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Derivative Instruments | 6 Months Ended
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May 31, 2023
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
DERIVATIVE INSTRUMENTS | DERIVATIVE INSTRUMENTS: In the ordinary course of business, the Company is exposed to foreign currency risk, interest rate risk, equity risk, commodity price changes and credit risk. The Company enters into transactions, and owns monetary assets and liabilities, that are denominated in currencies other than the legal entity’s functional currency. The Company may enter into forward contracts, option contracts, swaps, or other derivative instruments to offset a portion of the risk on expected future cash flows, earnings, net investments in certain international subsidiaries and certain existing assets and liabilities. However, the Company may choose not to hedge certain exposures for a variety of reasons including, but not limited to, accounting considerations and the prohibitive economic cost of hedging particular exposures. There can be no assurance the hedges will offset more than a portion of the financial impact resulting from movements in foreign currency exchange or interest rates. The Company does not use derivative instruments to cover equity risk and credit risk. The Company’s hedging program is not used for trading or speculative purposes. All derivatives are recognized on the balance sheet at their fair value. Changes in the fair value of derivatives are recorded in the Consolidated Statements of Operations, or as a component of AOCI in the Consolidated Balance Sheets, as discussed below. Cash Flow Hedges The Company uses interest rate swap derivative contracts to economically convert a portion of its variable-rate debt to fixed-rate debt. Gains and losses on cash flow hedges are recorded in AOCI until the hedged item is recognized in earnings. Deferred gains and losses associated with cash flow hedges of interest payments are recognized in “Interest expense and finance charges, net” in the same period as the related expense is recognized. Derivative instruments designated as cash flow hedges must be de-designated as hedges when it is probable the forecasted hedged transaction will not occur in the initially identified time period or within a subsequent two-month time period. Deferred gains and losses in AOCI associated with such derivative instruments are reclassified into earnings in the period of de-designation. Any subsequent changes in fair value of such derivative instruments are recorded in earnings unless they are re-designated as hedges of other transactions. The Company classifies cash flows related to the settlement of its cash flow hedges as operating activities in the Consolidated Statements of Cash Flows. The Company terminated its remaining interest rate swaps in May 2023 and had no interest rate swaps designated as cash flow hedges outstanding as of May 31, 2023. Net Investment Hedges The Company has entered into foreign currency forward contracts to hedge a portion of its net investment in euro denominated foreign operations which are designated as net investment hedges. The Company entered into the net investment hedges to offset the risk of change in the U.S. dollar value of the Company's investment in a euro functional subsidiary due to fluctuating foreign exchange rates. Gains and losses on the net investment hedges have been recorded in AOCI and will remain in AOCI until the sale or substantial liquidation of the underlying assets of the Company's investment. The initial fair value of hedge components excluded from the assessment of effectiveness is being recognized in the Consolidated Statements of Operations under a systematic and rational method over the life of the hedging instrument. The Company classifies cash flows related to the settlement of its net investment hedges as investing activities in the Consolidated Statements of Cash Flows. Non-Designated Derivatives The Company uses short-term forward contracts to offset the foreign exchange risk of assets and liabilities denominated in currencies other than the functional currency of the respective entities. These contracts, which are not designated as hedging instruments, mature or settle within twelve months. Derivatives that are not designated as hedging instruments are adjusted to fair value through earnings in the financial statement line item to which the derivative relates. Fair Values of Derivative Instruments in the Consolidated Balance Sheets The fair values of the Company’s derivative instruments are disclosed in Note 7 - Fair Value Measurements and summarized in the table below:
|  | Value as of
Balance Sheet Line Item |  | May 31, 2023 |  | November 30, 2022
Derivative instruments not designated as hedging instruments: |  |  |  |
Foreign exchange forward contracts (notional value) |  | $ | 1,649,587 |  |  | $ | 1,853,188 |
Other current assets |  | 14,548 |  |  | 9,597 |
Other accrued liabilities |  | 6,123 |  |  | 16,085 |
Derivative instruments designated as cash flow hedges: |  |  |  |
Interest rate swaps (notional value) |  | $ | — |  |  | $ | 1,000,000 |
Other current assets |  | — |  |  | 17,222 |
Derivative instruments designated as net investment hedges: |  |  |  |
Foreign currency forward contracts (notional value) |  | $ | 520,000 |  |  | $ | 523,750 |
Other accrued liabilities |  | 451 |  |  | 255 |
Other long-term liabilities |  | 26,038 |  |  | 16,420 |
The Company terminated interest rate swaps with a notional value of $400.0 million in December 2021 ("the December 2021 Terminations"). Cumulative losses from the December 2021 Terminations totaled $16.0 million and are being reclassified from AOCI to “Interest expense and finance charges, net” over the period through September 2023. The Company terminated the remaining interest rate swaps with a notional value of $1.0 billion in May 2023 (the "May 2023 Terminations"). Cumulative gains from the May 2023 Terminations totaled $10.0 million and are being reclassified from AOCI to "Interest expense and finance charges, net" over the period through October 2023. Volume of Activity The notional amounts of foreign exchange forward contracts represent the gross amounts of foreign currency, including, principally, the Australian dollar, Brazilian real, British pound, Canadian dollar, Chinese yuan, Czech koruna, Danish krone, Euro, Indian rupee, Indonesian rupiah, Japanese yen, Mexican peso, Norwegian krone, Philippine peso, Polish zloty, Singapore dollar, Swedish krona, Swiss franc and Turkish lira that will be bought or sold at maturity. The notional amounts for outstanding derivative instruments provide one measure of the transaction volume outstanding and do not represent the amount of the Company’s exposure to credit or market loss. The Company’s exposure to credit loss and market risk will vary over time as currency and interest rates change. The Effect of Derivative Instruments on AOCI and the Consolidated Statements of Operations The following table shows the gains and losses, before taxes, of the Company’s derivative instruments designated as cash flow hedges and net investment hedges in Other Comprehensive Income (“OCI”) and not designated as hedging instruments in the Consolidated Statements of Operations for the periods presented:
|  |  | Three Months Ended |  | Six Months Ended
| Location of Gains (Losses) in Income |  | May 31, 2023 |  | May 31, 2022 |  | May 31, 2023 |  | May 31, 2022
Derivative instruments not designated as hedging instruments: |  |  |  |  |  |  |  |  |
(Losses) gains recognized from foreign exchange contracts, net⁽¹⁾ | Cost of revenue |  | $ | (7,611) |  |  | $ | 14,013 |  |  | $ | (24,512) |  |  | $ | 4,118 |
Losses recognized from foreign exchange contracts, net⁽¹⁾ | Other expense, net |  | (2,662) |  |  | (949) |  |  | (5,225) |  |  | (1,159) |
Total |  |  | $ | (10,273) |  |  | $ | 13,064 |  |  | $ | (29,737) |  |  | $ | 2,959 |
Derivative instruments designated as cash flow hedges: |  |  |  |  |  |  |  |  |
(Losses) gains recognized in OCI on interest rate swaps |  |  | $ | (217) |  |  | $ | 14,232 |  |  | $ | 937 |  |  | $ | 26,051 |
Gains (losses) on interest rate swaps reclassified from AOCI into income | Interest expense and finance charges, net |  | $ | 2,445 |  |  | $ | (9,038) |  |  | $ | 3,583 |  |  | $ | (18,998) |
Derivative instruments designated as net investment hedges: |  |  |  |  |  |  |  |  |
(Losses) recognized in OCI on foreign exchange forward contracts⁽²⁾ |  |  | $ | (6,632) |  |  | $ | — |  |  | $ | (14,657) |  |  | $ | — |
Gains recognized in income (amount excluded from effectiveness testing)⁽²⁾ | Interest expense and finance charges, net |  | $ | 2,308 |  |  | $ | — |  |  | $ | 4,586 |  |  | $ | — |
____________________________ (1) The gains and losses largely offset the currency gains and losses that resulted from changes in the assets and liabilities denominated in nonfunctional currencies. (2) The Company had no net investment hedges outstanding during the three and six months ended May 31, 2022. Except for the net investment hedge amount for fiscal 2023 shown above, there were no material gain or loss amounts excluded from the assessment of effectiveness. Existing net gains in AOCI that are expected to be reclassified into earnings in the normal course of business within the next twelve months are $7.1 million. Credit exposure for derivative financial instruments is limited to the amounts, if any, by which the counterparties’ obligations under the contracts exceed the Company’s obligations to the counterparties. The Company manages the potential risk of credit losses through careful evaluation of counterparty credit standing and selection of counterparties from a limited group of financial institutions.

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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://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 40 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Subparagraph (f) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480237/815-40-50-5 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 5C -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480434/815-10-50-5C Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 815 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//815/tableOfContent + Details
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