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, 2018 and 2017, 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, 2018
(In millions)	Assets at Fair Value		Cash Equivalents		Short-term Investments		Other Long-term Assets
Cash	$	415	$	415	$	—	$	—
Level 1:
U.S. Treasury securities	1,178		500		678		—
Level 2:
Time deposits	925		907		18		—
U.S. Agency securities	102		100		2		—
Commercial paper and bonds	451		153		298		—
Money market funds	2,174		2,174		—		—
Total level 2	3,652		3,334		318		—
Level 3:
Non-marketable preferred stock	11		—		—		11
TOTAL	$	5,256	$	4,249	$	996	$	11



	As of May 31, 2017
(In millions)	Assets at Fair Value		Cash Equivalents		Short-term Investments		Other Long-term Assets
Cash	$	505	$	505	$	—	$	—
Level 1:
U.S. Treasury securities	1,545		159		1,386		—
Level 2:
Time deposits	813		769		44		—
U.S. Agency securities	522		150		372		—
Commercial paper and bonds	820		251		569		—
Money market funds	1,974		1,974		—		—
Total level 2	4,129		3,144		985		—
Level 3:
Non-marketable preferred stock	10		—		—		10
TOTAL	$	6,189	$	3,808	$	2,371	$	10

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 16 — Risk Management and Derivatives). Any amounts of cash collateral posted related to these instruments associated with the Company’s credit-related contingent features are recorded in Prepaid expenses and other current assets, which would further offset against the Company’s derivative liability balance (refer to Note 16 — Risk Management and Derivatives). Cash collateral received or posted related to the Company’s credit related contingent features is presented in the Cash provided by operations component of the Consolidated Statements of Cash Flows. Any amounts of non-cash collateral received, such as securities, are not recorded on the Consolidated Balance Sheets pursuant to U.S. GAAP.

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, 2018 and 2017, and indicate the level in the fair value hierarchy in which the Company classifies the fair value measurement.



	As of May 31, 2018
	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⁾	$	389	$	237	$	152	$	182	$	182	$	—
Embedded derivatives	11		3		8		8		2		6
TOTAL	$	400	$	240	$	160	$	190	$	184	$	6

(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 $182 million as of May 31, 2018. As of that date, the Company had received $23 million of cash collateral 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, 2018.



	As of May 31, 2017
	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⁾	$	231	$	216	$	15	$	246	$	166	$	80
Embedded derivatives	10		1		9		8		2		6
TOTAL	$	241	$	217	$	24	$	254	$	168	$	86


(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 $187 million as of May 31, 2017. As of that date, no amount of cash collateral had been received or posted on the derivative asset and liability balance related to these foreign exchange derivative instruments.

Available-for-sale securities comprise investments in U.S. Treasury and Agency securities, time deposits, 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). As of May 31, 2018, the Company held $960 million of available-for-sale securities with maturity dates within one year and $36 million with maturity dates over one year and less than five years within Short-term investments on the Consolidated Balance Sheets. The gross realized gains and losses on sales of available-for-sale securities were immaterial for the fiscal years ended May 31, 2018 and 2017. Unrealized gains and losses on available-for-sale securities included in Accumulated other comprehensive income were immaterial as of May 31, 2018 and 2017. The Company regularly reviews its available-for-sale securities for other-than-temporary impairment. For the years ended May 31, 2018 and 2017, the Company did not consider its securities to be other-than-temporarily impaired, and accordingly, did not recognize any impairment losses.

Included in Interest expense (income), net was interest income related to the Company’s available-for-sale securities of $70 million, $27 million and $12 million for the years ended May 31, 2018, 2017 and 2016, 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, 2018 and 2017.

No transfers among the levels within the fair value hierarchy occurred during the years ended May 31, 2018 or 2017.

For additional information related to the Company’s derivative financial instruments, refer to Note 16 — Risk Management and Derivatives. 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, respectively. The carrying amounts of other current financial assets and other current financial liabilities approximate fair value.

As of May 31, 2018 and 2017, assets or liabilities required to be measured at fair value on a non-recurring basis were immaterial.