Fair Value Measurements

12 Months Ended

May. 31, 2015

NOTE 6 — Fair Value Measurements

The following tables present information about the Company's financial assets and liabilities measured at fair value on a recurring basis as of May 31, 2015 and 2014 and indicate the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value. Refer to Note 1 — Summary of Significant Accounting Policies for additional detail regarding the Company’s fair value measurement methodology.



	As of May 31, 2015
(In millions)	Assets at Fair Value		Cash and Cash Equivalents		Short-term Investments		Other Long-term Assets
Cash	$	615	$	615	$	—	$	—
Level 1:
U.S. Treasury securities	869		225		644		—
Level 2:
Time deposits	684		684		—		—
U.S. Agency securities	976		110		866		—
Commercial paper and bonds	914		352		562		—
Money market funds	1,866		1,866		—		—
Total level 2	4,440		3,012		1,428		—
Level 3:
Non-marketable preferred stock	8		—		—		8
TOTAL	$	5,932	$	3,852	$	2,072	$	8



	As of May 31, 2014
(In millions)	Assets at Fair Value		Cash and Cash Equivalents		Short-term Investments		Other Long-term Assets
Cash	$	780	$	780	$	—	$	—
Level 1:
U.S. Treasury securities	1,137		151		986		—
Level 2:
Time deposits	227		227		—		—
U.S. Agency securities	1,027		25		1,002		—
Commercial paper and bonds	959		25		934		—
Money market funds	1,012		1,012		—		—
Total level 2	3,225		1,289		1,936		—
Level 3:
Non-marketable preferred stock	7		—		—		7
TOTAL	$	5,149	$	2,220	$	2,922	$	7

The Company elects to record the gross assets and liabilities of its derivative financial instruments on the Consolidated Balance Sheets. The Company’s derivative financial instruments are subject to master netting arrangements that allow for the offset of assets and liabilities in the event of default or early termination of the contract. Any amounts of cash collateral received related to these instruments associated with the Company's credit-related contingent features are recorded in Cash and equivalents and Accrued liabilities, the latter of which would further offset against the Company’s derivative asset balance (refer to Note 17 — Risk Management and Derivatives). Cash collateral received related to the Company's credit related contingent features is presented in the Cash provided by operations component of the Consolidated Statement of Cash Flows. Any amounts of non-cash collateral received, such as securities, are not recorded on the Consolidated Balance Sheets pursuant to the accounting standards for non-cash collateral received.

The following tables present information about the Company’s derivative assets and liabilities measured at fair value on a recurring basis as of May 31, 2015 and May 31, 2014, and indicate the level in the fair value hierarchy in which the Company classifies the fair value measurement.



	As of May 31, 2015
	Derivative Assets						Derivative Liabilities
(In millions)	Assets at Fair Value		Other Current Assets		Other Long-term Assets		Liabilities at Fair Value		Accrued Liabilities		Other Long-term Liabilities
Level 2:
Foreign exchange forwards and options⁽¹⁾	$	1,554	$	1,034	$	520	$	164	$	160	$	4
Embedded derivatives	7		2		5		11		2		9
Interest rate swaps⁽²⁾	78		78		—		—		—		—
TOTAL	$	1,639	$	1,114	$	525	$	175	$	162	$	13

(1)

If the foreign exchange derivative instruments had been netted in the Consolidated Balance Sheets, the asset and liability positions each would have been reduced by $161 million as of May 31, 2015. As of that date, the Company had received $900 million of cash collateral and $74 million of securities from various counterparties related to these foreign exchange derivative instruments. No amount of collateral was posted on the Company’s derivative liability balance as of May 31, 2015.


(2)	As of May 31, 2015, the Company had received $68 million of cash collateral related to its interest rate swaps.



	As of May 31, 2014
	Derivative Assets						Derivative Liabilities
(In millions)	Assets at Fair Value		Other Current Assets		Other Long-term Assets		Liabilities at Fair Value		Accrued Liabilities		Other Long-term Liabilities
Level 2:
Foreign exchange forwards and options⁽¹⁾	$	127	$	101	$	26	$	85	$	84	$	1
Interest rate swaps	6		—		6		—		—		—
TOTAL	$	133	$	101	$	32	$	85	$	84	$	1


(1)	If the foreign exchange derivative financial instruments had been netted in the Consolidated Balance Sheets, the asset and liability positions each would have been reduced by $63 million as of May 31, 2014. No amounts of collateral were received or posted on the Company’s derivative assets and liabilities as of May 31, 2014.

Available-for-sale securities comprise investments in U.S. Treasury and Agency securities, money market funds, corporate commercial paper and bonds. These securities are valued using market prices on both active markets (Level 1) and less active markets (Level 2). The gross realized gains and losses on sales of available-for-sale securities were immaterial for the fiscal years ended May 31, 2015 and 2014. Unrealized gains and losses on available-for-sale securities included in Other comprehensive income were immaterial as of May 31, 2015 and 2014.

The Company regularly reviews its available-for-sale securities for other-than-temporary impairment. For the years ended May 31, 2015 and 2014, the Company did not consider its securities to be other-than-temporarily impaired and accordingly, did not recognize any impairment losses.

As of May 31, 2015, the Company held $1,808 million of available-for-sale securities with maturity dates within one year and $264 million with maturity dates over one year and less than five years within Short-term investments on the Consolidated Balance Sheets.

Included in Interest expense (income), net was interest income related to the Company's available-for-sale securities of $6 million, $5 million and $4 million for the years ended May 31, 2015, 2014 and 2013, respectively.

The Company’s Level 3 assets comprise investments in certain non-marketable preferred stock. These Level 3 investments are an immaterial portion of the Company's portfolio. Changes in Level 3 investment assets were immaterial during the years ended May 31, 2015 and 2014.

Derivative financial instruments include foreign exchange forwards and options, embedded derivatives and interest rate swaps. Refer to Note 17 — Risk Management and Derivatives for additional detail.

No transfers among the levels within the fair value hierarchy occurred during the years ended May 31, 2015 or 2014.

As of May 31, 2015 and 2014, the Company had no assets or liabilities that were required to be measured at fair value on a non-recurring basis.

For fair value information regarding Notes payable and Long-term debt, refer to Note 7 — Short-Term Borrowings and Credit Lines and Note 8 — Long-Term Debt.

At May 31, 2015, the Company had $150 million of outstanding receivables related to its investments in reverse repurchase agreements recorded within Prepaid expenses and other current assets on the Consolidated Balance Sheet. The carrying amount of these agreements approximates their fair value based upon observable inputs other than quoted prices (Level 2). The reverse repurchase agreements are fully collateralized.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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