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Financial Instruments
 12 Months Ended
Apr. 28, 2017
Investments [Abstract]  
Financial Instruments
Financial Instruments
The Company holds investments such as marketable debt and equity securities that are classified and accounted for as trading and available-for-sale and are remeasured on a recurring basis. The Company also holds cost method, equity method, and other investments which are measured at fair value on a nonrecurring basis. Refer to Note 1 for information regarding valuation techniques and inputs used in the fair value measurements.

In accordance with authoritative guidance adopted in fiscal year 2017, certain investments for which the fair value is measured using the net asset value per share (or its equivalent) practical expedient are not presented within the fair value hierarchy. The fair value amounts presented for these investments are intended to permit reconciliation to the consolidated balance sheets. The revised presentation has been applied retrospectively and fiscal year 2016 values have been reclassified to conform to classifications used in the current year.
The following table summarizes the Company's investments by significant investment category and the consolidated balance sheet classification at April 28, 2017:
 
Valuation
 
Balance Sheet Classification
(in millions)
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 
Fair Value
 
Investments
 
Other Assets
Available-for-sale securities
 

 
 

 
 

 
 

 
 
 
 
Level 1:
 
 
 
 
 
 
 
 
 
 
 
U.S. government and agency securities
$
613

 
$
2

 
$
(5
)
 
$
610

 
$
610

 
$
—

Marketable equity securities
58

 
49

 
(4
)
 
103

 
—

 
103

Total Level 1
671

 
51

 
(9
)
 
713

 
610

 
103

Level 2:
 
 
 
 
 
 
 
 
 
 
 
Corporate debt securities
4,643

 
62

 
(23
)
 
4,682

 
4,682

 
—

U.S. government and agency securities
860

 
—

 
(10
)
 
850

 
850

 
—

Mortgage-backed securities
766

 
9

 
(16
)
 
759

 
759

 
—

Foreign government and agency securities
49

 
—

 
—

 
49

 
49

 
—

Other asset-backed securities
228

 
1

 
(1
)
 
228

 
228

 
—

Debt funds
1,246

 
4

 
(178
)
 
1,072

 
1,072

 
—

Total Level 2
7,792

 
76

 
(228
)
 
7,640

 
7,640

 
—

Level 3:
 
 
 
 
 
 
 
 
 
 
 
Corporate debt securities
1

 
—

 
—

 
1

 
—

 
1

Auction rate securities
47

 
—

 
(3
)
 
44

 
—

 
44

Total Level 3
48

 
—

 
(3
)
 
45

 
—

 
45

Investments measured at net asset value(1):
 
 
 
 
 
 
 
 
 
 
 
Debt funds
497

 
—

 
(6
)
 
491

 
491

 
—

Total available-for-sale securities
9,008

 
127

 
(246
)
 
8,889

 
8,741

 
148

Cost method, equity method, and other investments:
 
 
 
 
 
 
 
 
 
 
 
Level 3:
 
 
 
 
 
 
 
 
 
 
 
Cost method, equity method, and other investments
589

 
—

 
—

 
N/A

 
—

 
589

Total Level 3:
589

 
—

 
—

 
N/A

 
—

 
589

Total cost method, equity method, and other investments
589

 
—

 
—

 
N/A

 
—

 
589

Total investments
$
9,597

 
$
127

 
$
(246
)

$
8,889

 
$
8,741

 
$
737

(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 following table summarizes the Company's investments by significant investment categories and the related consolidated balance sheet classification at April 29, 2016:
 
Valuation
 
Balance Sheet Classification
(in millions)
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 
Fair Value
 
Investments
 
Other Assets
Available-for-sale securities:
 

 
 

 
 

 
 

 
 
 
 
Level 1:
 
 
 
 
 
 
 
 
 
 
 
U.S. government and agency securities
$
792

 
$
14

 
$
(1
)
 
$
805

 
$
805

 
$
—

Marketable equity securities
75

 
21

 
(11
)
 
85

 
—

 
85

Total Level 1
867

 
35

 
(12
)
 
890

 
805

 
85

Level 2:
 
 
 
 
 
 
 
 
 
 
 
Corporate debt securities
3,935

 
85

 
(24
)
 
3,996

 
3,996

 
—

U.S. government and agency securities
902

 
2

 
—

 
904

 
904

 
—

Mortgage-backed securities
1,016

 
17

 
(18
)
 
1,015

 
1,015

 
—

Other asset-backed securities
192

 
3

 
—

 
195

 
195

 
—

Debt funds
2,306

 
5

 
(247
)
 
2,064

 
2,064

 
—

Total Level 2
8,351

 
112

 
(289
)
 
8,174

 
8,174

 
—

Level 3:
 
 
 
 
 
 
 
 
 
 
 
Corporate debt securities
1

 
—

 
—

 
1

 
—

 
1

Auction rate securities
47

 
—

 
(3
)
 
44

 
—

 
44

Total Level 3
48

 
—

 
(3
)
 
45

 
—

 
45

Investments measured at net asset value(1):
 
 
 
 
 
 
 
 
 
 
 
Debt funds
734

 
—

 
(34
)
 
700

 
700

 
—

Total available-for-sale securities
10,000

 
147

 
(338
)
 
9,809

 
9,679

 
130

Trading securities:
 

 
 

 
 

 
 

 
 
 
 
Level 1:
 
 
 
 
 
 
 
 
 
 
 
Exchange-traded funds
65

 
15

 
(1
)
 
79

 
79

 
—

Total Level 1
65

 
15

 
(1
)
 
79

 
79

 
—

Total trading securities
65

 
15

 
(1
)
 
79

 
79

 
—

Cost method, equity method, and other investments:
 
 
 
 
 
 
 
 
 
 
 
Level 3:
 
 
 
 
 
 
 
 
 
 
 
Cost method, equity method, and other investments
506

 
—

 
—

 
N/A

 
—

 
506

Total Level 3
506

 
—

 
—

 
N/A

 
—

 
506

Total cost method, equity method, and other investments
506

 
—

 
—

 
N/A

 
—

 
506

Total investments
$
10,571

 
$
162

 
$
(339
)
 
$
9,888

 
$
9,758

 
$
636


(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.

Marketable Debt and Equity Securities:
The following tables present the gross unrealized losses and fair values of the Company’s available-for-sale securities that have been in a continuous unrealized loss position deemed to be temporary, aggregated by investment category at April 28, 2017 and April 29, 2016:
 
April 28, 2017
 
Less than 12 months
 
More than 12 months
(in millions)
Fair Value
 
Unrealized
Losses
 
Fair Value
 
Unrealized
Losses
Corporate debt securities
$
1,263

 
$
(19
)
 
$
46

 
$
(4
)
Auction rate securities
—

 
—

 
44

 
(3
)
Mortgage-backed securities
276

 
(4
)
 
95

 
(12
)
U.S. government and agency securities
896

 
(15
)
 
—

 
—

Other asset-backed securities
127

 
(1
)
 
—

 
—

Debt funds
173

 
(1
)
 
1,125

 
(183
)
Marketable equity securities
14

 
(3
)
 
2

 
(1
)
Total
$
2,749

 
$
(43
)
 
$
1,312

 
$
(203
)
 
April 29, 2016
 
Less than 12 months
 
More than 12 months
(in millions)
Fair Value
 
Unrealized
Losses
 
Fair Value
 
Unrealized
Losses
Corporate debt securities
$
756

 
$
(18
)
 
$
136

 
$
(6
)
Auction rate securities
—

 
—

 
44

 
(3
)
Mortgage-backed securities
196

 
(5
)
 
92

 
(5
)
U.S. government and agency securities
308

 
(4
)
 
67

 
(5
)
Debt funds
670

 
(26
)
 
1,601

 
(256
)
Marketable equity securities
45

 
(11
)
 
—

 
—

Total
$
1,975

 
$
(64
)
 
$
1,940

 
$
(275
)


The following table presents the unobservable inputs utilized in the fair value measurement of the auction rate securities classified as Level 3 at April 28, 2017:

 
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 2017 or 2016. 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 tables provide 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 29, 2016
$
45

 
$
1

 
$
44

Unrealized gains/(losses) included in other comprehensive income
—

 
—

 
—

Settlements
—

 
—

 
—

April 28, 2017
$
45

 
$
1

 
$
44

 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
Total Level 3
Investments
 
Corporate debt
securities
 
Auction rate
securities
April 24, 2015
$
106

 
$
1

 
$
105

Unrealized gains/(losses) included in other comprehensive income
(3
)
 
—

 
(3
)
Settlements
(58
)
 
—

 
(58
)
April 29, 2016
$
45

 
$
1

 
$
44


Activity related to the Company’s investment portfolio is as follows:
 
Fiscal Year
 
2017
 
2016
 
2015
(in millions)
Debt(1)
 
Equity(2)(3)
 
Debt(1)
 
Equity(2)(4)
 
Debt(1)
 
Equity(2)(5)
Proceeds from sales
$
5,224

 
$
132

 
$
9,881

 
$
42

 
$
5,640

 
$
250

Gross realized gains
75

 
49

 
36

 
38

 
33

 
164

Gross realized losses
(56
)
 
—

 
(53
)
 
—

 
(19
)
 
—

Impairment losses recognized
—

 
(30
)
 
—

 
(114
)
 
—

 
(29
)
(1)
Includes available-for-sale debt securities.
(2)
Includes marketable equity securities, cost method, equity method, exchange-traded funds, and other investments.
(3)
As a result of certain acquisitions that occurred during fiscal year 2017, the Company recognized a non-cash realized gain of $20 million on its previously-held minority investment included in other expense, net in the consolidated statement of income.
(4)
As a result of certain acquisitions that occurred during fiscal year 2016, the Company recognized a non-cash realized gain of $9 million on its previously-held minority investment included in other expense, net in the consolidated statement of income.
(5)
As a result of certain acquisitions that occurred during fiscal year 2015, the Company recognized a non-cash realized gain of $41 million on its previously-held minority investments included in other expense, net in the consolidated statement of income. Also, a realized gain on an equity method investment totaling $97 million is included in special charge (gain), net in the consolidated statement of income.
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 28, 2017 and April 29, 2016, 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 2017 and 2016 were not significant.
The April 28, 2017 balance of available-for-sale debt securities, excluding debt funds which have no single maturity date, 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 28, 2017
Due in one year or less
$
1,110

Due after one year through five years
2,855

Due after five years through ten years
3,177

Due after ten years
81

Total debt securities
$
7,223


The Company holds investments in marketable equity securities, which are classified as other assets in the consolidated balance sheets. The aggregate carrying amount of these investments was $103 million and $85 million at April 28, 2017 and April 29, 2016, respectively. The Company did not recognize any significant impairment charges related to marketable equity securities during fiscal year 2017. During the fiscal years 2016 and 2015 the Company determined that the fair value of certain marketable equity securities were below their carrying values and that the carrying values of these investments were not expected to be recoverable within a reasonable period of time. As a result, the Company recognized $20 million and $7 million in impairment charges for fiscal years 2016 and 2015 respectively, which were recognized within other expense, net in the consolidated statements of income.
Cost method, equity method, and other investments
The Company holds investments in equity and other securities that are accounted for using the cost or equity method, which are classified as other assets in the consolidated balance sheets. At April 28, 2017 and April 29, 2016, the aggregate carrying amount of equity and other securities without a quoted market price and accounted for using the cost or equity method was $589 million and $506 million, respectively. Cost and equity method investments are measured at fair value on a nonrecurring basis. Changes in circumstance or the occurrence of events that suggest the Company’s investment may not be recoverable are assessed quarterly. If there are identified events or changes in circumstances that may have a material adverse effect on the fair value of the investment, the investment is assessed for impairment.
Cost and equity method investments fall within Level 3 of the fair value hierarchy due to the use of significant unobservable inputs to determine fair value, as the investments are in privately-held entities without quoted market prices. To determine the fair value of these investments, the Company uses all pertinent financial information available related to the entities, including financial statements and market participant valuations from recent and proposed equity offerings. During the fiscal years 2017, 2016, and 2015 the Company determined that the fair values of certain cost and/or equity method investments were below their carrying values and that the carrying values of these investments were not expected to be recoverable within a reasonable period of time. As a result, the Company recognized $30 million of impairment charges during fiscal year 2017, which were recognized in other expense, net in the consolidated statements of income. During fiscal year 2016, the Company recognized $23 million of impairment charges, which were recognized in other expense, net and $70 million of impairment charges which were recognized in special charge (gain), net in the consolidated statements of income. During fiscal year 2015 the Company recognized $7 million of impairment charges, which were recognized in other expense, net in the consolidated statements of income.