Cisco 2011 Annual Report Download - page 92

Download and view the complete annual report

Please find page 92 of the 2011 Cisco annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 152

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152

Notes to Consolidated Financial Statements
1. Basis of Presentation
The fiscal year for Cisco Systems, Inc. (the “Company” or “Cisco”) is the 52 or 53 weeks ending on the last
Saturday in July. Fiscal 2011 and fiscal 2009 were each 52-week fiscal years, while fiscal 2010 was a 53-week
fiscal year. The Consolidated Financial Statements include the accounts of Cisco and its subsidiaries. All
significant intercompany accounts and transactions have been eliminated. The Company conducts business
globally and is primarily managed on a geographic basis in the following segments: United States and Canada,
European Markets, Emerging Markets, and Asia Pacific Markets. The Emerging Markets segment includes
Eastern Europe, Latin America, the Middle East and Africa, and Russia and the Commonwealth of Independent
States.
The Company consolidates its investment in a venture fund managed by SOFTBANK Corp. and its affiliates
(“SOFTBANK”) as the Company is the primary beneficiary. The noncontrolling interests attributed to
SOFTBANK are presented as a separate component from the Company’s equity in the equity section of the
Consolidated Balance Sheets. SOFTBANK’s share of the earnings in the venture fund is not presented separately
in the Consolidated Statements of Operations and is included in other income (loss), net, as this amount is not
material for any of the fiscal years presented.
Certain reclassifications have been made to amounts for prior years in order to conform to the current year’s
presentation, which include the reallocation of share-based compensation expense within operating expenses due
to a refinement of the underlying categories of expenses. The Company has evaluated subsequent events through
the date that the financial statements were issued.
2. Summary of Significant Accounting Policies
(a) Cash and Cash Equivalents The Company considers all highly liquid investments purchased with an original
or remaining maturity of less than three months at the date of purchase to be cash equivalents. Cash and cash
equivalents are maintained with various financial institutions.
(b) Available-for-Sale Investments The Company classifies its investments in both fixed income securities and
publicly traded equity securities as available-for-sale investments. Fixed income securities primarily consist of
U.S. government securities, U.S. government agency securities, non-U.S. government and agency securities,
corporate debt securities, and asset-backed securities. These available-for-sale investments are primarily held in
the custody of a major financial institution. The specific identification method is used to determine the cost basis
of fixed income securities sold. The weighted-average method is used to determine the cost basis of publicly
traded equity securities sold. These investments are recorded in the Consolidated Balance Sheets at fair value.
Unrealized gains and losses on these investments, to the extent the investments are unhedged, are included as a
separate component of accumulated other comprehensive income (AOCI), net of tax. The Company classifies its
investments as current based on the nature of the investments and their availability for use in current operations.
(c) Other-than-Temporary Impairments on Investments Effective at the beginning of the fourth quarter of fiscal
2009, the Company was required to evaluate its fixed income securities for impairments in connection with an
updated accounting standard. Under this updated standard, if the fair value of a debt security is less than its
amortized cost, the Company assesses whether the impairment is other than temporary. An impairment is
considered other than temporary if (i) the Company has the intent to sell the security, (ii) it is more likely than
not that the Company will be required to sell the security before recovery of the entire amortized cost basis, or
(iii) the Company does not expect to recover the entire amortized cost basis of the security. If impairment is
considered other than temporary based on condition (i) or (ii) described above, the entire difference between the
amortized cost and the fair value of the debt security is recognized in earnings. If an impairment is considered
other than temporary based on condition (iii), the amount representing credit losses (defined as the difference
between the present value of the cash flows expected to be collected and the amortized cost basis of the debt
84