Cisco 2013 Annual Report Download - page 112

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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 27,
2013
July 28,
2012
July 30,
2011
Line Item in Statements of
Operations
July 27,
2013
July 28,
2012
July 30,
2011
Derivatives designated as cash flow
hedging instruments:
Foreign currency derivatives ............ $73 $(131) $ 87 Operating expenses ...... $10 $(59) $ 89
Cost of sales - service .... 2(14) 17
Interest rate derivatives ................ —— — Interest expense ......... —12
Total ........................... $73 $(131) $ 87 $12 $(72) $108
Derivatives designated as net investment
hedging instruments:
Foreign currency derivatives ............ $ (1) $ 23 $ (10) Other income (loss), net . . . $— $— $ —
As of July 27, 2013, the Company estimates that approximately $20 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 27,
2013
July 28,
2012
July 30,
2011
July 27,
2013
July 28,
2012
July 30,
2011
Equity derivatives ................... Other income (loss), net $(155) $ (4) $ — $155 $4 $—
Interest rate derivatives ............... Interest expense (78) 78 74 78 (80) (77)
Total ......................... $(233) $74 $ 74 $233 $(76) $ (77)
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 27,
2013
July 28,
2012
July 30,
2011
Foreign currency derivatives .........................Other income (loss), net $ (74) $(206) $264
Total return swaps - deferred compensation .............Cost of sales - product —4—
Total return swaps - deferred compensation .............Operating expenses 61 333
Equity derivatives .................................Other income (loss), net —625
Total ........................................ $ (13) $(193) $322
The notional amounts of the Company’s outstanding derivatives are summarized as follows (in millions):
July 27, 2013 July 28, 2012
Derivatives designated as hedging instruments:
Foreign currency derivatives - cash flow hedges ..................................... $ 1,885 $ 2,910
Interest rate derivatives ......................................................... 5,250 4,250
Net investment hedging instruments ............................................... 662 468
Equity derivatives ............................................................. 1,098 272
Derivatives not designated as hedging instruments:
Foreign currency derivatives ..................................................... 3,739 6,241
Total return swaps-deferred compensation .......................................... 358 269
Total .................................................................... $12,992 $14,410
104