Risk Management and Derivatives (Tables)

9 Months Ended

Feb. 28, 2013

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 February 28, 2013 and May 31, 2012:


	Asset Derivatives					Liability Derivatives
(In millions)	Balance Sheet Location	February 28, 2013		May 31, 2012		Balance Sheet Location	February 28, 2013		May 31, 2012
Derivatives formally designated as hedging instruments:
Foreign exchange forwards and options	Prepaid expenses and other current assets	$	122	$	203	Accrued liabilities	$	37	$	35
Foreign exchange forwards and options	Deferred income taxes and other long-term assets		73		7	Deferred income taxes and other long-term liabilities		1		0
Interest rate swap contracts	Deferred income taxes and other long-term assets		12		15	Deferred income taxes and other long-term liabilities		0		0
Total derivatives formally designated as hedging instruments			207		225			38		35
Derivatives not designated as hedging instruments:
Foreign exchange forwards and options	Prepaid expenses and other current assets		65		55	Accrued liabilities		24		20
Embedded derivatives	Prepaid expenses and other current assets		0		1	Accrued liabilities		0		0
Total derivatives not designated as hedging instruments			65		56			24		20
TOTAL DERIVATIVES		$	272	$	281		$	62	$	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 nine months ended February 28, 2013 and February 29, 2012:


	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 February 28,			Nine Months Ended February 28,			Location of Gain (Loss) Reclassified From Accumulated Other Comprehensive Income Into Income	Three Months Ended February 28,			Nine Months Ended February 28,
(In millions)	2013			2013				2013			2013
Derivatives designated as cash flow hedges:
Foreign exchange forwards and options	$	37		$	41		Revenue	$	(3	)	$	(28	)
Foreign exchange forwards and options		60			17		Cost of sales		26			109
Foreign exchange forwards and options		(1	)		(3	)	Selling and administrative expense		1			2
Foreign exchange forwards and options		25			15		Other expense (income), net		(4	)		9
Total designated cash flow hedges	$	121		$	70			$	20		$	92
Derivatives designated as net investment hedges:
Foreign exchange forwards and options	$	0		$	0		Other expense (income), net	$	0		$	0

(1)

For the three and nine months ended February 28, 2013, the amounts recorded in other expense (income), 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 February 29,			Nine Months Ended February 29,		Location of Gain (Loss) Reclassified From Accumulated Other Comprehensive Income Into Income	Three Months Ended February 29,			Nine Months Ended February 29,
(In millions)	2012			2012			2012			2012
Derivatives designated as cash flow hedges:
Foreign exchange forwards and options	$	(12	)	$	5	Revenue	$	0		$	14
Foreign exchange forwards and options		3			146	Cost of sales		(1	)		(74	)
Foreign exchange forwards and options		0			0	Selling and administrative expense		(1	)		(3	)
Foreign exchange forwards and options		(3	)		8	Other expense (income), net		4			(14	)
Total designated cash flow hedges	$	(12	)	$	159		$	2		$	(77	)
Derivatives designated as net investment hedges:
Foreign exchange forwards and options	$	(2	)	$	35	Other expense (income), net	$	0		$	0

(1)

For the three and nine months ended February 29, 2012, the amounts recorded in other expense (income), 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 February 28 and 29,					Nine Months Ended February 28 and 29,						Location of Gain (Loss) Recognized in Income on Derivatives
(In millions)	2013		2012			2013			2012			Location of Gain (Loss) Recognized in Income on Derivatives
Derivatives designated as fair value hedges:
Interest rate swaps⁽¹⁾	$	1	$	1		$	4		$	5		Interest (income) expense, net
Derivatives not designated as hedging instruments:
Foreign exchange forwards and options	$	37	$	(17	)	$	(14	)	$	(14	)	Other expense (income), net
Embedded derivatives	$	0	$	0		$	(3	)	$	0		Other expense (income), 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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