Cisco 2012 Annual Report Download - page 107
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7. Financing Receivables and Guarantees
(a) Financing Receivables
Financing receivables primarily consist of lease receivables, loan receivables, and financed service contracts and
other. Lease receivables represent sales-type and direct-financing leases resulting from the sale of the Company’s
and complementary third-party products and are typically collateralized by a security interest in the underlying
assets. Loan receivables represent financing arrangements related to the sale of the Company’s products and
services, which may include additional funding for other costs associated with network installation and
integration of the Company’s products and services. Lease receivables consist of arrangements with terms of four
years on average, while loan receivables generally have terms of up to three years. The financed service contracts
and other category includes financing receivables related to technical support and advanced services, as well as
receivables related to financing of certain indirect costs associated with leases. 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 the Company’s financing receivables is presented as follows (in millions):
July 28, 2012
Lease
Receivables
Loan
Receivables
Financed Service
Contracts
and Other
Total Financing
Receivables
Gross ............................. $3,429 $1,796 $2,651 $7,876
Unearned income ................... (250) — — (250)
Allowance for credit loss ............. (247) (122) (11) (380)
Total, net .................. $2,932 $1,674 $2,640 $7,246
Reported as:
Current ....................... $1,200 $ 968 $1,493 $3,661
Noncurrent .................... 1,732 706 1,147 3,585
Total, net .................. $2,932 $1,674 $2,640 $7,246
July 30, 2011
Lease
Receivables
Loan
Receivables
Financed Service
Contracts
and Other
Total
Financing
Receivables
Gross ............................. $3,111 $1,468 $2,637 $7,216
Unearned income .................... (250) — — (250)
Allowance for credit loss .............. (237) (103) (27) (367)
Total, net .................. $2,624 $1,365 $2,610 $6,599
Reported as:
Current ........................ $1,087 $ 673 $1,351 $3,111
Noncurrent ..................... 1,537 692 1,259 3,488
Total, net .................. $2,624 $1,365 $2,610 $6,599
As of July 28, 2012 and July 30, 2011, the deferred service revenue related to the financed service contracts and
other was $1,838 million and $2,044 million, respectively.
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