v3.26.3
RISK MANAGEMENT AND DERIVATIVES
 3 Months Ended
Aug. 31, 2026
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
RISK MANAGEMENT AND DERIVATIVES
NOTE 7 — RISK MANAGEMENT AND DERIVATIVES
The Company is exposed to global market risks, including the effect of changes in foreign currency exchange rates and interest rates, and uses derivatives to manage financial exposures that occur in the normal course of business. The majority of derivatives outstanding as of August 31, 2026, are designated as foreign currency cash flow hedges, primarily for Euro/U.S. Dollar and Chinese Yuan/U.S. Dollar currency pairs. All derivatives are recognized on the Unaudited Condensed Consolidated Balance Sheets at fair value and classified based on the instrument's maturity date.
The following tables present the fair values of derivative instruments included within the Unaudited Condensed Consolidated Balance Sheets, which are classified within Level 2 of the fair value hierarchy:
DERIVATIVE ASSETS
BALANCE SHEET LOCATIONAUGUST 31,MAY 31,
(Dollars in millions)
20262026
Derivatives formally designated as hedging instruments:
Foreign exchange forwards and optionsPrepaid expenses and other current assets$118$111
Foreign exchange forwards and optionsDeferred income taxes and other assets5344
Interest rate swaps
Deferred income taxes and other assets
—6
Total derivatives formally designated as hedging instruments171161
Derivatives not designated as hedging instruments:
Foreign exchange forwards and optionsPrepaid expenses and other current assets2529
Total derivatives not designated as hedging instruments2529
TOTAL DERIVATIVE ASSETS$196$190
DERIVATIVE LIABILITIES
BALANCE SHEET LOCATIONAUGUST 31,MAY 31,
(Dollars in millions)
20262026
Derivatives formally designated as hedging instruments:
Foreign exchange forwards and optionsAccrued liabilities$220$253
Foreign exchange forwards and optionsDeferred income taxes and other liabilities4962
Interest rate swaps
Deferred income taxes and other liabilities
5310
Total derivatives formally designated as hedging instruments322325
Derivatives not designated as hedging instruments:
Foreign exchange forwards and optionsAccrued liabilities2018
Total derivatives not designated as hedging instruments2018
TOTAL DERIVATIVE LIABILITIES$342$343
If the foreign exchange and interest rate swap derivative instruments had been netted on the Unaudited Condensed Consolidated Balance Sheets, the asset and liability positions each would have been reduced by $179 million and $175 million as of August 31, 2026 and May 31, 2026, respectively. As of those dates, the Company posted $145 million and $119 million of cash collateral to various counterparties on the derivative liability balance and no amount of collateral was received from counterparties on the derivative asset balance.
The following tables present the amounts affecting the Unaudited Condensed Consolidated Statements of Income:

(Dollars in millions)
AMOUNT OF GAIN (LOSS) RECOGNIZED IN OTHER
COMPREHENSIVE INCOME (LOSS) ON DERIVATIVES
AMOUNT OF GAIN (LOSS)
RECLASSIFIED FROM ACCUMULATED
OTHER COMPREHENSIVE
INCOME (LOSS) INTO INCOME
THREE MONTHS ENDED AUGUST 31,LOCATION OF GAIN (LOSS)
RECLASSIFIED FROM ACCUMULATED
OTHER COMPREHENSIVE INCOME
(LOSS) INTO INCOME		THREE MONTHS ENDED AUGUST 31,
2026202520262025
Derivatives designated as cash flow hedges:
Foreign exchange forwards and options$(8)$43Revenues$(4)$(7)
Foreign exchange forwards and options27(153)Cost of sales(30)50
Foreign exchange forwards and options27(48)Other (income) expense, net(2)(14)
TOTAL DESIGNATED CASH FLOW HEDGES $46$(158)$(36)$29

AMOUNT OF GAIN (LOSS) RECOGNIZED
IN INCOME ON DERIVATIVES		LOCATION OF GAIN (LOSS)
RECOGNIZED IN INCOME
ON DERIVATIVES
THREE MONTHS ENDED AUGUST 31,
(Dollars in millions)
20262025
Derivatives not designated as hedging instruments:
Foreign exchange forwards and options$(29)$17Other (income) expense, net
CASH FLOW HEDGES
The total notional amount of outstanding foreign currency derivatives designated as cash flow hedges was approximately $15.9 billion and $16.4 billion as of August 31, 2026 and May 31, 2026, respectively. Approximately $101 million of deferred net losses (net of tax) on both outstanding and matured derivatives in Accumulated other comprehensive income (loss) as of August 31, 2026, are expected to be reclassified to Net income during the next 12 months concurrent with the underlying hedged transactions also being recorded in Net income. Actual amounts ultimately reclassified to Net income are dependent on the exchange rates in effect when derivative contracts currently outstanding mature. As of August 31, 2026, the maximum term over which the Company hedges exposures to the variability of cash flows for its forecasted transactions was 32 months.
FAIR VALUE HEDGES
The total notional amount of outstanding interest rate swap contracts designated as fair value hedges was $2.4 billion as of August 31, 2026 and May 31, 2026.
UNDESIGNATED DERIVATIVE INSTRUMENTS
The total notional amount of outstanding undesignated derivative instruments was $5.4 billion and $5.0 billion as of August 31, 2026 and May 31, 2026, respectively.