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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549 
_____________________________________
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 30, 2021
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
          
For the transition period from              to             
Commission file number 001-39940 
_____________________________________
CSCO-20211030_G1.JPG
CISCO SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Delaware   77-0059951
(State or other jurisdiction of
incorporation or organization)
  (I.R.S. Employer
Identification Number)
170 West Tasman Drive
San Jose, California 95134
(Address of principal executive office and zip code)
(408) 526-4000
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and formal fiscal year, if changed since last report.)
_____________________________________ 
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Stock, par value $0.001 per share CSCO The Nasdaq Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes    No    
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes     No    
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer Accelerated filer  
Non-accelerated filer Smaller reporting company  
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes  No 
Number of shares of the registrant’s common stock outstanding as of November 18, 2021: 4,217,606,555
____________________________________ 
1

Cisco Systems, Inc.
Form 10-Q for the Quarter Ended October 30, 2021
INDEX
Page
Part I
3
Item 1.
3
3
4
5
6
7
8
Item 2.
Item 3.
Item 4.
Part II.
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.

2

PART I. FINANCIAL INFORMATION 
Item 1. Financial Statements (Unaudited)
CISCO SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
(in millions, except par value)
(Unaudited)
October 30, 2021 July 31, 2021
ASSETS
Current assets:
Cash and cash equivalents $ 7,619  $ 9,175 
Investments 15,727  15,343 
Accounts receivable, net of allowance of $114 at October 30, 2021 and $109 at July 31, 2021
5,306  5,766 
Inventories 1,832  1,559 
Financing receivables, net 4,070  4,380 
Other current assets 3,034  2,889 
Total current assets 37,588  39,112 
Property and equipment, net 2,238  2,338 
Financing receivables, net 4,546  4,884 
Goodwill 38,802  38,168 
Purchased intangible assets, net 3,350  3,619 
Deferred tax assets 4,198  4,360 
Other assets 5,259  5,016 
TOTAL ASSETS $ 95,981  $ 97,497 
LIABILITIES AND EQUITY
Current liabilities:
Short-term debt $ 506  $ 2,508 
Accounts payable 2,261  2,362 
Income taxes payable 816  801 
Accrued compensation 3,231  3,818 
Deferred revenue 12,017  12,148 
Other current liabilities 4,407  4,620 
Total current liabilities 23,238  26,257 
Long-term debt 8,996  9,018 
Income taxes payable 8,553  8,538 
Deferred revenue 10,055  10,016 
Other long-term liabilities 2,438  2,393 
Total liabilities 53,280  56,222 
Commitments and contingencies (Note 14)
Equity:
Cisco stockholders’ equity:
Preferred stock, $0.001 par value: 5 shares authorized; none issued and outstanding
—  — 
Common stock and additional paid-in capital, $0.001 par value: 20,000 shares authorized; 4,217 shares issued and outstanding as of each of October 30, 2021 and July 31, 2021
42,621  42,346 
Retained earnings (Accumulated deficit) 553  (654)
Accumulated other comprehensive loss (473) (417)
Total equity 42,701  41,275 
TOTAL LIABILITIES AND EQUITY $ 95,981  $ 97,497 
See Notes to Consolidated Financial Statements.
3

CISCO SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per-share amounts)
(Unaudited) 
Three Months Ended
October 30, 2021 October 24, 2020
REVENUE:
Product $ 9,529  $ 8,587 
Service 3,371  3,342 
Total revenue 12,900  11,929 
COST OF SALES:
Product 3,673  3,206 
Service 1,174  1,142 
Total cost of sales 4,847  4,348 
GROSS MARGIN 8,053  7,581 
OPERATING EXPENSES:
Research and development 1,714  1,612 
Sales and marketing 2,261  2,217 
General and administrative 551  544 
Amortization of purchased intangible assets 84  36 
Restructuring and other charges 602 
Total operating expenses 4,615  5,011 
OPERATING INCOME 3,438  2,570 
Interest income 121  174 
Interest expense (89) (112)
Other income (loss), net 187  49 
Interest and other income (loss), net 219  111 
INCOME BEFORE PROVISION FOR INCOME TAXES 3,657  2,681 
Provision for income taxes 677  507 
NET INCOME $ 2,980  $ 2,174 
Net income per share:
Basic $ 0.71  $ 0.51 
Diluted $ 0.70  $ 0.51 
Shares used in per-share calculation:
Basic 4,218  4,230 
Diluted 4,243  4,244 
See Notes to Consolidated Financial Statements.
4

CISCO SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in millions)
(Unaudited)
Three Months Ended
October 30, 2021 October 24, 2020
Net income $ 2,980  $ 2,174 
Available-for-sale investments:
Change in net unrealized gains and losses, net of tax benefit (expense) of $28 and $17 for the first quarter of fiscal 2022 and 2021, respectively
(83) (24)
Net (gains) losses reclassified into earnings, net of tax (benefit) expense of $2 and $5 for the first quarter of fiscal 2022 and 2021, respectively
(4) (10)
(87) (34)
Cash flow hedging instruments:
Change in unrealized gains and losses, net of tax benefit (expense) of $(1) and $0 for the first quarter of fiscal 2022 and 2021, respectively
(2)
Net (gains) losses reclassified into earnings, net of tax (benefit) expense of $0 and $1 for the first quarter of fiscal 2022 and 2021, respectively
(1) (1)
(3)
Net change in cumulative translation adjustment and actuarial gains and losses net of tax benefit (expense) of $9 and $(1) for the first quarter of fiscal 2022 and 2021, respectively
25  109 
Other comprehensive income (loss) (56) 72 
Comprehensive income $ 2,924  $ 2,246 
See Notes to Consolidated Financial Statements.


5

CISCO SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(Unaudited)
Three Months Ended
October 30, 2021 October 24, 2020
Cash flows from operating activities:
Net income $ 2,980  $ 2,174 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization, and other 533  451 
Share-based compensation expense 453  438 
Provision (benefit) for receivables 13 
Deferred income taxes (98) (120)
(Gains) losses on divestitures, investments and other, net (211) (59)
Change in operating assets and liabilities, net of effects of acquisitions and divestitures:
Accounts receivable 427  1,526 
Inventories (275) (21)
Financing receivables 672  167 
Other assets (170) (259)
Accounts payable (93) 73 
Income taxes, net 17  (84)
Accrued compensation (585) (165)
Deferred revenue (95) (45)
Other liabilities (129)
Net cash provided by operating activities 3,427  4,096 
Cash flows from investing activities:
Purchases of investments (2,951) (3,756)
Proceeds from sales of investments 580  657 
Proceeds from maturities of investments 1,856  1,425 
Acquisitions, net of cash and cash equivalents acquired and divestitures (336) (830)
Purchases of investments in privately held companies (101) (68)
Return of investments in privately held companies 53  29 
Acquisition of property and equipment (122) (171)
Proceeds from sales of property and equipment
Net cash used in by investing activities (1,020) (2,710)
Cash flows from financing activities:
Issuances of common stock — 
Repurchases of common stockrepurchase program
(273) (800)
Shares repurchased for tax withholdings on vesting of restricted stock units (133) (89)
Repayments of debt (2,000) — 
Dividends paid (1,561) (1,520)
Other (3) 35 
Net cash used in financing activities (3,970) (2,373)
Net decrease in cash, cash equivalents, and restricted cash (1,563) (987)
Cash, cash equivalents, and restricted cash, beginning of period 9,942  11,812 
Cash, cash equivalents, and restricted cash, end of period $ 8,379  $ 10,825 
Supplemental cash flow information:
Cash paid for interest $ 124  $ 160 
Cash paid for income taxes, net $ 758  $ 710 


See Notes to Consolidated Financial Statements.
6

CISCO SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF EQUITY
(in millions, except per-share amounts)
(Unaudited)
Three Months Ended October 30, 2021 Shares of
Common
Stock
Common Stock
and
Additional
Paid-In Capital
Retained Earnings (Accumulated Deficit) Accumulated
Other
Comprehensive Loss
Total
Equity
Balance at July 31, 2021 4,217  $ 42,346  $ (654) $ (417) $ 41,275 
Net income 2,980  2,980 
Other comprehensive loss (56) (56)
Issuance of common stock — 
Repurchase of common stock (5) (46) (210) (256)
Shares repurchased for tax withholdings on vesting of restricted stock units (2) (133) (133)
Cash dividends declared ($0.37 per common share)
(1,561) (1,561)
Share-based compensation 453  453 
Other (2) (1)
Balance at October 30, 2021 4,217  $ 42,621  $ 553  $ (473) $ 42,701 

Three Months Ended October 24, 2020 Shares of
Common
Stock
Common Stock
and
Additional
Paid-In Capital
Accumulated Deficit Accumulated
Other
Comprehensive
Loss
Total
Equity
Balance at July 25, 2020 4,237  $ 41,202  $ (2,763) $ (519) $ 37,920 
Net income 2,174  2,174 
Other comprehensive income 72  72 
Issuance of common stock
Repurchase of common stock (20) (192) (608) (800)
Shares repurchased for tax withholdings on vesting of restricted stock units (2) (89) (89)
Cash dividends declared ($0.36 per common share)
(1,521) (1,521)
Effect of adoption of accounting standard (38) (38)
Share-based compensation 438  438 
Balance at October 24, 2020 4,222  $ 41,360  $ (2,756) $ (447) $ 38,157 



















7

CISCO SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1.Organization and 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 2022 is a 52-week fiscal year and fiscal 2021 was a 53-week fiscal year. 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 30, 2021 and for the first quarter of fiscal 2022 and 2021, 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 31, 2021 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 31, 2021.
The preparation of financial statements and related disclosures in conformity with GAAP requires us to make judgments, assumptions, and estimates that affect the amounts reported in the Consolidated Financial Statements and accompanying notes. The inputs into certain of our judgments, assumptions, and estimates considered the economic implications of the COVID-19 pandemic on our critical and significant accounting estimates. The actual results that we experience may differ materially from our estimates. As the COVID-19 pandemic continues to develop, many of our estimates could require increased judgment and carry a higher degree of variability and volatility. As events continue to evolve our estimates may change materially in future periods.
In the opinion of management, all normal recurring adjustments necessary to present fairly the consolidated balance sheet as of October 30, 2021, the results of operations, the statements of comprehensive income, the statements of cash flows and the statements of equity for the first quarter of fiscal 2022 and 2021, as applicable, have been made. The results of operations for the first quarter of fiscal 2022 are not necessarily indicative of the operating results for the full fiscal year or any future periods.
Our consolidated financial statements include our accounts and entities consolidated under the variable interest and voting models. The noncontrolling interests attributed to these investments, if material, 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.
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.

2.Recent Accounting Pronouncements
(a)New Accounting Updates Recently Adopted
Acquired Revenue Contracts with Customers in Business Combination In October 2021, the Financial Accounting Standards Board (FASB) issued an accounting standard update that requires companies to apply Accounting Standards Codification 606 to recognize and measure contract assets and contract liabilities from contracts with customers acquired in a business combination. We early adopted this accounting standard update beginning in the first quarter of fiscal 2022 and did not have a material impact on our Consolidated Financial Statements. The ongoing impact of this standard will be fact dependent on the transactions within its scope.
(b)Recent Accounting Standards or Updates Not Yet Effective
Reference Rate Reform In March 2020, the FASB issued an accounting standard update and subsequent amendments that provide optional expedients and exceptions to the current guidance on contract modification and hedging relationships to ease the financial reporting burden of the expected market transition from the London InterBank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates. This accounting standard update was effective upon issuance and may be
8

CISCO SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)

applied prospectively through December 31, 2022. We are currently evaluating the impact of this accounting standard update on our Consolidated Financial Statements.

3.Revenue
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, electronic delivery (or when the software is available for download by the customer), or once title 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 do not include the right for the customer to take possession of the software during the term, and therefore 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.
An allowance for future sales returns is established based on historical trends in product return rates. The allowance for future sales returns as of October 30, 2021 and July 31, 2021 was $49 million and $55 million, respectively, and was recorded as a reduction of our accounts receivable and revenue.
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 assess relevant contractual terms in our customer contracts to determine the transaction price. We apply judgment in identifying contractual terms and determining the transaction price as we may be required to estimate variable consideration when determining the amount of revenue to recognize. Variable consideration includes potential contractual penalties and various rebate, cooperative marketing and other incentive programs that we offer to our distributors, channel 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 single performance obligation satisfied over the contract term.
9

CISCO SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)


(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. Effective in the first quarter of fiscal 2022, we began reporting our product and service revenue in the following categories: Secure, Agile Networks; Hybrid Work; End-to-End Security; Internet for the Future; Optimized Application Experiences; Other Products; and Services. This change will better align our product categories with our strategic priorities. The following table presents this disaggregation of revenue (in millions):
Three Months Ended
October 30,
2021
October 24,
2020
Product revenue:
Secure, Agile Networks $ 5,967  $ 5,434 
Hybrid Work 1,109  1,193 
End-to-End Security 895  861 
Internet for the Future 1,374  942 
Optimized Application Experiences 181  153 
Other Products
Total Product 9,529  8,587 
Services 3,371  3,342 
Total $ 12,900  $ 11,929 
Amounts may not sum due to rounding.
Secure, Agile Networks consists of our core networking technologies of switching, enterprise routing, wireless, and compute products. These technologies consist of both hardware and software offerings, including software licenses and SaaS, that help our customers build networks, automate, orchestrate, integrate, and digitize data. 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.
Hybrid Work consists of our collaboration offerings. These 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.
End-to-End Security consists of our overall security offerings. 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.
Internet for the Future consists of our routed optical networking, public 5G, silicon, and optics offerings. These products consist primarily of both hardware and software offerings, including software licenses and SaaS. 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.
10

CISCO SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)

Optimized Application Experiences consists of our full stack observability and cloud-native platform offerings. These products consist primarily of software offerings, including software licenses and SaaS. Our 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.
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 9 for additional information. For these arrangements, cash is typically received over time.
(b)Contract Balances
Accounts receivable, net was $5.3 billion as of October 30, 2021 compared to $5.8 billion as of July 31, 2021, as reported on the Consolidated Balance Sheets.
The allowances for credit loss for our accounts receivable are summarized as follows (in millions):
Three Months Ended
October 30, 2021 October 24, 2020
Allowance for credit loss at beginning of period $ 109  $ 143 
Provisions (benefits) 19  14 
Recoveries (write-offs), net (14) (6)
Foreign exchange and other —  (26)
Allowance for credit loss at end of period $ 114  $ 125 
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. Our contract assets for these unbilled receivables, net of allowances, were $1.4 billion as of each of October 30, 2021 and July 31, 2021, and were included in other current assets and other assets.
Gross contract assets by our internal risk ratings are summarized as follows (in millions):
October 30,
2021
July 31,
2021
1 to 4 $ 445  $ 521 
5 to 6 839  770 
7 and Higher 154  166 
Total $ 1,438  $ 1,457 
Contract liabilities consist of deferred revenue. Deferred revenue was $22.1 billion as of October 30, 2021 compared to $22.2 billion as of July 31, 2021. We recognized approximately $4.1 billion of revenue during the first quarter of fiscal 2022 that was included in the deferred revenue balance at July 31, 2021.
(c)Capitalized Contract Acquisition Costs
We 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 $994 million and $967 million as of October 30, 2021 and July 31, 2021, respectively, and were included in other current assets and other assets. The amortization expense associated with these costs was $187 million and $123 million for the first quarter of fiscal 2022 and 2021, respectively, and was included in sales and marketing expenses.
11

CISCO SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)


4.Acquisitions and Divestitures
We completed one acquisition during the first quarter of fiscal 2022. 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
Total acquisitions (one in total)
$ 323  $ $ 10  $ 305 
The total purchase consideration related to our acquisitions completed during the first quarter of fiscal 2022 consisted of cash consideration and vested share-based awards assumed. The total cash and cash equivalents acquired from these acquisitions was approximately $6 million. Total transaction costs related to acquisition and divestiture activities were $19 million and $4 million for the first quarter of fiscal 2022 and 2021, respectively. These transaction costs were expensed as incurred in general and administrative expenses (“G&A”) in the Consolidated Statements of Operations.
The goodwill generated from acquisitions completed during the first quarter of fiscal 2022 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 2022 have not been presented because the effects of the acquisitions, individually and in the aggregate, were not material to our financial results.

5.Goodwill and Purchased Intangible Assets
(a)Goodwill
The following table presents the goodwill allocated to our reportable segments as of October 30, 2021 and during the first quarter of fiscal 2022 (in millions):
Balance at July 31, 2021 Acquisitions & Divestitures Foreign Currency Translation and Other Balance at October 30, 2021
Americas $ 23,673  $ 204  $ 315  $ 24,192 
EMEA 9,094  77  9,180 
APJC 5,401  24  5,430 
Total $ 38,168  $ 305  $ 329  $ 38,802 
(b)Purchased Intangible Assets
The following table presents details of our intangible assets acquired through acquisitions completed during the first quarter of fiscal 2022 (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
Total acquisitions (one in total)
2.0 $ 2.0 $ —  $ —  $ —  $ 10 
12

CISCO SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)

The following tables present details of our purchased intangible assets (in millions): 
October 30, 2021 Gross Accumulated Amortization Net
Purchased intangible assets with finite lives:
Technology $ 3,485  $ (1,482) $ 2,003 
Customer relationships 1,391  (597) 794 
Other 71  (23) 48 
Total purchased intangible assets with finite lives 4,947  (2,102) 2,845 
In-process research and development, with indefinite lives 505  —  505 
       Total $ 5,452  $ (2,102) $ 3,350 
July 31, 2021 Gross Accumulated Amortization Net
Purchased intangible assets with finite lives:
Technology $ 3,629  $ (1,437) $ 2,192 
Customer relationships 1,387  (523) 864 
Other 71  (13) 58 
Total purchased intangible assets with finite lives 5,087  (1,973) 3,114 
In-process research and development, with indefinite lives 505  —  505 
       Total $ 5,592  $ (1,973) $ 3,619 
Purchased intangible assets include intangible assets acquired through acquisitions as well as through direct purchases or licenses.
The following table presents the amortization of purchased intangible assets, including impairment charges (in millions):
Three Months Ended
October 30, 2021 October 24, 2020
Amortization of purchased intangible assets:
Cost of sales $ 202  $ 170 
Operating expenses 84  36 
Total $ 286  $ 206 
The estimated future amortization expense of purchased intangible assets with finite lives as of October 30, 2021 is as follows (in millions):
Fiscal Year Amount
2022 (remaining nine months) $ 763 
2023 $ 879 
2024 $ 750 
2025 $ 394 
2026 $ 58 
Thereafter $

6.Restructuring and Other Charges
We initiated a restructuring plan in fiscal 2021 (the “Fiscal 2021 Plan”), which included a voluntary early retirement program, in order to realign the organization and enable further investment in key priority areas. The total pretax charges are estimated to be approximately $900 million. In connection with the Fiscal 2021 Plan, we have incurred cumulative charges of $887 million and substantially completed this plan in fiscal 2021.
We initiated a restructuring plan in fiscal 2020 (the “Fiscal 2020 Plan”) in order to realign the organization and enable further investment in key priority areas. In connection with the Fiscal 2020 Plan, we incurred cumulative charges of $259 million. We completed the Fiscal 2020 Plan in fiscal 2021.
13

CISCO SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)

The aggregate pretax charges related to these plans are primarily cash-based and consist of severance and other one-time termination benefits, and other costs.
The following tables summarize the activities related to the restructuring and other charges (in millions):
FISCAL 2020 AND PRIOR PLANS FISCAL 2021 PLAN
Employee
Severance
Other Employee
Severance
Other Total
Liability as of July 31, 2021 $ —  $ 10  $ 16  $ $ 34 
Charges —  (1)
Cash payments —  (1) (8) —  (9)
Non-cash items —  —  —  (4) (4)
Liability as of October 30, 2021 $ —  $ $ 12  $ $ 26 
FISCAL 2020 AND PRIOR PLANS FISCAL 2021 PLAN
Employee
Severance
Other Employee Severance Other Total
Liability as of July 25, 2020 $ 58  $ 14  $ —  $ —  $ 72 
Charges —  —  590  12  602 
Cash payments (58) —  (272) —  (330)
Non-cash items —  —  —  (11) (11)
Liability as of October 24, 2020 $ —  $ 14  $ 318  $ $ 333 

7.Balance Sheet and Other Details
The following tables provide details of selected balance sheet and other items (in millions):
Cash, Cash Equivalents, and Restricted Cash
October 30,
2021
July 31,
2021
Cash and cash equivalents $ 7,619  $ 9,175 
Restricted cash included in other current assets 10  14 
Restricted cash included in other assets 750  753 
Total cash, cash equivalents, and restricted cash $ 8,379  $ 9,942 
Our restricted cash balances are funds primarily related to contractual obligations with suppliers.
Inventories
October 30,
2021
July 31,
2021
Raw materials $ 1,090  $ 801 
Work in process 41  54 
Finished goods:
Deferred cost of sales 85  97 
Manufactured finished goods 465  422 
Total finished goods 550  519 
Service-related spares 142  174 
Demonstration systems 11 
Total $ 1,832  $ 1,559 

14

CISCO SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)

Property and Equipment, Net
October 30,
2021
July 31,
2021
Gross property and equipment:
Land, buildings, and building and leasehold improvements $ 4,310  $ 4,304 
Computer equipment and related software 861  858 
Production, engineering, and other equipment 5,023  5,106 
Operating lease assets 250  273 
Furniture, fixtures and other 377  377 
Total gross property and equipment 10,821  10,918 
Less: accumulated depreciation and amortization
(8,583) (8,580)
Total $ 2,238  $ 2,338 
Remaining Performance Obligations
October 30,
2021
July 31,
2021
Product $ 13,384  $ 13,270 
Service 16,751  17,623 
Total $ 30,135  $ 30,893 
Current $ 15,941  $ 16,289 
Noncurrent 14,194  14,604 
Total $ 30,135  $ 30,893 
Remaining Performance Obligations (RPO) are comprised of deferred revenue plus unbilled contract revenue. As of October 30, 2021, the aggregate amount of RPO was comprised of $22.1 billion of deferred revenue and $8.1 billion of unbilled contract revenue. We expect approximately 53% of this amount to be recognized as revenue over the next 12 months. As of July 31, 2021, the aggregate amount of RPO was comprised of $22.2 billion of deferred revenue and $8.7 billion of unbilled contract revenue. Unbilled contract revenue represents noncancelable contracts for which we have not invoiced, have an obligation to perform, and revenue has not yet been recognized in the financial statements.
Deferred Revenue
October 30,
2021
July 31,
2021
Product $ 9,681  $ 9,416 
Service 12,391  12,748 
Total $ 22,072  $ 22,164 
Reported as:
Current $ 12,017  $ 12,148 
Noncurrent 10,055  10,016 
Total $ 22,072  $ 22,164 


15

CISCO SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)

8.Leases
(a)Lessee Arrangements
The following table presents our operating lease balances (in millions):
Balance Sheet Line Item October 30, 2021 July 31, 2021
Operating lease right-of-use assets Other assets $ 1,118  $ 1,095 
Operating lease liabilities Other current liabilities $ 353  $ 337 
Operating lease liabilities Other long-term liabilities 834  831 
Total operating lease liabilities $ 1,187  $ 1,168 
The components of our lease expenses were as follows (in millions):
Three Months Ended
October 30, 2021 October 24, 2020
Operating lease expense $ 95  $ 98 
Short-term lease expense 17  18 
Variable lease expense 49  46 
Total lease expense $ 161  $ 162 
Supplemental information related to our operating leases is as follows (in millions):
Three Months Ended
October 30, 2021 October 24, 2020
Cash paid for amounts included in the measurement of lease liabilities — operating cash flows $ 98  $ 105 
Right-of-use assets obtained in exchange for operating leases liabilities $ 120  $ 115 
The weighted-average lease term was 4.9 years and 5.2 years as of October 30, 2021 and July 31, 2021, respectively. The weighted-average discount rate was 1.7% as of each of October 30, 2021 and July 31, 2021.
The maturities of our operating leases (undiscounted) as of October 30, 2021 are as follows (in millions):
Fiscal Year Amount
2022 (remaining nine months) $ 283 
2023 307 
2024 224 
2025 145 
2026 84 
Thereafter 218 
Total lease payments 1,261 
Less interest (74)
Total $ 1,187 
(b)Lessor Arrangements
Our leases primarily represent sales-type leases with terms of four years on average. We provide leasing of our equipment and complementary third-party products primarily through our channel partners and distributors, for which the income arising from these leases is recognized through interest income. Interest income was $15 million and $21 million for the first quarter of fiscal 2022 and 2021, respectively, and was included in interest income in the Consolidated Statement of Operations. The net investment of our lease receivables is measured at the commencement date as the gross lease receivable, residual value less unearned income and allowance for credit loss. For additional information, see Note 9.
16

CISCO SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)

Future minimum lease payments on our lease receivables as of October 30, 2021 are summarized as follows (in millions):
Fiscal Year Amount
2022 (remaining nine months) $ 557 
2023 514 
2024 290 
2025 146 
2026 48 
Thereafter
Total 1,560 
Less: Present value of lease payments 1,490 
Unearned income $ 70 
Actual cash collections may differ from the contractual maturities due to early customer buyouts, refinancings, or defaults.
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 held by us and the associated accumulated depreciation are summarized as follows (in millions):
October 30, 2021 July 31, 2021
Operating lease assets $ 250  $ 273 
Accumulated depreciation (156) (165)
Operating lease assets, net $ 94  $ 108 
Our operating lease income was $32 million and $43 million for the first quarter of fiscal 2022 and 2021, respectively, and was included in product revenue in the Consolidated Statement of Operations.
Minimum future rentals on noncancelable operating leases as of October 30, 2021 are summarized as follows (in millions):
Fiscal Year Amount
2022 (remaining nine months) $ 35 
2023 25 
2024
2025
Total $ 68 

9.Financing Receivables
(a)Financing Receivables
Financing receivables primarily consist of lease receivables, loan receivables, and financed service contracts. Lease receivables represent sales-type 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 have terms of three years on average. 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 year to three years.
17

CISCO SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)

A summary of our financing receivables is presented as follows (in millions):
October 30, 2021 Lease
Receivables
Loan
Receivables
Financed Service
Contracts
Total
Gross $ 1,560  $ 4,809  $ 2,329  $ 8,698 
Residual value 97  —  —  97 
Unearned income (70) —  —  (70)
Allowance for credit loss (33) (74) (2) (109)
Total, net $ 1,554  $ 4,735  $ 2,327  $ 8,616 
Reported as:
Current $ 736  $ 2,198  $ 1,136  $ 4,070 
Noncurrent 818  2,537  1,191  4,546 
Total, net $ 1,554  $ 4,735  $ 2,327  $ 8,616 
July 31, 2021 Lease
Receivables
Loan
Receivables
Financed Service
Contracts
Total
Gross $ 1,710  $ 5,203  $ 2,453  $ 9,366 
Residual value 103  —  —  103 
Unearned income (78) —  —  (78)
Allowance for credit loss (38) (86) (3) (127)
Total, net $ 1,697  $ 5,117  $ 2,450  $ 9,264 
Reported as:
Current $ 780  $ 2,372  $ 1,228  $ 4,380 
Noncurrent 917  2,745  1,222  4,884 
Total, net $ 1,697  $ 5,117  $ 2,450  $ 9,264 
(b)Credit Quality of Financing Receivables
Gross financing receivables(1) categorized by our internal credit risk rating by period of origination as of October 30, 2021 and July 31, 2021 are summarized as follows (in millions):
Fiscal Year Three Months Ended
Internal Credit Risk Rating Prior July 28, 2018 July 27, 2019 July 25, 2020 July 31, 2021 October 30, 2021 Total
Lease Receivables:
1 to 4 $ 11  $ 75  $ 134  $ 204  $ 244  $ 58  $ 726 
5 to 6 10  44  141  258  247  15  715 
7 and Higher 19  12  49 
Total Lease Receivables $ 22  $ 123  $ 284  $ 481  $ 495  $ 85  $ 1,490 
Loan Receivables:
1 to 4 $ 27  $ 108  $ 265  $ 733  $ 1,299  $ 503  $ 2,935 
5 to 6 11  55  170  439  764  307  1,746 
7 and Higher 41  40  28  14  128 
Total Loan Receivables $ 40  $ 166  $ 476  $ 1,212  $ 2,091  $ 824  $ 4,809 
Financed Service Contracts:
1 to 4 $ $ 20  $ 85  $ 189  $ 824  $ 334  $ 1,455 
5 to 6 19  90  257  370  116  855 
7 and Higher —  19 
Total Financed Service Contracts $ $ 40  $ 179  $ 453  $ 1,198  $ 453  $ 2,329 
Total $ 68  $ 329  $ 939  $ 2,146  $ 3,784  $ 1,362  $ 8,628 
18

CISCO SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)

Fiscal Year
Internal Credit Risk Rating Prior July 29, 2017 July 28, 2018 July 27, 2019 July 25, 2020 July 31, 2021 Total
Lease Receivables:
1 to 4 $ $ 20  $ 100  $ 168  $ 282  $ 227  $ 799 
5 to 6 17  65  187  285  231  786 
7 and Higher —  12  23  47 
Total Lease Receivables $ $ 39  $ 171  $ 367  $ 590  $ 462  $ 1,632 
Loan Receivables:
1 to 4 $ $ 86  $ 134  $ 577  $ 990  $ 1,552  $ 3,343 
5 to 6 —  19  75  202  505  925  1,726 
7 and Higher 50  43  34  134 
Total Loan Receivables $ $ 107  $ 213  $ 829  $ 1,538  $ 2,511  $ 5,203 
Financed Service Contracts:
1 to 4 $ —  $ 38  $ 26  $ 106  $ 252  $ 1,053  $ 1,475 
5 to 6 —  26  105  302  520  959 
7 and Higher —  —  19 
Total Financed Service Contracts $ —  $ 44  $ 53  $ 217  $ 561  $ 1,578  $ 2,453 
Total $ $ 190  $ 437  $ 1,413  $ 2,689  $ 4,551  $ 9,288 
(1) Lease receivables calculated as gross lease receivables less unearned income.
The following tables present the aging analysis of gross receivables as of October 30, 2021 and July 31, 2021 (in millions):
DAYS PAST DUE
(INCLUDES BILLED AND UNBILLED)
October 30, 2021 31-60 61-90  91+ Total
Past Due
Current Total 120+ Still Accruing Nonaccrual
Financing
Receivables
Impaired
Financing
Receivables
Lease receivables $ 34  $ 12  $ 22  $ 68  $ 1,422  $ 1,490  $ $ 24  $ 24 
Loan receivables 77  17  27  121  4,688  4,809  29  29 
Financed service contracts 21  39  18  78  2,251  2,329 
Total $ 132  $ 68  $ 67  $ 267  $ 8,361  $ 8,628  $ 18  $ 56  $ 56 
DAYS PAST DUE
(INCLUDES BILLED AND UNBILLED)
July 31, 2021 31-60 61-90  91+ Total
Past Due
Current Total 120+ Still Accruing Nonaccrual
Financing
Receivables
Impaired
Financing
Receivables
Lease receivables $ 21  $ 17  $ 29  $ 67  $ 1,565  $ 1,632  $ $ 33  $ 26 
Loan receivables 71  17  35  123  5,080  5,203  33  33 
Financed service contracts 18  13  18  49  2,404  2,453 
Total $ 110  $ 47  $ 82  $ 239  $ 9,049  $ 9,288  $ $ 69  $ 62 
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.
19

CISCO SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)


(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 30, 2021 CREDIT LOSS ALLOWANCES
Lease
Receivables
Loan
Receivables
Financed Service
Contracts
Total
Allowance for credit loss as of July 31, 2021 $ 38  $ 86  $ $ 127 
Provisions (benefits) (5) (12) (1) (18)
Allowance for credit loss as of October 30, 2021 $ 33  $ 74  $ $ 109 
Three months ended October 24, 2020 CREDIT LOSS ALLOWANCES
Lease
Receivables
Loan
Receivables
Financed Service
Contracts
Total
Allowance for credit loss as of July 25, 2020 $ 48  $ 81  $ $ 138 
Provisions (benefits) (3) (1) (1)
Other 17  (1) 17 
Allowance for credit loss as of October 24, 2020 $ 46  $ 101  $ $ 154 


10.Available-for-Sale Debt and Equity Investments
(a)Summary of Available-for-Sale Debt Investments
The following tables summarize our available-for-sale debt investments (in millions):
October 30, 2021 Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized and Credit
Losses
Fair
Value
U.S. government securities $ 2,032  $ 12  $ (9) $ 2,035 
U.S. government agency securities 142  —  —  142 
Corporate debt securities 9,114  156  (50) 9,220 
U.S. agency mortgage-backed securities 2,790  24  (21) 2,793 
Commercial paper 1,054  —  —  1,054 
Certificates of deposit 269  —  —  269 
Total $ 15,401  $ 192  $ (80) $ 15,513 
July 31, 2021 Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized and Credit
Losses
Fair
Value
U.S. government securities $ 1,773  $ 21  $ —  $ 1,794 
U.S. government agency securities 152  —  —  152 
Non-U.S. government and agency securities —  — 
Corporate debt securities 8,727  213  (30) 8,910 
U.S. agency mortgage-backed securities 2,838  34  (10) 2,862 
Commercial paper 1,190  —  —  1,190 
Certificates of deposit 295  —  —  295 
Total $ 14,978  $ 268  $ (40) $ 15,206 

20

CISCO SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)

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 30, 2021 October 24, 2020
Gross realized gains $ $ 15 
Gross realized losses —  — 
Total $ $ 15 
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 30, 2021 and July 31, 2021 (in millions):
  UNREALIZED LOSSES
LESS THAN 12 MONTHS
UNREALIZED LOSSES
12 MONTHS OR GREATER
TOTAL
October 30, 2021 Fair Value Gross
Unrealized
Losses
Fair Value Gross
Unrealized
Losses
Fair Value Gross 
Unrealized 
Losses
U.S. government securities 
$ 1,341  $ (9) $ $ —  $ 1,343  $ (9)
U.S. government agency securities 100  —  —  —  100  — 
Corporate debt securities 3,204  (24) 27  (1) 3,231  (25)
U.S. agency mortgage-backed securities 1,937  (20) 52  (1) 1,989  (21)
Commercial paper 25  —  —  —  25  — 
Total $ 6,607  $ (53) $ 81  $ (2) $ 6,688  $ (55)
  UNREALIZED LOSSES
LESS THAN 12 MONTHS
UNREALIZED LOSSES
12 MONTHS OR GREATER
TOTAL
July 31, 2021 Fair Value Gross
Unrealized
Losses
Fair Value Gross
Unrealized
Losses
Fair Value Gross 
Unrealized 
Losses
U.S. government securities $ 468  $ —  $ —  $ —  $ 468  $ — 
U.S. government agency securities 26  —  —  —  26  — 
Corporate debt securities 1,086  (5) —  1,092  (5)
U.S. agency mortgage-backed securities 1,293  (10) 13  —  1,306  (10)
Commercial paper 37  —  —  —  37  — 
Total $ 2,910  $ (15) $ 19  $ —  $ 2,929  $ (15)
The following table summarizes the maturities of our available-for-sale debt investments as of October 30, 2021 (in millions): 
Amortized Cost Fair Value
Within 1 year $ 4,291  $ 4,281 
After 1 year through 5 years 8,013  8,106 
After 5 years through 10 years 301  326 
After 10 years
Mortgage-backed securities with no single maturity 2,790  2,793 
Total $ 15,401  $ 15,513 
Actual maturities may differ from the contractual maturities because borrowers may have the right to call or prepay certain obligations.
21

CISCO SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)


(b)Summary of Equity Investments
We recognized a net unrealized gain of $5 million during the first quarter of fiscal 2022 on our marketable securities still held as of the reporting date. Our net adjustments to non-marketable equity securities measured using the measurement alternative still held was a net gain of $2 million for the first quarter of fiscal 2022. We held equity interests in certain private equity funds of $1.0 billion and $0.9 billion as of October 30, 2021 and July 31, 2021, respectively, which are accounted for under the NAV practical expedient.
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 are evaluated for consolidation under the variable interest or voting interest entity models. We evaluate on an ongoing basis our investments in these privately held companies and our customer financings, and have determined that as of October 30, 2021, there were no significant variable interest or voting interest entities required to be consolidated in our Consolidated Financial Statements.
The carrying value of our investments in privately held companies was $1.7 billion and $1.5 billion as of October 30, 2021 and July 31, 2021, respectively. Of the total carrying value of our investments in privately held companies as of October 30, 2021, $1.0 billion of such investments are considered to be in variable interest entities which are unconsolidated. As of October 30, 2021, we have total funding commitments of $0.2 billion related to privately held investments, some of which may be based on the achievement of certain agreed-upon milestones or 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 privately held investments.

11. 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.
22

CISCO SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)

(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 30, 2021 JULY 31, 2021
FAIR VALUE MEASUREMENTS FAIR VALUE MEASUREMENTS
  Level 1 Level 2 Total
Balance
Level 1 Level 2 Total
Balance
Assets:
Cash equivalents:
Money market funds $ 4,351  $ —  $ 4,351  $ 5,694  $ —  $ 5,694 
Commercial paper —  10  10  —  114  114 
Certificates of deposit —  27  27  —  —  — 
U.S. government securities —  —  —  —  300  300 
Corporate debt securities —  41  41  —  —  — 
Non-U.S. government and agency securities —  30  30  —  —  — 
Available-for-sale debt investments:
U.S. government securities —  2,035  2,035  —  1,794  1,794 
U.S. government agency securities —  142  142  —  152  152 
Corporate debt securities —  9,220  9,220  —  8,910  8,910 
U.S. agency mortgage-backed securities —  2,793  2,793  —  2,862  2,862 
Non-U.S. government and agency securities —  —  —  — 
Commercial paper —  1,054  1,054  —  1,190  1,190 
Certificates of deposit —  269  269  —  295  295 
Equity investments:
Marketable equity securities 214  —  214  137  —  137 
Other assets:
Money market funds 750  —  750  750  —  750 
Derivative assets —  116