XML 29 R17.htm IDEA: XBRL DOCUMENT v3.8.0.1
Investments
6 Months Ended
Jan. 27, 2018
Investments, Debt and Equity Securities [Abstract]  
Investments
Investments
(a)
Summary of Available-for-Sale Investments
The following tables summarize the Company’s available-for-sale investments (in millions):
January 27, 2018
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair
Value
Fixed income securities:
 
 
 
 
 
 
 
U.S. government securities
$
17,506

 
$

 
$
(140
)
 
$
17,366

U.S. government agency securities
1,722

 

 
(10
)
 
1,712

Non-U.S. government and agency securities
340

 

 
(1
)
 
339

Corporate debt securities
31,508

 
80

 
(233
)
 
31,355

U.S. agency mortgage-backed securities
2,106

 

 
(49
)
 
2,057

Commercial paper
1,414

 

 

 
1,414

Certificates of deposit
196

 

 

 
196

Total fixed income securities
54,792

 
80

 
(433
)
 
54,439

Publicly traded equity securities
924

 
697

 
(1
)
 
1,620

Total (1)
$
55,716

 
$
777

 
$
(434
)
 
$
56,059


July 29, 2017
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair
Value
Fixed income securities:
 
 
 
 
 
 
 
U.S. government securities
$
19,880

 
$
3

 
$
(60
)
 
$
19,823

U.S. government agency securities
2,057

 

 
(5
)
 
2,052

Non-U.S. government and agency securities
389

 

 
(1
)
 
388

Corporate debt securities
31,626

 
202

 
(93
)
 
31,735

U.S. agency mortgage-backed securities
2,037

 
3

 
(17
)
 
2,023

Commercial paper
996

 

 

 
996

Certificates of deposit
60

 

 

 
60

Total fixed income securities
57,045

 
208

 
(176
)
 
57,077

Publicly traded equity securities
1,180

 
554

 
(27
)
 
1,707

Total (1)
$
58,225

 
$
762

 
$
(203
)
 
$
58,784

(1) Includes investments that were pending settlement as of the respective fiscal years. The net unsettled investment purchases (sales) were $(3) million and $(30) million as of January 27, 2018 and July 29, 2017, respectively.
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 available-for-sale investments (in millions):
 
Three Months Ended
 
Six Months Ended
 
January 27, 2018
 
January 28, 2017
 
January 27, 2018
 
January 28, 2017
Gross realized gains
$
165

 
$
18

 
$
232

 
$
48

Gross realized losses
(107
)
 
(48
)
 
(141
)
 
(63
)
Total
$
58

 
$
(30
)
 
$
91

 
$
(15
)

The following table presents the realized net gains (losses) related to available-for-sale investments by security type (in millions):
 
Three Months Ended
 
Six Months Ended
 
January 27, 2018
 
January 28, 2017
 
January 27, 2018
 
January 28, 2017
Net gains (losses) on investments in publicly traded equity securities
$
154

 
$
4

 
$
183

 
$
9

Net gains (losses) on investments in fixed income securities
(96
)
 
(34
)
 
(92
)
 
(24
)
Total
$
58

 
$
(30
)
 
$
91

 
$
(15
)

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 January 27, 2018 and July 29, 2017 (in millions):
 
UNREALIZED LOSSES
LESS THAN 12 MONTHS
 
UNREALIZED LOSSES
12 MONTHS OR GREATER
 
TOTAL
January 27, 2018
Fair Value
 
Gross
Unrealized
Losses
 
Fair Value
 
Gross
Unrealized
Losses
 
Fair Value
 
Gross 
Unrealized 
Losses
Fixed income securities:
 
 
 
 
 
 
 
 
 
 
 
U.S. government securities 
$
11,553

 
$
(96
)
 
$
5,804

 
$
(44
)
 
$
17,357

 
$
(140
)
U.S. government agency securities
1,152

 
(5
)
 
559

 
(5
)
 
1,711

 
(10
)
Non-U.S. government and agency securities
136

 

 
203

 
(1
)
 
339

 
(1
)
Corporate debt securities
16,003

 
(146
)
 
4,287

 
(87
)
 
20,290

 
(233
)
U.S. agency mortgage-backed securities
1,161

 
(19
)
 
876

 
(30
)
 
2,037

 
(49
)
Total fixed income securities
30,005

 
(266
)

11,729


(167
)

41,734


(433
)
Publicly traded equity securities
10

 
(1
)
 

 

 
10

 
(1
)
Total
$
30,015

 
$
(267
)
 
$
11,729

 
$
(167
)
 
$
41,744

 
$
(434
)
 
UNREALIZED LOSSES
LESS THAN 12 MONTHS
 
UNREALIZED LOSSES
12 MONTHS OR GREATER
 
TOTAL
July 29, 2017
Fair Value
 
Gross
Unrealized
Losses
 
Fair Value
 
Gross
Unrealized
Losses
 
Fair Value
 
Gross 
Unrealized 
Losses
Fixed income securities:
 
 
 
 
 
 
 
 
 
 
 
U.S. government securities 
$
14,962

 
$
(55
)
 
$
771

 
$
(5
)
 
$
15,733

 
$
(60
)
U.S. government agency securities
1,791

 
(4
)
 
130

 
(1
)
 
1,921

 
(5
)
Non-U.S. government and agency securities
368

 
(1
)
 

 

 
368

 
(1
)
Corporate debt securities
9,487

 
(92
)
 
101

 
(1
)
 
9,588

 
(93
)
U.S. agency mortgage-backed securities
1,485

 
(16
)
 
38

 
(1
)
 
1,523

 
(17
)
Total fixed income securities
28,093

 
(168
)
 
1,040

 
(8
)
 
29,133

 
(176
)
Publicly traded equity securities
122

 
(27
)
 

 

 
122

 
(27
)
Total
$
28,215

 
$
(195
)
 
$
1,040

 
$
(8
)
 
$
29,255

 
$
(203
)

The net realized losses related to the Company's available-for-sale investments included impairment charges of zero and $26 million for the three and six months ended January 27, 2018, respectively. These impairment charges related primarily 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 the corresponding periods in fiscal 2017.
As of January 27, 2018, 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 January 27, 2018, 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 six months ended January 27, 2018.
The Company has evaluated its publicly traded equity securities as of January 27, 2018 and has determined that there were no additional 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 as of January 27, 2018 (in millions): 
 
Amortized Cost
 
Fair Value
Less than 1 year
$
15,881

 
$
15,847

Due in 1 to 2 years
12,267

 
12,188

Due in 2 to 5 years
22,095

 
21,926

Due after 5 years
2,443

 
2,421

Mortgage-backed securities with no single maturity
2,106

 
2,057

Total
$
54,792

 
$
54,439


Actual maturities may differ from the contractual maturities because borrowers may have the right to call or prepay certain obligations.
(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 the six months ended January 27, 2018 and January 28, 2017 was $0.4 billion and $0.9 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 January 27, 2018 and July 29, 2017, the Company had no outstanding securities lending transactions.
(e)
Investments in Privately Held Companies
The carrying value of the 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 January 27, 2018 and July 29, 2017, the amounts are summarized in the following table (in millions):
 
January 27, 2018
 
July 29, 2017
Equity method investments
$
121

 
$
124

Cost method investments
861

 
859

Total
$
982

 
$
983


For additional information on impairment charges related to investments in privately held companies, see Note 9.
Variable Interest Entities In the ordinary course of business, the Company has investments in privately held companies and provides financing to certain customers. These privately held companies and customers may be considered to be variable interest entities. The Company evaluates on an ongoing basis its investments in these privately held companies and its customer financings, and has determined that as of January 27, 2018, except as disclosed in Note 1, there were no significant variable interest entities required to be consolidated in the Company’s Consolidated Financial Statements.
As of January 27, 2018, the carrying value of investments in privately held companies was $982 million, of which $528 million of such investments are considered to be in variable interest entities which are unconsolidated. In addition, the Company has additional funding commitments of $215 million related to these investments, some of which are based on the achievement of certain agreed-upon milestones, and some of which are required to be funded on demand. The carrying value of these investments and the additional funding commitments collectively represent the Company's maximum exposure related to these variable interest entities.