Derivative Instruments and Hedging

3 Months Ended

Feb. 27, 2016

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments and Hedging

DERIVATIVE INSTRUMENTS AND HEDGING

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 5 for information related to the fair value measurements 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 February 27, 2016 and November 28, 2015 was $45,499 and $48,797 respectively, 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 Condensed Balance Sheets at February 27, 2016 and November 28, 2015:

	February 27, 2016		November 28, 2015
Prepaid expenses and other current assets
Designated as hedging instruments:
Foreign exchange contracts	$	—	$	263
Unrecognized firm sales commitments	358		—
Total designated	$	358	$	263
Not designated as hedging instruments:
Foreign exchange contracts	186		155
Total not designated	$	186	$	155
Total derivatives	$	544	$	418
Accrued liabilities
Designated as hedging instruments:
Foreign exchange contracts	$	361	$	—
Unrecognized firm sales commitments	—		384
Total designated	$	361	$	384
Not designated as hedging instruments:
Foreign exchange contracts	451		40
Total not designated	$	451	$	40
Total derivatives	$	812	$	424

The following table presents the amounts of income (expense) from derivative instruments affecting the Consolidated Condensed Statements of Earnings for the three months endedFebruary 27, 2016 and February 28, 2015:

	February 27, 2016			February 28, 2015
Fair value hedges
Foreign exchange contracts - Selling and administrative expenses	$	(723	)	$	(8	)
Unrecognized firm sales commitments - Selling and administrative expenses	742			14
Total designated	$	19		$	6
Not designated as hedges
Foreign exchange contracts - Selling and administrative expenses	$	(728	)	$	(66	)
Foreign exchange contracts - Other, net income (expense)	4,123			(325		)
Total not designated	$	3,395		$	(391	)

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 Condensed Balance Sheets.

The total notional amount of foreign currency contracts designated as fair value hedges outstanding at February 27, 2016 and November 28, 2015 was $4,405 and $5,326, respectively. 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 Condensed 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 Condensed Balance Sheets and all realized and unrealized gains or losses on such foreign currency forward contracts are recognized in Other, net income on the Consolidated Condensed Statements of Earnings as incurred. The Company intends to settle the underlying inter-company advances in cash, therefore gains and losses on translation of the inter-company advances are also recognized in Other, net on the Consolidated Condensed Statements of Earnings as incurred. 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 Condensed Statements of Cash Flows.

The total notional amount of such foreign currency contracts not designated as hedging instruments outstanding as of February 27, 2016 and November 28, 2015 was $36,215 and $36,259, respectively. During the three months ended February 27, 2016, the Company recorded realized and unrealized gains of $4,123 on such forward currency contracts and losses of $4,187 on translation of the underlying inter-company advances. During the three months ended February 28, 2015, the Company recorded realized and unrealized losses of $325 on such forward currency contracts and losses of $258 on translation of the underlying inter-company advances.

Additionally, the total notional amount of foreign currency contracts de-designated as fair value hedges outstanding at February 27, 2016 and November 28, 2015 was $4,879 and $7,212, respectively.

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.