Financial Instruments

9 Months Ended

Jan. 24, 2020

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. 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 January 24, 2020 and April 26, 2019: 

	January 24, 2020
	Valuation								Balance Sheet Classification
(in millions)	Cost		Unrealized Gains		Unrealized Losses		Fair Value		Investments		Other Assets
Level 1:
U.S. government and agency securities	$	623	$	17	$	—	$	640	$	640	$	—
Level 2:
Corporate debt securities	5,155		52		(8)		5,199		5,199		—
U.S. government and agency securities	900		—		—		900		900		—
Mortgage-backed securities	655		13		(13)		655		655		—
Non-U.S. government and agency securities	13		—		—		13		13		—
Other asset-backed securities	511		3		(2)		512		512		—
Total Level 2	7,234		68		(23)		7,279		7,279		—
Level 3:
Auction rate securities	36		—		(3)		33		—		33
Total available-for-sale debt securities	$	7,893	$	85	$	(26)	$	7,952	$	7,919	$	33

	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

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 January 24, 2020 and April 26, 2019:

	January 24, 2020
	Less than 12 months				More than 12 months
(in millions)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
U.S. government and agency securities	$	96	$	—	$	40	$	—
Corporate debt securities	371		(3)		65		(5)
Mortgage-backed securities	82		(1)		63		(12)
Other asset-backed securities	23		—		165		(2)
Auction rate securities	—		—		33		(3)
Total	$	572	$	(4)	$	366	$	(22)

	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)

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 the three and nine months ended January 24, 2020 and January 25, 2019. 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.

During the three and nine months ended January 24, 2020, the Company redeemed $11 million worth of level 3 investments at par value. No gain or loss was recognized on the redemption. There were no purchases, sales, settlements, or gains or losses recognized in earnings or other comprehensive income for available-for-sale securities classified as Level 3 during the three and nine months ended January 25, 2019.

Activity related to the Company’s debt securities portfolio is as follows:

	Three months ended				Nine months Ended
(in millions)	January 24, 2020		January 25, 2019		January 24, 2020		January 25, 2019
Proceeds from sales	$	2,531	$	1,301	$	5,789	$	3,217
Gross realized gains	9		9		17		17
Gross realized losses	(2)		(36)		(13)		(55)

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 January 24, 2020 and April 26, 2019, the credit loss portion of other-than-temporary impairments on debt securities was not significant. No available-for-sale securities were sold for significantly less than carrying value during the three and nine months ended January 24, 2020 and January 25, 2019.

The January 24, 2020 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)	January 24, 2020
Due in one year or less	$	3,595
Due after one year through five years	2,727
Due after five years through ten years	1,577
Due after ten years	53
Total	$	7,952

Equity Securities, Equity Method Investments, and Other Investments

The Company holds investments in equity securities with and without readily determinable fair values, investments accounted for under the equity method, and other investments. Equity securities with readily determinable fair values are included in 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 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 January 24, 2020 and April 26, 2019, which are classified as other assets in the consolidated balance sheets:

(in millions)	January 24, 2020		April 26, 2019
Investments with readily determinable fair value (marketable equity securities)	$	39	$	—
Investments without readily determinable fair values	373		308
Equity method and other investments	68		64
Total equity and other investments	$	480	$	372

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.

	Three months ended				Nine months ended
(in millions)	January 24, 2020		January 25, 2019		January 24, 2020		January 25, 2019
Proceeds from sales	$	—	$	33	$	2	$	941
Gross gains	1		8		16		131
Gross losses	—		(1)		—		(30)
Impairment losses recognized	(1)		—		(5)		(12)

Net gains recognized for the three and nine months ended January 24, 2020 were $1 million and $16 million, respectively, comprised of unrealized gains on equity and other investments still held at January 24, 2020. Net gains recognized during the three months ended January 25, 2019 were $7 million, comprised of $1 million net realized gains on equity and other investments sold during the period and $6 million of net unrealized gains on equity and other investments still held at January 25, 2019. Net gains recognized during the nine months ended January 25, 2019 were $101 million, comprised of $71 million of net realized gains on equity and other investments sold during the period and $30 million of net unrealized gains on equity and other investments still held at January 25, 2019.