XML 33 R22.htm IDEA: XBRL DOCUMENT
v3.23.3

Derivative Instruments | 3 Months Ended
--- | ---
Oct. 28, 2023
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 and requiring collateral in certain cases. 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 28, 2023 |  | July 29, 2023 |  | Balance Sheet Line Item |  | October 28, 2023 |  | July 29, 2023
Derivatives designated as hedging instruments: |  |  |  |  |  |  |  |  |  |  |
Foreign currency derivatives | Other current assets |  | $ | 38 |  |  | $ | 22 |  |  | Other current liabilities |  | $ | — |  |  | $ | — |
Foreign currency derivatives | Other assets |  | 19 |  |  | 9 |  |  | Other long-term liabilities |  | — |  |  | — |
Interest rate derivatives | Other current assets |  | — |  |  | — |  |  | Other current liabilities |  | 10 |  |  | 17 |
Interest rate derivatives | Other assets |  | — |  |  | — |  |  | Other long-term liabilities |  | 22 |  |  | 24 |
Total |  |  | 57 |  |  | 31 |  |  |  |  | 32 |  |  | 41 |
Derivatives not designated as hedging instruments: |  |  |  |  |  |  |  |  |  |  |
Foreign currency derivatives | Other current assets |  | 1 |  |  | 1 |  |  | Other current liabilities |  | 41 |  |  | 25 |
Foreign currency derivatives | Other assets |  | — |  |  | — |  |  | Other long-term liabilities |  | 19 |  |  | 9 |
Total |  |  | 1 |  |  | 1 |  |  |  |  | 60 |  |  | 34 |
Total |  |  | $ | 58 |  |  | $ | 32 |  |  |  |  | $ | 92 |  |  | $ | 75 |
The following amounts were recorded on the Consolidated Balance Sheets related to cumulative basis adjustments for our fair value hedges (in millions):
|  | CARRYING AMOUNT OF THE HEDGED ASSETS/(LIABILITIES) |  | CUMULATIVE AMOUNT OF FAIR VALUE HEDGING ADJUSTMENT INCLUDED IN THE CARRYING AMOUNT OF THE HEDGED ASSETS/LIABILITIES
Balance Sheet Line Item of Hedged Item |  | October 28, 2023 |  | July 29, 2023 |  | October 28, 2023 |  | July 29, 2023
Short-term debt |  | $ | (990) |  |  | $ | (983) |  |  | $ | 10 |  |  | $ | 17 |
Long-term debt |  | $ | (478) |  |  | $ | (476) |  |  | $ | 22 |  |  | $ | 24 |
The effect of derivative instruments designated as fair value hedges, recognized in interest and other income (loss), net is summarized as follows (in millions):
|  | GAINS (LOSSES) FOR THE THREE MONTHS ENDED
|  | October 28, 2023 |  | October 29, 2022
Interest rate derivatives: |  |  |  |
Hedged items |  | $ | (9) |  |  | $ | 39 |
Derivatives designated as hedging instruments |  | 9 |  |  | (39) |
Total |  | $ | — |  |  | $ | — |
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 28, 2023 |  | October 29, 2022
Foreign currency derivatives |  | Other income (loss), net |  | $ | (130) |  |  | $ | (72) |
Total return swaps—deferred compensation |  | Operating expenses and other |  | (77) |  |  | (25) |
Equity derivatives |  | Other income (loss), net |  | 2 |  |  | (1) |
Total |  |  |  | $ | (205) |  |  | $ | (98) |
The notional amounts of our outstanding derivatives are summarized as follows (in millions):
| October 28, 2023 |  | July 29, 2023
Foreign currency derivatives | $ | 5,672 |  |  | $ | 5,419 |
Interest rate derivatives | 1,500 |  |  | 1,500 |
Total return swaps—deferred compensation | 783 |  |  | 792 |
Total | $ | 7,955 |  |  | $ | 7,711 |
(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. Under these collateral security arrangements, the net cash collateral provided for was $9 million and $40 million as of October 28, 2023 and July 29, 2023, respectively. (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. The derivative instrument’s gain or loss is initially reported as a component of accumulated other comprehensive income (AOCI) and subsequently reclassified into earnings when the hedged exposure affects earnings. 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, long-term customer financings 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, other current assets, 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 We hold interest rate swaps designated as fair value hedges related to fixed-rate senior notes that are due in fiscal 2024 through 2025. Under these interest rate swaps, we receive fixed-rate interest payments and make interest payments based on SOFR 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 SOFR. 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. (e)Equity Price Risk We hold marketable equity securities in our portfolio that are subject to price risk. To diversify our overall portfolio, we also hold equity derivatives that are not designated as accounting hedges. The change in the fair value of each of these investment types are included in other income (loss), net. We are also exposed to variability in compensation charges related to certain deferred compensation obligations to employees and directors. Although not designated as accounting hedges, we utilize derivatives such as total return swaps to economically hedge this exposure and offset the related compensation expense.

X
- References No definition available. + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 40 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Subparagraph (f) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480237/815-40-50-5 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 5C -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480434/815-10-50-5C Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 815 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//815/tableOfContent + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration