Fair Value Measurements:

6 Months Ended

Nov. 30, 2011

Fair Value Measurements:

NOTE 5 - Fair Value Measurements:

The Company measures certain financial assets and liabilities at fair value on a recurring basis, including derivatives and available-for-sale securities. Fair value is a market-based measurement that should be determined based on the assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the Company uses a three-level hierarchy established by the FASB that prioritizes fair value measurements based on the types of inputs used for the various valuation techniques (market approach, income approach, and cost approach).

The levels of hierarchy are described below:

• Level 1: Observable inputs such as quoted prices in active markets for identical assets or liabilities.

• Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly; these include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

• Level 3: Unobservable inputs in which there is little or no market data available, which require the reporting entity to develop its own assumptions.

The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. Financial assets and liabilities are classified in their entirety based on the most stringent level of input that is significant to the fair value measurement.

The following table presents information about the Company’s financial assets and liabilities measured at fair value on a recurring basis as of November 30, 2011 and May 31, 2011 and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value.

	November 30, 2011
	Fair Value Measurements Using						Assets /Liabilities at Fair Value		Balance Sheet Classification
	Level 1		Level 2		Level 3
	(in millions)
Assets
Derivatives:
Foreign exchange forwards	$	0	$	191	$	0	$	191	Other current assets and other long-term assets
Interest rate swap contracts		0		16		0		16	Other current assets and other long-term assets
Total derivatives		0		207		0		207
Available-for-sale securities:
U.S. Treasury securities		49		0		0		49	Cash and equivalents
Commercial paper and bonds		0		6		0		6	Cash and equivalents
Money market funds		0		1,056		0		1,056	Cash and equivalents
U.S. Treasury securities		833		0		0		833	Short-term investments
U.S. agency securities		0		293		0		293	Short-term investments
Commercial paper and bonds		0		310		0		310	Short-term investments
Total available-for-sale securities		882		1,665		0		2,547
Total Assets	$	882	$	1,872	$	0	$	2,754
Liabilities
Derivatives:
Foreign exchange forwards	$	0	$	47	$	0	$	47	Accrued liabilities and other long-term liabilities
Total Liabilities	$	0	$	47	$	0	$	47

	May 31, 2011
	Fair Value Measurements Using						Assets /Liabilities at Fair Value		Balance Sheet Classification
	Level 1		Level 2		Level 3
	(in millions)
Assets
Derivatives:
Foreign exchange forwards	$	0	$	38	$	0	$	38	Other current assets and other long-term assets
Interest rate swap contracts		0		15		0		15	Other current assets and other long-term assets
Total derivatives		0		53		0		53
Available-for-sale securities:
U.S. Treasury securities		125		0		0		125	Cash and equivalents
Commercial paper and bonds		0		157		0		157	Cash and equivalents
Money market funds		0		780		0		780	Cash and equivalents
U.S. Treasury securities		1,473		0		0		1,473	Short-term investments
U.S. agency securities		0		308		0		308	Short-term investments
Commercial paper and bonds		0		802		0		802	Short-term investments
Total available-for-sale securities		1,598		2,047		0		3,645
Total Assets	$	1,598	$	2,100	$	0	$	3,698
Liabilities
Derivatives:
Foreign exchange forwards	$	0	$	197	$	0	$	197	Accrued liabilities and other long-term liabilities
Total Liabilities	$	0	$	197	$	0	$	197

Derivative financial instruments include foreign exchange forwards and interest rate swaps. The fair value of derivative contracts is determined using observable market inputs such as the forward pricing curve, currency volatilities, currency correlations and interest rates, and considers nonperformance risk of the Company and that of its counterparties. Adjustments relating to these risks were not material at November 30, 2011 or May 31, 2011.

Available-for-sale securities are primarily comprised of 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). Level 1 instrument valuations are obtained from real-time quotes for transactions in active exchange markets involving identical assets. Level 2 instrument valuations are obtained from readily available pricing sources for comparable instruments.

As of November 30, 2011 and May 31, 2011, the Company had no Level 3 financial assets and liabilities and no assets or liabilities that were required to be measured at fair value on a non-recurring basis.

Short-Term Investments:

As of November 30, 2011 and May 31, 2011, short-term investments consisted of available-for-sale securities. Available-for-sale securities are recorded at fair value with unrealized gains and losses reported, net of tax, in other comprehensive income, unless unrealized losses are determined to be other than temporary. As of November 30, 2011, the Company held $1,098 million of available-for-sale securities with maturity dates within one year and $338 million with maturity dates over one year and less than five years within short-term investments. As of May 31, 2011, the Company held $2,253 million of available-for-sale securities with maturity dates within one year and $330 million with maturity dates over one year and less than five years within short-term investments.

Short-term investments classified as available-for-sale consist of the following at fair value:

	November 30, 2011		May 31, 2011
	(in millions)
Available-for-sale investments:
U.S. Treasury and agencies	$	1,126	$	1,781
Corporate commercial paper and bonds		310		802
Total available-for-sale investments	$	1,436	$	2,583

Interest income related to cash and equivalents and short-term investments included in interest expense, net was $7 million and $8 million for the three month periods ended November 30, 2011 and 2010, respectively, and $15 million and $16 million for the six month periods ended November 30, 2011 and 2010, respectively.

Fair Value of Long-Term Debt and Notes Payable:

The Company’s long-term debt is recorded at adjusted cost, net of amortized premiums and discounts and interest rate swap fair value adjustments. The fair value of long-term debt is estimated based upon quoted prices for similar instruments. The fair value of the Company’s long-term debt, including the current portion, was approximately $354 million at November 30, 2011 and $482 million at May 31, 2011.

The carrying amounts reflected in the unaudited condensed consolidated balance sheet for notes payable approximate fair value.