Risk Management and Derivatives (Tables)

6 Months Ended

Nov. 30, 2012

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

The following table presents the fair values of derivative instruments included within the consolidated balance sheets as of November 30, 2012 and May 31, 2012:


	Asset Derivatives					Liability Derivatives
(In millions)	Balance Sheet Location	November 30, 2012		May 31, 2012		Balance Sheet Location	November 30, 2012		May 31, 2012
Derivatives formally designated as hedging instruments:
Foreign exchange forwards and options	Prepaid expenses and other current assets	$	69	$	203	Accrued liabilities	$	51	$	35
Foreign exchange forwards and options	Deferred income taxes and other long-term assets		21		7	Deferred income taxes and other long-term liabilities		0		0
Interest rate swap contracts	Deferred income taxes and other long-term assets		13		15	Deferred income taxes and other long-term liabilities		0		0
Total derivatives formally designated as hedging instruments			103		225			51		35
Derivatives not designated as hedging instruments:
Foreign exchange forwards and options	Prepaid expenses and other current assets		26		55	Accrued liabilities		31		20
Embedded derivatives	Prepaid expenses and other current assets		0		1	Accrued liabilities		1		0
Total derivatives not designated as hedging instruments			26		56			32		20
TOTAL DERIVATIVES		$	129	$	281		$	83	$	55

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

The following tables present the amounts affecting the consolidated statements of income for the three and six months ended November 30, 2012 and 2011:


	Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivatives⁽¹⁾						Amount of Gain (Loss) Reclassified From Accumulated Other Comprehensive Income into Income⁽¹⁾
	Three Months Ended November 30,			Six Months Ended November 30,			Location of Gain (Loss) Reclassified From Accumulated Other Comprehensive Income Into Income	Three Months Ended November 30,			Six Months Ended November 30,
(In millions)	2012			2012				2012			2012
Derivatives designated as cash flow hedges:
Foreign exchange forwards and options	$	13		$	4		Revenue	$	(11	)	$	(25	)
Foreign exchange forwards and options		(19	)		(43	)	Cost of sales		51			83
Foreign exchange forwards and options		(3	)		(2	)	Selling and administrative expense		1			1
Foreign exchange forwards and options		(2	)		(10	)	Other (income) expense, net		5			13
Total designated cash flow hedges	$	(11	)	$	(51	)		$	46		$	72
Derivatives designated as net investment hedges:
Foreign exchange forwards and options	$	0		$	0		Other (income) expense, net	$	0		$	0

(1)

For the three and six months ended November 30, 2012, the amounts recorded in other (income) expense, net as a result of hedge ineffectiveness and the discontinuance of cash flow hedges because the forecasted transactions were no longer probable of occurring were immaterial.


	Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivatives⁽¹⁾					Amount of Gain (Loss) Reclassified From Accumulated Other Comprehensive Income into Income⁽¹⁾
	Three Months Ended November 30,			Six Months Ended November 30,		Location of Gain (Loss) Reclassified From Accumulated Other Comprehensive Income Into Income	Three Months November 30,			Six Months Ended November 30,
(In millions)	2011			2011			2011			2011
Derivatives designated as cash flow hedges:
Foreign exchange forwards and options	$	(4	)	$	17	Revenue	$	7		$	14
Foreign exchange forwards and options		186			143	Cost of sales		(34	)		(73	)
Foreign exchange forwards and options		2			0	Selling and administrative expense		(1	)		(2	)
Foreign exchange forwards and options		25			11	Other (income) expense, net		(7	)		(18	)
Total designated cash flow hedges	$	209		$	171		$	(35	)	$	(79	)
Derivatives designated as net investment hedges:
Foreign exchange forwards and options	$	46		$	37	Other (income) expense, net	$	0		$	0

(1)

For the three and six months ended November 30, 2012 and 2011, the amounts recorded in other (income) expense, net as a result of hedge ineffectiveness and 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
	Three Months Ended November 30,					Six Months Ended November 30,					Location of Gain (Loss) Recognized in Income on Derivatives
(In millions)	2012			2011		2012			2011		Location of Gain (Loss) Recognized in Income on Derivatives
Derivatives designated as fair value hedges:
Interest rate swaps⁽¹⁾	$	1		$	2	$	3		$	4	Interest (income) expense, net
Derivatives not designated as hedging instruments:
Foreign exchange forwards and options	$	(22	)	$	26	$	(51	)	$	3	Other (income) expense, net
Embedded derivatives	$	(3	)	$	0	$	(3	)	$	0	Other (income) expense, net

(1)

All interest rate swap agreements meet the shortcut method requirements under the accounting standards for derivatives and hedging. Accordingly, changes in the fair values of the interest rate swap agreements are considered to exactly offset changes in the fair value of the underlying long-term debt. Refer to “Fair Value Hedges” in this note for additional detail.

- Definition

Tabular disclosure of the location and amount of gains and losses reported in the statement of financial performance, or when applicable, the statement of financial position. For example, (a) gains and losses recognized in the income statement on derivative instruments designated and qualifying as hedging instruments in fair value hedges and related hedged items designated and qualifying in fair value hedges and (b) gains and losses initially recognized in other comprehensive income on derivative instruments designated and qualifying as cash flow hedges.

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- Definition

Tabular disclosure of the location and fair value amounts of derivative instruments (and nonderivative instruments that are designated and qualify as hedging instruments) reported in the statement of financial position.

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