Derivatives

Our business is exposed to various market risks, including interest rate and foreign currency risks. We utilize derivative instruments to help us manage these risks. We do not hold or issue derivatives for speculative purposes.

Interest Rate Swaps

To mitigate interest rate exposure on our outstanding Credit Facility debt, we utilize the following derivative instruments:


•	Interest rate derivative contracts that swap $100 million of floating rate debt at a 1.80 percent weighted-average fixed interest rate, plus the applicable Credit Facility spread. We entered into these swap contracts in 2011, and they expire in July 2015.


•	Forward-starting interest rate derivative contracts that swap $400 million of floating rate debt at a 2.86 percent weighted-average fixed interest rate, plus the applicable Credit Facility spread. We entered into these swap contracts in November 2013 and January 2014. The contracts take effect between May 2015 and November 2015, with respective expiration dates between May 2020 and November 2020.

Because the terms of these swaps and the variable rate debt (as amended or extended over time) coincide, we do not expect any ineffectiveness. We have designated and accounted for these instruments as cash flow hedges, with changes in fair value being deferred in accumulated other comprehensive loss in our consolidated balance sheets.

Foreign Currency Forwards

To mitigate foreign currency exposure, we utilize the following derivative instruments:

•

Foreign currency forward contracts that hedge the foreign currency exposure on Euro-denominated receipts in our U.S. Dollar functional entities. We utilize a rolling hedging program to mitigate a portion of this exposure. Because the critical terms of the forward contracts and the forecasted cash flows coincide, we do not expect any ineffectiveness associated with these contracts. We have designated and accounted for these derivatives as cash flow hedges, with changes in fair value being deferred in AOCI in our consolidated balance sheets. The notional amount of outstanding foreign currency forwards under these agreements as of August 31, 2014 and November 30, 2013 was approximately $15.0 million and $15.9 million, respectively.

•

Short-term foreign currency forward contracts that manage market risks associated with fluctuations in balances that are denominated in currencies other than the local functional currency. We account for these forward contracts at fair value and recognize the associated realized and unrealized gains and losses in other expense (income), net, since we have not designated these contracts as hedges for accounting purposes. The following table summarizes the notional amounts of these outstanding foreign currency forward contracts as of August 31, 2014 and November 30, 2013 (in thousands):



	August 31, 2014		November 30, 2013
Notional amount of currency pair:
Contracts to buy USD with CAD	$	58,734	$	142,606
Contracts to buy CAD with GBP	C$	—	C$	28,741
Contracts to buy USD with EUR	$	13,401	$	17,522
Contracts to buy CHF with USD	$	14,373	$	15,308
Contracts to buy GBP with EUR	£	4,815	£	5,866
Contracts to buy USD with GBP	£	4,797	£	1,863

Fair Value of Derivatives

Since our derivative instruments are not listed on an exchange, we have evaluated fair value by reference to similar transactions in active markets; consequently, we have classified all of our derivative instruments within Level 2 of the fair value measurement hierarchy. The following table shows the classification, location, and fair value of our derivative instruments as of August 31, 2014 and November 30, 2013 (in thousands):



	Fair Value of Derivative Instruments
	August 31, 2014		November 30, 2013		Balance Sheet Location
Assets:
Derivatives designated as accounting hedges:
Foreign currency forwards	$	547	$	8	Other current assets
Derivatives not designated as accounting hedges:
Foreign currency forwards	418		1,548		Other current assets
Total	$	965	$	1,556

Liabilities:
Derivatives designated as accounting hedges:
Interest rate swaps	$	11,601	$	3,366	Other accrued expenses
Foreign currency forwards	—		423		Other accrued expenses
Derivatives not designated as accounting hedges:
Foreign currency forwards	291		957		Other accrued expenses
Total	$	11,892	$	4,746

The net gain on foreign currency forwards that are not designated as hedging instruments for the three and nine months ended August 31, 2014 and 2013, respectively, was as follows (in thousands):



	Amount of gain recognized in the consolidated statements of operations
	Three months ended August 31,				Nine months ended August 31,
	2014		2013		2014		2013		Location on consolidated statements of operations
Foreign currency forwards	$	392	$	1,835	$	1,323	$	5,790	Other expense, net

The following table provides information about the cumulative amount of unrecognized hedge losses recorded in AOCI as of August 31, 2014 and November 30, 2013, as well as the activity on our cash flow hedging instruments for the three and nine months ended August 31, 2014 and 2013, respectively (in thousands):



	Three months ended August 31,						Nine months ended August 31,
	2014			2013			2014			2013
Beginning balance	$	(6,963	)	$	(1,664	)	$	(2,199	)	$	(2,225	)
Amount of gain (loss) recognized in AOCI on derivative:
Interest rate swaps	(366		)	9			(5,645		)	42
Foreign currency forwards	212			67			41			152
Amount of loss (gain) reclassified from AOCI into income:
Interest rate swaps ⁽¹⁾	239			235			713			696
Foreign currency forwards ⁽¹⁾	191			3			403			(15		)
Ending balance	$	(6,687	)	$	(1,350	)	$	(6,687	)	$	(1,350	)

(1) Amounts reclassified from AOCI into income related to interest rate swaps are recorded in interest expense, and amounts reclassified from AOCI into income related to foreign currency forwards are recorded in revenue.

The unrecognized gains relating to the foreign currency forwards are expected to be reclassified into revenue within the next 12 months, and approximately $1.3 million of the unrecognized losses relating to the interest rate swaps are expected to be reclassified into interest expense within the next 12 months.