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Financial Instruments | 12 Months Ended
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Nov. 30, 2019
Derivative Instrument Detail [Abstract] |
Financial Instruments | FINANCIAL INSTRUMENTS We use derivative financial instruments to enhance our ability to manage risk, including foreign currency 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 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 contract and currency swaps with highly-rated financial institutions to reduce fluctuations in the long or short currency positions. Forward contracts are generally less than 18 months duration. Currency swap agreements are established in conjunction with the terms of the underlying debt issues. At November 30, 2019, we had foreign currency exchange contracts to purchase or sell $489.2 million of foreign currencies as compared to $494.9 million at November 30, 2018. All of these contracts were designated as hedges of anticipated purchases denominated in a foreign currency or hedges of foreign currency denominated assets or liabilities. Hedge ineffectiveness was not material. 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. The gains and losses on these contracts are deferred in accumulated other comprehensive income until the hedged item is recognized in cost of goods sold, at which time the net amount deferred in accumulated other comprehensive income is also recognized in cost of goods sold. Gains and losses from contracts that are designated as hedges of assets, liabilities or firm commitments are recognized through income, offsetting the change in fair value of the hedged item. We also enter into fair value foreign currency exchange contracts to manage exposure to currency fluctuations in certain intercompany loans between subsidiaries. The notional value of these contracts was $357.5 million and $402.0 million at November 30, 2019 and 2018, respectively. During fiscal years 2019, 2018 and 2017, we recognized a $0.2 million gain, a $2.9 million loss and a $12.8 million gain, respectively, on the change in fair value of these contracts, which was offset by a $0.9 million loss, a $2.7 million gain and a $14.1 million loss, respectively, on the change in the currency component of the underlying loans. All of the losses and the gains for both fiscal years were recognized in our consolidated income statement as other income, net. At November 30, 2019, we had $151.3 million of notional contracts that have durations of less than seven days that are used to hedge short-term cash flow funding. At November 30, 2019, the remaining contracts have durations of one to twelve months. Beginning in the first quarter of 2019, we also utilized cross currency interest rate swap contracts that are designated as net investment hedges. As of November 30, 2019, we had notional values 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 Rates We finance a portion of our operations with both fixed and variable rate debt instruments, primarily commercial paper, notes and bank loans. We utilize interest rate swap agreements to minimize worldwide financing costs and to achieve a desired mix of variable and fixed rate debt. As of November 30, 2019, we have outstanding interest rate swap contracts for a notional amount of $350.0 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%. These swaps, which expire in November 2025, 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 that we issued in November 2015. 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 unrealized gain or loss on these swaps was offset by a corresponding increase or decrease in the value of the hedged debt. Hedge ineffectiveness was not material. All derivatives are recognized at fair value in the balance sheet and recorded in either other current assets, or other long-term assets, other accrued liabilities or other long-term liabilities depending upon their nature and maturity. The following tables disclose the notional amount and fair values of derivative instruments on our consolidated balance sheet:
As of November 30, 2019: |  |  |  |  |  |
(millions) | Asset Derivatives | Liability Derivatives
Derivatives | Balance sheet location | Notional amount | Fair value | Balance sheet location | Notional amount | Fair value
Interest rate contracts | Other current assets/Other long-term assets | $ | 350.0 |  | $ | 20.9 |  | Other accrued liabilities | $ | — |  | $ | — |
Foreign exchange contracts | Other current assets | 293.1 |  | 3.3 |  | Other accrued liabilities | 196.1 |  | 3.6 |
Cross currency contracts | Other current assets/Other long-term assets | 495.5 |  | 3.2 |  | Other long-term liabilities | — |  | — |
Total |  |  | $ | 27.4 |  |  |  | $ | 3.6 |
As of November 30, 2018: |  |  |  |  |  |
(millions) | Asset Derivatives | Liability Derivatives
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 other comprehensive income (OCI), accumulated other comprehensive income (AOCI) and our consolidated income statement for the years ended November 30, 2019, 2018 and 2017:
Fair value hedges (millions)
| Income statement location | Income (expense)
Derivative | 2019 | 2018 | 2017
Interest rate contracts | Interest expense | $ | — |  | $ | (0.1 | ) | $ | 0.9 |
| Income statement location | Gain (loss) recognized in income |  | Income statement location | Gain (loss) recognized in income
Derivative | 2019 | 2018 | 2017 | Hedged Item | 2019 | 2018 | 2017
Foreign exchange contracts | Other income, net | $ | 0.2 |  | $ | (2.9 | ) | $ | 12.8 |  | Intercompany loans | Other income, net | $ | (0.9 | ) | $ | 2.7 |  | $ | (14.1 | )
Cash flow hedges (millions)
| Gain (loss) recognized in OCI | Income statement location | Gain (loss) reclassified from AOCI
Derivative | 2019 | 2018 | 2017 | 2019 | 2018 | 2017
Interest rate contracts | $ | — |  | $ | — |  | $ | (2.9 | ) | Interest expense | $ | 0.5 |  | $ | 0.5 |  | $ | (0.4 | )
Foreign exchange contracts | (0.2 | ) | 2.6 |  | (7.3 | ) | Cost of goods sold | 1.6 |  | (3.3 | ) | 1.2 |
Total | $ | (0.2 | ) | $ | 2.6 |  | $ | (10.2 | ) |  | $ | 2.1 |  | $ | (2.8 | ) | $ | 0.8 |
The amount of gain or loss recognized in income on the ineffective portion of derivative instruments is not material. The net amount of accumulated other comprehensive income expected to be reclassified into income related to these contracts in the next twelve months is a $0.2 million increase to earnings.
Net investment hedges (millions)
| Gain (loss) recognized in OCI | Income statement location | Gain (loss) excluded from the assessment of hedge effectiveness
Derivative | 2019 |  | 2019
Cross currency contracts | $ | 1.1 |  | Interest expense | $ | 5.4 |
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. Fair Value of Financial Instruments The carrying amount and fair value of financial instruments as of November 30 were as follows:
| 2019 | 2018
(millions) | Carrying amount | Fair value | Carrying amount | Fair value
Long-term investments | $ | 124.4 |  | $ | 124.4 |  | $ | 120.8 |  | $ | 120.8 |
Long-term debt (including current portion) | 3,723.5 |  | 3,859.0 |  | 4,136.4 |  | 4,039.4 |
Derivatives related to: |  |  |  |
Interest rates (assets) | 20.9 |  | 20.9 |  | — |  | — |
Interest rates (liabilities) | — |  | — |  | 6.4 |  | 6.4 |
Foreign currency (assets) | 3.3 |  | 3.3 |  | 4.4 |  | 4.4 |
Foreign currency (liabilities) | 3.6 |  | 3.6 |  | 6.4 |  | 6.4 |
Cross currency (assets) | 3.2 |  | 3.2 |  | — |  | — |
Because of their short-term nature, the amounts reported in the balance sheet for cash and cash equivalents, receivables, short-term borrowings and trade accounts payable approximate fair value. At November 30, 2019, the fair value of long-term debt includes $3,437.5 million and $421.5 million determined using Level 1 and Level 2 valuation techniques, respectively. At November 30, 2018, the fair value of long-term debt includes $3,172.7 million and $866.7 million determined using Level 1 and Level 2 valuation techniques, respectively. The fair value for Level 2 long-term debt is determined by using quoted prices for similar debt instruments. Investments in affiliates are not readily marketable, and it is not practicable to estimate their fair value. Long-term investments are comprised of fixed income and equity securities held on behalf of employees in certain employee benefit plans and are stated at fair value on the balance sheet. Concentrations of Credit Risk We are potentially exposed to concentrations of credit risk with trade accounts receivable and financial instruments. The customers of our consumer segment are predominantly food retailers and food wholesalers. Consolidations in these industries have created larger customers. In addition, competition has increased with the growth in alternative channels including mass merchandisers, dollar stores, warehouse clubs, discount chains and e-commerce. This has caused some customers to be less profitable and increased our exposure to credit risk. We generally have a large and diverse customer base which limits our concentration of credit risk. At November 30, 2019, we did not have amounts due from any single customer that exceed 10% of consolidated trade accounts receivable. Current credit markets are highly volatile and some of our customers and counterparties are highly leveraged. We continue to closely monitor the credit worthiness of our customers and counterparties and generally do not require collateral. We believe that the allowance for doubtful accounts properly recognized trade receivables at realizable value. We consider nonperformance credit risk for other financial instruments to be insignificant.

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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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