Cisco 2010 Annual Report Download - page 62

Notes to Consolidated Financial Statements
because the Company used unobservable inputs to value them, reflecting the Company’s assessment of the assumptions market
participants would use in pricing these investments due to the absence of quoted market prices and inherent lack of liquidity. The
losses for the investments in privately held companies were recorded to other income (loss), net.
The fair values for purchased intangible assets and property held for sale were measured using discounted cash flow
techniques. These assets were classified as Level 3 assets because the Company used unobservable inputs to value them,
reflecting the Company’s assessment of the assumptions market participants would use in valuing these assets. The losses for
purchased intangible assets were included in amortization of purchased intangible assets, and the net losses for property held for
sale were included in G&A expenses.
The following table presents the Company’s financial instruments that were measured at fair value on a nonrecurring basis and
the losses recorded for the year ended July 25, 2009 (in millions):
FAIR VALUE MEASUREMENTS USING
Net Carrying
Value as of
July 25, 2009
Quoted Prices in
Active Markets
for Identical
Instruments
(Level 1)
Significant Other
Observable
Inputs (Level 2)
Significant
Unobservable
Inputs
(Level 3)
Total Losses
for the Year
Ended
July 25, 2009
Investments in privately held companies $ 69 $ — $ — $ 69 $ (78)
Losses on assets no longer held as of July 25, 2009 (9)
Total $ (87)
(d) Other
The fair value of certain of the Company’s financial instruments that are not measured at fair value, including accounts receivable,
accounts payable, accrued compensation, and other current liabilities, approximates the carrying amount because of their short
maturities. In addition, the fair value of the Company’s loan receivables and financed service contracts also approximates the
carrying amount. The fair value of the Company’s debt is disclosed in Note 9 and was determined using quoted market prices for
those securities.
9. Borrowings
(a) Debt
The following table summarizes the Company’s debt (in millions, except percentages):
July 31, 2010 July 25, 2009
Amount
Effective
Rate Amount
Effective
Rate
Senior notes:
5.25% fixed-rate notes, due 2011 (“2011 Notes”) $ 3,000 3.12% $ 3,000 3.12%
2.90% fixed-rate notes, due 2014 (“2014 Notes”) 500 3.11% ——
5.50% fixed-rate notes, due 2016 (“2016 Notes”) 3,000 3.18% 3,000 4.34%
4.95% fixed-rate notes, due 2019 (“2019 Notes”) 2,000 5.08% 2,000 5.08%
4.45% fixed-rate notes, due 2020 (“2020 Notes”) 2,500 4.50% ——
5.90% fixed-rate notes, due 2039 (“2039 Notes”) 2,000 6.11% 2,000 6.11%
5.50% fixed-rate notes, due 2040 (“2040 Notes”) 2,000 5.67% ——
Total senior notes 15,000 10,000
Other notes and borrowings 59 2
Unaccreted discount (73) (21)
Hedge accounting adjustment 298 314
Total $ 15,284 $ 10,295
Reported as:
Short-term debt $ 3,096 $—
Long-term debt 12,188 10,295
Total $ 15,284 $ 10,295
In November 2009, the Company issued senior unsecured notes in an aggregate principal amount of $5.0 billion. Of these notes,
$500 million will mature in 2014 and bear interest at a fixed rate of 2.90% per annum (the “2014 Notes”), $2.5 billion will mature in
2020 and bear interest at a fixed rate of 4.45% per annum (the “2020 Notes”), and $2.0 billion will mature in 2040 and bear interest
60 Cisco Systems, Inc.