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Financial Instruments
 12 Months Ended
Apr. 26, 2019
Investments [Abstract]  
Financial Instruments Financial Instruments
Debt Securities
The Company holds investments in marketable debt securities that are classified and accounted for as available-for-sale and are remeasured on a recurring basis. Refer to Note 1 for information regarding valuation techniques and inputs used in the fair value measurements.
The following tables summarize the Company's investments in available-for-sale debt securities by significant investment category and the related consolidated balance sheet classification at April 26, 2019 and April 27, 2018:
 
April 26, 2019
 
Valuation
 
Balance Sheet Classification
(in millions)
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 
Fair Value
 
Investments
 
Other Assets
Level 1:
 
 
 
 
 
 
 
 
 
 
 
U.S. government and agency securities
$
529

 
$
1

 
$
(7
)
 
$
523

 
$
523

 
$
—

Level 2:
 
 
 
 
 
 
 
 
 
 
 
Corporate debt securities
3,500

 
14

 
(21
)
 
3,493

 
3,493

 
—

U.S. government and agency securities
387

 
1

 
(7
)
 
381

 
381

 
—

Mortgage-backed securities
537

 
3

 
(20
)
 
520

 
520

 
—

Non-U.S. government and agency securities
11

 
—

 
—

 
11

 
11

 
—

Other asset-backed securities
529

 
1

 
(3
)
 
527

 
527

 
—

Total Level 2
4,964

 
19

 
(51
)
 
4,932

 
4,932

 
—

Level 3:
 
 
 
 
 
 
 
 
 
 
 
Auction rate securities
47

 
—

 
(3
)
 
44

 
—

 
44

Total available-for-sale debt securities
$
5,540

 
$
20

 
$
(61
)
 
$
5,499

 
$
5,455

 
$
44


 
April 27, 2018
 
Valuation
 
Balance Sheet Classification
(in millions)
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 
Fair Value
 
Investments
 
Other Assets
Level 1:
 
 
 
 
 
 
 
 
 
 
 
U.S. government and agency securities
$
732

 
$
—

 
$
(26
)
 
$
706

 
$
706

 
$
—

Level 2:
 
 
 
 
 
 
 
 
 
 
 
Corporate debt securities
4,179

 
20

 
(75
)
 
4,124

 
4,124

 
—

U.S. government and agency securities
848

 
—

 
(24
)
 
824

 
824

 
—

Mortgage-backed securities
725

 
2

 
(34
)
 
693

 
693

 
—

Non-U.S. government and agency securities
74

 
—

 
(1
)
 
73

 
73

 
—

Other asset-backed securities
358

 
—

 
(2
)
 
356

 
356

 
—

Total Level 2
6,184

 
22

 
(136
)
 
6,070

 
6,070

 
—

Level 3:
 
 
 
 
 
 
 
 
 
 
 
Auction rate securities
47

 
—

 
(3
)
 
44

 
—

 
44

Total available-for-sale debt securities
$
6,963

 
$
22

 
$
(165
)
 
$
6,820

 
$
6,776

 
$
44


The following tables present the gross unrealized losses and fair values of the Company’s available-for-sale debt securities that have been in a continuous unrealized loss position deemed to be temporary, aggregated by investment category, at April 26, 2019 and April 27, 2018:
 
April 26, 2019
 
Less than 12 months
 
More than 12 months
(in millions)
Fair Value
 
Unrealized
Losses
 
Fair Value
 
Unrealized
Losses
U.S. government and agency securities
$
130

 
$
(1
)
 
$
649

 
$
(13
)
Corporate debt securities
582

 
(5
)
 
1,153

 
(16
)
Mortgage-backed securities
73

 
(1
)
 
250

 
(19
)
Other asset-backed securities
290

 
(2
)
 
85

 
(1
)
Auction rate securities
—

 
—

 
44

 
(3
)
Total
$
1,075

 
$
(9
)
 
$
2,181

 
$
(52
)
 
April 27, 2018
 
Less than 12 months
 
More than 12 months
(in millions)
Fair Value
 
Unrealized
Losses
 
Fair Value
 
Unrealized
Losses
U.S. government and agency securities
$
762

 
$
(33
)
 
$
374

 
$
(17
)
Corporate debt securities
2,620

 
(58
)
 
272

 
(17
)
Mortgage-backed securities
442

 
(15
)
 
102

 
(19
)
Non-U.S. government and agency securities
32

 
—

 
36

 
(1
)
Other asset-backed securities
238

 
(1
)
 
63

 
(1
)
Auction rate securities
—

 
—

 
44

 
(3
)
Total
$
4,094

 
$
(107
)
 
$
891

 
$
(58
)


The following table presents the unobservable inputs utilized in the fair value measurement of the auction rate securities classified as Level 3 at April 26, 2019:

 
Valuation Technique
Unobservable Input
Range (Weighted Average)
Auction rate securities
Discounted cash flow
Years to principal recovery
2 yrs. - 12 yrs. (3 yrs.)
Illiquidity premium
6%

The Company reviews the fair value hierarchy classification on a quarterly basis. Changes in the ability to observe valuation inputs may result in a reclassification of levels for certain securities within the fair value hierarchy. The Company’s policy is to recognize transfers into and out of levels within the fair value hierarchy at the end of the fiscal quarter in which the actual event or change in circumstances that caused the transfer occurs. There were no transfers between Level 1, Level 2, or Level 3 during fiscal years 2019 or 2018. When a determination is made to classify an asset or liability within Level 3, the determination is based upon the significance of the unobservable inputs to the overall fair value measurement.
The following table provides a reconciliation of the beginning and ending balances of items measured at fair value on a recurring basis that used significant unobservable inputs (Level 3):
(in millions)
Total Level 3 Investments
 
Corporate Debt Securities
 
Auction Rate Securities
April 28, 2017
$
45

 
$
1

 
$
44

Settlements
(1
)
 
(1
)
 
—

April 27, 2018
44

 
—

 
44

Settlements
—

 
—

 
—

April 26, 2019
$
44

 
$
—

 
$
44


Activity related to the Company’s debt securities portfolio is as follows:
(in millions)
April 26, 2019
 
April 27, 2018
 
April 28, 2017
Proceeds from sales
$
3,718

 
$
3,309

 
$
3,646

Gross realized gains
18

 
27

 
49

Gross realized losses
(62
)
 
(21
)
 
(14
)
Credit losses represent the difference between the present value of cash flows expected to be collected on certain mortgage-backed securities and auction rate securities and the amortized cost of these securities. Based on the Company’s assessment of the credit quality of the underlying collateral and credit support available to each of the remaining securities in which the Company is invested, the Company believes it has recognized all necessary other-than-temporary impairments, as the Company does not have the intent to sell, nor is it more likely than not that the Company will be required to sell, before recovery of the amortized cost.
At April 26, 2019 and April 27, 2018, the credit loss portion of other-than temporary impairments on debt securities was not significant. The total reductions for available-for-sale debt securities sold during fiscal years 2019 and 2018 were not significant.
The April 26, 2019 balance of available-for-sale debt securities by contractual maturity is shown in the following table. Within the table, maturities of mortgage-backed securities have been allocated based upon timing of estimated cash flows assuming no change in the current interest rate environment. Actual maturities may differ from contractual maturities because the issuers of the securities may have the right to prepay obligations without prepayment penalties.
(in millions)
April 26, 2019
Due in one year or less
$
1,022

Due after one year through five years
2,198

Due after five years through ten years
2,244

Due after ten years
35

Total debt securities
$
5,499


Equity Securities, Equity Method Investments, and Other Investments
The Company commonly holds investments in equity securities with readily determinable fair values, equity investments without readily determinable fair values, investments accounted for under the equity method, and other investments.
Effective April 28, 2018, the Company adopted accounting standards update (ASU) 2016-01, which requires equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. As a result of the adoption, the Company reclassified $47 million from accumulated other comprehensive loss to the opening balance of retained earnings as of April 28, 2018. The Company uses quoted market prices to determine the fair value of equity securities with readily determinable fair values. For equity investments without readily determinable fair values that do not qualify for the practical expedient to estimate fair value using the net asset value per share or its equivalent, the Company has elected to measure these investments at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investment of the same issuer. This election is made for each investment separately and is reassessed at each reporting period as to whether the investment continues to qualify for this election. Additionally, at each reporting period, the Company makes a qualitative assessment considering impairment indicators to evaluate whether the investment is impaired.
Equity securities with readily determinable fair values are included within Level 1 of the fair value hierarchy, as they are measured using quoted market prices. Equity method investments and investments without readily determinable fair values, as described above, are included within Level 3 of the fair value hierarchy due to the use of significant unobservable inputs to determine fair value. To determine the fair value of these investments, the Company uses all pertinent financial information available related to the investees, including financial statements, market participant valuations from recent and proposed equity offerings, and other third-party data.
The following table summarizes the Company's equity and other investments at April 26, 2019, which are classified as other assets in the consolidated balance sheets:
(in millions)
 
April 26, 2019
Investments without readily determinable fair values
 
$
308

Equity method and other investments
 
64

Total equity and other investments
 
$
372


Prior to the adoption of ASU 2016-01, marketable equity securities were classified as available-for-sale and measured at fair value with unrealized changes recognized in accumulated other comprehensive income (AOCI), net of deferred taxes. Gains and losses on available-for-sale marketable equity securities were recognized in net income when realized. The Company also accounted for certain investments without quoted market prices under the cost method of accounting.
The following table summarizes the values of the Company's equity and other investments by significant investment category and the related consolidated balance sheet classification at April 27, 2018:
 
Valuation
 
Balance Sheet Classification
(in millions)
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 
Fair Value
 
Investments
 
Other Assets
Level 1:
 
 
 
 
 
 
 
 
 
 
 
Marketable equity securities
$
63

 
$
99

 
$
—

 
$
162

 
$
—

 
$
162

Level 2:
 
 
 
 
 
 
 
 
 
 
 
Debt funds
739

 
—

 
(154
)
 
585

 
585

 
—

Investments measured at net asset value(1):
 
 
 
 
 
 
 
 
 
 
 
Debt funds
199

 
—

 
(2
)
 
197

 
197

 
—

Total available-for-sale equity securities
1,001

 
99

 
(156
)
 
944

 
782

 
162

Cost method, equity method, and other investments:
 
 
 
 
 
 
 
 
 
 
 
Level 3:
 
 
 
 
 
 
 
 
 
 
 
Cost method, equity method, and other investments
353

 
—

 
—

 
N/A

 
—

 
353

Total equity and other investments
$
1,354

 
$
99

 
$
(156
)
 
$
944

 
$
782

 
$
515

(1) Certain investments that are measured at the net asset value per share (or its equivalent) as a practical expedient are excluded from the fair value hierarchy. The fair value amounts presented herein are intended to permit reconciliation to the consolidated balance sheets.
The table below includes activity related to the Company’s portfolio of equity and other investments. Gains and losses on equity and other investments are recognized in other non-operating income, net in the consolidated statements of income.    
(in millions)
 
April 26, 2019
 
April 27, 2018
 
April 28, 2017
Proceeds from sales
 
$
964

 
$
918

 
$
1,710

Gross realized gains
 
134

 
18

 
75

Gross realized losses
 
(30
)
 
(4
)
 
(42
)
Recognized impairment losses
 
(45
)
 
(231
)
 
(30
)

Net gains recognized during fiscal year 2019 were $104 million, comprised of $94 million net realized gains on equity and other investments sold during the period and $10 million of unrealized gains on equity and other investments still held at April 26, 2019. Gross gains and losses for fiscal years 2018 and 2017 represent gains and losses on instruments sold during the period.
During fiscal year 2018, the Company received bids from potential buyers and investors for some or all of its ownership in a portfolio of selected investments, which indicated that the fair values of certain of the underlying cost and equity method investments in the portfolio may be below the respective carrying values. The Company determined that the decline in the fair values was other-than-temporary given the uncertainty regarding the Company’s intent to hold the investments for a period of time that would be sufficient to recover the carrying values. As a result, the Company recognized impairment charges of $227 million during fiscal year 2018, which were recognized in other non-operating income, net in the consolidated statements of income. The fair values of the investments were determined based on Level 3 inputs. The carrying values of the investments prior to recognizing the impairment charges was $317 million. There were no other significant impairment charges recognized during fiscal year 2018 and impairment charges during fiscal years 2019 and 2017 were not significant.