
8.	Investments


(a)	Summary of Available-for-Sale Investments

The following tables summarize the Company’s available-for-sale investments (in millions):



July 25, 2015	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Fixed income securities:
U.S. government securities	$	29,904	$	41	$	(6	)	$	29,939
U.S. government agency securities	3,662		2		(1		)	3,663
Non-U.S. government and agency securities	1,128		1		(1		)	1,128
Corporate debt securities	15,802		34		(53		)	15,783
U.S. agency mortgage-backed securities	1,456		8		(3		)	1,461
Total fixed income securities	51,952		86		(64		)	51,974
Publicly traded equity securities	1,092		480		(7		)	1,565
Total	$	53,044	$	566	$	(71	)	$	53,539

July 26, 2014	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Fixed income securities:
U.S. government securities	$	31,717	$	29	$	(12	)	$	31,734
U.S. government agency securities	1,062		1		—			1,063
Non-U.S. government and agency securities	860		2		(1		)	861
Corporate debt securities	9,092		74		(7		)	9,159
U.S. agency mortgage-backed securities	574		5		—			579
Total fixed income securities	43,305		111		(20		)	43,396
Publicly traded equity securities	1,314		648		(10		)	1,952
Total	$	44,619	$	759	$	(30	)	$	45,348

Non-U.S. government and agency securities include agency and corporate debt securities that are guaranteed by non-U.S. governments.


(b)	Gains and Losses on Available-for-Sale Investments

The following table presents the gross realized gains and gross realized losses related to the Company’s available-for-sale investments (in millions):



Years Ended	July 25, 2015			July 26, 2014			July 27, 2013
Gross realized gains	$	221		$	341		$	264
Gross realized losses	(64		)	(41		)	(216		)
Total	$	157		$	300		$	48

The following table presents the realized net gains related to the Company’s available-for-sale investments by security type (in millions):



Years Ended	July 25, 2015		July 26, 2014		July 27, 2013
Net gains on investments in publicly traded equity securities	$	116	$	253	$	17
Net gains on investments in fixed income securities	41		47		31
Total	$	157	$	300	$	48

There were no impairment charges on available-for-sale investments for fiscal 2015. For fiscal 2014, the realized net gains related to the Company's available-for-sale investments included impairment charges of $11 million. These impairment charges related to publicly traded equity securities and were due to a decline in the fair value of those securities below their cost basis that were determined to be other than temporary. There were no impairment charges on available-for-sale investments for fiscal 2013.

The following tables present the breakdown of the available-for-sale investments with gross unrealized losses and the duration that those losses had been unrealized at July 25, 2015 and July 26, 2014 (in millions):



	UNREALIZED LOSSES LESS THAN 12 MONTHS					UNREALIZED LOSSES 12 MONTHS OR GREATER					TOTAL
July 25, 2015	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
Fixed income securities:
U.S. government securities	$	6,412	$	(6	)	$	—	$	—		$	6,412	$	(6	)
U.S. government agency securities	1,433		(1		)	—		—			1,433		(1		)
Non-U.S. government and agency securities	515		(1		)	4		—			519		(1		)
Corporate debt securities	9,552		(49		)	312		(4		)	9,864		(53		)
U.S. agency mortgage-backed securities	579		(3		)	—		—			579		(3		)
Total fixed income securities	18,491		(60		)	316		(4		)	18,807		(64		)
Publicly traded equity securities	108		(7		)	2		—			110		(7		)
Total	$	18,599	$	(67	)	$	318	$	(4	)	$	18,917	$	(71	)



	UNREALIZED LOSSES LESS THAN 12 MONTHS					UNREALIZED LOSSES 12 MONTHS OR GREATER					TOTAL
July 26, 2014	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
Fixed income securities:
U.S. government securities	$	7,676	$	(12	)	$	45	$	—		$	7,721	$	(12	)
Non-U.S. government and agency securities	361		(1		)	22		—			383		(1		)
Corporate debt securities	1,875		(3		)	491		(4		)	2,366		(7		)
Total fixed income securities	9,912		(16		)	558		(4		)	10,470		(20		)
Publicly traded equity securities	132		(10		)	—		—			132		(10		)
Total	$	10,044	$	(26	)	$	558	$	(4	)	$	10,602	$	(30	)

As of July 25, 2015, for fixed income securities that were in unrealized loss positions, the Company has determined that (i) it does not have the intent to sell any of these investments, and (ii) it is not more likely than not that it will be required to sell any of these investments before recovery of the entire amortized cost basis. In addition, as of July 25, 2015, the Company anticipates that it will recover the entire amortized cost basis of such fixed income securities and has determined that no other-than-temporary impairments associated with credit losses were required to be recognized during the year ended July 25, 2015.

The Company has evaluated its publicly traded equity securities as of July 25, 2015 and has determined that there was no indication of other-than-temporary impairments in the respective categories of unrealized losses. This determination was based on several factors, which include the length of time and extent to which fair value has been less than the cost basis, the financial condition and near-term prospects of the issuer, and the Company’s intent and ability to hold the publicly traded equity securities for a period of time sufficient to allow for any anticipated recovery in market value.


(c)	Maturities of Fixed Income Securities

The following table summarizes the maturities of the Company’s fixed income securities at July 25, 2015 (in millions):



	Amortized Cost		Fair Value
Less than 1 year	$	16,534	$	16,540
Due in 1 to 2 years	15,264		15,279
Due in 2 to 5 years	18,501		18,499
Due after 5 years	1,653		1,656
Total	$	51,952	$	51,974

Actual maturities may differ from the contractual maturities because borrowers may have the right to call or prepay certain obligations. The remaining contractual principal maturities for mortgage-backed securities were allocated assuming no prepayments.


(d)	Securities Lending

The Company periodically engages in securities lending activities with certain of its available-for-sale investments. These transactions are accounted for as a secured lending of the securities, and the securities are typically loaned only on an overnight basis. The average daily balance of securities lending for fiscal 2015 and 2014 was $0.4 billion and $1.5 billion, respectively. The Company requires collateral equal to at least 102% of the fair market value of the loaned security and that the collateral be in the form of cash or liquid, high-quality assets. The Company engages in these secured lending transactions only with highly creditworthy counterparties, and the associated portfolio custodian has agreed to indemnify the Company against collateral losses. The Company did not experience any losses in connection with the secured lending of securities during the periods presented. As of July 25, 2015 and July 26, 2014, the Company had no outstanding securities lending transactions.


(e)	Investments in Privately Held Companies

The carrying value of the Company’s investments in privately held companies was included in other assets. For such investments that were accounted for under the equity and cost method as of July 25, 2015 and July 26, 2014, the amounts are summarized in the following table (in millions):



	July 25, 2015		July 26, 2014
Equity method investments	$	578	$	630
Cost method investments	319		269
Total	$	897	$	899

Variable Interest Entities

VCE Joint Venture VCE is a joint venture formed in fiscal 2010 between the Company and EMC Corporation (“EMC”), with investments from VMware, Inc. (“VMware”) and Intel Capital Corporation ("Intel"). In October 2014, the Company, EMC, VMware, and Intel agreed to restructure VCE, and this transaction was completed in the second quarter of fiscal 2015. Prior to the restructuring, the Company’s cumulative gross investment in VCE was approximately $716 million, inclusive of convertible notes and accrued interest on convertible notes. The Company recorded cumulative losses from VCE under the equity method of $691 million since inception. The Company ceased accounting for the VCE investment under the equity method in October 2014, and losses of $47 million, $223 million and $183 million were recorded for the fiscal years ended July 25, 2015, July 26, 2014, and July 27, 2013, respectively. Under the terms of the restructuring, VCE paid $152 million to the Company for a portion of the outstanding principal balance of the convertible notes held by it and accrued interest on such notes, and the remaining principal balance of other such notes, and the accrued interest thereon, was cancelled. Pursuant to the restructuring, VCE also redeemed a portion of the Company’s equity interest in VCE, reducing the Company’s ownership interest in VCE from 35% prior to the restructuring to 10%. In connection with this transaction, the Company has written this investment down to a book value of zero and has recognized a gain in other income (loss), net of $126 million for the fiscal year ended July 25, 2015.

Other Variable Interest Entities In the ordinary course of business, the Company has investments in other privately held companies and provides financing to certain customers. These other privately held companies and customers may be considered to be variable interest entities. The Company evaluates on an ongoing basis its investments in these other privately held companies and its customer financings and has determined that as of July 25, 2015 there were no other variable interest entities required to be consolidated in the Company’s Consolidated Financial Statements.