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DERIVATIVE FINANCIAL INSTRUMENTS
 12 Months Ended
May 31, 2026
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
DERIVATIVE FINANCIAL INSTRUMENTS DERIVATIVE FINANCIAL INSTRUMENTS
RISK MANAGEMENT OBJECTIVE OF USING DERIVATIVES. We enter into derivative financial instruments to reduce the effects of volatility in foreign currency exchange exposure or interest rates on operating results and cash flows. Our derivative financial instruments are used to manage differences in the amount, timing, and duration of cash receipts and cash payments principally related to our investments and debts.
Certain of our foreign operations expose us to fluctuations of foreign exchange rates. These fluctuations may impact the value of our cash receipts and payments in terms of our functional currency. Certain of our debts expose us to fluctuations of interest rates, these fluctuations may impact our future cashflows.
NET INVESTMENT HEDGES. We are exposed to fluctuations in foreign exchange rates on investments we hold in foreign entities. We use debt denominated in foreign currency and fixed-to-fixed cross-currency swaps to hedge our exposure to changes in foreign exchange rates on certain of our foreign investments. Cross-currency swaps involve the receipt of functional-currency-fixed rate amounts from a counterparty in exchange for us making foreign-currency-fixed rate payments over the life of the agreement. Cross-currency swaps also involve final exchanges of the functional-currency principal amounts for the foreign-currency principal amounts between us and the counterparty.
For debt and foreign currency derivatives designated as net investment hedges, the gain or loss on the derivative is reported in AOCL as part of the cumulative translation adjustment. Amounts are reclassified out of AOCL into earnings when the hedged net investment is either sold or substantially liquidated.
As of May 31, 2026 and 2025, we had €518 million and €506 million, respectively, of debt designated to reduce the volatility of the U.S. dollar value of a portion of our net investment in a euro-denominated consolidated subsidiary.
During 2026 and 2025, we had certain foreign currency derivatives to hedge our net investments in foreign operations. The following foreign currency derivatives were outstanding as of May 31, 2026 and 2025 (notional amounts in millions):
20262025
Derivatives designated as net investment hedgesNumber of InstrumentsNotional SoldNotional PurchasedNumber of InstrumentsNotional SoldNotional Purchased
Cross-currency swaps4€(949)$1,000 4€(949)$1,000 
OTHER HEDGES. We are exposed to fluctuations in interest rate risks on the fair value of our debt. We are exposed to fluctuation in foreign exchange rates due to our international operations. We may enter into derivatives contracts to mitigate these risks. For derivatives not designated in hedging relationships, the changes in fair value are recognized immediately in Other, net.
During 2026 we entered into certain interest rate derivatives to hedge our interest rate risk on debt. During 2026 and 2025 we entered into certain foreign exchange contracts to hedge our foreign exchange exposures in the balance sheet. The following interest rate derivatives and foreign exchange contracts were outstanding as of May 31, 2026 and 2025 (notional amounts in millions):
20262025
Derivatives not designated in a hedging relationshipUnderlying NotionalUnderlying Notional
Interest rate swaps$2,300 $— 
Foreign exchange contracts1,753 1,118 
The following table presents the fair value of our derivatives, including their classification on the consolidated balance sheet, as of May 31, 2026 and 2025 (in millions):
Balance Sheet Location20262025
Asset Derivatives
Cross-currency swapsPrepaid expenses and other$12 $13 
Interest rate swapsPrepaid expenses and other4 — 
Foreign exchange contractsPrepaid expenses and other9 — 
Liability Derivatives
Cross-currency swapsOther liabilities$115 $108 
Interest rate swapsAccrued expenses1 — 
Foreign exchange contractsAccrued expenses3 2 
The estimated fair values were determined using pricing models that rely on market-based inputs such as foreign currency exchange rates and yield curves and are classified as Level 2 within the fair value hierarchy. This classification is defined as a fair value determined using market-based inputs other than quoted prices that are observable for the derivative financial instruments, either directly or indirectly.
Our cross-currency swaps and interest rate swaps contain an element of risk that counterparties may be unable to meet the terms of the agreements. We seek to minimize such risk exposures for these instruments by limiting the counterparties to banks and financial institutions that meet established credit guidelines. Our counterparties to the swaps all have an investment grade rating. To keep our exposure minimal, we monitor our counterparties’ credit worthiness on a regular basis, reviewing amongst others Standard & Poor’s rating and credit default swap spreads.
We recognized losses of $9 million, $86 million, and $6 million in AOCL related to our cross-currency swaps for the periods ended May 31, 2026, 2025 and 2024. Losses recognized in AOCL related to our debt designated as a net investment hedge, which excludes any adjustments for the impact of deferred income taxes, was immaterial for the periods ended May 31, 2026, 2025, and 2024.
Amounts recorded to “Other, net” related to our interest rate swaps and foreign exchange contracts for the periods ended May 31, 2026, 2025 and 2024 were immaterial.
As of May 31, 2026 and 2025, we had not posted any collateral related to our derivatives. No amounts have been reclassified out of AOCL during 2026 or 2025 for our net investment hedges. As of May 31, 2026 and 2025, our net investment hedges remained effective.