Item 3. Quantitative and Qualitative Disclosures About Market Risk
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk
Foreign Currency Risk
We are exposed to foreign currency risk in the ordinary course of business in our continuing operations. We manage cash flow exposures for our major countries and the foreign currency impact of assets and liabilities denominated in non-functional currencies using a combination of forward contracts. Principal currencies hedged are the Canadian Dollar, the Japanese Yen, the Brazilian Real, the Colombian Peso, the Chilean peso, the Chinese Yuan, the Euro, and the Mexican Peso . We do not hold or issue derivative financial instruments for trading purposes.
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Table of Contents
The following table presents the hypothetical changes in fair values of our outstanding foreign currency derivative instruments related to our continuing operations as of February 28, 2021 and November 30, 2020, arising from an instantaneous strengthening or weakening of the U.S. dollar by 5%, 10% and 15% (in thousands) :
Loss on Derivative Instruments Given a
Weakening of U.S. dollar by X Percent
Gain (Loss)
Assuming No
Change in
Exchange Rate
Gain on Derivative Instruments Given a
Strengthening of U.S. dollar by X Percent
15%
10%
5%
5%
10%
15%
Forward contracts at
February 28, 2021
$
(33,980
)
$
(20,369
)
$
(8,192
)
$
2,768
$
12,684
$
21,699
$
33,674
Forward contracts at
November 30, 2020
(48,022
)
(31,306
)
(16,349
)
(2,888
)
9,291
20,363
32,037
Our foreign exchange contracts have typical maturities of twelve months or less and are executed to protect us against foreign currency exposure pertaining to receivables, payables and intercompany transactions that are denominated in currencies different from the functional currencies of the respective entities. These contracts are marked-to-market and any material gains and losses on our hedge contracts resulting from a hypothetical, instantaneous change in the strength of the U.S. dollar would be significantly offset by mark-to-market gains and losses on the corresponding assets and liabilities being hedged.
Interest Rate and Equity Price Risk
There have been no material changes in interest rate risk and equity price risk related to our continuing operations during the three months ended February 28, 2021 from our Annual Report on Form 10-K for the fiscal year ended November 30, 2020. For a discussion of the Company's exposure to interest rate and equity risk, reference is made to disclosures set forth in Part II, Item 7A of our above-mentioned Annual Report on Form 10-K.
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