Cisco 2008 Annual Report Download - page 41

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46 Cisco Systems, Inc.
Quantitative and Qualitative Disclosures About Market Risk
Equity Derivatives
Our equity derivatives are summarized as follows (in millions):
July 26, 2008 July 28, 2007
Notional
Amount Fair Value
Notional
Amount Fair Value
Forward sale agreements $ 157 $ 32 $ 458 $ 1
We maintain a portfolio of publicly traded equity securities that are subject to price risk. We may hold equity securities for strategic
purposes or to diversify our overall investment portfolio. To manage our exposure to changes in the fair value of certain equity securities,
we may enter into equity derivatives, including forward sale and option agreements. As of July 26, 2008, we have entered into forward sale
agreements on certain publicly traded equity securities designated as fair value hedges. The gains and losses due to 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. The fair values of the equity derivatives are reflected in prepaid expenses and other current assets and other current liabilities.