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Risk Management and Derivatives (Tables)

9 Months Ended

Feb. 28, 2022

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 and indicate the level in the fair value hierarchy in which the Company classifies the fair value measurement:


	FEBRUARY 28, 2022
	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)	$	482	$	414	$	68	$	107	$	103	$	4
Embedded derivatives	2		2		—		1		1		—
TOTAL	$	484	$	416	$	68	$	108	$	104	$	4

(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 $107 million as of February 28, 2022. As of that date, the Company received $62 million of cash collateral from various counterparties related to foreign exchange derivative instruments. No amount of collateral was posted on the derivative liability balance as of February 28, 2022.


	MAY 31, 2021
	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)	$	92	$	76	$	16	$	456	$	415	$	41
Embedded derivatives	—		—		—		1		1		—
TOTAL	$	92	$	76	$	16	$	457	$	416	$	41

(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 $93 million as of May 31, 2021. As of that date, the Company had posted $39 million of cash collateral to various counterparties related to foreign exchange derivative instruments. No amount of collateral was received on the Company's derivative asset balance as of May 31, 2021.

The following tables present the fair values of derivative instruments included within the Unaudited Condensed Consolidated Balance Sheets:


	DERIVATIVE ASSETS
	BALANCE SHEET LOCATION	FEBRUARY 28,		MAY 31,
(Dollars in millions)		2022		2021
Derivatives formally designated as hedging instruments:
Foreign exchange forwards and options	Prepaid expenses and other current assets	$	393	$	42
Foreign exchange forwards and options	Deferred income taxes and other assets	68		16
Total derivatives formally designated as hedging instruments		461		58
Derivatives not designated as hedging instruments:
Foreign exchange forwards and options	Prepaid expenses and other current assets	21		34
Embedded derivatives	Prepaid expenses and other current assets	2		—


Total derivatives not designated as hedging instruments		23		34
TOTAL DERIVATIVE ASSETS		$	484	$	92

	DERIVATIVE LIABILITIES
	BALANCE SHEET LOCATION	FEBRUARY 28,		MAY 31,
(Dollars in millions)		2022		2021
Derivatives formally designated as hedging instruments:
Foreign exchange forwards and options	Accrued liabilities	$	83	$	385
Foreign exchange forwards and options	Deferred income taxes and other liabilities	4		41
Total derivatives formally designated as hedging instruments		87		426
Derivatives not designated as hedging instruments:
Foreign exchange forwards and options	Accrued liabilities	20		30
Embedded derivatives	Accrued liabilities	1		1


Total derivatives not designated as hedging instruments		21		31
TOTAL DERIVATIVE LIABILITIES		$	108	$	457

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:


	THREE MONTHS ENDED FEBRUARY 28,
	2022				2021
(Dollars in millions)	TOTAL		AMOUNT OF GAIN (LOSS) ON CASH FLOW HEDGE ACTIVITY		TOTAL		AMOUNT OF GAIN (LOSS) ON CASH FLOW HEDGE ACTIVITY
Revenues	$	10,871	$	(22)	$	10,357	$	16
Cost of sales	5,804		17		5,638		(35)
Demand creation expense	854		—		711		1
Other (income) expense, net	(94)		45		(22)		(26)
Interest expense (income), net	53		(2)		64		(2)


	NINE MONTHS ENDED FEBRUARY 28,
	2022				2021
(Dollars in millions)	TOTAL		AMOUNT OF GAIN (LOSS) ON CASH FLOW HEDGE ACTIVITY		TOTAL		AMOUNT OF GAIN (LOSS) ON CASH FLOW HEDGE ACTIVITY
Revenues	$	34,476	$	(63)	$	32,194	$	56
Cost of sales	18,500		(79)		17,887		110
Demand creation expense	2,789		1		2,117		2
Other (income) expense, net	(235)		56		18		(31)
Interest expense (income), net	165		(5)		199		(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:


(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 FEBRUARY 28,				LOCATION OF GAIN (LOSS) RECLASSIFIED FROM ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) INTO INCOME	THREE MONTHS ENDED FEBRUARY 28,
	2022		2021			2022		2021
Derivatives designated as cash flow hedges:
Foreign exchange forwards and options	$	(37)	$	(38)	Revenues	$	(22)	$	16
Foreign exchange forwards and options	4		(99)		Cost of sales	17		(35)
Foreign exchange forwards and options	—		1		Demand creation expense	—		1
Foreign exchange forwards and options	31		(24)		Other (income) expense, net	45		(26)
Interest rate swaps(2)	—		—		Interest expense (income), net	(2)		(2)
TOTAL DESIGNATED CASH FLOW HEDGES	$	(2)	$	(160)		$	38	$	(46)

(1)For the three months ended February 28, 2022 and 2021, 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 FEBRUARY 28,				LOCATION OF GAIN (LOSS) RECLASSIFIED FROM ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) INTO INCOME	NINE MONTHS ENDED FEBRUARY 28,
	2022		2021			2022		2021
Derivatives designated as cash flow hedges:
Foreign exchange forwards and options	$	(74)	$	(32)	Revenues	$	(63)	$	56
Foreign exchange forwards and options	522		(539)		Cost of sales	(79)		110
Foreign exchange forwards and options	(3)		4		Demand creation expense	1		2
Foreign exchange forwards and options	304		(183)		Other (income) expense, net	56		(31)
Interest rate swaps(2)	—		—		Interest expense (income), net	(5)		(5)
TOTAL DESIGNATED CASH FLOW HEDGES	$	749	$	(750)		$	(90)	$	132

(1)For the nine months ended February 28, 2022 and 2021, 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.


	AMOUNT OF GAIN (LOSS) RECOGNIZED IN INCOME ON DERIVATIVES								LOCATION OF GAIN (LOSS) RECOGNIZED IN INCOME ON DERIVATIVES
	THREE MONTHS ENDED FEBRUARY 28,				NINE MONTHS ENDED FEBRUARY 28,
(Dollars in millions)	2022		2021		2022		2021


Derivatives not designated as hedging instruments:
Foreign exchange forwards and options	$	(20)	$	(11)	$	12	$	(98)	Other (income) expense, net
Embedded derivatives	—		(4)		(9)		(17)		Other (income) expense, net