Risk Management and Derivatives (Tables)

9 Months Ended

Feb. 29, 2020

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Derivative Instruments in Statement of Financial Position, Fair Value

The following tables present information about the Company's derivative assets and liabilities measured at fair value on a recurring basis as of February 29, 2020 and May 31, 2019, and indicate the level in the fair value hierarchy in which the Company classifies the fair value measurement:



	FEBRUARY 29, 2020
	DERIVATIVE ASSETS						DERIVATIVE LIABILITIES
(Dollars 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⁾	$	324	$	297	$	27	$	48	$	47	$	1
Embedded derivatives	2		2		—		1		1		—
TOTAL	$	326	$	299	$	27	$	49	$	48	$	1

(1)

If the foreign exchange derivative instruments had been netted on the Unaudited Condensed Consolidated Balance Sheets, the asset and liability positions each would have been reduced by $47 million as of February 29, 2020. As of that date, the Company had received $86 million of cash collateral from various counterparties related to foreign exchange derivative instruments. No amount of collateral was posted on the Company's derivative liability balance as of February 29, 2020.



	MAY 31, 2019
	DERIVATIVE ASSETS						DERIVATIVE LIABILITIES
(Dollars 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⁾	$	611	$	611	$	—	$	51	$	51	$	—
Embedded derivatives	11		5		6		3		1		2
TOTAL	$	622	$	616	$	6	$	54	$	52	$	2

(1)

If the foreign exchange derivative instruments had been netted on the Consolidated Balance Sheets, the asset and liability positions each would have been reduced by $50 million as of May 31, 2019. As of that date, the Company had received $289 million of cash collateral from various counterparties related to foreign exchange derivative instruments. No amount of collateral was posted on the Company's derivative liability balance as of May 31, 2019.

The following tables present the fair values of derivative instruments included within the Unaudited Condensed Consolidated Balance Sheets as of February 29, 2020 and May 31, 2019:



	DERIVATIVE ASSETS
	BALANCE SHEET LOCATION	FEBRUARY 29,		MAY 31,
(Dollars in millions)	BALANCE SHEET LOCATION	2020		2019
Derivatives formally designated as hedging instruments:
Foreign exchange forwards and options	Prepaid expenses and other current assets	$	261	$	509
Foreign exchange forwards and options	Deferred income taxes and other assets	27		—
Total derivatives formally designated as hedging instruments		288		509
Derivatives not designated as hedging instruments:
Foreign exchange forwards and options	Prepaid expenses and other current assets	36		102
Embedded derivatives	Prepaid expenses and other current assets	2		5
Embedded derivatives	Deferred income taxes and other assets	—		6
Total derivatives not designated as hedging instruments		38		113
TOTAL DERIVATIVE ASSETS		$	326	$	622

	DERIVATIVE LIABILITIES
	BALANCE SHEET LOCATION	FEBRUARY 29,		MAY 31,
(Dollars in millions)	BALANCE SHEET LOCATION	2020		2019
Derivatives formally designated as hedging instruments:
Foreign exchange forwards and options	Accrued liabilities	$	37	$	5
Foreign exchange forwards and options	Deferred income taxes and other liabilities	1		—
Total derivatives formally designated as hedging instruments		38		5
Derivatives not designated as hedging instruments:
Foreign exchange forwards and options	Accrued liabilities	10		46
Embedded derivatives	Accrued liabilities	1		1
Embedded derivatives	Deferred income taxes and other liabilities	—		2
Total derivatives not designated as hedging instruments		11		49
TOTAL DERIVATIVE LIABILITIES		$	49	$	54

Schedule Of Derivative Instruments, Gain (Loss) In Statement Of Income

The following tables present the amounts in the Unaudited Condensed Consolidated Statements of Income in which the effects of cash flow hedges are recorded and the effects of cash flow hedge activity on these line items for the three and nine months ended February 29, 2020 and February 28, 2019:



	THREE MONTHS ENDED
	FEBRUARY 29, 2020					FEBRUARY 28, 2019
(Dollars in millions)	TOTAL		AMOUNT OF GAIN (LOSS) ON CASH FLOW HEDGE ACTIVITY			TOTAL			AMOUNT OF GAIN (LOSS) ON CASH FLOW HEDGE ACTIVITY
Revenues	$	10,104	$	(21	)	$	9,611		$	1
Cost of sales	5,631		110			5,272			34
Demand creation expense	870		—			865			—
Other (income) expense, net	297		44			(55		)	18
Interest expense (income), net	12		(2		)	12			(2		)



	NINE MONTHS ENDED
	FEBRUARY 29, 2020					FEBRUARY 28, 2019
(Dollars in millions)	TOTAL		AMOUNT OF GAIN (LOSS) ON CASH FLOW HEDGE ACTIVITY			TOTAL			AMOUNT OF GAIN (LOSS) ON CASH FLOW HEDGE ACTIVITY
Revenues	$	31,090	$	(12	)	$	28,933		$	9
Cost of sales	17,202		287			16,092			—
Demand creation expense	2,769		(3		)	2,739			—
Other (income) expense, net	223		121			(50		)	9
Interest expense (income), net	39		(5		)	37			(5		)

Schedule of Derivative Instruments, Gain (Loss) in Statement of Financial Performance

The following tables present the amounts affecting the Unaudited Condensed Consolidated Statements of Income for the three and nine months ended February 29, 2020 and February 28, 2019:



(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 29, 2020		FEBRUARY 28, 2019				FEBRUARY 29, 2020			FEBRUARY 28, 2019
Derivatives designated as cash flow hedges:
Foreign exchange forwards and options	$	17	$	(50	)	Revenues	$	(21	)	$	1
Foreign exchange forwards and options	39		(1		)	Cost of sales	110			34
Foreign exchange forwards and options	1		2			Demand creation expense	—			—
Foreign exchange forwards and options	7		7			Other (income) expense, net	44			18
Interest rate swaps⁽²⁾	—		—			Interest expense (income), net	(2		)	(2		)
Total designated cash flow hedges	$	64	$	(42	)		$	131		$	51


(1)	For the three months ended February 29, 2020 and February 28, 2019, 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 29, 2020			FEBRUARY 28, 2019				FEBRUARY 29, 2020			FEBRUARY 28, 2019
Derivatives designated as cash flow hedges:
Foreign exchange forwards and options	$	(45	)	$	(31	)	Revenues	$	(12	)	$	9
Foreign exchange forwards and options	185			273			Cost of sales	287			—
Foreign exchange forwards and options	1			2			Demand creation expense	(3		)	—
Foreign exchange forwards and options	67			112			Other (income) expense, net	121			9
Interest rate swaps⁽²⁾	—			—			Interest expense (income), net	(5		)	(5		)
Total designated cash flow hedges	$	208		$	356			$	388		$	13


(1)	For the nine months ended February 29, 2020 and February 28, 2019, 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 29, 2020			FEBRUARY 28, 2019			FEBRUARY 29, 2020			FEBRUARY 28, 2019
Derivatives not designated as hedging instruments:
Foreign exchange forwards and options	$	12		$	(59	)	$	(9	)	$	129	Other (income) expense, net
Embedded derivatives	(2		)	(2		)	(7		)	2		Other (income) expense, net