Financial Instruments

12 Months Ended

Apr. 26, 2024

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 April 26, 2024 and April 28, 2023:


	April 26, 2024
	Valuation								Balance Sheet Classification
(in millions)	Cost		Unrealized Gains		Unrealized Losses		Fair Value		Investments		Other Assets
Level 1:
U.S. government and agency securities	$	494	$	—	$	(22)	$	472	$	472	$	—
Level 2:
Corporate debt securities	3,953		4		(125)		3,832		3,832		—
U.S. government and agency securities	847		—		(43)		804		804		—
Mortgage-backed securities	692		1		(50)		643		643		—
Non-U.S. government and agency securities	5		—		—		5		5		—

Other asset-backed securities	941		2		(9)		934		934		—
Total Level 2	6,438		7		(227)		6,218		6,218		—
Level 3:
Auction rate securities	36		—		(3)		33		—		33
Total available-for-sale debt securities	$	6,968	$	7	$	(252)	$	6,723	$	6,690	$	33


	April 28, 2023
	Valuation								Balance Sheet Classification
(in millions)	Cost		Unrealized Gains		Unrealized Losses		Fair Value		Investments		Other Assets
Level 1:
U.S. government and agency securities	$	527	$	—	$	(22)	$	505	$	505	$	—
Level 2:
Corporate debt securities	4,140		6		(162)		3,984		3,984		—
U.S. government and agency securities	879		—		(45)		834		834		—
Mortgage-backed securities	560		—		(54)		506		506		—
Non-U.S. government and agency securities	15		—		—		15		15		—
Certificates of deposit	10		—		—		10		10
Other asset-backed securities	580		—		(19)		561		561		—

Total Level 2	6,185		6		(281)		5,911		5,911		—
Level 3:
Auction rate securities	36		—		(3)		33		—		33
Total available-for-sale debt securities	$	6,748	$	6	$	(305)	$	6,449	$	6,416	$	33

The amortized cost of debt securities excludes accrued interest, which is reported in other current assets in the consolidated balance sheets.

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, 2024 and April 28, 2023:


	April 26, 2024
	Less than 12 months				More than 12 months
(in millions)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Corporate debt securities	$	661	$	(10)	$	2,448	$	(116)
U.S. government and agency securities	177		(4)		730		(61)
Mortgage-backed securities	—		—		582		(50)
Other asset-backed securities	—		—		502		(9)
Auction rate securities	—		—		33		(3)
Total	$	838	$	(14)	$	4,296	$	(238)


	April 28, 2023
	Less than 12 months				More than 12 months
(in millions)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Corporate debt securities	$	286	$	(4)	$	2,901	$	(158)
U.S. government and agency securities	89		(3)		821		(64)
Mortgage-backed securities	26		(1)		460		(53)
Other asset-backed securities	—		—		545		(19)
Auction rate securities	—		—		33		(3)
Total	$	401	$	(8)	$	4,760	$	(297)

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. There were no transfers into or out of Level 3 during the fiscal years ended April 26, 2024 and April 28, 2023. 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.

Activity related to the Company’s available-for-sale debt securities portfolio is as follows:


(in millions)	April 26, 2024		April 28, 2023		April 29, 2022
Proceeds from sales	$	7,359	$	7,321	$	9,611
Gross realized gains	24		10		15
Gross realized losses	(26)		(43)		(18)

The contractual maturities of available-for-sale debt securities at April 26, 2024 are 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)	Amortized Cost		Fair Value
Due in one year or less	$	1,548	$	1,534
Due after one year through five years	3,644		3,479
Due after five years through ten years	758		744
Due after ten years	1,019		967
Total	$	6,968	$	6,723

Interest income is recognized in other non-operating income, net, in the consolidated statements of income. For fiscal years 2024, 2023, and 2022 there was $597 million, $386 million, and $186 million of interest income, respectively.

Equity Securities, Equity Method Investments, and Other Investments

The Company holds investments in equity securities with readily determinable fair values, equity method investments for which the Company has elected the fair value option, equity investments 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 for which the Company has elected the fair value option 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 a discounted cash flow methodology, taking into consideration various assumptions including discount rate, and all pertinent financial information available related to the investees, including the timing of anticipated product launches, historical financial results, and projections of future cash flows. Equity investments that do not have readily determinable fair values, and that are not accounted for via the fair value option, are included within Level 3 of the fair value hierarchy, as they are measured using the measurement alternative at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer.

The following table summarizes the Company's equity and other investments at April 26, 2024 and April 28, 2023, which are classified as primarily other assets in the consolidated balance sheets:


(in millions)	April 26, 2024		April 28, 2023
Investments with readily determinable fair value (marketable equity securities)	$	28	$	115
Investments for which the fair value option has been elected	311		531
Investments without readily determinable fair values	859		872
Equity method and other investments	84		89
Total equity and other investments	$	1,282	$	1,607

Gains and losses on the Company's portfolio of equity and other investments are recognized in other non-operating income, net in the consolidated statements of income. During the fiscal year ended April 26, 2024, there were $291 million of net unrealized losses on equity securities and other investments still held at April 26, 2024. During the fiscal year ended April 28, 2023, there were $56 million of net unrealized gains on equity securities and other investments still held at April 28, 2023.

Mozarc Medical Investment

As further described in Note 3, on April 1, 2023 the Company sold half of its RCS business to Mozarc, and as a result of the transaction the Company retained a 50% equity interest in Mozarc. Although the equity investment provides the Company with the ability to exercise significant influence over Mozarc, the Company has elected the fair value option to account for this equity investment. The Company believes the fair value option best reflects the economics of the underlying transaction.

Under the fair value option, changes in the fair value of the investment are recognized through earnings each reporting period in other non-operating income, net in the consolidated statements of income. During the fiscal year ended April 26, 2024, the Company recognized a loss of $220 million, primarily driven by the timing of anticipated product launches, historical financial results, and projections of future cash flows.

The following table provides a reconciliation of the beginning and ending balances of the Mozarc investment for which the fair value option has been elected:


	Fiscal Year
(in millions)	2024		2023
Beginning Balance	$	531	$	—
Initial valuation	—		307
Additional cash investment	—		224
Change in fair value	(220)		—
Ending Balance	$	311	$	531