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Financial Instruments | 9 Months Ended
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Aug. 31, 2019
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
FINANCIAL ARRANGEMENTS AND FINANCIAL INSTRUMENTS | FINANCING ARRANGEMENTS AND FINANCIAL INSTRUMENTS During the nine months ended August 31, 2019 and 2018, we repaid $100.0 million and $180.0 million, respectively, of the three-year term loan due August 17, 2020. During the nine months ended August 31, 2019 and 2018, we repaid $106.3 million and $156.3 million, respectively, of the five-year term loan due August 17, 2022, which included required principal installments of $56.3 million in both periods. During the nine months ended August 31, 2018, we repaid the $250 million, 5.75% notes that matured on December 15, 2017. We use derivative financial instruments to enhance our ability to manage risk, including foreign currency, net investment and interest rate exposures, which exist as part of our ongoing business operations. We do not enter into contracts for trading purposes, nor are we a party to any leveraged derivative instrument, and all derivatives are designated as hedges. We are not a party to master netting arrangements, and we do not offset the fair value of derivative contracts with the same counterparty in our financial statement disclosures. The use of derivative financial instruments is monitored through regular communication with senior management and the use of written guidelines. Foreign currency exchange risk. We are potentially exposed to foreign currency fluctuations affecting net investments in subsidiaries, transactions (both third-party and intercompany) and earnings denominated in foreign currencies. Management assesses foreign currency risk based on transactional cash flows and translational volatility and may enter into forward contracts and currency swaps to reduce fluctuations in long or short currency positions. Forward contracts and options are generally less than 18 months duration. Currency swap agreements are established in conjunction with the term of underlying debt issues. For foreign currency cash flow and fair value hedges, the assessment of effectiveness is generally based on changes in spot rates. Contracts which are designated as hedges of anticipated purchases denominated in a foreign currency (generally purchases of raw materials in U.S. dollars by operating units outside the U.S.) are considered cash flow hedges. At August 31, 2019, the notional value of these contracts was $73.8 million. We also enter into fair value foreign currency exchange contracts to manage exposure to currency fluctuations in certain intercompany loans between subsidiaries. At August 31, 2019, the notional value of these contracts was $381.5 million. During the three months ended August 31, 2019 and 2018, we recognized (losses) gains of $(5.3) million and $0.5 million, respectively, on the change in fair value of these contracts and gains (losses) of $5.2 million and $(1.1) million, respectively, on the change in the currency component of the underlying loans. During the nine months ended August 31, 2019 and 2018, we recognized losses of $(2.6) million and $(2.1) million, respectively, on the change in fair value of these contracts and gains of $2.0 million and $1.1 million, respectively, on the change in the currency component of the underlying loans. Both the gains and the losses were recognized in our consolidated income statement as other income, net. Beginning in the first quarter of 2019, we also utilized cross currency interest rate swap contracts that are considered net investment hedges. As of August 31, 2019, we had notional value of cross currency interest rate swap contracts of (i) $250 million notional value to receive $250 million at three-month U.S. LIBOR plus 0.685% and pay £194.1 million at three-month GBP LIBOR plus 0.740% and (ii) £194.1 million notional value to receive £194.1 million at three-month GBP LIBOR plus 0.740% and pay €221.8 million at three-month Euro EURIBOR plus 0.808%. These cross currency interest rate swap contracts expire in August 2027. Interest rate risk. We finance a portion of our operations with both fixed and variable rate debt instruments, principally commercial paper, notes and bank loans. We utilize interest rate swap agreements, including forward-starting swaps, to reduce interest rate volatility and funding costs associated with certain debt issues, and achieve a desired mix of variable and fixed rate debt. Fixed-to-variable interest rate swaps are designated and accounted for as fair value hedges and the assessment of effectiveness is based on changes in the fair value of the underlying debt. As of August 31, 2019, we have outstanding interest rate swap contracts for a notional amount of $350 million. Those interest rate swap contracts include a $100 million notional value of interest rate swap contracts, where we receive interest at 3.25% and pay a variable rate of interest based on three-month LIBOR plus 1.22%, which expire in November 2025, and are designated as fair value hedges of the changes in fair value of $100 million of the $250 million 3.25% medium-term notes due 2025. We also have $250 million notional interest rate swap contracts where we receive interest at 3.40% and pay a variable rate of interest based on three-month LIBOR plus 0.685%, which expire in August 2027, and are designated as fair value hedges of the changes in fair value of $250 million of the $750 million 3.40% term notes due 2027. Any realized gain or loss on either of these swaps was offset by a corresponding increase or decrease of the value of the hedged debt. All derivatives are recognized at fair value in the balance sheet and recorded in either other current assets, or noncurrent other assets, other accrued liabilities or other long-term liabilities depending upon their nature and maturity. The following table discloses the notional amount and fair values of derivative instruments on our balance sheet (in millions):
As of August 31, 2019 | Asset Derivatives |  | Liability Derivatives
| Balance sheet location |  | Notional amount |  | Fair value |  | Balance sheet location |  | Notional amount |  | Fair value
Interest rate contracts | Other current assets / Investments and other assets |  | $ | 350.0 |  |  | $ | 28.2 |  |  | Other accrued liabilities |  | $ | — |  |  | $ | — |
Foreign exchange contracts | Other current assets |  | 104.7 |  |  | 2.2 |  |  | Other accrued liabilities |  | 350.6 |  |  | 4.6 |
Cross currency contracts | Investments and other assets |  | 236.4 |  |  | 14.0 |  |  | Other long-term liabilities |  | 243.9 |  |  | 13.4 |
Total |  |  |  |  | $ | 44.4 |  |  |  |  |  |  | $ | 18.0 |
As of August 31, 2018 | Asset Derivatives |  | Liability Derivatives
| Balance sheet location |  | Notional amount |  | Fair value |  | Balance sheet location |  | Notional amount |  | Fair value
Interest rate contracts | Other current assets |  | $ | — |  |  | $ | — |  |  | Other accrued liabilities |  | $ | 100.0 |  |  | $ | 6.0 |
Foreign exchange contracts | Other current assets |  | 175.8 |  |  | 2.1 |  |  | Other accrued liabilities |  | 254.6 |  |  | 5.7 |
Total |  |  |  |  | $ | 2.1 |  |  |  |  |  |  | $ | 11.7 |
As of November 30, 2018 | Asset Derivatives |  | Liability Derivatives
| Balance sheet location |  | Notional amount |  | Fair value |  | Balance sheet location |  | Notional amount |  | Fair value
Interest rate contracts | Other current assets |  | $ | — |  |  | $ | — |  |  | Other accrued liabilities |  | $ | 100.0 |  |  | $ | 6.4 |
Foreign exchange contracts | Other current assets |  | 199.5 |  |  | 4.4 |  |  | Other accrued liabilities |  | 295.4 |  |  | 6.4 |
Total |  |  |  |  | $ | 4.4 |  |  |  |  |  |  | $ | 12.8 |
The following tables disclose the impact of derivative instruments on our other comprehensive income (OCI), accumulated other comprehensive income (AOCI) and our consolidated income statement for the three and nine-month periods ended August 31, 2019 and 2018 (in millions):
Fair Value Hedges |  |  |  |  |  |  |  |  |  |
Derivative |  | Income statement location |  | Income (expense)
|  |  |  | Three months ended August 31, 2019 |  | Three months ended August 31, 2018 |  | Nine months ended August 31, 2019 |  | Nine months ended August 31, 2018
Interest rate contracts |  | Interest expense |  | $ | — |  |  | $ | (0.1 | ) |  | $ | (0.3 | ) |  | $ | 0.1 |
Three months ended August 31, | Income statement location | Gain (loss) recognized in income |  | Income statement location | Gain (loss) recognized in income
Derivative |  | 2019 | 2018 | Hedged item |  | 2019 | 2018
Foreign exchange contracts | Other income, net | $ | (5.3 | ) | $ | 0.5 |  | Intercompany loans | Other income, net | $ | 5.2 |  | $ | (1.1 | )
Nine months ended August 31, | Income statement location | Gain (loss) recognized in income |  | Income statement location | Gain (loss) recognized in income
Derivative |  | 2019 | 2018 | Hedged item |  | 2019 | 2018
Foreign exchange contracts | Other income, net | $ | (2.6 | ) | $ | (2.1 | ) | Intercompany loans | Other income, net | $ | 2.0 |  | $ | 1.1 |
Cash Flow Hedges |  |
Three months ended August 31, |  |  |  |  |  |  |  |  |  |
Derivative |  | Gain or (loss) recognized in OCI |  | Income statement location |  | Gain or (loss) reclassified from AOCI
|  | 2019 |  | 2018 |  |  |  | 2019 |  | 2018
Interest rate contracts |  | $ | — |  |  | $ | — |  |  | Interest expense |  | $ | 0.2 |  |  | $ | 0.2 |
Foreign exchange contracts |  | (0.3 | ) |  | 0.1 |  |  | Cost of goods sold |  | 0.5 |  |  | (0.8 | )
Total |  | $ | (0.3 | ) |  | $ | 0.1 |  |  |  |  | $ | 0.7 |  |  | $ | (0.6 | )
Nine months ended August 31, |  |  |  |  |  |  |  |  |  |
Derivative |  | Gain or (Loss) recognized in OCI |  | Income statement location |  | Gain or (Loss) reclassified from AOCI
|  | 2019 |  | 2018 |  |  |  | 2019 |  | 2018
Interest rate contracts |  | $ | — |  |  | $ | — |  |  | Interest expense |  | $ | 0.4 |  |  | $ | 0.4 |
Foreign exchange contracts |  | 0.3 |  |  | 0.9 |  |  | Cost of goods sold |  | 0.9 |  |  | (3.5 | )
Total |  | $ | 0.3 |  |  | $ | 0.9 |  |  |  |  | $ | 1.3 |  |  | $ | (3.1 | )
For all cash flow and settled interest rate fair value hedge derivatives, the net amount of accumulated other comprehensive income (loss) expected to be reclassified in the next 12 months is $1.5 million as an increase to earnings.
Net Investment Hedges |  |
Three months ended August 31, |  |  |  |  |  |  |  |  |  |
Derivative |  | Gain or (loss) recognized in OCI |  | Income statement location |  | Gain or (loss) excluded from the assessment of hedge effectiveness
|  | 2019 |  | 2018 |  |  |  | 2019 |  | 2018
Cross currency contracts |  | $ | 3.0 |  |  | $ | — |  |  | Interest expense |  | $ | 1.7 |  |  | $ | — |
Nine months ended August 31, |  |  |  |  |  |  |  |  |  |
Derivative |  | Gain or (loss) recognized in OCI |  | Income statement location |  | Gain or (loss) excluded from the assessment of hedge effectiveness
|  | 2019 |  | 2018 |  |  |  | 2019 |  | 2018
Cross currency contracts |  | $ | 0.3 |  |  | $ | — |  |  | Interest expense |  | $ | 3.8 |  |  | $ | — |
For all net investment hedges, no amounts have been reclassified out of other comprehensive income (loss). The amounts noted in the tables above for OCI do not include any adjustments for the impact of deferred income taxes.

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- Definition The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -URI http://asc.fasb.org/topic&trid=2229140 + Details
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