Fair Value Measurements, Derivative Instruments and Hedging Activities (Tables)

9 Months Ended

Aug. 31, 2018

Estimated Carrying and Fair Values of Financial Instrument Assets and Liabilities Not Measured at Fair Value on a Recurring Basis

Financial Instruments that are not Measured at Fair Value on a Recurring Basis



	August 31, 2018								November 30, 2017
	Carrying Value		Fair Value						Carrying Value		Fair Value
(in millions)	Carrying Value		Level 1		Level 2		Level 3		Carrying Value		Level 1		Level 2		Level 3
Assets
Long-term other assets (a)	$	136	$	—	$	37	$	98	$	126	$	—	$	49	$	75
Total	$	136	$	—	$	37	$	98	$	126	$	—	$	49	$	75
Liabilities
Fixed rate debt (b)	$	5,308	$	—	$	5,463	$	—	$	5,588	$	—	$	5,892	$	—
Floating rate debt (b)	4,372		—		4,409		—		3,658		—		3,697		—
Total	$	9,680	$	—	$	9,872	$	—	$	9,246	$	—	$	9,589	$	—


(a)	Long-term other assets are comprised of notes receivable. The fair values of our Level 2 notes receivable were based on estimated future cash flows discounted at appropriate market interest rates. The fair values of our Level 3 notes receivable were estimated using risk-adjusted discount rates.

(b)

The debt amounts above do not include the impact of interest rate swaps or debt issuance costs. The fair values of our publicly-traded notes were based on their unadjusted quoted market prices in markets that are not sufficiently active to be Level 1 and, accordingly, are considered Level 2. The fair values of our other debt were estimated based on current market interest rates being applied to this debt.

Estimated Fair Value and Basis of Valuation of Financial Instrument Assets and Liabilities Measured at Fair Value on Recurring Basis

Financial Instruments that are Measured at Fair Value on a Recurring Basis



	August 31, 2018						November 30, 2017
(in millions)	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Assets
Cash and cash equivalents	$	526	$	—	$	—	$	395	$	—	$	—
Restricted cash	15		—		—		26		—		—
Marketable securities held in rabbi trusts (a)	6		—		—		97		—		—
Derivative financial instruments	—		5		—		—		15		—
Total	$	547	$	5	$	—	$	518	$	15	$	—
Liabilities
Derivative financial instruments	$	—	$	40	$	—	$	—	$	161	$	—
Total	$	—	$	40	$	—	$	—	$	161	$	—


(a)	The use of marketable securities held in rabbi trusts is restricted to funding certain deferred compensation and non-qualified U.S. pension plans.

Reconciliation of Changes in Carrying Amounts of Goodwill

Valuation of Goodwill and Trademarks



	Goodwill
(in millions)	NAA (a) Segment		EA (b) Segment			Total
At November 30, 2017	$	1,898	$	1,069		$	2,967
Foreign currency translation adjustment	—		(18		)	(18		)
At August 31, 2018	$	1,898	$	1,050		$	2,949

(a) North America & Australia (“NAA”)

(b) Europe & Asia (“EA”)

Reconciliation of Changes in Carrying Amounts of Trademarks



	Trademarks
(in millions)	NAA Segment		EA Segment			Total
At November 30, 2017	$	927	$	252		$	1,179
Foreign currency translation adjustment	—		(5		)	(5		)
At August 31, 2018	$	927	$	247		$	1,174

Estimated Fair Values of Derivative Financial Instruments and Location in the Consolidated Balance Sheets

Derivative Instruments and Hedging Activities



(in millions)	Balance Sheet Location	August 31, 2018		November 30, 2017
Derivative assets
Derivatives designated as hedging instruments
Net investment hedges (a)	Prepaid expenses and other	$	5	$	3
Foreign currency zero cost collars (b)	Prepaid expenses and other	—		12
Total derivative assets		$	5	$	15
Derivative liabilities
Derivatives designated as hedging instruments
Net investment hedges (a)	Accrued liabilities and other	$	—	$	13
	Other long-term liabilities	13		17
Interest rate swaps (c)	Accrued liabilities and other	8		10
	Other long-term liabilities	13		17
		35		57
Derivatives not designated as hedging instruments
Fuel (d)	Accrued liabilities and other	6		95
	Other long-term liabilities	—		9
		6		104
Total derivative liabilities		$	40	$	161


(a)	At August 31, 2018 and November 30, 2017, we had foreign currency swaps totaling $160 million and $324 million, respectively, that are designated as hedges of our net investments in foreign operations with a euro-denominated functional currency. At August 31, 2018, this foreign currency swap settles in September 2019.


(b)	At August 31, 2018 and November 30, 2017, we had foreign currency derivatives consisting of foreign currency zero cost collars that are designated as foreign currency cash flow hedges for a portion of our euro-denominated shipbuilding payments. See “Newbuild Currency Risks” below for additional information regarding these derivatives.

(c)

We have euro interest rate swaps designated as cash flow hedges whereby we receive floating interest rate payments in exchange for making fixed interest rate payments. These interest rate swap agreements effectively changed $422 million at August 31, 2018 and $479 million at November 30, 2017 of EURIBOR-based floating rate euro debt to fixed rate euro debt. At August 31, 2018, these interest rate swaps settle through March 2025.


(d)	At August 31, 2018 and November 30, 2017, we had fuel derivatives consisting of zero cost collars on Brent crude oil (“Brent”) to cover a portion of our estimated fuel consumption through 2018. See “Fuel Price Risks” below for additional information regarding these derivatives.

Offsetting Derivative Instruments

Our derivative contracts include rights of offset with our counterparties. We have elected to net certain of our derivative assets and liabilities within counterparties.



	August 31, 2018
(in millions)	Gross Amounts		Gross Amounts Offset in the Balance Sheet		Total Net Amounts Presented in the Balance Sheet		Gross Amounts not Offset in the Balance Sheet			Net Amounts
Assets	$	5	$	—	$	5	$	(5	)	$	—
Liabilities	$	40	$	—	$	40	$	(5	)	$	36

	November 30, 2017
(in millions)	Gross Amounts		Gross Amounts Offset in the Balance Sheet		Total Net Amounts Presented in the Balance Sheet		Gross Amounts not Offset in the Balance Sheet			Net Amounts
Assets	$	15	$	—	$	15	$	(8	)	$	7
Liabilities	$	161	$	—	$	161	$	(8	)	$	153

Derivatives Qualifying and Designated as Hedging Instruments Recognized in Other Comprehensive Income

The effective gain (loss) portions of our derivatives qualifying and designated as hedging instruments recognized in other comprehensive income were as follows:



	Three Months Ended August 31,						Nine Months Ended August 31,
(in millions)	2018			2017			2018			2017
Net investment hedges	$	3		$	(17	)	$	13		$	(33	)
Foreign currency zero cost collars – cash flow hedges	$	(1	)	$	17		$	(11	)	$	52
Interest rate swaps – cash flow hedges	$	1		$	1		$	5		$	5

Unrealized and Realized Gains (Losses) on Fuel Derivatives, Net



	Three Months Ended August 31,						Nine Months Ended August 31,
(in millions)	2018			2017			2018			2017
Unrealized gains on fuel derivatives, net	$	8		$	65		$	90		$	134
Realized losses on fuel derivatives, net	(4		)	(57		)	(29		)	(153		)
Gains (losses) on fuel derivatives, net	$	4		$	7		$	61		$	(19	)

Outstanding Fuel Derivatives

At August 31, 2018, for the following newbuild, we had foreign currency zero cost collars for a portion of euro-denominated shipyard payments. These collars are designated as cash flow hedges.



	Entered Into	Matures in	Weighted-Average Floor Rate		Weighted- Average Ceiling Rate
Nieuw Statendam	2016	November 2018	$	1.05	$	1.25