CISCO SYSTEMS, INC., 10-Q filed on 11/20/2018
Quarterly Report
v3.10.0.1
Document and Entity Information - shares
3 Months Ended
Oct. 27, 2018
Nov. 15, 2018
Document Documentand Entity Information [Abstract]    
Document Type 10-Q  
Amendment Flag false  
Document Period End Date Oct. 27, 2018  
Document Fiscal Period Focus Q1  
Document Fiscal Year Focus 2019  
Trading Symbol CSCO  
Entity Registrant Name CISCO SYSTEMS, INC.  
Entity Central Index Key 0000858877  
Current Fiscal Year End Date --07-27  
Entity Filer Category Large Accelerated Filer  
Entity Emerging Growth Company false  
Entity Small Business false  
Entity Common Stock, Shares Outstanding (in shares)   4,495,961,730
v3.10.0.1
Consolidated Balance Sheets - USD ($)
$ in Millions
Oct. 27, 2018
Jul. 28, 2018
Current assets:    
Cash and cash equivalents $ 8,410 $ 8,934
Investments 34,183 37,614
Accounts receivable, net of allowance for doubtful accounts of $130 at October 27, 2018 and $129 at July 28, 2018 4,536 5,554
Inventories 1,572 1,846
Financing receivables, net 4,851 4,949
Other current assets 2,134 2,940
Total current assets 55,686 61,837
Property and equipment, net 2,956 3,006
Financing receivables, net 4,644 4,882
Goodwill 33,386 31,706
Purchased intangible assets, net 2,716 2,552
Deferred tax assets 3,960 3,219
Other assets 2,081 1,582
TOTAL ASSETS 105,429 108,784
Current liabilities:    
Short-term debt 7,241 5,238
Accounts payable 1,805 1,904
Income taxes payable 1,084 1,004
Accrued compensation 2,622 2,986
Deferred revenue 9,637 11,490
Other current liabilities 4,025 4,413
Total current liabilities 26,414 27,035
Long-term debt 18,323 20,331
Income taxes payable 8,216 8,585
Deferred revenue 7,177 8,195
Other long-term liabilities 1,451 1,434
Total liabilities 61,581 65,580
Commitments and contingencies (Note 13)
Cisco shareholders’ equity:    
Preferred stock, no par value: 5 shares authorized; none issued and outstanding 0 0
Common stock and additional paid-in capital, $0.001 par value: 20,000 shares authorized; 4,517 and 4,614 shares issued and outstanding at October 27, 2018 and July 28, 2018, respectively 41,897 42,820
Retained earnings 3,169 1,233
Accumulated other comprehensive income (loss) (1,218) (849)
Total equity 43,848 43,204
TOTAL LIABILITIES AND EQUITY $ 105,429 $ 108,784
v3.10.0.1
Consolidated Balance Sheets (Parenthetical) - USD ($)
$ in Millions
Oct. 27, 2018
Jul. 28, 2018
Statement of Financial Position [Abstract]    
Accounts receivable, allowance for doubtful accounts $ 130 $ 129
Preferred stock, shares authorized (in shares) 5,000,000 5,000,000
Preferred stock, issued (in shares) 0 0
Preferred stock, outstanding (in shares) 0 0
Common stock, par value (in dollars per share) $ 0.001 $ 0.001
Common stock, shares authorized (in shares) 20,000,000,000 20,000,000,000
Common stock, shares issued (in shares) 4,517,000,000 4,614,000,000
Common stock, shares outstanding (in shares) 4,517,000,000 4,614,000,000
v3.10.0.1
Consolidated Statements of Operations - USD ($)
shares in Millions, $ in Millions
3 Months Ended
Oct. 27, 2018
Oct. 28, 2017
REVENUE:    
Revenue $ 13,072 $ 12,136
COST OF SALES:    
Total cost of sales 4,926 4,709
GROSS MARGIN 8,146 7,427
OPERATING EXPENSES:    
Research and development 1,608 1,567
Sales and marketing 2,410 2,334
General and administrative 211 557
Amortization of purchased intangible assets 34 61
Restructuring and other charges 78 152
Total operating expenses 4,341 4,671
OPERATING INCOME 3,805 2,756
Interest income 344 379
Interest expense (221) (235)
Other income (loss), net (19) 62
Interest and other income (loss), net 104 206
INCOME BEFORE PROVISION FOR INCOME TAXES 3,909 2,962
Provision for income taxes 360 568
NET INCOME $ 3,549 $ 2,394
Net income per share:    
Basic (in dollars per share) $ 0.78 $ 0.48
Diluted (in dollars per share) $ 0.77 $ 0.48
Shares used in per-share calculation:    
Basic (in shares) 4,565 4,959
Diluted (in shares) 4,614 4,994
Product    
REVENUE:    
Revenue $ 9,890 $ 9,054
COST OF SALES:    
Total cost of sales 3,799 3,615
Service    
REVENUE:    
Revenue 3,182 3,082
COST OF SALES:    
Total cost of sales $ 1,127 $ 1,094
v3.10.0.1
Consolidated Statements of Comprehensive Income - USD ($)
$ in Millions
3 Months Ended
Oct. 27, 2018
Oct. 28, 2017
Statement of Comprehensive Income [Abstract]    
Net income $ 3,549 $ 2,394
Available-for-sale investments:    
Change in net unrealized gains and losses, net of tax benefit (expense) of $13 and $(23) for the three months ended October 27, 2018 and October 28, 2017, respectively 5 (5)
Net (gains) losses reclassified into earnings, net of tax (benefit) expense of $0 and $10 for the three months ended October 27, 2018 and October 28, 2017, respectively 6 (23)
Total- Available-for-sale investments 11 (28)
Cash flow hedging instruments:    
Change in unrealized gains and losses, net of tax benefit (expense) of $1 and $(1) for the three months ended October 27, 2018 and October 28, 2017, respectively (3) 7
Net (gains) losses reclassified into earnings, net of tax (benefit) expense of $0 and $2 for the three months ended October 27, 2018 and October 28, 2017, respectively 0 (11)
Total- Cash flow hedging instruments (3) (4)
Net change in cumulative translation adjustment and actuarial gains and losses net of tax benefit (expense) of $(1) and $(2) for the three months ended October 27, 2018 and October 28, 2017, respectively (209) 17
Other comprehensive income (loss) (201) (15)
Comprehensive income (loss) 3,348 2,379
Comprehensive (income) loss attributable to noncontrolling interests 0 0
Comprehensive income (loss) attributable to Cisco Systems, Inc. $ 3,348 $ 2,379
v3.10.0.1
Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($)
$ in Millions
3 Months Ended
Oct. 27, 2018
Oct. 28, 2017
Statement of Comprehensive Income [Abstract]    
Change in net unrealized gains, tax benefit (expense) $ 13 $ (23)
Net (gains) losses reclassified into earnings, tax expense (benefit) 0 10
Change in unrealized gains and losses, tax benefit (expense) 1 (1)
Net (gains) losses reclassified into earnings, tax expense (benefit) 0 2
Net change in cumulative translation adjustment and actuarial gains and losses, tax benefit (expense) $ (1) $ (2)
v3.10.0.1
Consolidated Statements of Cash Flows - USD ($)
$ in Millions
3 Months Ended
Oct. 27, 2018
Oct. 28, 2017
Cash flows from operating activities:    
Net income $ 3,549 $ 2,394
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation, amortization, and other 465 566
Share-based compensation expense 403 392
Provision (benefit) for receivables 8 (17)
Deferred income taxes (72) 178
(Gains) losses on divestitures, investments and other, net 7 (56)
Change in operating assets and liabilities, net of effects of acquisitions and divestitures:    
Accounts receivable 892 957
Inventories (34) (80)
Financing receivables 273 (333)
Other assets (295) 8
Accounts payable (153) (235)
Income taxes, net (437) (419)
Accrued compensation (348) (215)
Deferred revenue (309) 77
Other liabilities (186) (137)
Net cash provided by operating activities 3,763 3,080
Cash flows from investing activities:    
Purchases of investments (484) (8,275)
Proceeds from sales of investments 2,805 2,682
Proceeds from maturities of investments 2,541 3,929
Acquisition of businesses, net of cash and cash equivalents acquired (1,964) (725)
Purchases of investments in privately held companies (29) (20)
Return of investments in privately held companies 16 81
Acquisition of property and equipment (212) (168)
Proceeds from sales of property and equipment 2 1
Other 0 (10)
Net cash provided by (used in) investing activities 2,675 (2,505)
Cash flows from financing activities:    
Issuances of common stock 8 9
Repurchases of common stock—repurchase program (5,076) (1,686)
Shares repurchased for tax withholdings on vesting of restricted stock units (318) (342)
Short-term borrowings, original maturities of 90 days or less, net 0 (2,498)
Issuances of debt 0 5,482
Repayments of debt 0 (748)
Dividends paid (1,500) (1,436)
Other (59) (31)
Net cash used in financing activities (6,945) (1,250)
Net increase (decrease) in cash, cash equivalents, and restricted cash (507) (675)
Cash, cash equivalents, and restricted cash, beginning of period 8,993 11,773
Cash, cash equivalents, and restricted cash, end of period 8,486 11,098
Supplemental cash flow information:    
Cash paid for interest 269 283
Cash paid for income taxes, net $ 869 $ 810
v3.10.0.1
Consolidated Statements of Equity - USD ($)
shares in Millions, $ in Millions
Total
Shares of Common Stock
Common Stock and Additional Paid-In Capital
Retained Earnings
Accumulated Other Comprehensive Income (Loss)
Total Cisco Shareholders’ Equity
Non-controlling Interests
Increase (Decrease) in Stockholders' Equity [Roll Forward]              
Effect of adoption of accounting standards $ 9     $ 9   $ 9  
Beginning balance (in shares) at Jul. 29, 2017   4,983          
Beginning balance at Jul. 29, 2017 66,137   $ 45,253 20,838 $ 46 66,137 $ 0
Increase (Decrease) in Stockholders' Equity [Roll Forward]              
Net income 2,394     2,394   2,394  
Other comprehensive income (loss) (15)       (15) (15) 0
Issuance of common stock (in shares)   30          
Issuance of common stock $ 9   9     9  
Repurchase of common stock (in shares) (51) (51)          
Repurchase of common stock $ (1,620)   (462) (1,158)   (1,620)  
Shares repurchased for tax withholdings on vesting of restricted stock units (in shares) (11) (11)          
Shares repurchased for tax withholdings on vesting of restricted stock units $ (342)   (342)     (342)  
Cash dividends declared (1,436)     (1,436)   (1,436)  
Share-based compensation 392   392     392  
Purchase acquisitions and other 22   22     22  
Ending Balance (in shares) at Oct. 28, 2017   4,951          
Ending Balance at Oct. 28, 2017 65,550   44,872 20,647 31 65,550 0
Increase (Decrease) in Stockholders' Equity [Roll Forward]              
Effect of adoption of accounting standards 3,729     3,897 (168) 3,729  
Beginning balance (in shares) at Jul. 28, 2018   4,614          
Beginning balance at Jul. 28, 2018 43,204   42,820 1,233 (849) 43,204 0
Increase (Decrease) in Stockholders' Equity [Roll Forward]              
Net income 3,549     3,549   3,549  
Other comprehensive income (loss) (201)       (201) (201)  
Issuance of common stock (in shares)   19          
Issuance of common stock $ 8   8     8  
Repurchase of common stock (in shares) (109) (109)          
Repurchase of common stock $ (5,026)   (1,016) (4,010)   (5,026)  
Shares repurchased for tax withholdings on vesting of restricted stock units (in shares) (7) (7)          
Shares repurchased for tax withholdings on vesting of restricted stock units $ (318)   (318)     (318)  
Cash dividends declared (1,500)     (1,500)   (1,500)  
Share-based compensation 403   403     403  
Ending Balance (in shares) at Oct. 27, 2018   4,517          
Ending Balance at Oct. 27, 2018 $ 43,848   $ 41,897 $ 3,169 $ (1,218) $ 43,848 $ 0
v3.10.0.1
Consolidated Statements of Equity (Parenthetical) - $ / shares
3 Months Ended
Oct. 27, 2018
Oct. 28, 2017
Statement of Stockholders' Equity [Abstract]    
Cash dividends declared (in dollars per share) $ 0.33 $ 0.29
v3.10.0.1
Basis of Presentation
3 Months Ended
Oct. 27, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Basis of Presentation
Basis of Presentation
The fiscal year for Cisco Systems, Inc. (the “Company,” “Cisco,” “we,” “us,” or “our”) is the 52 or 53 weeks ending on the last Saturday in July. Fiscal 2019 and fiscal 2018 are each 52-week fiscal years. The Consolidated Financial Statements include our accounts and those of our subsidiaries. All intercompany accounts and transactions have been eliminated. We conduct business globally and are primarily managed on a geographic basis in the following three geographic segments: the Americas; Europe, Middle East, and Africa (EMEA); and Asia Pacific, Japan, and China (APJC).
We have prepared the accompanying financial data as of October 27, 2018 and for the three months ended October 27, 2018 and October 28, 2017, without audit, pursuant to the rules and regulations of the U.S. Securities and Exchange Commission ("SEC"). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States ("GAAP") have been condensed or omitted pursuant to such rules and regulations. The July 28, 2018 Consolidated Balance Sheet was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States. However, we believe that the disclosures are adequate to make the information presented not misleading. These Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and the notes thereto included in our Annual Report on Form 10-K for the fiscal year ended July 28, 2018.
We consolidate our investments in certain variable interest entities (VIEs) where we are the primary beneficiary. The noncontrolling interests attributed to these investments, if any, are presented as a separate component from our equity in the equity section of the Consolidated Balance Sheets. The share of earnings attributable to the noncontrolling interests are not presented separately in the Consolidated Statements of Operations as these amounts are not material for any of the fiscal periods presented.
In the opinion of management, all normal recurring adjustments necessary to present fairly the consolidated balance sheet as of October 27, 2018; the results of operations and the statements of comprehensive income (loss) for the three months ended October 27, 2018 and October 28, 2017; the statements of cash flows and equity for the three months ended October 27, 2018 and October 28, 2017, as applicable, have been made. The results of operations for the three months ended October 27, 2018 are not necessarily indicative of the operating results for the full fiscal year or any future periods.
Certain reclassifications have been made to the amounts in prior periods in order to conform to the current period’s presentation. We have evaluated subsequent events through the date that the financial statements were issued.
v3.10.0.1
Recent Accounting Pronouncements
3 Months Ended
Oct. 27, 2018
Accounting Policies [Abstract]  
Recent Accounting Pronouncements
Recent Accounting Pronouncements
(a)
New Accounting Updates Recently Adopted
Revenue Recognition In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers, a new accounting standard related to revenue recognition. ASC 606 supersedes nearly all U.S. GAAP on revenue recognition and eliminated industry-specific guidance. The underlying principle of ASC 606 is to recognize revenue when a customer obtains control of promised goods or services at an amount that reflects the consideration that is expected to be received in exchange for those goods or services. It also requires increased disclosures including the nature, amount, timing, and uncertainty of revenues and cash flows related to contracts with customers.
ASC 606 allows two methods of adoption: i) retrospectively to each prior period presented (“full retrospective method”), or ii) retrospectively with the cumulative effect recognized in retained earnings as of the date of adoption ("modified retrospective method"). At the beginning of the first quarter of fiscal 2019, we adopted ASC 606 using the modified retrospective method to those contracts that were not completed as of July 28, 2018. Refer to Opening Balance Adjustments below for the impact of adoption on our Consolidated Financial Statements.
We have implemented new accounting policies, systems, processes, and internal controls necessary to support the requirements of ASC 606.
ASC 606 primarily impacts our revenue recognition for software arrangements and sales to two-tier distributors. In both areas, the new standard accelerates the recognition of revenue.
The table below details the timing of when revenue was typically recognized under the prior revenue standard compared to the timing of when revenue is typically recognized under ASC 606 for these major areas:
 
 
Prior Revenue Standard
 
ASC 606
Software arrangements:
 
 
 
 
Perpetual software licenses
 
Upfront
 
Upfront
Term software licenses
 
Ratable
 
Upfront
Security software licenses
 
Ratable
 
Ratable
Enterprise license agreements (software licenses)
 
Ratable
 
Upfront
Software support (maintenance)
 
Ratable
 
Ratable
Software-as-a-service
 
Ratable
 
Ratable
Two-tier distribution
 
Sell-Through
 
Sell-In

In addition to the above revenue recognition timing impacts, ASC 606 requires incremental contract acquisition costs (such as sales commissions) for customer contracts to be capitalized and amortized on a systematic basis that is consistent with the transfer to the customer of the goods or services to which the assets relates.
We enter into contracts with customers that can include various combinations of products and services which are generally distinct and accounted for as separate performance obligations. As a result, our contracts may contain multiple performance obligations. We determine whether arrangements are distinct based on whether the customer can benefit from the product or service on its own or together with other resources that are readily available and whether our commitment to transfer the product or service to the customer is separately identifiable from other obligations in the contract. We classify our hardware, perpetual software licenses, and software-as-a-service (SaaS) as distinct performance obligations. Term software licenses represent multiple obligations, which include software licenses and software maintenance. In transactions where we deliver hardware or software, we are typically the principal and we record revenue and costs of goods sold on a gross basis. We refer to our term software licenses, security software licenses, SaaS, and associated service arrangements as subscription offers.
We recognize revenue upon transfer of control of promised goods or services in a contract with a customer in an amount that reflects the consideration we expect to receive in exchange for those products or services. Transfer of control occurs once the customer has the contractual right to use the product, generally upon shipment or once delivery and risk of loss has transferred to the customer. Transfer of control can also occur over time for software maintenance and services as the customer receives the benefit over the contract term. Our hardware and perpetual software licenses are distinct performance obligations where revenue is recognized upfront upon transfer of control. Term software licenses include multiple performance obligations where the term licenses are recognized upfront upon transfer of control, with the associated software maintenance revenue recognized ratably over the contract term as services and software updates are provided. SaaS arrangements have one distinct performance obligation which is satisfied over time with revenue recognized ratably over the contract term as the customer consumes the services. On our product sales, we record consideration from shipping and handling on a gross basis within net product sales. We record our revenue net of any associated sales taxes.
Significant Judgments
Revenue is allocated among these performance obligations in a manner that reflects the consideration that we expect to be entitled to for the promised goods or services based on standalone selling prices (SSP). SSP is estimated for each distinct performance obligation and judgment may be required in their determination. The best evidence of SSP is the observable price of a product or service when we sell the goods separately in similar circumstances and to similar customers. In instances where SSP is not directly observable, we determine SSP using information that may include market conditions and other observable inputs.
We apply judgment in determining the transaction price as we may be required to estimate variable consideration when determining the amount of revenue to recognize. Variable consideration includes various rebate, cooperative marketing, and other incentive programs that we offer to our distributors, partners and customers. When determining the amount of revenue to recognize, we estimate the expected usage of these programs, applying the expected value or most likely estimate and update the estimate at each reporting period as actual utilization becomes available. We also consider the customers' right of return in determining the transaction price, where applicable.
We assess certain software licenses, such as for security software, that contain critical updates or upgrades which customers can download throughout the contract term. Without these updates or upgrades, the functionality of the software would diminish over a relatively short time period. These updates or upgrades provide the customer the full functionality of the purchased security software licenses and are required to maintain the security license's utility as the risks and threats in the environment are rapidly changing. In these circumstances, the revenue from these software arrangements is recognized as a distinct performance obligation satisfied over the contract term.
For the additional disclosures required as part of ASC 606 see Note 3.
Financial Instruments In January 2016, the FASB issued an accounting standard update that changes the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. The most significant impact of this accounting standard update is that it requires the remeasurement of investments not accounted for under the equity method to be recorded at fair value through the Consolidated Statement of Operations at the end of each reporting period. The application of this accounting standard update increases the variability of other income (loss), net.
Our equity investments are accounted for as follows:
Marketable equity securities have readily determinable fair value (RDFV) that are measured and recorded at fair value.
Non-marketable equity securities do not have RDFV and are measured using a measurement alternative recorded at cost less any impairment, plus or minus changes resulting from qualifying observable price changes. For certain of these securities, we have elected to apply the net asset value (NAV) practical expedient. The NAV is the estimated fair value of these investments.
Equity method investments are securities we do not control, but are able to exert significant influence over the investee. These investments are measured at cost less any impairment, plus or minus our share of equity method investee income or loss.
We adopted this accounting standard update beginning the first quarter of fiscal 2019. The standard was adopted using the modified retrospective method for our marketable equity securities and non-marketable equity securities measured using the NAV practical expedient. For our non-marketable equity securities measured using the measurement alternative, we applied the prospective method. Refer to Opening Balance Adjustments below for the impact of adoption on our Consolidated Balance Sheet.
Income Taxes on Intra-Entity Transfers of Assets In October 2016, the FASB issued an accounting standard update that requires recognition of the income tax consequences of intra-entity transfers of assets (other than inventory) at the transaction date. We adopted this accounting standard update beginning in the first quarter of fiscal 2019 on a modified retrospective basis. The ongoing impact of this standard will be facts and circumstances dependent on any transactions within its scope. Refer to Opening Balance Adjustments below for the impact of adoption on our Consolidated Balance Sheet.
Classification of Cash Flow Elements In August 2016, the FASB issued an accounting standard update related to the classification of certain cash receipts and cash payments on the statement of cash flows. We adopted this accounting standard update beginning in the first quarter of fiscal 2019 on a retrospective basis. The application of this accounting standard update did not have an impact on our Consolidated Statements of Cash Flows.
Restricted Cash in Statement of Cash Flows In November 2016, the FASB issued an accounting standard update that provides guidance on the classification and presentation of changes in restricted cash and cash equivalents in the statement of cash flows. We adopted this accounting standard update beginning in the first quarter of fiscal 2019 using a retrospective transition method to each period presented. The application of this accounting standard update did not have a material impact on our Consolidated Statements of Cash Flows. Prior period information has been retrospectively adjusted due to the adoption of ASU 2016-18, Statement of Cash Flows, Restricted Cash in the beginning of the first quarter of fiscal 2019.
Simplifying the Test for Goodwill Impairment In January 2017, the FASB issued an accounting standard update that removes Step
2 of the goodwill impairment test, which requires the assessment of fair value of individual assets and liabilities of a reporting unit to measure goodwill impairments. Goodwill impairment will now be the amount by which a reporting unit's carrying value exceeds its fair value. We early adopted this accounting standard update beginning in the first quarter of fiscal 2019 on a prospective basis. The application of this accounting standard update did not have a material impact on our Consolidated Financial Statements.
Definition of a Business In January 2017, the FASB issued an accounting standard update that clarifies the definition of a business to help companies evaluate whether acquisition or disposal transactions should be accounted for as asset groups or as businesses. We adopted this accounting standard update beginning in the first quarter of fiscal 2019 on a prospective basis. The impact of this accounting standard update will be fact dependent, but we expect that some transactions that were previously accounted for as business combinations or disposal transactions will be accounted for as asset purchases or asset sales under the accounting standard update.
Opening Balance Adjustments
The following table summarizes the cumulative effect of the changes made to the Consolidated Balance Sheet for the adoption of ASC 606, ASU 2016-01, Financial Instruments, and ASU 2016-16, Intra-Entity Transfers of Assets Other than Inventory (in millions):
Line Item in Consolidated Balance Sheet:
 
Balance at July 28, 2018
 
New Revenue Recognition Standard
 
New Financial Instruments Standard
 
New Intra-Entity Transfers Standard
 
Adjusted Balance at July 29, 2018
ASSETS
 
 
 
 
 
 
 
 
 
 
Accounts receivable, net
 
$
5,554

 
$
(104
)
(1) 
$

 
$

 
$
5,450

Inventories
 
$
1,846

 
$
(302
)
(2) 
$

 
$

 
$
1,544

Other current assets (includes capitalized contract acquisition costs)
 
$
2,940

 
$
371

(3), (4) 
$

 
$
(25
)
(3) 
$
3,286

Deferred tax assets
 
$
3,219

 
$
(624
)
(3) 
$
(15
)
(3) 
$
1,415

(8) 
$
3,995

Other assets (includes capitalized contract acquisition costs)
 
$
1,582

 
$
327

(4) 
$
136

(7) 
$
(91
)
(3) 
$
1,954

 
 
 
 
 
 
 
 
 
 
 
TOTAL ASSETS
 
$
108,784

 
$
(332
)
 
$
121

 
$
1,299

 
$
109,872

 
 
 
 
 
 
 
 
 
 
 
LIABILITIES AND EQUITY
 
 
 
 
 
 
 
 
 
 
Income taxes payable
 
$
1,004

 
$

 
$

 
$
11

(3) 
$
1,015

Deferred revenue — current
 
$
11,490

 
$
(1,702
)
(5) 
$

 
$

 
$
9,788

Other current liabilities
 
$
4,413

 
$
33

(6) 
$

 
$

 
$
4,446

Deferred revenue — non-current
 
$
8,195

 
$
(1,081
)
(5) 
$

 
$

 
$
7,114

Other long-term liabilities
 
$
1,434

 
$
85

(3) 
$
13

(3) 
$

 
$
1,532

Retained earnings
 
$
1,233

 
$
2,333

(10) 
$
283

(10) 
$
1,281

(10) 
$
5,130

Accumulated other comprehensive income (loss)
 
$
(849
)
 
$

 
$
(175
)
(9) 
$
7

(3) 
$
(1,017
)
 
 
 
 
 
 
 
 
 
 
 
TOTAL LIABILITIES AND EQUITY
 
$
108,784

 
$
(332
)
 
$
121

 
$
1,299

 
$
109,872

(1) Primarily represents the decrease to accounts receivable related to the change in recognizing revenue on sales to two-tier distributors from a sell-through to a sell-in basis
(2) Primarily represents the reduction of inventory for the change from recognizing revenue on sales to two-tier distributors from a sell-through to a sell-in basis
(3) Includes the impacts to deferred tax assets, liabilities and other income tax balances
(4) Primarily represents capitalized contract acquisition costs (e.g. commissions)
(5) Primarily represents deferred revenue adjusted to retained earnings primarily due to the change in revenue recognition for certain software arrangements from ratable to upfront, recognizing revenue on sales to two-tier distributors from a sell-through to a sell-in basis. Of this total $2.8 billion adjustment, $2.6 billion related to product deferred revenue, of which $1.3 billion relates to our recurring software and subscription offers, $0.6 billion relates to two-tier distribution, and the remainder relates to non-recurring software and other adjustments.
(6) Primarily represents the reclassification of accounts receivable contra balances to other current liabilities, adjustments to rebate liabilities for the change from recognizing revenue on sales to two-tier distributors from a sell-through to a sell-in basis, and reclassifications from other current liabilities for amounts that are not contract liabilities under ASC 606
(7) Represents the adjustment due to the remeasurement of non-marketable equity investments at fair value
(8) Primarily represents the change in net deferred tax assets related to unrecognized income tax effects of intra-entity asset transfers
(9) Represents the reclassification of net unrealized gains from accumulated other comprehensive income (loss) to retained earnings
(10) Retained earnings impact from the adjustments noted above
Impact of ASC 606 Adoption
The application of ASC 606 increased our total revenue by $276 million in the first quarter of fiscal 2019. The application of ASC 606 did not have a material impact to either our cost of sales or our operating expenses in the first quarter of fiscal 2019. We recognized a $152 million benefit to our provision for income taxes relating to indirect effects from the adoption of ASC 606 in the first quarter of fiscal 2019. For additional information regarding ASC 606, see Note 3 to the Consolidated Financial Statements.
In connection with the adoption of ASC 606, we recorded a transition adjustment to increase retained earnings by $2.3 billion. See above for the transition impact of ASC 606 by balance sheet line item. As of October 27, 2018, the balance sheet changes attributable to ASC 606 related to accounts receivable, inventories, and deferred revenue were not materially different than the impacts upon adoption. In connection with the adoption of ASC 606, we established contract assets for unbilled receivables. As of October 27, 2018, we had total contract assets of $447 million of which, $270 million was recorded in other current assets and $177 million was recorded in other assets. As of October 27, 2018, we had total capitalized contract acquisition costs of $673 million, of which $380 million was recorded in other current assets and $293 million was recorded in other assets. The adoption of ASC 606 did not have any impact on net cash provided by operating activities.
(b)
Recent Accounting Standards or Updates Not Yet Effective
Leases In February 2016, the FASB issued an accounting standard update and subsequent amendments related to leases requiring lessees to recognize operating and financing lease liabilities on the balance sheet, as well as corresponding right-of-use assets. The new lease standard also makes some changes to lessor accounting and aligns key aspects of the lessor accounting model with the revenue recognition standard. In addition, disclosures will be required to enable users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. The accounting standard update will be effective for us beginning in the first quarter of fiscal 2020 and early adoption is permitted. We expect to adopt this accounting standard update on a modified retrospective basis in the first quarter of fiscal 2020, and we are currently evaluating the impact of this accounting standard update on our Consolidated Financial Statements.
Credit Losses of Financial Instruments In June 2016, the FASB issued an accounting standard update that requires measurement and recognition of expected credit losses for financial assets held based on historical experience, current conditions, and reasonable and supportable forecasts that affect the collectibility of the reported amount. The accounting standard update will be effective for us beginning in the first quarter of fiscal 2021 and early adoption in fiscal 2020 is permitted. We expect to adopt this accounting standard update on a modified retrospective basis in the first quarter of fiscal 2021, and we are currently evaluating the impact of this accounting standard update on our Consolidated Financial Statements.
v3.10.0.1
Revenue
3 Months Ended
Oct. 27, 2018
Revenue from Contract with Customer [Abstract]  
Revenue
Revenue
(a)
Disaggregation of Revenue
We disaggregate our revenue into groups of similar products and services that depict the nature, amount, and timing of revenue and cash flows for our various offerings. The sales cycle, contractual obligations, customer requirements, and go-to-market strategies differ for each of our product categories, resulting in different economic risk profiles for each category. The following table presents this disaggregation of revenue (in millions):
 
Three Months Ended
 
October 27,
2018
 
October 28,
2017
Revenue:
 
 
 
Infrastructure Platforms
$
7,642

 
$
6,980

Applications
1,419

 
1,203

Security
651

 
585

Other Products
178

 
286

Total Product
9,890

 
9,054

Services
3,182

 
3,082

Total
$
13,072

 
$
12,136


Amounts may not sum due to rounding.
Infrastructure Platforms consist of our core networking technologies of switching, routing, data center products, and wireless that are designed to work together to deliver networking capabilities and transport and/or store data. These technologies consist of both hardware and software offerings, including software licenses and software-as-a-service (SaaS), that help our customers build networks, automate, orchestrate, integrate, and digitize data. We are shifting and expanding more of our business to software and subscriptions across our core networking portfolio. Our hardware and perpetual software in this category are distinct performance obligations where revenue is recognized upfront upon transfer of control. Term software licenses are multiple performance obligations where the term license is recognized upfront upon transfer of control with the associated software maintenance revenue recognized ratably over the contract term. SaaS arrangements in this category have one distinct performance obligation which is satisfied over time with revenue recognized ratably over the contract term.
Applications consists of offerings that utilize the core networking and data center platforms to provide their functions. The products consist primarily of software offerings, including software licenses and SaaS, as well as hardware. Our perpetual software and hardware in this category are distinct performance obligations where revenue is recognized upfront upon transfer of control. Term software licenses are multiple performance obligations where the term license is recognized upfront upon transfer of control with the associated software maintenance revenue recognized ratably over the contract term. SaaS arrangements in this category have one distinct performance obligation which is satisfied over time with revenue recognized ratably over the contract term.
Security primarily includes our unified threat management, advanced threat security, and web security products. These products consist of both hardware and software offerings, including software licenses and SaaS. Updates and upgrades for the term software licenses are critical for our software to perform its intended commercial purpose because of the continuous need for our software to secure our customers' network environments against frequent threats. Therefore, security software licenses are generally represented by a single distinct performance obligation with revenue recognized ratably over the contract term. Our hardware and perpetual software in this category are distinct performance obligations where revenue is recognized upfront upon transfer of control. SaaS arrangements in this category have one distinct performance obligation which is satisfied over time with revenue recognized ratably over the contract term.
Other Products primarily include our Service Provider Video Software Solutions, cloud and system management products. On May 1, 2018, we announced a definitive agreement to sell the SPVSS business. The sale was closed on October 28, 2018. These products include both hardware and software licenses. Our offerings in this category are distinct performance obligations where revenue is recognized upfront upon transfer of control.
In addition to our product offerings, we provide a broad range of service and support options for our customers, including technical support services and advanced services. Technical support services represent the majority of these offerings which are distinct performance obligations that are satisfied over time with revenue recognized ratably over the contract term. Advanced services are distinct performance obligations that are satisfied over time with revenue recognized as services are delivered.
The sales arrangements as discussed above are typically made pursuant to customer purchase orders based on master purchase or partner agreements. Cash is received based on our standard payment terms which is typically 30 days. We provide financing arrangements to customers for all of our hardware, software and service offerings. Refer to Note 8 for additional information. For these arrangements, cash is typically received over time.
(b)
Contract Balances
Accounts receivable, net was $4.5 billion as of October 27, 2018 compared to $5.6 billion as of July 28, 2018, as reported on the Consolidated Balance Sheet.
Contract assets consist of unbilled receivables and are recorded when revenue is recognized in advance of scheduled billings to our customers. These amounts are primarily related to software and service arrangements where transfer of control has occurred but we have not yet invoiced. As of October 27, 2018 and July 29, 2018, our contract assets for these unbilled receivables were $447 million and $122 million, respectively, and were included in other current assets and other assets.
Contract liabilities consist of deferred revenue. Deferred revenue was $16.8 billion as of October 27, 2018 compared to $19.7 billion as of July 28, 2018. In connection with the adoption of ASC 606, we recorded an adjustment to retained earnings to reduce deferred revenue by $2.8 billion. We recognized approximately $3.4 billion of revenue during the first quarter of fiscal 2019 that was included in the deferred revenue balance at July 29, 2018.
(c)
Remaining Performance Obligations
Remaining Performance Obligations (RPO) are comprised of deferred revenue plus unbilled contract revenue. As of October 27, 2018, the aggregate amount of RPO was $22.3 billion, comprised of $16.8 billion of deferred revenue and $5.5 billion of unbilled contract revenue. We expect approximately 55% of this amount to be recognized as revenue over the next year. Unbilled contract revenue represents non-cancelable contracts for which we have not invoiced, have an obligation to perform, and revenue has not yet been recognized in the financial statements.
(d)
Capitalized Contract Acquisition Costs
In connection with the adoption of ASC 606, we began to capitalize direct and incremental costs incurred to acquire contracts, primarily sales commissions, for which the associated revenue is expected to be recognized in future periods. We incur these costs in connection with both initial contracts and renewals. These costs are initially deferred and typically amortized over the term of the customer contract which corresponds to the period of benefit. Deferred sales commissions were $673 million and $644 million as of October 27, 2018 and July 29, 2018, respectively, and were included in other current assets and other assets. The amortization expense associated with these costs was $112 million for the first quarter of fiscal 2019 and was included in sales and marketing expenses.
v3.10.0.1
Acquisitions and Divestitures
3 Months Ended
Oct. 27, 2018
Business Combinations [Abstract]  
Acquisitions and Divestitures
Acquisitions and Divestitures
We completed two acquisitions during the first quarter of fiscal 2019. A summary of the allocation of the total purchase consideration is presented as follows (in millions):
 
Purchase Consideration
 
Net Tangible Assets Acquired (Liabilities Assumed)
 
Purchased Intangible Assets
 
Goodwill
Duo
$
2,025

 
$
(57
)
 
$
342

 
$
1,740

Other (one acquisition)
34

 
3

 
8

 
23

Total
$
2,059

 
$
(54
)
 
$
350

 
$
1,763

On September 28, 2018, we completed our acquisition of privately held Duo Security, Inc. ("Duo"), a leading provider of unified access security and multi-factor authentication delivered through the cloud. Revenue from the Duo acquisition has been included in our Security product category.
The total purchase consideration related to acquisitions completed during the first quarter of fiscal 2019 consisted of cash consideration and vested share-based awards assumed. The total cash and cash equivalents acquired from these acquisitions was approximately $82 million. Total transaction costs related to acquisition and divestiture activities were $10 million and $9 million for the first quarter of fiscal 2019 and fiscal 2018, respectively. These transaction costs were expensed as incurred in general and administrative expenses ("G&A") in the Consolidated Statements of Operations. We recognized a gain of $3 million and $46 million during the first quarter of 2019 and fiscal 2018, respectively, in connection with step acquisitions. The gains were recognized in other income (loss), net in the Consolidated Statement of Operations.
The purchase price allocation for acquisitions completed during recent periods is preliminary and subject to revision as additional information about fair value of assets and liabilities becomes available. Additional information that existed as of the acquisition date but at that time was unknown to us may become known to us during the remainder of the measurement period, a period not to exceed 12 months from the acquisition date. Adjustments in the purchase price allocation may require a recasting of the amounts allocated to goodwill retroactive to the period in which the acquisition occurred.
The goodwill generated from acquisitions completed during the first quarter of fiscal 2019 is primarily related to expected synergies. The goodwill is generally not deductible for income tax purposes.
The Consolidated Financial Statements include the operating results of each acquisition from the date of acquisition. Pro forma results of operations and the revenue and net income subsequent to the acquisition date for the acquisitions completed during the first quarter of fiscal 2019 have not been presented because the effects of the acquisitions, individually and in the aggregate, were not material to our financial results.
Divestiture of Service Provider Video Software Solutions On May 1, 2018, we announced a definitive agreement to sell our Service Provider Video Software Solutions ("SPVSS") business. As of October 27, 2018, this business had tangible assets of approximately $165 million (primarily comprised of accounts receivables, inventories and various other current and long-term assets) and net intangible assets and goodwill (based on relative fair value) of $330 million. In addition, the business had total liabilities of approximately $290 million (primarily comprised of deferred revenue and various other current and long-term liabilities). These assets and liabilities were held for sale and were not presented separately as the amounts were not material to the Consolidated Balance Sheet. We closed the sale of this business on October 28, 2018 and the value is preliminary and subject to revision as information is finalized. We expect to have an immaterial financial statement impact from this transaction.
v3.10.0.1
Goodwill and Purchased Intangible Assets
3 Months Ended
Oct. 27, 2018
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and Purchased Intangible Assets
Goodwill and Purchased Intangible Assets
(a)
Goodwill
The following table presents the goodwill allocated to our reportable segments as of October 27, 2018 and during the first quarter of fiscal 2019 (in millions):
 
Balance at
 
 
 
 
 
Balance at
 
July 28, 2018
 
Acquisitions
 
Other
 
October 27, 2018
Americas
$
19,998

 
$
1,073

 
$
(53
)
 
$
21,018

EMEA
7,529

 
491

 
(19
)
 
8,001

APJC
4,179

 
199

 
(11
)
 
4,367

Total
$
31,706

 
$
1,763

 
$
(83
)
 
$
33,386


“Other” in the table above primarily consists of foreign currency translation as well as immaterial purchase accounting adjustments.
(b)
Purchased Intangible Assets
The following table presents details of our intangible assets acquired through acquisitions completed during the first quarter of fiscal 2019 (in millions, except years):
 
FINITE LIVES
 
INDEFINITE LIVES
 
TOTAL
 
TECHNOLOGY
 
CUSTOMER
RELATIONSHIPS
 
OTHER
 
IPR&D
 
 
Weighted-
Average Useful
Life (in Years)
 
Amount
 
Weighted-
Average Useful
Life (in Years)
 
Amount
 
Weighted-
Average Useful
Life (in Years)
 
Amount
 
Amount
 
Amount
Duo
5.0
 
$
153

 
5.0

 
$
94

 
2.5

 
$
18

 
$
77

 
$
342

Others (one in total)
5.0
 
8

 

 

 

 

 

 
8

Total
 
 
$
161

 
 
 
$
94

 
 
 
$
18

 
$
77

 
$
350


The following tables present details of our purchased intangible assets (in millions): 
October 27, 2018
 
Gross
 
Accumulated Amortization
 
Net
Purchased intangible assets with finite lives:
 
 
 
 
 
 
Technology
 
$
3,847

 
$
(2,013
)
 
$
1,834

Customer relationships
 
1,629

 
(965
)
 
664

Other
 
80

 
(42
)
 
38

Total purchased intangible assets with finite lives
 
5,556

 
(3,020
)
 
2,536

In-process research and development, with indefinite lives
 
180

 

 
180

       Total
 
$
5,736

 
$
(3,020
)
 
$
2,716

 
July 28, 2018
 
Gross
 
Accumulated Amortization
 
Net
Purchased intangible assets with finite lives:
 
 
 
 
 
 
Technology
 
$
3,711

 
$
(1,888
)
 
$
1,823

Customer relationships
 
1,538

 
(937
)
 
601

Other
 
63

 
(38
)
 
25

Total purchased intangible assets with finite lives
 
5,312

 
(2,863
)
 
2,449

In-process research and development, with indefinite lives
 
103

 

 
103

       Total
 
$
5,415

 
$
(2,863
)
 
$
2,552


Purchased intangible assets include intangible assets acquired through acquisitions as well as through direct purchases or licenses.
There were no impairment charges related to purchased intangible assets for the first quarter of fiscal 2019 and fiscal 2018, respectively. Impairment charges are primarily a result of declines in estimated fair values of certain purchased intangible assets resulting from the reduction or elimination of expected future cash flows associated with certain of our technology and in-process research and development (IPR&D) intangible assets.
The following table presents the amortization of purchased intangible assets, including impairment charges (in millions):
 
Three Months Ended
 
October 27, 2018
 
October 28, 2017
Amortization of purchased intangible assets:
 
 
 
Cost of sales
$
151

 
$
154

Operating expenses
34

 
61

Total
$
185

 
$
215


The estimated future amortization expense of purchased intangible assets with finite lives as of October 27, 2018 is as follows (in millions):
Fiscal Year
Amount
2019 (remaining nine months)
$
577

2020
$
726

2021
$
530

2022
$
274

2023
$
133

Thereafter
$
45

v3.10.0.1
Restructuring and Other Charges
3 Months Ended
Oct. 27, 2018
Restructuring Charges [Abstract]  
Restructuring and Other Charges
Restructuring and Other Charges
We initiated a restructuring plan during fiscal 2018 (the "Fiscal 2018 Plan") in order to realign the organization and enable further investment in key priority areas with estimated pretax charges of approximately $300 million. In the first quarter of fiscal 2019, we expanded the restructuring plan to include an additional $300 million of estimated additional pretax charges. In connection with the Fiscal 2018 Plan, we have incurred cumulative charges of $186 million. These aggregate pretax charges are primarily cash-based and consist of employee severance and other one-time termination benefits, and other associated costs. We expect the Fiscal 2018 Plan to be substantially completed in fiscal 2019.
We announced a restructuring plan in August 2016 (the "Fiscal 2017 Plan"), in order to reinvest in our key priority areas. In connection with the Fiscal 2017 Plan, we incurred cumulative charges of approximately $1.0 billion, which were primarily cash-based and consisted of employee severance and other one-time termination benefits, and other associated costs. We completed the Fiscal 2017 Plan in fiscal 2018.
The following tables summarize the activities related to the restructuring and other charges (in millions):
 
 
FISCAL 2017 AND PRIOR PLANS
 
FISCAL 2018 PLAN
 
 
 
 
Employee Severance
 
Other
 
Employee
Severance
 
Other
 
Total
Liability as of July 28, 2018
 
$
41

 
$
13

 
$
19

 
$

 
$
73

Charges
 

 

 
54

 
24

 
78

Cash payments
 
(10
)
 
(1
)
 
(52
)
 
(1
)
 
(64
)
Non-cash items
 

 

 

 
(23
)
 
(23
)
Liability as of October 27, 2018
 
$
31

 
$
12

 
$
21

 
$

 
$
64

 
 
FISCAL 2017 AND PRIOR PLANS
 
 
 
 
Employee
Severance
 
Other
 
Total
Liability as of July 29, 2017
 
$
74

 
$
43

 
$
117

Charges
 
145

 
7

 
152

Cash payments
 
(79
)
 
(16
)
 
(95
)
Non-cash items
 

 
(6
)
 
(6
)
Liability as of October 28, 2017
 
$
140

 
$
28

 
$
168

v3.10.0.1
Balance Sheet Details
3 Months Ended
Oct. 27, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Balance Sheet Details
Balance Sheet Details
The following tables provide details of selected balance sheet items (in millions):
 
 
October 27,
2018
 
July 28,
2018
Cash and cash equivalents
 
$
8,410

 
$
8,934

Restricted cash included in other current assets
 
32

 
32

Restricted cash included in other assets
 
44

 
27

Total cash, cash equivalents, and restricted cash
 
$
8,486

 
$
8,993


Inventories:
 
 
 
 
Raw materials
 
$
421

 
$
423

Work in Process
 

 

Finished goods:
 
 
 
 
Deferred cost of sales and distributor inventory
 
116

 
443

Manufactured finished goods
 
758

 
689

Total finished goods
 
874

 
1,132

Service-related spares
 
248

 
258

Demonstration systems
 
29

 
33

Total
 
$
1,572

 
$
1,846


Property and equipment, net:
 
 
 
 
Gross property and equipment:
 
 
 
 
Land, buildings, and building and leasehold improvements
 
$
4,707

 
$
4,710

Computer equipment and related software
 
1,037

 
1,085

Production, engineering, and other equipment
 
5,712

 
5,734

Operating lease assets
 
475

 
356

Furniture and fixtures
 
363

 
358

Total gross property and equipment
 
12,294

 
12,243

Less: accumulated depreciation and amortization
 
(9,338
)
 
(9,237
)
Total
 
$
2,956

 
$
3,006


Deferred revenue:
 
 
 
 
Service
 
$
11,062

 
$
11,431

Product
 
5,752

 
8,254

Total
 
$
16,814

 
$
19,685

Reported as:
 

 
 
Current
 
$
9,637

 
$
11,490

Noncurrent
 
7,177

 
8,195

Total
 
$
16,814

 
$
19,685

v3.10.0.1
Financing Receivables and Operating Leases
3 Months Ended
Oct. 27, 2018
Receivables [Abstract]  
Financing Receivables and Operating Leases
Financing Receivables and Operating Leases
(a)
Financing Receivables
Financing receivables primarily consist of lease receivables, loan receivables, and financed service contracts. Lease receivables represent sales-type and direct-financing leases resulting from the sale of Cisco’s and complementary third-party products and are typically collateralized by a security interest in the underlying assets. Lease receivables consist of arrangements with terms of four years on average. Loan receivables represent financing arrangements related to the sale of our hardware, software, and services, which may include additional funding for other costs associated with network installation and integration of our products and services. Loan receivables generally have terms of up to three years. Financed service contracts include financing receivables related to technical support and advanced services. Revenue related to the technical support services is typically deferred and included in deferred service revenue and is recognized ratably over the period during which the related services are to be performed, which typically ranges from one to three years.
A summary of our financing receivables is presented as follows (in millions):
October 27, 2018
Lease
Receivables
 
Loan
Receivables
 
Financed Service
Contracts
 
Total
Gross
$
2,511

 
$
4,924

 
$
2,240

 
$
9,675

Residual value
159

 

 

 
159

Unearned income
(140
)
 

 

 
(140
)
Allowance for credit loss
(131
)
 
(60
)
 
(8
)
 
(199
)
Total, net
$
2,399

 
$
4,864

 
$
2,232

 
$
9,495

Reported as:
 
 
 
 
 
 
 
Current
$
1,143

 
$
2,422

 
$
1,286

 
$
4,851

Noncurrent
1,256

 
2,442

 
946

 
4,644

Total, net
$
2,399

 
$
4,864

 
$
2,232

 
$
9,495

July 28, 2018
Lease
Receivables
 
Loan
Receivables
 
Financed Service
Contracts
 
Total
Gross
$
2,688

 
$
4,999

 
$
2,326

 
$
10,013

Residual value
164

 

 

 
164

Unearned income
(141
)
 

 

 
(141
)
Allowance for credit loss
(135
)
 
(60
)
 
(10
)
 
(205
)
Total, net
$
2,576

 
$
4,939

 
$
2,316

 
$
9,831

Reported as:
 
 
 
 
 
 
 
Current
$
1,249

 
$
2,376

 
$
1,324

 
$
4,949

Noncurrent
1,327

 
2,563

 
992

 
4,882

Total, net
$
2,576

 
$
4,939

 
$
2,316

 
$
9,831


Future minimum lease payments to Cisco on lease receivables as of October 27, 2018 are summarized as follows (in millions):
Fiscal Year
Amount
2019 (remaining nine months)
$
1,105

2020
614

2021
478

2022
231

2023
78

Thereafter
5

Total
$
2,511


Actual cash collections may differ from the contractual maturities due to early customer buyouts, refinancings, or defaults.
(b)
Credit Quality of Financing Receivables
Gross receivables, excluding residual value, less unearned income categorized by our internal credit risk rating as of October 27, 2018 and July 28, 2018 are summarized as follows (in millions):
 
INTERNAL CREDIT RISK RATING
October 27, 2018
1 to 4
 
5 to 6
 
7 and Higher
 
Total
Lease receivables
$
1,238

 
$
1,084

 
$
49

 
$
2,371

Loan receivables
3,122

 
1,744

 
58

 
4,924

Financed service contracts
1,454

 
768

 
18

 
2,240

Total
$
5,814

 
$
3,596

 
$
125

 
$
9,535

 
INTERNAL CREDIT RISK RATING
July 28, 2018
1 to 4
 
5 to 6
 
7 and Higher
 
Total
Lease receivables
$
1,294

 
$
1,199

 
$
54

 
$
2,547

Loan receivables
3,184

 
1,752

 
63

 
4,999

Financed service contracts
1,468

 
835

 
23

 
2,326

Total
$
5,946

 
$
3,786

 
$
140

 
$
9,872


We determine the adequacy of our allowance for credit loss by assessing the risks and losses inherent in our financing receivables by portfolio segment. The portfolio segment is based on the types of financing offered by us to our customers, which consist of the following: lease receivables, loan receivables, and financed service contracts.
Our internal credit risk ratings of 1 through 4 correspond to investment-grade ratings, while credit risk ratings of 5 and 6 correspond to non-investment grade ratings. Credit risk ratings of 7 and higher correspond to substandard ratings.
The following tables present the aging analysis of gross receivables, excluding residual value and less unearned income as of October 27, 2018 and July 28, 2018 (in millions):
 
DAYS PAST DUE
(INCLUDES BILLED AND UNBILLED)
 
 
 
 
 
 
 
 
October 27, 2018
31-60
 
61-90 
 
91+
 
Total
Past Due
 
Current
 
Total
 
Nonaccrual
Financing
Receivables
 
Impaired
Financing
Receivables
Lease receivables
$
79

 
$
27

 
$
121

 
$
227

 
$
2,144

 
$
2,371

 
$
5

 
$
5

Loan receivables
123

 
85

 
348

 
556

 
4,368

 
4,924

 
29

 
29

Financed service contracts
102

 
147

 
262

 
511

 
1,729

 
2,240

 
3

 
3

Total
$
304

 
$
259

 
$
731

 
$
1,294

 
$
8,241

 
$
9,535

 
$
37

 
$
37

 
DAYS PAST DUE
(INCLUDES BILLED AND UNBILLED)
 
 
 
 
 
 
 
 
July 28, 2018
31-60
 
61-90 
 
91+
 
Total
Past Due
 
Current
 
Total
 
Nonaccrual
Financing
Receivables
 
Impaired
Financing
Receivables
Lease receivables
$
72

 
$
27

 
$
155

 
$
254

 
$
2,293

 
$
2,547

 
$
9

 
$
9

Loan receivables
104

 
55

 
252

 
411

 
4,588

 
4,999

 
30

 
30

Financed service contracts
138

 
78

 
304

 
520

 
1,806

 
2,326

 
3

 
3

Total
$
314

 
$
160

 
$
711

 
$
1,185

 
$
8,687

 
$
9,872

 
$
42

 
$
42


Past due financing receivables are those that are 31 days or more past due according to their contractual payment terms. The data in the preceding tables is presented by contract, and the aging classification of each contract is based on the oldest outstanding receivable, and therefore past due amounts also include unbilled and current receivables within the same contract. The balances of either unbilled or current financing receivables included in the category of 91 days plus past due for financing receivables were $474 million and $503 million as of October 27, 2018 and July 28, 2018, respectively.
As of October 27, 2018, we had financing receivables of $234 million, net of unbilled or current receivables, that were in the category of 91 days plus past due but remained on accrual status as they are well secured and in the process of collection. Such balance was $182 million as of July 28, 2018.
(c)
Allowance for Credit Loss Rollforward
The allowances for credit loss and the related financing receivables are summarized as follows (in millions):
Three months ended October 27, 2018
CREDIT LOSS ALLOWANCES
 
Lease
Receivables
 
Loan
Receivables
 
Financed Service
Contracts
 
Total
Allowance for credit loss as of July 28, 2018
$
135

 
$
60

 
$
10

 
$
205

Provisions (benefits)
(3
)
 

 
(2
)
 
(5
)
Foreign exchange and other
(1
)
 

 

 
(1
)
Allowance for credit loss as of October 27, 2018
$
131

 
$
60

 
$
8

 
$
199

Three months ended October 28, 2017
CREDIT LOSS ALLOWANCES
 
Lease
Receivables
 
Loan
Receivables
 
Financed Service
Contracts
 
Total
Allowance for credit loss as of July 29, 2017
$
162

 
$
103

 
$
30

 
$
295

Provisions
(2
)
 
2

 
(6
)
 
(6
)
Foreign exchange and other

 
1

 
(1
)
 

Allowance for credit loss as of October 28, 2017
$
160

 
$
106

 
$
23

 
$
289


We assess the allowance for credit loss related to financing receivables on either an individual or a collective basis. We consider various factors in evaluating lease and loan receivables and the earned portion of financed service contracts for possible impairment on an individual basis. These factors include our historical experience, credit quality and age of the receivable balances, and economic conditions that may affect a customer’s ability to pay. When the evaluation indicates that it is probable that all amounts due pursuant to the contractual terms of the financing agreement, including scheduled interest payments, are unable to be collected, the financing receivable is considered impaired. All such outstanding amounts, including any accrued interest, will be assessed and fully reserved at the customer level. Our internal credit risk ratings are categorized as 1 through 10, with the lowest credit risk rating representing the highest quality financing receivables.
Typically, we also consider receivables with a risk rating of 8 or higher to be impaired and will include them in the individual assessment for allowance. These balances, as of October 27, 2018 and July 28, 2018, are presented under “(b) Credit Quality of Financing Receivables” above.
We evaluate the remainder of our financing receivables portfolio for impairment on a collective basis and record an allowance for credit loss at the portfolio segment level. When evaluating the financing receivables on a collective basis, we use expected default frequency rates published by a major third-party credit-rating agency as well as our own historical loss rate in the event of default, while also systematically giving effect to economic conditions, concentration of risk, and correlation.
(d)
Operating Leases
We provide financing of certain equipment through operating leases, and the amounts are included in property and equipment in the Consolidated Balance Sheets. Amounts relating to equipment on operating lease assets and the associated accumulated depreciation are summarized as follows (in millions):
 
October 27, 2018
 
July 28, 2018
Operating lease assets
$
475

 
$
356

Accumulated depreciation
(333
)
 
(238
)
Operating lease assets, net
$
142

 
$
118


Minimum future rentals on noncancelable operating leases as of October 27, 2018 are summarized as follows (in millions):
Fiscal Year
Amount
2019 (remaining nine months)
$
125

2020
108

2021
44

2022
3

Thereafter
1

Total
$
281

v3.10.0.1
Available-for-Sale Debt Investments and Equity Investments
3 Months Ended
Oct. 27, 2018
Investments, Debt and Equity Securities [Abstract]  
Available-for-Sale Debt Investments and Equity Investments
Available-for-Sale Debt Investments and Equity Investments
The following table summarizes our available-for-sale debt investments and equity investments (in millions):
 
October 27, 2018
 
July 28, 2018
Available-for-sale debt investments
$
34,183

 
$
37,009

Marketable equity securities

 
605

Total investments
34,183

 
37,614

Non-marketable equity securities included in other assets
1,125

 
978

Equity method investments included in other assets
115

 
118

Total
$
35,423

 
$
38,710


(a)
Summary of Available-for-Sale Debt Investments
The following tables summarize our available-for-sale debt investments (in millions):
October 27, 2018
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair
Value
U.S. government securities
$
5,783

 
$

 
$
(29
)
 
$
5,754

U.S. government agency securities
434

 

 
(4
)
 
430

Non-U.S. government and agency securities
153

 

 

 
153

Corporate debt securities
26,444

 
33

 
(446
)
 
26,031

U.S. agency mortgage-backed securities
1,481

 

 
(60
)
 
1,421

Commercial paper
309

 

 

 
309

Certificates of deposit
85

 

 

 
85

Total (1)
$
34,689

 
$
33

 
$
(539
)
 
$
34,183


July 28, 2018
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair
Value
U.S. government securities
$
7,318

 
$

 
$
(43
)
 
$
7,275

U.S. government agency securities
732

 

 
(5
)
 
727

Non-U.S. government and agency securities
209

 

 
(1
)
 
208

Corporate debt securities
27,765

 
44

 
(445
)
 
27,364

U.S. agency mortgage-backed securities
1,488

 

 
(53
)
 
1,435

Total (1)
$
37,512

 
$
44

 
$
(547
)
 
$
37,009

(1) Net unsettled investment purchases were $1 million and net unsettled investment sales were $1.5 billion as of October 27, 2018 and July 28, 2018, respectively and were included in other current assets and other current liabilities.
Non-U.S. government and agency securities include agency and corporate debt securities that are guaranteed by non-U.S. governments.
The following table presents the gross realized gains and gross realized losses related to available-for-sale debt investments (in millions):
 
Three Months Ended
 
October 27, 2018
 
October 28, 2017
Gross realized gains
$
2

 
$
8

Gross realized losses
(8
)
 
(4
)
Total
$
(6
)
 
$
4

The following tables present the breakdown of the available-for-sale debt investments with gross unrealized losses and the duration that those losses had been unrealized at October 27, 2018 and July 28, 2018 (in millions):
 
UNREALIZED LOSSES
LESS THAN 12 MONTHS
 
UNREALIZED LOSSES
12 MONTHS OR GREATER
 
TOTAL
October 27, 2018
Fair Value
 
Gross
Unrealized
Losses
 
Fair Value
 
Gross
Unrealized
Losses
 
Fair Value
 
Gross 
Unrealized 
Losses
U.S. government securities 
$
516

 
$
(3
)
 
$
5,231

 
$
(26
)
 
$
5,747

 
$
(29
)
U.S. government agency securities
4

 

 
427

 
(4
)
 
431

 
(4
)
Non-U.S. government and agency securities

 

 
153

 

 
153

 

Corporate debt securities
13,483

 
(257
)
 
6,738

 
(189
)
 
20,221

 
(446
)
U.S. agency mortgage-backed securities
456

 
(12
)
 
947

 
(48
)
 
1,403

 
(60
)
Total
$
14,459

 
$
(272
)
 
$
13,496

 
$
(267
)
 
$
27,955

 
$
(539
)
 
UNREALIZED LOSSES
LESS THAN 12 MONTHS
 
UNREALIZED LOSSES
12 MONTHS OR GREATER
 
TOTAL
July 28, 2018
Fair Value
 
Gross
Unrealized
Losses
 
Fair Value
 
Gross
Unrealized
Losses
 
Fair Value
 
Gross 
Unrealized 
Losses
U.S. government securities 
$
2,966

 
$
(20
)
 
$
4,303

 
$
(23
)
 
$
7,269

 
$
(43
)
U.S. government agency securities
206

 
(2
)
 
521

 
(3
)
 
727

 
(5
)
Non-U.S. government and agency securities
105

 
(1
)
 
103

 

 
208

 
(1
)
Corporate debt securities
16,990

 
(344
)
 
3,511

 
(101
)
 
20,501

 
(445
)
U.S. agency mortgage-backed securities
826

 
(24
)
 
581

 
(29
)
 
1,407

 
(53
)
Total
$
21,093

 
$
(391
)
 
$
9,019

 
$
(156
)
 
$
30,112

 
$
(547
)

During the first quarter of fiscal 2019 and fiscal 2018, respectively, we did not recognize any impairment charges on our available-for-sale debt investments. For available-for-sale debt investments that were in an unrealized loss position as of October 27, 2018, we have determined that no other-than-temporary impairments were required to be recognized.
The following table summarizes the maturities of our available-for-sale debt investments as of October 27, 2018 (in millions): 
 
Amortized Cost
 
Fair Value
Within 1 year
$
12,283

 
$
12,243

After 1 year through 5 years
19,248

 
18,922

After 5 years through 10 years
1,662

 
1,581

After 10 years
15

 
16

Mortgage-backed securities with no single maturity
1,481

 
1,421

Total
$
34,689

 
$
34,183


Actual maturities may differ from the contractual maturities because borrowers may have the right to call or prepay certain obligations.
(b)
Summary of Equity Investments
We recorded adjustments to the carrying value of our non-marketable equity securities measured using the measurement alternative in the first quarter of fiscal 2019 as follows (in millions):
 
Three Months Ended
 
October 27, 2018
Adjustments to non-marketable equity securities measured using the measurement alternative:
 
Upward adjustments
$
10

Downward adjustments, including impairments
(16
)
Net downward adjustments
$
(6
)
Gains and losses recognized on our marketable and non-marketable equity securities for the first quarter of fiscal 2019 are summarized below (in millions):
 
Three Months Ended
 
October 27, 2018
Net gains and losses recognized during the period on equity investments
$
8

Less: Net gains and losses recognized on equity investments sold
(12
)
Unrealized gains and losses recognized during reporting period on equity securities still held at the reporting date
$
(4
)
(c)
Securities Lending
We periodically engage in securities lending activities with certain of our available-for-sale debt investments. These transactions are accounted for as a secured lending of the securities, and the securities are typically loaned only on an overnight basis. The average daily balance of securities lending was $0.5 billion as of each of the first quarters of fiscal 2019 and fiscal 2018, respectively. We require collateral equal to at least 102% of the fair market value of the loaned security and that the collateral be in the form of cash or liquid, high-quality assets. We engage in these secured lending transactions only with highly creditworthy counterparties, and the associated portfolio custodian has agreed to indemnify us against collateral losses. We did not experience any losses in connection with the secured lending of securities during the periods presented. As of October 27, 2018 and July 28, 2018, we had no outstanding securities lending transactions.
(d)
Variable Interest Entities
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 evaluate on an ongoing basis our investments in these privately held companies and our customer financings, and have determined that as of October 27, 2018, except as disclosed in Note 1, there were no significant variable interest entities required to be consolidated in our Consolidated Financial Statements.
As of October 27, 2018, the carrying value of our non-marketable equity securities was $1.2 billion, of which $670 million of such investments are considered to be in variable interest entities which are unconsolidated. In addition, we have additional funding commitments of $204 million related to these investments, 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 carrying value of these investments and the additional funding commitments collectively represent our maximum exposure related to these variable interest entities.
v3.10.0.1
Fair Value
3 Months Ended
Oct. 27, 2018
Fair Value Disclosures [Abstract]  
Fair Value
Fair Value
Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be either recorded or disclosed at fair value, we consider the principal or most advantageous market in which we would transact, and we also consider assumptions that market participants would use when pricing the asset or liability.
(a)
Fair Value Hierarchy
The accounting guidance for fair value measurement requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is as follows:
Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.
Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability, such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.
Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

(b)
Assets and Liabilities Measured at Fair Value on a Recurring Basis
Assets and liabilities measured at fair value on a recurring basis were as follows (in millions):
 
OCTOBER 27, 2018
FAIR VALUE MEASUREMENTS
 
JULY 28, 2018
FAIR VALUE MEASUREMENTS
 
Level 1
 
Level 2
 
Total
Balance
 
Level 1
 
Level 2
 
Total
Balance
Assets:
 
 
 
 
 
 
 
 
 
 
 
Cash equivalents:
 
 
 
 
 
 
 
 
 
 
 
Money market funds
$
6,332

 
$

 
$
6,332

 
$
6,890

 
$

 
$
6,890

Commercial paper

 
210

 
210

 

 

 

Certificates of deposit

 
20

 
20

 

 

 

Repurchase agreements

 
16

 
16

 

 

 

Available-for-sale debt investments:
 
 
 
 
 
 
 
 
 
 

U.S. government securities

 
5,754

 
5,754

 

 
7,275

 
7,275

U.S. government agency securities

 
430

 
430

 

 
727

 
727

Non-U.S. government and agency securities

 
153

 
153

 

 
208

 
208

Corporate debt securities

 
26,031

 
26,031

 

 
27,364

 
27,364

U.S. agency mortgage-backed securities

 
1,421

 
1,421

 

 
1,435

 
1,435

Commercial paper

 
309

 
309

 

 

 

Certificates of deposit

 
85

 
85

 

 

 

Equity investments:
 
 
 
 
 
 
 
 
 
 
 
Marketable equity securities

 

 

 
605

 

 
605

Derivative assets

 
6

 
6

 

 
2

 
2

Total
$
6,332

 
$
34,435

 
$
40,767

 
$
7,495

 
$
37,011

 
$
44,506

Liabilities:
 
 
 
 
 
 
 
 
 
 
 
Derivative liabilities
$

 
$
91

 
$
91

 
$

 
$
74

 
$
74

Total
$

 
$
91

 
$
91

 
$

 
$
74

 
$
74


Level 1 marketable equity securities are determined by using quoted prices in active markets for identical assets. Level 2 available-for-sale debt investments are priced using quoted market prices for similar instruments or nonbinding market prices that are corroborated by observable market data. We use inputs such as actual trade data, benchmark yields, broker/dealer quotes, and other similar data, which are obtained from quoted market prices, independent pricing vendors, or other sources, to determine the ultimate fair value of these assets and liabilities. We use such pricing data as the primary input to make our assessments and determinations as to the ultimate valuation of our investment portfolio and have not made, during the periods presented, any material adjustments to such inputs. We are ultimately responsible for the financial statements and underlying estimates. Our derivative instruments are primarily classified as Level 2, as they are not actively traded and are valued using pricing models that use observable market inputs. We did not have any transfers between Level 1 and Level 2 fair value measurements during the periods presented.
(c)
Assets Measured at Fair Value on a Nonrecurring Basis
The following table presents gains and losses on assets that were measured at fair value on a nonrecurring basis (in millions):
 
TOTAL GAINS (LOSSES) FOR THE THREE MONTHS ENDED
 
October 27, 2018
 
October 28, 2017
Non-marketable equity securities
$
(6
)
 
$
(21
)

These assets were measured at fair value due to events or circumstances we identified as having significant impact on their fair value during the respective periods. The carrying value of our non-marketable equity securities recorded to fair value on a non-recurring basis is adjusted for observable transactions for identical or similar investments of the same issuer or impairment. These securities are classified as Level 3 in the fair value hierarchy because we estimate the value based on valuation methods using the observable transaction price at the transaction date and other unobservable inputs such as volatility, rights, and obligations of the securities we hold.
(d) Other Fair Value Disclosures
The fair value of short-term loan receivables and financed service contracts approximates their carrying value due to their short duration. The aggregate carrying value of long-term loan receivables and financed service contracts as of October 27, 2018 and July 28, 2018 was $3.4 billion and $3.6 billion, respectively. The estimated fair value of long-term loan receivables and financed service contracts approximates their carrying value. We use significant unobservable inputs in determining discounted cash flows to estimate the fair value of our long-term loan receivables and financed service contracts, and therefore they are categorized as Level 3.
As of October 27, 2018, the estimated fair value of our short-term debt approximates its carrying value due to the short maturities. As of October 27, 2018, the fair value of our senior notes and other long-term debt was $26.2 billion with a carrying amount of $25.6 billion. This compares to a fair value of $26.4 billion and a carrying amount of $25.6 billion as of July 28, 2018. 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.
v3.10.0.1
Borrowings
3 Months Ended
Oct. 27, 2018
Debt Disclosure [Abstract]  
Borrowings
Borrowings
(a)
Short-Term Debt
The following table summarizes our short-term debt (in millions, except percentages):
 
October 27, 2018
 
July 28, 2018
 
Amount
 
Effective Rate
 
Amount
 
Effective Rate
Current portion of long-term debt
$
7,241

 
3.06
%
 
$
5,238

 
3.46
%

We have a short-term debt financing program of up to $10.0 billion through the issuance of commercial paper notes. We use the proceeds from the issuance of commercial paper notes for general corporate purposes. We had no commercial paper notes outstanding as of October 27, 2018 and July 28, 2018.
The effective rates for the short- and long-term debt include the interest on the notes, the accretion of the discount, the issuance costs, and, if applicable, adjustments related to hedging.
(b)
Long-Term Debt
The following table summarizes our long-term debt (in millions, except percentages):
 
 
 
October 27, 2018
 
July 28, 2018
 
Maturity Date
 
Amount
 
Effective Rate
 
Amount
 
Effective Rate
Senior notes:
 
 
 
 
 
 
 
 
 
Floating-rate notes:
 
 
 
 
 
 
 
 
 
Three-month LIBOR plus 0.50%
March 1, 2019
 
$
500

 
2.88%
 
$
500

 
2.86%
Three-month LIBOR plus 0.34%
September 20, 2019
 
500

 
2.72%
 
500

 
2.71%
Fixed-rate notes:
 
 
 
 
 
 
 
 
 
4.95%
February 15, 2019
 
2,000

 
5.22%
 
2,000

 
5.17%
1.60%
February 28, 2019
 
1,000

 
1.67%
 
1,000

 
1.67%
2.125%
March 1, 2019
 
1,750

 
2.87%
 
1,750

 
2.71%
1.40%
September 20, 2019
 
1,500

 
1.48%
 
1,500

 
1.48%
4.45%
January 15, 2020
 
2,500

 
4.68%
 
2,500

 
4.52%
2.45%
June 15, 2020
 
1,500

 
2.54%
 
1,500

 
2.54%
2.20%
February 28, 2021
 
2,500

 
2.30%
 
2,500

 
2.30%
2.90%
March 4, 2021
 
500

 
3.05%
 
500

 
2.86%
1.85%
September 20, 2021
 
2,000

 
1.90%
 
2,000

 
1.90%
3.00%
June 15, 2022
 
500

 
3.32%
 
500

 
3.11%
2.60%
February 28, 2023
 
500

 
2.68%
 
500

 
2.68%
2.20%
September 20, 2023
 
750

 
2.27%
 
750

 
2.27%
3.625%
March 4, 2024
 
1,000

 
3.17%
 
1,000

 
2.98%
3.50%
June 15, 2025
 
500

 
3.48%
 
500

 
3.27%
2.95%
February 28, 2026
 
750

 
3.01%
 
750

 
3.01%
2.50%
September 20, 2026
 
1,500

 
2.55%
 
1,500

 
2.55%
5.90%
February 15, 2039
 
2,000

 
6.11%
 
2,000

 
6.11%
5.50%
January 15, 2040
 
2,000

 
5.67%
 
2,000

 
5.67%
Total
 
 
25,750

 
 
 
25,750

 
 
Unaccreted discount/issuance costs
 
 
(112
)
 
 
 
(116
)
 
 
Hedge accounting fair value adjustments
 
 
(74
)
 
 
 
(65
)
 
 
Total
 
 
$
25,564

 
 
 
$
25,569

 
 
 
 
 
 
 
 
 
 
 
 
Reported as:
 
 
 
 
 
 
 
 
 
Current portion of long-term debt
 
 
$
7,241

 
 
 
$
5,238

 
 
Long-term debt
 
 
18,323

 
 
 
20,331

 
 
Total
 
 
$
25,564

 
 
 
$
25,569

 
 

We entered into interest rate swaps in prior periods with an aggregate notional amount of $6.75 billion designated as fair value hedges of certain of our fixed-rate senior notes. These swaps convert the fixed interest rates of the fixed-rate notes to floating interest rates based on the London InterBank Offered Rate ("LIBOR"). The gains and losses related to changes in the fair value of the interest rate swaps substantially offset changes in the fair value of the hedged portion of the underlying debt that are attributable to the changes in market interest rates. For additional information, see Note 12.
Interest is payable semiannually on each class of the senior fixed-rate notes and payable quarterly on the floating-rate notes. Each of the senior fixed-rate notes is redeemable by us at any time, subject to a make-whole premium. The senior notes rank at par with the commercial paper notes that may be issued in the future pursuant to our short-term debt financing program, as discussed above under “(a) Short-Term Debt.” As of October 27, 2018, we were in compliance with all debt covenants.
As of October 27, 2018, future principal payments for long-term debt, including the current portion, are summarized as follows (in millions):
Fiscal Year
Amount
2019 (remaining nine months)
$
5,250

2020
6,000

2021
3,000

2022
2,500

2023
500

Thereafter
8,500

Total
$
25,750


(c)
Credit Facility
On May 15, 2015, we 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 May 15, 2020. Any advances under the credit agreement will accrue interest at rates that are equal to, based on certain conditions, either (i) the highest of (a) the Federal Funds rate plus 0.50%, (b) Bank of America’s “prime rate” as announced from time to time, or (c) LIBOR, or a comparable or successor rate that is approved by the Administrative Agent (“Eurocurrency Rate”), for an interest period of one-month plus 1.00%, or (ii) the Eurocurrency Rate, plus a margin that is based on our senior debt credit ratings as published by Standard & Poor’s Financial Services, LLC and Moody’s Investors Service, Inc., provided that in no event will the Eurocurrency Rate be less than zero. We may also, upon the agreement of either the then-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 up to May 15, 2022.
This credit agreement requires that we comply with certain covenants, including that we maintain an interest coverage ratio as defined in the agreement. As of October 27, 2018, we were in compliance with the required interest coverage ratio and the other covenants, and we had not borrowed any funds under this credit facility.
v3.10.0.1
Derivative Instruments
3 Months Ended
Oct. 27, 2018
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Instruments
Derivative Instruments
(a)
Summary of Derivative Instruments
We use derivative instruments primarily to manage exposures to foreign currency exchange rate, interest rate, and equity price risks. Our 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. Our derivatives expose us to credit risk to the extent that the counterparties may be unable to meet the terms of the agreement. We do, however, seek to mitigate such risks by limiting our 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 our 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
 
October 27,
2018
 
July 28,
2018
 
Balance Sheet Line Item
 
October 27,
2018
 
July 28,
2018
Derivatives designated as hedging instruments:
 
 
 
 
 
 
 
 
 
 
 
Foreign currency derivatives
Other current assets
 
$
4

 
$
1

 
Other current liabilities
 
$
6

 
$

Interest rate derivatives
Other current assets
 

 

 
Other current liabilities
 
7

 
10

Interest rate derivatives
Other assets
 

 

 
Other long-term liabilities
 
74

 
62

Total
 
 
4

 
1

 
 
 
87

 
72

Derivatives not designated as hedging instruments:
 
 
 
 
 
 
 
 
 
 
 
Foreign currency derivatives
Other current assets
 
1

 
1

 
Other current liabilities
 
4

 
2

Total return swaps—deferred compensation
Other current assets
 
1

 

 
Other current liabilities
 

 

Total
 
 
2

 
1

 
 
 
4

 
2

Total
 
 
$
6

 
$
2

 
 
 
$
91

 
$
74


The effects of our cash flow and net investment hedging instruments on other comprehensive income (OCI) and the Consolidated Statements of Operations are summarized as follows (in millions):
GAINS (LOSSES) RECOGNIZED
IN OCI ON DERIVATIVES FOR THE
THREE MONTHS ENDED (EFFECTIVE PORTION)
 
GAINS (LOSSES) RECLASSIFIED FROM
AOCI INTO INCOME FOR THE
THREE MONTHS ENDED (EFFECTIVE PORTION)
 
 
October 27,
2018
 
October 28,
2017
 
Line Item in
Statements of Operations
 
October 27,
2018
 
October 28,
2017
Derivatives designated as cash flow hedging instruments:
 
 
 
 
 
 
 
 
 
 
Foreign currency derivatives
 
$
(4
)
 
$
8

 
Revenue — service
 
$
1

 
$

 
 
 
 
 
 
Operating expenses
 
(1
)
 
10

 
 
 
 
 
 
Cost of sales service
 

 
3

Total
 
$
(4
)
 
$
8

 
 
 
$

 
$
13

 
 
 
 
 
 
 
 
 
 
 
Derivatives designated as net investment hedging instruments:
 
 
 
 
 
 
 
 
 
 
Foreign currency derivatives
 
$
4

 
$
(5
)
 
Other income (loss), net
 
$

 
$


As of October 27, 2018, we estimate that approximately $3 million of net derivative losses related to our cash flow hedges included in accumulated other comprehensive income (AOCI) will be reclassified into earnings within the next 12 months when the underlying hedged item impacts earnings.
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
DERIVATIVE
INSTRUMENTS FOR THE
THREE MONTHS ENDED
 
GAINS (LOSSES)
RELATED TO HEDGED
ITEMS FOR THE
THREE MONTHS ENDED
Derivatives Designated as Fair Value Hedging Instruments
 
Line Item in Statements of Operations
 
October 27,
2018
 
October 28,
2017
 
October 27,
2018
 
October 28,
2017
Interest rate derivatives
 
Interest expense
 
$
(9
)
 
$
(46
)
 
$
9

 
$
46

Equity derivatives
 
Other income (loss), net
 

 
(14
)
 

 
14

Total
 
 
 
$
(9
)
 
$
(60
)
 
$
9

 
$
60


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
THREE MONTHS ENDED
Derivatives Not Designated as
Hedging Instruments
 
Line Item in Statements of Operations
 
October 27,
2018
 
October 28,
2017
Foreign currency derivatives
 
Other income (loss), net
 
$
(27
)
 
$
7

Total return swaps—deferred compensation
 
Operating expenses
 
(24
)
 
15

 
 
Cost of sales — product
 
(1
)
 

 
 
Cost of sales — service
 
(1
)
 
1

 
 
Other income (loss), net
 
(4
)
 
(2
)
Equity derivatives
 
Other income (loss), net
 
1

 
1

Total
 
 
 
$
(56
)
 
$
22


The notional amounts of our outstanding derivatives are summarized as follows (in millions):
 
October 27,
2018
 
July 28,
2018
Derivatives designated as hedging instruments:
 
 
 
Foreign currency derivatives—cash flow hedges
$
796

 
$
147

Interest rate derivatives
6,750

 
6,750

Net investment hedging instruments
246

 
250

Derivatives not designated as hedging instruments:
 
 
 
Foreign currency derivatives
2,170

 
2,298

Total return swaps—deferred compensation
564

 
566

Total
$
10,526

 
$
10,011


(b)
Offsetting of Derivative Instruments
We present our derivative instruments at gross fair values in the Consolidated Balance Sheets. However, our master netting and other similar arrangements with the respective counterparties allow for net settlement under certain conditions, which are designed to reduce credit risk by permitting net settlement with the same counterparty. To further limit credit risk, we also enter into collateral security arrangements related to certain derivative instruments whereby cash is posted as collateral between the counterparties based on the fair market value of the derivative instrument. Information related to these offsetting arrangements is summarized as follows (in millions):
 
October 27, 2018
 
GROSS AMOUNTS OFFSET IN THE CONSOLIDATED BALANCE SHEETS
 
GROSS AMOUNTS NOT OFFSET IN THE CONSOLIDATED BALANCE SHEETS
BUT WITH LEGAL RIGHTS TO OFFSET
 
Gross Amounts Recognized
 
Gross Amounts Offset
 
Net Amounts Presented
 
Gross Derivative Amounts
 
Cash Collateral
 
Net Amount
Derivatives assets
$
6

 
$

 
$
6

 
$
(5
)
 
$

 
$
1

Derivatives liabilities
$
91

 
$

 
$
91

 
$
(5
)
 
$
(70
)
 
$
16

 
July 28, 2018
 
GROSS AMOUNTS OFFSET IN THE CONSOLIDATED BALANCE SHEETS
 
GROSS AMOUNTS NOT OFFSET IN THE CONSOLIDATED BALANCE SHEETS
BUT WITH LEGAL RIGHTS TO OFFSET
 
Gross Amounts Recognized
 
Gross Amounts Offset
 
Net Amounts Presented
 
Gross Derivative Amounts
 
Cash Collateral
 
Net Amount
Derivatives assets
$
2

 
$

 
$
2

 
$
(2
)
 
$

 
$

Derivatives liabilities
$
74

 
$

 
$
74

 
$
(2
)
 
$
(53
)
 
$
19


(c)
Foreign Currency Exchange Risk
We conduct business globally in numerous currencies. Therefore, we are exposed to adverse movements in foreign currency exchange rates. To limit the exposure related to foreign currency changes, we enter into foreign currency contracts. We do not enter into such contracts for speculative purposes.
We hedge forecasted foreign currency transactions related to certain revenues, operating expenses and service cost of sales with currency options and forward contracts. These currency options and forward contracts, designated as cash flow hedges, generally have maturities of less than 24 months. We assess effectiveness based on changes in total fair value of the derivatives. The effective portion of the derivative instrument’s gain or loss is initially reported as a component of AOCI and subsequently reclassified into earnings when the hedged exposure affects earnings. The ineffective portion, if any, of the gain or loss is reported in earnings immediately. During the periods presented, we did not discontinue any cash flow hedges for which it was probable that a forecasted transaction would not occur.
We enter into foreign exchange forward and option contracts to reduce the short-term effects of foreign currency fluctuations on assets and liabilities such as foreign currency receivables, including long-term customer financings, investments, and payables. These derivatives are not designated as hedging instruments. Gains and losses on the contracts are included in other income (loss), net, and substantially offset foreign exchange gains and losses from the remeasurement of intercompany balances or other current assets, investments, or liabilities denominated in currencies other than the functional currency of the reporting entity.
We hedge certain net investments in our foreign operations with forward contracts to reduce the effects of foreign currency fluctuations on our net investment in those foreign subsidiaries. These derivative instruments generally have maturities of up to six months.
(d)
Interest Rate Risk
Interest Rate Derivatives, Investments   Our primary objective for holding available-for-sale debt investments is to achieve an appropriate investment return consistent with preserving principal and managing risk. To realize these objectives, we may utilize interest rate swaps or other derivatives designated as fair value or cash flow hedges. As of October 27, 2018 and July 28, 2018, we did not have any outstanding interest rate derivatives related to our available-for-sale debt investments.
Interest Rate Derivatives Designated as Fair Value Hedges, Long-Term Debt In the first quarter of fiscal 2019, we did not enter into any interest rate swaps. In prior fiscal years, we entered into interest rate swaps designated as fair value hedges related to fixed-rate senior notes that are due in fiscal 2019 through 2025. Under these interest rate swaps, we receive fixed-rate interest payments and make interest payments based on LIBOR plus a fixed number of basis points. The effect of such swaps is to convert the fixed interest rates of the senior fixed-rate notes to floating interest rates based on LIBOR. The gains and losses related to changes in the fair value of the interest rate swaps are included in interest expense and substantially offset changes in the fair value of the hedged portion of the underlying debt that are attributable to the changes in market interest rates. The fair value of the interest rate swaps was reflected in other current liabilities and other long-term liabilities.
(e)
Equity Price Risk
We may hold equity securities for strategic purposes or to diversify our overall investment portfolio. The marketable equity securities in our portfolio are subject to price risk. To manage our exposure to changes in the fair value of certain equity securities, we have periodically entered into equity derivatives that are designated as fair value hedges. The changes in the value of the hedging instruments are included in other income (loss), net, and offset the change in the fair value of the underlying hedged investment. In addition, we periodically enter into equity derivatives that are not designated as accounting hedges. The changes in the fair value of these derivatives are also included in other income (loss), net.
We are also exposed to variability in compensation charges related to certain deferred compensation obligations to employees. Although not designated as accounting hedges, we utilize derivatives such as total return swaps to economically hedge this exposure.
(f)
Hedge Effectiveness
For the periods presented, amounts excluded from the assessment of hedge effectiveness were not material for fair value, cash flow, and net investment hedges. In addition, hedge ineffectiveness for fair value, cash flow, and net investment hedges was not material for any of the periods presented.
v3.10.0.1
Commitments and Contingencies
3 Months Ended
Oct. 27, 2018
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies
Commitments and Contingencies
(a)
Operating Leases
We lease office space in many U.S. locations. Outside the United States, larger leased sites include sites in Belgium, Canada, China, Germany, India, Israel, Japan, Mexico, Poland and the United Kingdom. We also lease equipment and vehicles. Future minimum lease payments under all noncancelable operating leases with an initial term in excess of one year as of October 27, 2018 are as follows (in millions):
Fiscal Year
Amount
2019 (remaining nine months)
$
312

2020
323

2021
220

2022
152

2023
102

Thereafter
116

Total
$
1,225


(b)
Purchase Commitments with Contract Manufacturers and Suppliers
We purchase components from a variety of suppliers and use several contract manufacturers to provide manufacturing services for our products. During the normal course of business, in order to manage manufacturing lead times and help ensure adequate component supply, we enter into agreements with contract manufacturers and suppliers that either allow them to procure inventory based upon criteria as defined by us or establish the parameters defining our requirements. A significant portion of our reported purchase commitments arising from these agreements consists of firm, noncancelable, and unconditional commitments. Certain of these purchase commitments with contract manufacturers and suppliers relate to arrangements to secure long-term pricing for certain product components for multi-year periods. In certain instances, these agreements allow us the option to cancel, reschedule, and adjust our requirements based on our business needs prior to firm orders being placed.
The following table summarizes our purchase commitments with contract manufacturers and suppliers (in millions):
Commitments by Period
October 27,
2018
 
July 28,
2018
Less than 1 year
$
5,500

 
$
5,407

1 to 3 years
704

 
710

3 to 5 years
270

 
360

Total
$
6,474

 
$
6,477


We record a liability for firm, noncancelable, and unconditional purchase commitments for quantities in excess of our future demand forecasts consistent with the valuation of our excess and obsolete inventory. As of October 27, 2018 and July 28, 2018, the liability for these purchase commitments was $150 million and $159 million, respectively, and was included in other current liabilities.
(c)
Other Commitments
In connection with our acquisitions, we have agreed to pay certain additional amounts contingent upon the achievement of certain agreed-upon technology, development, product, or other milestones or upon the continued employment with Cisco of certain employees of the acquired entities.
The following table summarizes the compensation expense related to acquisitions (in millions):
 
Three Months Ended
 
October 27, 2018
 
October 28, 2017
Compensation expense related to acquisitions
$
109

 
$
42


As of October 27, 2018, we estimated that future cash compensation expense of up to $585 million may be required to be recognized pursuant to the applicable business combination agreements.
We also have certain funding commitments, primarily related to our non-marketable equity and other investments, 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 $378 million and $223 million as of October 27, 2018 and July 28, 2018, respectively.
(d)
Product Warranties
The following table summarizes the activity related to the product warranty liability (in millions):
 
Three Months Ended
 
October 27,
2018
 
October 28,
2017
Balance at beginning of period
$
359

 
$
407

Provisions for warranties issued
156

 
148

Adjustments for pre-existing warranties
(3
)
 
(12
)
Settlements
(145
)
 
(149
)
Balance at end of period
$
367

 
$
394


We accrue for warranty costs as part of our cost of sales based on associated material product costs, labor costs for technical support staff, and associated overhead. Our products are generally covered by a warranty for periods ranging from 90 days to five years, and for some products we provide a limited lifetime warranty.
(e)
Financing and Other Guarantees
In the ordinary course of business, we provide financing guarantees for various third-party financing arrangements extended to channel partners and end-user customers. Payments under these financing guarantee arrangements were not material for the periods presented.
Channel Partner Financing Guarantees   We facilitate arrangements for third-party financing extended to channel partners, consisting of revolving short-term financing, generally with payment terms ranging from 60 to 90 days. These financing arrangements facilitate the working capital requirements of the channel partners, and, in some cases, we guarantee a portion of these arrangements. The volume of channel partner financing was $7.2 billion and $6.7 billion for the first quarter of fiscal 2019 and fiscal 2018, respectively. The balance of the channel partner financing subject to guarantees was $931 million and $953 million as of October 27, 2018 and July 28, 2018, respectively.
End-User Financing Guarantees   We also provide financing guarantees for third-party financing arrangements extended to end-user customers related to leases and loans, which typically have terms of up to three years. The volume of financing provided by third parties for leases and loans as to which we had provided guarantees was $3 million and $14 million for the first quarter of fiscal 2019 and fiscal 2018, respectively.
Financing Guarantee Summary   The aggregate amounts of financing guarantees outstanding at October 27, 2018 and July 28, 2018, representing the total maximum potential future payments under financing arrangements with third parties along with the related deferred revenue, are summarized in the following table (in millions):
 
October 27,
2018
 
July 28,
2018
Maximum potential future payments relating to financing guarantees:
 
 
 
Channel partner
$
307

 
$
277

End user
28

 
31

Total
$
335

 
$
308

Deferred revenue associated with financing guarantees:
 
 
 
Channel partner
$
(72
)
 
$
(94
)
End user
(26
)
 
(28
)
Total
$
(98
)
 
$
(122
)
Maximum potential future payments relating to financing guarantees, net of associated deferred revenue
$
237

 
$
186


Other Guarantees Our other guarantee arrangements as of October 27, 2018 and July 28, 2018 that were subject to recognition and disclosure requirements were not material.
(f)
Indemnifications
In the normal course of business, we indemnify other parties, including customers, lessors, and parties to other transactions with us, with respect to certain matters. We have agreed to indemnify against losses arising from a breach of representations or covenants or out of intellectual property infringement or other claims made against certain parties. These agreements may limit the time within which an indemnification claim can be made and the amount of the claim.
We have been asked to indemnify Time Warner Cable (“TWC”) for patent infringement claims asserted against it by Sprint Communications Company, L.P. (“Sprint”) in federal court in Kansas. Sprint alleges that TWC infringed certain Sprint patents by offering VoIP telephone services utilizing products provided by us generally in combination with those of other manufacturers. Sprint seeks monetary damages. Following a trial on March 3, 2017, a jury in Kansas found that TWC willfully infringed five Sprint patents and awarded Sprint $139.8 million in damages. On March 14, 2017, the Kansas court declined Sprint's request for enhanced damages and entered judgment in favor of Sprint for $139.8 million plus 1.06% in post-judgment interest. On May 30, 2017, the Court awarded Sprint $20.3 million in pre-judgment interest and denied TWC's post-trial motions. TWC has appealed to the U.S. Court of Appeals for the Federal Circuit. We believe that TWC continues to have strong non-infringement and invalidity defenses and arguments and/or that Sprint’s damages claims are inconsistent with prevailing law. Due to the uncertainty surrounding the litigation process, we are unable to reasonably estimate the ultimate outcome of the TWC litigation at this time. Should Sprint prevail in litigation, or TWC agree to a settlement, we, in accordance with our agreements, may have an obligation to indemnify TWC for damages, mediation awards, or settlement amounts arising from its use of our products. At this time, we do not anticipate that our obligations regarding the final outcome would be material.
During the first quarter of fiscal 2018, we recorded legal and indemnification settlement charges of $122 million to product cost of sales related to these and other matters.
In addition, we have entered into indemnification agreements with our officers and directors, and our Amended and Restated Bylaws contain similar indemnification obligations to our agents.
It is not possible to determine the maximum potential amount under these indemnification agreements due to our limited history with prior indemnification claims and the unique facts and circumstances involved in each particular agreement. Historically, payments made by us under these agreements have not had a material effect on our operating results, financial position, or cash flows.
(g)
Legal Proceedings
Brazil Brazilian authorities have investigated our Brazilian subsidiary and certain of our former employees, as well as a Brazilian importer of our products, and its affiliates and employees, relating to alleged evasion of import taxes and alleged improper transactions involving the subsidiary and the importer. Brazilian tax authorities have assessed claims against our Brazilian subsidiary based on a theory of joint liability with the Brazilian importer for import taxes, interest, and penalties. In addition to claims asserted by the Brazilian federal tax authorities in prior fiscal years, tax authorities from the Brazilian state of Sao Paulo have asserted similar claims on the same legal basis in prior fiscal years.
The asserted claims by Brazilian federal tax authorities that remain are for calendar years 2003 through 2007, and the asserted claims by the tax authorities from the state of Sao Paulo are for calendar years 2005 through 2007. The total asserted claims by Brazilian state and federal tax authorities aggregate to $221 million for the alleged evasion of import and other taxes, $1.4 billion for interest, and $1.0 billion for various penalties, all determined using an exchange rate as of October 27, 2018. We have completed a thorough review of the matters and believe the asserted claims against our Brazilian subsidiary are without merit, and we are defending the claims vigorously. While we believe there is no legal basis for the alleged liability, due to the complexities and uncertainty surrounding the judicial process in Brazil and the nature of the claims asserting joint liability with the importer, we are unable to determine the likelihood of an unfavorable outcome against our Brazilian subsidiary and are unable to reasonably estimate a range of loss, if any. We do not expect a final judicial determination for several years.
SRI International On September 4, 2013, SRI International, Inc. (“SRI”) asserted patent infringement claims against us in the U.S. District Court for the District of Delaware, accusing our products and services in the area of network intrusion detection of infringing two U.S. patents. SRI sought monetary damages of at least a reasonable royalty and enhanced damages. The trial on these claims began on May 2, 2016 and, on May 12, 2016, the jury returned a verdict finding willful infringement of the asserted patents. The jury awarded SRI damages of $23.7 million. On May 25, 2017, the Court awarded SRI enhanced damages and attorneys’ fees, entered judgment in the new amount of $57.0 million, and ordered an ongoing royalty of 3.5% through the expiration of the patents in 2018. We have appealed to the United States Court of Appeals for the Federal Circuit on various grounds. We believe we have strong arguments to overturn the jury verdict and/or reduce the damages award. While the ultimate outcome of the case may still result in a loss, we do not expect it to be material.
Straight Path On September 24, 2014, Straight Path IP Group, Inc. (“Straight Path”) asserted patent infringement claims against us in the U.S. District Court for the Northern District of California, accusing our 9971 IP Phone, Unified Communications Manager working in conjunction with 9971 IP Phones, and Video Communication Server products of infringement. All of the asserted patents have expired and Straight Path was therefore limited to seeking monetary damages for the alleged past infringement. On November 13, 2017, the Court granted our motion for summary judgment of non-infringement, thereby dismissing Straight Path's claims against us and cancelling a trial which had been set for March 12, 2018. On January 16, 2018, Straight Path appealed to the U.S. Court of Appeal for the Federal Circuit.
Arista Networks, Inc. As reported in our Form 10-K for the fiscal year ended July 28, 2018 we received a payment of $400 million from Arista Networks, Inc. ("Arista") in connection with the settlement of litigation. The payment was recognized in general and administrative expenses in our first quarter of fiscal 2019.
Oyster Optics On November 24, 2016, Oyster Optics, LLC (“Oyster”) asserted patent infringement claims against us in the U.S. District Court for the Eastern District of Texas. Oyster alleges that certain Cisco ONS 15454 and NCS 2000 line cards infringe U.S. Patent No. 7,620,327 (“the ‘327 Patent”). Oyster seeks monetary damages. Oyster filed infringement claims based on the ‘327 Patent against other defendants, including ZTE, Nokia, NEC, Infinera, Huawei, Ciena, Alcatel-Lucent, and Fujitsu, and the court consolidated the cases alleging infringement of the ‘327 Patent. Oyster's cases against some of the defendants were resolved. The court vacated the November 4, 2018 trial date set for Oyster's claims against Cisco and one other remaining defendant, pending resolution of Oyster's appeal of the court's summary judgment ruling dismissing certain of Oyster's claims. While we believe that we have strong non-infringement arguments and that the patent is invalid, if we do not prevail in the District Court, we believe damages ultimately assessed would not be material. Due to uncertainty surrounding patent litigation processes, we are unable to reasonably estimate the ultimate outcome of this litigation at this time. However, we do not anticipate that any final outcome of the dispute would be material.
In addition, we are subject to legal proceedings, claims, and litigation arising in the ordinary course of business, including intellectual property litigation. While the outcome of these matters is currently not determinable, we do not expect that the ultimate costs to resolve these matters will have a material adverse effect on our consolidated financial position, results of operations, or cash flows. For additional information regarding intellectual property litigation, see “Part II, Item 1A. Risk Factors-We may be found to infringe on intellectual property rights of others” herein.
v3.10.0.1
Shareholders' Equity
3 Months Ended
Oct. 27, 2018
Stockholders' Equity Note [Abstract]  
Shareholders' Equity
Shareholders’ Equity
(a)
Cash Dividends on Shares of Common Stock
We declared and paid cash dividends of $0.33 and $0.29 per common share, or $1.5 billion and $1.4 billion, on our outstanding common stock for the first quarter of fiscal 2019 and fiscal 2018, respectively.
Any future dividends will be subject to the approval of our Board of Directors.
(b)
Stock Repurchase Program
In September 2001, our Board of Directors authorized a stock repurchase program. On February 14, 2018, our Board of Directors authorized a $25 billion increase to the stock repurchase program. As of October 27, 2018, the remaining authorized amount for stock repurchases under this program, including the additional authorization, is approximately $14.0 billion, with no termination date. A summary of the stock repurchase activity for fiscal year 2018 and 2017 under the stock repurchase program, reported based on the trade date, is summarized as follows (in millions, except per-share amounts):

Quarter Ended
 
Shares
 
Weighted-Average Price per Share
 
Amount
Fiscal 2019
 
 
 
 
 
 
October 27, 2018
 
109

 
$
46.01

 
$
5,026

 
 
 
 
 
 
 
Fiscal 2018
 
 
 
 
 
 
July 28, 2018
 
138

 
$
43.58

 
$
6,015

April 28, 2018
 
140

 
$
42.83

 
$
6,015

January 27, 2018
 
103

 
$
39.07

 
$
4,011

October 28, 2017
 
51

 
$
31.80

 
$
1,620


There were $130 million and $180 million of stock repurchases that were pending settlement as of October 27, 2018 and July 28, 2018, respectively.
The purchase price for the shares of our stock repurchased is reflected as a reduction to shareholders’ equity. We are required to allocate the purchase price of the repurchased shares as (i) a reduction to retained earnings and (ii) a reduction of common stock and additional paid-in capital.
(c)
Restricted Stock Unit Withholdings
We repurchased approximately 7 million and 11 million shares, or $318 million and $342 million, of common stock in settlement of employee tax withholding obligations due upon the vesting of restricted stock or stock units for each of the first quarter of fiscal 2019 and fiscal 2018, respectively.
(d) Preferred Stock
Under the terms of our Articles of Incorporation, the Board of Directors may determine the rights, preferences, and terms of our authorized but unissued shares of preferred stock.
v3.10.0.1
Employee Benefit Plans
3 Months Ended
Oct. 27, 2018
Retirement Benefits [Abstract]  
Employee Benefit Plans
Employee Benefit Plans
(a)
Employee Stock Incentive Plans
Stock Incentive Plan Program Description    As of October 27, 2018, we had one stock incentive plan: the 2005 Stock Incentive Plan (the “2005 Plan”). In addition, we have, in connection with our acquisitions of various companies, assumed the share-based awards granted under stock incentive plans of the acquired companies or issued share-based awards in replacement thereof. Share-based awards are designed to reward employees for their long-term contributions to us and provide incentives for them to remain with Cisco. The number and frequency of share-based awards are based on competitive practices, operating results of Cisco, government regulations, and other factors. Our primary stock incentive plan is summarized as follows:
2005 Plan    As of October 27, 2018, the maximum number of shares issuable under the 2005 Plan over its term was 694 million shares, plus shares from certain previous plans that are forfeited or are terminated for any other reason before being exercised or settled. If any awards granted under the 2005 Plan are forfeited or are terminated for any other reason before being exercised or settled, the unexercised or unsettled shares underlying the awards will again be available under the 2005 Plan. In addition, starting November 19, 2013, shares withheld by Cisco from an award other than a stock option or stock appreciation right to satisfy withholding tax liabilities resulting from such award will again be available for issuance, based on the fungible share ratio in effect on the date of grant.
Pursuant to an amendment approved by our shareholders on November 12, 2009, the number of shares available for issuance under the 2005 Plan is reduced by 1.5 shares for each share awarded as a stock grant or a stock unit, and any shares underlying awards outstanding from certain previous plans that expire unexercised at the end of their maximum terms become available for reissuance under the 2005 Plan. The 2005 Plan permits the granting of stock options, restricted stock, and restricted stock units ("RSUs"), the vesting of which may be performance-based or market-based along with the requisite service requirement, and stock appreciation rights to employees (including employee directors and officers), consultants of Cisco and its subsidiaries and affiliates, and non-employee directors of Cisco. Stock options and stock appreciation rights granted under the 2005 Plan have an exercise price of at least 100% of the fair market value of the underlying stock on the grant date. The expiration date for stock options and stock appreciation rights shall be no later than 10 years from the grant date.
The stock options will generally become exercisable for 20% or 25% of the option shares one year from the date of grant and then ratably over the following 48 months or 36 months, respectively. Time-based stock grants and time-based RSUs will generally vest over a four year term. The majority of the performance-based and market-based RSUs vests at the end of the three-year requisite service period or earlier if the award recipient meets certain retirement eligibility conditions. Certain performance-based RSUs, that are based on the achievement of financial and/or non-financial operating goals, typically vest upon the achievement of milestones (and may require subsequent service periods), with overall vesting of the shares underlying the award ranging from six months to three years. The Compensation and Management Development Committee of our Board of Directors has the discretion to use different vesting schedules. Stock appreciation rights may be awarded in combination with stock options or stock grants, and such awards shall provide that the stock appreciation rights will not be exercisable unless the related stock options or stock grants are forfeited. Stock grants may be awarded in combination with non-statutory stock options, and such awards may provide that the stock grants will be forfeited in the event that the related non-statutory stock options are exercised.
(b)
Employee Stock Purchase Plan
We have an Employee Stock Purchase Plan, which includes its subplan named the International Employee Stock Purchase Plan (together, the “Purchase Plan”), under which 621 million shares of our common stock have been reserved for issuance as of October 27, 2018. Eligible employees are offered shares through a 24-month offering period, which consists of four consecutive 6-month purchase periods. Employees may purchase a limited number of shares of our stock at a discount of up to 15% of the lesser of the market value at the beginning of the offering period or the end of each 6-month purchase period.  The Purchase Plan is scheduled to terminate on January 3, 2020. No shares were issued under the Purchase Plan during each of the first quarter of fiscal 2019 and fiscal 2018. As of October 27, 2018, 78 million shares were available for issuance under the Purchase Plan.
(c)
Summary of Share-Based Compensation Expense
Share-based compensation expense consists primarily of expenses for stock options, stock purchase rights, restricted stock, and RSUs granted to employees. The following table summarizes share-based compensation expense (in millions):
 
Three Months Ended
 
October 27, 2018
 
October 28, 2017
Cost of sales—product
$
23

 
$
23

Cost of sales—service
33

 
34

Share-based compensation expense in cost of sales
56

 
57

Research and development
130

 
136

Sales and marketing
137

 
135

General and administrative
62

 
64

Restructuring and other charges
23

 
6

Share-based compensation expense in operating expenses
352

 
341

Total share-based compensation expense
$
408

 
$
398

Income tax benefit for share-based compensation
$
165

 
$
175


As of October 27, 2018, the total compensation cost related to unvested share-based awards not yet recognized was $3.0 billion which is expected to be recognized over approximately 2.6 years on a weighted-average basis.
(d)
Share-Based Awards Available for Grant
A summary of share-based awards available for grant is as follows (in millions):
 
Share-Based Awards
Available for Grant
BALANCE AT JULY 29, 2017
272

Restricted stock, stock units, and other share-based awards granted
(70
)
Share-based awards canceled/forfeited/expired
18

Shares withheld for taxes and not issued
25

BALANCE AT JULY 28, 2018
245

Restricted stock, stock units, and other share-based awards granted
(12
)
Share-based awards canceled/forfeited/expired
5

Shares withheld for taxes and not issued
9

Other
1

BALANCE AT OCTOBER 27, 2018
248


For each share awarded as restricted stock or a restricted stock unit award under the 2005 Plan, 1.5 shares was deducted from the available share-based award balance. For restricted stock units that were awarded with vesting contingent upon the achievement of future financial performance or market-based metrics, the maximum awards that can be achieved upon full vesting of such awards were reflected in the preceding table.
(e)
Restricted Stock and Stock Unit Awards
A summary of the restricted stock and stock unit activity, which includes time-based and performance-based or market-based RSUs, is as follows (in millions, except per-share amounts):
 
Restricted Stock/
Stock Units
 
Weighted-Average
Grant Date Fair
Value per Share
 
Aggregate Fair  Value
UNVESTED BALANCE AT JULY 29, 2017
141

 
$
26.94

 
 
Granted
46

 
35.62

 
 
Assumed from acquisitions
1

 
28.26

 
 
Vested
(53
)
 
26.02

 
$
1,909

Canceled/forfeited/other
(16
)
 
28.37

 
 
UNVESTED BALANCE AT JULY 28, 2018
119

 
30.56

 
 
Granted
8

 
45.05

 
 
Vested
(19
)
 
25.92

 
$
883

Canceled/forfeited/other
(4
)
 
30.33

 
 
UNVESTED BALANCE AT OCTOBER 27, 2018
104

 
$
32.48

 
 

(f)
Stock Option Awards
A summary of the stock option activity is as follows (in millions, except per-share amounts):
 
STOCK OPTIONS OUTSTANDING
 
Number
Outstanding
 
Weighted-Average
Exercise Price per Share
BALANCE AT JULY 29, 2017
12

 
$
6.15

Assumed from acquisitions
3

 
8.20

Exercised
(8
)
 
5.77

Canceled/forfeited/expired
(1
)
 
8.75

BALANCE AT JULY 28, 2018
6

 
7.18

Exercised
(1
)
 
6.50

BALANCE AT OCTOBER 27, 2018
5

 
$
7.29


The following table summarizes significant ranges of outstanding and exercisable stock options as of October 27, 2018 (in millions, except years and share prices):
 
 
STOCK OPTIONS OUTSTANDING
 
STOCK OPTIONS EXERCISABLE
Range of Exercise Prices
 
Number
Outstanding
 
Weighted-
Average
Remaining
Contractual
Life
(in Years)
 
Weighted-
Average
Exercise
Price per
Share
 
Aggregate
Intrinsic
Value
 
Number
Exercisable
 
Weighted-
Average
Exercise
Price per
Share
 
Aggregate
Intrinsic
Value
$   0.01 – 35.00
 
5

 
5.8
 
$
7.29

 
$
195

 
4

 
$
7.06

 
$
140


The aggregate intrinsic value in the preceding table represents the total pretax intrinsic value, based on our closing stock price of $44.25 as of October 26, 2018. The total number of in-the-money stock options exercisable as of October 27, 2018 was 4 million. As of July 28, 2018, 4 million outstanding stock options were exercisable and the weighted-average exercise price was $6.84.
(g)
Valuation of Employee Share-Based Awards
Time-based restricted stock units and performance-based restricted stock units ("PRSUs") that are based on our financial performance metrics or non-financial operating goals are valued using the market value of our common stock on the date of grant, discounted for the present value of expected dividends. On the date of grant, we estimated the fair value of the total shareholder return ("TSR") component of the PRSUs using a Monte Carlo simulation model. The assumptions for the valuation of time-based RSUs and PRSUs are summarized as follows:
 
RESTRICTED STOCK UNITS
 
PERFORMANCE BASED
RESTRICTED STOCK UNITS
Three Months Ended
October 27, 2018
 
October 28, 2017
 
October 27, 2018
 
October 28, 2017
Number of shares granted (in millions)
6

 
7

 
2

 
3

Grant date fair value per share
$
44.32

 
$
29.81

 
$
47.00

 
$
31.31

Weighted-average assumptions/inputs:
 
 
 
 
 
 
 
   Expected dividend yield
2.8
%
 
3.6
%
 
2.8
%
 
3.6
%
   Range of risk-free interest rates
2.1%  2.9%

 
1.0%  1.9%

 
2.1%  3.0%

 
1.0%-1.6%

   Range of expected volatilities for index
N/A

 
N/A

 
13.0% – 65.2%

 
13.2%-81.0%

The PRSUs granted during the periods presented are contingent on the achievement of our financial performance metrics, our comparative market-based returns, or the achievement of financial and non-financial operating goals. For the awards based on financial performance metrics or comparative market-based returns, generally 50% of the PRSUs are earned based on the average of annual operating cash flow and earnings per share goals established at the beginning of each fiscal year over a three-year performance period. Generally, the remaining 50% of the PRSUs are earned based on our TSR measured against the benchmark TSR of a peer group over the same period. Each PRSU recipient could vest in 0% to 150% of the target shares granted contingent on the achievement of our financial performance metrics or our comparative market-based returns and 0% to 100% of the target shares granted contingent on the achievement of non-financial operating goals.
v3.10.0.1
Comprehensive Income (Loss)
3 Months Ended
Oct. 27, 2018
Comprehensive Income [Abstract]  
Comprehensive Income (Loss)
Comprehensive Income (Loss)
The components of AOCI, net of tax, and the other comprehensive income (loss), excluding noncontrolling interest, for the first quarter of fiscal 2019 and fiscal 2018 are summarized as follows (in millions):
 
Net Unrealized Gains (Losses) on Available-for-Sale Investments
 
Net Unrealized Gains (Losses) Cash Flow Hedging Instruments
 
Cumulative Translation Adjustment and Actuarial Gains (Losses)
 
Accumulated Other Comprehensive Income (Loss)
BALANCE AT JULY 28, 2018
$
(310
)
 
$
(11
)
 
$
(528
)
 
$
(849
)
Other comprehensive income (loss) before reclassifications attributable to Cisco Systems, Inc.
(8
)
 
(4
)
 
(207
)
 
(219
)
(Gains) losses reclassified out of AOCI
6

 

 
(1
)
 
5

Tax benefit (expense)
13

 
1

 
(1
)
 
13

Total change for the period
11

 
(3
)
 
(209
)
 
(201
)
Effect of adoption of accounting standards
(168
)
 

 

 
(168
)
BALANCE AT OCTOBER 27, 2018
$
(467
)
 
$
(14
)
 
$
(737
)
 
$
(1,218
)
 
Net Unrealized Gains (Losses) on Available-for-Sale Investments
 
Net Unrealized Gains (Losses) Cash Flow Hedging Instruments
 
Cumulative Translation Adjustment and Actuarial Gains (Losses)
 
Accumulated Other Comprehensive Income (Loss)
BALANCE AT JULY 29, 2017
$
373

 
$
32

 
$
(359
)
 
$
46

Other comprehensive income (loss) before reclassifications attributable to Cisco Systems, Inc.
18

 
8

 
18

 
44

(Gains) losses reclassified out of AOCI
(33
)
 
(13
)
 
1

 
(45
)
Tax benefit (expense)
(13
)
 
1

 
(2
)
 
(14
)
Total change for the period
(28
)
 
(4
)
 
17

 
(15
)
BALANCE AT OCTOBER 28, 2017
$
345

 
$
28


$
(342
)
 
$
31



The net gains (losses) reclassified out of AOCI into the Consolidated Statements of Operations, with line item location, during each period were as follows (in millions):
 
 
Three Months Ended
 
 
 
 
October 27,
2018
 
October 28,
2017
 
 
Comprehensive Income Components
 
Income Before Taxes
 
Line Item in Statements of Operations
Net unrealized gains and losses on available-for-sale investments
 
$
(6
)
 
$
33

 
Other income (loss), net
Net unrealized gains and losses on cash flow hedging instruments
 
 
 
 
 
 
Foreign currency derivatives
 
(1
)
 
10

 
Operating expenses
Foreign currency derivatives
 
1

 

 
Revenue—service
Foreign currency derivatives
 

 
3

 
Cost of sales—service
 
 


13


 
Cumulative translation adjustment and actuarial gains and losses
 

 
(1
)
 
Operating expenses
Cumulative translation adjustment and actuarial gains and losses
 
1

 

 
Other income (loss), net
Total amounts reclassified out of AOCI
 
$
(5
)

$
45


 
v3.10.0.1
Income Taxes
3 Months Ended
Oct. 27, 2018
Income Tax Disclosure [Abstract]  
Income Taxes
Income Taxes
The following table provides details of income taxes (in millions, except percentages):
 
Three Months Ended
 
October 27,
2018
 
October 28,
2017
Income before provision for income taxes
$
3,909

 
$
2,962

Provision for income taxes
$
360

 
$
568

Effective tax rate
9.2
%
 
19.2
%

The effective tax rate for the first quarter of fiscal 2019 includes a $152 million tax benefit relating to indirect effects from the adoption of ASC 606 at the beginning of our first quarter of fiscal 2019.
On December 22, 2017, the Tax Cuts and Jobs Act (the "Tax Act") was enacted. The Tax Act significantly revises the U.S. corporate income tax by, among other things, lowering the statutory corporate income tax rate (“federal tax rate”) from 35% to 21% effective January 1, 2018, implementing a modified territorial tax system, and imposing a mandatory one-time transition tax on accumulated earnings of foreign subsidiaries. The enactment of the Tax Act resulted in us recording a provisional tax expense of $10.4 billion in fiscal 2018.
In December 2017, the Securities and Exchange Commission staff issued Staff Accounting Bulletin No. 118, which addresses how a company recognizes provisional estimates when a company does not have the necessary information available, prepared or analyzed (including computations) in reasonable detail to complete its accounting for the effect of the changes in the Tax Act. The measurement period ends when a company has obtained, prepared, and analyzed the information necessary to finalize its accounting, but cannot extend beyond one year. The final impact of the Tax Act may differ from the above provisional estimates due to changes in interpretations of the Tax Act, any legislative action to address questions that arise because of the Tax Act, by changes in accounting standard for income taxes and related interpretations in response to the Tax Act, and any updates or changes to estimates used in the provisional amounts. We have determined that the $8.1 billion of tax expense for the U.S. transition tax on accumulated earnings of foreign subsidiaries, the $1.2 billion of foreign withholding tax, and the $1.1 billion of tax expense for DTA re-measurement were each provisional amounts and reasonable estimates as of October 27, 2018. Estimates used in the provisional amounts include: the anticipated reversal pattern of the gross DTAs; and earnings, cash positions, foreign taxes and withholding taxes attributable to foreign subsidiaries. The provisional tax expense related to the U.S. transition tax on accumulated earnings in foreign subsidiaries includes an $863 million benefit related to the U.S. taxation of deemed foreign dividends in the transition fiscal year. This benefit may be reduced or eliminated in future legislation. If such legislation is enacted, we will record the impact of the legislation in the quarter of enactment.
The Tax Act includes a Global Intangible Low-Taxed Income ("GILTI") provision that imposes U.S. tax on certain foreign subsidiary income in the year it is earned. Our accounting policy is to treat tax on GILTI as a current period cost included in tax expense in the year incurred.
As of October 27, 2018, we had $1.9 billion of unrecognized tax benefit, of which $1.7 billion, if recognized, would favorably impact the effective tax rate. We regularly engage in discussions and negotiations with tax authorities regarding tax matters in various jurisdictions. We believe it is reasonably possible that certain federal, foreign and state tax matters may be concluded in the next 12 months. Specific positions that may be resolved include issues involving transfer pricing and various other matters. We estimate that the unrecognized tax benefits at October 27, 2018 could be reduced by approximately $200 million in the next 12 months.
v3.10.0.1
Segment Information and Major Customers
3 Months Ended
Oct. 27, 2018
Segment Reporting [Abstract]  
Segment Information and Major Customers
Segment Information and Major Customers
(a)
Revenue and Gross Margin by Segment
We conduct business globally and are primarily managed on a geographic basis consisting of three segments: the Americas, EMEA, and APJC. Our management makes financial decisions and allocates resources based on the information it receives from our internal management system. Sales are attributed to a segment based on the ordering location of the customer. We do not allocate research and development, sales and marketing, or general and administrative expenses to our segments in this internal management system because management does not include the information in our measurement of the performance of the operating segments. In addition, we do not allocate amortization and impairment of acquisition-related intangible assets, share-based compensation expense, significant litigation settlements and other contingencies, charges related to asset impairments and restructurings, and certain other charges to the gross margin for each segment because management does not include this information in our measurement of the performance of the operating segments.
Summarized financial information by segment for the first quarter of fiscal 2019 and fiscal 2018, based on our internal management system and as utilized by our Chief Operating Decision Maker ("CODM"), is as follows (in millions):
 
Three Months Ended
 
October 27,
2018
 
October 28,
2017
Revenue:
 
 
 
Americas
$
7,751

 
$
7,350

EMEA
3,224

 
2,909

APJC
2,096

 
1,877

Total
$
13,072

 
$
12,136

Gross margin:
 
 
 
Americas
$
5,070

 
$
4,722

EMEA
2,070

 
1,839

APJC
1,200

 
1,165

Segment total
8,341

 
7,726

Unallocated corporate items
(195
)
 
(299
)
Total
$
8,146

 
$
7,427


Amounts may not sum and percentages may not recalculate due to rounding.
Revenue in the United States was $6.9 billion and $6.5 billion for the first quarter of fiscal 2019 and fiscal 2018, respectively.
(b)
Revenue for Groups of Similar Products and Services
We design, manufacture, and sell Internet Protocol (IP)-based networking and other products related to the communications and information technology (IT) industry and provide services associated with these products and their use.
The following table presents revenue for groups of similar products and services (in millions):
 
Three Months Ended
 
October 27,
2018
 
October 28,
2017
Revenue:
 
 
 
Infrastructure Platforms
$
7,642

 
$
6,980

Applications
1,419

 
1,203

Security
651

 
585

Other Products
178

 
286

Total Product
9,890

 
9,054

Services
3,182

 
3,082

Total
$
13,072

 
$
12,136



(c)
Additional Segment Information
The majority of our assets was attributable to our U.S. operations as of each of October 27, 2018 and July 28, 2018.
Property and equipment information is based on the physical location of the assets. The following table presents property and equipment information for geographic areas (in millions):
 
October 27,
2018
 
July 28,
2018
Property and equipment, net:
 
 
 
United States
$
2,421

 
$
2,487

International
535

 
519

Total
$
2,956

 
$
3,006

v3.10.0.1
Net Income per Share
3 Months Ended
Oct. 27, 2018
Earnings Per Share [Abstract]  
Net Income per Share
Net Income per Share
The following table presents the calculation of basic and diluted net income per share (in millions, except per-share amounts):
 
Three Months Ended
 
October 27,
2018
 
October 28,
2017
Net income
$
3,549

 
$
2,394

Weighted-average shares—basic
4,565

 
4,959

Effect of dilutive potential common shares
49

 
35

Weighted-average shares—diluted
4,614

 
4,994

Net income per share—basic
$
0.78

 
$
0.48

Net income per share—diluted
$
0.77

 
$
0.48

Antidilutive employee share-based awards, excluded
9

 
15


Employee equity share options, unvested shares, and similar equity instruments granted and assumed by Cisco are treated as potential common shares outstanding in computing diluted earnings per share. Diluted shares outstanding include the dilutive effect of in-the-money options, unvested restricted stock, and restricted stock units. The dilutive effect of such equity awards is calculated based on the average share price for each fiscal period using the treasury stock method. Under the treasury stock method, the amount the employee must pay for exercising stock options and the amount of compensation cost for future service that has not yet recognized are collectively assumed to be used to repurchase shares.
v3.10.0.1
Recent Accounting Pronouncements (Policies)
3 Months Ended
Oct. 27, 2018
Accounting Policies [Abstract]  
Fiscal Period
The fiscal year for Cisco Systems, Inc. (the “Company,” “Cisco,” “we,” “us,” or “our”) is the 52 or 53 weeks ending on the last Saturday in July. Fiscal 2019 and fiscal 2018 are each 52-week fiscal years.
Basis of Presentation
The Consolidated Financial Statements include our accounts and those of our subsidiaries. All intercompany accounts and transactions have been eliminated. We conduct business globally and are primarily managed on a geographic basis in the following three geographic segments: the Americas; Europe, Middle East, and Africa (EMEA); and Asia Pacific, Japan, and China (APJC).
We have prepared the accompanying financial data as of October 27, 2018 and for the three months ended October 27, 2018 and October 28, 2017, without audit, pursuant to the rules and regulations of the U.S. Securities and Exchange Commission ("SEC"). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States ("GAAP") have been condensed or omitted pursuant to such rules and regulations. The July 28, 2018 Consolidated Balance Sheet was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States. However, we believe that the disclosures are adequate to make the information presented not misleading. These Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and the notes thereto included in our Annual Report on Form 10-K for the fiscal year ended July 28, 2018.
We consolidate our investments in certain variable interest entities (VIEs) where we are the primary beneficiary. The noncontrolling interests attributed to these investments, if any, are presented as a separate component from our equity in the equity section of the Consolidated Balance Sheets. The share of earnings attributable to the noncontrolling interests are not presented separately in the Consolidated Statements of Operations as these amounts are not material for any of the fiscal periods presented.
In the opinion of management, all normal recurring adjustments necessary to present fairly the consolidated balance sheet as of October 27, 2018; the results of operations and the statements of comprehensive income (loss) for the three months ended October 27, 2018 and October 28, 2017; the statements of cash flows and equity for the three months ended October 27, 2018 and October 28, 2017, as applicable, have been made. The results of operations for the three months ended October 27, 2018 are not necessarily indicative of the operating results for the full fiscal year or any future periods.
Reclassification
Certain reclassifications have been made to the amounts in prior periods in order to conform to the current period’s presentation. We have evaluated subsequent events through the date that the financial statements were issued.
New Accounting Updates Recently Adopted and Recent Accounting Standards or Updates Not Yet Effective
New Accounting Updates Recently Adopted
Revenue Recognition In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers, a new accounting standard related to revenue recognition. ASC 606 supersedes nearly all U.S. GAAP on revenue recognition and eliminated industry-specific guidance. The underlying principle of ASC 606 is to recognize revenue when a customer obtains control of promised goods or services at an amount that reflects the consideration that is expected to be received in exchange for those goods or services. It also requires increased disclosures including the nature, amount, timing, and uncertainty of revenues and cash flows related to contracts with customers.
ASC 606 allows two methods of adoption: i) retrospectively to each prior period presented (“full retrospective method”), or ii) retrospectively with the cumulative effect recognized in retained earnings as of the date of adoption ("modified retrospective method"). At the beginning of the first quarter of fiscal 2019, we adopted ASC 606 using the modified retrospective method to those contracts that were not completed as of July 28, 2018. Refer to Opening Balance Adjustments below for the impact of adoption on our Consolidated Financial Statements.
We have implemented new accounting policies, systems, processes, and internal controls necessary to support the requirements of ASC 606.
ASC 606 primarily impacts our revenue recognition for software arrangements and sales to two-tier distributors. In both areas, the new standard accelerates the recognition of revenue.
The table below details the timing of when revenue was typically recognized under the prior revenue standard compared to the timing of when revenue is typically recognized under ASC 606 for these major areas:
 
 
Prior Revenue Standard
 
ASC 606
Software arrangements:
 
 
 
 
Perpetual software licenses
 
Upfront
 
Upfront
Term software licenses
 
Ratable
 
Upfront
Security software licenses
 
Ratable
 
Ratable
Enterprise license agreements (software licenses)
 
Ratable
 
Upfront
Software support (maintenance)
 
Ratable
 
Ratable
Software-as-a-service
 
Ratable
 
Ratable
Two-tier distribution
 
Sell-Through
 
Sell-In

In addition to the above revenue recognition timing impacts, ASC 606 requires incremental contract acquisition costs (such as sales commissions) for customer contracts to be capitalized and amortized on a systematic basis that is consistent with the transfer to the customer of the goods or services to which the assets relates.
We enter into contracts with customers that can include various combinations of products and services which are generally distinct and accounted for as separate performance obligations. As a result, our contracts may contain multiple performance obligations. We determine whether arrangements are distinct based on whether the customer can benefit from the product or service on its own or together with other resources that are readily available and whether our commitment to transfer the product or service to the customer is separately identifiable from other obligations in the contract. We classify our hardware, perpetual software licenses, and software-as-a-service (SaaS) as distinct performance obligations. Term software licenses represent multiple obligations, which include software licenses and software maintenance. In transactions where we deliver hardware or software, we are typically the principal and we record revenue and costs of goods sold on a gross basis. We refer to our term software licenses, security software licenses, SaaS, and associated service arrangements as subscription offers.
We recognize revenue upon transfer of control of promised goods or services in a contract with a customer in an amount that reflects the consideration we expect to receive in exchange for those products or services. Transfer of control occurs once the customer has the contractual right to use the product, generally upon shipment or once delivery and risk of loss has transferred to the customer. Transfer of control can also occur over time for software maintenance and services as the customer receives the benefit over the contract term. Our hardware and perpetual software licenses are distinct performance obligations where revenue is recognized upfront upon transfer of control. Term software licenses include multiple performance obligations where the term licenses are recognized upfront upon transfer of control, with the associated software maintenance revenue recognized ratably over the contract term as services and software updates are provided. SaaS arrangements have one distinct performance obligation which is satisfied over time with revenue recognized ratably over the contract term as the customer consumes the services. On our product sales, we record consideration from shipping and handling on a gross basis within net product sales. We record our revenue net of any associated sales taxes.
Significant Judgments
Revenue is allocated among these performance obligations in a manner that reflects the consideration that we expect to be entitled to for the promised goods or services based on standalone selling prices (SSP). SSP is estimated for each distinct performance obligation and judgment may be required in their determination. The best evidence of SSP is the observable price of a product or service when we sell the goods separately in similar circumstances and to similar customers. In instances where SSP is not directly observable, we determine SSP using information that may include market conditions and other observable inputs.
We apply judgment in determining the transaction price as we may be required to estimate variable consideration when determining the amount of revenue to recognize. Variable consideration includes various rebate, cooperative marketing, and other incentive programs that we offer to our distributors, partners and customers. When determining the amount of revenue to recognize, we estimate the expected usage of these programs, applying the expected value or most likely estimate and update the estimate at each reporting period as actual utilization becomes available. We also consider the customers' right of return in determining the transaction price, where applicable.
We assess certain software licenses, such as for security software, that contain critical updates or upgrades which customers can download throughout the contract term. Without these updates or upgrades, the functionality of the software would diminish over a relatively short time period. These updates or upgrades provide the customer the full functionality of the purchased security software licenses and are required to maintain the security license's utility as the risks and threats in the environment are rapidly changing. In these circumstances, the revenue from these software arrangements is recognized as a distinct performance obligation satisfied over the contract term.
For the additional disclosures required as part of ASC 606 see Note 3.
Financial Instruments In January 2016, the FASB issued an accounting standard update that changes the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. The most significant impact of this accounting standard update is that it requires the remeasurement of investments not accounted for under the equity method to be recorded at fair value through the Consolidated Statement of Operations at the end of each reporting period. The application of this accounting standard update increases the variability of other income (loss), net.
Our equity investments are accounted for as follows:
Marketable equity securities have readily determinable fair value (RDFV) that are measured and recorded at fair value.
Non-marketable equity securities do not have RDFV and are measured using a measurement alternative recorded at cost less any impairment, plus or minus changes resulting from qualifying observable price changes. For certain of these securities, we have elected to apply the net asset value (NAV) practical expedient. The NAV is the estimated fair value of these investments.
Equity method investments are securities we do not control, but are able to exert significant influence over the investee. These investments are measured at cost less any impairment, plus or minus our share of equity method investee income or loss.
We adopted this accounting standard update beginning the first quarter of fiscal 2019. The standard was adopted using the modified retrospective method for our marketable equity securities and non-marketable equity securities measured using the NAV practical expedient. For our non-marketable equity securities measured using the measurement alternative, we applied the prospective method. Refer to Opening Balance Adjustments below for the impact of adoption on our Consolidated Balance Sheet.
Income Taxes on Intra-Entity Transfers of Assets In October 2016, the FASB issued an accounting standard update that requires recognition of the income tax consequences of intra-entity transfers of assets (other than inventory) at the transaction date. We adopted this accounting standard update beginning in the first quarter of fiscal 2019 on a modified retrospective basis. The ongoing impact of this standard will be facts and circumstances dependent on any transactions within its scope. Refer to Opening Balance Adjustments below for the impact of adoption on our Consolidated Balance Sheet.
Classification of Cash Flow Elements In August 2016, the FASB issued an accounting standard update related to the classification of certain cash receipts and cash payments on the statement of cash flows. We adopted this accounting standard update beginning in the first quarter of fiscal 2019 on a retrospective basis. The application of this accounting standard update did not have an impact on our Consolidated Statements of Cash Flows.
Restricted Cash in Statement of Cash Flows In November 2016, the FASB issued an accounting standard update that provides guidance on the classification and presentation of changes in restricted cash and cash equivalents in the statement of cash flows. We adopted this accounting standard update beginning in the first quarter of fiscal 2019 using a retrospective transition method to each period presented. The application of this accounting standard update did not have a material impact on our Consolidated Statements of Cash Flows. Prior period information has been retrospectively adjusted due to the adoption of ASU 2016-18, Statement of Cash Flows, Restricted Cash in the beginning of the first quarter of fiscal 2019.
Simplifying the Test for Goodwill Impairment In January 2017, the FASB issued an accounting standard update that removes Step
2 of the goodwill impairment test, which requires the assessment of fair value of individual assets and liabilities of a reporting unit to measure goodwill impairments. Goodwill impairment will now be the amount by which a reporting unit's carrying value exceeds its fair value. We early adopted this accounting standard update beginning in the first quarter of fiscal 2019 on a prospective basis. The application of this accounting standard update did not have a material impact on our Consolidated Financial Statements.
Definition of a Business In January 2017, the FASB issued an accounting standard update that clarifies the definition of a business to help companies evaluate whether acquisition or disposal transactions should be accounted for as asset groups or as businesses. We adopted this accounting standard update beginning in the first quarter of fiscal 2019 on a prospective basis. The impact of this accounting standard update will be fact dependent, but we expect that some transactions that were previously accounted for as business combinations or disposal transactions will be accounted for as asset purchases or asset sales under the accounting standard update.
Opening Balance Adjustments
The following table summarizes the cumulative effect of the changes made to the Consolidated Balance Sheet for the adoption of ASC 606, ASU 2016-01, Financial Instruments, and ASU 2016-16, Intra-Entity Transfers of Assets Other than Inventory (in millions):
Line Item in Consolidated Balance Sheet:
 
Balance at July 28, 2018
 
New Revenue Recognition Standard
 
New Financial Instruments Standard
 
New Intra-Entity Transfers Standard
 
Adjusted Balance at July 29, 2018
ASSETS
 
 
 
 
 
 
 
 
 
 
Accounts receivable, net
 
$
5,554

 
$
(104
)
(1) 
$

 
$

 
$
5,450

Inventories
 
$
1,846

 
$
(302
)
(2) 
$

 
$

 
$
1,544

Other current assets (includes capitalized contract acquisition costs)
 
$
2,940

 
$
371

(3), (4) 
$

 
$
(25
)
(3) 
$
3,286

Deferred tax assets
 
$
3,219

 
$
(624
)
(3) 
$
(15
)
(3) 
$
1,415

(8) 
$
3,995

Other assets (includes capitalized contract acquisition costs)
 
$
1,582

 
$
327

(4) 
$
136

(7) 
$
(91
)
(3) 
$
1,954

 
 
 
 
 
 
 
 
 
 
 
TOTAL ASSETS
 
$
108,784

 
$
(332
)
 
$
121

 
$
1,299

 
$
109,872

 
 
 
 
 
 
 
 
 
 
 
LIABILITIES AND EQUITY
 
 
 
 
 
 
 
 
 
 
Income taxes payable
 
$
1,004

 
$

 
$

 
$
11

(3) 
$
1,015

Deferred revenue — current
 
$
11,490

 
$
(1,702
)
(5) 
$

 
$

 
$
9,788

Other current liabilities
 
$
4,413

 
$
33

(6) 
$

 
$

 
$
4,446

Deferred revenue — non-current
 
$
8,195

 
$
(1,081
)
(5) 
$

 
$

 
$
7,114

Other long-term liabilities
 
$
1,434

 
$
85

(3) 
$
13

(3) 
$

 
$
1,532

Retained earnings
 
$
1,233

 
$
2,333

(10) 
$
283

(10) 
$
1,281

(10) 
$
5,130

Accumulated other comprehensive income (loss)
 
$
(849
)
 
$

 
$
(175
)
(9) 
$
7

(3) 
$
(1,017
)
 
 
 
 
 
 
 
 
 
 
 
TOTAL LIABILITIES AND EQUITY
 
$
108,784

 
$
(332
)
 
$
121

 
$
1,299

 
$
109,872

(1) Primarily represents the decrease to accounts receivable related to the change in recognizing revenue on sales to two-tier distributors from a sell-through to a sell-in basis
(2) Primarily represents the reduction of inventory for the change from recognizing revenue on sales to two-tier distributors from a sell-through to a sell-in basis
(3) Includes the impacts to deferred tax assets, liabilities and other income tax balances
(4) Primarily represents capitalized contract acquisition costs (e.g. commissions)
(5) Primarily represents deferred revenue adjusted to retained earnings primarily due to the change in revenue recognition for certain software arrangements from ratable to upfront, recognizing revenue on sales to two-tier distributors from a sell-through to a sell-in basis. Of this total $2.8 billion adjustment, $2.6 billion related to product deferred revenue, of which $1.3 billion relates to our recurring software and subscription offers, $0.6 billion relates to two-tier distribution, and the remainder relates to non-recurring software and other adjustments.
(6) Primarily represents the reclassification of accounts receivable contra balances to other current liabilities, adjustments to rebate liabilities for the change from recognizing revenue on sales to two-tier distributors from a sell-through to a sell-in basis, and reclassifications from other current liabilities for amounts that are not contract liabilities under ASC 606
(7) Represents the adjustment due to the remeasurement of non-marketable equity investments at fair value
(8) Primarily represents the change in net deferred tax assets related to unrecognized income tax effects of intra-entity asset transfers
(9) Represents the reclassification of net unrealized gains from accumulated other comprehensive income (loss) to retained earnings
(10) Retained earnings impact from the adjustments noted above
Impact of ASC 606 Adoption
The application of ASC 606 increased our total revenue by $276 million in the first quarter of fiscal 2019. The application of ASC 606 did not have a material impact to either our cost of sales or our operating expenses in the first quarter of fiscal 2019. We recognized a $152 million benefit to our provision for income taxes relating to indirect effects from the adoption of ASC 606 in the first quarter of fiscal 2019. For additional information regarding ASC 606, see Note 3 to the Consolidated Financial Statements.
In connection with the adoption of ASC 606, we recorded a transition adjustment to increase retained earnings by $2.3 billion. See above for the transition impact of ASC 606 by balance sheet line item. As of October 27, 2018, the balance sheet changes attributable to ASC 606 related to accounts receivable, inventories, and deferred revenue were not materially different than the impacts upon adoption. In connection with the adoption of ASC 606, we established contract assets for unbilled receivables. As of October 27, 2018, we had total contract assets of $447 million of which, $270 million was recorded in other current assets and $177 million was recorded in other assets. As of October 27, 2018, we had total capitalized contract acquisition costs of $673 million, of which $380 million was recorded in other current assets and $293 million was recorded in other assets. The adoption of ASC 606 did not have any impact on net cash provided by operating activities.
(b)
Recent Accounting Standards or Updates Not Yet Effective
Leases In February 2016, the FASB issued an accounting standard update and subsequent amendments related to leases requiring lessees to recognize operating and financing lease liabilities on the balance sheet, as well as corresponding right-of-use assets. The new lease standard also makes some changes to lessor accounting and aligns key aspects of the lessor accounting model with the revenue recognition standard. In addition, disclosures will be required to enable users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. The accounting standard update will be effective for us beginning in the first quarter of fiscal 2020 and early adoption is permitted. We expect to adopt this accounting standard update on a modified retrospective basis in the first quarter of fiscal 2020, and we are currently evaluating the impact of this accounting standard update on our Consolidated Financial Statements.
Credit Losses of Financial Instruments In June 2016, the FASB issued an accounting standard update that requires measurement and recognition of expected credit losses for financial assets held based on historical experience, current conditions, and reasonable and supportable forecasts that affect the collectibility of the reported amount. The accounting standard update will be effective for us beginning in the first quarter of fiscal 2021 and early adoption in fiscal 2020 is permitted. We expect to adopt this accounting standard update on a modified retrospective basis in the first quarter of fiscal 2021, and we are currently evaluating the impact of this accounting standard update on our Consolidated Financial Statements.
Financing Receivables and Operating Leases
Financing receivables primarily consist of lease receivables, loan receivables, and financed service contracts. Lease receivables represent sales-type and direct-financing leases resulting from the sale of Cisco’s and complementary third-party products and are typically collateralized by a security interest in the underlying assets. Lease receivables consist of arrangements with terms of four years on average. Loan receivables represent financing arrangements related to the sale of our hardware, software, and services, which may include additional funding for other costs associated with network installation and integration of our products and services. Loan receivables generally have terms of up to three years. Financed service contracts include financing receivables related to technical support and advanced services. Revenue related to the technical support services is typically deferred and included in deferred service revenue and is recognized ratably over the period during which the related services are to be performed, which typically ranges from one to three years.
Impairment of Financing Receivable
We assess the allowance for credit loss related to financing receivables on either an individual or a collective basis. We consider various factors in evaluating lease and loan receivables and the earned portion of financed service contracts for possible impairment on an individual basis. These factors include our historical experience, credit quality and age of the receivable balances, and economic conditions that may affect a customer’s ability to pay. When the evaluation indicates that it is probable that all amounts due pursuant to the contractual terms of the financing agreement, including scheduled interest payments, are unable to be collected, the financing receivable is considered impaired. All such outstanding amounts, including any accrued interest, will be assessed and fully reserved at the customer level. Our internal credit risk ratings are categorized as 1 through 10, with the lowest credit risk rating representing the highest quality financing receivables.
Typically, we also consider receivables with a risk rating of 8 or higher to be impaired and will include them in the individual assessment for allowance. These balances, as of October 27, 2018 and July 28, 2018, are presented under “(b) Credit Quality of Financing Receivables” above.
We evaluate the remainder of our financing receivables portfolio for impairment on a collective basis and record an allowance for credit loss at the portfolio segment level. When evaluating the financing receivables on a collective basis, we use expected default frequency rates published by a major third-party credit-rating agency as well as our own historical loss rate in the event of default, while also systematically giving effect to economic conditions, concentration of risk, and correlation.
Fair Value Measurement
Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be either recorded or disclosed at fair value, we consider the principal or most advantageous market in which we would transact, and we also consider assumptions that market participants would use when pricing the asset or liability.
(a)
Fair Value Hierarchy
The accounting guidance for fair value measurement requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is as follows:
Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.
Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability, such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.
Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.
Fair Value of Financial Instruments
Level 1 marketable equity securities are determined by using quoted prices in active markets for identical assets. Level 2 available-for-sale debt investments are priced using quoted market prices for similar instruments or nonbinding market prices that are corroborated by observable market data. We use inputs such as actual trade data, benchmark yields, broker/dealer quotes, and other similar data, which are obtained from quoted market prices, independent pricing vendors, or other sources, to determine the ultimate fair value of these assets and liabilities. We use such pricing data as the primary input to make our assessments and determinations as to the ultimate valuation of our investment portfolio and have not made, during the periods presented, any material adjustments to such inputs. We are ultimately responsible for the financial statements and underlying estimates. Our derivative instruments are primarily classified as Level 2, as they are not actively traded and are valued using pricing models that use observable market inputs. We did not have any transfers between Level 1 and Level 2 fair value measurements during the periods presented.
These assets were measured at fair value due to events or circumstances we identified as having significant impact on their fair value during the respective periods. The carrying value of our non-marketable equity securities recorded to fair value on a non-recurring basis is adjusted for observable transactions for identical or similar investments of the same issuer or impairment. These securities are classified as Level 3 in the fair value hierarchy because we estimate the value based on valuation methods using the observable transaction price at the transaction date and other unobservable inputs such as volatility, rights, and obligations of the securities we hold.
Derivatives
We use derivative instruments primarily to manage exposures to foreign currency exchange rate, interest rate, and equity price risks. Our 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. Our derivatives expose us to credit risk to the extent that the counterparties may be unable to meet the terms of the agreement. We do, however, seek to mitigate such risks by limiting our 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.
Offsetting of Derivative Instruments
We present our derivative instruments at gross fair values in the Consolidated Balance Sheets. However, our master netting and other similar arrangements with the respective counterparties allow for net settlement under certain conditions, which are designed to reduce credit risk by permitting net settlement with the same counterparty. To further limit credit risk, we also enter into collateral security arrangements related to certain derivative instruments whereby cash is posted as collateral between the counterparties based on the fair market value of the derivative instrument.
Hedging Derivatives
We conduct business globally in numerous currencies. Therefore, we are exposed to adverse movements in foreign currency exchange rates. To limit the exposure related to foreign currency changes, we enter into foreign currency contracts. We do not enter into such contracts for speculative purposes.
We hedge forecasted foreign currency transactions related to certain revenues, operating expenses and service cost of sales with currency options and forward contracts. These currency options and forward contracts, designated as cash flow hedges, generally have maturities of less than 24 months. We assess effectiveness based on changes in total fair value of the derivatives. The effective portion of the derivative instrument’s gain or loss is initially reported as a component of AOCI and subsequently reclassified into earnings when the hedged exposure affects earnings. The ineffective portion, if any, of the gain or loss is reported in earnings immediately. During the periods presented, we did not discontinue any cash flow hedges for which it was probable that a forecasted transaction would not occur.
We enter into foreign exchange forward and option contracts to reduce the short-term effects of foreign currency fluctuations on assets and liabilities such as foreign currency receivables, including long-term customer financings, investments, and payables. These derivatives are not designated as hedging instruments. Gains and losses on the contracts are included in other income (loss), net, and substantially offset foreign exchange gains and losses from the remeasurement of intercompany balances or other current assets, investments, or liabilities denominated in currencies other than the functional currency of the reporting entity.
We hedge certain net investments in our foreign operations with forward contracts to reduce the effects of foreign currency fluctuations on our net investment in those foreign subsidiaries. These derivative instruments generally have maturities of up to six months.
(d)
Interest Rate Risk
Interest Rate Derivatives, Investments   Our primary objective for holding available-for-sale debt investments is to achieve an appropriate investment return consistent with preserving principal and managing risk. To realize these objectives, we may utilize interest rate swaps or other derivatives designated as fair value or cash flow hedges. As of October 27, 2018 and July 28, 2018, we did not have any outstanding interest rate derivatives related to our available-for-sale debt investments.
Interest Rate Derivatives Designated as Fair Value Hedges, Long-Term Debt In the first quarter of fiscal 2019, we did not enter into any interest rate swaps. In prior fiscal years, we entered into interest rate swaps designated as fair value hedges related to fixed-rate senior notes that are due in fiscal 2019 through 2025. Under these interest rate swaps, we receive fixed-rate interest payments and make interest payments based on LIBOR plus a fixed number of basis points. The effect of such swaps is to convert the fixed interest rates of the senior fixed-rate notes to floating interest rates based on LIBOR. The gains and losses related to changes in the fair value of the interest rate swaps are included in interest expense and substantially offset changes in the fair value of the hedged portion of the underlying debt that are attributable to the changes in market interest rates. The fair value of the interest rate swaps was reflected in other current liabilities and other long-term liabilities.
(e)
Equity Price Risk
We may hold equity securities for strategic purposes or to diversify our overall investment portfolio. The marketable equity securities in our portfolio are subject to price risk. To manage our exposure to changes in the fair value of certain equity securities, we have periodically entered into equity derivatives that are designated as fair value hedges. The changes in the value of the hedging instruments are included in other income (loss), net, and offset the change in the fair value of the underlying hedged investment.
Derivatives Not Designated as Hedges
In addition, we periodically enter into equity derivatives that are not designated as accounting hedges. The changes in the fair value of these derivatives are also included in other income (loss), net.
We are also exposed to variability in compensation charges related to certain deferred compensation obligations to employees. Although not designated as accounting hedges, we utilize derivatives such as total return swaps to economically hedge this exposure.
Hedge Effectiveness
For the periods presented, amounts excluded from the assessment of hedge effectiveness were not material for fair value, cash flow, and net investment hedges. In addition, hedge ineffectiveness for fair value, cash flow, and net investment hedges was not material for any of the periods presented.
Commitments and Contingencies
We record a liability for firm, noncancelable, and unconditional purchase commitments for quantities in excess of our future demand forecasts consistent with the valuation of our excess and obsolete inventory.
We purchase components from a variety of suppliers and use several contract manufacturers to provide manufacturing services for our products. During the normal course of business, in order to manage manufacturing lead times and help ensure adequate component supply, we enter into agreements with contract manufacturers and suppliers that either allow them to procure inventory based upon criteria as defined by us or establish the parameters defining our requirements. A significant portion of our reported purchase commitments arising from these agreements consists of firm, noncancelable, and unconditional commitments. Certain of these purchase commitments with contract manufacturers and suppliers relate to arrangements to secure long-term pricing for certain product components for multi-year periods. In certain instances, these agreements allow us the option to cancel, reschedule, and adjust our requirements based on our business needs prior to firm orders being placed.
Indemnifications
In the normal course of business, we indemnify other parties, including customers, lessors, and parties to other transactions with us, with respect to certain matters. We have agreed to indemnify against losses arising from a breach of representations or covenants or out of intellectual property infringement or other claims made against certain parties. These agreements may limit the time within which an indemnification claim can be made and the amount of the claim.
Segment Information
We conduct business globally and are primarily managed on a geographic basis consisting of three segments: the Americas, EMEA, and APJC. Our management makes financial decisions and allocates resources based on the information it receives from our internal management system. Sales are attributed to a segment based on the ordering location of the customer. We do not allocate research and development, sales and marketing, or general and administrative expenses to our segments in this internal management system because management does not include the information in our measurement of the performance of the operating segments. In addition, we do not allocate amortization and impairment of acquisition-related intangible assets, share-based compensation expense, significant litigation settlements and other contingencies, charges related to asset impairments and restructurings, and certain other charges to the gross margin for each segment because management does not include this information in our measurement of the performance of the operating segments.
Net Income per Share
Employee equity share options, unvested shares, and similar equity instruments granted and assumed by Cisco are treated as potential common shares outstanding in computing diluted earnings per share. Diluted shares outstanding include the dilutive effect of in-the-money options, unvested restricted stock, and restricted stock units. The dilutive effect of such equity awards is calculated based on the average share price for each fiscal period using the treasury stock method. Under the treasury stock method, the amount the employee must pay for exercising stock options and the amount of compensation cost for future service that has not yet recognized are collectively assumed to be used to repurchase shares.

v3.10.0.1
Recent Accounting Pronouncements (Tables)
3 Months Ended
Oct. 27, 2018
Accounting Policies [Abstract]  
Summary of New Accounting Pronouncements
The following table summarizes the cumulative effect of the changes made to the Consolidated Balance Sheet for the adoption of ASC 606, ASU 2016-01, Financial Instruments, and ASU 2016-16, Intra-Entity Transfers of Assets Other than Inventory (in millions):
Line Item in Consolidated Balance Sheet:
 
Balance at July 28, 2018
 
New Revenue Recognition Standard
 
New Financial Instruments Standard
 
New Intra-Entity Transfers Standard
 
Adjusted Balance at July 29, 2018
ASSETS
 
 
 
 
 
 
 
 
 
 
Accounts receivable, net
 
$
5,554

 
$
(104
)
(1) 
$

 
$

 
$
5,450

Inventories
 
$
1,846

 
$
(302
)
(2) 
$

 
$

 
$
1,544

Other current assets (includes capitalized contract acquisition costs)
 
$
2,940

 
$
371

(3), (4) 
$

 
$
(25
)
(3) 
$
3,286

Deferred tax assets
 
$
3,219

 
$
(624
)
(3) 
$
(15
)
(3) 
$
1,415

(8) 
$
3,995

Other assets (includes capitalized contract acquisition costs)
 
$
1,582

 
$
327

(4) 
$
136

(7) 
$
(91
)
(3) 
$
1,954

 
 
 
 
 
 
 
 
 
 
 
TOTAL ASSETS
 
$
108,784

 
$
(332
)
 
$
121

 
$
1,299

 
$
109,872

 
 
 
 
 
 
 
 
 
 
 
LIABILITIES AND EQUITY
 
 
 
 
 
 
 
 
 
 
Income taxes payable
 
$
1,004

 
$

 
$

 
$
11

(3) 
$
1,015

Deferred revenue — current
 
$
11,490

 
$
(1,702
)
(5) 
$

 
$

 
$
9,788

Other current liabilities
 
$
4,413

 
$
33

(6) 
$

 
$

 
$
4,446

Deferred revenue — non-current
 
$
8,195

 
$
(1,081
)
(5) 
$

 
$

 
$
7,114

Other long-term liabilities
 
$
1,434

 
$
85

(3) 
$
13

(3) 
$

 
$
1,532

Retained earnings
 
$
1,233

 
$
2,333

(10) 
$
283

(10) 
$
1,281

(10) 
$
5,130

Accumulated other comprehensive income (loss)
 
$
(849
)
 
$

 
$
(175
)
(9) 
$
7

(3) 
$
(1,017
)
 
 
 
 
 
 
 
 
 
 
 
TOTAL LIABILITIES AND EQUITY
 
$
108,784

 
$
(332
)
 
$
121

 
$
1,299

 
$
109,872

(1) Primarily represents the decrease to accounts receivable related to the change in recognizing revenue on sales to two-tier distributors from a sell-through to a sell-in basis
(2) Primarily represents the reduction of inventory for the change from recognizing revenue on sales to two-tier distributors from a sell-through to a sell-in basis
(3) Includes the impacts to deferred tax assets, liabilities and other income tax balances
(4) Primarily represents capitalized contract acquisition costs (e.g. commissions)
(5) Primarily represents deferred revenue adjusted to retained earnings primarily due to the change in revenue recognition for certain software arrangements from ratable to upfront, recognizing revenue on sales to two-tier distributors from a sell-through to a sell-in basis. Of this total $2.8 billion adjustment, $2.6 billion related to product deferred revenue, of which $1.3 billion relates to our recurring software and subscription offers, $0.6 billion relates to two-tier distribution, and the remainder relates to non-recurring software and other adjustments.
(6) Primarily represents the reclassification of accounts receivable contra balances to other current liabilities, adjustments to rebate liabilities for the change from recognizing revenue on sales to two-tier distributors from a sell-through to a sell-in basis, and reclassifications from other current liabilities for amounts that are not contract liabilities under ASC 606
(7) Represents the adjustment due to the remeasurement of non-marketable equity investments at fair value
(8) Primarily represents the change in net deferred tax assets related to unrecognized income tax effects of intra-entity asset transfers
(9) Represents the reclassification of net unrealized gains from accumulated other comprehensive income (loss) to retained earnings
(10) Retained earnings impact from the adjustments noted above
The table below details the timing of when revenue was typically recognized under the prior revenue standard compared to the timing of when revenue is typically recognized under ASC 606 for these major areas:
 
 
Prior Revenue Standard
 
ASC 606
Software arrangements:
 
 
 
 
Perpetual software licenses
 
Upfront
 
Upfront
Term software licenses
 
Ratable
 
Upfront
Security software licenses
 
Ratable
 
Ratable
Enterprise license agreements (software licenses)
 
Ratable
 
Upfront
Software support (maintenance)
 
Ratable
 
Ratable
Software-as-a-service
 
Ratable
 
Ratable
Two-tier distribution
 
Sell-Through
 
Sell-In
v3.10.0.1
Revenue (Tables)
3 Months Ended
Oct. 27, 2018
Revenue from Contract with Customer [Abstract]  
Disaggregation of Revenue
The following table presents this disaggregation of revenue (in millions):
 
Three Months Ended
 
October 27,
2018
 
October 28,
2017
Revenue:
 
 
 
Infrastructure Platforms
$
7,642

 
$
6,980

Applications
1,419

 
1,203

Security
651

 
585

Other Products
178

 
286

Total Product
9,890

 
9,054

Services
3,182

 
3,082

Total
$
13,072

 
$
12,136

v3.10.0.1
Acquisitions and Divestitures (Tables)
3 Months Ended
Oct. 27, 2018
Business Combinations [Abstract]  
Schedule of Business Acquisitions, by Acquisition
A summary of the allocation of the total purchase consideration is presented as follows (in millions):
 
Purchase Consideration
 
Net Tangible Assets Acquired (Liabilities Assumed)
 
Purchased Intangible Assets
 
Goodwill
Duo
$
2,025

 
$
(57
)
 
$
342

 
$
1,740

Other (one acquisition)
34

 
3

 
8

 
23

Total
$
2,059

 
$
(54
)
 
$
350

 
$
1,763

v3.10.0.1
Goodwill and Purchased Intangible Assets (Tables)
3 Months Ended
Oct. 27, 2018
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill by Reportable Segment
The following table presents the goodwill allocated to our reportable segments as of October 27, 2018 and during the first quarter of fiscal 2019 (in millions):
 
Balance at
 
 
 
 
 
Balance at
 
July 28, 2018
 
Acquisitions
 
Other
 
October 27, 2018
Americas
$
19,998

 
$
1,073

 
$
(53
)
 
$
21,018

EMEA
7,529

 
491

 
(19
)
 
8,001

APJC
4,179

 
199

 
(11
)
 
4,367

Total
$
31,706

 
$
1,763

 
$
(83
)
 
$
33,386

Schedule of Intangible Assets Acquired Through Business Combinations
The following table presents details of our intangible assets acquired through acquisitions completed during the first quarter of fiscal 2019 (in millions, except years):
 
FINITE LIVES
 
INDEFINITE LIVES
 
TOTAL
 
TECHNOLOGY
 
CUSTOMER
RELATIONSHIPS
 
OTHER
 
IPR&D
 
 
Weighted-
Average Useful
Life (in Years)
 
Amount
 
Weighted-
Average Useful
Life (in Years)
 
Amount
 
Weighted-
Average Useful
Life (in Years)
 
Amount
 
Amount
 
Amount
Duo
5.0
 
$
153

 
5.0

 
$
94

 
2.5

 
$
18

 
$
77

 
$
342

Others (one in total)
5.0
 
8

 

 

 

 

 

 
8

Total
 
 
$
161

 
 
 
$
94

 
 
 
$
18

 
$
77

 
$
350

Schedule of Purchased Intangible Assets
The following tables present details of our purchased intangible assets (in millions): 
October 27, 2018
 
Gross
 
Accumulated Amortization
 
Net
Purchased intangible assets with finite lives:
 
 
 
 
 
 
Technology
 
$
3,847

 
$
(2,013
)
 
$
1,834

Customer relationships
 
1,629

 
(965
)
 
664

Other
 
80

 
(42
)
 
38

Total purchased intangible assets with finite lives
 
5,556

 
(3,020
)
 
2,536

In-process research and development, with indefinite lives
 
180

 

 
180

       Total
 
$
5,736

 
$
(3,020
)
 
$
2,716

 
July 28, 2018
 
Gross
 
Accumulated Amortization
 
Net
Purchased intangible assets with finite lives:
 
 
 
 
 
 
Technology
 
$
3,711

 
$
(1,888
)
 
$
1,823

Customer relationships
 
1,538

 
(937
)
 
601

Other
 
63

 
(38
)
 
25

Total purchased intangible assets with finite lives
 
5,312

 
(2,863
)
 
2,449

In-process research and development, with indefinite lives
 
103

 

 
103

       Total
 
$
5,415

 
$
(2,863
)
 
$
2,552

Schedule of Amortization of Purchased Intangible Assets
The following table presents the amortization of purchased intangible assets, including impairment charges (in millions):
 
Three Months Ended
 
October 27, 2018
 
October 28, 2017
Amortization of purchased intangible assets:
 
 
 
Cost of sales
$
151

 
$
154

Operating expenses
34

 
61

Total
$
185

 
$
215

Schedule of Estimated Future Amortization Expense of Purchased Intangible Assets
The estimated future amortization expense of purchased intangible assets with finite lives as of October 27, 2018 is as follows (in millions):
Fiscal Year
Amount
2019 (remaining nine months)
$
577

2020
$
726

2021
$
530

2022
$
274

2023
$
133

Thereafter
$
45

v3.10.0.1
Restructuring and Other Charges (Tables)
3 Months Ended
Oct. 27, 2018
Restructuring Charges [Abstract]  
Liabilities Related to Restructuring and Other Charges
The following tables summarize the activities related to the restructuring and other charges (in millions):
 
 
FISCAL 2017 AND PRIOR PLANS
 
FISCAL 2018 PLAN
 
 
 
 
Employee Severance
 
Other
 
Employee
Severance
 
Other
 
Total
Liability as of July 28, 2018
 
$
41

 
$
13

 
$
19

 
$

 
$
73

Charges
 

 

 
54

 
24

 
78

Cash payments
 
(10
)
 
(1
)
 
(52
)
 
(1
)
 
(64
)
Non-cash items
 

 

 

 
(23
)
 
(23
)
Liability as of October 27, 2018
 
$
31

 
$
12

 
$
21

 
$

 
$
64

 
 
FISCAL 2017 AND PRIOR PLANS
 
 
 
 
Employee
Severance
 
Other
 
Total
Liability as of July 29, 2017
 
$
74

 
$
43

 
$
117

Charges
 
145

 
7

 
152

Cash payments
 
(79
)
 
(16
)
 
(95
)
Non-cash items
 

 
(6
)
 
(6
)
Liability as of October 28, 2017
 
$
140

 
$
28

 
$
168

v3.10.0.1
Balance Sheet Details (Tables)
3 Months Ended
Oct. 27, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Total Cash, Cash Equivalents, and Restricted Cash
The following tables provide details of selected balance sheet items (in millions):
 
 
October 27,
2018
 
July 28,
2018
Cash and cash equivalents
 
$
8,410

 
$
8,934

Restricted cash included in other current assets
 
32

 
32

Restricted cash included in other assets
 
44

 
27

Total cash, cash equivalents, and restricted cash
 
$
8,486

 
$
8,993

Inventories
The following tables provide details of selected balance sheet items (in millions):
 
 
October 27,
2018
 
July 28,
2018
Cash and cash equivalents
 
$
8,410

 
$
8,934

Restricted cash included in other current assets
 
32

 
32

Restricted cash included in other assets
 
44

 
27

Total cash, cash equivalents, and restricted cash
 
$
8,486

 
$
8,993


Inventories:
 
 
 
 
Raw materials
 
$
421

 
$
423

Work in Process
 

 

Finished goods:
 
 
 
 
Deferred cost of sales and distributor inventory
 
116

 
443

Manufactured finished goods
 
758

 
689

Total finished goods
 
874

 
1,132

Service-related spares
 
248

 
258

Demonstration systems
 
29

 
33

Total
 
$
1,572

 
$
1,846

Property and Equipment, Net
Property and equipment, net:
 
 
 
 
Gross property and equipment:
 
 
 
 
Land, buildings, and building and leasehold improvements
 
$
4,707

 
$
4,710

Computer equipment and related software
 
1,037

 
1,085

Production, engineering, and other equipment
 
5,712

 
5,734

Operating lease assets
 
475

 
356

Furniture and fixtures
 
363

 
358

Total gross property and equipment
 
12,294

 
12,243

Less: accumulated depreciation and amortization
 
(9,338
)
 
(9,237
)
Total
 
$
2,956

 
$
3,006

Deferred Revenue
Deferred revenue:
 
 
 
 
Service
 
$
11,062

 
$
11,431

Product
 
5,752

 
8,254

Total
 
$
16,814

 
$
19,685

Reported as:
 

 
 
Current
 
$
9,637

 
$
11,490

Noncurrent
 
7,177

 
8,195

Total
 
$
16,814

 
$
19,685

v3.10.0.1
Financing Receivables and Operating Leases (Tables)
3 Months Ended
Oct. 27, 2018
Receivables [Abstract]  
Financing Receivables
A summary of our financing receivables is presented as follows (in millions):
October 27, 2018
Lease
Receivables
 
Loan
Receivables
 
Financed Service
Contracts
 
Total
Gross
$
2,511

 
$
4,924

 
$
2,240

 
$
9,675

Residual value
159

 

 

 
159

Unearned income
(140
)
 

 

 
(140
)
Allowance for credit loss
(131
)
 
(60
)
 
(8
)
 
(199
)
Total, net
$
2,399

 
$
4,864

 
$
2,232

 
$
9,495

Reported as:
 
 
 
 
 
 
 
Current
$
1,143

 
$
2,422

 
$
1,286

 
$
4,851

Noncurrent
1,256

 
2,442

 
946

 
4,644

Total, net
$
2,399

 
$
4,864

 
$
2,232

 
$
9,495

July 28, 2018
Lease
Receivables
 
Loan
Receivables
 
Financed Service
Contracts
 
Total
Gross
$
2,688

 
$
4,999

 
$
2,326

 
$
10,013

Residual value
164

 

 

 
164

Unearned income
(141
)
 

 

 
(141
)
Allowance for credit loss
(135
)
 
(60
)
 
(10
)
 
(205
)
Total, net
$
2,576

 
$
4,939

 
$
2,316

 
$
9,831

Reported as:
 
 
 
 
 
 
 
Current
$
1,249

 
$
2,376

 
$
1,324

 
$
4,949

Noncurrent
1,327

 
2,563

 
992

 
4,882

Total, net
$
2,576

 
$
4,939

 
$
2,316

 
$
9,831

Contractual Maturities of the Gross Lease Receivables
Future minimum lease payments to Cisco on lease receivables as of October 27, 2018 are summarized as follows (in millions):
Fiscal Year
Amount
2019 (remaining nine months)
$
1,105

2020
614

2021
478

2022
231

2023
78

Thereafter
5

Total
$
2,511

Schedule of Internal Credit Risk Rating for Each Portfolio Segment and Class
Gross receivables, excluding residual value, less unearned income categorized by our internal credit risk rating as of October 27, 2018 and July 28, 2018 are summarized as follows (in millions):
 
INTERNAL CREDIT RISK RATING
October 27, 2018
1 to 4
 
5 to 6
 
7 and Higher
 
Total
Lease receivables
$
1,238

 
$
1,084

 
$
49

 
$
2,371

Loan receivables
3,122

 
1,744

 
58

 
4,924

Financed service contracts
1,454

 
768

 
18

 
2,240

Total
$
5,814

 
$
3,596

 
$
125

 
$
9,535

 
INTERNAL CREDIT RISK RATING
July 28, 2018
1 to 4
 
5 to 6
 
7 and Higher
 
Total
Lease receivables
$
1,294

 
$
1,199

 
$
54

 
$
2,547

Loan receivables
3,184

 
1,752

 
63

 
4,999

Financed service contracts
1,468

 
835

 
23

 
2,326

Total
$
5,946

 
$
3,786

 
$
140

 
$
9,872

Schedule of Financing Receivables by Portfolio Segment and Class Aging Analysis
The following tables present the aging analysis of gross receivables, excluding residual value and less unearned income as of October 27, 2018 and July 28, 2018 (in millions):
 
DAYS PAST DUE
(INCLUDES BILLED AND UNBILLED)
 
 
 
 
 
 
 
 
October 27, 2018
31-60
 
61-90 
 
91+
 
Total
Past Due
 
Current
 
Total
 
Nonaccrual
Financing
Receivables
 
Impaired
Financing
Receivables
Lease receivables
$
79

 
$
27

 
$
121

 
$
227

 
$
2,144

 
$
2,371

 
$
5

 
$
5

Loan receivables
123

 
85

 
348

 
556

 
4,368

 
4,924

 
29

 
29

Financed service contracts
102

 
147

 
262

 
511

 
1,729

 
2,240

 
3

 
3

Total
$
304

 
$
259

 
$
731

 
$
1,294

 
$
8,241

 
$
9,535

 
$
37

 
$
37

 
DAYS PAST DUE
(INCLUDES BILLED AND UNBILLED)
 
 
 
 
 
 
 
 
July 28, 2018
31-60
 
61-90 
 
91+
 
Total
Past Due
 
Current
 
Total
 
Nonaccrual
Financing
Receivables
 
Impaired
Financing
Receivables
Lease receivables
$
72

 
$
27

 
$
155

 
$
254

 
$
2,293

 
$
2,547

 
$
9

 
$
9

Loan receivables
104

 
55

 
252

 
411

 
4,588

 
4,999

 
30

 
30

Financed service contracts
138

 
78

 
304

 
520

 
1,806

 
2,326

 
3

 
3

Total
$
314

 
$
160

 
$
711

 
$
1,185

 
$
8,687

 
$
9,872

 
$
42

 
$
42

Allowance for Credit Loss and Related Financing Receivables
The allowances for credit loss and the related financing receivables are summarized as follows (in millions):
Three months ended October 27, 2018
CREDIT LOSS ALLOWANCES
 
Lease
Receivables
 
Loan
Receivables
 
Financed Service
Contracts
 
Total
Allowance for credit loss as of July 28, 2018
$
135

 
$
60

 
$
10

 
$
205

Provisions (benefits)
(3
)
 

 
(2
)
 
(5
)
Foreign exchange and other
(1
)
 

 

 
(1
)
Allowance for credit loss as of October 27, 2018
$
131

 
$
60

 
$
8

 
$
199

Three months ended October 28, 2017
CREDIT LOSS ALLOWANCES
 
Lease
Receivables
 
Loan
Receivables
 
Financed Service
Contracts
 
Total
Allowance for credit loss as of July 29, 2017
$
162

 
$
103

 
$
30

 
$
295

Provisions
(2
)
 
2

 
(6
)
 
(6
)
Foreign exchange and other

 
1

 
(1
)
 

Allowance for credit loss as of October 28, 2017
$
160

 
$
106

 
$
23

 
$
289


Schedule of Property Subject to or Available for Operating Lease
Amounts relating to equipment on operating lease assets and the associated accumulated depreciation are summarized as follows (in millions):
 
October 27, 2018
 
July 28, 2018
Operating lease assets
$
475

 
$
356

Accumulated depreciation
(333
)
 
(238
)
Operating lease assets, net
$
142

 
$
118

Schedule of Future Minimum Rental Payments for Operating Leases
Minimum future rentals on noncancelable operating leases as of October 27, 2018 are summarized as follows (in millions):
Fiscal Year
Amount
2019 (remaining nine months)
$
125

2020
108

2021
44

2022
3

Thereafter
1

Total
$
281

v3.10.0.1
Available-for-Sale Debt Investments and Equity Investments (Tables)
3 Months Ended
Oct. 27, 2018
Investments, Debt and Equity Securities [Abstract]  
Summary of Available-for-sale Debt Investments and Equity Investments
The following table summarizes our available-for-sale debt investments and equity investments (in millions):
 
October 27, 2018
 
July 28, 2018
Available-for-sale debt investments
$
34,183

 
$
37,009

Marketable equity securities

 
605

Total investments
34,183

 
37,614

Non-marketable equity securities included in other assets
1,125

 
978

Equity method investments included in other assets
115

 
118

Total
$
35,423

 
$
38,710

Summary of Available-for-Sale Investments
The following tables summarize our available-for-sale debt investments (in millions):
October 27, 2018
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair
Value
U.S. government securities
$
5,783

 
$

 
$
(29
)
 
$
5,754

U.S. government agency securities
434

 

 
(4
)
 
430

Non-U.S. government and agency securities
153

 

 

 
153

Corporate debt securities
26,444

 
33

 
(446
)
 
26,031

U.S. agency mortgage-backed securities
1,481

 

 
(60
)
 
1,421

Commercial paper
309

 

 

 
309

Certificates of deposit
85

 

 

 
85

Total (1)
$
34,689

 
$
33

 
$
(539
)
 
$
34,183


July 28, 2018
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair
Value
U.S. government securities
$
7,318

 
$

 
$
(43
)
 
$
7,275

U.S. government agency securities
732

 

 
(5
)
 
727

Non-U.S. government and agency securities
209

 

 
(1
)
 
208

Corporate debt securities
27,765

 
44

 
(445
)
 
27,364

U.S. agency mortgage-backed securities
1,488

 

 
(53
)
 
1,435

Total (1)
$
37,512

 
$
44

 
$
(547
)
 
$
37,009

(1) Net unsettled investment purchases were $1 million and net unsettled investment sales were $1.5 billion as of October 27, 2018 and July 28, 2018, respectively and were included in other current assets and other current liabilities.
Gross Realized Gains and Gross Realized Losses Related to Available-for-Sale Investment
The following table presents the gross realized gains and gross realized losses related to available-for-sale debt investments (in millions):
 
Three Months Ended
 
October 27, 2018
 
October 28, 2017
Gross realized gains
$
2

 
$
8

Gross realized losses
(8
)
 
(4
)
Total
$
(6
)
 
$
4

Available-for-Sale Investments with Gross Unrealized Losses
The following tables present the breakdown of the available-for-sale debt investments with gross unrealized losses and the duration that those losses had been unrealized at October 27, 2018 and July 28, 2018 (in millions):
 
UNREALIZED LOSSES
LESS THAN 12 MONTHS
 
UNREALIZED LOSSES
12 MONTHS OR GREATER
 
TOTAL
October 27, 2018
Fair Value
 
Gross
Unrealized
Losses
 
Fair Value
 
Gross
Unrealized
Losses
 
Fair Value
 
Gross 
Unrealized 
Losses
U.S. government securities 
$
516

 
$
(3
)
 
$
5,231

 
$
(26
)
 
$
5,747

 
$
(29
)
U.S. government agency securities
4

 

 
427

 
(4
)
 
431

 
(4
)
Non-U.S. government and agency securities

 

 
153

 

 
153

 

Corporate debt securities
13,483

 
(257
)
 
6,738

 
(189
)
 
20,221

 
(446
)
U.S. agency mortgage-backed securities
456

 
(12
)
 
947

 
(48
)
 
1,403

 
(60
)
Total
$
14,459

 
$
(272
)
 
$
13,496

 
$
(267
)
 
$
27,955

 
$
(539
)
 
UNREALIZED LOSSES
LESS THAN 12 MONTHS
 
UNREALIZED LOSSES
12 MONTHS OR GREATER
 
TOTAL
July 28, 2018
Fair Value
 
Gross
Unrealized
Losses
 
Fair Value
 
Gross
Unrealized
Losses
 
Fair Value
 
Gross 
Unrealized 
Losses
U.S. government securities 
$
2,966

 
$
(20
)
 
$
4,303

 
$
(23
)
 
$
7,269

 
$
(43
)
U.S. government agency securities
206

 
(2
)
 
521

 
(3
)
 
727

 
(5
)
Non-U.S. government and agency securities
105

 
(1
)
 
103

 

 
208

 
(1
)
Corporate debt securities
16,990

 
(344
)
 
3,511

 
(101
)
 
20,501

 
(445
)
U.S. agency mortgage-backed securities
826

 
(24
)
 
581

 
(29
)
 
1,407

 
(53
)
Total
$
21,093

 
$
(391
)
 
$
9,019

 
$
(156
)
 
$
30,112

 
$
(547
)
Maturities of Fixed Income Securities
The following table summarizes the maturities of our available-for-sale debt investments as of October 27, 2018 (in millions): 
 
Amortized Cost
 
Fair Value
Within 1 year
$
12,283

 
$
12,243

After 1 year through 5 years
19,248

 
18,922

After 5 years through 10 years
1,662

 
1,581

After 10 years
15

 
16

Mortgage-backed securities with no single maturity
1,481

 
1,421

Total
$
34,689

 
$
34,183

Summary of Adjustments to Carrying Value of Investments
We recorded adjustments to the carrying value of our non-marketable equity securities measured using the measurement alternative in the first quarter of fiscal 2019 as follows (in millions):
 
Three Months Ended
 
October 27, 2018
Adjustments to non-marketable equity securities measured using the measurement alternative:
 
Upward adjustments
$
10

Downward adjustments, including impairments
(16
)
Net downward adjustments
$
(6
)
Gains and losses recognized on our marketable and non-marketable equity securities for the first quarter of fiscal 2019 are summarized below (in millions):
 
Three Months Ended
 
October 27, 2018
Net gains and losses recognized during the period on equity investments
$
8

Less: Net gains and losses recognized on equity investments sold
(12
)
Unrealized gains and losses recognized during reporting period on equity securities still held at the reporting date
$
(4
)
v3.10.0.1
Fair Value (Tables)
3 Months Ended
Oct. 27, 2018
Fair Value Disclosures [Abstract]  
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis
Assets and liabilities measured at fair value on a recurring basis were as follows (in millions):
 
OCTOBER 27, 2018
FAIR VALUE MEASUREMENTS
 
JULY 28, 2018
FAIR VALUE MEASUREMENTS
 
Level 1
 
Level 2
 
Total
Balance
 
Level 1
 
Level 2
 
Total
Balance
Assets:
 
 
 
 
 
 
 
 
 
 
 
Cash equivalents:
 
 
 
 
 
 
 
 
 
 
 
Money market funds
$
6,332

 
$

 
$
6,332

 
$
6,890

 
$

 
$
6,890

Commercial paper

 
210

 
210

 

 

 

Certificates of deposit

 
20

 
20

 

 

 

Repurchase agreements

 
16

 
16

 

 

 

Available-for-sale debt investments:
 
 
 
 
 
 
 
 
 
 

U.S. government securities

 
5,754

 
5,754

 

 
7,275

 
7,275

U.S. government agency securities

 
430

 
430

 

 
727

 
727

Non-U.S. government and agency securities

 
153

 
153

 

 
208

 
208

Corporate debt securities

 
26,031

 
26,031

 

 
27,364

 
27,364

U.S. agency mortgage-backed securities

 
1,421

 
1,421

 

 
1,435

 
1,435

Commercial paper

 
309

 
309

 

 

 

Certificates of deposit

 
85

 
85

 

 

 

Equity investments:
 
 
 
 
 
 
 
 
 
 
 
Marketable equity securities

 

 

 
605

 

 
605

Derivative assets

 
6

 
6

 

 
2

 
2

Total
$
6,332

 
$
34,435

 
$
40,767

 
$
7,495

 
$
37,011

 
$
44,506

Liabilities:
 
 
 
 
 
 
 
 
 
 
 
Derivative liabilities
$

 
$
91

 
$
91

 
$

 
$
74

 
$
74

Total
$

 
$
91

 
$
91

 
$

 
$
74

 
$
74

Fair Value Measurements, Nonrecurring
The following table presents gains and losses on assets that were measured at fair value on a nonrecurring basis (in millions):
 
TOTAL GAINS (LOSSES) FOR THE THREE MONTHS ENDED
 
October 27, 2018
 
October 28, 2017
Non-marketable equity securities
$
(6
)
 
$
(21
)
v3.10.0.1
Borrowings (Tables)
3 Months Ended
Oct. 27, 2018
Debt Disclosure [Abstract]  
Schedule of Short-Term Debt
The following table summarizes our short-term debt (in millions, except percentages):
 
October 27, 2018
 
July 28, 2018
 
Amount
 
Effective Rate
 
Amount
 
Effective Rate
Current portion of long-term debt
$
7,241

 
3.06
%
 
$
5,238

 
3.46
%
Schedule of Long-Term Debt
The following table summarizes our long-term debt (in millions, except percentages):
 
 
 
October 27, 2018
 
July 28, 2018
 
Maturity Date
 
Amount
 
Effective Rate
 
Amount
 
Effective Rate
Senior notes:
 
 
 
 
 
 
 
 
 
Floating-rate notes:
 
 
 
 
 
 
 
 
 
Three-month LIBOR plus 0.50%
March 1, 2019
 
$
500

 
2.88%
 
$
500

 
2.86%
Three-month LIBOR plus 0.34%
September 20, 2019
 
500

 
2.72%
 
500

 
2.71%
Fixed-rate notes:
 
 
 
 
 
 
 
 
 
4.95%
February 15, 2019
 
2,000

 
5.22%
 
2,000

 
5.17%
1.60%
February 28, 2019
 
1,000

 
1.67%
 
1,000

 
1.67%
2.125%
March 1, 2019
 
1,750

 
2.87%
 
1,750

 
2.71%
1.40%
September 20, 2019
 
1,500

 
1.48%
 
1,500

 
1.48%
4.45%
January 15, 2020
 
2,500

 
4.68%
 
2,500

 
4.52%
2.45%
June 15, 2020
 
1,500

 
2.54%
 
1,500

 
2.54%
2.20%
February 28, 2021
 
2,500

 
2.30%
 
2,500

 
2.30%
2.90%
March 4, 2021
 
500

 
3.05%
 
500

 
2.86%
1.85%
September 20, 2021
 
2,000

 
1.90%
 
2,000

 
1.90%
3.00%
June 15, 2022
 
500

 
3.32%
 
500

 
3.11%
2.60%
February 28, 2023
 
500

 
2.68%
 
500

 
2.68%
2.20%
September 20, 2023
 
750

 
2.27%
 
750

 
2.27%
3.625%
March 4, 2024
 
1,000

 
3.17%
 
1,000

 
2.98%
3.50%
June 15, 2025
 
500

 
3.48%
 
500

 
3.27%
2.95%
February 28, 2026
 
750

 
3.01%
 
750

 
3.01%
2.50%
September 20, 2026
 
1,500

 
2.55%
 
1,500

 
2.55%
5.90%
February 15, 2039
 
2,000

 
6.11%
 
2,000

 
6.11%
5.50%
January 15, 2040
 
2,000

 
5.67%
 
2,000

 
5.67%
Total
 
 
25,750

 
 
 
25,750

 
 
Unaccreted discount/issuance costs
 
 
(112
)
 
 
 
(116
)
 
 
Hedge accounting fair value adjustments
 
 
(74
)
 
 
 
(65
)
 
 
Total
 
 
$
25,564

 
 
 
$
25,569

 
 
 
 
 
 
 
 
 
 
 
 
Reported as:
 
 
 
 
 
 
 
 
 
Current portion of long-term debt
 
 
$
7,241

 
 
 
$
5,238

 
 
Long-term debt
 
 
18,323

 
 
 
20,331

 
 
Total
 
 
$
25,564

 
 
 
$
25,569

 
 

Schedule of Principal Payments for Long-Term Debt
As of October 27, 2018, future principal payments for long-term debt, including the current portion, are summarized as follows (in millions):
Fiscal Year
Amount
2019 (remaining nine months)
$
5,250

2020
6,000

2021
3,000

2022
2,500

2023
500

Thereafter
8,500

Total
$
25,750

v3.10.0.1
Derivative Instruments (Tables)
3 Months Ended
Oct. 27, 2018
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivatives Recorded at Fair Value
The fair values of our 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
 
October 27,
2018
 
July 28,
2018
 
Balance Sheet Line Item
 
October 27,
2018
 
July 28,
2018
Derivatives designated as hedging instruments:
 
 
 
 
 
 
 
 
 
 
 
Foreign currency derivatives
Other current assets
 
$
4

 
$
1

 
Other current liabilities
 
$
6

 
$

Interest rate derivatives
Other current assets
 

 

 
Other current liabilities
 
7

 
10

Interest rate derivatives
Other assets
 

 

 
Other long-term liabilities
 
74

 
62

Total
 
 
4

 
1

 
 
 
87

 
72

Derivatives not designated as hedging instruments:
 
 
 
 
 
 
 
 
 
 
 
Foreign currency derivatives
Other current assets
 
1

 
1

 
Other current liabilities
 
4

 
2

Total return swaps—deferred compensation
Other current assets
 
1

 

 
Other current liabilities
 

 

Total
 
 
2

 
1

 
 
 
4

 
2

Total
 
 
$
6

 
$
2

 
 
 
$
91

 
$
74

Gains and Losses on Derivatives Designated as Cash Flow Hedges
The effects of our cash flow and net investment hedging instruments on other comprehensive income (OCI) and the Consolidated Statements of Operations are summarized as follows (in millions):
GAINS (LOSSES) RECOGNIZED
IN OCI ON DERIVATIVES FOR THE
THREE MONTHS ENDED (EFFECTIVE PORTION)
 
GAINS (LOSSES) RECLASSIFIED FROM
AOCI INTO INCOME FOR THE
THREE MONTHS ENDED (EFFECTIVE PORTION)
 
 
October 27,
2018
 
October 28,
2017
 
Line Item in
Statements of Operations
 
October 27,
2018
 
October 28,
2017
Derivatives designated as cash flow hedging instruments:
 
 
 
 
 
 
 
 
 
 
Foreign currency derivatives
 
$
(4
)
 
$
8

 
Revenue — service
 
$
1

 
$

 
 
 
 
 
 
Operating expenses
 
(1
)
 
10

 
 
 
 
 
 
Cost of sales service
 

 
3

Total
 
$
(4
)
 
$
8

 
 
 
$

 
$
13

 
 
 
 
 
 
 
 
 
 
 
Derivatives designated as net investment hedging instruments:
 
 
 
 
 
 
 
 
 
 
Foreign currency derivatives
 
$
4

 
$
(5
)
 
Other income (loss), net
 
$

 
$


Schedule of Derivative Fair Value Hedge Instruments Gain Loss in Statement of Financial Performance
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
DERIVATIVE
INSTRUMENTS FOR THE
THREE MONTHS ENDED
 
GAINS (LOSSES)
RELATED TO HEDGED
ITEMS FOR THE
THREE MONTHS ENDED
Derivatives Designated as Fair Value Hedging Instruments
 
Line Item in Statements of Operations
 
October 27,
2018
 
October 28,
2017
 
October 27,
2018
 
October 28,
2017
Interest rate derivatives
 
Interest expense
 
$
(9
)
 
$
(46
)
 
$
9

 
$
46

Equity derivatives
 
Other income (loss), net
 

 
(14
)
 

 
14

Total
 
 
 
$
(9
)
 
$
(60
)
 
$
9

 
$
60


Effect of Derivative Instruments Not Designated as Fair Value Hedges on Consolidated Statement of Operations Summary
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
THREE MONTHS ENDED
Derivatives Not Designated as
Hedging Instruments
 
Line Item in Statements of Operations
 
October 27,
2018
 
October 28,
2017
Foreign currency derivatives
 
Other income (loss), net
 
$
(27
)
 
$
7

Total return swaps—deferred compensation
 
Operating expenses
 
(24
)
 
15

 
 
Cost of sales — product
 
(1
)
 

 
 
Cost of sales — service
 
(1
)
 
1

 
 
Other income (loss), net
 
(4
)
 
(2
)
Equity derivatives
 
Other income (loss), net
 
1

 
1

Total
 
 
 
$
(56
)
 
$
22

Schedule of Notional Amounts of Derivatives Outstanding
The notional amounts of our outstanding derivatives are summarized as follows (in millions):
 
October 27,
2018
 
July 28,
2018
Derivatives designated as hedging instruments:
 
 
 
Foreign currency derivatives—cash flow hedges
$
796

 
$
147

Interest rate derivatives
6,750

 
6,750

Net investment hedging instruments
246

 
250

Derivatives not designated as hedging instruments:
 
 
 
Foreign currency derivatives
2,170

 
2,298

Total return swaps—deferred compensation
564

 
566

Total
$
10,526

 
$
10,011

Offsetting Assets and Liabilities
Information related to these offsetting arrangements is summarized as follows (in millions):
 
October 27, 2018
 
GROSS AMOUNTS OFFSET IN THE CONSOLIDATED BALANCE SHEETS
 
GROSS AMOUNTS NOT OFFSET IN THE CONSOLIDATED BALANCE SHEETS
BUT WITH LEGAL RIGHTS TO OFFSET
 
Gross Amounts Recognized
 
Gross Amounts Offset
 
Net Amounts Presented
 
Gross Derivative Amounts
 
Cash Collateral
 
Net Amount
Derivatives assets
$
6

 
$

 
$
6

 
$
(5
)
 
$

 
$
1

Derivatives liabilities
$
91

 
$

 
$
91

 
$
(5
)
 
$
(70
)
 
$
16

 
July 28, 2018
 
GROSS AMOUNTS OFFSET IN THE CONSOLIDATED BALANCE SHEETS
 
GROSS AMOUNTS NOT OFFSET IN THE CONSOLIDATED BALANCE SHEETS
BUT WITH LEGAL RIGHTS TO OFFSET
 
Gross Amounts Recognized
 
Gross Amounts Offset
 
Net Amounts Presented
 
Gross Derivative Amounts
 
Cash Collateral
 
Net Amount
Derivatives assets
$
2

 
$

 
$
2

 
$
(2
)
 
$

 
$

Derivatives liabilities
$
74

 
$

 
$
74

 
$
(2
)
 
$
(53
)
 
$
19

v3.10.0.1
Commitments and Contingencies (Tables)
3 Months Ended
Oct. 27, 2018
Commitments and Contingencies Disclosure [Abstract]  
Schedule of Future Annual Minimum Lease Payments Under All Noncancelable Operating Leases
Future minimum lease payments under all noncancelable operating leases with an initial term in excess of one year as of October 27, 2018 are as follows (in millions):
Fiscal Year
Amount
2019 (remaining nine months)
$
312

2020
323

2021
220

2022
152

2023
102

Thereafter
116

Total
$
1,225

Schedule of Purchase Commitments
The following table summarizes our purchase commitments with contract manufacturers and suppliers (in millions):
Commitments by Period
October 27,
2018
 
July 28,
2018
Less than 1 year
$
5,500

 
$
5,407

1 to 3 years
704

 
710

3 to 5 years
270

 
360

Total
$
6,474

 
$
6,477

Compensation expenses Related to Business Combinations
The following table summarizes the compensation expense related to acquisitions (in millions):
 
Three Months Ended
 
October 27, 2018
 
October 28, 2017
Compensation expense related to acquisitions
$
109

 
$
42

Schedule of Product Warranty Liability
The following table summarizes the activity related to the product warranty liability (in millions):
 
Three Months Ended
 
October 27,
2018
 
October 28,
2017
Balance at beginning of period
$
359

 
$
407

Provisions for warranties issued
156

 
148

Adjustments for pre-existing warranties
(3
)
 
(12
)
Settlements
(145
)
 
(149
)
Balance at end of period
$
367

 
$
394

Schedule of Guarantor Obligations
  The aggregate amounts of financing guarantees outstanding at October 27, 2018 and July 28, 2018, representing the total maximum potential future payments under financing arrangements with third parties along with the related deferred revenue, are summarized in the following table (in millions):
 
October 27,
2018
 
July 28,
2018
Maximum potential future payments relating to financing guarantees:
 
 
 
Channel partner
$
307

 
$
277

End user
28

 
31

Total
$
335

 
$
308

Deferred revenue associated with financing guarantees:
 
 
 
Channel partner
$
(72
)
 
$
(94
)
End user
(26
)
 
(28
)
Total
$
(98
)
 
$
(122
)
Maximum potential future payments relating to financing guarantees, net of associated deferred revenue
$
237

 
$
186

v3.10.0.1
Shareholders' Equity (Tables)
3 Months Ended
Oct. 27, 2018
Stockholders' Equity Note [Abstract]  
Stock Repurchase Program
A summary of the stock repurchase activity for fiscal year 2018 and 2017 under the stock repurchase program, reported based on the trade date, is summarized as follows (in millions, except per-share amounts):

Quarter Ended
 
Shares
 
Weighted-Average Price per Share
 
Amount
Fiscal 2019
 
 
 
 
 
 
October 27, 2018
 
109

 
$
46.01

 
$
5,026

 
 
 
 
 
 
 
Fiscal 2018
 
 
 
 
 
 
July 28, 2018
 
138

 
$
43.58

 
$
6,015

April 28, 2018
 
140

 
$
42.83

 
$
6,015

January 27, 2018
 
103

 
$
39.07

 
$
4,011

October 28, 2017
 
51

 
$
31.80

 
$
1,620

v3.10.0.1
Employee Benefit Plans (Tables)
3 Months Ended
Oct. 27, 2018
Retirement Benefits [Abstract]  
Summary of Share-Based Compensation Expense
The following table summarizes share-based compensation expense (in millions):
 
Three Months Ended
 
October 27, 2018
 
October 28, 2017
Cost of sales—product
$
23

 
$
23

Cost of sales—service
33

 
34

Share-based compensation expense in cost of sales
56

 
57

Research and development
130

 
136

Sales and marketing
137

 
135

General and administrative
62

 
64

Restructuring and other charges
23

 
6

Share-based compensation expense in operating expenses
352

 
341

Total share-based compensation expense
$
408

 
$
398

Income tax benefit for share-based compensation
$
165

 
$
175

Summary of Share-Based Awards Available for Grant
A summary of share-based awards available for grant is as follows (in millions):
 
Share-Based Awards
Available for Grant
BALANCE AT JULY 29, 2017
272

Restricted stock, stock units, and other share-based awards granted
(70
)
Share-based awards canceled/forfeited/expired
18

Shares withheld for taxes and not issued
25

BALANCE AT JULY 28, 2018
245

Restricted stock, stock units, and other share-based awards granted
(12
)
Share-based awards canceled/forfeited/expired
5

Shares withheld for taxes and not issued
9

Other
1

BALANCE AT OCTOBER 27, 2018
248

Summary of Restricted Stock and Stock Unit Activity
A summary of the restricted stock and stock unit activity, which includes time-based and performance-based or market-based RSUs, is as follows (in millions, except per-share amounts):
 
Restricted Stock/
Stock Units
 
Weighted-Average
Grant Date Fair
Value per Share
 
Aggregate Fair  Value
UNVESTED BALANCE AT JULY 29, 2017
141

 
$
26.94

 
 
Granted
46

 
35.62

 
 
Assumed from acquisitions
1

 
28.26

 
 
Vested
(53
)
 
26.02

 
$
1,909

Canceled/forfeited/other
(16
)
 
28.37

 
 
UNVESTED BALANCE AT JULY 28, 2018
119

 
30.56

 
 
Granted
8

 
45.05

 
 
Vested
(19
)
 
25.92

 
$
883

Canceled/forfeited/other
(4
)
 
30.33

 
 
UNVESTED BALANCE AT OCTOBER 27, 2018
104

 
$
32.48

 
 
Summary of Stock Option Activity
A summary of the stock option activity is as follows (in millions, except per-share amounts):
 
STOCK OPTIONS OUTSTANDING
 
Number
Outstanding
 
Weighted-Average
Exercise Price per Share
BALANCE AT JULY 29, 2017
12

 
$
6.15

Assumed from acquisitions
3

 
8.20

Exercised
(8
)
 
5.77

Canceled/forfeited/expired
(1
)
 
8.75

BALANCE AT JULY 28, 2018
6

 
7.18

Exercised
(1
)
 
6.50

BALANCE AT OCTOBER 27, 2018
5

 
$
7.29

Summary of Significant Ranges of Outstanding and Exercisable Stock Options
The following table summarizes significant ranges of outstanding and exercisable stock options as of October 27, 2018 (in millions, except years and share prices):
 
 
STOCK OPTIONS OUTSTANDING
 
STOCK OPTIONS EXERCISABLE
Range of Exercise Prices
 
Number
Outstanding
 
Weighted-
Average
Remaining
Contractual
Life
(in Years)
 
Weighted-
Average
Exercise
Price per
Share
 
Aggregate
Intrinsic
Value
 
Number
Exercisable
 
Weighted-
Average
Exercise
Price per
Share
 
Aggregate
Intrinsic
Value
$   0.01 – 35.00
 
5

 
5.8
 
$
7.29

 
$
195

 
4

 
$
7.06

 
$
140

Schedule of Assumptions Used
The assumptions for the valuation of time-based RSUs and PRSUs are summarized as follows:
 
RESTRICTED STOCK UNITS
 
PERFORMANCE BASED
RESTRICTED STOCK UNITS
Three Months Ended
October 27, 2018
 
October 28, 2017
 
October 27, 2018
 
October 28, 2017
Number of shares granted (in millions)
6

 
7

 
2

 
3

Grant date fair value per share
$
44.32

 
$
29.81

 
$
47.00

 
$
31.31

Weighted-average assumptions/inputs:
 
 
 
 
 
 
 
   Expected dividend yield
2.8
%
 
3.6
%
 
2.8
%
 
3.6
%
   Range of risk-free interest rates
2.1%  2.9%

 
1.0%  1.9%

 
2.1%  3.0%

 
1.0%-1.6%

   Range of expected volatilities for index
N/A

 
N/A

 
13.0% – 65.2%

 
13.2%-81.0%

v3.10.0.1
Comprehensive Income (Loss) (Tables)
3 Months Ended
Oct. 27, 2018
Comprehensive Income [Abstract]  
Components of AOCI, Net of Tax
The components of AOCI, net of tax, and the other comprehensive income (loss), excluding noncontrolling interest, for the first quarter of fiscal 2019 and fiscal 2018 are summarized as follows (in millions):
 
Net Unrealized Gains (Losses) on Available-for-Sale Investments
 
Net Unrealized Gains (Losses) Cash Flow Hedging Instruments
 
Cumulative Translation Adjustment and Actuarial Gains (Losses)
 
Accumulated Other Comprehensive Income (Loss)
BALANCE AT JULY 28, 2018
$
(310
)
 
$
(11
)
 
$
(528
)
 
$
(849
)
Other comprehensive income (loss) before reclassifications attributable to Cisco Systems, Inc.
(8
)
 
(4
)
 
(207
)
 
(219
)
(Gains) losses reclassified out of AOCI
6

 

 
(1
)
 
5

Tax benefit (expense)
13

 
1

 
(1
)
 
13

Total change for the period
11

 
(3
)
 
(209
)
 
(201
)
Effect of adoption of accounting standards
(168
)
 

 

 
(168
)
BALANCE AT OCTOBER 27, 2018
$
(467
)
 
$
(14
)
 
$
(737
)
 
$
(1,218
)
 
Net Unrealized Gains (Losses) on Available-for-Sale Investments
 
Net Unrealized Gains (Losses) Cash Flow Hedging Instruments
 
Cumulative Translation Adjustment and Actuarial Gains (Losses)
 
Accumulated Other Comprehensive Income (Loss)
BALANCE AT JULY 29, 2017
$
373

 
$
32

 
$
(359
)
 
$
46

Other comprehensive income (loss) before reclassifications attributable to Cisco Systems, Inc.
18

 
8

 
18

 
44

(Gains) losses reclassified out of AOCI
(33
)
 
(13
)
 
1

 
(45
)
Tax benefit (expense)
(13
)
 
1

 
(2
)
 
(14
)
Total change for the period
(28
)
 
(4
)
 
17

 
(15
)
BALANCE AT OCTOBER 28, 2017
$
345

 
$
28


$
(342
)
 
$
31

Reclassification out of Accumulated Other Comprehensive Income
The net gains (losses) reclassified out of AOCI into the Consolidated Statements of Operations, with line item location, during each period were as follows (in millions):
 
 
Three Months Ended
 
 
 
 
October 27,
2018
 
October 28,
2017
 
 
Comprehensive Income Components
 
Income Before Taxes
 
Line Item in Statements of Operations
Net unrealized gains and losses on available-for-sale investments
 
$
(6
)
 
$
33

 
Other income (loss), net
Net unrealized gains and losses on cash flow hedging instruments
 
 
 
 
 
 
Foreign currency derivatives
 
(1
)
 
10

 
Operating expenses
Foreign currency derivatives
 
1

 

 
Revenue—service
Foreign currency derivatives
 

 
3

 
Cost of sales—service
 
 


13


 
Cumulative translation adjustment and actuarial gains and losses
 

 
(1
)
 
Operating expenses
Cumulative translation adjustment and actuarial gains and losses
 
1

 

 
Other income (loss), net
Total amounts reclassified out of AOCI
 
$
(5
)

$
45


 
v3.10.0.1
Income Taxes (Tables)
3 Months Ended
Oct. 27, 2018
Income Tax Disclosure [Abstract]  
Income Tax Provision
The following table provides details of income taxes (in millions, except percentages):
 
Three Months Ended
 
October 27,
2018
 
October 28,
2017
Income before provision for income taxes
$
3,909

 
$
2,962

Provision for income taxes
$
360

 
$
568

Effective tax rate
9.2
%
 
19.2
%
v3.10.0.1
Segment Information and Major Customers (Tables)
3 Months Ended
Oct. 27, 2018
Segment Reporting [Abstract]  
Reportable Segments
Summarized financial information by segment for the first quarter of fiscal 2019 and fiscal 2018, based on our internal management system and as utilized by our Chief Operating Decision Maker ("CODM"), is as follows (in millions):
 
Three Months Ended
 
October 27,
2018
 
October 28,
2017
Revenue:
 
 
 
Americas
$
7,751

 
$
7,350

EMEA
3,224

 
2,909

APJC
2,096

 
1,877

Total
$
13,072

 
$
12,136

Gross margin:
 
 
 
Americas
$
5,070

 
$
4,722

EMEA
2,070

 
1,839

APJC
1,200

 
1,165

Segment total
8,341

 
7,726

Unallocated corporate items
(195
)
 
(299
)
Total
$
8,146

 
$
7,427

Net Sales for Groups of Similar Products and Services
The following table presents revenue for groups of similar products and services (in millions):
 
Three Months Ended
 
October 27,
2018
 
October 28,
2017
Revenue:
 
 
 
Infrastructure Platforms
$
7,642

 
$
6,980

Applications
1,419

 
1,203

Security
651

 
585

Other Products
178

 
286

Total Product
9,890

 
9,054

Services
3,182

 
3,082

Total
$
13,072

 
$
12,136

Property and Equipment Information for Geographical Area
The following table presents property and equipment information for geographic areas (in millions):
 
October 27,
2018
 
July 28,
2018
Property and equipment, net:
 
 
 
United States
$
2,421

 
$
2,487

International
535

 
519

Total
$
2,956

 
$
3,006



v3.10.0.1
Net Income per Share (Tables)
3 Months Ended
Oct. 27, 2018
Earnings Per Share [Abstract]  
Calculation of Basic and Diluted Net Income per Share
The following table presents the calculation of basic and diluted net income per share (in millions, except per-share amounts):
 
Three Months Ended
 
October 27,
2018
 
October 28,
2017
Net income
$
3,549

 
$
2,394

Weighted-average shares—basic
4,565

 
4,959

Effect of dilutive potential common shares
49

 
35

Weighted-average shares—diluted
4,614

 
4,994

Net income per share—basic
$
0.78

 
$
0.48

Net income per share—diluted
$
0.77

 
$
0.48

Antidilutive employee share-based awards, excluded
9

 
15

v3.10.0.1
Basis of Presentation (Details)
3 Months Ended
Oct. 27, 2018
segment
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Number of geographic segments (segment) 3
v3.10.0.1
Recent Accounting Pronouncements (Summary of Cumulative Effect of the Changes Made to Consolidated Balance Sheet for the Adoption of New Accounting Standard Updates) (Details) - USD ($)
$ in Millions
Oct. 27, 2018
Jul. 29, 2018
Jul. 28, 2018
ASSETS      
Accounts receivable, net $ 4,536 $ 5,450 $ 5,554
Inventories 1,572 1,544 1,846
Other current assets 2,134 3,286 2,940
Deferred tax assets 3,960 3,995 3,219
Other assets 2,081 1,954 1,582
TOTAL ASSETS 105,429 109,872 108,784
LIABILITIES AND EQUITY      
Income taxes payable 1,084 1,015 1,004
Deferred revenue 9,637 9,788 11,490
Other current liabilities 4,025 4,446 4,413
Deferred revenue 7,177 7,114 8,195
Other long-term liabilities 1,451 1,532 1,434
Retained earnings 3,169 5,130 1,233
Accumulated other comprehensive income (loss) (1,218) (1,017) (849)
TOTAL LIABILITIES AND EQUITY 105,429 109,872 108,784
Total deferred revenue 16,814   19,685
Product      
LIABILITIES AND EQUITY      
Total deferred revenue 5,752   $ 8,254
Accounting Standards Update 2014-09      
ASSETS      
Accounts receivable, net   (104)  
Inventories   (302)  
Other current assets   371  
Deferred tax assets   (624)  
Other assets   327  
TOTAL ASSETS   (332)  
LIABILITIES AND EQUITY      
Income taxes payable   0  
Deferred revenue   (1,702)  
Other current liabilities   33  
Deferred revenue   (1,081)  
Other long-term liabilities   85  
Retained earnings   2,333  
Accumulated other comprehensive income (loss)   0  
TOTAL LIABILITIES AND EQUITY   (332)  
Accounting Standards Update 2014-09 | Difference between Revenue Guidance in Effect before and after Topic 606      
LIABILITIES AND EQUITY      
Retained earnings   2,300  
Total deferred revenue $ 2,800 2,800  
Accounting Standards Update 2014-09 | Product | Difference between Revenue Guidance in Effect before and after Topic 606      
LIABILITIES AND EQUITY      
Total deferred revenue   2,600  
Accounting Standards Update 2014-09 | Recurring Software and Subscription Offers | Difference between Revenue Guidance in Effect before and after Topic 606      
LIABILITIES AND EQUITY      
Total deferred revenue   1,300  
Accounting Standards Update 2014-09 | Two-Tier Distribution | Difference between Revenue Guidance in Effect before and after Topic 606      
LIABILITIES AND EQUITY      
Total deferred revenue   600  
Accounting Standards Update 2016-01      
ASSETS      
Accounts receivable, net   0  
Inventories   0  
Other current assets   0  
Deferred tax assets   (15)  
Other assets   136  
TOTAL ASSETS   121  
LIABILITIES AND EQUITY      
Income taxes payable   0  
Deferred revenue   0  
Other current liabilities   0  
Deferred revenue   0  
Other long-term liabilities   13  
Retained earnings   283  
Accumulated other comprehensive income (loss)   (175)  
TOTAL LIABILITIES AND EQUITY   121  
Accounting Standards Update 2016-16      
ASSETS      
Accounts receivable, net   0  
Inventories   0  
Other current assets   (25)  
Deferred tax assets   1,415  
Other assets   (91)  
TOTAL ASSETS   1,299  
LIABILITIES AND EQUITY      
Income taxes payable   11  
Deferred revenue   0  
Other current liabilities   0  
Deferred revenue   0  
Other long-term liabilities   0  
Retained earnings   1,281  
Accumulated other comprehensive income (loss)   7  
TOTAL LIABILITIES AND EQUITY   $ 1,299  
v3.10.0.1
Recent Accounting Pronouncements (Additional Information) (Details) - USD ($)
$ in Millions
3 Months Ended
Oct. 27, 2018
Oct. 28, 2017
Jul. 29, 2018
Jul. 28, 2018
New Accounting Pronouncements or Change in Accounting Principle [Line Items]        
Revenue, total $ 13,072 $ 12,136    
Benefit for provision for income taxes (360) $ (568)    
Increase in retained earnings 3,169   $ 5,130 $ 1,233
Total contract assets 5,500      
Total contract assets noncurrent 177      
Total capitalized contract acquisition costs 673     644
Capitalized contract acquisition costs, current 380      
Capitalized contract acquisition costs, noncurrent 293      
Accounting Standards Update 2014-09        
New Accounting Pronouncements or Change in Accounting Principle [Line Items]        
Increase in retained earnings     2,333  
Difference between Revenue Guidance in Effect before and after Topic 606 | Accounting Standards Update 2014-09        
New Accounting Pronouncements or Change in Accounting Principle [Line Items]        
Revenue, total 276      
Benefit for provision for income taxes 152      
Increase in retained earnings     $ 2,300  
Software and Service Agreements        
New Accounting Pronouncements or Change in Accounting Principle [Line Items]        
Total contract assets 447     $ 122
Total contract assets, current $ 270      
v3.10.0.1
Revenue (Disaggregation of Revenue) (Details) - USD ($)
$ in Millions
3 Months Ended
Oct. 27, 2018
Oct. 28, 2017
Disaggregation of Revenue [Line Items]    
Revenue $ 13,072 $ 12,136
Product    
Disaggregation of Revenue [Line Items]    
Revenue 9,890 9,054
Infrastructure Platforms    
Disaggregation of Revenue [Line Items]    
Revenue 7,642 6,980
Applications    
Disaggregation of Revenue [Line Items]    
Revenue 1,419 1,203
Security    
Disaggregation of Revenue [Line Items]    
Revenue 651 585
Other Products    
Disaggregation of Revenue [Line Items]    
Revenue 178 286
Service    
Disaggregation of Revenue [Line Items]    
Revenue $ 3,182 $ 3,082
v3.10.0.1
Revenue (Additional Information) (Details) - USD ($)
$ in Millions
3 Months Ended
Oct. 27, 2018
Jul. 29, 2018
Jul. 28, 2018
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]      
Payment terms 30 days    
Accounts receivable, net $ 4,536 $ 5,450 $ 5,554
Total contract assets 5,500    
Total deferred revenue 16,814   19,685
Revenue recognized 3,400    
Remaining performance obligation 22,300    
Total deferred sales commissions 673   644
Amortization of sales commissions, expense 112    
Accounting Standards Update 2014-09      
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]      
Accounts receivable, net   (104)  
Difference between Revenue Guidance in Effect before and after Topic 606 | Accounting Standards Update 2014-09      
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]      
Total deferred revenue 2,800 $ 2,800  
Software and Service Agreements      
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]      
Total contract assets $ 447   $ 122
v3.10.0.1
Revenue (Performance Obligation) (Details) - Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2018-10-28
Oct. 27, 2018
Revenue from Contract with Customer [Abstract]  
Remaining performance obligation, expected timing of satisfaction, period 1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]  
Remaining performance obligation, percentage 55.00%
v3.10.0.1
Acquisitions and Divestitures (Additional Information) (Details)
$ in Millions
3 Months Ended
Oct. 27, 2018
USD ($)
acquisition
Oct. 28, 2017
USD ($)
Supplementary Information [Line Items]    
Number of business combinations (acquisition) | acquisition 2  
Acquired cash and cash equivalents $ 82  
Gains recognized from acquisitions 3 $ 46
Discontinued Operations, Held-for-sale | Service Provider Video    
Supplementary Information [Line Items]    
Disposal group, tangible assets 165  
Disposal group, goodwill and intangible assets 330  
Disposal group, liabilities 290  
General and administrative    
Supplementary Information [Line Items]    
Acquisition related costs $ 10 $ 9
v3.10.0.1
Acquisitions and Divestitures (Summary of Allocation of Total Purchase Consideration) (Details)
$ in Millions
3 Months Ended
Oct. 27, 2018
USD ($)
acquisition
Business Acquisition [Line Items]  
Purchase Consideration $ 2,059
Net Tangible Assets Acquired (Liabilities Assumed) (54)
Purchased Intangible Assets 350
Goodwill $ 1,763
Number of business combinations (acquisition) | acquisition 2
Duo  
Business Acquisition [Line Items]  
Purchase Consideration $ 2,025
Net Tangible Assets Acquired (Liabilities Assumed) (57)
Purchased Intangible Assets 342
Goodwill 1,740
Other (one acquisition)  
Business Acquisition [Line Items]  
Purchase Consideration 34
Net Tangible Assets Acquired (Liabilities Assumed) 3
Purchased Intangible Assets 8
Goodwill $ 23
Number of business combinations (acquisition) | acquisition 1
v3.10.0.1
Goodwill and Purchased Intangible Assets (Schedule of Goodwill by Reportable Segments) (Details)
$ in Millions
3 Months Ended
Oct. 27, 2018
USD ($)
Goodwill [Roll Forward]  
Beginning Balance $ 31,706
Acquisitions 1,763
Other (83)
Ending Balance 33,386
Americas  
Goodwill [Roll Forward]  
Beginning Balance 19,998
Acquisitions 1,073
Other (53)
Ending Balance 21,018
EMEA  
Goodwill [Roll Forward]  
Beginning Balance 7,529
Acquisitions 491
Other (19)
Ending Balance 8,001
APJC  
Goodwill [Roll Forward]  
Beginning Balance 4,179
Acquisitions 199
Other (11)
Ending Balance $ 4,367
v3.10.0.1
Goodwill and Purchased Intangible Assets (Schedule of Intangible Assets Acquired Through Business Combinations) (Details)
$ in Millions
3 Months Ended
Oct. 27, 2018
USD ($)
acquisition
Intangible Assets Acquired Through Business Combinations  
Total, Amount $ 350
Number of business combinations (acquisition) | acquisition 2
Duo  
Intangible Assets Acquired Through Business Combinations  
Total, Amount $ 342
Other (one acquisition)  
Intangible Assets Acquired Through Business Combinations  
Total, Amount $ 8
Number of business combinations (acquisition) | acquisition 1
IPR&D  
Intangible Assets Acquired Through Business Combinations  
Indefinite Lives, Amount $ 77
IPR&D | Duo  
Intangible Assets Acquired Through Business Combinations  
Indefinite Lives, Amount 77
IPR&D | Other (one acquisition)  
Intangible Assets Acquired Through Business Combinations  
Indefinite Lives, Amount 0
TECHNOLOGY  
Intangible Assets Acquired Through Business Combinations  
Finite Lives, Amount $ 161
TECHNOLOGY | Duo  
Intangible Assets Acquired Through Business Combinations  
Weighted- Average Useful Life (in Years) 5 years
Finite Lives, Amount $ 153
TECHNOLOGY | Other (one acquisition)  
Intangible Assets Acquired Through Business Combinations  
Weighted- Average Useful Life (in Years) 5 years
Finite Lives, Amount $ 8
CUSTOMER RELATIONSHIPS  
Intangible Assets Acquired Through Business Combinations  
Finite Lives, Amount $ 94
CUSTOMER RELATIONSHIPS | Duo  
Intangible Assets Acquired Through Business Combinations  
Weighted- Average Useful Life (in Years) 5 years
Finite Lives, Amount $ 94
CUSTOMER RELATIONSHIPS | Other (one acquisition)  
Intangible Assets Acquired Through Business Combinations  
Weighted- Average Useful Life (in Years) 0 years
Finite Lives, Amount $ 0
OTHER  
Intangible Assets Acquired Through Business Combinations  
Finite Lives, Amount $ 18
OTHER | Duo  
Intangible Assets Acquired Through Business Combinations  
Weighted- Average Useful Life (in Years) 2 years 6 months
Finite Lives, Amount $ 18
OTHER | Other (one acquisition)  
Intangible Assets Acquired Through Business Combinations  
Weighted- Average Useful Life (in Years) 0 years
Finite Lives, Amount $ 0
v3.10.0.1
Goodwill and Purchased Intangible Assets (Schedule of Purchased Intangible Assets With Finite and Indefinite Lives) (Details) - USD ($)
$ in Millions
Oct. 27, 2018
Jul. 28, 2018
Purchased intangible assets with finite lives:    
Gross $ 5,556 $ 5,312
Accumulated Amortization (3,020) (2,863)
Total purchased intangible assets with finite lives, net 2,536 2,449
In-process research and development, with indefinite lives 180 103
Total finite and indefinite lives intangible assets, Gross 5,736 5,415
Total finite and indefinite lives intangible assets, net 2,716 2,552
TECHNOLOGY    
Purchased intangible assets with finite lives:    
Gross 3,847 3,711
Accumulated Amortization (2,013) (1,888)
Total purchased intangible assets with finite lives, net 1,834 1,823
CUSTOMER RELATIONSHIPS    
Purchased intangible assets with finite lives:    
Gross 1,629 1,538
Accumulated Amortization (965) (937)
Total purchased intangible assets with finite lives, net 664 601
OTHER    
Purchased intangible assets with finite lives:    
Gross 80 63
Accumulated Amortization (42) (38)
Total purchased intangible assets with finite lives, net $ 38 $ 25
v3.10.0.1
Goodwill and Purchased Intangible Assets (Additional Information) (Details)
3 Months Ended
Oct. 27, 2018
USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]  
Purchased intangible assets impairment $ 0
v3.10.0.1
Goodwill and Purchased Intangible Assets (Schedule of Amortization of Purchased Intangible Assets) (Details) - USD ($)
$ in Millions
3 Months Ended
Oct. 27, 2018
Oct. 28, 2017
Acquired Finite-Lived Intangible Assets [Line Items]    
Amortization of purchased intangible assets $ 34 $ 61
Cost of sales    
Acquired Finite-Lived Intangible Assets [Line Items]    
Amortization of purchased intangible assets 151 154
Share-based compensation expense in operating expenses    
Acquired Finite-Lived Intangible Assets [Line Items]    
Amortization of purchased intangible assets 34 61
Total    
Acquired Finite-Lived Intangible Assets [Line Items]    
Amortization of purchased intangible assets $ 185 $ 215
v3.10.0.1
Goodwill and Purchased Intangible Assets (Schedule of Estimated Future Amortization Expense of Purchased Intangible Assets) (Details)
$ in Millions
Oct. 27, 2018
USD ($)
Finite-Lived Intangible Assets, Future Amortization Expense [Abstract]  
2019 (remaining nine months) $ 577
2020 726
2021 530
2022 274
2023 133
Thereafter $ 45
v3.10.0.1
Restructuring and Other Charges (Additional Information) (Details) - USD ($)
$ in Millions
3 Months Ended
Oct. 27, 2018
Oct. 28, 2017
Jul. 28, 2018
Restructuring Cost and Reserve [Line Items]      
Restructuring charges $ 78 $ 152  
Fiscal 2018 Plan      
Restructuring Cost and Reserve [Line Items]      
Expected restructuring charges 300   $ 300
Fiscal 2018 Plan | Employee Severance and Other Restructuring      
Restructuring Cost and Reserve [Line Items]      
Restructuring charges 186    
FISCAL 2017 PLAN      
Restructuring Cost and Reserve [Line Items]      
Cumulative restructuring charges incurred $ 1,000    
v3.10.0.1
Restructuring and Other Charges (Schedule of Activities Related to Restructuring and Other Charges) (Details) - USD ($)
$ in Millions
3 Months Ended
Oct. 27, 2018
Oct. 28, 2017
Restructuring Reserve [Roll Forward]    
Liability as of beginning period $ 73 $ 117
Charges 78 152
Cash payments (64) (95)
Non-cash items (23) (6)
Liability as of ending period 64 168
FISCAL 2017 AND PRIOR PLANS | Employee Severance    
Restructuring Reserve [Roll Forward]    
Liability as of beginning period 41 74
Charges 0 145
Cash payments (10) (79)
Non-cash items 0 0
Liability as of ending period 31 140
FISCAL 2017 AND PRIOR PLANS | Other    
Restructuring Reserve [Roll Forward]    
Liability as of beginning period 13 43
Charges 0 7
Cash payments (1) (16)
Non-cash items 0 (6)
Liability as of ending period 12 $ 28
FISCAL 2018 PLAN | Employee Severance    
Restructuring Reserve [Roll Forward]    
Liability as of beginning period 19  
Charges 54  
Cash payments (52)  
Non-cash items 0  
Liability as of ending period 21  
FISCAL 2018 PLAN | Other    
Restructuring Reserve [Roll Forward]    
Liability as of beginning period 0  
Charges 24  
Cash payments (1)  
Non-cash items (23)  
Liability as of ending period $ 0  
v3.10.0.1
Balance Sheet Details (Details) - USD ($)
$ in Millions
Oct. 27, 2018
Jul. 29, 2018
Jul. 28, 2018
Total cash, cash equivalents, and restricted cash      
Cash and cash equivalents $ 8,410   $ 8,934
Restricted cash included in other current assets 32   32
Restricted cash included in other assets 44   27
Total cash, cash equivalents, and restricted cash 8,486   8,993
Inventories:      
Raw materials 421   423
Work in Process 0   0
Finished goods:      
Deferred cost of sales and distributor inventory 116   443
Manufactured finished goods 758   689
Total finished goods 874   1,132
Service-related spares 248   258
Demonstration systems 29   33
Total 1,572 $ 1,544 1,846
Gross property and equipment:      
Land, buildings, and building and leasehold improvements 4,707   4,710
Computer equipment and related software 1,037   1,085
Production, engineering, and other equipment 5,712   5,734
Operating lease assets 475   356
Furniture and fixtures 363   358
Total gross property and equipment 12,294   12,243
Less: accumulated depreciation and amortization (9,338)   (9,237)
Total 2,956   3,006
Disaggregation of Revenue [Line Items]      
Deferred revenue: 16,814   19,685
Current 9,637 9,788 11,490
Noncurrent 7,177 $ 7,114 8,195
Service      
Disaggregation of Revenue [Line Items]      
Deferred revenue: 11,062   11,431
Product      
Disaggregation of Revenue [Line Items]      
Deferred revenue: $ 5,752   $ 8,254
v3.10.0.1
Financing Receivables and Operating Leases (Additional Information) (Details)
$ in Millions
3 Months Ended
Oct. 27, 2018
USD ($)
rating
Jul. 28, 2018
USD ($)
Financing Receivables And Guarantees [Line Items]    
Average lease term 4 years  
Threshold for past due receivables 31 days  
Unbilled or current financing receivables included in greater than 91 days plus past due | $ $ 474 $ 503
Financing receivable, 91 days past due and still accruing | $ $ 234 $ 182
Investment credit risk ratings range lowest (rating) 1  
Highest rating when receivables are deemed impaired (rating) 10  
Rating at or higher when receivables deemed impaired (rating) 8  
Maximum    
Financing Receivables And Guarantees [Line Items]    
Loan receivables term 3 years  
Maximum | Financed Service Contracts    
Financing Receivables And Guarantees [Line Items]    
Financed service contracts term 3 years  
Minimum | Financed Service Contracts    
Financing Receivables And Guarantees [Line Items]    
Financed service contracts term 1 year  
v3.10.0.1
Financing Receivables and Operating Leases (Schedule of Financing Receivables) (Details) - USD ($)
$ in Millions
Oct. 27, 2018
Jul. 28, 2018
Oct. 28, 2017
Jul. 29, 2017
Financing Receivables [Line Items]        
Allowance for credit loss $ (199) $ (205) $ (289) $ (295)
Current 4,851 4,949    
Lease Receivables        
Financing Receivables [Line Items]        
Gross 2,511 2,688    
Residual value 159 164    
Unearned income (140) (141)    
Allowance for credit loss (131) (135)    
Total, net 2,399 2,576    
Current 1,143 1,249    
Noncurrent 1,256 1,327    
Loan Receivables        
Financing Receivables [Line Items]        
Gross 4,924 4,999    
Residual value 0 0    
Unearned income 0 0    
Allowance for credit loss (60) (60)    
Total, net 4,864 4,939    
Current 2,422 2,376    
Noncurrent 2,442 2,563    
Financed Service Contracts        
Financing Receivables [Line Items]        
Gross 2,240 2,326    
Residual value 0 0    
Unearned income 0 0    
Allowance for credit loss (8) (10)    
Total, net 2,232 2,316    
Current 1,286 1,324    
Noncurrent 946 992    
Total        
Financing Receivables [Line Items]        
Gross 9,675 10,013    
Residual value 159 164    
Unearned income (140) (141)    
Allowance for credit loss (199) (205)    
Total, net 9,495 9,831    
Current 4,851 4,949    
Noncurrent $ 4,644 $ 4,882    
v3.10.0.1
Financing Receivables and Operating Leases (Schedule of Contractual Maturities of Gross Lease Receivables) (Details)
$ in Millions
Oct. 27, 2018
USD ($)
Receivables [Abstract]  
2019 (remaining nine months) $ 1,105
2020 614
2021 478
2022 231
2023 78
Thereafter 5
Total $ 2,511
v3.10.0.1
Financing Receivables and Operating Leases (Schedule of Financing Receivables Categorized by Internal Credit Risk Rating) (Details) - USD ($)
$ in Millions
Oct. 27, 2018
Jul. 28, 2018
Financing Receivable, Recorded Investment [Line Items]    
Gross receivables less unearned income $ 9,535 $ 9,872
1 to 4    
Financing Receivable, Recorded Investment [Line Items]    
Gross receivables less unearned income 5,814 5,946
5 to 6    
Financing Receivable, Recorded Investment [Line Items]    
Gross receivables less unearned income 3,596 3,786
7 and Higher    
Financing Receivable, Recorded Investment [Line Items]    
Gross receivables less unearned income 125 140
Total    
Financing Receivable, Recorded Investment [Line Items]    
Gross receivables less unearned income 9,535 9,872
Lease Receivables | 1 to 4    
Financing Receivable, Recorded Investment [Line Items]    
Gross receivables less unearned income 1,238 1,294
Lease Receivables | 5 to 6    
Financing Receivable, Recorded Investment [Line Items]    
Gross receivables less unearned income 1,084 1,199
Lease Receivables | 7 and Higher    
Financing Receivable, Recorded Investment [Line Items]    
Gross receivables less unearned income 49 54
Lease Receivables | Total    
Financing Receivable, Recorded Investment [Line Items]    
Gross receivables less unearned income 2,371 2,547
Loan Receivables | 1 to 4    
Financing Receivable, Recorded Investment [Line Items]    
Gross receivables less unearned income 3,122 3,184
Loan Receivables | 5 to 6    
Financing Receivable, Recorded Investment [Line Items]    
Gross receivables less unearned income 1,744 1,752
Loan Receivables | 7 and Higher    
Financing Receivable, Recorded Investment [Line Items]    
Gross receivables less unearned income 58 63
Loan Receivables | Total    
Financing Receivable, Recorded Investment [Line Items]    
Gross receivables less unearned income 4,924 4,999
Financed Service Contracts | 1 to 4    
Financing Receivable, Recorded Investment [Line Items]    
Gross receivables less unearned income 1,454 1,468
Financed Service Contracts | 5 to 6    
Financing Receivable, Recorded Investment [Line Items]    
Gross receivables less unearned income 768 835
Financed Service Contracts | 7 and Higher    
Financing Receivable, Recorded Investment [Line Items]    
Gross receivables less unearned income 18 23
Financed Service Contracts | Total    
Financing Receivable, Recorded Investment [Line Items]    
Gross receivables less unearned income $ 2,240 $ 2,326
v3.10.0.1
Financing Receivables and Operating Leases (Schedule of Aging Analysis of Financing Receivables) (Details) - USD ($)
$ in Millions
Oct. 27, 2018
Jul. 28, 2018
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Total Past Due $ 1,294 $ 1,185
Current 8,241 8,687
Total 9,535 9,872
Nonaccrual Financing Receivables 37 42
Impaired Financing Receivables 37 42
Past due 31-60 days    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Total Past Due 304 314
Past due 61-90 days    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Total Past Due 259 160
Past due 91 or above days    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Total Past Due 731 711
Lease Receivables    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Total Past Due 227 254
Current 2,144 2,293
Total 2,371 2,547
Nonaccrual Financing Receivables 5 9
Impaired Financing Receivables 5 9
Lease Receivables | Past due 31-60 days    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Total Past Due 79 72
Lease Receivables | Past due 61-90 days    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Total Past Due 27 27
Lease Receivables | Past due 91 or above days    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Total Past Due 121 155
Loan Receivables    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Total Past Due 556 411
Current 4,368 4,588
Total 4,924 4,999
Nonaccrual Financing Receivables 29 30
Impaired Financing Receivables 29 30
Loan Receivables | Past due 31-60 days    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Total Past Due 123 104
Loan Receivables | Past due 61-90 days    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Total Past Due 85 55
Loan Receivables | Past due 91 or above days    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Total Past Due 348 252
Financed Service Contracts    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Total Past Due 511 520
Current 1,729 1,806
Total 2,240 2,326
Nonaccrual Financing Receivables 3 3
Impaired Financing Receivables 3 3
Financed Service Contracts | Past due 31-60 days    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Total Past Due 102 138
Financed Service Contracts | Past due 61-90 days    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Total Past Due 147 78
Financed Service Contracts | Past due 91 or above days    
Financing Receivable, Recorded Investment, Past Due [Line Items]    
Total Past Due $ 262 $ 304
v3.10.0.1
Financing Receivables and Operating Leases (Summary of Allowances for Credit Loss and Related Financing Receivables) (Details) - USD ($)
$ in Millions
3 Months Ended
Oct. 27, 2018
Oct. 28, 2017
Financing Receivable, Allowance for Credit Losses [Roll Forward]    
Allowance for credit loss as of beginning of period $ 205 $ 295
Provisions (5) (6)
Foreign exchange and other (1) 0
Allowance for credit loss as of end of period 199 289
Lease Receivables    
Financing Receivable, Allowance for Credit Losses [Roll Forward]    
Allowance for credit loss as of beginning of period 135 162
Provisions (3) (2)
Foreign exchange and other (1) 0
Allowance for credit loss as of end of period 131 160
Loan Receivables    
Financing Receivable, Allowance for Credit Losses [Roll Forward]    
Allowance for credit loss as of beginning of period 60 103
Provisions 0 2
Foreign exchange and other 0 1
Allowance for credit loss as of end of period 60 106
Financed Service Contracts    
Financing Receivable, Allowance for Credit Losses [Roll Forward]    
Allowance for credit loss as of beginning of period 10 30
Provisions (2) (6)
Foreign exchange and other 0 (1)
Allowance for credit loss as of end of period 8 $ 23
Lease Receivables    
Financing Receivable, Allowance for Credit Losses [Roll Forward]    
Allowance for credit loss as of beginning of period 135  
Allowance for credit loss as of end of period 131  
Loan Receivables    
Financing Receivable, Allowance for Credit Losses [Roll Forward]    
Allowance for credit loss as of beginning of period 60  
Allowance for credit loss as of end of period 60  
Financed Service Contracts    
Financing Receivable, Allowance for Credit Losses [Roll Forward]    
Allowance for credit loss as of beginning of period 10  
Allowance for credit loss as of end of period $ 8  
v3.10.0.1
Financing Receivables and Operating Leases (Operating Lease Schedule) (Details) - USD ($)
$ in Millions
Oct. 27, 2018
Jul. 28, 2018
Receivables [Abstract]    
Operating lease assets $ 475 $ 356
Accumulated depreciation (333) (238)
Operating lease assets, net $ 142 $ 118
v3.10.0.1
Financing Receivables and Operating Leases (Minimum Future Rental Payments) (Details)
$ in Millions
Oct. 27, 2018
USD ($)
Receivables [Abstract]  
2019 (remaining nine months) $ 125
2020 108
2021 44
2022 3
Thereafter 1
Total $ 281
v3.10.0.1
Available-for-Sale Debt Investments and Equity Investments (Summary of Available-for-sale Debt Investments and Equity Investments) (Details) - USD ($)
$ in Millions
Oct. 27, 2018
Jul. 28, 2018
Investments, Debt and Equity Securities [Abstract]    
Available-for-sale debt investments $ 34,183 $ 37,009
Marketable equity securities 0 605
Total investments 34,183 37,614
Non-marketable equity securities included in other assets 1,125 978
Equity method investments included in other assets 115 118
Total $ 35,423 $ 38,710
v3.10.0.1
Available-for-Sale Debt Investments and Equity Investments (Summary of Available-for-Sale Investments) (Details) - USD ($)
$ in Millions
Oct. 27, 2018
Jul. 28, 2018
Schedule of Investments [Line Items]    
Amortized Cost $ 34,689 $ 37,512
Gross Unrealized Gains 33 44
Gross Unrealized Losses (539) (547)
Fair Value 34,183 37,009
Net unsettled, available-for-sale investments purchases (sales), net 1 (1,500)
U.S. government securities    
Schedule of Investments [Line Items]    
Amortized Cost 5,783 7,318
Gross Unrealized Gains 0 0
Gross Unrealized Losses (29) (43)
Fair Value 5,754 7,275
U.S. government agency securities    
Schedule of Investments [Line Items]    
Amortized Cost 434 732
Gross Unrealized Gains 0 0
Gross Unrealized Losses (4) (5)
Fair Value 430 727
Non-U.S. government and agency securities    
Schedule of Investments [Line Items]    
Amortized Cost 153 209
Gross Unrealized Gains 0 0
Gross Unrealized Losses 0 (1)
Fair Value 153 208
Corporate debt securities    
Schedule of Investments [Line Items]    
Amortized Cost 26,444 27,765
Gross Unrealized Gains 33 44
Gross Unrealized Losses (446) (445)
Fair Value 26,031 27,364
U.S. agency mortgage-backed securities    
Schedule of Investments [Line Items]    
Amortized Cost 1,481 1,488
Gross Unrealized Gains 0 0
Gross Unrealized Losses (60) (53)
Fair Value 1,421 $ 1,435
Commercial paper    
Schedule of Investments [Line Items]    
Amortized Cost 309  
Gross Unrealized Gains 0  
Gross Unrealized Losses 0  
Fair Value 309  
Certificates of deposit    
Schedule of Investments [Line Items]    
Amortized Cost 85  
Gross Unrealized Gains 0  
Gross Unrealized Losses 0  
Fair Value $ 85  
v3.10.0.1
Available-for-Sale Debt Investments and Equity Investments (Gross Realized Gains and Gross Realized Losses Related to Available-for-Sale Investment) (Details) - USD ($)
$ in Millions
3 Months Ended
Oct. 27, 2018
Oct. 28, 2017
Investments [Abstract]    
Gross realized gains $ 2 $ 8
Gross realized losses (8) (4)
Total $ (6) $ 4
v3.10.0.1
Available-for-Sale Debt Investments and Equity Investments (Available-for-Sale Investments With Gross Unrealized Losses) (Details) - USD ($)
$ in Millions
Oct. 27, 2018
Jul. 28, 2018
Schedule of Investments [Line Items]    
UNREALIZED LOSSES LESS THAN 12 MONTHS, Fair Value $ 14,459 $ 21,093
UNREALIZED LOSSES LESS THAN 12 MONTHS, Gross Unrealized Losses (272) (391)
UNREALIZED LOSSES 12 MONTHS OR GREATER, Fair Value 13,496 9,019
UNREALIZED LOSSES 12 MONTHS OR GREATER, Gross Unrealized Losses (267) (156)
TOTAL, Fair Value 27,955 30,112
TOTAL, Gross Unrealized Losses (539) (547)
U.S. government securities    
Schedule of Investments [Line Items]    
UNREALIZED LOSSES LESS THAN 12 MONTHS, Fair Value 516 2,966
UNREALIZED LOSSES LESS THAN 12 MONTHS, Gross Unrealized Losses (3) (20)
UNREALIZED LOSSES 12 MONTHS OR GREATER, Fair Value 5,231 4,303
UNREALIZED LOSSES 12 MONTHS OR GREATER, Gross Unrealized Losses (26) (23)
TOTAL, Fair Value 5,747 7,269
TOTAL, Gross Unrealized Losses (29) (43)
U.S. government agency securities    
Schedule of Investments [Line Items]    
UNREALIZED LOSSES LESS THAN 12 MONTHS, Fair Value 4 206
UNREALIZED LOSSES LESS THAN 12 MONTHS, Gross Unrealized Losses 0 (2)
UNREALIZED LOSSES 12 MONTHS OR GREATER, Fair Value 427 521
UNREALIZED LOSSES 12 MONTHS OR GREATER, Gross Unrealized Losses (4) (3)
TOTAL, Fair Value 431 727
TOTAL, Gross Unrealized Losses (4) (5)
Non-U.S. government and agency securities    
Schedule of Investments [Line Items]    
UNREALIZED LOSSES LESS THAN 12 MONTHS, Fair Value 0 105
UNREALIZED LOSSES LESS THAN 12 MONTHS, Gross Unrealized Losses 0 (1)
UNREALIZED LOSSES 12 MONTHS OR GREATER, Fair Value 153 103
UNREALIZED LOSSES 12 MONTHS OR GREATER, Gross Unrealized Losses 0 0
TOTAL, Fair Value 153 208
TOTAL, Gross Unrealized Losses 0 (1)
Corporate debt securities    
Schedule of Investments [Line Items]    
UNREALIZED LOSSES LESS THAN 12 MONTHS, Fair Value 13,483 16,990
UNREALIZED LOSSES LESS THAN 12 MONTHS, Gross Unrealized Losses (257) (344)
UNREALIZED LOSSES 12 MONTHS OR GREATER, Fair Value 6,738 3,511
UNREALIZED LOSSES 12 MONTHS OR GREATER, Gross Unrealized Losses (189) (101)
TOTAL, Fair Value 20,221 20,501
TOTAL, Gross Unrealized Losses (446) (445)
U.S. agency mortgage-backed securities    
Schedule of Investments [Line Items]    
UNREALIZED LOSSES LESS THAN 12 MONTHS, Fair Value 456 826
UNREALIZED LOSSES LESS THAN 12 MONTHS, Gross Unrealized Losses (12) (24)
UNREALIZED LOSSES 12 MONTHS OR GREATER, Fair Value 947 581
UNREALIZED LOSSES 12 MONTHS OR GREATER, Gross Unrealized Losses (48) (29)
TOTAL, Fair Value 1,403 1,407
TOTAL, Gross Unrealized Losses $ (60) $ (53)
v3.10.0.1
Available-for-Sale Debt Investments and Equity Investments (Additional Information) (Details)
entity in Millions
3 Months Ended
Oct. 27, 2018
USD ($)
entity
Oct. 28, 2017
USD ($)
Jul. 28, 2018
USD ($)
Schedule of Investments [Line Items]      
Impairment charges of available-for-sale investments $ 0 $ 0  
Average daily balance of securities lending $ 500,000,000 $ 500,000,000  
Fair value of securities received as collateral that can be resold or repledged, percentage (at least) 102.00%    
Secured lending transactions outstanding $ 0   $ 0
Number of variable interest entities required to be consolidated (entity) | entity 0    
Investments in privately held companies $ 1,200,000,000    
Funding commitments 204,000,000    
Variable Interest Entity, Not Primary Beneficiary      
Schedule of Investments [Line Items]      
Investments in privately held companies $ 670,000,000    
v3.10.0.1
Available-for-Sale Debt Investments and Equity Investments (Maturities of Fixed Income Securities) (Details) - USD ($)
$ in Millions
Oct. 27, 2018
Jul. 28, 2018
Debt Securities, Available-for-sale, Amortized Cost, Fiscal Year Maturity [Abstract]    
Within 1 year $ 12,283  
After 1 year through 5 years 19,248  
After 5 years through 10 years 1,662  
After 10 years 15  
Mortgage-backed securities with no single maturity 1,481  
Amortized Cost 34,689 $ 37,512
Debt Securities, Available-for-sale, Fair Value, Fiscal Year Maturity [Abstract]    
Within 1 year 12,243  
After 1 year through 5 years 18,922  
After 5 years through 10 years 1,581  
After 10 years 16  
Mortgage-backed securities with no single maturity 1,421  
Total $ 34,183 $ 37,009
v3.10.0.1
Available-for-Sale Debt Investments and Equity Investments (Summary of Gains and Losses Recognized on Marketable and Non-marketable Equity Securities) (Details)
$ in Millions
3 Months Ended
Oct. 27, 2018
USD ($)
Adjustments to non-marketable equity securities measured using the measurement alternative:  
Upward adjustments $ 10
Downward adjustments, including impairments (16)
Net downward adjustments (6)
Net gains and losses recognized during the period on equity investments 8
Less: Net gains and losses recognized on equity investments sold (12)
Unrealized gains and losses recognized during reporting period on equity securities still held at the reporting date $ (4)
v3.10.0.1
Fair Value (Assets and Liabilities Measured at Fair Value on Recurring Basis) (Details) - Fair Value, Measurements, Recurring - USD ($)
$ in Millions
Oct. 27, 2018
Jul. 28, 2018
Fair Value Measurements [Line Items]    
Assets: $ 40,767 $ 44,506
Liabilities: 91 74
Fair Value, Inputs, Level 1 [Member]    
Fair Value Measurements [Line Items]    
Assets: 6,332 7,495
Liabilities: 0 0
Level 2    
Fair Value Measurements [Line Items]    
Assets: 34,435 37,011
Liabilities: 91 74
Derivative assets    
Fair Value Measurements [Line Items]    
Assets: 6 2
Derivative assets | Fair Value, Inputs, Level 1 [Member]    
Fair Value Measurements [Line Items]    
Assets: 0 0
Derivative assets | Level 2    
Fair Value Measurements [Line Items]    
Assets: 6 2
Derivative liabilities    
Fair Value Measurements [Line Items]    
Liabilities: 91 74
Derivative liabilities | Fair Value, Inputs, Level 1 [Member]    
Fair Value Measurements [Line Items]    
Liabilities: 0 0
Derivative liabilities | Level 2    
Fair Value Measurements [Line Items]    
Liabilities: 91 74
Money market funds | Cash equivalents:    
Fair Value Measurements [Line Items]    
Assets: 6,332 6,890
Money market funds | Cash equivalents: | Fair Value, Inputs, Level 1 [Member]    
Fair Value Measurements [Line Items]    
Assets: 6,332 6,890
Money market funds | Cash equivalents: | Level 2    
Fair Value Measurements [Line Items]    
Assets: 0 0
U.S. government securities | Available-for-sale debt investments:    
Fair Value Measurements [Line Items]    
Assets: 5,754 7,275
U.S. government securities | Available-for-sale debt investments: | Fair Value, Inputs, Level 1 [Member]    
Fair Value Measurements [Line Items]    
Assets: 0 0
U.S. government securities | Available-for-sale debt investments: | Level 2    
Fair Value Measurements [Line Items]    
Assets: 5,754 7,275
U.S. government agency securities | Available-for-sale debt investments:    
Fair Value Measurements [Line Items]    
Assets: 430 727
U.S. government agency securities | Available-for-sale debt investments: | Fair Value, Inputs, Level 1 [Member]    
Fair Value Measurements [Line Items]    
Assets: 0 0
U.S. government agency securities | Available-for-sale debt investments: | Level 2    
Fair Value Measurements [Line Items]    
Assets: 430 727
Non-U.S. government and agency securities | Available-for-sale debt investments:    
Fair Value Measurements [Line Items]    
Assets: 153 208
Non-U.S. government and agency securities | Available-for-sale debt investments: | Fair Value, Inputs, Level 1 [Member]    
Fair Value Measurements [Line Items]    
Assets: 0 0
Non-U.S. government and agency securities | Available-for-sale debt investments: | Level 2    
Fair Value Measurements [Line Items]    
Assets: 153 208
Corporate debt securities | Available-for-sale debt investments:    
Fair Value Measurements [Line Items]    
Assets: 26,031 27,364
Corporate debt securities | Available-for-sale debt investments: | Fair Value, Inputs, Level 1 [Member]    
Fair Value Measurements [Line Items]    
Assets: 0 0
Corporate debt securities | Available-for-sale debt investments: | Level 2    
Fair Value Measurements [Line Items]    
Assets: 26,031 27,364
U.S. agency mortgage-backed securities | Available-for-sale debt investments:    
Fair Value Measurements [Line Items]    
Assets: 1,421 1,435
U.S. agency mortgage-backed securities | Available-for-sale debt investments: | Fair Value, Inputs, Level 1 [Member]    
Fair Value Measurements [Line Items]    
Assets: 0 0
U.S. agency mortgage-backed securities | Available-for-sale debt investments: | Level 2    
Fair Value Measurements [Line Items]    
Assets: 1,421 1,435
Commercial paper | Cash equivalents:    
Fair Value Measurements [Line Items]    
Assets: 210 0
Commercial paper | Cash equivalents: | Fair Value, Inputs, Level 1 [Member]    
Fair Value Measurements [Line Items]    
Assets: 0 0
Commercial paper | Cash equivalents: | Level 2    
Fair Value Measurements [Line Items]    
Assets: 210 0
Commercial paper | Available-for-sale debt investments:    
Fair Value Measurements [Line Items]    
Assets: 309 0
Commercial paper | Available-for-sale debt investments: | Fair Value, Inputs, Level 1 [Member]    
Fair Value Measurements [Line Items]    
Assets: 0 0
Commercial paper | Available-for-sale debt investments: | Level 2    
Fair Value Measurements [Line Items]    
Assets: 309 0
Certificates of deposit | Cash equivalents:    
Fair Value Measurements [Line Items]    
Assets: 20 0
Certificates of deposit | Cash equivalents: | Fair Value, Inputs, Level 1 [Member]    
Fair Value Measurements [Line Items]    
Assets: 0 0
Certificates of deposit | Cash equivalents: | Level 2    
Fair Value Measurements [Line Items]    
Assets: 20 0
Certificates of deposit | Available-for-sale debt investments:    
Fair Value Measurements [Line Items]    
Assets: 85 0
Certificates of deposit | Available-for-sale debt investments: | Fair Value, Inputs, Level 1 [Member]    
Fair Value Measurements [Line Items]    
Assets: 0 0
Certificates of deposit | Available-for-sale debt investments: | Level 2    
Fair Value Measurements [Line Items]    
Assets: 85 0
Repurchase agreements | Cash equivalents:    
Fair Value Measurements [Line Items]    
Assets: 16 0
Repurchase agreements | Cash equivalents: | Fair Value, Inputs, Level 1 [Member]    
Fair Value Measurements [Line Items]    
Assets: 0 0
Repurchase agreements | Cash equivalents: | Level 2    
Fair Value Measurements [Line Items]    
Assets: 16 0
Equity securities | Available-for-sale debt investments:    
Fair Value Measurements [Line Items]    
Assets: 0 605
Equity securities | Available-for-sale debt investments: | Fair Value, Inputs, Level 1 [Member]    
Fair Value Measurements [Line Items]    
Assets: 0 605
Equity securities | Available-for-sale debt investments: | Level 2    
Fair Value Measurements [Line Items]    
Assets: $ 0 $ 0
v3.10.0.1
Fair Value (Fair Value, Nonrecurring Measurement) (Details) - USD ($)
$ in Millions
3 Months Ended
Oct. 27, 2018
Oct. 28, 2017
Fair Value, Measurements, Nonrecurring | Level 3 | Equity securities    
Fair Value Assets And Liabilities Measured On Nonrecurring Basis [Line Items]    
Total gains (losses) for nonrecurring measurements $ (6) $ (21)
v3.10.0.1
Fair Value (Additional Information) (Details) - USD ($)
$ in Millions
Oct. 27, 2018
Jul. 28, 2018
Fair Value Measurements [Line Items]    
Senior notes, carrying value $ 25,564 $ 25,569
Level 3    
Fair Value Measurements [Line Items]    
Long term loan receivables and financed service contracts and others carrying value 3,400 3,600
Level 2    
Fair Value Measurements [Line Items]    
Senior notes, fair value 26,200 26,400
Senior notes, carrying value $ 25,600 $ 25,600
v3.10.0.1
Borrowings (Schedule Of Short-Term Debt) (Details) - USD ($)
$ in Millions
Oct. 27, 2018
Jul. 28, 2018
Short-term Debt [Line Items]    
Amount $ 7,241 $ 5,238
Current portion of long-term debt    
Short-term Debt [Line Items]    
Amount $ 7,241 $ 5,238
Effective Rate 3.06% 3.46%
v3.10.0.1
Borrowings (Additional Information) (Details) - USD ($)
May 15, 2015
Oct. 27, 2018
Jul. 28, 2018
Debt Instrument [Line Items]      
Short-term debt   $ 7,241,000,000 $ 5,238,000,000
Derivative, notional amount   10,526,000,000 10,011,000,000
Line of credit facility, amount outstanding   0  
Unsecured revolving credit facility      
Debt Instrument [Line Items]      
Current borrowing capacity $ 3,000,000,000    
Additional credit facility upon agreement (up to) $ 2,000,000,000.0    
Unsecured revolving credit facility | Federal fund rate plus 0.50%      
Debt Instrument [Line Items]      
Interest rate based on % above pre-defined market rate 0.50%    
Unsecured revolving credit facility | LIBOR      
Debt Instrument [Line Items]      
Interest rate based on % above pre-defined market rate 1.00%    
Unsecured revolving credit facility | Eurodollar      
Debt Instrument [Line Items]      
Interest rate based on % above pre-defined market rate 0.00%    
Derivatives designated as hedging instruments: | Interest rate derivatives      
Debt Instrument [Line Items]      
Derivative, notional amount   6,750,000,000 6,750,000,000
Commercial paper      
Debt Instrument [Line Items]      
Commercial paper, maximum borrowing limit (up to)   10,000,000,000.0  
Short-term debt   $ 0 $ 0
v3.10.0.1
Borrowings (Schedule of Long-Term Debt) (Details) - USD ($)
$ in Millions
3 Months Ended
Oct. 27, 2018
Jul. 28, 2018
Debt Instrument [Line Items]    
Total $ 25,750 $ 25,750
Unaccreted discount/issuance costs (112) (116)
Hedge accounting fair value adjustments (74) (65)
Total 25,564 25,569
Current portion of long-term debt 7,241 5,238
Long-term debt 18,323 20,331
Floating Rate Notes 3-month Libor Plus 0.50% Due March 2019    
Debt Instrument [Line Items]    
Amount $ 500 $ 500
Effective Rate 2.88% 2.86%
Floating Rate Notes 3-month Libor Plus 0.34% Due September 2019    
Debt Instrument [Line Items]    
Amount $ 500 $ 500
Effective Rate 2.72% 2.71%
Fixed-Rate Notes, 4.95%, Due February 2019    
Debt Instrument [Line Items]    
Interest rate, stated percentage 4.95%  
Amount $ 2,000 $ 2,000
Effective Rate 5.22% 5.17%
Fixed-Rate Notes, 1.60%, Due February 2019    
Debt Instrument [Line Items]    
Interest rate, stated percentage 1.60%  
Amount $ 1,000 $ 1,000
Effective Rate 1.67% 1.67%
Fixed-Rate Notes, 2.125%, Due March 2019    
Debt Instrument [Line Items]    
Interest rate, stated percentage 2.125%  
Amount $ 1,750 $ 1,750
Effective Rate 2.87% 2.71%
Fixed-Rate Notes, 1.40%, Due September 2019    
Debt Instrument [Line Items]    
Interest rate, stated percentage 1.40%  
Amount $ 1,500 $ 1,500
Effective Rate 1.48% 1.48%
Fixed-Rate Notes, 4.45%, Due January 2020    
Debt Instrument [Line Items]    
Interest rate, stated percentage 4.45%  
Amount $ 2,500 $ 2,500
Effective Rate 4.68% 4.52%
Fixed-Rate Notes, 2.45%, Due June 2020    
Debt Instrument [Line Items]    
Interest rate, stated percentage 2.45%  
Amount $ 1,500 $ 1,500
Effective Rate 2.54% 2.54%
Fixed-Rate Notes, 2.20%, Due February 2021    
Debt Instrument [Line Items]    
Interest rate, stated percentage 2.20%  
Amount $ 2,500 $ 2,500
Effective Rate 2.30% 2.30%
Fixed-Rate Notes, 2.90%, Due March 2021    
Debt Instrument [Line Items]    
Interest rate, stated percentage 2.90%  
Amount $ 500 $ 500
Effective Rate 3.05% 2.86%
Fixed-Rate Notes, 1.85%, Due September 2021    
Debt Instrument [Line Items]    
Interest rate, stated percentage 1.85%  
Amount $ 2,000 $ 2,000
Effective Rate 1.90% 1.90%
Fixed-Rate Notes, 3.00 %, Due June 15, 2022    
Debt Instrument [Line Items]    
Interest rate, stated percentage 3.00%  
Amount $ 500 $ 500
Effective Rate 3.32% 3.11%
Fixed-Rate Notes, 2.60%, Due February, 2023    
Debt Instrument [Line Items]    
Interest rate, stated percentage 2.60%  
Amount $ 500 $ 500
Effective Rate 2.68% 2.68%
Fixed-Rate Notes, 2.20%, Due September 2023    
Debt Instrument [Line Items]    
Interest rate, stated percentage 2.20%  
Amount $ 750 $ 750
Effective Rate 2.27% 2.27%
Fixed-Rate Notes, 3.625%, Due March 2024    
Debt Instrument [Line Items]    
Interest rate, stated percentage 3.625%  
Amount $ 1,000 $ 1,000
Effective Rate 3.17% 2.98%
Fixed-Rate Notes, 3.50%, Due June 15, 2025    
Debt Instrument [Line Items]    
Interest rate, stated percentage 3.50%  
Amount $ 500 $ 500
Effective Rate 3.48% 3.27%
Fixed-Rate Notes, 2.95%, Due February, 2026    
Debt Instrument [Line Items]    
Interest rate, stated percentage 2.95%  
Amount $ 750 $ 750
Effective Rate 3.01% 3.01%
Fixed-Rate Notes, 2.50%, Due September 2026    
Debt Instrument [Line Items]    
Interest rate, stated percentage 2.50%  
Amount $ 1,500 $ 1,500
Effective Rate 2.55% 2.55%
Fixed-Rate Notes, 5.90%, Due February 2039    
Debt Instrument [Line Items]    
Interest rate, stated percentage 5.90%  
Amount $ 2,000 $ 2,000
Effective Rate 6.11% 6.11%
Fixed-Rate Notes, 5.50%, Due January 2040    
Debt Instrument [Line Items]    
Interest rate, stated percentage 5.50%  
Amount $ 2,000 $ 2,000
Effective Rate 5.67% 5.67%
LIBOR | Floating Rate Notes 3-month Libor Plus 0.50% Due March 2019    
Debt Instrument [Line Items]    
Three-month LIBOR plus this percentage 0.50%  
LIBOR | Floating Rate Notes 3-month Libor Plus 0.34% Due September 2019    
Debt Instrument [Line Items]    
Three-month LIBOR plus this percentage 0.34%  
v3.10.0.1
Borrowings (Schedule of Future Principal Payments for Long-Term Debt) (Details) - USD ($)
$ in Millions
Oct. 27, 2018
Jul. 28, 2018
Debt Disclosure [Abstract]    
2019 (remaining nine months) $ 5,250  
2020 6,000  
2021 3,000  
2022 2,500  
2023 500  
Thereafter 8,500  
Total $ 25,750 $ 25,750
v3.10.0.1
Derivative Instruments (Derivatives Recorded at Fair Value) (Details) - USD ($)
$ in Millions
Oct. 27, 2018
Jul. 28, 2018
Derivative [Line Items]    
DERIVATIVE ASSETS $ 6 $ 2
DERIVATIVE LIABILITIES 91 74
Derivatives designated as hedging instruments:    
Derivative [Line Items]    
DERIVATIVE ASSETS 4 1
DERIVATIVE LIABILITIES 87 72
Derivatives designated as hedging instruments: | Foreign currency derivatives | Other current assets    
Derivative [Line Items]    
DERIVATIVE ASSETS 4 1
Derivatives designated as hedging instruments: | Foreign currency derivatives | Other current liabilities    
Derivative [Line Items]    
DERIVATIVE LIABILITIES 6 0
Derivatives designated as hedging instruments: | Interest rate derivatives | Other current assets    
Derivative [Line Items]    
DERIVATIVE ASSETS 0 0
Derivatives designated as hedging instruments: | Interest rate derivatives | Other current liabilities    
Derivative [Line Items]    
DERIVATIVE LIABILITIES 7 10
Derivatives designated as hedging instruments: | Interest rate derivatives | Other assets    
Derivative [Line Items]    
DERIVATIVE ASSETS 0 0
Derivatives designated as hedging instruments: | Interest rate derivatives | Other long-term liabilities    
Derivative [Line Items]    
DERIVATIVE LIABILITIES 74 62
Derivatives not designated as hedging instruments:    
Derivative [Line Items]    
DERIVATIVE ASSETS 2 1
DERIVATIVE LIABILITIES 4 2
Derivatives not designated as hedging instruments: | Foreign currency derivatives | Other current assets    
Derivative [Line Items]    
DERIVATIVE ASSETS 1 1
Derivatives not designated as hedging instruments: | Foreign currency derivatives | Other current liabilities    
Derivative [Line Items]    
DERIVATIVE LIABILITIES 4 2
Derivatives not designated as hedging instruments: | Total return swaps—deferred compensation | Other current assets    
Derivative [Line Items]    
DERIVATIVE ASSETS 1 0
Derivatives not designated as hedging instruments: | Total return swaps—deferred compensation | Other current liabilities    
Derivative [Line Items]    
DERIVATIVE LIABILITIES $ 0 $ 0
v3.10.0.1
Derivative Instruments (Effect of Derivative Instruments Designated as Cash Flow Hedges on Other Comprehensive Income and Consolidated Statements of Operations Summary) (Details) - USD ($)
$ in Millions
3 Months Ended
Oct. 27, 2018
Oct. 28, 2017
Derivatives designated as cash flow hedging instruments:    
Derivative [Line Items]    
GAINS (LOSSES) RECOGNIZED IN OCI ON DERIVATIVES (EFFECTIVE PORTION) $ (4) $ 8
GAINS (LOSSES) RECLASSIFIED FROM AOCI INTO INCOME (EFFECTIVE PORTION) 0 13
Derivatives designated as cash flow hedging instruments: | Foreign currency derivatives    
Derivative [Line Items]    
GAINS (LOSSES) RECOGNIZED IN OCI ON DERIVATIVES (EFFECTIVE PORTION) (4) 8
Derivatives designated as cash flow hedging instruments: | Foreign currency derivatives | Revenue — service | Service    
Derivative [Line Items]    
GAINS (LOSSES) RECLASSIFIED FROM AOCI INTO INCOME (EFFECTIVE PORTION) 1 0
Derivatives designated as cash flow hedging instruments: | Foreign currency derivatives | Operating expenses    
Derivative [Line Items]    
GAINS (LOSSES) RECLASSIFIED FROM AOCI INTO INCOME (EFFECTIVE PORTION) (1) 10
Derivatives designated as cash flow hedging instruments: | Foreign currency derivatives | Cost of sales | Service    
Derivative [Line Items]    
GAINS (LOSSES) RECLASSIFIED FROM AOCI INTO INCOME (EFFECTIVE PORTION) 0 3
Derivatives designated as net investment hedging instruments: | Foreign currency derivatives    
Derivative [Line Items]    
GAINS (LOSSES) RECOGNIZED IN OCI ON DERIVATIVES (EFFECTIVE PORTION) 4 (5)
Derivatives designated as net investment hedging instruments: | Foreign currency derivatives | Other income (loss), net    
Derivative [Line Items]    
GAINS (LOSSES) RECLASSIFIED FROM AOCI INTO INCOME (EFFECTIVE PORTION) $ 0 $ 0
v3.10.0.1
Derivative Instruments (Additional Information) (Details)
$ in Millions
3 Months Ended
Oct. 27, 2018
USD ($)
derivative
Jul. 28, 2018
derivative
Derivative [Line Items]    
Net derivative gains or losses to be reclassified from AOCI into earnings in next twelve months | $ $ 3  
Fixed Income Securities    
Derivative [Line Items]    
Number of interest rate derivatives held (derivative) | derivative 0 0
Derivatives designated as cash flow hedging instruments:    
Derivative [Line Items]    
Foreign currency cash flow hedges maturity period, maximum, months 24 months  
v3.10.0.1
Derivative Instruments (Effect of Derivative Instruments Designated as Fair Value Hedges and Underlying Hedged Items on Consolidated Statements of Operations) (Details) - Derivatives Designated as Fair Value Hedging Instruments - USD ($)
$ in Millions
3 Months Ended
Oct. 27, 2018
Oct. 28, 2017
Hedge Underlying Gain Loss [Line Items]    
GAINS (LOSSES) ON DERIVATIVE INSTRUMENTS $ (9) $ (60)
GAINS (LOSSES) RELATED TO HEDGED ITEMS 9 60
Interest rate derivatives | Interest expense    
Hedge Underlying Gain Loss [Line Items]    
GAINS (LOSSES) ON DERIVATIVE INSTRUMENTS (9) (46)
GAINS (LOSSES) RELATED TO HEDGED ITEMS 9 46
Equity derivatives | Other income (loss), net    
Hedge Underlying Gain Loss [Line Items]    
GAINS (LOSSES) ON DERIVATIVE INSTRUMENTS 0 (14)
GAINS (LOSSES) RELATED TO HEDGED ITEMS $ 0 $ 14
v3.10.0.1
Derivative Instruments (Effect of Derivative Instruments Not Designated as Hedges on Consolidated Statement of Operations Summary) (Details) - Derivatives not designated as hedging instruments: - USD ($)
$ in Millions
3 Months Ended
Oct. 27, 2018
Oct. 28, 2017
Derivative Instruments, Gain (Loss) [Line Items]    
GAINS (LOSSES) FOR THE PERIOD $ (56) $ 22
Foreign currency derivatives | Other income (loss), net    
Derivative Instruments, Gain (Loss) [Line Items]    
GAINS (LOSSES) FOR THE PERIOD (27) 7
Total return swaps—deferred compensation | Other income (loss), net    
Derivative Instruments, Gain (Loss) [Line Items]    
GAINS (LOSSES) FOR THE PERIOD (4) (2)
Total return swaps—deferred compensation | Operating expenses    
Derivative Instruments, Gain (Loss) [Line Items]    
GAINS (LOSSES) FOR THE PERIOD (24) 15
Total return swaps—deferred compensation | Cost of sales | Product    
Derivative Instruments, Gain (Loss) [Line Items]    
GAINS (LOSSES) FOR THE PERIOD (1) 0
Total return swaps—deferred compensation | Cost of sales | Service    
Derivative Instruments, Gain (Loss) [Line Items]    
GAINS (LOSSES) FOR THE PERIOD (1) 1
Equity derivatives | Other income (loss), net    
Derivative Instruments, Gain (Loss) [Line Items]    
GAINS (LOSSES) FOR THE PERIOD $ 1 $ 1
v3.10.0.1
Derivative Instruments (Schedule of Notional Amounts of Derivatives Outstanding) (Details) - USD ($)
Oct. 27, 2018
Jul. 28, 2018
Derivative [Line Items]    
Derivatives $ 10,526,000,000 $ 10,011,000,000
Derivatives designated as hedging instruments: | Foreign currency derivatives    
Derivative [Line Items]    
Derivatives 796,000,000 147,000,000
Derivatives designated as hedging instruments: | Interest rate derivatives    
Derivative [Line Items]    
Derivatives 6,750,000,000 6,750,000,000
Derivatives designated as hedging instruments: | Net investment hedging instruments    
Derivative [Line Items]    
Derivatives 246,000,000 250,000,000
Derivatives not designated as hedging instruments: | Foreign currency derivatives    
Derivative [Line Items]    
Derivatives 2,170,000,000 2,298,000,000
Derivatives not designated as hedging instruments: | Total return swaps—deferred compensation    
Derivative [Line Items]    
Derivatives $ 564,000,000 $ 566,000,000
v3.10.0.1
Derivative Instruments (Offsetting of Derivative Assets and Liabilities) (Details) - USD ($)
$ in Millions
Oct. 27, 2018
Jul. 28, 2018
Derivative Instruments and Hedging Activities Disclosure [Abstract]    
Gross Amount of Recognized, Assets $ 6 $ 2
Gross Amounts Offset, Assets 0 0
Net Amounts Presented, Assets 6 2
Gross Derivative Amounts, Assets (5) (2)
Cash Collateral, Assets 0 0
Net Amount, Assets 1 0
Gross Amount of Recognized, Liabilities 91 74
Gross Amounts Offset, Liabilities 0 0
Net Amount Presented, Liabilities 91 74
Gross Derivative Amounts, Liabilities (5) (2)
Cash Collateral, Liabilities (70) (53)
Net Amount, Liabilities $ 16 $ 19
v3.10.0.1
Commitments and Contingencies (Schedule of Future Minimum Lease Payments Under All Noncancelable Operating Leases) (Details)
$ in Millions
Oct. 27, 2018
USD ($)
Commitments and Contingencies Disclosure [Abstract]  
2019 (remaining nine months) $ 312
2020 323
2021 220
2022 152
2023 102
Thereafter 116
Total $ 1,225
v3.10.0.1
Commitments and Contingencies (Schedule of Purchase Commitments) (Details) - USD ($)
$ in Millions
Oct. 27, 2018
Jul. 28, 2018
Commitments and Contingencies Disclosure [Abstract]    
Less than 1 year $ 5,500 $ 5,407
1 to 3 years 704 710
3 to 5 years 270 360
Total $ 6,474 $ 6,477
v3.10.0.1
Commitments and Contingencies (Additional Information) (Details)
$ in Millions
3 Months Ended
May 30, 2017
USD ($)
May 25, 2017
USD ($)
Mar. 14, 2017
USD ($)
Mar. 03, 2017
USD ($)
patent
May 12, 2016
USD ($)
Sep. 04, 2013
patent
Oct. 27, 2018
USD ($)
Oct. 28, 2017
USD ($)
Jul. 28, 2018
USD ($)
Contingency [Line Items]                  
Liability for purchase commitments             $ 150.0   $ 159.0
Future compensation expense & contingent consideration (up to)             585.0    
Commitments and contingencies              
Volume of channel partner financing             7,200.0 $ 6,700.0  
Balance of the channel partner financing subject to guarantees             931.0   953.0
Financing provided by third parties for leases and loans on which the Company has provided guarantees             3.0 14.0  
Brazilian authority claim of import tax evasion by importer tax portion             221.0    
Brazilian authority claim of import tax evasion by importer interest portion             1,400.0    
Brazilian authority claim of import tax evasion by importer penalties portion             1,000.0    
SRI International                  
Contingency [Line Items]                  
Damages awarded, value         $ 23.7        
SRI International | Pending Litigation                  
Contingency [Line Items]                  
Damages awarded, value   $ 57.0              
Number of allegedly infringed patents (patent) | patent           2      
Percentage of royalty awarded   3.50%              
Arista Networks, Inc vs. Company                  
Contingency [Line Items]                  
Proceeds from Legal Settlements             $ 400.0    
Patent Infringement | Sprint Communications Company, L.P. vs. Time Warner Cable, Inc. | Pending Litigation                  
Contingency [Line Items]                  
Number of patents found infringed (patent) | patent       5          
Damages awarded, value     $ 139.8 $ 139.8          
Percentage of post-judgment interest awarded     1.06%            
Pre-judgment interest requested $ 20.3                
Patent Indemnification                  
Contingency [Line Items]                  
Legal and indemnification settlement               $ 122.0  
Minimum                  
Contingency [Line Items]                  
Warranty period for products             90 days    
Channel partners revolving short-term financing payment term             60 days    
Maximum                  
Contingency [Line Items]                  
Warranty period for products             5 years    
Channel partners revolving short-term financing payment term             90 days    
End user lease and loan term             3 years    
Investments in privately held companies (impaired)                  
Contingency [Line Items]                  
Commitments and contingencies             $ 378.0   $ 223.0
v3.10.0.1
Commitments and Contingencies (Schedule of Other Commitments) (Details) - USD ($)
$ in Millions
3 Months Ended
Oct. 27, 2018
Oct. 28, 2017
Acquisition    
Contingency [Line Items]    
Compensation expense related to acquisitions $ 109 $ 42
v3.10.0.1
Commitments and Contingencies (Schedule Of Product Warranty Liability) (Details) - USD ($)
$ in Millions
3 Months Ended
Oct. 27, 2018
Oct. 28, 2017
Movement in Standard and Extended Product Warranty, Increase (Decrease) [Roll Forward]    
Balance at beginning of period $ 359 $ 407
Provisions for warranties issued 156 148
Adjustments for pre-existing warranties (3) (12)
Settlements (145) (149)
Balance at end of period $ 367 $ 394
v3.10.0.1
Commitments and Contingencies (Schedule of Financing Guarantees Outstanding) (Details) - USD ($)
$ in Millions
Oct. 27, 2018
Jul. 28, 2018
Loss Contingencies [Line Items]    
Maximum potential future payments relating to financing guarantees: $ 335 $ 308
Deferred revenue associated with financing guarantees: (98) (122)
Maximum potential future payments relating to financing guarantees, net of associated deferred revenue 237 186
Channel partner    
Loss Contingencies [Line Items]    
Maximum potential future payments relating to financing guarantees: 307 277
Deferred revenue associated with financing guarantees: (72) (94)
End user    
Loss Contingencies [Line Items]    
Maximum potential future payments relating to financing guarantees: 28 31
Deferred revenue associated with financing guarantees: $ (26) $ (28)
v3.10.0.1
Shareholders' Equity (Additional Information) (Details) - USD ($)
$ / shares in Units, shares in Millions
3 Months Ended
Oct. 27, 2018
Oct. 28, 2017
Jul. 28, 2018
Feb. 14, 2018
Class of Stock [Line Items]        
Cash dividends paid per common share (in dollars per share) $ 0.33 $ 0.29    
Payments of dividends $ 1,500,000,000 $ 1,436,000,000    
Authorized additional repurchase amount       $ 25,000,000,000
Remaining authorized repurchase amount $ 14,000,000,000      
Shares repurchased for tax withholdings on vesting of restricted stock units (in shares) 7 11    
Payments related to tax withholding for share-based compensation $ 318,000,000 $ 342,000,000    
Stock repurchase program        
Class of Stock [Line Items]        
Stock repurchases pending settlement $ 130,000,000   $ 180,000,000  
v3.10.0.1
Shareholders' Equity (Stock Repurchase Program) (Details) - USD ($)
$ / shares in Units, shares in Millions, $ in Millions
3 Months Ended
Oct. 27, 2018
Jul. 28, 2018
Apr. 28, 2018
Jan. 27, 2018
Oct. 28, 2017
Stockholders' Equity Note [Abstract]          
Repurchase of common stock under the stock repurchase program, Shares Repurchased (in shares) 109 138 140 103 51
Repurchase of common stock under the stock repurchase program, Weighted-Average Price per Share (in dollars per share) $ 46.01 $ 43.58 $ 42.83 $ 39.07 $ 31.80
Repurchase of common stock under the stock repurchase program, Amount Repurchased $ 5,026 $ 6,015 $ 6,015 $ 4,011 $ 1,620
v3.10.0.1
Employee Benefit Plans (Additional Information) (Details)
$ / shares in Units, $ in Billions
3 Months Ended
Nov. 12, 2009
shares
Oct. 27, 2018
USD ($)
stock_incentive_plan
shares
Oct. 28, 2017
shares
Oct. 26, 2018
$ / shares
Jul. 28, 2018
$ / shares
shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Number of stock incentive plans (stock incentive plan) | stock_incentive_plan   1      
Total compensation cost related to unvested share-based awards | $   $ 3.0      
Expected period of recognition of compensation cost   2 years 7 months 6 days      
Closing stock price (in dollars per share) | $ / shares       $ 44.25  
In-the-money exercisable stock option shares (in shares)   4,000,000      
Number Exercisable (in shares)         4,000,000
Weighted- average exercise price per share (in dollars per share) | $ / shares         $ 6.84
Employee Stock Purchase Plan          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Shares reserved for issuance (in shares)   621,400,000.0      
Expiration date for stock options and stock appreciation rights   24 months      
Shares eligible for employees purchase, percentage of discount   15.00%      
Shares issued under employee purchase plan, shares (in shares)   0 0    
Shares available for issuance (in shares)   78,000,000      
2005 Plan          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Shares reserved for issuance (in shares)   694,000,000      
Exercise price as a percentage of market value for Options 100.00%        
Award requisite service period   3 years      
PRSU allocation between Financial operating goals and TSR   50.00%      
2005 Plan | Stock awards subsequent to November 12, 2009          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Reduction in shares available for issuance pursuant to November 12, 2009 amendment (in shares) 1.5 1.5      
2005 Plan | Stock awards subsequent to November 12, 2009 | Maximum          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Expiration date for stock options and stock appreciation rights 10 years        
2005 Plan | Employee Stock Option          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Award vesting period   1 year      
2005 Plan | Employee Stock Option | Maximum          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Share-based compensation award vesting rights, percentage   25.00%      
Award requisite service period   48 months      
2005 Plan | Employee Stock Option | Minimum          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Share-based compensation award vesting rights, percentage   20.00%      
Award requisite service period   36 months      
2005 Plan | Performance base and Market base RSU          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Award requisite service period   3 years      
2005 Plan | Performance based RSU based on Financial or nonFinancial operating goal | Maximum          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Award requisite service period   3 years      
2005 Plan | Performance based RSU based on Financial or nonFinancial operating goal | Minimum          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Award requisite service period   6 months      
2005 Plan | PRSU based on financial performance metrics | Maximum          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Share-based compensation award vesting rights, percentage   150.00%      
2005 Plan | PRSU based on financial performance metrics | Minimum          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Share-based compensation award vesting rights, percentage   0.00%      
2005 Plan | PRSU based on TSR | Maximum          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Share-based compensation award vesting rights, percentage   150.00%      
2005 Plan | PRSU based on TSR | Minimum          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Share-based compensation award vesting rights, percentage   0.00%      
2005 Plan | PRSU based on nonfinancial operating goals | Maximum          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Share-based compensation award vesting rights, percentage   100.00%      
2005 Plan | PRSU based on nonfinancial operating goals | Minimum          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Share-based compensation award vesting rights, percentage   0.00%      
2005 Plan | Time Based Stock Grants And Restricted Stock Units (RSUs)          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Award vesting period   4 years      
v3.10.0.1
Employee Benefit Plans (Summary Of Share-Based Compensation Expense) (Details) - USD ($)
$ in Millions
3 Months Ended
Oct. 27, 2018
Oct. 28, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]    
Total share-based compensation expense $ 408 $ 398
Income tax benefit for share-based compensation 165 175
Share-based compensation expense in cost of sales    
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]    
Total share-based compensation expense 56 57
Research and development    
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]    
Total share-based compensation expense 130 136
Sales and marketing    
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]    
Total share-based compensation expense 137 135
General and administrative    
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]    
Total share-based compensation expense 62 64
Restructuring and other charges    
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]    
Total share-based compensation expense 23 6
Share-based compensation expense in operating expenses    
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]    
Total share-based compensation expense 352 341
Product | Share-based compensation expense in cost of sales    
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]    
Total share-based compensation expense 23 23
Service | Share-based compensation expense in cost of sales    
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]    
Total share-based compensation expense $ 33 $ 34
v3.10.0.1
Employee Benefit Plans (Summary of Share-Based Awards available for Grant) (Details) - shares
3 Months Ended 12 Months Ended
Oct. 27, 2018
Jul. 28, 2018
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding [Roll Forward]    
Balance, beginning of period (in shares) 245,000,000 272,000,000
Restricted stock, stock units, and other share-based awards granted (in shares) (12,000,000) (70,000,000)
Share-based awards canceled/forfeited/expired (in shares) 5,000,000 18,000,000
Shares withheld for taxes and not issued (in shares) 9,000,000 25,000,000
Other (in shares) 1,000,000  
Balance, end of period (in shares) 248,000,000 245,000,000
v3.10.0.1
Employee Benefit Plans (Summary Of Restricted Stock And Stock Unit Activity) (Details) - USD ($)
$ / shares in Units, $ in Millions
3 Months Ended 12 Months Ended
Oct. 27, 2018
Jul. 28, 2018
Jul. 29, 2017
Restricted Stock/ Stock Units      
Assumed from acquisitions (in shares)   3,000,000  
Weighted-Average Grant Date Fair Value per Share      
Assumed from acquisitions (in dollars per share)   $ 8.20  
Restricted Stock/Stock Units      
Restricted Stock/ Stock Units      
Beginning balance (in shares) 119,000,000 141,000,000  
Granted (in shares) 8,000,000 46,000,000  
Assumed from acquisitions (in shares)   1,000,000  
Vested (in shares) (19,000,000) (53,000,000)  
Canceled/forfeited (in shares) (4,000,000) (16,000,000)  
Ending balance (in shares) 104,000,000 119,000,000 141,000,000
Weighted-Average Grant Date Fair Value per Share      
Beginning balance (in dollars per share) $ 30.56 $ 26.94  
Granted (in dollars per share) 45.05 35.62  
Assumed from acquisitions (in dollars per share)   28.26  
Vested (in dollars per share) 25.92 26.02  
Canceled/forfeited (in dollars per share) 30.33 28.37  
Ending balance (in dollars per share) $ 32.48 $ 30.56 $ 26.94
Aggregate Fair Value $ 883   $ 1,909
v3.10.0.1
Employee Benefit Plans (Summary Of Stock Option Activity) (Details) - $ / shares
3 Months Ended 12 Months Ended
Oct. 27, 2018
Jul. 28, 2018
Number Outstanding    
Beginning balance (in shares) 6,000,000 12,000,000
Assumed from acquisitions (in shares)   3,000,000
Exercised (in shares) (1,000,000) (8,000,000)
Canceled/forfeited/expired (in shares)   (1,000,000)
Ending balance (in shares) 5,000,000 6,000,000
Weighted-Average Exercise Price per Share    
Beginning balance (in dollars per share) $ 7.18 $ 6.15
Assumed from acquisitions (in dollars per share)   8.20
Exercised (in dollars per share) $ 6.50 5.77
Canceled/forfeited/expired (in dollars per share)   8.75
Ending Balance (in dollars per share)   $ 7.18
v3.10.0.1
Employee Benefit Plans (Summary Of Significant Ranges Of Outstanding And Exercisable Stock Options) (Details) - USD ($)
$ / shares in Units, $ in Millions
3 Months Ended
Oct. 27, 2018
Jul. 28, 2018
Jul. 29, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Number Outstanding (in shares) 5,000,000 6,000,000 12,000,000
Weighted- Average Exercise Price per Share (in dollars per share)   $ 7.18 $ 6.15
Number Exercisable (in shares)   4,000,000  
Weighted- Average Exercise Price per Share (in dollars per share)   $ 6.84  
$ 0.01 – 35.00      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Range of exercise prices, lower range price (in dollars per share) $ 0.01    
Range of exercise prices, upper range price (in dollars per share) $ 35    
Number Outstanding (in shares) 5,000,000    
Weighted- Average Remaining Contractual Life (in Years) 5 years 9 months 18 days    
Weighted- Average Exercise Price per Share (in dollars per share) $ 7.29    
Aggregate Intrinsic Value $ 195    
Number Exercisable (in shares) 4,000,000    
Weighted- Average Exercise Price per Share (in dollars per share) $ 7.06    
Aggregate Intrinsic Value (Exercisable Options) $ 140    
v3.10.0.1
Employee Benefit Plans (Summary Assumptions Related To And Valuation Of Employee Share-Based Awards (Time-Based RSU and PRSU)) (Details) - $ / shares
3 Months Ended
Oct. 27, 2018
Oct. 28, 2017
RESTRICTED STOCK UNITS    
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]    
Number of shares granted (in shares) 6,000,000 7,000,000
Grant date fair value per share (in dollars per share) $ 44.32 $ 29.81
Expected dividend yield 2.80% 3.60%
Range of risk-free interest rates, minimum 2.10% 1.00%
Range of risk-free interest rates, maximum 2.90% 1.90%
PERFORMANCE RESTRICTED STOCK UNITS    
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]    
Number of shares granted (in shares) 2,000,000 3,000,000
Grant date fair value per share (in dollars per share) $ 47.00 $ 31.31
Expected dividend yield 2.80% 3.60%
Range of risk-free interest rates, minimum 2.10% 1.00%
Range of risk-free interest rates, maximum 3.00% 1.60%
Range of expected volatilities for index, minimum 13.00% 13.20%
Range of expected volatilities for index, maximum 65.20% 81.00%
v3.10.0.1
Comprehensive Income (Loss) (AOCI components) (Details) - USD ($)
$ in Millions
3 Months Ended
Oct. 27, 2018
Oct. 28, 2017
Jul. 28, 2018
Jul. 29, 2017
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]        
Balance, beginning of period $ 43,204      
Other comprehensive income (loss) (201) $ (15)    
Effect of adoption of accounting standards     $ 3,729 $ 9
Balance, end of period 43,848      
Net Unrealized Gains (Losses) on Available-for-Sale Investments        
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]        
Balance, beginning of period (310) 373    
Other comprehensive income (loss) before reclassifications attributable to Cisco Systems, Inc. (8) 18    
(Gains) losses reclassified out of AOCI 6 (33)    
Tax benefit (expense) 13 (13)    
Other comprehensive income (loss) 11 (28)    
Effect of adoption of accounting standards     (168)  
Balance, end of period (467) 345    
Net Unrealized Gains (Losses) Cash Flow Hedging Instruments        
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]        
Balance, beginning of period (11) 32    
Other comprehensive income (loss) before reclassifications attributable to Cisco Systems, Inc. (4) 8    
(Gains) losses reclassified out of AOCI 0 (13)    
Tax benefit (expense) 1 1    
Other comprehensive income (loss) (3) (4)    
Effect of adoption of accounting standards     0  
Balance, end of period (14) 28    
Cumulative Translation Adjustment and Actuarial Gains (Losses)        
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]        
Balance, beginning of period (528) (359)    
Other comprehensive income (loss) before reclassifications attributable to Cisco Systems, Inc. (207) 18    
(Gains) losses reclassified out of AOCI (1) 1    
Tax benefit (expense) (1) (2)    
Other comprehensive income (loss) (209) 17    
Effect of adoption of accounting standards     0  
Balance, end of period (737) (342)    
Accumulated Other Comprehensive Income (Loss)        
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]        
Balance, beginning of period (849) 46    
Other comprehensive income (loss) before reclassifications attributable to Cisco Systems, Inc. (219) 44    
(Gains) losses reclassified out of AOCI 5 (45)    
Tax benefit (expense) 13 (14)    
Other comprehensive income (loss) (201) (15)    
Effect of adoption of accounting standards     $ (168)  
Balance, end of period $ (1,218) $ 31    
v3.10.0.1
Comprehensive Income (Loss) (Reclassification Out of Other Comprehensive Income) (Details) - USD ($)
$ in Millions
3 Months Ended
Oct. 27, 2018
Oct. 28, 2017
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items]    
Revenue $ 13,072 $ 12,136
NET INCOME 3,549 2,394
Total amounts reclassified out of AOCI (5) 45
Reclassification out of Accumulated Other Comprehensive Income | Net unrealized gains and losses on available-for-sale investments    
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items]    
Other income (loss), net (6) 33
Reclassification out of Accumulated Other Comprehensive Income | Net unrealized gains and losses on cash flow hedging instruments    
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items]    
Operating expenses (1) 10
NET INCOME 0 13
Reclassification out of Accumulated Other Comprehensive Income | Cumulative translation adjustment and actuarial gains and losses    
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items]    
Other income (loss), net 1 0
Operating expenses 0 1
Service    
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items]    
Revenue 3,182 3,082
Service | Reclassification out of Accumulated Other Comprehensive Income | Net unrealized gains and losses on cash flow hedging instruments    
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items]    
Revenue 1 0
Cost of sales $ 0 $ 3
v3.10.0.1
Income Taxes (Income Before Provision for Income Taxes) (Details) - USD ($)
$ in Millions
3 Months Ended
Oct. 27, 2018
Oct. 28, 2017
Income Tax Disclosure [Abstract]    
Income before provision for income taxes $ 3,909 $ 2,962
Provision for income taxes $ 360 $ 568
Effective tax rate 9.20% 19.20%
v3.10.0.1
Income Taxes (Additional Information) (Details) - USD ($)
$ in Millions
3 Months Ended 12 Months Ended
Oct. 27, 2018
Oct. 28, 2017
Jul. 28, 2018
Income Tax Contingency [Line Items]      
Benefit for provision for income taxes $ (360) $ (568)  
Tax Cuts and Jobs Act of 2017, provisional tax expense     $ 10,400
Tax Cuts and Jobs Act of 2017, transition tax expense (benefit) 8,100   $ (863)
Tax Cuts and Jobs Act of 2017, tax expense for foreign withholding tax 1,200    
Tax Cuts and Jobs Act of 2017, re-measurement of net deferred tax assets 1,100    
Unrecognized tax benefits 1,900    
Unrecognized tax benefits that would impact effective tax rate 1,700    
Unrecognized tax benefit that could be reduced in next 12 months 200    
Accounting Standards Update 2014-09 | Difference between Revenue Guidance in Effect before and after Topic 606      
Income Tax Contingency [Line Items]      
Benefit for provision for income taxes $ 152    
v3.10.0.1
Segment Information and Major Customers (Additional Information) (Details)
$ in Millions
3 Months Ended
Oct. 27, 2018
USD ($)
segment
Oct. 28, 2017
USD ($)
Segment Reporting Information [Line Items]    
Number of geographic segments (segment) | segment 3  
Revenue $ 13,072 $ 12,136
United States    
Segment Reporting Information [Line Items]    
Revenue $ 6,900 $ 6,500
v3.10.0.1
Segment Information and Major Customers (Summary of Reportable Segments) (Details) - USD ($)
$ in Millions
3 Months Ended
Oct. 27, 2018
Oct. 28, 2017
Segment Reporting Information [Line Items]    
Revenue, total $ 13,072 $ 12,136
Gross margin 8,146 7,427
Operating Segments | Americas    
Segment Reporting Information [Line Items]    
Revenue, total 7,751 7,350
Gross margin 5,070 4,722
Operating Segments | EMEA    
Segment Reporting Information [Line Items]    
Revenue, total 3,224 2,909
Gross margin 2,070 1,839
Operating Segments | APJC    
Segment Reporting Information [Line Items]    
Revenue, total 2,096 1,877
Gross margin 1,200 1,165
Segment Reconciling Items    
Segment Reporting Information [Line Items]    
Gross margin 8,341 7,726
Intersegment Eliminations    
Segment Reporting Information [Line Items]    
Gross margin $ (195) $ (299)
v3.10.0.1
Segment Information and Major Customers (Summary of Net Revenue for Groups of Similar Products and Services) (Details) - USD ($)
$ in Millions
3 Months Ended
Oct. 27, 2018
Oct. 28, 2017
Segment Reporting, Revenue Reconciling Item [Line Items]    
Revenue, total $ 13,072 $ 12,136
Infrastructure Platforms    
Segment Reporting, Revenue Reconciling Item [Line Items]    
Revenue, total 7,642 6,980
Applications    
Segment Reporting, Revenue Reconciling Item [Line Items]    
Revenue, total 1,419 1,203
Security    
Segment Reporting, Revenue Reconciling Item [Line Items]    
Revenue, total 651 585
Other Products    
Segment Reporting, Revenue Reconciling Item [Line Items]    
Revenue, total 178 286
Total Product    
Segment Reporting, Revenue Reconciling Item [Line Items]    
Revenue, total 9,890 9,054
Service    
Segment Reporting, Revenue Reconciling Item [Line Items]    
Revenue, total $ 3,182 $ 3,082
v3.10.0.1
Segment Information and Major Customers (Property and Equipment Information for Geographic Areas) (Details) - USD ($)
$ in Millions
Oct. 27, 2018
Jul. 28, 2018
Segment Reporting, Asset Reconciling Item [Line Items]    
Property and equipment, net $ 2,956 $ 3,006
United States    
Segment Reporting, Asset Reconciling Item [Line Items]    
Property and equipment, net 2,421 2,487
International    
Segment Reporting, Asset Reconciling Item [Line Items]    
Property and equipment, net $ 535 $ 519
v3.10.0.1
Net Income per Share (Calculation of Basic and Diluted Net Income per Share) (Details) - USD ($)
$ / shares in Units, shares in Millions, $ in Millions
3 Months Ended
Oct. 27, 2018
Oct. 28, 2017
Earnings Per Share [Abstract]    
Net income $ 3,549 $ 2,394
Weighted-average shares—basic (in shares) 4,565 4,959
Effect of dilutive potential common shares (in shares) 49 35
Weighted-average shares—diluted (in shares) 4,614 4,994
Net income (loss) per share—basic (in dollars per share) $ 0.78 $ 0.48
Net income (loss) per share—diluted (in dollars per share) $ 0.77 $ 0.48
Antidilutive employee share-based awards, excluded (in shares) 9 15