Cisco 2012 Annual Report Download - page 120

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The effects of the Company’s cash flow and net investment hedging instruments on OCI and the Consolidated
Statements of Operations are summarized as follows (in millions):
GAINS (LOSSES) RECOGNIZED
IN OCI ON DERIVATIVES FOR
THE YEARS ENDED (EFFECTIVE PORTION)
GAINS (LOSSES) RECLASSIFIED FROM
AOCI INTO INCOME FOR
THE YEARS ENDED (EFFECTIVE PORTION)
July 28,
2012
July 30,
2011
July 31,
2010
Line Item in Statements of
Operations
July 28,
2012
July 30,
2011
July 31,
2010
Derivatives designated as cash flow
hedging instruments:
Foreign currency derivatives .......$(131) $ 87 $33 Operating expenses ...... $ (59) $ 89 $ (1)
Cost of sales - service .... (14) 17 —
Interest rate derivatives ........... —— 23 Interest expense ......... 12—
Total ......................$(131) $ 87 $56 $ (72) $ 108 $ (1)
Derivatives designated as net investment
hedging instruments:
Foreign currency derivatives .......$23$ (10) $ (2) Other income, net ....... $— $— $—
During each of the fiscal years presented, the amounts recognized in earnings on derivative instruments
designated as cash flow hedges related to the ineffective portion were not material, and the Company did not
exclude any component of the changes in fair value of the derivative instruments from the assessment of hedge
effectiveness. As of July 28, 2012, the Company estimates that approximately $41 million of net derivative gains
related to its cash flow hedges included in AOCI will be reclassified into earnings within the next 12 months.
The effect on the Consolidated Statements of Operations of derivative instruments designated as fair value
hedges and the underlying hedged items is summarized as follows (in millions):
GAINS (LOSSES) ON
DERIVATIVES
INSTRUMENTS FOR THE
YEARS ENDED
GAINS (LOSSES)
RELATED TO HEDGED
ITEMS FOR THE YEARS
ENDED
Derivatives Designated as Fair Value
Hedging Instruments
Line Item in Statements of
Operations
July 28,
2012
July 30,
2011
July 31,
2010
July 28,
2012
July 30,
2011
July 31,
2010
Equity derivatives ........... Other income, net $ (4) $— $3 $4 $ — $ (3)
Interest rate derivatives ...... Interest expense 78 74 72 (80) (77) (77)
Total ................. $74 $ 74 $75 $(76) $ (77) $(80)
The Company did not exclude from the assessment of hedge effectiveness any component of the changes in fair
value of the derivative instruments designated as fair value hedges.
The effect on the Consolidated Statements of Operations of derivative instruments not designated as hedges is
summarized as follows (in millions):
GAINS (LOSSES) FOR THE
YEARS ENDED
Derivatives Not Designated as Hedging Instruments Line Item in Statements of Operations
July 28,
2012
July 30,
2011
July 31,
2010
Foreign currency derivatives ................Other income, net $(206) $264 $(100)
Total return swaps - deferred compensation ....Cost of sales - product 4——
Total return swaps - deferred compensation ....Operating expenses 333 18
Equity derivatives ........................Other income, net 625 12
Total ............................... $(193) $322 $ (70)
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