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 seek to mitigate such risks by limiting our counterparties to major financial institutions and requiring collateral in certain cases. In addition, the potential risk of loss with any one counterparty resulting from 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	July 27, 2024		July 29, 2023		Balance Sheet Line Item	July 27, 2024		July 29, 2023
Derivatives designated as hedging instruments:
Foreign currency derivatives	Other current assets	$	47	$	22	Other current liabilities	$	1	$	—
Foreign currency derivatives	Other assets	15		9		Other long-term liabilities	—		—
Interest rate derivatives	Other current assets	—		—		Other current liabilities	11		17
Interest rate derivatives	Other assets	—		—		Other long-term liabilities	—		24
Total		62		31			12		41
Derivatives not designated as hedging instruments:
Foreign currency derivatives	Other current assets	2		1		Other current liabilities	47		25
Foreign currency derivatives	Other assets	—		—		Other long-term liabilities	15		9
Total		2		1			62		34
Total		$	64	$	32		$	74	$	75


	CARRYING AMOUNT OF THE HEDGED ASSETS/(LIABILITIES)				CUMULATIVE AMOUNT OF FAIR VALUE HEDGING ADJUSTMENT INCLUDED IN THE CARRYING AMOUNT OF THE HEDGED ASSETS/LIABILITIES
Balance Sheet Line Item of Hedged Item	July 27, 2024		July 29, 2023		July 27, 2024		July 29, 2023
Short-term debt	$	(488)	$	(983)	$	11	$	17
Long-term debt	$	—	$	(476)	$	—	$	24


	GAINS (LOSSES) FOR THE YEARS ENDED
	July 27, 2024		July 29, 2023		July 30, 2022
Interest rate derivatives:
Hedged items	$	(30)	$	31	$	116
Derivatives designated as hedging instruments	30		(31)		(118)
Total	$	—	$	—	$	(2)


		GAINS (LOSSES) FOR THE YEARS ENDED
Derivatives Not Designated as Hedging Instruments	Line Item in Statements of Operations	July 27, 2024		July 29, 2023		July 30, 2022
Foreign currency derivatives	Other income (loss), net	$	(162)	$	1	$	(237)
Total return swaps—deferred compensation	Operating expenses and other	91		58		(92)
Equity derivatives	Other income (loss), net	2		13		9
Total		$	(69)	$	72	$	(320)


	July 27, 2024		July 29, 2023
Foreign currency derivatives	$	7,434	$	5,419
Interest rate derivatives	500		1,500
Total return swaps—deferred compensation	985		792
Total	$	8,919	$	7,711

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. Under these collateral security arrangements, the net cash collateral provided for was $11 million and $40 million as of July 27, 2024 and July 29, 2023, respectively.

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. The derivative instrument’s gain or loss is initially reported as a component of accumulated other comprehensive income (AOCI) and subsequently reclassified into earnings when the hedged exposure affects earnings.

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, long-term customer financings 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 monetary assets and 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.

We hold an interest rate swap designated as a fair value hedge related to a fixed-rate senior note that is due in fiscal 2025. Under the interest rate swap, we receive fixed-rate interest payments and make interest payments based on SOFR plus a fixed number of basis points. The effect of the swap is to convert the fixed interest rate of the senior fixed-rate note to a floating interest rate based on SOFR. The gain and loss related to the change in the fair value of the interest rate swap is included in interest expense and substantially offsets the change in the fair value of the hedged portion of the underlying debt attributable to the change in market interest rates.

We hold marketable equity securities in our portfolio that are subject to price risk. To diversify our overall portfolio, we also hold equity derivatives that are not designated as accounting hedges. The change in the fair value of each of these investment types are included in other income (loss), net.