XML 28 R16.htm IDEA: XBRL DOCUMENT
v3.25.1

RISK MANAGEMENT AND DERIVATIVES | 9 Months Ended
--- | ---
Feb. 28, 2025
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
RISK MANAGEMENT AND DERIVATIVES |
NOTE 8 — RISK MANAGEMENT AND DERIVATIVES
The Company is exposed to global market risks, including the effect of changes in foreign currency exchange rates and interest rates, and uses derivatives to manage financial exposures that occur in the normal course of business. As of and for the three and nine months ended February 28, 2025, there have been no material changes to the Company's hedging program or strategy from what was disclosed within the Annual Report. The majority of derivatives outstanding as of February 28, 2025, are designated as foreign currency cash flow hedges, primarily for Euro/U.S. Dollar, Chinese Yuan/U.S. Dollar, British Pound/Euro and Japanese Yen/U.S. Dollar currency pairs. All derivatives are recognized on the Unaudited Condensed Consolidated Balance Sheets at fair value and classified based on the instrument's maturity date. The following tables present the fair values of derivative instruments included within the Unaudited Condensed Consolidated Balance Sheets:
| DERIVATIVE ASSETS
| BALANCE SHEET LOCATION | FEBRUARY 28, |  | MAY 31,
(Dollars in millions) | 2025 |  | 2024
Derivatives formally designated as hedging instruments: |  |  |  |
Foreign exchange forwards and options | Prepaid expenses and other current assets | $ | 479 |  |  | $ | 269 |
Foreign exchange forwards and options | Deferred income taxes and other assets | 128 |  |  | 44 |
Interest rate swaps | Deferred income taxes and other assets | 22 |  |  | — |
Total derivatives formally designated as hedging instruments |  | 629 |  |  | 313 |
Derivatives not designated as hedging instruments: |  |  |  |
Foreign exchange forwards and options | Prepaid expenses and other current assets | 12 |  |  | 30 |
Total derivatives not designated as hedging instruments |  | 12 |  |  | 30 |
TOTAL DERIVATIVE ASSETS |  | $ | 641 |  |  | $ | 343 |
| DERIVATIVE LIABILITIES
| BALANCE SHEET LOCATION | FEBRUARY 28, |  | MAY 31,
(Dollars in millions) | 2025 |  | 2024
Derivatives formally designated as hedging instruments: |  |  |  |
Foreign exchange forwards and options | Accrued liabilities | $ | 74 |  |  | $ | 110 |
Foreign exchange forwards and options | Deferred income taxes and other liabilities | 9 |  |  | 5 |
Interest rate swaps | Deferred income taxes and other liabilities | 4 |  |  | 31 |
Total derivatives formally designated as hedging instruments |  | 87 |  |  | 146 |
Derivatives not designated as hedging instruments: |  |  |  |
Foreign exchange forwards and options | Accrued liabilities | 12 |  |  | 5 |
Total derivatives not designated as hedging instruments |  | 12 |  |  | 5 |
TOTAL DERIVATIVE LIABILITIES |  | $ | 99 |  |  | $ | 151 |
The following tables present the amounts affecting the Unaudited Condensed Consolidated Statements of Income:
(Dollars in millions) | AMOUNT OF GAIN (LOSS) RECOGNIZED IN OTHER COMPREHENSIVE INCOME (LOSS) ON DERIVATIVES(1) |  | AMOUNT OF GAIN (LOSS) RECLASSIFIED FROM ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) INTO INCOME(1)
THREE MONTHS ENDED |  | LOCATION OF GAIN (LOSS) RECLASSIFIED FROM ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) INTO INCOME |  | THREE MONTHS ENDED
FEBRUARY 28, 2025 | FEBRUARY 29, 2024 |  |  | FEBRUARY 28, 2025 | FEBRUARY 29, 2024
Derivatives designated as cash flow hedges: |  |  |  |  |  |  |
Foreign exchange forwards and options | $ | (30) |  | $ | (32) |  |  | Revenues |  | $ | (25) |  | $ | (10) |
Foreign exchange forwards and options | 180 |  | 135 |  |  | Cost of sales |  | 67 |  | 70 |
Foreign exchange forwards and options | — |  | — |  |  | Demand creation expense |  | — |  | 1 |
Foreign exchange forwards and options | 66 |  | 49 |  |  | Other (income) expense, net |  | 57 |  | 52 |
Interest rate swaps(2) | — |  | — |  |  | Interest expense (income), net |  | (2) |  | (2) |
TOTAL DESIGNATED CASH FLOW HEDGES | $ | 216 |  | $ | 152 |  |  |  |  | $ | 97 |  | $ | 111 |
(1)For the three months ended February 28, 2025 and February 29, 2024, the amounts recorded in Other (income) expense, net as a result of the discontinuance of cash flow hedges because the forecasted transactions were no longer probable of occurring were immaterial. (2)Gains and losses associated with terminated interest rate swaps, which were previously designated as cash flow hedges and recorded in Accumulated other comprehensive income (loss), will be released through Interest expense (income), net over the term of the issued debt.
(Dollars in millions) | AMOUNT OF GAIN (LOSS) RECOGNIZED IN OTHER COMPREHENSIVE INCOME (LOSS) ON DERIVATIVES(1) |  | AMOUNT OF GAIN (LOSS) RECLASSIFIED FROM ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) INTO INCOME(1)
NINE MONTHS ENDED |  | LOCATION OF GAIN (LOSS) RECLASSIFIED FROM ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) INTO INCOME |  | NINE MONTHS ENDED
FEBRUARY 28, 2025 | FEBRUARY 29, 2024 |  |  | FEBRUARY 28, 2025 | FEBRUARY 29, 2024
Derivatives designated as cash flow hedges: |  |  |  |  |  |  |
Foreign exchange forwards and options | $ | (103) |  | $ | (55) |  |  | Revenues |  | $ | (70) |  | $ | (7) |
Foreign exchange forwards and options | 478 |  | 154 |  |  | Cost of sales |  | 187 |  | 221 |
Foreign exchange forwards and options | — |  | 2 |  |  | Demand creation expense |  | — |  | 1 |
Foreign exchange forwards and options | 194 |  | 78 |  |  | Other (income) expense, net |  | 102 |  | 138 |
Interest rate swaps(2) | — |  | — |  |  | Interest expense (income), net |  | (6) |  | (6) |
TOTAL DESIGNATED CASH FLOW HEDGES | $ | 569 |  | $ | 179 |  |  |  |  | $ | 213 |  | $ | 347 |
(1)For the nine months ended February 28, 2025 and February 29, 2024, the amounts recorded in Other (income) expense, net as a result of the discontinuance of cash flow hedges because the forecasted transactions were no longer probable of occurring were immaterial. (2)Gains and losses associated with terminated interest rate swaps, which were previously designated as cash flow hedges and recorded in Accumulated other comprehensive income (loss), will be released through Interest expense (income), net over the term of the issued debt.
| AMOUNT OF GAIN (LOSS) RECOGNIZED IN INCOME ON DERIVATIVES | LOCATION OF GAIN (LOSS) RECOGNIZED IN INCOME ON DERIVATIVES
| THREE MONTHS ENDED |  | NINE MONTHS ENDED
(Dollars in millions) | FEBRUARY 28, 2025 | FEBRUARY 29, 2024 |  | FEBRUARY 28, 2025 | FEBRUARY 29, 2024
Derivatives not designated as hedging instruments: |  |  |  |  |  |
Foreign exchange forwards and options | $ | 3 |  | $ | 9 |  |  | $ | 9 |  | $ | (1) |  | Other (income) expense, net
CASH FLOW HEDGES The total notional amount of outstanding foreign currency derivatives designated as cash flow hedges was approximately $14.7 billion and $16.2 billion as of February 28, 2025 and May 31, 2024, respectively. Approximately $471 million of deferred net gains (net of tax) on both outstanding and matured derivatives in Accumulated other comprehensive income (loss) as of February 28, 2025, are expected to be reclassified to Net income during the next 12 months concurrent with the underlying hedged transactions also being recorded in Net income. Actual amounts ultimately reclassified to Net income are dependent on the exchange rates in effect when derivative contracts currently outstanding mature. As of February 28, 2025, the maximum term over which the Company hedges exposures to the variability of cash flows for its forecasted transactions was 27 months. FAIR VALUE HEDGES The total notional amount of outstanding interest rate swap contracts designated as fair value hedges was $2.4 billion and $1.8 billion as of February 28, 2025 and May 31, 2024, respectively. UNDESIGNATED DERIVATIVE INSTRUMENTS The total notional amount of outstanding undesignated derivative instruments was $3.3 billion and $4.4 billion as of February 28, 2025 and May 31, 2024, respectively. CREDIT RISK As of February 28, 2025, the Company was in compliance with all credit risk-related contingent features and considers the impact of the risk of counterparty default to be immaterial. For additional information related to the Company's derivative financial instruments and collateral, refer to Note 3 — Fair Value Measurements.

X
- References No definition available. + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 40 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Subparagraph (f) -Publisher FASB -URI https://asc.fasb.org/1943274/2147480237/815-40-50-5 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 5C -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147480434/815-10-50-5C Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 815 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/815/tableOfContent + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration