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Financing Receivables | 6 Months Ended
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Jan. 29, 2022
Receivables [Abstract] |
Financing Receivables | 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. A summary of our financing receivables is presented as follows (in millions):
January 29, 2022 | Lease Receivables |  | Loan Receivables |  | Financed Service Contracts |  | Total
Gross | $ | 1,364 |  |  | $ | 4,581 |  |  | $ | 2,149 |  |  | $ | 8,094 |
Residual value | 88 |  |  | — |  |  | — |  |  | 88 |
Unearned income | (64) |  |  | — |  |  | — |  |  | (64) |
Allowance for credit loss | (27) |  |  | (67) |  |  | (3) |  |  | (97) |
Total, net | $ | 1,361 |  |  | $ | 4,514 |  |  | $ | 2,146 |  |  | $ | 8,021 |
Reported as: |  |  |  |  |  |  |
Current | $ | 651 |  |  | $ | 2,218 |  |  | $ | 1,128 |  |  | $ | 3,997 |
Noncurrent | 710 |  |  | 2,296 |  |  | 1,018 |  |  | 4,024 |
Total, net | $ | 1,361 |  |  | $ | 4,514 |  |  | $ | 2,146 |  |  | $ | 8,021 |
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 The tables below present our gross financing receivables, excluding residual value, less unearned income, categorized by our internal credit risk rating by period of origination (in millions):
January 29, 2022 |  |  | Fiscal Year |  | Six Months Ended |  |
Internal Credit Risk Rating | Prior |  | July 28, 2018 |  | July 27, 2019 |  | July 25, 2020 |  | July 31, 2021 |  | January 29, 2022 |  | Total
Lease Receivables: |  |  |  |  |  |  |  |  |  |  |  |  |
1 to 4 | $ | 6 |  |  | $ | 51 |  |  | $ | 104 |  |  | $ | 171 |  |  | $ | 209 |  |  | $ | 125 |  |  | $ | 666 |
5 to 6 | 6 |  |  | 28 |  |  | 105 |  |  | 199 |  |  | 200 |  |  | 57 |  |  | 595 |
7 and Higher | 1 |  |  | 2 |  |  | 6 |  |  | 15 |  |  | 4 |  |  | 11 |  |  | 39 |
Total Lease Receivables | $ | 13 |  |  | $ | 81 |  |  | $ | 215 |  |  | $ | 385 |  |  | $ | 413 |  |  | $ | 193 |  |  | $ | 1,300 |
Loan Receivables: |  |  |  |  |  |  |  |  |  |  |  |  |
1 to 4 | $ | 16 |  |  | $ | 85 |  |  | $ | 221 |  |  | $ | 665 |  |  | $ | 1,182 |  |  | $ | 660 |  |  | $ | 2,829 |
5 to 6 | 5 |  |  | 34 |  |  | 119 |  |  | 359 |  |  | 662 |  |  | 450 |  |  | 1,629 |
7 and Higher | 2 |  |  | 2 |  |  | 36 |  |  | 36 |  |  | 26 |  |  | 21 |  |  | 123 |
Total Loan Receivables | $ | 23 |  |  | $ | 121 |  |  | $ | 376 |  |  | $ | 1,060 |  |  | $ | 1,870 |  |  | $ | 1,131 |  |  | $ | 4,581 |
Financed Service Contracts: |  |  |  |  |  |  |  |  |  |  |  |  |
1 to 4 | $ | 2 |  |  | $ | 16 |  |  | $ | 65 |  |  | $ | 169 |  |  | $ | 740 |  |  | $ | 380 |  |  | $ | 1,372 |
5 to 6 | 1 |  |  | 15 |  |  | 76 |  |  | 184 |  |  | 337 |  |  | 149 |  |  | 762 |
7 and Higher | — |  |  | — |  |  | 3 |  |  | 6 |  |  | 3 |  |  | 3 |  |  | 15 |
Total Financed Service Contracts | $ | 3 |  |  | $ | 31 |  |  | $ | 144 |  |  | $ | 359 |  |  | $ | 1,080 |  |  | $ | 532 |  |  | $ | 2,149 |
Total | $ | 39 |  |  | $ | 233 |  |  | $ | 735 |  |  | $ | 1,804 |  |  | $ | 3,363 |  |  | $ | 1,856 |  |  | $ | 8,030 |
July 31, 2021 |  |  | 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 | $ | 2 |  |  | $ | 20 |  |  | $ | 100 |  |  | $ | 168 |  |  | $ | 282 |  |  | $ | 227 |  |  | $ | 799 |
5 to 6 | 1 |  |  | 17 |  |  | 65 |  |  | 187 |  |  | 285 |  |  | 231 |  |  | 786 |
7 and Higher | — |  |  | 2 |  |  | 6 |  |  | 12 |  |  | 23 |  |  | 4 |  |  | 47 |
Total Lease Receivables | $ | 3 |  |  | $ | 39 |  |  | $ | 171 |  |  | $ | 367 |  |  | $ | 590 |  |  | $ | 462 |  |  | $ | 1,632 |
Loan Receivables: |  |  |  |  |  |  |  |  |  |  |  |  |
1 to 4 | $ | 4 |  |  | $ | 86 |  |  | $ | 134 |  |  | $ | 577 |  |  | $ | 990 |  |  | $ | 1,552 |  |  | $ | 3,343 |
5 to 6 | — |  |  | 19 |  |  | 75 |  |  | 202 |  |  | 505 |  |  | 925 |  |  | 1,726 |
7 and Higher | 1 |  |  | 2 |  |  | 4 |  |  | 50 |  |  | 43 |  |  | 34 |  |  | 134 |
Total Loan Receivables | $ | 5 |  |  | $ | 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 | — |  |  | 6 |  |  | 26 |  |  | 105 |  |  | 302 |  |  | 520 |  |  | 959 |
7 and Higher | — |  |  | — |  |  | 1 |  |  | 6 |  |  | 7 |  |  | 5 |  |  | 19 |
Total Financed Service Contracts | $ | — |  |  | $ | 44 |  |  | $ | 53 |  |  | $ | 217 |  |  | $ | 561 |  |  | $ | 1,578 |  |  | $ | 2,453 |
Total | $ | 8 |  |  | $ | 190 |  |  | $ | 437 |  |  | $ | 1,413 |  |  | $ | 2,689 |  |  | $ | 4,551 |  |  | $ | 9,288 |
The following tables present the aging analysis of gross receivables as of January 29, 2022 and July 31, 2021 (in millions):
| DAYS PAST DUE (INCLUDES BILLED AND UNBILLED) |  |  |  |  |  |  |  |  |  |
January 29, 2022 | 31-60 |  | 61-90 |  | 91+ |  | Total Past Due |  | Current |  | Total |  | 120+ Still Accruing |  | Nonaccrual Financing Receivables |  | Impaired Financing Receivables
Lease receivables | $ | 26 |  |  | $ | 15 |  |  | $ | 26 |  |  | $ | 67 |  |  | $ | 1,233 |  |  | $ | 1,300 |  |  | $ | 9 |  |  | $ | 19 |  |  | $ | 19 |
Loan receivables | 66 |  |  | 12 |  |  | 42 |  |  | 120 |  |  | 4,461 |  |  | 4,581 |  |  | 8 |  |  | 25 |  |  | 25 |
Financed service contracts | 16 |  |  | 6 |  |  | 10 |  |  | 32 |  |  | 2,117 |  |  | 2,149 |  |  | 4 |  |  | 2 |  |  | 2 |
Total | $ | 108 |  |  | $ | 33 |  |  | $ | 78 |  |  | $ | 219 |  |  | $ | 7,811 |  |  | $ | 8,030 |  |  | $ | 21 |  |  | $ | 46 |  |  | $ | 46 |
| 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 |  |  | $ | 1 |  |  | $ | 33 |  |  | $ | 26 |
Loan receivables | 71 |  |  | 17 |  |  | 35 |  |  | 123 |  |  | 5,080 |  |  | 5,203 |  |  | 4 |  |  | 33 |  |  | 33 |
Financed service contracts | 18 |  |  | 13 |  |  | 18 |  |  | 49 |  |  | 2,404 |  |  | 2,453 |  |  | 3 |  |  | 3 |  |  | 3 |
Total | $ | 110 |  |  | $ | 47 |  |  | $ | 82 |  |  | $ | 239 |  |  | $ | 9,049 |  |  | $ | 9,288 |  |  | $ | 8 |  |  | $ | 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. (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 January 29, 2022 | CREDIT LOSS ALLOWANCES
| Lease Receivables |  | Loan Receivables |  | Financed Service Contracts |  | Total
Allowance for credit loss as of October 30, 2021 | $ | 33 |  |  | $ | 74 |  |  | $ | 2 |  |  | $ | 109 |
Provisions (benefits) | (4) |  |  | (7) |  |  | 1 |  |  | (10) |
Recoveries (write-offs), net | (2) |  |  | — |  |  | — |  |  | (2) |
Allowance for credit loss as of January 29, 2022 | $ | 27 |  |  | $ | 67 |  |  | $ | 3 |  |  | $ | 97 |
Three Months Ended January 23, 2021 | CREDIT LOSS ALLOWANCES
| Lease Receivables |  | Loan Receivables |  | Financed Service Contracts |  | Total
Allowance for credit loss as of October 24, 2020 | $ | 46 |  |  | $ | 101 |  |  | $ | 7 |  |  | $ | 154 |
Provisions (benefits) | (4) |  |  | (6) |  |  | 2 |  |  | (8) |
Other | 1 |  |  | 1 |  |  | — |  |  | 2 |
Allowance for credit loss as of January 23, 2021 | $ | 43 |  |  | $ | 96 |  |  | $ | 9 |  |  | $ | 148 |
Six months ended January 29, 2022 | CREDIT LOSS ALLOWANCES
| Lease Receivables |  | Loan Receivables |  | Financed Service Contracts |  | Total
Allowance for credit loss as of July 31, 2021 | $ | 38 |  |  | $ | 86 |  |  | $ | 3 |  |  | $ | 127 |
Provisions (benefits) | (9) |  |  | (19) |  |  | — |  |  | (28) |
Recoveries (write-offs), net | (2) |  |  | — |  |  | — |  |  | (2) |
Allowance for credit loss as of January 29, 2022 | $ | 27 |  |  | $ | 67 |  |  | $ | 3 |  |  | $ | 97 |
Six months ended January 23, 2021 | CREDIT LOSS ALLOWANCES
| Lease Receivables |  | Loan Receivables |  | Financed Service Contracts |  | Total
Allowance for credit loss as of July 25, 2020 | $ | 48 |  |  | $ | 81 |  |  | $ | 9 |  |  | $ | 138 |
Provisions (benefits) | (7) |  |  | (3) |  |  | 1 |  |  | (9) |
Other | 2 |  |  | 18 |  |  | (1) |  |  | 19 |
Allowance for credit loss as of January 23, 2021 | $ | 43 |  |  | $ | 96 |  |  | $ | 9 |  |  | $ | 148 |

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