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Financial Instruments | 12 Months Ended
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Nov. 30, 2022
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, 2022, we had foreign currency exchange contracts to purchase or sell $560.5 million of foreign currencies as compared to $583.6 million at November 30, 2021. 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. All foreign currency exchange contracts outstanding at November 30, 2022 have durations of less than 18 months, including $150.9 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 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. Hedges of foreign currency denominated assets and liabilities include contracts with a notional value of $355.5 million and $449.3 million at November 30, 2022 and 2021, respectively. We enter into these fair value foreign currency exchange contracts to manage exposure to currency fluctuations in certain intercompany loans between subsidiaries as well as currency exposure to third-party non-functional currency assets or liabilities. 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 utilize cross currency interest rate swap contracts that are designated as net investment hedges. Any gains or losses on net investment hedges are included in foreign currency translation adjustments in accumulated other comprehensive loss. As of November 30, 2022 and 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 SONIA plus 0.859% and (ii) £194.1 million notional value to receive £194.1 million at three-month GBP SONIA plus 0.859% and pay €221.8 million at three-month Euro EURIBOR plus 0.808%. These cross-currency interest rate swap contracts expire in August 2027. In conjunction with the phase-out of LIBOR, during 2022 we amended the terms of this cross currency swap such that, effective February 15, 2022, we now pay and receive at GBP SONIA plus 0.859% (previously GBP LIBOR plus 0.740%). As of November 30, 2022, we also had cross currency interest rate swap contracts of $250 million notional value to receive $250 million at USD SOFR plus 0.684% and pay £184.1 million at GBP SONIA plus 0.574% and (ii) £184.1 million notional value to receive £184.1 million at GBP SONIA plus 0.574% and pay €219.2 million at Euro ESTR plus 0.667%, both of which expire in April 2030. 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, 2022 and 2021, we have outstanding interest rate swap contracts for a notional amount of $600 million and $350 million, respectively. The following is a summary of our outstanding interest rate swaps as of November 30, 2022 and 2021 ($ amounts in millions).
| Fair value hedge of changes in fair value of:
| $250 3.25% notes due 2025 |  | $750 3.40% notes due 2027 |  | $500 2.50% notes due 2030 (1)
Notional | $ | 100.0 |  |  | $ | 250.0 |  |  | $ | 250.0 |
Receive rate | 3.25 | % |  | 3.40 | % |  | 2.50 | %
Pay rate | Three-month LIBOR + 1.22% |  | Three-month LIBOR + 0.685% |  | SOFR + 0.684%
Expiration | November 2025 |  | August 2027 |  | April 2030
(1) The $250 million notional swap that expires in April 2030 was entered into during 2022. 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. The following tables disclose the notional amount and fair values of derivative instruments on our consolidated balance sheet:
As of November 30, 2022: |  |  |  |  |  |
(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 | $ | — |  | $ | — |  | Other accrued liabilities | $ | 600.0 |  | $ | 42.4 |
Foreign exchange contracts | Other current assets | 344.9 |  | 11.0 |  | Other accrued liabilities | 215.6 |  | 1.5 |
Cross currency contracts | Other current assets/Other long-term assets | 680.0 |  | 44.5 |  | Other long-term liabilities | 226.1 |  | 8.3 |
Total |  |  | $ | 55.5 |  |  |  | $ | 52.2 |
As of November 30, 2021: |  |  |  |  |  |
(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 |  | $ | 23.1 |  | Other accrued liabilities | $ | — |  | $ | — |
Foreign exchange contracts | Other current assets | 380.8 |  | 8.3 |  | Other accrued liabilities | 202.8 |  | 2.8 |
Cross currency contracts | Other current assets/Other long-term assets | 251.0 |  | 4.4 |  | Other long-term liabilities | 257.5 |  | 8.0 |
Total |  |  | $ | 35.8 |  |  |  | $ | 10.8 |
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, 2022, 2021 and 2020:
Fair value hedges (millions)
| Income statement location | Income (expense)
Derivative | 2022 | 2021 | 2020
Interest rate contracts | Interest expense | $ | 4.0 |  | $ | 8.2 |  | $ | 5.2 |
| Income statement location | Gain (loss) recognized in income |  | Income statement location | Gain (loss) recognized in income
Derivative | 2022 | 2021 | 2020 | Hedged Item | 2022 | 2021 | 2020
Foreign exchange contracts | Other income, net | $ | 6.6 |  | $ | (1.9) |  | $ | (4.0) |  | Intercompany loans | Other income, net | $ | (6.3) |  | $ | 2.9 |  | $ | 3.0 |
Cash flow hedges (millions)
| Gain (loss) recognized in OCI | Income statement location | Gain (loss) reclassified from AOCI
Derivative | 2022 | 2021 | 2020 | 2022 | 2021 | 2020
Interest rate contracts | $ | 18.7 |  | $ | 0.3 |  | $ | — |  | Interest expense, Other income, net | $ | 19.2 |  | $ | 0.5 |  | $ | 0.5 |
Foreign exchange contracts | 5.3 |  | (2.0) |  | 1.9 |  | Cost of goods sold | 1.6 |  | (0.7) |  | 1.6 |
Total | $ | 24.0 |  | $ | (1.7) |  | $ | 1.9 |  |  | $ | 20.8 |  | $ | (0.2) |  | $ | 2.1 |
In March 2022, we entered into treasury lock arrangements with a notional amount totaling $200 million in order to manage our interest rate risk associated with the anticipated issuance of at least $200 million of fixed rate debt by August 2022. These treasury locks had a maturity date of August 12, 2022 and an average fixed rate of 1.89%. We designated these treasury lock arrangements as cash flow hedges with any unrealized gain, prior to settlement, recognized in accumulated other comprehensive income. In July 2022, we settled the $200 million notional treasury locks upon determining we would not issue fixed rate debt but rather enter into the previously described $500 million 364-day revolving credit facility. The proceeds received upon settlement of these treasury lock arrangements were $18.7 million and were recognized in Other income, net in our consolidated income statements for the year ended November 30, 2022. The amount of gain or loss recognized in income on the ineffective portion of derivative instruments is not material. For all cash flow and settled interest rate fair value hedge derivatives, 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 $3.3 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 | 2022 | 2021 | 2020 |  | 2022 | 2021 | 2020
Cross currency contracts | $ | 37.6 |  | $ | 15.5 |  | $ | (20.8) |  | Interest expense | $ | 7.3 |  | $ | 1.5 |  | $ | 3.1 |
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. 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, 2022, 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 https://asc.fasb.org/topic&trid=2229140 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 40 -Section 50 -Paragraph 5 -Subparagraph (f) -URI https://asc.fasb.org/extlink&oid=126731327&loc=d3e90205-114008 + Details
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