Financial Instruments

9 Months Ended

Aug. 31, 2015

Derivative Instruments and Hedging Activities Disclosure [Abstract]

FINANCIAL INSTRUMENTS

FINANCING ARRANGEMENTS AND 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 instruments. The use of derivative financial instruments is monitored through regular communication with senior management and the use of written guidelines.

In June 2015, we entered into a five-year $750 million revolving credit facility which will expire in June 2020. The pricing for this credit facility, on a fully drawn basis, is LIBOR plus 0.75%. This credit facility replaces our $600 million revolving credit facility that was due to expire in June 2016.

During the nine months ended August 31, 2015, we have entered into a total of $100 million of forward starting interest rate swap agreements to manage our interest rate risk associated with the anticipated issuance of at least $100 million of fixed rate notes by December 2015. We entered into $50 million of these swap agreements during our second quarter of 2015 and $50 million of these swap agreements during our third quarter of 2015. We intend to cash settle all of these agreements upon issuance of the fixed rate notes thereby effectively locking in the fixed interest rate in effect at the time the swap agreements were initiated. The weighted average fixed rate of these agreements is 2.25%. We have designated these forward starting interest rate swap agreements, which expire on December 18, 2015, as cash flow hedges. The gain or loss on these agreements is deferred in other comprehensive income and will be amortized over the life of the fixed rate notes as a component of interest expense.

As of August 31, 2015, the maximum time frame for our foreign exchange forward contracts is 15 months. The amount of foreign exchange forward contracts greater than 12 months is not material.

For all derivatives, the net amount of accumulated other comprehensive income expected to be reclassified in the next 12 months is $3.2 million as an increase to earnings.

All derivatives are recognized at fair value in the balance sheet and recorded in either current or noncurrent other assets or other accrued liabilities or other long-term liabilities depending upon nature and maturity.

The following table discloses the fair values of derivative instruments on our balance sheet (in millions):

As of August 31, 2015	Asset Derivatives					Liability Derivatives
	Balance Sheet Location	Notional Amount		Fair Value		Balance Sheet Location	Notional Amount		Fair Value
Interest rate contracts	Other current assets	$	150.0	$	3.5	Other accrued liabilities	$	50.0	$	0.2
Foreign exchange contracts	Other current assets	143.7		5.1		Other accrued liabilities	81.2		1.2
Total				$	8.6				$	1.4
As of August 31, 2014	Asset Derivatives					Liability Derivatives
	Balance Sheet Location	Notional Amount		Fair Value		Balance Sheet Location	Notional Amount		Fair Value
Interest rate contracts	Other current assets	$	100.0	$	7.3
Foreign exchange contracts	Other current assets	105.9		1.6		Other accrued liabilities	$	104.6	$	0.8
Total				$	8.9				$	0.8
As of November 30, 2014	Asset Derivatives					Liability Derivatives
	Balance Sheet Location	Notional Amount		Fair Value		Balance Sheet Location	Notional Amount		Fair Value
Interest rate contracts	Other current assets	$	100.0	$	7.4
Foreign exchange contracts	Other current assets	106.3		4.9		Other accrued liabilities	$	156.4	$	1.4
Total				$	12.3				$	1.4

The following tables disclose the impact of derivative instruments on our other comprehensive income (OCI), accumulated other comprehensive income (AOCI) and our income statement for the three and nine month periods ended August 31, 2015 and 2014 (in millions):

Fair Value Hedges -
Derivative	Income statement location	Expense
		For the three months ended August 31, 2015		For the three months ended August 31, 2014		For the nine months ended August 31, 2015		For the nine months ended August 31, 2014
Interest rate contracts	Interest  expense	$	1.2	$	1.3	$	3.7	$	3.8

Cash Flow Hedges –
For the three months ended August 31,
Derivative	Gain or (Loss) recognized in OCI					Income statement location	Gain or (Loss) reclassified from AOCI
	2015			2014			2015			2014
Interest rate contracts	$	(0.2	)	$	—	Interest expense	$	—		$	—
Foreign exchange contracts	1.6			1.1		Cost of goods sold	2.1			(0.3		)
Total	$	1.4		$	1.1		$	2.1		$	(0.3	)
Cash Flow Hedges –
For the nine months ended August 31,
Derivative	Gain or (Loss) recognized in OCI					Income statement location	Gain or (Loss) reclassified from AOCI
	2015			2014			2015			2014
Interest rate contracts	$	0.8		$	—	Interest expense	$	(0.1	)	$	(0.1	)
Foreign exchange contracts	4.7			0.6		Cost of goods sold	5.4			(0.8		)
Total	$	5.5		$	0.6		$	5.3		$	(0.9	)

The amount of gain or loss recognized in income on the ineffective portion of derivative instruments is not material. The amounts noted in the tables above for OCI do not include any adjustments for the impact of deferred income taxes.