Financial Instruments

12 Months Ended

Nov. 30, 2021

Derivative Instrument Detail [Abstract]

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, 2021, we had foreign currency exchange contracts to purchase or sell $583.6 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. Hedge ineffectiveness was not material. All foreign currency exchange contracts outstanding at November

30, 2021 have durations of less than 18 months, including $209.7 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. 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 exposure to currency fluctuations in certain intercompany loans between subsidiaries as well as currency exposure to third-party non-functional currency assets or liabilities. The notional value of these contracts was $449.3 million and $212.3 million at November 30, 2021 and 2020, respectively. 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 November 30, 2021 and 2020, 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.

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, 2021 and 2020, we have outstanding interest rate swap contracts for a notional amount of $350.0 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%. These swaps, which expire in November 2025, 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.

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, 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
As of November 30, 2020:
(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	$	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 other comprehensive income (OCI), accumulated other comprehensive income (AOCI) and our consolidated income statement for the years ended November 30, 2021, 2020 and 2019:


Fair value hedges (millions)
	Income statement location	Income (expense)
Derivative	Income statement location	2021		2020		2019
Interest rate contracts	Interest expense	$	8.2	$	5.2	$	—


	Income statement location	Gain (loss) recognized in income							Income statement location	Gain (loss) recognized in income
Derivative	Income statement location	2021		2020		2019		Hedged Item	Income statement location	2021		2020		2019
Foreign exchange contracts	Other income, net	$	(1.9)	$	(4.0)	$	0.2	Intercompany loans	Other income, net	$	2.9	$	3.0	$	(0.9)


Cash flow hedges (millions)
	Gain (loss) recognized in OCI						Income statement location	Gain (loss) reclassified from AOCI
Derivative	2021		2020		2019		Income statement location	2021		2020		2019
Interest rate contracts	$	0.3	$	—	$	—	Interest expense	$	0.5	$	0.5	$	0.5
Foreign exchange contracts	(2.0)		1.9		(0.2)		Cost of goods sold	(0.7)		1.6		1.6
Total	$	(1.7)	$	1.9	$	(0.2)		$	(0.2)	$	2.1	$	2.1

The amount of gain or loss recognized in income on the ineffective portion of derivative instruments is not material. 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 $0.2 million decrease to earnings.


Net investment hedges (millions)
	Gain (loss) recognized in OCI						Income statement location	Gain (loss) excluded from the assessment of hedge effectiveness
Derivative	2021		2020		2019			2021		2020		2019
Cross currency contracts	$	15.5	$	(20.8)	$	1.1	Interest expense	$	1.5	$	3.1	$	5.4

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, 2021, 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.