Financial instruments

12 Months Ended

Aug. 31, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Financial instruments

Financial instruments

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):

August 31, 2022	Notional		Fair value		Location in Consolidated Balance Sheets
Derivatives designated as hedges:
Foreign currency forwards	$	448	$	19	Other current assets
Cross currency interest rate swaps	150		12		Other current assets
Cross currency interest rate swaps	750		83		Other non-current assets
Foreign currency forwards	3		—		Other non-current assets
Foreign currency forwards	221		1		Other current liabilities
Derivatives not designated as hedges:
Foreign currency forwards	$	2,874	$	49	Other current assets
Foreign currency forwards	1,098		6		Other current liabilities
Total return swap	183		6		Other current liabilities

August 31, 2021	Notional		Fair value		Location in Consolidated Balance Sheets
Derivatives designated as hedges:
Foreign currency forwards	$	575	$	7	Other current assets
Cross currency interest rate swaps	155		1		Other non-current assets
Foreign currency forwards	6		—		Other non-current assets
Foreign currency forwards	31		1		Other current liabilities
Cross currency interest rate swaps	109		9		Other current liabilities
Cross currency interest rate swaps	801		23		Other non-current liabilities
Foreign currency forwards	23		1		Other non-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 Currency translation adjustments within Accumulated other comprehensive income (loss) in the Consolidated Balance Sheets.

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 Unrealized gain (loss) on cash flow hedges within Accumulated other comprehensive income (loss) in the Consolidated Balance Sheets, 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 (expense) due to changes in fair value of these derivative instruments were recognized in earnings as follows (in millions):

	Location in Consolidated Statements of Earnings	2022		2021		2020
Foreign currency forwards	Selling, general and administrative expense 1	$	—	$	(75)	$	(63)
Total return swap	Selling, general and administrative expense	(33)		58		24
Foreign currency forwards	Other income, net 1,2	523		(8)		11

1.In fiscal 2022, certain expenses related to derivative instruments used as economic hedges, were presented as Other income, net within the Consolidated Statements of Earnings, whereas these expenses were recorded within Selling, general, and administrative expenses within the Consolidated Statements of Earnings in prior periods.

2.Excludes remeasurement gains and losses on economically hedged assets and liabilities.

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 Balance Sheets.