CSCO · 10-K · 2025A · Full report

Interest Rate and Refinancing Exposure

CISCO SYSTEMS, INC. · 2025-09-03 · Importance 63 · Surprise 64

In fiscal 2025 Cisco reported interest income of $1,001 million versus $1,365 million in fiscal 2024 (a decrease of $364 million) and interest expense of $1,593 million versus $1,006 million in fiscal 2024 (an increase of $587 million), resulting in net interest expense pressure in the period. Management attributes the decline in interest income to a lower average balance of cash and available-for-sale debt investments and lower interest rates, and the increase in interest expense to a higher average balance of debt outstanding. The changes occurred in fiscal 2025 compared with fiscal 2024 and reflect both lower market rates and Cisco's higher average borrowings during the year. These dynamics have increased net financing cost and are discussed as contributors to interest income (expense), net in the MD&A.

Key facts

• Interest expense in fiscal 2025: $(1,593) million, increased versus $(1,006) million in fiscal 2024 primarily due to a higher average balance of debt outstanding.
• On February 2, 2024 Cisco entered into an amended and restated 5-year $5.0 billion unsecured revolving credit agreement.
• Interest income (expense), net in fiscal 2025: $(592) million (net interest expense).
• Interest income in fiscal 2025: $1,001 million, decreased $364 million versus fiscal 2024.
• The credit agreement requires Cisco to maintain an interest coverage ratio of not less than 3.0 to 1.0, and Cisco was in compliance with all associated covenants as of July 26, 2025.
• The interest rate for the February 2, 2024 credit agreement is determined based on a formula using certain market rates.
• As of July 26, 2025, Cisco had not borrowed any funds under its $5.0 billion credit agreement.

Impact estimates