receivables on a collective basis, we use expected default frequency rates published by a major third-party credit-rating agency as well as our own historical loss rate in the event of default, while also systematically giving effect to economic conditions, concentration of risk, and correlation.

Fair Value Measurement

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, we consider the principal or most advantageous market in which we would transact, and we also consider assumptions that market participants would use when pricing the asset or liability.

(a) Fair Value Hierarchy

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.

Fair Value of Financial Instruments

These assets were measured at fair value due to events or circumstances we identified as having significant impact on their fair value during the respective periods. The carrying value of our non-marketable equity securities recorded to fair value on a non-recurring basis is adjusted for observable transactions for identical or similar investments of the same issuer or impairment. These securities are classified as Level 3 in the fair value hierarchy because we estimate the value based on valuation methods using the observable transaction price at the transaction date and other unobservable inputs such as volatility, rights, and obligations of the securities we hold.

Level 1 marketable equity securities are determined by using quoted prices in active markets for identical assets. Level 2 available-for-sale debt investments are priced using quoted market prices for similar instruments or nonbinding market prices that are corroborated by observable market data. We use 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. We use such pricing data as the primary input to make our assessments and determinations as to the ultimate valuation of our investment portfolio and have not made, during the periods presented, any material adjustments to such inputs. We are ultimately responsible for the financial statements and underlying estimates. Our 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. We did not have any transfers between Level 1 and Level 2 fair value measurements during the periods presented.

Derivatives

We use derivative instruments primarily to manage exposures to foreign currency exchange rate, interest rate, and equity price risks. Our 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. Our derivatives expose us to credit risk to the extent that the counterparties may be unable to meet the terms of the agreement. We do, however, seek to mitigate such risks by limiting our 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.

Offsetting of Derivative Instruments

We present our derivative instruments at gross fair values in the Consolidated Balance Sheets. However, our 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, we also enter 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.

Hedging Derivatives

We conduct business globally in numerous currencies. Therefore, we are exposed to adverse movements in foreign currency exchange rates. To limit the exposure related to foreign currency changes, we enter into foreign currency contracts. We do not enter into such contracts for speculative purposes.

We hedge forecasted foreign currency transactions related to certain revenues, 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. We assess 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, we did not discontinue any cash flow hedges for which it was probable that a forecasted transaction would not occur.

We enter 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.

We hedge certain net investments in our foreign operations with forward contracts to reduce the effects of foreign currency fluctuations on our net investment in those foreign subsidiaries. These derivative instruments generally have maturities of up to six months.

(d) Interest Rate Risk

Interest Rate Derivatives, Investments   Our primary objective for holding available-for-sale debt investments is to achieve an appropriate investment return consistent with preserving principal and managing risk. To realize these objectives, we may utilize interest rate swaps or other derivatives designated as fair value or cash flow hedges. As of April 27, 2019 and July 28, 2018, we did not have any outstanding interest rate derivatives related to our available-for-sale debt investments.

Interest Rate Derivatives Designated as Fair Value Hedges, Long-Term Debt In the first nine months of fiscal 2019, we did not enter into any interest rate swaps. In prior fiscal years, we entered into interest rate swaps designated as fair value hedges related to fixed-rate senior notes that are due in fiscal 2020through 2025. Under these interest rate swaps, we receive fixed-rate interest payments and make 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 assets and other current and long-term liabilities.

(e) Equity Price Risk

We may hold equity securities for strategic purposes or to diversify our overall investment portfolio. The marketable equity securities in our portfolio are subject to price risk. To manage our exposure to changes in the fair value of certain equity securities, we have 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.

Derivatives Not Designated as Hedges

In addition, we periodically enter 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.

We are also exposed to variability in compensation charges related to certain deferred compensation obligations to employees. Although not designated as accounting hedges, we utilize derivatives such as total return swaps to economically hedge this exposure.

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.

Commitments and Contingencies

We record a liability for firm, noncancelable, and unconditional purchase commitments for quantities in excess of our future demand forecasts consistent with the valuation of our excess and obsolete inventory.

We purchase components from a variety of suppliers and use several contract manufacturers to provide manufacturing services for our products. During the normal course of business, in order to manage manufacturing lead times and help ensure adequate component supply, we enter into agreements with contract manufacturers and suppliers that either allow them to procure inventory based upon criteria as defined by us or establish the parameters defining our requirements. A significant portion of our 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 us the option to cancel, reschedule, and adjust our requirements based on our business needs prior to firm orders being placed.

Indemnifications

In the normal course of business, we indemnify other parties, including customers, lessors, and parties to other transactions with us, with respect to certain matters. We have agreed to indemnify 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.

Segment Information

We conduct business globally and are primarily managed on a geographic basis consisting of three segments: the Americas, EMEA, and APJC. Our management makes financial decisions and allocates resources based on the information it receives from our internal management system. Sales are attributed to a segment based on the ordering location of the customer. We do not allocate research and development, sales and marketing, or general and administrative expenses to our segments in this internal management system because management does not include the information in our measurement of the performance of the operating segments. In addition, we do 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 our measurement of the performance of the operating segments.

Net Income per Share

Employee equity share options, unvested shares, and similar equity instruments granted and assumed by Cisco 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 are collectively assumed to be used to repurchase shares.

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Recent Accounting Pronouncements (Tables)

9 Months Ended

Apr. 27, 2019

Accounting Policies [Abstract]

Summary of New Accounting Pronouncements

The table below details the timing of when revenue was typically recognized under the prior revenue standard compared to the timing of when revenue is typically recognized under ASC 606 for these major areas:

	Prior Revenue Standard	ASC 606
Software arrangements:
Perpetual software licenses	Upfront	Upfront
Term software licenses	Ratable	Upfront
Security software licenses	Ratable	Ratable
Enterprise license agreements (software licenses)	Ratable	Upfront
Software support (maintenance)	Ratable	Ratable
Software-as-a-service	Ratable	Ratable
Two-tier distribution	Sell-Through	Sell-In

The following table summarizes the cumulative effect of the changes made to the Consolidated Balance Sheet for the adoption of ASC 606, ASU 2016-01, Financial Instruments, and ASU 2016-16, Intra-Entity Transfers of Assets Other than Inventory (in millions):

Line Item in Consolidated Balance Sheet:	Balance at July 28, 2018			New Revenue Recognition Standard				New Financial Instruments Standard				New Intra-Entity Transfers Standard				Adjusted Balance at July 29, 2018
ASSETS
Accounts receivable, net	$	5,554		$	(104	)	(1)	$	—			$	—			$	5,450
Inventories	$	1,846		$	(302	)	(2)	$	—			$	—			$	1,544
Other current assets (includes capitalized contract acquisition costs)	$	2,940		$	371		(3), (4)	$	—			$	(25	)	(3)	$	3,286
Deferred tax assets	$	3,219		$	(624	)	(3)	$	(15	)	(3)	$	1,415		(8)	$	3,995
Other assets (includes capitalized contract acquisition costs)	$	1,582		$	327		(4)	$	136		(7)	$	(91	)	(3)	$	1,954
TOTAL ASSETS	$	108,784		$	(332	)		$	121			$	1,299			$	109,872
LIABILITIES AND EQUITY
Income taxes payable	$	1,004		$	—			$	—			$	11		(3)	$	1,015
Deferred revenue — current	$	11,490		$	(1,702	)	(5)	$	—			$	—			$	9,788
Other current liabilities	$	4,413		$	33		(6)	$	—			$	—			$	4,446
Deferred revenue — non-current	$	8,195		$	(1,081	)	(5)	$	—			$	—			$	7,114
Other long-term liabilities	$	1,434		$	85		(3)	$	13		(3)	$	—			$	1,532
Retained earnings	$	1,233		$	2,333		(10)	$	283		(10)	$	1,281		(10)	$	5,130
Accumulated other comprehensive income (loss)	$	(849	)	$	—			$	(175	)	(9)	$	7		(3)	$	(1,017	)
TOTAL LIABILITIES AND EQUITY	$	108,784		$	(332	)		$	121			$	1,299			$	109,872

⁽¹⁾ Primarily represents the decrease to accounts receivable related to the change in recognizing revenue on sales to two-tier distributors from a sell-through to a sell-in basis

⁽²⁾ Primarily represents the reduction of inventory for the change from recognizing revenue on sales to two-tier distributors from a sell-through to a sell-in basis

⁽³⁾ Includes the impacts to deferred tax assets, liabilities and other income tax balances

⁽⁴⁾ Primarily represents capitalized contract acquisition costs (e.g. commissions)

⁽⁵⁾ Primarily represents deferred revenue adjusted to retained earnings primarily due to the change in revenue recognition for certain software arrangements from ratable to upfront, recognizing revenue on sales to two-tier distributors from a sell-through to a sell-in basis. Of this total $2.8 billion adjustment, $2.6 billion related to product deferred revenue, of which $1.3 billion relates to our recurring software and subscription offers, $0.6 billion relates to two-tier distribution, and the remainder relates to non-recurring software and other adjustments.

⁽⁶⁾ Primarily represents the reclassification of accounts receivable contra balances to other current liabilities, adjustments to rebate liabilities for the change from recognizing revenue on sales to two-tier distributors from a sell-through to a sell-in basis, and reclassifications from other current liabilities for amounts that are not contract liabilities under ASC 606

⁽⁷⁾ Represents the adjustment due to the remeasurement of non-marketable equity investments at fair value

⁽⁸⁾ Primarily represents the change in net deferred tax assets related to unrecognized income tax effects of intra-entity asset transfers

⁽⁹⁾ Represents the reclassification of net unrealized gains from accumulated other comprehensive income (loss) to retained earnings

⁽¹⁰⁾ Retained earnings impact from the adjustments noted above

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Revenue (Tables)

9 Months Ended

Apr. 27, 2019

Revenue from Contract with Customer [Abstract]

Disaggregation of Revenue

The following table presents this disaggregation of revenue (in millions):

	Three Months Ended				Nine Months Ended
	April 27, 2019		April 28, 2018		April 27, 2019		April 28, 2018
Revenue:
Infrastructure Platforms	$	7,545	$	7,180	$	22,315	$	20,870
Applications	1,431		1,310		4,315		3,697
Security	707		583		2,016		1,725
Other Products	39		231		239		775
Total Product	9,722		9,304		28,885		27,067
Services	3,236		3,159		9,591		9,419
Total (1)	$	12,958	$	12,463	$	38,476	$	36,486

Amounts may not sum due to rounding.

⁽¹⁾ During the second quarter of fiscal 2019, we completed the divestiture of the Service Provider Video Software Solutions ("SPVSS") business. Total revenue includes SPVSS business revenue of $0 and $219 million for the third quarter of fiscal 2019 and 2018, respectively, and $168 million and $697 million for the first nine months of fiscal 2019 and 2018, respectively.

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Acquisitions and Divestitures (Tables)

9 Months Ended

Apr. 27, 2019

Business Combinations [Abstract]

Summary of Allocation of Total Purchase Consideration

A summary of the allocation of the total purchase consideration is presented as follows (in millions):

	Purchase Consideration		Net Tangible Assets Acquired (Liabilities Assumed)			Purchased Intangible Assets		Goodwill
Duo	$	2,025	$	(57	)	$	342	$	1,740
Luxtera	596		(19		)	319		296
Others (three in total)	65		2			11		52
Total	$	2,686	$	(74	)	$	672	$	2,088

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Goodwill and Purchased Intangible Assets (Tables)

9 Months Ended

Apr. 27, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill by Reportable Segment

The following table presents the goodwill allocated to our reportable segments as of April 27, 2019 and during the first nine months of fiscal 2019 (in millions):

	Balance at July 28, 2018		Acquisitions & Divestitures		Other			Balance at April 27, 2019
Americas	$	19,998	$	1,240	$	(109	)	$	21,129
EMEA	7,529		486		(33		)	7,982
APJC	4,179		274		(20		)	4,433
Total	$	31,706	$	2,000	$	(162	)	$	33,544

Schedule of Intangible Assets Acquired Through Business Combinations

The following table presents details of our intangible assets acquired through acquisitions completed during the first nine months of fiscal 2019 (in millions, except years):

	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
Duo	5.0	$	153	5.0	$	94	2.5	$	18	$	77	$	342
Luxtera	4.0	2		5.0	58		1.6	3		256		319
Others (three in total)	4.4	11		—	—		—	—		—		11
Total		$	166		$	152		$	21	$	333	$	672

Schedule of Purchased Intangible Assets

The following tables present details of our purchased intangible assets (in millions):

April 27, 2019	Gross		Accumulated Amortization			Net
Purchased intangible assets with finite lives:
Technology	$	3,169	$	(1,775	)	$	1,394
Customer relationships	840		(296		)	544
Other	41		(18		)	23
Total purchased intangible assets with finite lives	4,050		(2,089		)	1,961
In-process research and development, with indefinite lives	437		—			437
Total	$	4,487	$	(2,089	)	$	2,398

July 28, 2018	Gross		Accumulated Amortization			Net
Purchased intangible assets with finite lives:
Technology	$	3,711	$	(1,888	)	$	1,823
Customer relationships	1,538		(937		)	601
Other	63		(38		)	25
Total purchased intangible assets with finite lives	5,312		(2,863		)	2,449
In-process research and development, with indefinite lives	103		—			103
Total	$	5,415	$	(2,863	)	$	2,552

Schedule of Amortization of Purchased Intangible Assets

The following table presents the amortization of purchased intangible assets, including impairment charges (in millions):

	Three Months Ended				Nine Months Ended
	April 27, 2019		April 28, 2018		April 27, 2019		April 28, 2018
Amortization of purchased intangible assets:
Cost of sales	$	157	$	177	$	464	$	491
Operating expenses	39		67		112		188
Total	$	196	$	244	$	576	$	679

Schedule of Estimated Future Amortization Expense of Purchased Intangible Assets

The estimated future amortization expense of purchased intangible assets with finite lives as of April 27, 2019 is as follows (in millions):

Fiscal Year	Amount
2019 (remaining three months)	$	194
2020	$	741
2021	$	543
2022	$	287
2023	$	145
Thereafter	$	51

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Restructuring and Other Charges (Tables)

9 Months Ended

Apr. 27, 2019

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):

	FISCAL 2017 AND PRIOR PLANS						FISCAL 2018 PLAN
	Employee Severance			Other			Employee Severance			Other			Total
Liability as of July 28, 2018	$	41		$	13		$	19		$	—		$	73
Charges	—			(1		)	232			51			282
Cash payments	(34		)	(7		)	(232		)	(2		)	(275		)
Non-cash items	—			—			—			(46		)	(46		)
Liability as of April 27, 2019	$	7		$	5		$	19		$	3		$	34

	FISCAL 2017 AND PRIOR PLANS						FISCAL 2018 PLAN
	Employee Severance			Other			Employee Severance			Other			Total
Liability as of July 29, 2017	$	74		$	43		$	—		$	—		$	117
Charges	223			27			75			7			332
Cash payments	(245		)	(30		)	(49		)	(1		)	(325		)
Non-cash items	4			(18		)	—			(6		)	(20		)
Liability as of April 28, 2018	$	56		$	22		$	26		$	—		$	104

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Balance Sheet Details (Tables)

9 Months Ended

Apr. 27, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Total Cash, Cash Equivalents, and Restricted Cash

The following tables provide details of selected balance sheet items (in millions):

	April 27, 2019		July 28, 2018
Cash and cash equivalents	$	10,251	$	8,934
Restricted cash included in other current assets	21		32
Restricted cash included in other assets	1		27
Total cash, cash equivalents, and restricted cash	$	10,273	$	8,993

Inventories

Inventories:
Raw materials	$	398	$	423
Work in process	12		—
Finished goods:
Deferred cost of sales and distributor inventory	77		443
Manufactured finished goods	787		689
Total finished goods	864		1,132
Service-related spares	217		258
Demonstration systems	22		33
Total	$	1,513	$	1,846

Property and Equipment, Net

Property and equipment, net:
Gross property and equipment:
Land, buildings, and building and leasehold improvements	$	4,554		$	4,710
Computer equipment and related software	941			1,085
Production, engineering, and other equipment	5,688			5,734
Operating lease assets	562			356
Furniture and fixtures	370			358
Total gross property and equipment	12,115			12,243
Less: accumulated depreciation and amortization	(9,281		)	(9,237		)
Total	$	2,834		$	3,006

Deferred Revenue

Deferred revenue:
Service	$	11,297	$	11,431
Product	6,159		8,254
Total	$	17,456	$	19,685
Reported as:
Current	$	10,117	$	11,490
Noncurrent	7,339		8,195
Total	$	17,456	$	19,685

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Financing Receivables and Operating Leases (Tables)

9 Months Ended

Apr. 27, 2019

Receivables [Abstract]

Financing Receivables

A summary of our financing receivables is presented as follows (in millions):

April 27, 2019	Lease Receivables			Loan Receivables			Financed Service Contracts			Total
Gross	$	2,442		$	5,240		$	2,349		$	10,031
Residual value	152			—			—			152
Unearned income	(139		)	—			—			(139		)
Allowance for credit loss	(68		)	(77		)	(8		)	(153		)
Total, net	$	2,387		$	5,163		$	2,341		$	9,891
Reported as:
Current	$	1,033		$	2,632		$	1,364		$	5,029
Noncurrent	1,354			2,531			977			4,862
Total, net	$	2,387		$	5,163		$	2,341		$	9,891

July 28, 2018	Lease Receivables			Loan Receivables			Financed Service Contracts			Total
Gross	$	2,688		$	4,999		$	2,326		$	10,013
Residual value	164			—			—			164
Unearned income	(141		)	—			—			(141		)
Allowance for credit loss	(135		)	(60		)	(10		)	(205		)
Total, net	$	2,576		$	4,939		$	2,316		$	9,831
Reported as:
Current	$	1,249		$	2,376		$	1,324		$	4,949
Noncurrent	1,327			2,563			992			4,882
Total, net	$	2,576		$	4,939		$	2,316		$	9,831

Contractual Maturities of the Gross Lease Receivables

Future minimum lease payments to Cisco on lease receivables as of April 27, 2019 are summarized as follows (in millions):

Fiscal Year	Amount
2019 (remaining three months)	$	308
2020	984
2021	632
2022	341
2023	147
Thereafter	30
Total	$	2,442

Schedule of Internal Credit Risk Rating for Each Portfolio Segment and Class

Gross receivables, excluding residual value, less unearned income categorized by our internal credit risk rating as of April 27, 2019 and July 28, 2018 are summarized as follows (in millions):

	INTERNAL CREDIT RISK RATING
April 27, 2019	1 to 4		5 to 6		7 and Higher		Total
Lease receivables	$	1,235	$	1,029	$	39	$	2,303
Loan receivables	3,187		1,890		163		5,240
Financed service contracts	1,351		984		14		2,349
Total	$	5,773	$	3,903	$	216	$	9,892

	INTERNAL CREDIT RISK RATING
July 28, 2018	1 to 4		5 to 6		7 and Higher		Total
Lease receivables	$	1,294	$	1,199	$	54	$	2,547
Loan receivables	3,184		1,752		63		4,999
Financed service contracts	1,468		835		23		2,326
Total	$	5,946	$	3,786	$	140	$	9,872

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 April 27, 2019 and July 28, 2018 (in millions):

	DAYS PAST DUE (INCLUDES BILLED AND UNBILLED)
April 27, 2019	31-60		61-90		91+		Total Past Due		Current		Total		Nonaccrual Financing Receivables		Impaired Financing Receivables
Lease receivables	$	79	$	36	$	114	$	229	$	2,074	$	2,303	$	18	$	18
Loan receivables	108		81		255		444		4,796		5,240		30		30
Financed service contracts	75		113		471		659		1,690		2,349		4		4
Total	$	262	$	230	$	840	$	1,332	$	8,560	$	9,892	$	52	$	52

	DAYS PAST DUE (INCLUDES BILLED AND UNBILLED)
July 28, 2018	31-60		61-90		91+		Total Past Due		Current		Total		Nonaccrual Financing Receivables		Impaired Financing Receivables
Lease receivables	$	72	$	27	$	155	$	254	$	2,293	$	2,547	$	9	$	9
Loan receivables	104		55		252		411		4,588		4,999		30		30
Financed service contracts	138		78		304		520		1,806		2,326		3		3
Total	$	314	$	160	$	711	$	1,185	$	8,687	$	9,872	$	42	$	42

Allowance for Credit Loss and Related Financing Receivables

The allowances for credit loss and the related financing receivables are summarized as follows (in millions):

Three months ended April 27, 2019	CREDIT LOSS ALLOWANCES
	Lease Receivables			Loan Receivables		Financed Service Contracts			Total
Allowance for credit loss as of January 26, 2019	$	127		$	64	$	9		$	200
Provisions (benefits)	(41		)	13		27			(1		)
Recoveries (write-offs), net	2			—		(28		)	(26		)
Foreign exchange and other	(20		)	—		—			(20		)
Allowance for credit loss as of April 27, 2019	$	68		$	77	$	8		$	153

Nine months ended April 27, 2019	CREDIT LOSS ALLOWANCES
	Lease Receivables			Loan Receivables		Financed Service Contracts			Total
Allowance for credit loss as of July 28, 2018	$	135		$	60	$	10		$	205
Provisions (benefits)	(48		)	17		26			(5		)
Recoveries (write-offs), net	2			—		(28		)	(26		)
Foreign exchange and other	(21		)	—		—			(21		)
Allowance for credit loss as of April 27, 2019	$	68		$	77	$	8		$	153

Three months ended April 28, 2018	CREDIT LOSS ALLOWANCES
	Lease Receivables			Loan Receivables			Financed Service Contracts			Total
Allowance for credit loss as of January 27, 2018	$	165		$	94		$	13		$	272
Provisions (benefits)	1			(8		)	(1		)	(8		)
Foreign exchange and other	(1		)	(1		)	—			(2		)
Allowance for credit loss as of April 28, 2018	$	165		$	85		$	12		$	262

Nine months ended April 28, 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 (benefits)	2		(19		)	(17		)	(34		)
Foreign exchange and other	1		1			(1		)	1
Allowance for credit loss as of April 28, 2018	$	165	$	85		$	12		$	262

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):

	April 27, 2019			July 28, 2018
Operating lease assets	$	562		$	356
Accumulated depreciation	(382		)	(238		)
Operating lease assets, net	$	180		$	118

Schedule of Future Minimum Rental Payments for Operating Leases

Minimum future rentals on noncancelable operating leases as of April 27, 2019 are summarized as follows (in millions):

Fiscal Year	Amount
2019 (remaining three months)	$	42
2020	120
2021	58
2022	12
Total	$	232

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Available-for-Sale Debt Investments and Equity Investments (Tables)

9 Months Ended

Apr. 27, 2019

Investments, Debt and Equity Securities [Abstract]

Summary of Available-for-sale Debt Investments and Equity Investments

The following table summarizes our available-for-sale debt investments and equity investments (in millions):

	April 27, 2019		July 28, 2018
Available-for-sale debt investments	$	24,387	$	37,009
Marketable equity securities	5		605
Total investments	24,392		37,614
Non-marketable equity securities included in other assets (1)	1,135		978
Equity method investments included in other assets	115		118
Total	$	25,642	$	38,710

Summary of Available-for-Sale Investments

The following tables summarize our available-for-sale debt investments (in millions):

April 27, 2019	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. government securities	$	1,455	$	1	$	(4	)	$	1,452
U.S. government agency securities	264		—		(1		)	263
Corporate debt securities	21,307		40		(115		)	21,232
U.S. agency mortgage-backed securities	1,465		3		(28		)	1,440
Total (1)	$	24,491	$	44	$	(148	)	$	24,387

July 28, 2018	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. government securities	$	7,318	$	—	$	(43	)	$	7,275
U.S. government agency securities	732		—		(5		)	727
Non-U.S. government and agency securities	209		—		(1		)	208
Corporate debt securities	27,765		44		(445		)	27,364
U.S. agency mortgage-backed securities	1,488		—		(53		)	1,435
Total (1)	$	37,512	$	44	$	(547	)	$	37,009

⁽¹⁾ Net unsettled investment purchases were $1 million and net unsettled investment sales were $1.5 billion as of April 27, 2019 and July 28, 2018, respectively and were included in other current assets and other current liabilities.

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 debt investments (in millions):

	Three Months Ended						Nine Months Ended
	April 27, 2019			April 28, 2018			April 27, 2019			April 28, 2018
Gross realized gains	$	7		$	1		$	10		$	15
Gross realized losses	(14		)	(40		)	(28		)	(146		)
Total	$	(7	)	$	(39	)	$	(18	)	$	(131	)

Available-for-Sale Investments with Gross Unrealized Losses

The following tables present the breakdown of the available-for-sale debt investments with gross unrealized losses and the duration that those losses had been unrealized at April 27, 2019 and July 28, 2018 (in millions):

	UNREALIZED LOSSES LESS THAN 12 MONTHS					UNREALIZED LOSSES 12 MONTHS OR GREATER					TOTAL
April 27, 2019	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross  Unrealized  Losses
U.S. government securities	$	8	$	—		$	1,409	$	(4	)	$	1,417	$	(4	)
U.S. government agency securities	—		—			263		(1		)	263		(1		)
Corporate debt securities	1,851		(7		)	12,662		(108		)	14,513		(115		)
U.S. agency mortgage-backed securities	48		—			1,155		(28		)	1,203		(28		)
Total	$	1,907	$	(7	)	$	15,489	$	(141	)	$	17,396	$	(148	)

	UNREALIZED LOSSES LESS THAN 12 MONTHS					UNREALIZED LOSSES 12 MONTHS OR GREATER					TOTAL
July 28, 2018	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross  Unrealized  Losses
U.S. government securities	$	2,966	$	(20	)	$	4,303	$	(23	)	$	7,269	$	(43	)
U.S. government agency securities	206		(2		)	521		(3		)	727		(5		)
Non-U.S. government and agency securities	105		(1		)	103		—			208		(1		)
Corporate debt securities	16,990		(344		)	3,511		(101		)	20,501		(445		)
U.S. agency mortgage-backed securities	826		(24		)	581		(29		)	1,407		(53		)
Total	$	21,093	$	(391	)	$	9,019	$	(156	)	$	30,112	$	(547	)

Maturities of Fixed Income Securities

The following table summarizes the maturities of our available-for-sale debt investments as of April 27, 2019 (in millions):

	Amortized Cost		Fair Value
Within 1 year	$	7,363	$	7,353
After 1 year through 5 years	13,892		13,826
After 5 years through 10 years	1,760		1,756
After 10 years	11		12
Mortgage-backed securities with no single maturity	1,465		1,440
Total	$	24,491	$	24,387

Summary of Adjustments to Carrying Value of Investments

We recorded adjustments to the carrying value of our non-marketable equity securities measured using the measurement alternative during the third quarter and first nine months of fiscal 2019 as follows (in millions):

	Three Months Ended			Nine Months Ended
	April 27, 2019			April 27, 2019
Adjustments to non-marketable equity securities measured using the measurement alternative:
Upward adjustments	$	9		$	33
Downward adjustments, including impairments	(4		)	(22		)
Net upward adjustments	$	5		$	11

Gains and losses recognized on our marketable and non-marketable equity securities for the third quarter and first nine months of fiscal 2019 are summarized below (in millions):

	Three Months Ended			Nine Months Ended
	April 27, 2019			April 27, 2019
Net gains and losses recognized during the period on equity investments	$	3		$	78
Less: Net gains and losses recognized on equity investments sold	(44		)	(51		)
Unrealized gains and losses recognized during reporting period on equity securities still held at the reporting date	$	(41	)	$	27

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Fair Value (Tables)

9 Months Ended

Apr. 27, 2019

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 were as follows (in millions):

	APRIL 27, 2019 FAIR VALUE MEASUREMENTS						JULY 28, 2018 FAIR VALUE MEASUREMENTS
	Level 1		Level 2		Total Balance		Level 1		Level 2		Total Balance
Assets:
Cash equivalents:
Money market funds	$	8,283	$	—	$	8,283	$	6,890	$	—	$	6,890
Available-for-sale debt investments:
U.S. government securities	—		1,452		1,452		—		7,275		7,275
U.S. government agency securities	—		263		263		—		727		727
Non-U.S. government and agency securities	—		—		—		—		208		208
Corporate debt securities	—		21,232		21,232		—		27,364		27,364
U.S. agency mortgage-backed securities	—		1,440		1,440		—		1,435		1,435
Equity investments:
Marketable equity securities	5		—		5		605		—		605
Derivative assets	—		36		36		—		2		2
Total	$	8,288	$	24,423	$	32,711	$	7,495	$	37,011	$	44,506
Liabilities:
Derivative liabilities	$	—	$	20	$	20	$	—	$	74	$	74
Total	$	—	$	20	$	20	$	—	$	74	$	74

Fair Value Measurements, Nonrecurring

The following table presents gains and losses on assets that were measured at fair value on a nonrecurring basis (in millions):

	TOTAL GAINS (LOSSES) FOR THE THREE MONTHS ENDED						TOTAL GAINS (LOSSES) FOR THE NINE MONTHS ENDED
	April 27, 2019			April 28, 2018			April 27, 2019		April 28, 2018
Non-marketable equity securities and equity method investments	$	(3	)	$	(17	)	$	3	$	(56	)
Purchased intangible assets (impaired)	—			(1		)	—		(1		)
Property held for sale—land and buildings	—			—			—		20
Total gains (losses) for nonrecurring measurements	$	(3	)	$	(18	)	$	3	$	(37	)

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Borrowings (Tables)

9 Months Ended

Apr. 27, 2019

Debt Disclosure [Abstract]

Schedule of Short-Term Debt

The following table summarizes our short-term debt (in millions, except percentages):

	April 27, 2019				July 28, 2018
	Amount		Effective Rate		Amount		Effective Rate
Current portion of long-term debt	$	4,494	3.52	%	$	5,238	3.46	%
Commercial paper	3,283		2.53	%	—		—	%
Total short-term debt	$	7,777			$	5,238

Schedule of Long-Term Debt

The following table summarizes our long-term debt (in millions, except percentages):

		April 27, 2019				July 28, 2018
	Maturity Date	Amount			Effective Rate	Amount			Effective Rate
Senior notes:
Floating-rate notes:
Three-month LIBOR plus 0.50%	March 1, 2019	$	—		—%	$	500		2.86%
Three-month LIBOR plus 0.34%	September 20, 2019	500			3.01%	500			2.71%
Fixed-rate notes:
4.95%	February 15, 2019	—			—%	2,000			5.17%
1.60%	February 28, 2019	—			—%	1,000			1.67%
2.125%	March 1, 2019	—			—%	1,750			2.71%
1.40%	September 20, 2019	1,500			1.48%	1,500			1.48%
4.45%	January 15, 2020	2,500			4.84%	2,500			4.52%
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			3.25%	500			2.86%
1.85%	September 20, 2021	2,000			1.90%	2,000			1.90%
3.00%	June 15, 2022	500			3.51%	500			3.11%
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			3.37%	1,000			2.98%
3.50%	June 15, 2025	500			3.67%	500			3.27%
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		20,500				25,750
Unaccreted discount/issuance costs		(103		)		(116		)
Hedge accounting fair value adjustments		18				(65		)
Total		$	20,415			$	25,569
Reported as:
Current portion of long-term debt		$	4,494			$	5,238
Long-term debt		15,921				20,331
Total		$	20,415			$	25,569

Schedule of Principal Payments for Long-Term Debt

As of April 27, 2019, future principal payments for long-term debt, including the current portion, are summarized as follows (in millions):

Fiscal Year	Amount
2019 (remaining three months)	$	—
2020	6,000
2021	3,000
2022	2,500
2023	500
Thereafter	8,500
Total	$	20,500

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Derivative Instruments (Tables)

9 Months Ended

Apr. 27, 2019

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivatives Recorded at Fair Value

The fair values of our derivative instruments and the line items on the Consolidated Balance Sheets to which they were recorded are summarized as follows (in millions):

	DERIVATIVE ASSETS					DERIVATIVE LIABILITIES
	Balance Sheet Line Item	April 27, 2019		July 28, 2018		Balance Sheet Line Item	April 27, 2019		July 28, 2018
Derivatives designated as hedging instruments:
Foreign currency derivatives	Other current assets	$	5	$	1	Other current liabilities	$	3	$	—
Interest rate derivatives	Other current assets	—		—		Other current liabilities	7		10
Interest rate derivatives	Other assets	27		—		Other long-term liabilities	4		62
Total		32		1			14		72
Derivatives not designated as hedging instruments:
Foreign currency derivatives	Other current assets	4		1		Other current liabilities	6		2
Total		4		1			6		2
Total		$	36	$	2		$	20	$	74

Gains and Losses on Derivatives Designated as Cash Flow Hedges

The effects of our cash flow and net investment hedging instruments on other comprehensive income (OCI) and the Consolidated Statements of Operations are summarized as follows (in millions):

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)
	April 27, 2019		April 28, 2018			Line Item in Statements of Operations	April 27, 2019			April 28, 2018
Derivatives designated as cash flow hedging instruments:
Foreign currency derivatives	$	12	$	(10	)	Revenue — product	$	(1	)	$	—
						Revenue — service	1			—
						Cost of sales — service	—			7
						Operating expenses	—			21
Total	$	12	$	(10	)		$	—		$	28
Derivatives designated as net investment hedging instruments:
Foreign currency derivatives	$	—	$	7		Other income (loss), net	$	—		$	—

GAINS (LOSSES) RECOGNIZED IN OCI ON DERIVATIVES FOR THE NINE MONTHS ENDED (EFFECTIVE PORTION)						GAINS (LOSSES) RECLASSIFIED FROM AOCI INTO INCOME FOR THE NINE MONTHS ENDED (EFFECTIVE PORTION)
	April 27, 2019		April 28, 2018			Line Item in Statements of Operations	April 27, 2019			April 28, 2018
Derivatives designated as cash flow hedging instruments:
Foreign currency derivatives	$	2	$	28		Revenue — product	$	—		$	—
						Revenue — service	3			—
						Cost of sales — service	(1		)	14
						Operating expenses	(1		)	45
Total	$	2	$	28			$	1		$	59
Derivatives designated as net investment hedging instruments:
Foreign currency derivatives	$	3	$	(10	)	Other income (loss), net	$	—		$	—

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):

		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	April 27, 2019		April 28, 2018			April 27, 2019			April 28, 2018
Interest rate derivatives	Interest expense	$	33	$	(59	)	$	(31	)	$	58
Equity derivatives	Other income (loss), net	—		25			—			(25		)
Total		$	33	$	(34	)	$	(31	)	$	33

		GAINS (LOSSES) ON DERIVATIVE INSTRUMENTS FOR THE NINE MONTHS ENDED					GAINS (LOSSES) RELATED TO HEDGED ITEMS FOR THE NINE MONTHS ENDED
Derivatives Designated as Fair Value Hedging Instruments	Line Item in Statements of Operations	April 27, 2019		April 28, 2018			April 27, 2019			April 28, 2018
Interest rate derivatives	Interest expense	$	88	$	(168	)	$	(83	)	$	167
Equity derivatives	Other income (loss), net	—		(24		)	—			24
Total		$	88	$	(192	)	$	(83	)	$	191

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):

		GAINS (LOSSES) FOR THE THREE MONTHS ENDED						GAINS (LOSSES) FOR THE NINE MONTHS ENDED
Derivatives Not Designated as Hedging Instruments	Line Item in Statements of Operations	April 27, 2019			April 28, 2018			April 27, 2019			April 28, 2018
Foreign currency derivatives	Other income (loss), net	$	(29	)	$	(53	)	$	(57	)	$	20
Total return swaps—deferred compensation	Operating expenses	42			(26		)	9			28
	Cost of sales — product	2			(1		)	1			—
	Cost of sales — service	2			(1		)	—			1
	Other income (loss), net	(4		)	(3		)	(12		)	(8		)
Equity derivatives	Other income (loss), net	1			(7		)	2			(4		)
Total		$	14		$	(91	)	$	(57	)	$	37

Schedule of Notional Amounts of Derivatives Outstanding

The notional amounts of our outstanding derivatives are summarized as follows (in millions):

	April 27, 2019		July 28, 2018
Derivatives designated as hedging instruments:
Foreign currency derivatives—cash flow hedges	$	623	$	147
Interest rate derivatives	4,500		6,750
Net investment hedging instruments	363		250
Derivatives not designated as hedging instruments:
Foreign currency derivatives	2,760		2,298
Total return swaps—deferred compensation	572		566
Total	$	8,818	$	10,011

Offsetting Assets and Liabilities

Information related to these offsetting arrangements is summarized as follows (in millions):

	April 27, 2019
	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	$	36	$	—	$	36	$	(10	)	$	(26	)	$	—
Derivatives liabilities	$	20	$	—	$	20	$	(10	)	$	(5	)	$	5

	July 28, 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	$	2	$	—	$	2	$	(2	)	$	—		$	—
Derivatives liabilities	$	74	$	—	$	74	$	(2	)	$	(53	)	$	19

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Commitments and Contingencies (Tables)

9 Months Ended

Apr. 27, 2019

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 April 27, 2019 are as follows (in millions):

Fiscal Year	Amount
2019 (remaining three months)	$	111
2020	372
2021	257
2022	177
2023	112
Thereafter	121
Total	$	1,150

Schedule of Purchase Commitments

The following table summarizes our purchase commitments with contract manufacturers and suppliers (in millions):

Commitments by Period	April 27, 2019		July 28, 2018
Less than 1 year	$	4,738	$	5,407
1 to 3 years	734		710
3 to 5 years	90		360
Total	$	5,562	$	6,477

Compensation expenses Related to Business Combinations

The following table summarizes the compensation expense related to acquisitions (in millions):

	Three Months Ended				Nine Months Ended
	April 27, 2019		April 28, 2018		April 27, 2019		April 28, 2018
Compensation expense related to acquisitions	$	76	$	53	$	251	$	141

Schedule of Product Warranty Liability

The following table summarizes the activity related to the product warranty liability (in millions):

	Nine Months Ended
	April 27, 2019			April 28, 2018
Balance at beginning of period	$	359		$	407
Provisions for warranties issued	447			431
Adjustments for pre-existing warranties	(6		)	(32		)
Settlements	(449		)	(441		)
Acquisitions and divestitures	(2		)	—
Balance at end of period	$	349		$	365

Schedule of Guarantor Obligations

  The aggregate amounts of financing guarantees outstanding at April 27, 2019 and July 28, 2018, 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):

	April 27, 2019			July 28, 2018
Maximum potential future payments relating to financing guarantees:
Channel partner	$	221		$	277
End user	19			31
Total	$	240		$	308
Deferred revenue associated with financing guarantees:
Channel partner	$	(63	)	$	(94	)
End user	(18		)	(28		)
Total	$	(81	)	$	(122	)
Maximum potential future payments relating to financing guarantees, net of associated deferred revenue	$	159		$	186

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Shareholders' Equity (Tables)

9 Months Ended

Apr. 27, 2019

Stockholders' Equity Note [Abstract]

Stock Repurchase Program

A summary of the stock repurchase activity for fiscal 2019 and 2018 under the stock repurchase program, reported based on the trade date, is summarized as follows (in millions, except per-share amounts):

Quarter Ended	Shares	Weighted-Average Price per Share		Amount
Fiscal 2019
April 27, 2019	116	$	52.14	$	6,020
January 26, 2019	111	$	45.09	$	5,016
October 27, 2018	109	$	46.01	$	5,026
Fiscal 2018
July 28, 2018	138	$	43.58	$	6,015
April 28, 2018	140	$	42.83	$	6,015
January 27, 2018	103	$	39.07	$	4,011
October 28, 2017	51	$	31.80	$	1,620

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Employee Benefit Plans (Tables)

9 Months Ended

Apr. 27, 2019

Retirement Benefits [Abstract]

Summary of Share-Based Compensation Expense

The following table summarizes share-based compensation expense (in millions):

	Three Months Ended				Nine Months Ended
	April 27, 2019		April 28, 2018		April 27, 2019		April 28, 2018
Cost of sales—product	$	22	$	24	$	67	$	70
Cost of sales—service	32		33		96		98
Share-based compensation expense in cost of sales	54		57		163		168
Research and development	135		139		398		409
Sales and marketing	124		142		386		412
General and administrative	63		61		190		189
Restructuring and other charges	3		6		45		24
Share-based compensation expense in operating expenses	325		348		1,019		1,034
Total share-based compensation expense	$	379	$	405	$	1,182	$	1,202
Income tax benefit for share-based compensation	$	98	$	140	$	389	$	411

Summary of Share-Based Awards Available for Grant

A summary of share-based awards available for grant is as follows (in millions):

	Share-Based Awards Available for Grant
BALANCE AT JULY 29, 2017	272
Restricted stock, stock units, and other share-based awards granted	(70	)
Share-based awards canceled/forfeited/expired	18
Shares withheld for taxes and not issued	25
BALANCE AT JULY 28, 2018	245
Restricted stock, stock units, and other share-based awards granted	(41	)
Share-based awards canceled/forfeited/expired	16
Shares withheld for taxes and not issued	17
Other	1
BALANCE AT APRIL 27, 2019	238

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):

	Restricted Stock/ Stock Units		Weighted-Average Grant Date Fair Value per Share		Aggregate Fair  Value
UNVESTED BALANCE AT JULY 29, 2017	141		$	26.94
Granted	46		35.62
Assumed from acquisitions	1		28.26
Vested	(53	)	26.02		$	1,909
Canceled/forfeited/other	(16	)	28.37
UNVESTED BALANCE AT JULY 28, 2018	119		30.56
Granted	27		45.01
Vested	(36	)	28.30		$	1,698
Canceled/forfeited/other	(12	)	31.39
UNVESTED BALANCE AT APRIL 27, 2019	98		$	35.30

Summary of Stock Option Activity

A summary of the stock option activity is as follows (in millions, except per-share amounts):

	STOCK OPTIONS OUTSTANDING
	Number Outstanding		Weighted-Average Exercise Price per Share
BALANCE AT JULY 29, 2017	12		$	6.15
Assumed from acquisitions	3		8.20
Exercised	(8	)	5.77
Canceled/forfeited/expired	(1	)	8.75
BALANCE AT JULY 28, 2018	6		7.18
Exercised	(3	)	6.88
BALANCE AT APRIL 27, 2019	3		$	7.35

Summary of Significant Ranges of Outstanding and Exercisable Stock Options

The following table summarizes significant ranges of outstanding and exercisable stock options as of April 27, 2019 (in millions, except years and share prices):

	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	3	5.3	$	7.35	$	141	2	$	7.22	$	117

Schedule of Assumptions Used

The assumptions for the valuation of time-based RSUs and PRSUs are summarized as follows:

	RESTRICTED STOCK UNITS						PERFORMANCE BASED RESTRICTED STOCK UNITS
Three Months Ended	April 27, 2019			April 28, 2018			April 27, 2019	April 28, 2018
Number of shares granted (in millions)	2			2			—	—
Grant date fair value per share	$	48.17		$	39.31		N/A	$	43.44
Weighted-average assumptions/inputs:
Expected dividend yield	2.7		%	2.9		%	N/A	3.0		%
Range of risk-free interest rates	2.2% – 2.6%			0.0% – 2.6%			N/A	1.5%-2.5%
Range of expected volatilities for index	N/A			N/A			N/A	12.5%-82.8%

	RESTRICTED STOCK UNITS						PERFORMANCE BASED RESTRICTED STOCK UNITS
Nine Months Ended	April 27, 2019			April 28, 2018			April 27, 2019			April 28, 2018
Number of shares granted (in millions)	25			30			2			3
Grant date fair value per share	$	44.84		$	33.97		$	47.00		$	31.96
Weighted-average assumptions/inputs:
Expected dividend yield	2.8		%	3.2		%	2.8		%	3.5		%
Range of risk-free interest rates	0.0% – 2.9%			0.0% – 2.6%			2.1% – 3.0%			1.0%-2.5%
Range of expected volatilities for index	N/A			N/A			13.0% – 65.2%			12.5%-82.8%

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Comprehensive Income (Loss) (Tables)

9 Months Ended

Apr. 27, 2019

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 first nine months of fiscal 2019 and 2018 are summarized as follows (in millions):

	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 28, 2018	$	(310	)	$	(11	)	$	(528	)	$	(849	)
Other comprehensive income (loss) before reclassifications attributable to Cisco Systems, Inc.	382			3			(224		)	161
(Gains) losses reclassified out of AOCI	18			(1		)	4			21
Tax benefit (expense)	(59		)	—			(2		)	(61		)
Total change for the period	341			2			(222		)	121
Effect of adoption of accounting standards	(168		)	—			—			(168		)
BALANCE AT APRIL 27, 2019	$	(137	)	$	(9	)	$	(750	)	$	(896	)

	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.	(620		)	28			34			(558		)
(Gains) losses reclassified out of AOCI	(108		)	(59		)	5			(162		)
Tax benefit (expense)	24			4			(3		)	25
Total change for the period	(704		)	(27		)	36			(695		)
Effect of adoption of accounting standard	54			—			(9		)	45
BALANCE AT APRIL 28, 2018	$	(277	)	$	5		$	(332	)	$	(604	)

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):

	Three Months Ended					Nine Months Ended
	April 27, 2019			April 28, 2018		April 27, 2019			April 28, 2018
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	$	(7	)	$	17	$	(18	)	$	108		Other income (loss), net
Net unrealized gains and losses on cash flow hedging instruments
Foreign currency derivatives	(1		)	—		—			—			Revenue—product
Foreign currency derivatives	1			—		3			—			Revenue—service
Foreign currency derivatives	—			7		(1		)	14			Cost of sales—service
Foreign currency derivatives	—			21		(1		)	45			Operating expenses
	—			28		1			59
Cumulative translation adjustment and actuarial gains and losses	—			—		—			(5		)	Operating expenses
Cumulative translation adjustment and actuarial gains and losses	(1		)	—		(4		)	—			Other income (loss), net
Total amounts reclassified out of AOCI	$	(8	)	$	45	$	(21	)	$	162

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Income Taxes (Tables)

9 Months Ended

Apr. 27, 2019

Income Tax Disclosure [Abstract]

Income Tax Provision

The following table provides details of income taxes (in millions, except percentages):

	Three Months Ended						Nine Months Ended
	April 27, 2019			April 28, 2018			April 27, 2019			April 28, 2018
Income before provision for income taxes	$	3,615		$	3,253		$	10,867		$	9,447
Provision for income taxes	$	571		$	562		$	1,452		$	13,140
Effective tax rate	15.8		%	17.3		%	13.4		%	139.1		%

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Segment Information and Major Customers (Tables)

9 Months Ended

Apr. 27, 2019

Segment Reporting [Abstract]

Reportable Segments

Summarized financial information by segment for the third quarter and the first nine months of fiscal 2019 and2018, based on our internal management system and as utilized by our Chief Operating Decision Maker ("CODM"), is as follows (in millions):

	Three Months Ended						Nine Months Ended
	April 27, 2019			April 28, 2018			April 27, 2019			April 28, 2018
Revenue:
Americas	$	7,695		$	7,161		$	22,798		$	21,515
EMEA	3,356			3,281			9,803			9,252
APJC	1,907			2,021			5,875			5,719
Total	$	12,958		$	12,463		$	38,476		$	36,486
Gross margin:
Americas	$	5,046		$	4,614		$	14,911		$	13,950
EMEA	2,166			2,109			6,307			5,925
APJC	1,158			1,247			3,467			3,506
Segment total	8,370			7,970			24,686			23,381
Unallocated corporate items	(197		)	(211		)	(594		)	(697		)
Total	$	8,173		$	7,759		$	24,092		$	22,684

Net Sales for Groups of Similar Products and Services

The following table presents revenue for groups of similar products and services (in millions):

	Three Months Ended				Nine Months Ended
	April 27, 2019		April 28, 2018		April 27, 2019		April 28, 2018
Revenue:
Infrastructure Platforms	$	7,545	$	7,180	$	22,315	$	20,870
Applications	1,431		1,310		4,315		3,697
Security	707		583		2,016		1,725
Other Products	39		231		239		775
Total Product	9,722		9,304		28,885		27,067
Services	3,236		3,159		9,591		9,419
Total (1)	$	12,958	$	12,463	$	38,476	$	36,486

⁽¹⁾ Includes SPVSS business revenue of $0 and $219 million for the third quarter of fiscal 2019 and 2018, respectively, and $168 million and $697 million for the first nine months of fiscal 2019 and 2018, respectively.

Property and Equipment Information for Geographical Area

The following table presents property and equipment information for geographic areas (in millions):

	April 27, 2019		July 28, 2018
Property and equipment, net:
United States	$	2,297	$	2,487
International	537		519
Total	$	2,834	$	3,006

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Net Income (Loss) per Share (Tables)

9 Months Ended

Apr. 27, 2019

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):

	Three Months Ended				Nine Months Ended
	April 27, 2019		April 28, 2018		April 27, 2019		April 28, 2018
Net income (loss)	$	3,044	$	2,691	$	9,415	$	(3,693	)
Weighted-average shares—basic	4,370		4,791		4,468		4,892
Effect of dilutive potential common shares	45		53		41		—
Weighted-average shares—diluted	4,415		4,844		4,509		4,892
Net income (loss) per share—basic	$	0.70	$	0.56	$	2.11	$	(0.76	)
Net income (loss) per share—diluted	$	0.69	$	0.56	$	2.09	$	(0.76	)

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Basis of Presentation (Details)	9 Months Ended
	Apr. 27, 2019 segment
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Number of geographic segments (segment)	3

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Recent Accounting Pronouncements (Summary of Cumulative Effect of the Changes Made to Consolidated Balance Sheet for the Adoption of New Accounting Standard Updates) (Details) - USD ($) $ in Millions	Apr. 27, 2019	Jul. 29, 2018	Jul. 28, 2018
ASSETS
Accounts receivable, net	$ 3,795	$ 5,450	$ 5,554
Inventories	1,513	1,544	1,846
Other current assets	2,331	3,286	2,940
Deferred tax assets	4,023	3,995	3,219
Other assets	2,315	1,954	1,582
TOTAL ASSETS	97,287	109,872	108,784
LIABILITIES AND EQUITY
Income taxes payable	953	1,015	1,004
Deferred revenue	10,117	9,788	11,490
Other current liabilities	4,172	4,446	4,413
Deferred revenue	7,339	7,114	8,195
Other long-term liabilities	1,272	1,532	1,434
(Accumulated deficit) Retained earnings	(2,877)	5,130	1,233
Accumulated other comprehensive income (loss)	(896)	(1,017)	(849)
TOTAL LIABILITIES AND EQUITY	97,287	109,872	108,784
Total deferred revenue	17,456		19,685
Product
LIABILITIES AND EQUITY
Total deferred revenue	6,159		$ 8,254
Accounting Standards Update 2014-09
ASSETS
Accounts receivable, net		(104)
Inventories		(302)
Other current assets		371
Deferred tax assets		(624)
Other assets		327
TOTAL ASSETS		(332)
LIABILITIES AND EQUITY
Income taxes payable		0
Deferred revenue		(1,702)
Other current liabilities		33
Deferred revenue		(1,081)
Other long-term liabilities		85
(Accumulated deficit) Retained earnings		2,333
Accumulated other comprehensive income (loss)		0
TOTAL LIABILITIES AND EQUITY		(332)
Accounting Standards Update 2014-09 | Difference between Revenue Guidance in Effect before and after Topic 606
LIABILITIES AND EQUITY
(Accumulated deficit) Retained earnings		2,300
Total deferred revenue	$ 2,800	2,800
Accounting Standards Update 2014-09 | Product | Difference between Revenue Guidance in Effect before and after Topic 606
LIABILITIES AND EQUITY
Total deferred revenue		2,600
Accounting Standards Update 2014-09 | Recurring Software and Subscription Offers | Difference between Revenue Guidance in Effect before and after Topic 606
LIABILITIES AND EQUITY
Total deferred revenue		1,300
Accounting Standards Update 2014-09 | Two-Tier Distribution | Difference between Revenue Guidance in Effect before and after Topic 606
LIABILITIES AND EQUITY
Total deferred revenue		600
Accounting Standards Update 2016-01
ASSETS
Accounts receivable, net		0
Inventories		0
Other current assets		0
Deferred tax assets		(15)
Other assets		136
TOTAL ASSETS		121
LIABILITIES AND EQUITY
Income taxes payable		0
Deferred revenue		0
Other current liabilities		0
Deferred revenue		0
Other long-term liabilities		13
(Accumulated deficit) Retained earnings		283
Accumulated other comprehensive income (loss)		(175)
TOTAL LIABILITIES AND EQUITY		121
Accounting Standards Update 2016-16
ASSETS
Accounts receivable, net		0
Inventories		0
Other current assets		(25)
Deferred tax assets		1,415
Other assets		(91)
TOTAL ASSETS		1,299
LIABILITIES AND EQUITY
Income taxes payable		11
Deferred revenue		0
Other current liabilities		0
Deferred revenue		0
Other long-term liabilities		0
(Accumulated deficit) Retained earnings		1,281
Accumulated other comprehensive income (loss)		7
TOTAL LIABILITIES AND EQUITY		$ 1,299

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Recent Accounting Pronouncements (Additional Information) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Apr. 27, 2019	Apr. 28, 2018	Apr. 27, 2019	Apr. 28, 2018	Jul. 29, 2018	Jul. 28, 2018
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Revenue, total	$ 12,958	$ 12,463	$ 38,476	$ 36,486
Benefit for provision for income taxes	(571)	$ (562)	(1,452)	$ (13,140)
Increase in retained earnings	(2,877)		(2,877)		$ 5,130	$ 1,233
Total contract assets noncurrent	383		383
Total capitalized contract acquisition costs	705		705			644
Capitalized contract acquisition costs, current	390		390
Capitalized contract acquisition costs, noncurrent	315		315
Accounting Standards Update 2014-09
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Increase in retained earnings					2,333
Difference between Revenue Guidance in Effect before and after Topic 606 | Accounting Standards Update 2014-09
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Revenue, total	146		662
Benefit for provision for income taxes	152		152
Increase in retained earnings					$ 2,300
Software and Service Agreements
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Total contract assets	637		637			$ 122
Total contract assets, current	$ 254		$ 254

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Revenue (Disaggregation of Revenue) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Apr. 27, 2019	Apr. 28, 2018	Apr. 27, 2019	Apr. 28, 2018
Disaggregation of Revenue [Line Items]
Revenue	$ 12,958	$ 12,463	$ 38,476	$ 36,486
Product
Disaggregation of Revenue [Line Items]
Revenue	9,722	9,304	28,885	27,067
Infrastructure Platforms
Disaggregation of Revenue [Line Items]
Revenue	7,545	7,180	22,315	20,870
Applications
Disaggregation of Revenue [Line Items]
Revenue	1,431	1,310	4,315	3,697
Security
Disaggregation of Revenue [Line Items]
Revenue	707	583	2,016	1,725
Other Products
Disaggregation of Revenue [Line Items]
Revenue	39	231	239	775
Other Products | Discontinued operations, held-for-sale | Service Provider Video
Disaggregation of Revenue [Line Items]
Revenue	0	219	168	697
Service
Disaggregation of Revenue [Line Items]
Revenue	$ 3,236	$ 3,159	$ 9,591	$ 9,419

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Revenue (Additional Information) (Details) - USD ($) $ in Millions	3 Months Ended	9 Months Ended
	Apr. 27, 2019	Apr. 27, 2019	Jul. 29, 2018	Jul. 28, 2018
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Payment terms		30 days
Accounts receivable, net	$ 3,795	$ 3,795	$ 5,450	$ 5,554
Total deferred revenue	17,456	17,456		19,685
Revenue recognized	2,000	8,000
Remaining performance obligation	23,000	23,000
Total deferred sales commissions	705	705		644
Amortization of sales commissions, expense	124	349
Unbilled Contract Revenue
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Remaining performance obligation	5,500	5,500
Accounting Standards Update 2014-09
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Accounts receivable, net			(104)
Difference between Revenue Guidance in Effect before and after Topic 606 | Accounting Standards Update 2014-09
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Total deferred revenue	2,800	2,800	$ 2,800
Software and Service Agreements
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Total contract assets	$ 637	$ 637		$ 122

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Revenue (Performance Obligation) (Details)	Apr. 27, 2019
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2016-01-26
Revenue from Contract with Customer [Abstract]
Remaining performance obligation, expected timing of satisfaction, period	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-01-26
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Remaining performance obligation, percentage	56.00%

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Acquisitions and Divestitures (Additional Information) (Details) $ in Millions	9 Months Ended
	Apr. 27, 2019 USD ($) acquisition	Apr. 28, 2018 USD ($)	Oct. 28, 2018 USD ($)
Supplementary Information [Line Items]
Number of business combinations (acquisition) | acquisition	5
Acquired cash and cash equivalents	$ 100
Discontinued operations, held-for-sale | Service Provider Video
Supplementary Information [Line Items]
Disposal group, tangible assets			$ 160
Disposal group, goodwill and intangible assets			340
Disposal group, liabilities			$ 200
General and administrative
Supplementary Information [Line Items]
Acquisition related costs	$ 15	$ 25

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Acquisitions and Divestitures (Summary of Allocation of Total Purchase Consideration) (Details) $ in Millions	9 Months Ended
	Apr. 27, 2019 USD ($) acquisition
Business Acquisition [Line Items]
Purchase Consideration	$ 2,686
Net Tangible Assets Acquired (Liabilities Assumed)	(74)
Purchased Intangible Assets	672
Goodwill	$ 2,088
Number of business combinations (acquisition) | acquisition	5
Duo
Business Acquisition [Line Items]
Purchase Consideration	$ 2,025
Net Tangible Assets Acquired (Liabilities Assumed)	(57)
Purchased Intangible Assets	342
Goodwill	1,740
Luxtera
Business Acquisition [Line Items]
Purchase Consideration	596
Net Tangible Assets Acquired (Liabilities Assumed)	(19)
Purchased Intangible Assets	319
Goodwill	296
Others (three in total)
Business Acquisition [Line Items]
Purchase Consideration	65
Net Tangible Assets Acquired (Liabilities Assumed)	2
Purchased Intangible Assets	11
Goodwill	$ 52
Number of business combinations (acquisition) | acquisition	3

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Goodwill and Purchased Intangible Assets (Schedule of Goodwill by Reportable Segments) (Details) $ in Millions	9 Months Ended
	Apr. 27, 2019 USD ($)
Goodwill [Roll Forward]
Beginning Balance	$ 31,706
Acquisitions & Divestitures	2,000
Other	(162)
Ending Balance	33,544
Americas
Goodwill [Roll Forward]
Beginning Balance	19,998
Acquisitions & Divestitures	1,240
Other	(109)
Ending Balance	21,129
EMEA
Goodwill [Roll Forward]
Beginning Balance	7,529
Acquisitions & Divestitures	486
Other	(33)
Ending Balance	7,982
APJC
Goodwill [Roll Forward]
Beginning Balance	4,179
Acquisitions & Divestitures	274
Other	(20)
Ending Balance	$ 4,433

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Goodwill and Purchased Intangible Assets (Schedule of Intangible Assets Acquired Through Business Combinations) (Details) $ in Millions	9 Months Ended
	Apr. 27, 2019 USD ($) acquisition
Intangible Assets Acquired Through Business Combinations
Total, Amount	$ 672
Number of business combinations (acquisition) | acquisition	5
IPR&D
Intangible Assets Acquired Through Business Combinations
Indefinite Lives, Amount	$ 333
TECHNOLOGY
Intangible Assets Acquired Through Business Combinations
Finite Lives, Amount	166
CUSTOMER RELATIONSHIPS
Intangible Assets Acquired Through Business Combinations
Finite Lives, Amount	152
OTHER
Intangible Assets Acquired Through Business Combinations
Finite Lives, Amount	21
Duo
Intangible Assets Acquired Through Business Combinations
Total, Amount	342
Duo | IPR&D
Intangible Assets Acquired Through Business Combinations
Indefinite Lives, Amount	$ 77
Duo | TECHNOLOGY
Intangible Assets Acquired Through Business Combinations
Weighted- Average Useful Life (in Years)	5 years
Finite Lives, Amount	$ 153
Duo | CUSTOMER RELATIONSHIPS
Intangible Assets Acquired Through Business Combinations
Weighted- Average Useful Life (in Years)	5 years
Finite Lives, Amount	$ 94
Duo | OTHER
Intangible Assets Acquired Through Business Combinations
Weighted- Average Useful Life (in Years)	2 years 6 months
Finite Lives, Amount	$ 18
Luxtera
Intangible Assets Acquired Through Business Combinations
Total, Amount	319
Luxtera | IPR&D
Intangible Assets Acquired Through Business Combinations
Indefinite Lives, Amount	$ 256
Luxtera | TECHNOLOGY
Intangible Assets Acquired Through Business Combinations
Weighted- Average Useful Life (in Years)	4 years
Finite Lives, Amount	$ 2
Luxtera | CUSTOMER RELATIONSHIPS
Intangible Assets Acquired Through Business Combinations
Weighted- Average Useful Life (in Years)	5 years
Finite Lives, Amount	$ 58
Luxtera | OTHER
Intangible Assets Acquired Through Business Combinations
Weighted- Average Useful Life (in Years)	1 year 7 months 6 days
Finite Lives, Amount	$ 3
Others (three in total)
Intangible Assets Acquired Through Business Combinations
Total, Amount	$ 11
Number of business combinations (acquisition) | acquisition	3
Others (three in total) | IPR&D
Intangible Assets Acquired Through Business Combinations
Indefinite Lives, Amount	$ 0
Others (three in total) | TECHNOLOGY
Intangible Assets Acquired Through Business Combinations
Weighted- Average Useful Life (in Years)	4 years 4 months 24 days
Finite Lives, Amount	$ 11
Others (three in total) | CUSTOMER RELATIONSHIPS
Intangible Assets Acquired Through Business Combinations
Weighted- Average Useful Life (in Years)	0 years
Finite Lives, Amount	$ 0
Others (three in total) | OTHER
Intangible Assets Acquired Through Business Combinations
Weighted- Average Useful Life (in Years)	0 years
Finite Lives, Amount	$ 0

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Goodwill and Purchased Intangible Assets (Schedule of Purchased Intangible Assets With Finite and Indefinite Lives) (Details) - USD ($) $ in Millions	Apr. 27, 2019	Jul. 28, 2018
Purchased intangible assets with finite lives:
Gross	$ 4,050	$ 5,312
Accumulated Amortization	(2,089)	(2,863)
Total purchased intangible assets with finite lives, net	1,961	2,449
In-process research and development, with indefinite lives	437	103
Total finite and indefinite lives intangible assets, Gross	4,487	5,415
Total finite and indefinite lives intangible assets, net	2,398	2,552
TECHNOLOGY
Purchased intangible assets with finite lives:
Gross	3,169	3,711
Accumulated Amortization	(1,775)	(1,888)
Total purchased intangible assets with finite lives, net	1,394	1,823
CUSTOMER RELATIONSHIPS
Purchased intangible assets with finite lives:
Gross	840	1,538
Accumulated Amortization	(296)	(937)
Total purchased intangible assets with finite lives, net	544	601
OTHER
Purchased intangible assets with finite lives:
Gross	41	63
Accumulated Amortization	(18)	(38)
Total purchased intangible assets with finite lives, net	$ 23	$ 25

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Goodwill and Purchased Intangible Assets (Additional Information) (Details) - USD ($)	3 Months Ended		9 Months Ended
	Apr. 27, 2019	Apr. 28, 2018	Apr. 27, 2019	Apr. 28, 2018
Goodwill and Intangible Assets Disclosure [Abstract]
Purchased intangible assets impairment	$ 0	$ 1,000,000	$ 0	$ 1,000,000

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Goodwill and Purchased Intangible Assets (Schedule of Amortization of Purchased Intangible Assets) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Apr. 27, 2019	Apr. 28, 2018	Apr. 27, 2019	Apr. 28, 2018
Acquired Finite-Lived Intangible Assets [Line Items]
Amortization of purchased intangible assets	$ 39	$ 67	$ 112	$ 188
Cost of sales
Acquired Finite-Lived Intangible Assets [Line Items]
Amortization of purchased intangible assets	157	177	464	491
Share-based compensation expense in operating expenses
Acquired Finite-Lived Intangible Assets [Line Items]
Amortization of purchased intangible assets	39	67	112	188
Total
Acquired Finite-Lived Intangible Assets [Line Items]
Amortization of purchased intangible assets	$ 196	$ 244	$ 576	$ 679

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Goodwill and Purchased Intangible Assets (Schedule of Estimated Future Amortization Expense of Purchased Intangible Assets) (Details) $ in Millions	Apr. 27, 2019 USD ($)
Finite-Lived Intangible Assets, Future Amortization Expense [Abstract]
2019 (remaining three months)	$ 194
2020	741
2021	543
2022	287
2023	145
Thereafter	$ 51

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Restructuring and Other Charges (Additional Information) (Details) - USD ($) $ in Millions	3 Months Ended	9 Months Ended
	Apr. 27, 2019	Apr. 27, 2019	Apr. 28, 2018	Jul. 28, 2018
Restructuring Cost and Reserve [Line Items]
Restructuring charges		$ 282	$ 332
Fiscal 2018 Plan
Restructuring Cost and Reserve [Line Items]
Expected restructuring charges				$ 600
Restructuring charges	$ 18	282
Cumulative restructuring charges incurred	390	390
Fiscal 2017 Plan
Restructuring Cost and Reserve [Line Items]
Cumulative restructuring charges incurred	$ 1,000	$ 1,000

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Restructuring and Other Charges (Schedule of Activities Related to Restructuring and Other Charges) (Details) - USD ($) $ in Millions	3 Months Ended	9 Months Ended
	Apr. 27, 2019	Apr. 27, 2019	Apr. 28, 2018
Restructuring Reserve [Roll Forward]
Liability as of beginning period		$ 73	$ 117
Charges		282	332
Cash payments		(275)	(325)
Non-cash items		(46)	(20)
Liability as of ending period	$ 34	34	104
FISCAL 2017 AND PRIOR PLANS | Employee Severance
Restructuring Reserve [Roll Forward]
Liability as of beginning period		41	74
Charges		0	223
Cash payments		(34)	(245)
Non-cash items		0	4
Liability as of ending period	7	7	56
FISCAL 2017 AND PRIOR PLANS | Other
Restructuring Reserve [Roll Forward]
Liability as of beginning period		13	43
Charges		(1)	27
Cash payments		(7)	(30)
Non-cash items		0	(18)
Liability as of ending period	5	5	22
FISCAL 2018 PLAN
Restructuring Reserve [Roll Forward]
Charges	18	282
FISCAL 2018 PLAN | Employee Severance
Restructuring Reserve [Roll Forward]
Liability as of beginning period		19	0
Charges		232	75
Cash payments		(232)	(49)
Non-cash items		0	0
Liability as of ending period	19	19	26
FISCAL 2018 PLAN | Other
Restructuring Reserve [Roll Forward]
Liability as of beginning period		0	0
Charges		51	7
Cash payments		(2)	(1)
Non-cash items		(46)	(6)
Liability as of ending period	$ 3	$ 3	$ 0

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Balance Sheet Details (Details) - USD ($) $ in Millions	Apr. 27, 2019	Jul. 29, 2018	Jul. 28, 2018
Total cash, cash equivalents, and restricted cash
Cash and cash equivalents	$ 10,251		$ 8,934
Restricted cash included in other current assets	21		32
Restricted cash included in other assets	1		27
Total cash, cash equivalents, and restricted cash	10,273		8,993
Inventories:
Raw materials	398		423
Work in process	12		0
Finished goods:
Deferred cost of sales and distributor inventory	77		443
Manufactured finished goods	787		689
Total finished goods	864		1,132
Service-related spares	217		258
Demonstration systems	22		33
Total	1,513	$ 1,544	1,846
Gross property and equipment:
Land, buildings, and building and leasehold improvements	4,554		4,710
Computer equipment and related software	941		1,085
Production, engineering, and other equipment	5,688		5,734
Operating lease assets	562		356
Furniture and fixtures	370		358
Total gross property and equipment	12,115		12,243
Less: accumulated depreciation and amortization	(9,281)		(9,237)
Total	2,834		3,006
Disaggregation of Revenue [Line Items]
Deferred revenue:	17,456		19,685
Current	10,117	9,788	11,490
Noncurrent	7,339	$ 7,114	8,195
Service
Disaggregation of Revenue [Line Items]
Deferred revenue:	11,297		11,431
Product
Disaggregation of Revenue [Line Items]
Deferred revenue:	$ 6,159		$ 8,254

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Financing Receivables and Operating Leases (Additional Information) (Details) $ in Millions	9 Months Ended
	Apr. 27, 2019 USD ($) rating	Jul. 28, 2018 USD ($)
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 | $	$ 249	$ 503
Financing receivable, 91 days past due and still accruing | $	$ 231	$ 182
Investment credit risk ratings range lowest (rating)	1
Highest rating when receivables are deemed impaired (rating)	10
Rating at or higher when receivables deemed impaired (rating)	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

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Financing Receivables and Operating Leases (Schedule of Financing Receivables) (Details) - USD ($) $ in Millions	Apr. 27, 2019	Jan. 26, 2019	Jul. 28, 2018	Apr. 28, 2018	Jan. 27, 2018	Jul. 29, 2017
Financing Receivables [Line Items]
Allowance for credit loss	$ (153)	$ (200)	$ (205)	$ (262)	$ (272)	$ (295)
Current	5,029		4,949
Lease Receivables
Financing Receivables [Line Items]
Gross	2,442		2,688
Residual value	152		164
Unearned income	(139)		(141)
Allowance for credit loss	(68)		(135)
Total, net	2,387		2,576
Current	1,033		1,249
Noncurrent	1,354		1,327
Loan Receivables
Financing Receivables [Line Items]
Gross	5,240		4,999
Residual value	0		0
Unearned income	0		0
Allowance for credit loss	(77)		(60)
Total, net	5,163		4,939
Current	2,632		2,376
Noncurrent	2,531		2,563
Financed Service Contracts
Financing Receivables [Line Items]
Gross	2,349		2,326
Residual value	0		0
Unearned income	0		0
Allowance for credit loss	(8)		(10)
Total, net	2,341		2,316
Current	1,364		1,324
Noncurrent	977		992
Total
Financing Receivables [Line Items]
Gross	10,031		10,013
Residual value	152		164
Unearned income	(139)		(141)
Allowance for credit loss	(153)		(205)
Total, net	9,891		9,831
Current	5,029		4,949
Noncurrent	$ 4,862		$ 4,882

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Financing Receivables and Operating Leases (Schedule of Contractual Maturities of Gross Lease Receivables) (Details) $ in Millions	Apr. 27, 2019 USD ($)
Receivables [Abstract]
2019 (remaining three months)	$ 308
2020	984
2021	632
2022	341
2023	147
Thereafter	30
Total	$ 2,442

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Financing Receivables and Operating Leases (Schedule of Financing Receivables Categorized by Internal Credit Risk Rating) (Details) - USD ($) $ in Millions	Apr. 27, 2019	Jul. 28, 2018
Financing Receivable, Recorded Investment [Line Items]
Gross receivables less unearned income	$ 9,892	$ 9,872
1 to 4
Financing Receivable, Recorded Investment [Line Items]
Gross receivables less unearned income	5,773	5,946
5 to 6
Financing Receivable, Recorded Investment [Line Items]
Gross receivables less unearned income	3,903	3,786
7 and Higher
Financing Receivable, Recorded Investment [Line Items]
Gross receivables less unearned income	216	140
Total
Financing Receivable, Recorded Investment [Line Items]
Gross receivables less unearned income	9,892	9,872
Lease Receivables | 1 to 4
Financing Receivable, Recorded Investment [Line Items]
Gross receivables less unearned income	1,235	1,294
Lease Receivables | 5 to 6
Financing Receivable, Recorded Investment [Line Items]
Gross receivables less unearned income	1,029	1,199
Lease Receivables | 7 and Higher
Financing Receivable, Recorded Investment [Line Items]
Gross receivables less unearned income	39	54
Lease Receivables | Total
Financing Receivable, Recorded Investment [Line Items]
Gross receivables less unearned income	2,303	2,547
Loan Receivables | 1 to 4
Financing Receivable, Recorded Investment [Line Items]
Gross receivables less unearned income	3,187	3,184
Loan Receivables | 5 to 6
Financing Receivable, Recorded Investment [Line Items]
Gross receivables less unearned income	1,890	1,752
Loan Receivables | 7 and Higher
Financing Receivable, Recorded Investment [Line Items]
Gross receivables less unearned income	163	63
Loan Receivables | Total
Financing Receivable, Recorded Investment [Line Items]
Gross receivables less unearned income	5,240	4,999
Financed Service Contracts | 1 to 4
Financing Receivable, Recorded Investment [Line Items]
Gross receivables less unearned income	1,351	1,468
Financed Service Contracts | 5 to 6
Financing Receivable, Recorded Investment [Line Items]
Gross receivables less unearned income	984	835
Financed Service Contracts | 7 and Higher
Financing Receivable, Recorded Investment [Line Items]
Gross receivables less unearned income	14	23
Financed Service Contracts | Total
Financing Receivable, Recorded Investment [Line Items]
Gross receivables less unearned income	$ 2,349	$ 2,326

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Financing Receivables and Operating Leases (Schedule of Aging Analysis of Financing Receivables) (Details) - USD ($) $ in Millions	Apr. 27, 2019	Jul. 28, 2018
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	$ 1,332	$ 1,185
Current	8,560	8,687
Total	9,892	9,872
Nonaccrual Financing Receivables	52	42
Impaired Financing Receivables	52	42
Past due 31-60 days
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	262	314
Past due 61-90 days
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	230	160
Past due 91 or above days
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	840	711
Lease Receivables
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	229	254
Current	2,074	2,293
Total	2,303	2,547
Nonaccrual Financing Receivables	18	9
Impaired Financing Receivables	18	9
Lease Receivables | Past due 31-60 days
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	79	72
Lease Receivables | Past due 61-90 days
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	36	27
Lease Receivables | Past due 91 or above days
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	114	155
Loan Receivables
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	444	411
Current	4,796	4,588
Total	5,240	4,999
Nonaccrual Financing Receivables	30	30
Impaired Financing Receivables	30	30
Loan Receivables | Past due 31-60 days
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	108	104
Loan Receivables | Past due 61-90 days
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	81	55
Loan Receivables | Past due 91 or above days
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	255	252
Financed Service Contracts
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	659	520
Current	1,690	1,806
Total	2,349	2,326
Nonaccrual Financing Receivables	4	3
Impaired Financing Receivables	4	3
Financed Service Contracts | Past due 31-60 days
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	75	138
Financed Service Contracts | Past due 61-90 days
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	113	78
Financed Service Contracts | Past due 91 or above days
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	$ 471	$ 304

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Financing Receivables and Operating Leases (Summary of Allowances for Credit Loss and Related Financing Receivables) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Apr. 27, 2019	Apr. 28, 2018	Apr. 27, 2019	Apr. 28, 2018
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Allowance for credit loss as of beginning of period	$ 200	$ 272	$ 205	$ 295
Provisions (benefits)	(1)	(8)	(5)	(34)
Recoveries (write-offs), net	(26)		(26)
Foreign exchange and other	(20)	(2)	(21)	1
Allowance for credit loss as of end of period	153	262	153	262
Lease Receivables
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Allowance for credit loss as of beginning of period	127	165	135	162
Provisions (benefits)	(41)	1	(48)	2
Recoveries (write-offs), net	2		2
Foreign exchange and other	(20)	(1)	(21)	1
Allowance for credit loss as of end of period	68	165	68	165
Loan Receivables
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Allowance for credit loss as of beginning of period	64	94	60	103
Provisions (benefits)	13	(8)	17	(19)
Recoveries (write-offs), net	0		0
Foreign exchange and other	0	(1)	0	1
Allowance for credit loss as of end of period	77	85	77	85
Financed Service Contracts
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Allowance for credit loss as of beginning of period	9	13	10	30
Provisions (benefits)	27	(1)	26	(17)
Recoveries (write-offs), net	(28)		(28)
Foreign exchange and other	0	0	0	(1)
Allowance for credit loss as of end of period	8	$ 12	8	$ 12
Lease Receivables
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Allowance for credit loss as of beginning of period			135
Allowance for credit loss as of end of period	68		68
Loan Receivables
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Allowance for credit loss as of beginning of period			60
Allowance for credit loss as of end of period	77		77
Financed Service Contracts
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Allowance for credit loss as of beginning of period			10
Allowance for credit loss as of end of period	$ 8		$ 8

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Financing Receivables and Operating Leases (Operating Lease Schedule) (Details) - USD ($) $ in Millions	Apr. 27, 2019	Jul. 28, 2018
Receivables [Abstract]
Operating lease assets	$ 562	$ 356
Accumulated depreciation	(382)	(238)
Operating lease assets, net	$ 180	$ 118

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Financing Receivables and Operating Leases (Minimum Future Rental Payments) (Details) $ in Millions	Apr. 27, 2019 USD ($)
Receivables [Abstract]
2019 (remaining three months)	$ 42
2020	120
2021	58
2022	12
Total	$ 232

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Available-for-Sale Debt Investments and Equity Investments (Summary of Available-for-sale Debt Investments and Equity Investments) (Details) - USD ($) $ in Millions	Apr. 27, 2019	Jul. 28, 2018
Investments, Debt and Equity Securities [Abstract]
Available-for-sale debt investments	$ 24,387	$ 37,009
Marketable equity securities	5	605
Total investments	24,392	37,614
Non-marketable equity securities included in other assets (1)	1,135	978
Equity method investments included in other assets	115	118
Total	25,642	38,710
Debt Securities, Available-for-sale [Line Items]
Non-marketable equity securities included in other assets	1,135	$ 978
Net Asset Value (NAV) | Private equity funds
Investments, Debt and Equity Securities [Abstract]
Non-marketable equity securities included in other assets (1)	600
Debt Securities, Available-for-sale [Line Items]
Non-marketable equity securities included in other assets	$ 600

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Available-for-Sale Debt Investments and Equity Investments (Summary of Available-for-Sale Investments) (Details) - USD ($) $ in Millions	Apr. 27, 2019	Jul. 28, 2018
Schedule of Investments [Line Items]
Amortized Cost	$ 24,491	$ 37,512
Gross Unrealized Gains	44	44
Gross Unrealized Losses	(148)	(547)
Fair Value	24,387	37,009
Net unsettled, available-for-sale investments purchases (sales), net	1	(1,500)
U.S. government securities
Schedule of Investments [Line Items]
Amortized Cost	1,455	7,318
Gross Unrealized Gains	1	0
Gross Unrealized Losses	(4)	(43)
Fair Value	1,452	7,275
U.S. government agency securities
Schedule of Investments [Line Items]
Amortized Cost	264	732
Gross Unrealized Gains	0	0
Gross Unrealized Losses	(1)	(5)
Fair Value	263	727
Non-U.S. government and agency securities
Schedule of Investments [Line Items]
Amortized Cost		209
Gross Unrealized Gains		0
Gross Unrealized Losses		(1)
Fair Value		208
Corporate debt securities
Schedule of Investments [Line Items]
Amortized Cost	21,307	27,765
Gross Unrealized Gains	40	44
Gross Unrealized Losses	(115)	(445)
Fair Value	21,232	27,364
U.S. agency mortgage-backed securities
Schedule of Investments [Line Items]
Amortized Cost	1,465	1,488
Gross Unrealized Gains	3	0
Gross Unrealized Losses	(28)	(53)
Fair Value	$ 1,440	$ 1,435

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Available-for-Sale Debt Investments and Equity Investments (Gross Realized Gains and Gross Realized Losses Related to Available-for-Sale Investment) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Apr. 27, 2019	Apr. 28, 2018	Apr. 27, 2019	Apr. 28, 2018
Investments [Abstract]
Gross realized gains	$ 7	$ 1	$ 10	$ 15
Gross realized losses	(14)	(40)	(28)	(146)
Total	$ (7)	$ (39)	$ (18)	$ (131)

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Available-for-Sale Debt Investments and Equity Investments (Available-for-Sale Investments With Gross Unrealized Losses) (Details) - USD ($) $ in Millions	Apr. 27, 2019	Jul. 28, 2018
Schedule of Investments [Line Items]
UNREALIZED LOSSES LESS THAN 12 MONTHS, Fair Value	$ 1,907	$ 21,093
UNREALIZED LOSSES LESS THAN 12 MONTHS, Gross Unrealized Losses	(7)	(391)
UNREALIZED LOSSES 12 MONTHS OR GREATER, Fair Value	15,489	9,019
UNREALIZED LOSSES 12 MONTHS OR GREATER, Gross Unrealized Losses	(141)	(156)
TOTAL, Fair Value	17,396	30,112
TOTAL, Gross Unrealized Losses	(148)	(547)
U.S. government securities
Schedule of Investments [Line Items]
UNREALIZED LOSSES LESS THAN 12 MONTHS, Fair Value	8	2,966
UNREALIZED LOSSES LESS THAN 12 MONTHS, Gross Unrealized Losses	0	(20)
UNREALIZED LOSSES 12 MONTHS OR GREATER, Fair Value	1,409	4,303
UNREALIZED LOSSES 12 MONTHS OR GREATER, Gross Unrealized Losses	(4)	(23)
TOTAL, Fair Value	1,417	7,269
TOTAL, Gross Unrealized Losses	(4)	(43)
U.S. government agency securities
Schedule of Investments [Line Items]
UNREALIZED LOSSES LESS THAN 12 MONTHS, Fair Value	0	206
UNREALIZED LOSSES LESS THAN 12 MONTHS, Gross Unrealized Losses	0	(2)
UNREALIZED LOSSES 12 MONTHS OR GREATER, Fair Value	263	521
UNREALIZED LOSSES 12 MONTHS OR GREATER, Gross Unrealized Losses	(1)	(3)
TOTAL, Fair Value	263	727
TOTAL, Gross Unrealized Losses	(1)	(5)
Non-U.S. government and agency securities
Schedule of Investments [Line Items]
UNREALIZED LOSSES LESS THAN 12 MONTHS, Fair Value		105
UNREALIZED LOSSES LESS THAN 12 MONTHS, Gross Unrealized Losses		(1)
UNREALIZED LOSSES 12 MONTHS OR GREATER, Fair Value		103
UNREALIZED LOSSES 12 MONTHS OR GREATER, Gross Unrealized Losses		0
TOTAL, Fair Value		208
TOTAL, Gross Unrealized Losses		(1)
Corporate debt securities
Schedule of Investments [Line Items]
UNREALIZED LOSSES LESS THAN 12 MONTHS, Fair Value	1,851	16,990
UNREALIZED LOSSES LESS THAN 12 MONTHS, Gross Unrealized Losses	(7)	(344)
UNREALIZED LOSSES 12 MONTHS OR GREATER, Fair Value	12,662	3,511
UNREALIZED LOSSES 12 MONTHS OR GREATER, Gross Unrealized Losses	(108)	(101)
TOTAL, Fair Value	14,513	20,501
TOTAL, Gross Unrealized Losses	(115)	(445)
U.S. agency mortgage-backed securities
Schedule of Investments [Line Items]
UNREALIZED LOSSES LESS THAN 12 MONTHS, Fair Value	48	826
UNREALIZED LOSSES LESS THAN 12 MONTHS, Gross Unrealized Losses	0	(24)
UNREALIZED LOSSES 12 MONTHS OR GREATER, Fair Value	1,155	581
UNREALIZED LOSSES 12 MONTHS OR GREATER, Gross Unrealized Losses	(28)	(29)
TOTAL, Fair Value	1,203	1,407
TOTAL, Gross Unrealized Losses	$ (28)	$ (53)

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Available-for-Sale Debt Investments and Equity Investments (Additional Information) (Details)	3 Months Ended		9 Months Ended
	Apr. 27, 2019 USD ($) entity	Apr. 28, 2018 USD ($)	Apr. 27, 2019 USD ($) entity	Apr. 28, 2018 USD ($)	Jul. 28, 2018 USD ($)
Schedule of Investments [Line Items]
Impairment charges of available-for-sale investments	$ 0	$ 0	$ 0	$ 0
Average daily balance of securities lending			$ 1,300,000,000	$ 300,000,000
Fair value of securities received as collateral that can be resold or repledged, percentage (at least)			102.00%
Secured lending transactions outstanding	$ 0		$ 0		$ 0
Number of variable interest entities required to be consolidated (entity) | entity	0		0
Investments in privately held companies	$ 1,300,000,000		$ 1,300,000,000
Funding commitments	345,000,000		345,000,000
Variable Interest Entity, Not Primary Beneficiary
Schedule of Investments [Line Items]
Investments in privately held companies	$ 683,000,000		$ 683,000,000

XML

Available-for-Sale Debt Investments and Equity Investments (Maturities of Fixed Income Securities) (Details) - USD ($) $ in Millions	Apr. 27, 2019	Jul. 28, 2018
Debt Securities, Available-for-sale, Amortized Cost, Fiscal Year Maturity [Abstract]
Within 1 year	$ 7,363
After 1 year through 5 years	13,892
After 5 years through 10 years	1,760
After 10 years	11
Mortgage-backed securities with no single maturity	1,465
Amortized Cost	24,491	$ 37,512
Debt Securities, Available-for-sale, Fair Value, Fiscal Year Maturity [Abstract]
Within 1 year	7,353
After 1 year through 5 years	13,826
After 5 years through 10 years	1,756
After 10 years	12
Mortgage-backed securities with no single maturity	1,440
Total	$ 24,387	$ 37,009

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Available-for-Sale Debt Investments and Equity Investments (Summary of Gains and Losses Recognized on Marketable and Non-marketable Equity Securities) (Details) - USD ($) $ in Millions	3 Months Ended	9 Months Ended
	Apr. 27, 2019	Apr. 27, 2019
Adjustments to non-marketable equity securities measured using the measurement alternative:
Upward adjustments	$ 9	$ 33
Downward adjustments, including impairments	(4)	(22)
Net upward adjustments	5	11
Net gains and losses recognized during the period on equity investments	3	78
Less: Net gains and losses recognized on equity investments sold	(44)	(51)
Unrealized gains and losses recognized during reporting period on equity securities still held at the reporting date	$ (41)	$ 27

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Fair Value (Assets and Liabilities Measured at Fair Value on Recurring Basis) (Details) - USD ($) $ in Millions	Apr. 27, 2019	Jul. 28, 2018
Fair Value Measurements [Line Items]
Available-for-sale debt investments	$ 24,387	$ 37,009
Marketable equity securities	5	605
Derivative assets	36	2
Derivative liabilities	20	74
U.S. government securities
Fair Value Measurements [Line Items]
Available-for-sale debt investments	1,452	7,275
U.S. government agency securities
Fair Value Measurements [Line Items]
Available-for-sale debt investments	263	727
Non-U.S. government and agency securities
Fair Value Measurements [Line Items]
Available-for-sale debt investments		208
Corporate debt securities
Fair Value Measurements [Line Items]
Available-for-sale debt investments	21,232	27,364
Fair Value, Measurements, Recurring
Fair Value Measurements [Line Items]
Marketable equity securities	5	605
Derivative assets	36	2
Total	32,711	44,506
Derivative liabilities	20	74
Total	20	74
Fair Value, Measurements, Recurring | U.S. government securities
Fair Value Measurements [Line Items]
Available-for-sale debt investments	1,452	7,275
Fair Value, Measurements, Recurring | U.S. government agency securities
Fair Value Measurements [Line Items]
Available-for-sale debt investments	263	727
Fair Value, Measurements, Recurring | Non-U.S. government and agency securities
Fair Value Measurements [Line Items]
Available-for-sale debt investments	0	208
Fair Value, Measurements, Recurring | Corporate debt securities
Fair Value Measurements [Line Items]
Available-for-sale debt investments	21,232	27,364
Fair Value, Measurements, Recurring | U.S. agency mortgage-backed securities
Fair Value Measurements [Line Items]
Available-for-sale debt investments	1,440	1,435
Fair Value, Measurements, Recurring | Money market funds
Fair Value Measurements [Line Items]
Cash equivalents:	8,283	6,890
Fair Value, Measurements, Recurring | Level 1
Fair Value Measurements [Line Items]
Marketable equity securities	5	605
Derivative assets	0	0
Total	8,288	7,495
Derivative liabilities	0	0
Total	0	0
Fair Value, Measurements, Recurring | Level 1 | U.S. government securities
Fair Value Measurements [Line Items]
Available-for-sale debt investments	0	0
Fair Value, Measurements, Recurring | Level 1 | U.S. government agency securities
Fair Value Measurements [Line Items]
Available-for-sale debt investments	0	0
Fair Value, Measurements, Recurring | Level 1 | Non-U.S. government and agency securities
Fair Value Measurements [Line Items]
Available-for-sale debt investments	0	0
Fair Value, Measurements, Recurring | Level 1 | Corporate debt securities
Fair Value Measurements [Line Items]
Available-for-sale debt investments	0	0
Fair Value, Measurements, Recurring | Level 1 | U.S. agency mortgage-backed securities
Fair Value Measurements [Line Items]
Available-for-sale debt investments	0	0
Fair Value, Measurements, Recurring | Level 1 | Money market funds
Fair Value Measurements [Line Items]
Cash equivalents:	8,283	6,890
Fair Value, Measurements, Recurring | Level 2
Fair Value Measurements [Line Items]
Marketable equity securities	0	0
Derivative assets	36	2
Total	24,423	37,011
Derivative liabilities	20	74
Total	20	74
Fair Value, Measurements, Recurring | Level 2 | U.S. government securities
Fair Value Measurements [Line Items]
Available-for-sale debt investments	1,452	7,275
Fair Value, Measurements, Recurring | Level 2 | U.S. government agency securities
Fair Value Measurements [Line Items]
Available-for-sale debt investments	263	727
Fair Value, Measurements, Recurring | Level 2 | Non-U.S. government and agency securities
Fair Value Measurements [Line Items]
Available-for-sale debt investments	0	208
Fair Value, Measurements, Recurring | Level 2 | Corporate debt securities
Fair Value Measurements [Line Items]
Available-for-sale debt investments	21,232	27,364
Fair Value, Measurements, Recurring | Level 2 | U.S. agency mortgage-backed securities
Fair Value Measurements [Line Items]
Available-for-sale debt investments	1,440	1,435
Fair Value, Measurements, Recurring | Level 2 | Money market funds
Fair Value Measurements [Line Items]
Cash equivalents:	$ 0	$ 0

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Fair Value (Fair Value, Nonrecurring Measurement) (Details) - Fair Value, Measurements, Nonrecurring - Level 3 - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Apr. 27, 2019	Apr. 28, 2018	Apr. 27, 2019	Apr. 28, 2018
Fair Value Assets And Liabilities Measured On Nonrecurring Basis [Line Items]
Total gains (losses) for nonrecurring measurements	$ (3)	$ (18)	$ 3	$ (37)
Non-marketable equity securities and equity method investments
Fair Value Assets And Liabilities Measured On Nonrecurring Basis [Line Items]
Total gains (losses) for nonrecurring measurements	(3)	(17)	3	(56)
Purchased intangible assets (impaired)
Fair Value Assets And Liabilities Measured On Nonrecurring Basis [Line Items]
Total gains (losses) for nonrecurring measurements	0	(1)	0	(1)
Property held for sale—land and buildings
Fair Value Assets And Liabilities Measured On Nonrecurring Basis [Line Items]
Total gains (losses) for nonrecurring measurements	$ 0	$ 0	$ 0	$ 20

XML

Fair Value (Additional Information) (Details) - USD ($)	Apr. 27, 2019	Jul. 28, 2018	Apr. 28, 2018
Fair Value Measurements [Line Items]
Senior notes, carrying value	$ 20,415,000,000	$ 25,569,000,000
Level 3
Fair Value Measurements [Line Items]
Long term loan receivables and financed service contracts and others carrying value	3,500,000,000	3,600,000,000
Level 2
Fair Value Measurements [Line Items]
Senior notes, fair value	21,600,000,000	26,400,000,000
Senior notes, carrying value	$ 20,400,000,000	$ 25,600,000,000
Fair Value, Measurements, Nonrecurring | Property held for sale—land and buildings | Level 3
Fair Value Measurements [Line Items]
Carrying value of the property held for sale			$ 0

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Borrowings (Schedule Of Short-Term Debt) (Details) - USD ($) $ in Millions	Apr. 27, 2019	Jul. 28, 2018
Short-term Debt [Line Items]
Amount	$ 7,777	$ 5,238
Current portion of long-term debt
Short-term Debt [Line Items]
Amount	$ 4,494	$ 5,238
Effective Rate	3.52%	3.46%
Commercial paper
Short-term Debt [Line Items]
Amount	$ 3,283	$ 0
Effective Rate	2.53%	0.00%

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Borrowings (Additional Information) (Details) - USD ($)	May 15, 2015	Apr. 27, 2019	Jul. 28, 2018
Debt Instrument [Line Items]
Derivative, notional amount		$ 8,818,000,000	$ 10,011,000,000
Line of credit facility, amount outstanding		0
Unsecured revolving credit facility
Debt Instrument [Line Items]
Current borrowing capacity	$ 3,000,000,000
Additional credit facility upon agreement (up to)	$ 2,000,000,000.0
Unsecured revolving credit facility | Federal Fund rate
Debt Instrument [Line Items]
Interest rate based on % above pre-defined market rate	0.50%
Unsecured revolving credit facility | LIBOR
Debt Instrument [Line Items]
Interest rate based on % above pre-defined market rate	1.00%
Unsecured revolving credit facility | Eurodollar
Debt Instrument [Line Items]
Interest rate based on % above pre-defined market rate	0.00%
Derivatives designated as hedging instruments: | Interest rate derivatives
Debt Instrument [Line Items]
Derivative, notional amount		4,500,000,000	$ 6,750,000,000
Commercial paper
Debt Instrument [Line Items]
Commercial paper, maximum borrowing limit (up to)		$ 10,000,000,000.0

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Borrowings (Schedule of Long-Term Debt) (Details) - USD ($) $ in Millions	9 Months Ended
	Apr. 27, 2019	Jul. 28, 2018
Debt Instrument [Line Items]
Total	$ 20,500	$ 25,750
Unaccreted discount/issuance costs	(103)	(116)
Hedge accounting fair value adjustments	18	(65)
Total	20,415	25,569
Current portion of long-term debt	4,494	5,238
Long-term debt	15,921	20,331
Floating Rate Notes 3-month Libor Plus 0.50% Due March 2019
Debt Instrument [Line Items]
Amount	$ 0	$ 500
Effective Rate	0.00%	2.86%
Floating Rate Notes 3-month Libor Plus 0.34% Due September 2019
Debt Instrument [Line Items]
Amount	$ 500	$ 500
Effective Rate	3.01%	2.71%
Fixed-Rate Notes, 4.95%, Due February 2019
Debt Instrument [Line Items]
Interest rate, stated percentage	4.95%
Amount	$ 0	$ 2,000
Effective Rate	0.00%	5.17%
Fixed-Rate Notes, 1.60%, Due February 2019
Debt Instrument [Line Items]
Interest rate, stated percentage	1.60%
Amount	$ 0	$ 1,000
Effective Rate	0.00%	1.67%
Fixed-Rate Notes, 2.125%, Due March 2019
Debt Instrument [Line Items]
Interest rate, stated percentage	2.125%
Amount	$ 0	$ 1,750
Effective Rate	0.00%	2.71%
Fixed-Rate Notes, 1.40%, Due September 2019
Debt Instrument [Line Items]
Interest rate, stated percentage	1.40%
Amount	$ 1,500	$ 1,500
Effective Rate	1.48%	1.48%
Fixed-Rate Notes, 4.45%, Due January 2020
Debt Instrument [Line Items]
Interest rate, stated percentage	4.45%
Amount	$ 2,500	$ 2,500
Effective Rate	4.84%	4.52%
Fixed-Rate Notes, 2.45%, Due June 2020
Debt Instrument [Line Items]
Interest rate, stated percentage	2.45%
Amount	$ 1,500	$ 1,500
Effective Rate	2.54%	2.54%
Fixed-Rate Notes, 2.20%, Due February 2021
Debt Instrument [Line Items]
Interest rate, stated percentage	2.20%
Amount	$ 2,500	$ 2,500
Effective Rate	2.30%	2.30%
Fixed-Rate Notes, 2.90%, Due March 2021
Debt Instrument [Line Items]
Interest rate, stated percentage	2.90%
Amount	$ 500	$ 500
Effective Rate	3.25%	2.86%
Fixed-Rate Notes, 1.85%, Due September 2021
Debt Instrument [Line Items]
Interest rate, stated percentage	1.85%
Amount	$ 2,000	$ 2,000
Effective Rate	1.90%	1.90%
Fixed-Rate Notes, 3.00 %, Due June 2022
Debt Instrument [Line Items]
Interest rate, stated percentage	3.00%
Amount	$ 500	$ 500
Effective Rate	3.51%	3.11%
Fixed-Rate Notes, 2.60%, Due February, 2023
Debt Instrument [Line Items]
Interest rate, stated percentage	2.60%
Amount	$ 500	$ 500
Effective Rate	2.68%	2.68%
Fixed-Rate Notes, 2.20%, Due September 2023
Debt Instrument [Line Items]
Interest rate, stated percentage	2.20%
Amount	$ 750	$ 750
Effective Rate	2.27%	2.27%
Fixed-Rate Notes, 3.625%, Due March 2024
Debt Instrument [Line Items]
Interest rate, stated percentage	3.625%
Amount	$ 1,000	$ 1,000
Effective Rate	3.37%	2.98%
Fixed-Rate Notes, 3.50%, Due June 2025
Debt Instrument [Line Items]
Interest rate, stated percentage	3.50%
Amount	$ 500	$ 500
Effective Rate	3.67%	3.27%
Fixed-Rate Notes, 2.95%, Due February, 2026
Debt Instrument [Line Items]
Interest rate, stated percentage	2.95%
Amount	$ 750	$ 750
Effective Rate	3.01%	3.01%
Fixed-Rate Notes, 2.50%, Due September 2026
Debt Instrument [Line Items]
Interest rate, stated percentage	2.50%
Amount	$ 1,500	$ 1,500
Effective Rate	2.55%	2.55%
Fixed-Rate Notes, 5.90%, Due February 2039
Debt Instrument [Line Items]
Interest rate, stated percentage	5.90%
Amount	$ 2,000	$ 2,000
Effective Rate	6.11%	6.11%
Fixed-Rate Notes, 5.50%, Due January 2040
Debt Instrument [Line Items]
Interest rate, stated percentage	5.50%
Amount	$ 2,000	$ 2,000
Effective Rate	5.67%	5.67%
LIBOR | Floating Rate Notes 3-month Libor Plus 0.50% Due March 2019
Debt Instrument [Line Items]
Three-month LIBOR plus this percentage	0.50%
LIBOR | Floating Rate Notes 3-month Libor Plus 0.34% Due September 2019
Debt Instrument [Line Items]
Three-month LIBOR plus this percentage	0.34%

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Borrowings (Schedule of Future Principal Payments for Long-Term Debt) (Details) - USD ($) $ in Millions	Apr. 27, 2019	Jul. 28, 2018
Debt Disclosure [Abstract]
2019 (remaining three months)	$ 0
2020	6,000
2021	3,000
2022	2,500
2023	500
Thereafter	8,500
Total	$ 20,500	$ 25,750

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Derivative Instruments (Derivatives Recorded at Fair Value) (Details) - USD ($) $ in Millions	Apr. 27, 2019	Jul. 28, 2018
Derivative [Line Items]
DERIVATIVE ASSETS	$ 36	$ 2
DERIVATIVE LIABILITIES	20	74
Derivatives designated as hedging instruments:
Derivative [Line Items]
DERIVATIVE ASSETS	32	1
DERIVATIVE LIABILITIES	14	72
Derivatives designated as hedging instruments: | Foreign currency derivatives | Other current assets
Derivative [Line Items]
DERIVATIVE ASSETS	5	1
Derivatives designated as hedging instruments: | Foreign currency derivatives | Other current liabilities
Derivative [Line Items]
DERIVATIVE LIABILITIES	3	0
Derivatives designated as hedging instruments: | Interest rate derivatives | Other current assets
Derivative [Line Items]
DERIVATIVE ASSETS	0	0
Derivatives designated as hedging instruments: | Interest rate derivatives | Other current liabilities
Derivative [Line Items]
DERIVATIVE LIABILITIES	7	10
Derivatives designated as hedging instruments: | Interest rate derivatives | Other assets
Derivative [Line Items]
DERIVATIVE ASSETS	27	0
Derivatives designated as hedging instruments: | Interest rate derivatives | Other long-term liabilities
Derivative [Line Items]
DERIVATIVE LIABILITIES	4	62
Derivatives not designated as hedging instruments:
Derivative [Line Items]
DERIVATIVE ASSETS	4	1
DERIVATIVE LIABILITIES	6	2
Derivatives not designated as hedging instruments: | Foreign currency derivatives | Other current assets
Derivative [Line Items]
DERIVATIVE ASSETS	4	1
Derivatives not designated as hedging instruments: | Foreign currency derivatives | Other current liabilities
Derivative [Line Items]
DERIVATIVE LIABILITIES	$ 6	$ 2

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Derivative Instruments (Effect of Derivative Instruments Designated as Cash Flow Hedges on Other Comprehensive Income and Consolidated Statements of Operations Summary) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Apr. 27, 2019	Apr. 28, 2018	Apr. 27, 2019	Apr. 28, 2018
Derivatives designated as cash flow hedging instruments:
Derivative [Line Items]
GAINS (LOSSES) RECOGNIZED IN OCI ON DERIVATIVES (EFFECTIVE PORTION)	$ 12	$ (10)	$ 2	$ 28
GAINS (LOSSES) RECLASSIFIED FROM AOCI INTO INCOME (EFFECTIVE PORTION)	0	28	1	59
Derivatives designated as cash flow hedging instruments: | Foreign currency derivatives
Derivative [Line Items]
GAINS (LOSSES) RECOGNIZED IN OCI ON DERIVATIVES (EFFECTIVE PORTION)	12	(10)	2	28
Derivatives designated as cash flow hedging instruments: | Foreign currency derivatives | Revenue | Product
Derivative [Line Items]
GAINS (LOSSES) RECLASSIFIED FROM AOCI INTO INCOME (EFFECTIVE PORTION)	(1)	0	0	0
Derivatives designated as cash flow hedging instruments: | Foreign currency derivatives | Revenue | Service
Derivative [Line Items]
GAINS (LOSSES) RECLASSIFIED FROM AOCI INTO INCOME (EFFECTIVE PORTION)	1	0	3	0
Derivatives designated as cash flow hedging instruments: | Foreign currency derivatives | Cost of sales | Service
Derivative [Line Items]
GAINS (LOSSES) RECLASSIFIED FROM AOCI INTO INCOME (EFFECTIVE PORTION)	0	7	(1)	14
Derivatives designated as cash flow hedging instruments: | Foreign currency derivatives | Operating expenses
Derivative [Line Items]
GAINS (LOSSES) RECLASSIFIED FROM AOCI INTO INCOME (EFFECTIVE PORTION)	0	21	(1)	45
Derivatives designated as net investment hedging instruments: | Foreign currency derivatives
Derivative [Line Items]
GAINS (LOSSES) RECOGNIZED IN OCI ON DERIVATIVES (EFFECTIVE PORTION)	0	7	3	(10)
Derivatives designated as net investment hedging instruments: | Foreign currency derivatives | Other income (loss), net
Derivative [Line Items]
GAINS (LOSSES) RECLASSIFIED FROM AOCI INTO INCOME (EFFECTIVE PORTION)	$ 0	$ 0	$ 0	$ 0

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Derivative Instruments (Additional Information) (Details) $ in Millions	9 Months Ended
	Apr. 27, 2019 USD ($) derivative	Jul. 28, 2018 derivative
Derivative [Line Items]
Net derivative gains or losses to be reclassified from AOCI into earnings in next twelve months | $	$ 3
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

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Derivative Instruments (Effect of Derivative Instruments Designated as Fair Value Hedges and Underlying Hedged Items on Consolidated Statements of Operations) (Details) - Derivatives Designated as Fair Value Hedging Instruments - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Apr. 27, 2019	Apr. 28, 2018	Apr. 27, 2019	Apr. 28, 2018
Hedge Underlying Gain Loss [Line Items]
GAINS (LOSSES) ON DERIVATIVE INSTRUMENTS	$ 33	$ (34)	$ 88	$ (192)
GAINS (LOSSES) RELATED TO HEDGED ITEMS	(31)	33	(83)	191
Interest rate derivatives | Interest expense
Hedge Underlying Gain Loss [Line Items]
GAINS (LOSSES) ON DERIVATIVE INSTRUMENTS	33	(59)	88	(168)
GAINS (LOSSES) RELATED TO HEDGED ITEMS	(31)	58	(83)	167
Equity derivatives | Other income (loss), net
Hedge Underlying Gain Loss [Line Items]
GAINS (LOSSES) ON DERIVATIVE INSTRUMENTS	0	25	0	(24)
GAINS (LOSSES) RELATED TO HEDGED ITEMS	$ 0	$ (25)	$ 0	$ 24

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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		9 Months Ended
	Apr. 27, 2019	Apr. 28, 2018	Apr. 27, 2019	Apr. 28, 2018
Derivative Instruments, Gain (Loss) [Line Items]
GAINS (LOSSES) FOR THE PERIOD	$ 14	$ (91)	$ (57)	$ 37
Foreign currency derivatives | Other income (loss), net
Derivative Instruments, Gain (Loss) [Line Items]
GAINS (LOSSES) FOR THE PERIOD	(29)	(53)	(57)	20
Total return swaps—deferred compensation | Other income (loss), net
Derivative Instruments, Gain (Loss) [Line Items]
GAINS (LOSSES) FOR THE PERIOD	(4)	(3)	(12)	(8)
Total return swaps—deferred compensation | Operating expenses
Derivative Instruments, Gain (Loss) [Line Items]
GAINS (LOSSES) FOR THE PERIOD	42	(26)	9	28
Total return swaps—deferred compensation | Cost of sales | Product
Derivative Instruments, Gain (Loss) [Line Items]
GAINS (LOSSES) FOR THE PERIOD	2	(1)	1	0
Total return swaps—deferred compensation | Cost of sales | Service
Derivative Instruments, Gain (Loss) [Line Items]
GAINS (LOSSES) FOR THE PERIOD	2	(1)	0	1
Equity derivatives | Other income (loss), net
Derivative Instruments, Gain (Loss) [Line Items]
GAINS (LOSSES) FOR THE PERIOD	$ 1	$ (7)	$ 2	$ (4)

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Derivative Instruments (Schedule of Notional Amounts of Derivatives Outstanding) (Details) - USD ($)	Apr. 27, 2019	Jul. 28, 2018
Derivative [Line Items]
Derivatives	$ 8,818,000,000	$ 10,011,000,000
Derivatives designated as hedging instruments: | Foreign currency derivatives
Derivative [Line Items]
Derivatives	623,000,000	147,000,000
Derivatives designated as hedging instruments: | Interest rate derivatives
Derivative [Line Items]
Derivatives	4,500,000,000	6,750,000,000
Derivatives designated as hedging instruments: | Net investment hedging instruments
Derivative [Line Items]
Derivatives	363,000,000	250,000,000
Derivatives not designated as hedging instruments: | Foreign currency derivatives
Derivative [Line Items]
Derivatives	2,760,000,000	2,298,000,000
Derivatives not designated as hedging instruments: | Total return swaps—deferred compensation
Derivative [Line Items]
Derivatives	$ 572,000,000	$ 566,000,000

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Derivative Instruments (Offsetting of Derivative Assets and Liabilities) (Details) - USD ($) $ in Millions	Apr. 27, 2019	Jul. 28, 2018
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Gross Amount of Recognized, Assets	$ 36	$ 2
Gross Amounts Offset, Assets	0	0
Net Amounts Presented, Assets	36	2
Gross Derivative Amounts, Assets	(10)	(2)
Cash Collateral, Assets	(26)	0
Net Amount, Assets	0	0
Gross Amount of Recognized, Liabilities	20	74
Gross Amounts Offset, Liabilities	0	0
Net Amount Presented, Liabilities	20	74
Gross Derivative Amounts, Liabilities	(10)	(2)
Cash Collateral, Liabilities	(5)	(53)
Net Amount, Liabilities	$ 5	$ 19

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Commitments and Contingencies (Schedule of Future Minimum Lease Payments Under All Noncancelable Operating Leases) (Details) $ in Millions	Apr. 27, 2019 USD ($)
Commitments and Contingencies Disclosure [Abstract]
2019 (remaining three months)	$ 111
2020	372
2021	257
2022	177
2023	112
Thereafter	121
Total	$ 1,150

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Commitments and Contingencies (Schedule of Purchase Commitments) (Details) - USD ($) $ in Millions	Apr. 27, 2019	Jul. 28, 2018
Commitments and Contingencies Disclosure [Abstract]
Less than 1 year	$ 4,738	$ 5,407
1 to 3 years	734	710
3 to 5 years	90	360
Total	$ 5,562	$ 6,477

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Commitments and Contingencies (Additional Information) (Details) $ in Millions							3 Months Ended		9 Months Ended
	May 30, 2017 USD ($)	May 25, 2017 USD ($)	Mar. 14, 2017 USD ($)	Mar. 03, 2017 USD ($) patent	May 12, 2016 USD ($)	Sep. 04, 2013 patent	Apr. 27, 2019 USD ($)	Apr. 28, 2018 USD ($)	Apr. 27, 2019 USD ($)	Apr. 28, 2018 USD ($)	Jul. 28, 2018 USD ($)
Contingency [Line Items]
Liability for purchase commitments							$ 129.0		$ 129.0		$ 159.0
Future compensation expense & contingent consideration (up to)							512.0		512.0
Commitments and contingencies
Volume of channel partner financing							7,200.0	$ 7,100.0	21,700.0	$ 20,700.0
Balance of the channel partner financing subject to guarantees							1,325.0		1,325.0		1,000.0
Financing provided by third parties for leases and loans on which the Company has provided guarantees							1.0	$ 3.0	11.0	29.0
Brazilian authority claim of import tax evasion by importer tax portion							206.0		206.0
Brazilian authority claim of import tax evasion by importer interest portion							1,300.0		1,300.0
Brazilian authority claim of import tax evasion by importer penalties portion							1,000.0		$ 1,000.0
SRI International
Contingency [Line Items]
Damages awarded, value					$ 23.7
SRI International | Pending Litigation
Contingency [Line Items]
Damages awarded, value		$ 57.0
Number of allegedly infringed patents (patent) | patent						2
Percentage of royalty awarded		3.50%
Arista Networks, Inc vs. Company
Contingency [Line Items]
Proceeds from Legal Settlements							400.0
Patent Infringement | Sprint Communications Company, L.P. vs. Time Warner Cable, Inc. | Pending Litigation
Contingency [Line Items]
Number of patents found infringed (patent) | patent				5
Damages awarded, value			$ 139.8	$ 139.8
Percentage of post-judgment interest awarded			1.06%
Pre-judgment interest requested	$ 20.3
Patent Indemnification
Contingency [Line Items]
Legal and indemnification settlement										$ 127.0
Minimum
Contingency [Line Items]
Warranty period for products									90 days
Channel partners revolving short-term financing payment term									60 days
Maximum
Contingency [Line Items]
Warranty period for products									5 years
Channel partners revolving short-term financing payment term									90 days
End user lease and loan term									3 years
Investments in privately held companies (impaired)
Contingency [Line Items]
Commitments and contingencies							$ 345.0		$ 345.0		$ 223.0

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Commitments and Contingencies (Schedule of Other Commitments) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Apr. 27, 2019	Apr. 28, 2018	Apr. 27, 2019	Apr. 28, 2018
Acquisition
Contingency [Line Items]
Compensation expense related to acquisitions	$ 76	$ 53	$ 251	$ 141

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Commitments and Contingencies (Schedule Of Product Warranty Liability) (Details) - USD ($) $ in Millions	9 Months Ended
	Apr. 27, 2019	Apr. 28, 2018
Movement in Standard and Extended Product Warranty, Increase (Decrease) [Roll Forward]
Balance at beginning of period	$ 359	$ 407
Provisions for warranties issued	447	431
Adjustments for pre-existing warranties	(6)	(32)
Settlements	(449)	(441)
Acquisitions and divestitures	(2)	0
Balance at end of period	$ 349	$ 365

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Commitments and Contingencies (Schedule of Financing Guarantees Outstanding) (Details) - USD ($) $ in Millions	Apr. 27, 2019	Jul. 28, 2018
Loss Contingencies [Line Items]
Maximum potential future payments relating to financing guarantees:	$ 240	$ 308
Deferred revenue associated with financing guarantees:	(81)	(122)
Maximum potential future payments relating to financing guarantees, net of associated deferred revenue	159	186
Channel partner
Loss Contingencies [Line Items]
Maximum potential future payments relating to financing guarantees:	221	277
Deferred revenue associated with financing guarantees:	(63)	(94)
End user
Loss Contingencies [Line Items]
Maximum potential future payments relating to financing guarantees:	19	31
Deferred revenue associated with financing guarantees:	$ (18)	$ (28)

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Shareholders' Equity (Additional Information) (Details) - USD ($)	3 Months Ended		9 Months Ended
	Apr. 27, 2019	Apr. 28, 2018	Apr. 27, 2019	Apr. 28, 2018	Jul. 28, 2018	Feb. 14, 2018
Class of Stock [Line Items]
Cash dividends paid per common share (in dollars per share)	$ 0.35	$ 0.33	$ 1.01	$ 0.91
Payments of dividends	$ 1,500,000,000	$ 1,600,000,000	$ 4,489,000,000	$ 4,433,000,000
Authorized additional repurchase amount						$ 15,000,000,000
Remaining authorized repurchase amount	18,000,000,000		18,000,000,000
Stock repurchase program
Class of Stock [Line Items]
Stock repurchases pending settlement	$ 200,000,000		$ 200,000,000		$ 180,000,000

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Shareholders' Equity (Stock Repurchase Program) (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions	3 Months Ended
	Apr. 27, 2019	Jan. 26, 2019	Oct. 27, 2018	Jul. 28, 2018	Apr. 28, 2018	Jan. 27, 2018	Oct. 28, 2017
Stockholders' Equity Note [Abstract]
Repurchase of common stock under the stock repurchase program, Shares Repurchased (in shares)	116	111	109	138	140	103	51
Repurchase of common stock under the stock repurchase program, Weighted-Average Price per Share (in dollars per share)	$ 52.14	$ 45.09	$ 46.01	$ 43.58	$ 42.83	$ 39.07	$ 31.80
Repurchase of common stock under the stock repurchase program, Amount Repurchased	$ 6,020	$ 5,016	$ 5,026	$ 6,015	$ 6,015	$ 4,011	$ 1,620

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Employee Benefit Plans (Additional Information) (Details) $ / shares in Units, $ in Billions		3 Months Ended		9 Months Ended
	Nov. 12, 2009 shares	Apr. 27, 2019 USD ($) stock_incentive_plan shares	Apr. 28, 2018 shares	Apr. 27, 2019 USD ($) stock_incentive_plan shares	Apr. 28, 2018 shares	Oct. 26, 2018 $ / shares	Jul. 28, 2018 $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of stock incentive plans (stock incentive plan) | stock_incentive_plan		1		1
Total compensation cost related to unvested share-based awards | $		$ 2.9		$ 2.9
Expected period of recognition of compensation cost				2 years 9 months 6 days
Closing stock price (in dollars per share) | $ / shares						$ 55.88
In-the-money exercisable stock option shares (in shares)		2,000,000		2,000,000
Number Exercisable (in shares)							4,000,000
Weighted- average exercise price per share (in dollars per share) | $ / shares							$ 6.84
Employee Stock Purchase Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares reserved for issuance (in shares)		721,400,000.0		721,400,000.0
Expiration date for stock options and stock appreciation rights				24 months
Shares eligible for employees purchase, percentage of discount				15.00%
Shares issued under employee purchase plan, shares (in shares)		0	0	9,000,000	12,000,000
Shares available for issuance (in shares)		169,000,000		169,000,000
2005 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares reserved for issuance (in shares)		694,000,000		694,000,000
Exercise price as a percentage of market value for Options	100.00%
Award requisite service period				3 years
PRSU allocation between Financial operating goals and TSR				50.00%
2005 Plan | Stock awards subsequent to November 12, 2009
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Reduction in shares available for issuance pursuant to November 12, 2009 amendment (in shares)	1.5	1.5		1.5
2005 Plan | Stock awards subsequent to November 12, 2009 | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expiration date for stock options and stock appreciation rights	10 years
2005 Plan | Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period				1 year
2005 Plan | Employee Stock Option | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation award vesting rights, percentage				25.00%
Award requisite service period				48 months
2005 Plan | Employee Stock Option | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation award vesting rights, percentage				20.00%
Award requisite service period				36 months
2005 Plan | Performance base and Market base RSU
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award requisite service period				3 years
2005 Plan | Performance based RSU based on Financial or nonFinancial operating goal | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award requisite service period				3 years
2005 Plan | Performance based RSU based on Financial or nonFinancial operating goal | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award requisite service period				6 months
2005 Plan | PRSU based on financial performance metrics | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation award vesting rights, percentage				150.00%
2005 Plan | PRSU based on financial performance metrics | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation award vesting rights, percentage				0.00%
2005 Plan | PRSU based on TSR | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation award vesting rights, percentage				150.00%
2005 Plan | PRSU based on TSR | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation award vesting rights, percentage				0.00%
2005 Plan | PRSU based on nonfinancial operating goals | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation award vesting rights, percentage				100.00%
2005 Plan | PRSU based on nonfinancial operating goals | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation award vesting rights, percentage				0.00%
2005 Plan | Time Based Stock Grants And Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period				4 years

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Employee Benefit Plans (Summary Of Share-Based Compensation Expense) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Apr. 27, 2019	Apr. 28, 2018	Apr. 27, 2019	Apr. 28, 2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total share-based compensation expense	$ 379	$ 405	$ 1,182	$ 1,202
Income tax benefit for share-based compensation	98	140	389	411
Share-based compensation expense in cost of sales
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total share-based compensation expense	54	57	163	168
Research and development
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total share-based compensation expense	135	139	398	409
Sales and marketing
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total share-based compensation expense	124	142	386	412
General and administrative
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total share-based compensation expense	63	61	190	189
Restructuring and other charges
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total share-based compensation expense	3	6	45	24
Share-based compensation expense in operating expenses
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total share-based compensation expense	325	348	1,019	1,034
Product | Share-based compensation expense in cost of sales
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total share-based compensation expense	22	24	67	70
Service | Share-based compensation expense in cost of sales
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total share-based compensation expense	$ 32	$ 33	$ 96	$ 98

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Employee Benefit Plans (Summary of Share-Based Awards available for Grant) (Details) - shares	9 Months Ended	12 Months Ended
	Apr. 27, 2019	Jul. 28, 2018
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding [Roll Forward]
Balance, beginning of period (in shares)	245,000,000	272,000,000
Restricted stock, stock units, and other share-based awards granted (in shares)	(41,000,000)	(70,000,000)
Share-based awards canceled/forfeited/expired (in shares)	16,000,000	18,000,000
Shares withheld for taxes and not issued (in shares)	17,000,000	25,000,000
Other (in shares)	1,000,000
Balance, end of period (in shares)	238,000,000	245,000,000

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Employee Benefit Plans (Summary Of Restricted Stock And Stock Unit Activity) (Details) - USD ($) $ / shares in Units, $ in Millions	9 Months Ended	12 Months Ended
	Apr. 27, 2019	Jul. 28, 2018
Restricted Stock/ Stock Units
Assumed from acquisitions (in shares)		3,000,000
Weighted-Average Grant Date Fair Value per Share
Assumed from acquisitions (in dollars per share)		$ 8.20
Restricted Stock/Stock Units
Restricted Stock/ Stock Units
Beginning balance (in shares)	119,000,000	141,000,000
Granted (in shares)	27,000,000	46,000,000
Assumed from acquisitions (in shares)		1,000,000
Vested (in shares)	(36,000,000)	(53,000,000)
Canceled/forfeited (in shares)	(12,000,000)	(16,000,000)
Ending balance (in shares)	98,000,000	119,000,000
Weighted-Average Grant Date Fair Value per Share
Beginning balance (in dollars per share)	$ 30.56	$ 26.94
Granted (in dollars per share)	45.01	35.62
Assumed from acquisitions (in dollars per share)		28.26
Vested (in dollars per share)	28.30	26.02
Canceled/forfeited (in dollars per share)	31.39	28.37
Ending balance (in dollars per share)	$ 35.30	$ 30.56
Aggregate Fair Value	$ 1,698	$ 1,909

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Employee Benefit Plans (Summary Of Stock Option Activity) (Details) - $ / shares	9 Months Ended	12 Months Ended
	Apr. 27, 2019	Jul. 28, 2018
Number Outstanding
Beginning balance (in shares)	6,000,000	12,000,000
Assumed from acquisitions (in shares)		3,000,000
Exercised (in shares)	(3,000,000)	(8,000,000)
Canceled/forfeited/expired (in shares)		(1,000,000)
Ending balance (in shares)	3,000,000	6,000,000
Weighted-Average Exercise Price per Share
Beginning balance (in dollars per share)	$ 7.18	$ 6.15
Assumed from acquisitions (in dollars per share)		8.20
Exercised (in dollars per share)	$ 6.88	5.77
Canceled/forfeited/expired (in dollars per share)		8.75
Ending Balance (in dollars per share)		$ 7.18

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Employee Benefit Plans (Summary Of Significant Ranges Of Outstanding And Exercisable Stock Options) (Details) - USD ($) $ / shares in Units, $ in Millions	9 Months Ended
	Apr. 27, 2019	Jul. 28, 2018	Jul. 29, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number Outstanding (in shares)	3,000,000	6,000,000	12,000,000
Weighted- Average Exercise Price per Share (in dollars per share)		$ 7.18	$ 6.15
Number Exercisable (in shares)		4,000,000
Weighted- Average Exercise Price per Share (in dollars per share)		$ 6.84
$ 0.01 – 35.00
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Range of exercise prices, lower range price (in dollars per share)	$ 0.01
Range of exercise prices, upper range price (in dollars per share)	$ 35
Number Outstanding (in shares)	3,000,000
Weighted- Average Remaining Contractual Life (in Years)	5 years 3 months 18 days
Weighted- Average Exercise Price per Share (in dollars per share)	$ 7.35
Aggregate Intrinsic Value	$ 141
Number Exercisable (in shares)	2,000,000
Weighted- Average Exercise Price per Share (in dollars per share)	$ 7.22
Aggregate Intrinsic Value (Exercisable Options)	$ 117

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Employee Benefit Plans (Summary Assumptions Related To And Valuation Of Employee Share-Based Awards (Time-Based RSU and PRSU)) (Details) - $ / shares	3 Months Ended		9 Months Ended
	Apr. 27, 2019	Apr. 28, 2018	Apr. 27, 2019	Apr. 28, 2018
RESTRICTED STOCK UNITS
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares granted (in shares)	2,000,000	2,000,000	25,000,000	30,000,000
Grant date fair value per share (in dollars per share)	$ 48.17	$ 39.31	$ 44.84	$ 33.97
Expected dividend yield	2.70%	2.90%	2.80%	3.20%
Range of risk-free interest rates, minimum	0.00%	0.00%	0.00%	0.00%
Range of risk-free interest rates, maximum	2.60%	2.60%	2.90%	2.10%
PERFORMANCE RESTRICTED STOCK UNITS
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares granted (in shares)	0	0	2,000,000	3,000,000
Grant date fair value per share (in dollars per share)		$ 43.44	$ 47.00	$ 31.96
Expected dividend yield		3.00%	2.80%	3.50%
Range of risk-free interest rates, minimum		1.50%	2.10%	1.00%
Range of risk-free interest rates, maximum		2.50%	3.00%	2.50%
Range of expected volatilities for index, minimum		12.50%	13.00%
Range of expected volatilities for index, maximum		82.80%	65.20%

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Comprehensive Income (Loss) (AOCI components) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Apr. 27, 2019	Apr. 28, 2018	Apr. 27, 2019	Apr. 28, 2018
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Balance, beginning of period			$ 43,204
Other comprehensive income (loss)	$ 214	$ (732)	121	$ (695)
Balance, end of period	36,804		36,804
Net Unrealized Gains (Losses) on Available-for-Sale Investments
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Balance, beginning of period			(310)	373
Other comprehensive income (loss) before reclassifications attributable to Cisco Systems, Inc.			382	(620)
(Gains) losses reclassified out of AOCI			18	(108)
Tax benefit (expense)			(59)	24
Other comprehensive income (loss)			341	(704)
Effect of adoption of accounting standards	(168)	54	(168)	54
Balance, end of period	(137)	(277)	(137)	(277)
Net Unrealized Gains (Losses) Cash Flow Hedging Instruments
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Balance, beginning of period			(11)	32
Other comprehensive income (loss) before reclassifications attributable to Cisco Systems, Inc.			3	28
(Gains) losses reclassified out of AOCI			(1)	(59)
Tax benefit (expense)			0	4
Other comprehensive income (loss)			2	(27)
Effect of adoption of accounting standards	0	0	0	0
Balance, end of period	(9)	5	(9)	5
Cumulative Translation Adjustment and Actuarial Gains (Losses)
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Balance, beginning of period			(528)	(359)
Other comprehensive income (loss) before reclassifications attributable to Cisco Systems, Inc.			(224)	34
(Gains) losses reclassified out of AOCI			4	5
Tax benefit (expense)			(2)	(3)
Other comprehensive income (loss)			(222)	36
Effect of adoption of accounting standards	0	(9)	0	(9)
Balance, end of period	(750)	(332)	(750)	(332)
Accumulated Other Comprehensive Income (Loss)
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Balance, beginning of period			(849)	46
Other comprehensive income (loss) before reclassifications attributable to Cisco Systems, Inc.			161	(558)
(Gains) losses reclassified out of AOCI			21	(162)
Tax benefit (expense)			(61)	25
Other comprehensive income (loss)	214	(732)	121	(695)
Effect of adoption of accounting standards	(168)	45	(168)	45
Balance, end of period	$ (896)	$ (604)	$ (896)	$ (604)

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Comprehensive Income (Loss) (Reclassification Out of Other Comprehensive Income) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Apr. 27, 2019	Apr. 28, 2018	Apr. 27, 2019	Apr. 28, 2018
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items]
Revenue	$ 12,958	$ 12,463	$ 38,476	$ 36,486
NET INCOME (LOSS)	3,044	2,691	9,415	(3,693)
Total amounts reclassified out of AOCI	(8)	45	(21)	162
Reclassification out of Accumulated Other Comprehensive Income | Net unrealized gains and losses on available-for-sale investments
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items]
Other income (loss), net	(7)	17	(18)	108
Reclassification out of Accumulated Other Comprehensive Income | Net unrealized gains and losses on cash flow hedging instruments
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items]
Operating expenses	0	21	(1)	45
NET INCOME (LOSS)	0	28	1	59
Reclassification out of Accumulated Other Comprehensive Income | Cumulative translation adjustment and actuarial gains and losses
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items]
Other income (loss), net	(1)	0	(4)	0
Operating expenses	0	0	0	5
Product
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items]
Revenue	9,722	9,304	28,885	27,067
Product | Reclassification out of Accumulated Other Comprehensive Income | Net unrealized gains and losses on cash flow hedging instruments
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items]
Revenue	(1)	0	0	0
Service
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items]
Revenue	3,236	3,159	9,591	9,419
Service | Reclassification out of Accumulated Other Comprehensive Income | Net unrealized gains and losses on cash flow hedging instruments
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items]
Revenue	1	0	3	0
Cost of sales	$ 0	$ 7	$ (1)	$ 14

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Income Taxes (Income Before Provision for Income Taxes) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Apr. 27, 2019	Apr. 28, 2018	Apr. 27, 2019	Apr. 28, 2018
Income Tax Disclosure [Abstract]
Income before provision for income taxes	$ 3,615	$ 3,253	$ 10,867	$ 9,447
Provision for income taxes	$ 571	$ 562	$ 1,452	$ 13,140
Effective tax rate	15.80%	17.30%	13.40%	139.10%

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Income Taxes (Additional Information) (Details) - USD ($) $ in Millions	3 Months Ended			9 Months Ended		12 Months Ended
	Apr. 27, 2019	Oct. 27, 2018	Apr. 28, 2018	Apr. 27, 2019	Apr. 28, 2018	Jul. 28, 2018
Income Tax Contingency [Line Items]
Benefit for provision for income taxes	$ (571)		$ (562)	$ (1,452)	$ (13,140)
Tax Cuts and Jobs Act of 2017, provisional tax expense						$ 10,400
Tax Cuts and Jobs Act, provisional tax expense		$ 58		10,500
Tax Cuts and Jobs Act, transition tax expense (benefit)				8,200
Tax Cuts And Jobs Act, tax expense for foreign withholding tax				1,200
Tax Cuts and Jobs Act, re-measurement of net deferred tax assets				1,100
Tax Cuts and Jobs Act, transition tax benefit, foreign dividends				900
Unrecognized tax benefits	1,800			1,800
Unrecognized tax benefits that would impact effective tax rate	1,600			1,600
Unrecognized tax benefit that could be reduced in next 12 months	50			50
Accounting Standards Update 2014-09 | Difference between Revenue Guidance in Effect before and after Topic 606
Income Tax Contingency [Line Items]
Benefit for provision for income taxes	$ 152			$ 152

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Segment Information and Major Customers (Additional Information) (Details) $ in Millions	3 Months Ended		9 Months Ended
	Apr. 27, 2019 USD ($)	Apr. 28, 2018 USD ($)	Apr. 27, 2019 USD ($) segment	Apr. 28, 2018 USD ($)
Segment Reporting Information [Line Items]
Number of geographic segments (segment) | segment			3
Revenue	$ 12,958	$ 12,463	$ 38,476	$ 36,486
United States
Segment Reporting Information [Line Items]
Revenue	$ 6,800	$ 6,200	$ 20,200	$ 18,800

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Segment Information and Major Customers (Summary of Reportable Segments) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Apr. 27, 2019	Apr. 28, 2018	Apr. 27, 2019	Apr. 28, 2018
Segment Reporting Information [Line Items]
Revenue, total	$ 12,958	$ 12,463	$ 38,476	$ 36,486
Gross margin	8,173	7,759	24,092	22,684
Operating Segments | Americas
Segment Reporting Information [Line Items]
Revenue, total	7,695	7,161	22,798	21,515
Gross margin	5,046	4,614	14,911	13,950
Operating Segments | EMEA
Segment Reporting Information [Line Items]
Revenue, total	3,356	3,281	9,803	9,252
Gross margin	2,166	2,109	6,307	5,925
Operating Segments | APJC
Segment Reporting Information [Line Items]
Revenue, total	1,907	2,021	5,875	5,719
Gross margin	1,158	1,247	3,467	3,506
Segment Reconciling Items
Segment Reporting Information [Line Items]
Gross margin	8,370	7,970	24,686	23,381
Intersegment Eliminations
Segment Reporting Information [Line Items]
Gross margin	$ (197)	$ (211)	$ (594)	$ (697)

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Segment Information and Major Customers (Summary of Net Revenue for Groups of Similar Products and Services) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Apr. 27, 2019	Apr. 28, 2018	Apr. 27, 2019	Apr. 28, 2018
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenue, total	$ 12,958	$ 12,463	$ 38,476	$ 36,486
Infrastructure Platforms
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenue, total	7,545	7,180	22,315	20,870
Applications
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenue, total	1,431	1,310	4,315	3,697
Security
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenue, total	707	583	2,016	1,725
Other Products
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenue, total	39	231	239	775
Other Products | Discontinued operations, held-for-sale | Service Provider Video
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenue, total	0	219	168	697
Total Product
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenue, total	9,722	9,304	28,885	27,067
Service
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenue, total	$ 3,236	$ 3,159	$ 9,591	$ 9,419

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Segment Information and Major Customers (Property and Equipment Information for Geographic Areas) (Details) - USD ($) $ in Millions	Apr. 27, 2019	Jul. 28, 2018
Segment Reporting, Asset Reconciling Item [Line Items]
Property and equipment, net	$ 2,834	$ 3,006
United States
Segment Reporting, Asset Reconciling Item [Line Items]
Property and equipment, net	2,297	2,487
International
Segment Reporting, Asset Reconciling Item [Line Items]
Property and equipment, net	$ 537	$ 519

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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		9 Months Ended
	Apr. 27, 2019	Apr. 28, 2018	Apr. 27, 2019	Apr. 28, 2018
Earnings Per Share [Abstract]
Net income	$ 3,044	$ 2,691	$ 9,415	$ (3,693)
Weighted-average shares—basic (in shares)	4,370	4,791	4,468	4,892
Effect of dilutive potential common shares (in shares)	45	53	41	0
Weighted-average shares—diluted (in shares)	4,415	4,844	4,509	4,892
Net income (loss) per share—basic (in dollars per share)	$ 0.70	$ 0.56	$ 2.11	$ (0.76)
Net income (loss) per share—diluted (in dollars per share)	$ 0.69	$ 0.56	$ 2.09	$ (0.76)
Antidilutive employee share-based awards, excluded (in shares)	5	5	32	32