XML 23 R12.htm IDEA: XBRL DOCUMENT
v3.21.2

Financial Instruments | 9 Months Ended
--- | ---
Aug. 31, 2021
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Financing Arrangements and Financial Instruments | FINANCING ARRANGEMENTS AND FINANCIAL INSTRUMENTS In February 2021, we issued $500.0 million of 0.90% notes due February 15, 2026, with cash proceeds received of $495.7 million, net of discounts and underwriters' fees. Also, in February 2021, we issued $500.0 million of 1.85% notes due February 15, 2031, with cash proceeds received of $492.8 million, net of discounts and underwriters' fees. Interest is payable semiannually on both of these notes in arrears in February and August of each year. The net proceeds from these issuances were used to pay down short-term borrowings, including a portion of the $1,443.0 million of commercial paper issued to finance our acquisitions of Cholula and FONA, and for general corporate purposes. During the three months ended August 31, 2021, we repaid our $250 million, 3.90% notes that matured on July 8, 2021. In June 2021, we entered into a five-year $1.5 billion revolving credit facility, which will expire in June 2026. The current pricing for the credit facility, on a fully drawn basis, is LIBOR plus 1.25%. The pricing of the credit facility is based on a credit rating grid that contains a fully drawn maximum pricing of the credit facility equal to LIBOR plus 1.75%. The provisions of this new revolving credit facility restrict subsidiary indebtedness and require us to maintain a minimum interest coverage ratio. We do not expect that this covenant would limit our access to this revolving credit facility for the foreseeable future. This facility replaced the following prior revolving credit facilities: (i) a five-year $1.0 billion revolving credit facility that was due to expire in August 2022, and (ii) a 364-day $1.0 billion revolving facility, which we entered into in the first quarter of 2021 and that was due to expire in December 2021. The terms of those revolving credit facilities are more fully described in note 6 of the notes to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended November 30, 2020. 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 contract and currency swaps to reduce fluctuations in the long or short currency positions. Forward contracts are generally less than 18 months duration. At August 31, 2021, we had foreign currency exchange contracts to purchase or sell $598.1 million of foreign currencies as compared to $383.8 million at November 30, 2020. 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. All foreign currency exchange contracts outstanding at August 31, 2021 have durations of less than 18 months, including $232.9 million of notional contracts that have durations of less than one month and are used to hedge short-term cash flow funding. 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 loss until the hedged item is recognized in Cost of goods sold, at which time the net amount deferred in Accumulated other comprehensive loss 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 both exposure to currency fluctuations in certain intercompany loans between subsidiaries as well as currency exposure to third-party non-functional currency assets or liabilities. At August 31, 2021, the notional value of these contracts was $391.7 million. Any gains or losses recorded based on both the change in fair value of these contracts and the change in the currency component of the underlying loans are recognized in our consolidated income statement as Other income, net. We also utilize cross currency interest rate swap contracts that are designated as net investment hedges. As of August 31, 2021, we had 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. Any gains or losses on net investment hedges are included in foreign currency translation adjustments in Accumulated other comprehensive loss. 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 to minimize worldwide financing costs and to achieve a desired mix of variable and fixed rate debt. As of August 31, 2021, 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. The fair value of these swap contracts is offset by a corresponding increase or decrease of the value of the hedged debt. All derivatives are recognized at fair value in our consolidated balance sheet and recorded in either Prepaid expenses and other current assets, Other long-term assets, Other accrued liabilities or Other long-term liabilities, depending upon their nature and maturity. Hedge ineffectiveness was not material. The following table discloses the notional amount and fair values of derivative instruments on our balance sheet (in millions):
As of August 31, 2021 | 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 long-term assets |  | $ | 350.0 |  |  | $ | 30.0 |  |  | Other accrued liabilities |  | $ | — |  |  | $ | — |
Foreign exchange contracts | Other current assets |  | 444.0 |  |  | 6.2 |  |  | Other accrued liabilities |  | 154.1 |  |  | 1.6 |
Cross currency contracts | Other current assets / Other long-term assets |  | 261.9 |  |  | 2.8 |  |  | Other long-term liabilities |  | 266.8 |  |  | 17.2 |
Total |  |  |  |  | $ | 39.0 |  |  |  |  |  |  | $ | 18.8 |
As of November 30, 2020 | 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 long-term assets |  | $ | 350.0 |  |  | $ | 43.1 |  |  | Other accrued liabilities |  | $ | — |  |  | $ | — |
Foreign exchange contracts | Other current assets |  | 27.5 |  |  | 1.4 |  |  | Other accrued liabilities |  | 356.3 |  |  | 8.2 |
Cross currency contracts | Other current assets / Other long-term assets |  | — |  |  | — |  |  | Other long-term liabilities |  | 524.4 |  |  | 18.8 |
Total |  |  |  |  | $ | 44.5 |  |  |  |  |  |  | $ | 27.0 |
The following tables disclose the impact of derivative instruments on our Other comprehensive income (OCI), Accumulated other comprehensive loss (AOCI) and our consolidated income statement for the three- and nine-months ended August 31, 2021 and 2020 (in millions):
Fair Value Hedges |  |  |  |  |  |  |  |  |  |
Derivative |  | Income statement location |  | Income (expense)
|  |  |  | Three months ended August 31, 2021 |  | Three months ended August 31, 2020 |  | Nine months ended August 31, 2021 |  | Nine months ended August 31, 2020
Interest rate contracts |  | Interest expense |  | $ | 2.1 |  |  | $ | 1.8 |  |  | $ | 6.1 |  |  | $ | 3.2 |
Three months ended August 31, | Income statement location | Gain (loss) recognized in income |  | Income statement location | Gain (loss) recognized in income
Derivative |  | 2021 | 2020 | Hedged item |  | 2021 | 2020
Foreign exchange contracts | Other income, net | $ | 5.6 |  | $ | (7.6) |  | Intercompany loans | Other income, net | $ | (5.4) |  | $ | 7.3 |
Nine months ended August 31, | Income statement location | Gain (loss) recognized in income |  | Income statement location | Gain (loss) recognized in income
Derivative |  | 2021 | 2020 | Hedged item |  | 2021 | 2020
Foreign exchange contracts | Other income, net | $ | (0.3) |  | $ | (4.1) |  | Intercompany loans | Other income, net | $ | 1.1 |  | $ | 3.1 |
The gains (losses) recognized on fair value hedges relating to currency exposure on third-party non-functional currency assets or liabilities were not material during the three- and nine-months ended August 31, 2021 and 2020.
Cash Flow Hedges |  |
Three months ended August 31, |  |  |  |  |  |  |  |  |  |
Derivative |  | Gain (loss) recognized in OCI |  | Income statement location |  | Gain (loss) reclassified from AOCI
|  | 2021 |  | 2020 |  |  |  | 2021 |  | 2020
Interest rate contracts |  | $ | — |  |  | $ | — |  |  | Interest expense |  | $ | 0.2 |  |  | $ | 0.2 |
Foreign exchange contracts |  | 1.5 |  |  | (0.6) |  |  | Cost of goods sold |  | (0.3) |  |  | 1.1 |
Total |  | $ | 1.5 |  |  | $ | (0.6) |  |  |  |  | $ | (0.1) |  |  | $ | 1.3 |
Nine months ended August 31, |  |  |  |  |  |  |  |  |  |
Derivative |  | Gain (loss) recognized in OCI |  | Income statement location |  | Gain (loss) reclassified from AOCI
|  | 2021 |  | 2020 |  |  |  | 2021 |  | 2020
Interest rate contracts |  | $ | 0.3 |  |  | $ | — |  |  | Interest expense |  | $ | 0.4 |  |  | $ | 0.4 |
Foreign exchange contracts |  | (0.9) |  |  | 2.3 |  |  | Cost of goods sold |  | (0.6) |  |  | 1.2 |
Total |  | $ | (0.6) |  |  | $ | 2.3 |  |  |  |  | $ | (0.2) |  |  | $ | 1.6 |
For all cash flow and settled interest rate fair value hedge derivatives, the net amount of Accumulated other comprehensive loss expected to be reclassified in the next 12 months is $0.7 million as an increase to earnings.
Net Investment Hedges |  |
Three months ended August 31, |  |  |  |  |  |  |  |  |  |
Derivative |  | Gain (loss) recognized in OCI |  | Income statement location |  | Gain (loss) excluded from the assessment of hedge effectiveness
|  | 2021 |  | 2020 |  |  |  | 2021 |  | 2020
Cross currency contracts |  | $ | 8.4 |  |  | $ | (17.4) |  |  | Interest expense |  | $ | 0.4 |  |  | $ | 0.3 |
Nine months ended August 31, |  |  |  |  |  |  |  |  |  |
Derivative |  | Gain (loss) recognized in OCI |  | Income statement location |  | Gain (loss) excluded from the assessment of hedge effectiveness
|  | 2021 |  | 2020 |  |  |  | 2021 |  | 2020
Cross currency contracts |  | $ | 4.9 |  |  | $ | (20.7) |  |  | Interest expense |  | $ | 1.1 |  |  | $ | 2.7 |
For all net investment hedges, no amounts have been reclassified out of Accumulated other comprehensive loss. The amounts noted in the tables above for OCI do not include any adjustments for the impact of deferred income taxes.

X
- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1B -Subparagraph (h) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1C -Subparagraph (c) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495334-112611 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1I -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495371-112611 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1I -Subparagraph (d) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495371-112611 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(c)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1B -Subparagraph (g) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1C -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495334-112611 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1C -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495334-112611 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1E -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495348-112611 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1B -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1I -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495371-112611 Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1B -Subparagraph (i) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611 + Details
Name: | us-gaap_DebtDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- References No definition available. + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration