Investments
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(a) | Summary of Available-for-Sale Investments |
The following tables summarize the Company’s available-for-sale investments (in millions): |
| | | | | | | | | | | | | | | |
July 27, 2013 | Amortized Cost | | Gross Unrealized Gains | | Gross Unrealized Losses | | Fair Value |
Fixed income securities: | | | | | | | |
U.S. government securities | $ | 27,814 |
| | $ | 22 |
| | $ | (13 | ) | | $ | 27,823 |
|
U.S. government agency securities | 3,083 |
| | 7 |
| | (1 | ) | | 3,089 |
|
Non-U.S. government and agency securities | 1,094 |
| | 3 |
| | (2 | ) | | 1,095 |
|
Corporate debt securities | 7,876 |
| | 55 |
| | (50 | ) | | 7,881 |
|
Total fixed income securities | 39,867 |
| | 87 |
| | (66 | ) | | 39,888 |
|
Publicly traded equity securities | 2,063 |
| | 738 |
| | (4 | ) | | 2,797 |
|
Total | $ | 41,930 |
| | $ | 825 |
| | $ | (70 | ) | | $ | 42,685 |
|
| | | | | | | |
July 28, 2012 | Amortized Cost | | Gross Unrealized Gains | | Gross Unrealized Losses | | Fair Value |
Fixed income securities: | | | | | | | |
U.S. government securities | $ | 24,201 |
| | $ | 41 |
| | $ | (1 | ) | | $ | 24,241 |
|
U.S. government agency securities | 5,367 |
| | 21 |
| | — |
| | 5,388 |
|
Non-U.S. government and agency securities | 1,629 |
| | 9 |
| | — |
| | 1,638 |
|
Corporate debt securities | 5,959 |
| | 74 |
| | (3 | ) | | 6,030 |
|
Total fixed income securities | 37,156 |
| | 145 |
| | (4 | ) | | 37,297 |
|
Publicly traded equity securities | 1,107 |
| | 524 |
| | (11 | ) | | 1,620 |
|
Total | $ | 38,263 |
| | $ | 669 |
| | $ | (15 | ) | | $ | 38,917 |
|
U.S. government agency securities include corporate debt securities that are guaranteed by the Federal Deposit Insurance Corporation (FDIC), while non-U.S. government and agency securities include agency and corporate debt securities that are guaranteed by non-U.S. governments.
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(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 27, 2013 | | July 28, 2012 | | July 30, 2011 |
Gross realized gains | $ | 264 |
| | $ | 561 |
| | $ | 322 |
|
Gross realized losses | (216 | ) | | (460 | ) | | (143 | ) |
Total | $ | 48 |
| | $ | 101 |
| | $ | 179 |
|
The following table presents the realized net gains (losses) related to the Company’s available-for-sale investments by security type (in millions):
|
| | | | | | | | | | | |
Years Ended | July 27, 2013 | | July 28, 2012 | | July 30, 2011 |
Net gains on investments in publicly traded equity securities | $ | 17 |
| | $ | 43 |
| | $ | 88 |
|
Net gains on investments in fixed income securities | 31 |
| | 58 |
| | 91 |
|
Total | $ | 48 |
| | $ | 101 |
| | $ | 179 |
|
Impairment charges on available-for-sale investments were not material for the periods presented.
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 27, 2013 and July 28, 2012 (in millions):
|
| | | | | | | | | | | | | | | | | | | | | | | |
| UNREALIZED LOSSES LESS THAN 12 MONTHS | | UNREALIZED LOSSES 12 MONTHS OR GREATER | | TOTAL |
July 27, 2013 | Fair Value | | Gross Unrealized Losses | | Fair Value | | Gross Unrealized Losses | | Fair Value | | Gross Unrealized Losses |
Fixed income securities: | | | | | | | | | | | |
U.S. government securities | $ | 7,865 |
| | $ | (13 | ) | | $ | — |
| | $ | — |
| | $ | 7,865 |
| | $ | (13 | ) |
U.S. government agency securities | 294 |
| | (1 | ) | | — |
| | — |
| | 294 |
| | (1 | ) |
Non-U.S. government and agency securities | 432 |
| | (2 | ) | | — |
| | — |
| | 432 |
| | (2 | ) |
Corporate debt securities | 3,704 |
| | (50 | ) | | 4 |
| | — |
| | 3,708 |
| | (50 | ) |
Total fixed income securities | 12,295 |
| | (66 | ) | | 4 |
| | — |
| | 12,299 |
| | (66 | ) |
Publicly traded equity securities | 278 |
| | (4 | ) | | — |
| | — |
| | 278 |
| | (4 | ) |
Total | $ | 12,573 |
| | $ | (70 | ) | | $ | 4 |
| | $ | — |
| | $ | 12,577 |
| | $ | (70 | ) |
| | | | | | | | | | | |
| UNREALIZED LOSSES LESS THAN 12 MONTHS | | UNREALIZED LOSSES 12 MONTHS OR GREATER | | TOTAL |
July 28, 2012 | Fair Value | | Gross Unrealized Losses | | Fair Value | | Gross Unrealized Losses | | Fair Value | | Gross Unrealized Losses |
Fixed income securities: | | | | | | | | | | | |
U.S. government securities | $ | 5,357 |
| | $ | (1 | ) | | $ | — |
| | $ | — |
| | $ | 5,357 |
| | $ | (1 | ) |
Corporate debt securities | 603 |
| | (3 | ) | | 14 |
| | — |
| | 617 |
| | (3 | ) |
Total fixed income securities | 5,960 |
| | (4 | ) | | 14 |
| | — |
| | 5,974 |
| | (4 | ) |
Publicly traded equity securities | 167 |
| | (8 | ) | | 20 |
| | (3 | ) | | 187 |
| | (11 | ) |
Total | $ | 6,127 |
| | $ | (12 | ) | | $ | 34 |
| | $ | (3 | ) | | $ | 6,161 |
| | $ | (15 | ) |
As of July 27, 2013, 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 27, 2013, 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 27, 2013.
The Company has evaluated its publicly traded equity securities as of July 27, 2013 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.
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(c) | Maturities of Fixed Income Securities |
The following table summarizes the maturities of the Company’s fixed income securities at July 27, 2013 (in millions):
|
| | | | | | | |
| Amortized Cost | | Fair Value |
Less than 1 year | $ | 15,903 |
| | $ | 15,918 |
|
Due in 1 to 2 years | 11,115 |
| | 11,144 |
|
Due in 2 to 5 years | 12,706 |
| | 12,681 |
|
Due after 5 years | 143 |
| | 145 |
|
Total | $ | 39,867 |
| | $ | 39,888 |
|
Actual maturities may differ from the contractual maturities because borrowers may have the right to call or prepay certain obligations.
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 2013 and 2012 was $0.7 billion and $0.5 billion, respectively. The Company requires collateral equal to at least 102% of the fair market value of the loaned security 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 27, 2013 and July 28, 2012, the Company had no outstanding securities lending transactions.
