Cisco 2010 Annual Report Download - page 37

Management’s Discussion and Analysis of Financial Condition and Results of Operations
Long-Term Debt The amount of long-term debt in the preceding table represents the principal amount of the respective debt
instruments. See Note 9 to the Consolidated Financial Statements.
Other Long-Term Liabilities Other long-term liabilities include noncurrent income taxes payable, accrued liabilities for deferred
compensation, noncurrent deferred tax liabilities, and certain other long-term liabilities. Due to the uncertainty in the timing of future
payments, our noncurrent income taxes payable of approximately $1.4 billion and noncurrent deferred tax liabilities of $276 million
were presented as one aggregated amount in the total column on a separate line in the preceding table. Noncurrent income taxes
payable includes uncertain tax positions (see Note 14 to the Consolidated Financial Statements) partially offset by payments.
Other Commitments
In connection with our business combinations and asset purchases, we have agreed to pay certain additional amounts contingent
upon the achievement of agreed-upon technology, development, product, or other milestones, or continued employment with us of
certain employees of acquired entities. See Note 11 to the Consolidated Financial Statements.
We also have certain funding commitments primarily related to our investments in privately held companies and venture funds,
some of which are based on the achievement of certain agreed-upon milestones, and some of which are required to be funded on
demand. The funding commitments were $279 million as of July 31, 2010, compared with $313 million as of July 25, 2009.
Off-Balance Sheet Arrangements
We consider our investments in unconsolidated variable interest entities to be off-balance sheet arrangements. In the ordinary
course of business, we have investments in privately held companies and provide financing to certain customers. These privately
held companies and customers may be considered to be variable interest entities. We have evaluated our investments in these
privately held companies and our customer financings and have determined that there were no significant unconsolidated variable
interest entities as of July 31, 2010.
On an ongoing basis, we reassess our investments in privately held companies and customer financings to determine if they
are variable interest entities and if we would be regarded as the primary beneficiary. As a result of this ongoing assessment, we
may be required to make additional disclosures or consolidate these entities. Because we may not control these entities, we may
not have the ability to influence these events.
We provide financing guarantees, which are generally for various third-party financing arrangements extended to our channel
partners and end-user customers. We could be called upon to make payments under these guarantees in the event of nonpayment
by the channel partners or end-user customers. See the previous discussion of these financing guarantees under “Financing
Receivables and Guarantees.”
Stock Repurchase Program
In September 2001, our Board of Directors authorized a stock repurchase program. As of July 31, 2010, our Board of Directors had
authorized an aggregate repurchase of up to $72 billion of common stock under this program, and as of July 31, 2010 the
remaining authorized repurchase amount was $7.0 billion with no termination date. A summary of the stock repurchase activity
under the stock repurchase program, reported based on the trade date, is summarized as follows (in millions, except per-share
amounts):
Shares
Repurchased
Weighted-
Average Price
per Share
Amount
Repurchased
Cumulative balance at July 26, 2008 2,600 $ 20.60 $ 53,579
Repurchase of common stock under the stock repurchase program 202 17.89 3,600
Cumulative balance at July 25, 2009 2,802 $ 20.41 $ 57,179
Repurchase of common stock under the stock repurchase program 325 24.02 7,803
Cumulative balance at July 31, 2010 3,127 $ 20.78 $ 64,982
Liquidity and Capital Resource Requirements
Based on past performance and current expectations, we believe our cash and cash equivalents, investments; cash generated from
operations; our ability to access capital markets, such as our issuance of $5.0 billion of senior notes in November 2009; and
committed credit lines will satisfy our working capital needs, capital expenditures, investment requirements, stock repurchases,
contractual obligations, commitments, principal payments on debt, future customer financings, and other liquidity requirements
associated with our operations through at least the next 12 months. We intend to begin paying a cash dividend on our common
stock during fiscal 2011. There are no other transactions, arrangements, or other relationships with unconsolidated entities or other
persons that are reasonably likely to materially affect liquidity, the availability, and our requirements for capital resources.
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