Financial instruments

3 Months Ended

Nov. 30, 2021

Derivative Instruments and Hedging Activities Disclosure [Abstract]

The Company uses derivative instruments to hedge its exposure to market risks, including interest rate and currency risks, arising from operating and financing risks.

The Company has non-U.S. dollar denominated net investments and uses foreign currency denominated financial instruments, specifically foreign currency derivatives and foreign currency denominated debt, to hedge its foreign currency risk.

The notional amounts and fair value of derivative instruments outstanding were as follows (in millions):


November 30, 2021	Notional		Fair Value		Location in Consolidated Condensed Balance Sheets
Derivatives designated as hedges:
Foreign currency forwards	$	5	$	—	Other non-current assets
Cross currency interest rate swaps	153		4		Other non-current assets
Foreign currency forwards	17		—		Other non-current liabilities
Cross currency interest rate swaps	633		8		Other non-current liabilities
Foreign currency forwards	610		17		Other current assets
Foreign currency forwards	85		1		Other current liabilities
Cross currency interest rate swaps	157		5		Other current liabilities
Derivatives not designated as hedges:
Foreign currency forwards	$	3,900	$	64	Other current assets
Foreign currency forwards	2,968		2		Other current liabilities
Total return swap	271		11		Other current liabilities


August 31, 2021	Notional		Fair Value		Location in Consolidated Condensed Balance Sheets
Derivatives designated as hedges:
Cross currency interest rate swaps	$	155	$	1	Other non-current assets
Foreign currency forwards	6		—		Other non-current assets
Foreign currency forwards	23		1		Other non-current liabilities
Cross currency interest rate swaps	801		23		Other non-current liabilities
Foreign currency forwards	575		7		Other current assets
Foreign currency forwards	31		1		Other current liabilities
Cross currency interest rate swaps	109		9		Other current liabilities
Derivatives not designated as hedges:
Foreign currency forwards	$	3,636	$	38	Other current assets
Total return swap	224		2		Other current assets
Foreign currency forwards	808		3		Other current liabilities
Total return swap	37		—		Other current liabilities

Net investment hedges

The Company uses cross currency interest rate swaps and foreign currency forward contracts to hedge net investments in subsidiaries with non-U.S. dollar functional currencies. For qualifying net investment hedges, changes in the fair value of the derivatives are recorded in the currency translation adjustment within accumulated other comprehensive income (loss).

Cash flow hedges

The Company uses interest rate swaps to hedge the variability in forecasted cash flows of certain floating-rate debt. For qualifying cash flow hedges, changes in the fair value of the derivatives are recorded in accumulated other comprehensive income (loss) and released to the Consolidated Statements of Earnings when the hedged cash flows affect earnings.

Derivatives not designated as hedges

The Company enters into derivative transactions that are not designated as accounting hedges. These derivative instruments are economic hedges of foreign currency risks. The Company also utilizes total return swaps to economically hedge variability in compensation charges related to certain deferred compensation obligations. The income (expenses) due to changes in fair value of these derivative instruments were recognized in earnings as follows (in millions):


		Three months ended November 30,
	Location in Consolidated Condensed Statements of Earnings	2021		2020
Foreign currency forwards	Selling, general and administrative expenses	$	55	$	(29)
Total return swap	Selling, general and administrative expenses	(2)		13
Foreign currency forwards	Other income (expense)	(1)		(9)

Derivatives credit risk

Counterparties to derivative financial instruments expose the Company to credit-related losses in the event of counterparty nonperformance, and the Company regularly monitors the credit worthiness of each counterparty.

Derivatives offsetting

The Company does not offset the fair value amounts of derivative instruments subject to master netting agreements in the Consolidated Condensed Balance Sheets.