Cisco 2014 Annual Report Download - page 110

As of July 26, 2014, future principal payments for long-term debt, including the current portion, are summarized as follows (in
millions):
Fiscal Year Amount
2015 ........................................................ $ 500
2016 ........................................................ 3,853
2017 ........................................................ 4,151
2018 ........................................................ —
2019 ........................................................ 4,250
Thereafter .................................................... 8,000
Total .................................................... $20,754
(c) Credit Facility
On February 17, 2012, the Company entered into a credit agreement with certain institutional lenders that provides for a $3.0
billion unsecured revolving credit facility that is scheduled to expire on February 17, 2017. Any advances under the credit
agreement will accrue interest at rates that are equal to, based on certain conditions, either (i) the higher of the Federal Funds
rate plus 0.50%, Bank of America’s “prime rate” as announced from time to time, or one-month LIBOR plus 1.00% or
(ii) LIBOR plus a margin that is based on the Company’s senior debt credit ratings as published by Standard & Poor’s
Financial Services, LLC and Moody’s Investors Service, Inc. The credit agreement requires the Company to comply with
certain covenants, including that it maintain an interest coverage ratio as defined in the agreement. As of July 26, 2014, the
Company was in compliance with the required interest coverage ratio and the other covenants, and the Company had not
borrowed any funds under the credit facility.
The Company may also, upon the agreement of either the existing lenders or additional lenders not currently parties to the
agreement, increase the commitments under the credit facility by up to an additional $2.0 billion and/or extend the expiration
date of the credit facility by up to two additional years, or up to February 17, 2019.
11. Derivative Instruments
(a) Summary of Derivative Instruments
The Company uses derivative instruments primarily to manage exposures to foreign currency exchange rate, interest rate, and
equity price risks. The Company’s primary objective in holding derivatives is to reduce the volatility of earnings and cash
flows associated with changes in foreign currency exchange rates, interest rates, and equity prices. The Company’s derivatives
expose it to credit risk to the extent that the counterparties may be unable to meet the terms of the agreement. The Company
does, however, seek to mitigate such risks by limiting its counterparties to major financial institutions. In addition, the
potential risk of loss with any one counterparty resulting from this type of credit risk is monitored. Management does not
expect material losses as a result of defaults by counterparties.
The fair values of the Company’s derivative instruments and the line items on the Consolidated Balance Sheets to which they
were recorded are summarized as follows (in millions):
DERIVATIVE ASSETS DERIVATIVE LIABILITIES
Balance Sheet Line Item
July 26,
2014
July 27,
2013 Balance Sheet Line Item
July 26,
2014
July 27,
2013
Derivatives designated as hedging
instruments:
Foreign currency derivatives ..... Other current assets $7 $ 33 Other current liabilities $6 $7
Interest rate derivatives ......... Other assets 148 147 Other long-term liabilities 32
Equity derivatives ............. Other current assets —— Other current liabilities 56 155
Total ........................ 155 180 65 164
Derivatives not designated as hedging
instruments:
Foreign currency derivatives ..... Other current assets 32 Other current liabilities 27
Equity derivatives ............. Other assets 2— Other long-term liabilities ——
Total ........................ 5227
Total .................... $160 $182 $67 $171
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