Financial Instruments

6 Months Ended

May 31, 2024

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Financial Instruments

FINANCIAL INSTRUMENTS

As of May 31, 2024, we maintained a 364-day $500 million revolving credit facility, which was entered into in June 2023 and expired in June 2024. We continue to maintain a committed five-year $1.5 billion revolving credit facility which will expire in June 2026.

We use derivative financial instruments to enhance our ability to manage risk, including foreign currency, net investment 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 exchange risk. 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. We assess 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.

The following is a summary of the notional amounts of outstanding foreign currency exchange contracts as of May 31, 2024 and November 30, 2023 (in millions):

	May 31, 2024		November 30, 2023
Fair value hedges	$	824.9	$	765.4
Cash flow hedge	114.7		235.0
Total	$	939.6	$	1,000.4

All of these contracts were designated as hedges of foreign currency denominated assets or liabilities or hedges of anticipated purchases denominated in a foreign currency. Hedge ineffectiveness was not material. All foreign currency exchange contracts outstanding at May 31, 2024 have durations of less than 18 months, including $233.1 million of notional contracts that have an initial duration of less than one month and are used to hedge short-term cash flow funding.

Contracts which are designated as hedges of foreign currency denominated assets are considered fair value hedges. These foreign currency exchange contracts manage both exposure to currency fluctuations in certain intercompany loans between subsidiaries as well as currency exposure to third-party non-functional currency assets or liabilities. 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. Contracts which are designated as hedges of anticipated purchases denominated in a foreign currency (generally purchases of inventory 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.

We also utilize cross currency interest rate swap contracts that are designated as net investment hedges. Gains or losses on net investment hedges, exclusive of interest accruals, are included in foreign currency translation adjustments in accumulated other comprehensive loss. We exclude the interest accruals on cross-currency interest rate swap contracts from the assessment and measurement of hedge effectiveness. We recognize the interest accruals on cross-currency interest rate swap contracts within interest expense.

Interest rate risk. We finance a portion of our operations with both fixed and variable rate debt instruments, principally commercial paper, notes and bank loans. We utilize interest rate derivative contracts, including interest rate swap agreements, to minimize worldwide financing costs and to achieve a desired mix of variable and fixed rate debt.

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

	Asset Derivatives					Liability Derivatives
	Balance sheet location	Notional amount		Fair value		Balance sheet location	Notional amount		Fair value
As of May 31, 2024
Interest rate contracts	Other current assets / Other long-term assets	$	—	$	—	Other accrued liabilities / Other long-term liabilities	$	600.0	$	53.8
Foreign exchange contracts	Other current assets	260.5		2.4		Other accrued liabilities	679.1		9.0
Cross currency contracts	Other current assets / Other long-term assets	722.1		27.1		Other long-term liabilities	237.8		5.0
Total				$	29.5				$	67.8
As of November 30, 2023
Interest rate contracts	Other current assets / Other long-term assets	$	—	$	—	Other accrued liabilities / Other long-term liabilities	$	600.0	$	52.8
Foreign exchange contracts	Other current assets	161.3		2.5		Other accrued liabilities	839.1		16.0
Cross currency contracts	Other current assets / Other long-term assets	719.6		24.6		Other long-term liabilities	238.9		7.5
Total				$	27.1				$	76.3

The following tables disclose the impact of derivative instruments on our other comprehensive income (OCI), accumulated other comprehensive loss (AOCI) and our consolidated income statement for the three and six months ended May 31, 2024 and 2023 (in millions):

Fair Value Hedges
Derivative	Income statement location	(Expense) income
		Three months ended May 31, 2024		Three months ended May 31, 2023		Six months ended May 31, 2024		Six months ended May 31, 2023
Interest rate contracts	Interest expense	$	(5.1)	$	(4.0)	$	(10.2)	$	(7.7)

	Income statement location	Gain (loss) recognized in income					Income statement location	Gain (loss) recognized in income
Derivative		2024		2023		Hedged item		2024		2023
Three months ended May 31,
Foreign exchange contracts	Other income, net	$	(3.8)	$	(6.5)	Intercompany loans	Other income, net	$	2.5	$	7.2
Six months ended May 31,
Foreign exchange contracts	Other income, net	$	(6.7)	$	(5.7)	Intercompany loans	Other income, net	$	3.9	$	7.1

The gains (losses) recognized on fair value hedges relating to currency exposure on third-party non-functional currency assets or liabilities were not material during the three and six months ended May 31, 2024 and 2023.

Cash Flow Hedges
Derivative	Gain (loss) recognized in OCI				Income statement location	Gain (loss) reclassified from AOCI
	2024		2023			2024		2023
Three months ended May 31,
Interest rate contracts	$	—	$	(2.6)	Interest expense	$	(0.1)	$	0.1
Foreign exchange contracts	(0.1)		(1.3)		Cost of goods sold	0.2		(0.1)
Total	$	(0.1)	$	(3.9)		$	0.1	$	—
Six months ended May 31,
Interest rate contracts	$	—	$	(2.6)	Interest expense	$	(0.3)	$	0.2
Foreign exchange contracts	(0.3)		(2.4)		Cost of goods sold	1.5		(1.3)
Total	$	(0.3)	$	(5.0)		$	1.2	$	(1.1)

As of May 31, 2024, the net amount of accumulated other comprehensive loss associated with all cash flow and settled interest rate cash flow hedge derivatives expected to be reclassified in the next 12 months is $0.5 million as a decrease to earnings.

Net Investment Hedges
Derivative	Gain (loss) recognized in OCI				Income statement location	Gain (loss) excluded from the assessment of hedge effectiveness
	2024		2023			2024		2023
Three months ended May 31,
Cross currency contracts	$	(0.9)	$	(3.8)	Interest expense	$	2.4	$	2.9
Six months ended May 31,
Cross currency contracts	$	5.0	$	(9.6)	Interest expense	$	4.6	$	6.2

For all net investment hedges, no amounts have been reclassified out of accumulated other comprehensive loss. The amounts noted in the tables above for OCI do not include any adjustments for the impact of deferred income taxes.

Since the third quarter of 2023, we have maintained a nonrecourse accounts receivable sale program whereby certain eligible U.S. receivables are sold to a third-party financial institution in exchange for cash. The program provides us with an additional means for managing liquidity. Under the terms of the arrangement, we act as the collecting agent on behalf of the financial institution. We account for the transfer of receivables as a sale at the point control is transferred through derecognition of the receivable on our condensed consolidated balance sheet. The outstanding amount of receivables sold under this program were $22.5 million as of May 31, 2024. As collecting agent on the sold receivables, we had $5.5 million of cash collected that was not yet remitted to the third-party financial institution as of May 31, 2024. The incremental costs of selling receivables under this arrangement were insignificant for the three months and six months ended May 31, 2024.