However based on the Companys historical experience and the estimated

However based on the companys historical experience

This preview shows page 73 - 75 out of 119 pages.

However, based on the Company’s historical experience and the estimated probability of future loss, the Company has determined that the fair value of such indemnification is not material to the Company’s financial position or results of operations. In the ordinary course of its business, the Company is involved in various legal proceedings involving contractual and employment relationships, product liability claims, trademark rights, and a variety of other matters. While the Company cannot predict the outcome of its pending legal matters with certainty, the Company does not believe any currently identified claim, proceeding or litigation, either individually or in aggregate, will have a material impact on the Company’s results of operations, financial position or cash flows. NOTE 17 — 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 Company does not hold or issue derivatives for trading or speculative purposes. The Company may elect to designate certain derivatives as hedging instruments under the accounting standards for derivatives and hedging. The Company formally documents all relationships between designated hedging instruments and hedged items as well as its risk management objective and strategy for undertaking hedge transactions. This process includes linking all derivatives designated as hedges to either recognized assets or liabilities or forecasted transactions. The majority of derivatives outstanding as of May 31, 2014 are designated as cash flow or fair value hedges. All derivatives are recognized on the balance sheet at fair value and classified based on the instrument’s maturity date. The total notional amount of outstanding derivatives as of May 31, 2014 was approximately $12 billion , which primarily comprises cash flow hedges for Euro/U.S. Dollar, British Pound/Euro, and Japanese Yen/U.S. Dollar currency pairs. As of May 31, 2014 , there were outstanding currency forward contracts with maturities up to 24 months. 67
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Table of Contents The following table presents the fair values of derivative instruments included within the Consolidated Balance Sheets as of May 31, 2014 and 2013 : Asset Derivatives Liability Derivatives (In millions) Balance Sheet Location 2014 2013 Balance Sheet Location 2014 2013 Derivatives formally designated as hedging instruments: Foreign exchange forwards and options Prepaid expenses and other current assets $ 76 $ 141 Accrued liabilities $ 57 $ 12 Foreign exchange forwards and options Deferred income taxes and other assets 26 79 Deferred income taxes and other liabilities 1 Interest rate swap contracts Deferred income taxes and other assets 6 11 Deferred income taxes and other liabilities Total derivatives formally designated as hedging instruments 108 231 58 12 Derivatives not designated as hedging instruments: Foreign exchange forwards and options
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