Cisco 2014 Annual Report Download - page 108

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term loan receivables and financed service contracts and other approximates their carrying value. The Company uses
significant unobservable inputs in determining discounted cash flows to estimate the fair value of its long-term loan
receivables and financed service contracts, and therefore they are categorized as Level 3.
As of July 26, 2014 and July 27, 2013, the estimated fair value of the short-term debt approximates its carrying value due to
the short maturities. As of July 26, 2014, the fair value of the Company’s senior notes and other long-term debt was $22.4
billion with a carrying amount of $20.9 billion. This compares to a fair value of $17.6 billion and a carrying amount of $16.2
billion as of July 27, 2013. The fair value of the senior notes and other long-term debt was determined based on observable
market prices in a less active market and was categorized as Level 2 in the fair value hierarchy.
10. Borrowings
(a) Short-Term Debt
The following table summarizes the Company’s short-term debt (in millions, except percentages):
July 26, 2014 July 27, 2013
Amount Effective Rate Amount Effective Rate
Current portion of long-term debt ......................... $500 3.11% $3,273 0.63%
Other notes and borrowings ............................. 8 2.67% 10 2.52%
Total short-term debt ............................... $508 $3,283
In fiscal 2011, the Company established a short-term debt financing program of up to $3.0 billion through the issuance of
commercial paper notes. The Company uses the proceeds from the issuance of commercial paper notes for general corporate
purposes. In the third quarter of fiscal 2014, the Company issued and repaid $1.0 billion of indebtedness under commercial
paper and had no commercial paper notes outstanding as of each of July 26, 2014 and July 27, 2013.
The effective interest rate on the current portion of long-term debt includes the impact of interest rate swaps, as discussed
further in “(b) Long-Term Debt.” The Company repaid senior floating-rate and fixed-rate notes upon their maturity in the third
quarter of fiscal 2014 for an aggregate principal amount of $3.3 billion. Other notes and borrowings consist of the short-term
portion of secured borrowings associated with customer financing arrangements. These notes and credit facilities were subject
to various terms and foreign currency market interest rates pursuant to individual financial arrangements between the financing
institution and the applicable foreign subsidiary.
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