v3.26.1
Derivative Financial Instruments and Hedging Activities
 3 Months Ended
Jul. 31, 2026
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Financial Instruments and Hedging Activities Derivative Financial Instruments and Hedging Activities
We are subject to market risks, including the effect of fluctuations in foreign currency exchange rates, commodity prices, and interest rates. We use derivatives to help manage financial exposures that occur in the normal course of business. We formally document the purpose of each derivative contract, which includes linking the contract to the financial exposure it is designed to mitigate. We do not hold or issue derivatives for trading or speculative purposes.

Cash flow hedges. We use currency derivative contracts, primarily forward contracts, to limit our exposure to the foreign currency exchange rate risk that we cannot mitigate internally by using netting strategies. We designate most of these contracts as cash flow hedges of forecasted transactions (expected to occur within three years). We record all changes in the fair value of cash flow hedges in AOCI until the underlying hedged transaction occurs, at which time we reclassify that amount to earnings. These currency derivatives related primarily to the euro, British pound, and Australian dollar and had a maximum term of 24 months at both April 30, 2026 and July 31, 2026.

At inception, we expect each currency derivative designated as a hedge to be highly effective in offsetting the financial exposure it is designed to mitigate. We assess the effectiveness of our hedges continually. If we determine that any currency derivative designated as a hedge is no longer highly effective, we discontinue hedge accounting for that derivative.

Net investment hedges. We also use foreign currency-denominated debt instruments and cross-currency swaps (entered into in the first quarter of fiscal 2027) to help manage our foreign currency exchange rate risk. We designate a portion of the debt instruments and cross-currency swaps as net investment hedges, which are intended to mitigate foreign currency exposure related to non-U.S. dollar net investments in certain foreign subsidiaries. Any change in value of the designated portion of the hedging instruments is recorded in AOCI, offsetting the foreign currency translation adjustment of the related net investments that are also recorded in AOCI. The changes in value will be subsequently reclassified into earnings when the hedged net investment is either sold, liquidated, or substantially liquidated. We assess the effectiveness of our cross-currency swaps using the spot method. Under this method, the periodic interest settlements are recorded directly in earnings through interest expense, net. Accordingly, we recorded a negligible amount of interest income for the three months ended July 31, 2026.

Undesignated hedges. Some of our currency derivatives, including a portion of our cross-currency swaps and forward contracts, are not designated as hedges because we use them to partially offset the immediate earnings impact of changes in foreign currency exchange rates on existing assets or liabilities. We immediately recognize the change in fair value of these contracts in earnings. The forward contracts had a maximum term of two months at both April 30, 2026 and July 31, 2026.
The following table presents the contractual amounts of our outstanding instruments:
(Dollars in millions)DesignationApril 30, 2026July 31, 2026
Currency derivativesCash flow hedges$517 $520 
Foreign currency-denominated debt1
Net investment hedges538 403 
Currency derivatives2
Net investment hedges— 131 
Currency derivativesUndesignated69 291 
1At April 30, 2026, includes £299 million, or approximately $404 million, of outstanding British pound-denominated debt and €115 million, or approximately $134 million, of outstanding euro-denominated debt designated as a net investment hedge. The euro-denominated debt matured in the first quarter of fiscal 2027 (refer to Note 7). At July 31, 2026, includes £299 million, or approximately $403 million, of outstanding British pound-denominated debt designated as a net investment hedge. This debt matures in fiscal 2029.
2At July 31, 2026, we had outstanding cross-currency swaps with a total notional value of €300 million, or approximately $341 million, of which $131 million is designated as a hedge of a portion of our net investment in certain European operations. These derivative contracts mature in fiscal 2033.

The following table presents the pre-tax impact that changes in the fair value of our derivative instruments and non-derivative hedging instruments had on AOCI and earnings:
Three Months Ended
July 31,
(Dollars in millions)Classification20252026
Derivative Instruments
Currency derivatives designated as cash flow hedges:
Net gain (loss) recognized in AOCIn/a$— $4 
Net gain (loss) reclassified from AOCI into earningsSales(3)(4)
Currency derivatives designated as net investment hedge:
Net gain (loss) recognized in AOCIn/a$— $(2)
Currency derivatives not designated as hedging instruments:
Net gain (loss) recognized in earningsSales$— $1 
Net gain (loss) recognized in earningsOther income (expense), net2 (4)
Non-Derivative Hedging Instruments
Foreign currency-denominated debt designated as net investment hedge:
Net gain (loss) recognized in AOCIn/a$5 $4 
Total amounts presented in the accompanying condensed consolidated statements of operations for line items affected by the net gains (losses) shown above:
Sales$1,191 $1,181 
Other income (expense), net17 2 

We expect to reclassify $4 million of deferred net losses on cash flow hedges recorded in AOCI as of July 31, 2026, to earnings during the next 12 months. This reclassification would offset the anticipated earnings impact of the underlying hedged exposures. The actual amounts that we ultimately reclassify to earnings will depend on the exchange rates in effect when the underlying hedged transactions occur.
The following table presents the fair values of our derivative instruments:
April 30, 2026July 31, 2026
(Dollars in millions)
Classification		Derivative AssetsDerivative LiabilitiesDerivative AssetsDerivative Liabilities
Designated as cash flow hedges:
Currency derivativesAccrued expenses$2 $(15)$4 $(11)
Currency derivativesOther liabilities1 (2)1 (1)
Designated as net investment hedge:
Currency derivativesOther liabilities— — — (2)
Not designated as hedges:
Currency derivativesOther current assets1 — — — 
Currency derivativesOther liabilities— — — (4)

The fair values reflected in the above table are presented on a gross basis. However, as discussed further below, the fair values of those instruments subject to net settlement agreements are presented on a net basis in our balance sheets.

Cash flows from the settlement of our derivatives, including both undesignated hedges and those designated in hedge accounting relationships, appear on our statements of cash flows in the same categories as the cash flows from the hedged items.

Credit risk. We are exposed to credit-related losses if the counterparties to our derivative contracts default. This credit risk is limited to the fair value of the contracts. To manage this risk, we contract only with major financial institutions that have investment-grade credit ratings and with whom we have standard ISDA agreements that allow for net settlement of the derivative contracts. Also, we have established counterparty credit guidelines that we monitor regularly. Based on our most recent assessment, we consider our counterparty credit risk to be low.
Our derivative instruments are not subject to credit rating contingencies and no collateral is required or posted under these agreements. The aggregate fair value of our derivatives in a net liability position due to counterparties was $14 million at
April 30, 2026, and $13 million at July 31, 2026. If we were required to settle the net liability position under these derivative instruments on July 31, 2026, we would have sufficient available liquidity on hand to satisfy this obligation.

Offsetting. As noted above, our derivative contracts are governed by ISDA agreements that allow for net settlement of derivative contracts with the same counterparty. It is our policy to present the fair values of current derivatives (that is, those with a remaining term of 12 months or less) with the same counterparty on a net basis in our balance sheets. Similarly, we present the fair values of noncurrent derivatives with the same counterparty on a net basis. We do not net current derivatives with noncurrent derivatives in our balance sheets.

The following table summarizes the gross and net amounts of our derivative contracts:
(Dollars in millions)Gross Amounts of Recognized Assets (Liabilities)Gross Amounts Offset in Balance SheetNet Amounts Presented in Balance SheetGross Amounts Not Offset in Balance SheetNet Amounts
April 30, 2026
Derivative assets$4 $(3)$1 $— $1 
Derivative liabilities(17)3 (14)— (14)
July 31, 2026
Derivative assets$5 $(5)$— $— $— 
Derivative liabilities(18)5 (13)— (13)

Forward purchase contracts. We use forward purchase contracts with suppliers to protect against corn price volatility. We expect to take physical delivery of the corn underlying each contract and use it for production over a reasonable period of time. Accordingly, we account for these contracts as normal purchases rather than as derivative instruments.