Cisco Systems Inc. (CSCO)

Available-for-Sale Debt Investments

Cisco classifies the investments in fixed income securities as available-for-sale debt investments. Cisco’s available-for-sale debt investments primarily consist of U.S. government, U.S. government agency, non-U.S. government and agency, corporate debt, and U.S. agency mortgage-backed securities. These available-for-sale debt investments are primarily held in the custody of a major financial institution. A specific identification method is used to determine the cost basis of available-for-sale debt investments sold. These investments are recorded in the Consolidated Balance Sheets at fair value. Unrealized gains and losses on these investments, to the extent the investments are unhedged, are included as a separate component of accumulated other comprehensive income (AOCI), net of tax. Cisco classifies the investments as current based on the nature of the investments and their availability for use in current operations.

Equity Instruments

Cisco’s equity investments are accounted for as follows:

• Marketable equity securities have readily determinable fair value (RDFV) that are measured and recorded at fair value through income.
• 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, Cisco has 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 Cisco does not control, but is able to exert significant influence over the investee. These investments are measured at cost less any impairment, plus or minus Cisco’s share of equity method investee income or loss.

Source: 10-K (filing date: 2019-09-05).

Cisco Systems Inc., adjustment to net income

US$ in millions

	12 months ended	Jul 27, 2019	Jul 28, 2018	Jul 29, 2017	Jul 30, 2016	Jul 25, 2015	Jul 26, 2014
	Net income (as reported)
	Add: Available-for-sale investments, change in net unrealized gains and losses, net of tax
	Less: Available-for-sale investments, net (gains) losses reclassified into earnings, net of tax
	Net income (adjusted)

Based on: 10-K (filing date: 2019-09-05), 10-K (filing date: 2018-09-06), 10-K (filing date: 2017-09-07), 10-K (filing date: 2016-09-08), 10-K (filing date: 2015-09-08), 10-K (filing date: 2014-09-09).

Cisco Systems Inc., adjusted profitability ratios

		Jul 27, 2019	Jul 28, 2018	Jul 29, 2017	Jul 30, 2016	Jul 25, 2015	Jul 26, 2014
	Net Profit Margin
	Reported net profit margin
	Adjusted net profit margin
	Return on Equity (ROE)
	Reported ROE
	Adjusted ROE
	Return on Assets (ROA)
	Reported ROA
	Adjusted ROA

Based on: 10-K (filing date: 2019-09-05), 10-K (filing date: 2018-09-06), 10-K (filing date: 2017-09-07), 10-K (filing date: 2016-09-08), 10-K (filing date: 2015-09-08), 10-K (filing date: 2014-09-09).

Cisco Systems Inc., Profitability Ratios: Reported vs. Adjusted

		Jul 27, 2019	Jul 28, 2018	Jul 29, 2017	Jul 30, 2016	Jul 25, 2015	Jul 26, 2014
	As Reported
	Selected Financial Data (US$ in millions)
	Net income
	Revenue
	Profitability Ratio
	Net profit margin1
	Adjusted: Mark to Market Available-for-sale Securities
	Selected Financial Data (US$ in millions)
	Adjusted net income
	Revenue
	Profitability Ratio
	Adjusted net profit margin2

Based on: 10-K (filing date: 2019-09-05), 10-K (filing date: 2018-09-06), 10-K (filing date: 2017-09-07), 10-K (filing date: 2016-09-08), 10-K (filing date: 2015-09-08), 10-K (filing date: 2014-09-09).

		Jul 27, 2019	Jul 28, 2018	Jul 29, 2017	Jul 30, 2016	Jul 25, 2015	Jul 26, 2014
	As Reported
	Selected Financial Data (US$ in millions)
	Net income
	Total Cisco shareholders’ equity
	Profitability Ratio
	ROE1
	Adjusted: Mark to Market Available-for-sale Securities
	Selected Financial Data (US$ in millions)
	Adjusted net income
	Total Cisco shareholders’ equity
	Profitability Ratio
	Adjusted ROE2

Based on: 10-K (filing date: 2019-09-05), 10-K (filing date: 2018-09-06), 10-K (filing date: 2017-09-07), 10-K (filing date: 2016-09-08), 10-K (filing date: 2015-09-08), 10-K (filing date: 2014-09-09).

		Jul 27, 2019	Jul 28, 2018	Jul 29, 2017	Jul 30, 2016	Jul 25, 2015	Jul 26, 2014
	As Reported
	Selected Financial Data (US$ in millions)
	Net income
	Total assets
	Profitability Ratio
	ROA1
	Adjusted: Mark to Market Available-for-sale Securities
	Selected Financial Data (US$ in millions)
	Adjusted net income
	Total assets
	Profitability Ratio
	Adjusted ROA2

Based on: 10-K (filing date: 2019-09-05), 10-K (filing date: 2018-09-06), 10-K (filing date: 2017-09-07), 10-K (filing date: 2016-09-08), 10-K (filing date: 2015-09-08), 10-K (filing date: 2014-09-09).