Derivative Instruments and Hedging Activities

12 Months Ended

Nov. 29, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments and Hedging Activities

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

The Company is exposed to various market risks that arise from transactions entered into in the normal course of business. The Company selectively uses derivative instruments to manage certain such risks, including market risks associated with changes in foreign currency exchange rates and changes in interest rates. The Company does not hold or issue derivatives for trading or speculative purposes. A description of each type of derivative utilized by the Company to manage risk is included below. In addition, refer to Note E for information related to the fair value measurements and valuation methods utilized by the Company for each derivative type.

The Company may elect to designate certain derivatives as hedging instruments under the accounting standards for derivatives and hedging. The Company formally documents all relationships between designated hedging instruments and hedged items as well as its risk management objective and strategy for undertaking hedge transactions.

All derivatives are recognized on the balance sheet at fair value and classified based on the instrument's maturity date. The total notional amount of derivatives outstanding at November 30, 2014 was $97,479, which consists of undesignated derivative instruments to manage translational foreign exchange risk related to inter-company advances, and derivatives designated as fair value hedges to manage the risk of changes in foreign currency exchange rates on certain firm sales commitments expected to be settled at future dates.

The following table presents the fair values of derivative instruments included within the Consolidated Balance Sheets at November 30, 2014 and 2013:

	2014		2013
Prepaid expenses and other current assets
Designated as hedging instruments:
Foreign exchange contracts	—		—
Unrecognized firm sales commitments	248		—
Total designated	$	248	$	—
Not designated as hedging instruments:
Foreign exchange contracts	362		—
Total not designated	$	362	$	—
Total derivatives	$	610	$	—
Accrued liabilities
Designated as hedging instruments:
Foreign exchange contracts	245		—
Unrecognized firm sales commitments	—		—
Total designated	$	245	$	—
Not designated as hedging instruments:
Foreign exchange contracts	122		—
Total not designated	$	122	$	—
Total derivatives	$	367	$	—

The following table presents the amounts affecting the Consolidated Statements of Earnings for the years ended November 30, 2014 and 2013:

	2014			2013
Fair value hedges
Foreign exchange contracts - Selling and administrative expenses	$	(250	)	$	—
Unrecognized firm sales commitments - Selling and administrative expenses	252			—
Total designated	$	2		$	—
Not designated as hedges
Foreign exchange contracts - Selling and administrative expenses	$	(135	)	$	—
Foreign exchange contracts - Other, net income (expense)	2,421			—
Total not designated	$	2,286		$	—

Fair Value Hedges

The Company is exposed to changes in foreign currency exchange rates on certain unrecognized firm sales commitments expected to be settled at future dates. The Company may use foreign currency forward contracts to manage certain such risks. The Company designates each such contract as a fair value hedge from the date the firm sales commitment and derivative contract are entered into through the date the related sale occurs, at which point the foreign currency forward contract is de-designated as a fair value hedging instrument. All realized and unrealized gains or losses on such foreign currency forward contracts are recognized in income as incurred. Changes in the fair value of the related unrecognized firm sales commitments that arise due to fluctuations in foreign currency exchange rates are also reflected in income and as an asset or liability on the Consolidated Balance Sheets.

The total notional amount of foreign currency contracts designated as fair value hedges outstanding at November 30, 2014 was $6,013. There were no such fair value hedges entered into during the year ended November 30, 2013. The cash flows associated with the periodic settlement of the Company's fair value hedges are reflected as a component of Cash flows from operating activities in the Consolidated Statements of Cash Flows.

Undesignated Derivative Instruments

The Company is exposed to changes in foreign currency exchange rates on certain inter-company advances. The Company may use foreign currency forward contracts to manage certain such risks. These forward contracts are not designated as hedging instruments under the accounting standards for derivatives and hedging. These undesignated instruments are recorded at fair value as an asset or liability on the Consolidated Balance Sheets and all realized and unrealized gains or losses on such foreign currency forward contracts are recognized in income as incurred.

The total notional amount of such foreign currency contracts not designated as hedging instruments outstanding as of November 30, 2014 was $87,440. Additionally, the total notional amount of foreign currency contracts de-designated as fair value hedges outstanding at November 30, 2014 was $4,026. There were no such foreign currency contracts entered into during the year ended November 30, 2013. The cash flows associated with the periodic settlement of the Company's undesignated derivative instruments are reflected as a component of Cash flows from operating activities in the Consolidated Statements of Cash Flows.

Counterparty credit risk

By using derivative instruments to manage certain of its risk exposures, the Company is subject, from time to time, to credit risk and market risk on such derivative instruments. Credit risk arises from the potential failure of the counterparty to perform under the terms of the derivative instrument. When the fair value of a derivative instrument is positive, the counterparty owes the Company, which creates credit risk for the Company. The Company mitigates this credit risk by entering into transactions with only creditworthy counterparties. Market risk arises from the potential adverse effects on the value of the derivative that result from changes in foreign currency exchange rates or interest rates, depending on the nature of the derivative. The Company mitigates this market risk by establishing and monitoring parameters that limit the types and degrees of market risk that may be undertaken.