Cisco 2009 Annual Report Download - page 56

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Notes to Consolidated Financial Statements
(c) Loan Receivables
Loan receivables are summarized as follows (in millions):
July 25, 2009 July 26, 2008
Gross loan receivables $ 861 $ 607
Allowances (88) (128)
Loan receivables, net $ 773 $ 479
Reported as:
Current $ 236 $ 263
Noncurrent 537 216
Loan receivables, net $ 773 $ 479
A portion of the revenue related to loan receivables is deferred and included in deferred product revenue based on revenue recognition
criteria.
(d) Financing Guarantees
In the ordinary course of business, the Company provides financing guarantees, which are generally for various third-party financing
arrangements extended to channel partners and end-user customers.
Channel Partner Financing Guarantees The Company facilitates arrangements for third-party financing extended to channel partners,
consisting of revolving short-term financing, generally with payment terms ranging from 60 to 90 days. These financing arrangements
facilitate the working capital requirements of the channel partners and, in some cases, the Company guarantees a portion of these
arrangements. The volume of channel partner financing was $14.2 billion, $14.4 billion and $10.5 billion for fiscal 2009, 2008, and 2007,
respectively. As of the end of fiscal 2009 and fiscal 2008, the balance of the channel partner financing subject to guarantees was $1.1 billion
and $1.7 billion, respectively.
End-User Financing Guarantees The Company also provides financing guarantees for third-party financing arrangements extended to
end-user customers related to leases and loans that typically have terms of up to three years. The volume of financing provided by third
parties for leases and loans on which the Company has provided guarantees was $1.2 billion for both fiscal 2009 and fiscal 2008.
Financing Guarantee Summary The aggregate amount of financing guarantees outstanding at July 25, 2009 and July 26, 2008,
representing the total maximum potential future payments under financing arrangements with third parties, and the related deferred
revenue are summarized in the following table (in millions):
July 25, 2009 July 26, 2008
Maximum potential future payments relating to financing guarantees:
Channel partner $ 334 $ 450
End-user 405 380
Total $ 739 $ 830
Deferred revenue associated with financing guarantees:
Channel partner $ 218 $ 263
End-user 378 347
Total $ 596 $ 610
54 Cisco Systems, Inc.