Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Feb. 28, 2020 | Mar. 20, 2020 | |
Entity Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Feb. 28, 2020 | |
Document Transition Report | false | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2020 | |
Current Fiscal Year End Date | --11-27 | |
Entity File Number | 0-15175 | |
Entity Central Index Key | 0000796343 | |
Entity Registrant Name | ADOBE INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 77-0019522 | |
Entity Address, Address Line One | 345 Park Avenue | |
Entity Address, City or Town | San Jose | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 95110-2704 | |
City Area Code | 408 | |
Local Phone Number | 536-6000 | |
Title of 12(b) Security | Common Stock, $0.0001 par value per share | |
Trading Symbol | ADBE | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Amendment Flag | false | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 481,800,850 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Millions | Feb. 28, 2020 | Nov. 29, 2019 | [1] |
Assets: | |||
Cash and cash equivalents | $ 2,688 | $ 2,650 | |
Short-term investments | 1,483 | 1,527 | |
Trade receivables, net of allowances for doubtful accounts of $9 and $10, respectively | 1,389 | 1,535 | |
Prepaid expenses and other current assets | 895 | 783 | |
Total current assets | 6,455 | 6,495 | |
Property and equipment, net | 1,340 | 1,293 | |
Operating lease right-of-use asset, net | 504 | 0 | |
Goodwill | 10,691 | 10,691 | |
Other intangibles, net | 1,626 | 1,721 | |
Other assets | 598 | 562 | |
Total assets | 21,214 | 20,762 | |
Current liabilities: | |||
Trade payables | 265 | 209 | |
Accrued expenses | 1,241 | 1,399 | |
Debt | 0 | 3,149 | |
Deferred revenue | 3,489 | 3,378 | |
Income taxes payable | 149 | 56 | |
Operating lease liabilities | 84 | 0 | |
Total current liabilities | 5,228 | 8,191 | |
Long-term liabilities: | |||
Debt | 4,113 | 989 | |
Deferred revenue | 125 | 123 | |
Income taxes payable | 530 | 616 | |
Deferred income taxes | 48 | 140 | |
Operating lease liabilities | 514 | 0 | |
Other liabilities | 191 | 173 | |
Total liabilities | 10,749 | 10,232 | |
Stockholders' equity: | |||
Preferred stock, $0.0001 par value; 2 shares authorized, none issued | 0 | 0 | |
Common stock, $0.0001 par value; 900 shares authorized; 601 shares issued; 483 shares outstanding for both periods | 0 | 0 | |
Additional paid-in-capital | 6,665 | 6,504 | |
Retained earnings | 15,390 | 14,829 | |
Accumulated other comprehensive income (loss) | (189) | (188) | |
Treasury stock, at cost (118 shares for both periods) | (11,401) | (10,615) | |
Total stockholders’ equity | 10,465 | 10,530 | |
Total liabilities and stockholders' equity | $ 21,214 | $ 20,762 | |
[1] | The condensed consolidated balance sheet as of November 29, 2019 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) shares in Millions, $ in Millions | Feb. 28, 2020 | Nov. 29, 2019 |
Current assets: | ||
Allowances for doubtful accounts | $ 9 | $ 10 |
Stockholders' equity: | ||
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 2 | 2 |
Preferred stock, shares issued | 0 | 0 |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 900 | 900 |
Common stock, shares issued | 601 | 601 |
Common stock, shares outstanding | 483 | 483 |
Treasury stock, shares | 118 | 118 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income (Unaudited) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | |
Feb. 28, 2020 | Mar. 01, 2019 | |
Revenue: | ||
Subscription | $ 2,825 | $ 2,305 |
Product | 143 | 171 |
Services and support | 123 | 125 |
Total revenue | 3,091 | 2,601 |
Cost of revenue: | ||
Subscription | 355 | 288 |
Product | 7 | 12 |
Services and support | 90 | 97 |
Total cost of revenue | 452 | 397 |
Gross profit | 2,639 | 2,204 |
Operating expenses: | ||
Research and development | 532 | 465 |
Sales and marketing | 857 | 781 |
General and administrative | 271 | 216 |
Amortization of intangibles | 42 | 47 |
Total operating expenses | 1,702 | 1,509 |
Operating income | 937 | 695 |
Non-operating income (expense): | ||
Interest expense | (33) | (41) |
Investment gains (losses), net | (3) | 44 |
Other income (expense), net | 18 | 4 |
Total non-operating income (expense), net | (18) | 7 |
Income before income taxes | 919 | 702 |
Provision for (benefit from) income taxes | (36) | 28 |
Net income | $ 955 | $ 674 |
Basic net income per share | $ 1.98 | $ 1.38 |
Shares used to compute basic net income per share | 482.4 | 488.1 |
Diluted net income per share | $ 1.96 | $ 1.36 |
Shares used to compute diluted net income per share | 487.8 | 494.2 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Millions | 3 Months Ended | ||
Feb. 28, 2020 | Mar. 01, 2019 | ||
Statement of Comprehensive Income [Abstract] | |||
Net income | $ 955 | $ 674 | |
Available-for-sale securities: | |||
Unrealized gains / losses on available-for-sale securities | 4 | 13 | |
Derivatives designated as hedging instruments: | |||
Unrealized gains / losses on derivative instruments | 1 | (9) | |
Reclassification adjustment for realized gains / losses on derivative instruments | (2) | [1] | (8) |
Net increase (decrease) from derivatives designated as hedging instruments | (1) | (17) | |
Foreign currency translation adjustments | (4) | 2 | |
Other comprehensive income (loss), net of taxes | (1) | (2) | |
Total comprehensive income, net of taxes | $ 954 | $ 672 | |
[1] | Reclassification adjustments for gains / losses on foreign currency hedges are classified in revenue and reclassification adjustments for gains / losses on Treasury lock hedges are classified in interest expense. |
Condensed Consolidated Statem_3
Condensed Consolidated Statement of Stockholders' Equity (Unaudited) - USD ($) shares in Millions, $ in Millions | Total | Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Treasury Stock | |
Beginning balances at Nov. 30, 2018 | $ 9,362 | $ 0 | $ 5,685 | $ 11,816 | $ (148) | $ (7,991) | |
Beginning balances, shares at Nov. 30, 2018 | 601 | ||||||
Beginning Treasury stock, shares at Nov. 30, 2018 | (113) | ||||||
Impacts of adoption of the new revenue standard | 442 | 442 | |||||
Net income | 674 | 674 | |||||
Other comprehensive income (losses), net of tax | (2) | (2) | |||||
Re-issuance of treasury stock under stock compensation plans | (281) | (8) | (353) | $ 80 | |||
Re-issuance of treasury stock under stock compensation plans, shares | 3 | ||||||
Purchase of treasury stock | $ (500) | $ (500) | |||||
Purchase of treasury stock, shares | (2.1) | (2) | |||||
Stock-based compensation | $ 180 | 180 | |||||
Value of shares in deferred compensation plan | (4) | $ (4) | |||||
Ending balances at Mar. 01, 2019 | 9,871 | $ 0 | 5,857 | 12,579 | (150) | $ (8,415) | |
Ending balances, shares at Mar. 01, 2019 | 601 | ||||||
Ending Treasury stock, shares at Mar. 01, 2019 | (112) | ||||||
Beginning balances at Nov. 29, 2019 | 10,530 | [1] | $ 0 | 6,504 | 14,829 | (188) | $ (10,615) |
Beginning balances, shares at Nov. 29, 2019 | 601 | ||||||
Beginning Treasury stock, shares at Nov. 29, 2019 | (118) | ||||||
Net income | 955 | 955 | |||||
Other comprehensive income (losses), net of tax | (1) | (1) | |||||
Re-issuance of treasury stock under stock compensation plans | (378) | (56) | (394) | $ 72 | |||
Re-issuance of treasury stock under stock compensation plans, shares | 2 | ||||||
Purchase of treasury stock | $ (850) | $ (850) | |||||
Purchase of treasury stock, shares | (2.4) | (2) | |||||
Stock-based compensation | $ 217 | 217 | |||||
Value of shares in deferred compensation plan | (8) | $ (8) | |||||
Ending balances at Feb. 28, 2020 | $ 10,465 | $ 0 | $ 6,665 | $ 15,390 | $ (189) | $ (11,401) | |
Ending balances, shares at Feb. 28, 2020 | 601 | ||||||
Ending Treasury stock, shares at Feb. 28, 2020 | (118) | ||||||
[1] | The condensed consolidated balance sheet as of November 29, 2019 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Millions | 3 Months Ended | ||
Feb. 28, 2020 | Mar. 01, 2019 | ||
Cash flows from operating activities: | |||
Net income | $ 955 | $ 674 | |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation, amortization and accretion | 188 | 186 | |
Stock-based compensation | 217 | 185 | |
Increase (Decrease) In Operating Lease Right-Of-Use Assets | 21 | 0 | |
Deferred income taxes | (93) | (19) | |
Unrealized losses (gains) on investments, net | 6 | (42) | |
Other non-cash items | 2 | 1 | |
Changes in operating assets and liabilities, net of acquired assets and assumed liabilities: | |||
Trade receivables, net | 145 | 65 | |
Prepaid expenses and other assets | (197) | (148) | |
Trade payables | 55 | (41) | |
Accrued expenses and other liabilities | (98) | (20) | |
Income taxes payable | 10 | 6 | |
Deferred revenue | 114 | 166 | |
Net cash provided by operating activities | 1,325 | 1,013 | |
Cash flows from investing activities: | |||
Purchases of short-term investments | (213) | 0 | |
Maturities of short-term investments | 235 | 97 | |
Proceeds from sales of short-term investments | 26 | 14 | |
Acquisitions, net of cash acquired | 0 | (100) | |
Purchases of property and equipment | (94) | (65) | |
Purchases of long-term investments, intangibles and other assets | (2) | (78) | |
Net cash used for investing activities | (48) | (132) | |
Cash flows from financing activities: | |||
Purchases of treasury stock | (850) | (500) | |
Proceeds from re-issuance of treasury stock | 88 | 72 | |
Taxes paid related to net share settlement of equity awards | (467) | (353) | |
Proceeds from issuance of debt | 3,144 | 0 | |
Repayments of debt | (3,150) | 0 | |
Other financing activities, net | 2 | (3) | |
Net cash used for financing activities | (1,233) | (784) | |
Effect of foreign currency exchange rates on cash and cash equivalents | (6) | (1) | |
Net increase (decrease) in cash and cash equivalents | 38 | 96 | |
Cash and cash equivalents at beginning of period | 2,650 | [1] | 1,643 |
Cash and cash equivalents at end of period | 2,688 | 1,739 | |
Supplemental disclosures: | |||
Cash paid for income taxes, net of refunds | 45 | 52 | |
Cash paid for interest | $ 38 | $ 51 | |
[1] | The condensed consolidated balance sheet as of November 29, 2019 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. |
Basis of Presentation and Summa
Basis of Presentation and Summary of Significant Accounting Policies | 3 Months Ended |
Feb. 28, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation and Significant Accounting Policies | BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES We have prepared the accompanying unaudited condensed consolidated financial statements pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Pursuant to these rules and regulations, we have condensed or omitted certain information and footnote disclosures we normally include in our annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). In management’s opinion, we have made all adjustments (consisting only of normal, recurring adjustments, except as otherwise indicated) necessary to fairly present our financial position, results of operations and cash flows. Our interim period operating results do not necessarily indicate the results that may be expected for any other interim period or for the full fiscal year. These financial statements and accompanying notes should be read in conjunction with the consolidated financial statements and notes thereto in our Annual Report on Form 10-K for the fiscal year ended November 29, 2019 on file with the SEC (our “Annual Report”). Reclassification Certain immaterial prior year amounts have been reclassified to conform to current year presentation in the condensed consolidated statements of cash flows and notes to condensed consolidated financial statements. Recently Adopted Accounting Guidance On February 24, 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842), (“ASC 842”), a new standard related to leases to increase transparency and comparability among organizations by requiring the recognition of right-of-use (“ROU”) assets and lease liabilities on the balance sheet for all leases with terms greater than twelve months, including for those leases classified as operating leases under the legacy standard (“ASC 840”). Under ASC 842, added disclosures are required as compared to ASC 840 to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. On November 30, 2019, the beginning of our fiscal year 2020, we adopted ASC 842 using the alternative modified retrospective transition method provided in ASU 2018-11, Leases (Topic 842): Targeted Improvements. Under this method, we recorded ROU assets and lease liabilities of approximately $519 million and $618 million , respectively, at the adoption date and did not include any retrospective adjustments to comparative periods to reflect the adoption of ASC 842. The lease liabilities reflect the remaining minimum rental payments for our existing leases as of the adoption date, discounted using our incremental borrowing rate for each lease. The standard had no impact on our consolidated net income or cash flows. We elected the package of practical expedients permitted under the transition guidance, which allowed us to carry forward our assessments on whether a contract was or contains a lease, our historical lease classification and our initial direct costs for any leases that existed prior to adoption date. We also elected the practical expedient that allowed us to carry forward our accounting treatment for existing land easements. We did not elect the hindsight practical expedient to determine the lease term for existing leases. On August 28, 2017, the FASB issued ASU No. 2017-12, Derivatives and Hedging, requiring expanded hedge accounting for both non-financial and financial risk components and refining the measurement of hedge results to better reflect an entity’s hedging strategies. The updated standard also amends the presentation and disclosure requirements and changes how entities assess hedge effectiveness. On November 30, 2019, the beginning of our fiscal year 2020, we adopted the accounting requirements of the updated standard utilizing the modified retrospective method of transition. The adoption of this standard did not have a material impact on our condensed consolidated financial statements and related disclosures. Significant Accounting Policies Leases We determine if an arrangement is or contains a lease at contract inception. In certain of our lease arrangements, primarily those related to our data center arrangements, judgment is required in determining if a contract contains a lease. For these arrangements, there is judgment in evaluating if the arrangement involves an identified asset that is physically distinct or whether we have the right to substantially all of the capacity of an identified asset that is not physically distinct. In arrangements that involved an identified asset, there is also judgment in evaluating if we have the right to direct the use of that asset. We do not have any finance leases. Operating leases are recorded in our condensed consolidated balance sheets. ROU assets and lease liabilities are measured at the lease commencement date based on the present value of the remaining lease payments over the lease term, determined using the discount rate for the lease at the commencement date. Because the rate implicit in our leases is not readily determinable, we use our incremental borrowing rate as the discount rate, which approximates the interest rate at which we could borrow on a collateralized basis with similar terms and payments and in similar economic environments. Our leases have remaining lease terms of up to 12 years , some of which include options to extend the lease for up to 9 years and options to terminate the lease within 1 year . Optional periods to extend the lease, including by not exercising a termination option, are included in the lease term when it is reasonably certain that the option will be exercised. We also have one land lease that expires in 2091. Operating lease expense is recognized on a straight-line basis over the lease term. We account for lease and non-lease components, principally common area maintenance for our facilities leases, as a single lease component for our facilities and data center leases. There have been no other material changes to our significant accounting policies as compared to the significant accounting policies described in our Annual Report. Recent Accounting Pronouncements Not Yet Effective On June 16, 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses, requiring the measurement and recognition of expected credit losses for financial assets held at amortized cost, which include our accounts receivable and contract assets. The standard also requires that we recognize credit impairment losses related to our available-for-sale debt securities through an allowance for credit losses instead of a reduction in the cost basis. The effective date of the new standard for public companies is for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years. Early adoption is permitted. The new standard must be adopted using a modified retrospective transition with a cumulative effect adjustment recorded to opening retained earnings as of the initial adoption date. The updated standard is effective for us beginning in the first quarter of fiscal 2021 and we do not plan to early adopt. We are currently evaluating the effect that the standard will have on our condensed consolidated financial statements and related disclosures. With the exception of the new standard discussed above, there have been no other recent accounting pronouncements or changes in accounting pronouncements during the three months ended February 28, 2020 , as compared to the recent accounting pronouncements described in our Annual Report, that are of significance or potential significance to us. |
Revenue (Notes)
Revenue (Notes) | 3 Months Ended |
Feb. 28, 2020 | |
Revenue [Abstract] | |
Revenue | REVENUE Segment Information Our segment results for the three months ended February 28, 2020 and March 1, 2019 were as follows: (dollars in millions) Digital Media Digital Experience Publishing Total Three months ended February 28, 2020 Revenue $ 2,169 $ 858 $ 64 $ 3,091 Cost of revenue 87 361 4 452 Gross profit $ 2,082 $ 497 $ 60 $ 2,639 Gross profit as a percentage of revenue 96 % 58 % 94 % 85 % Three months ended March 1, 2019 Revenue $ 1,777 $ 743 $ 81 $ 2,601 Cost of revenue 68 324 5 397 Gross profit $ 1,709 $ 419 $ 76 $ 2,204 Gross profit as a percentage of revenue 96 % 56 % 93 % 85 % Revenue by geographic area for the three months ended February 28, 2020 and March 1, 2019 were as follows: (in millions) 2020 2019 Americas $ 1,797 $ 1,510 EMEA 817 703 APAC 477 388 Total $ 3,091 $ 2,601 Revenue by major offerings in our Digital Media reportable segment for the three months ended February 28, 2020 and March 1, 2019 were as follows: (in millions) 2020 2019 Creative Cloud $ 1,818 $ 1,495 Document Cloud 351 282 Total $ 2,169 $ 1,777 Subscription revenue by segment for the three months ended February 28, 2020 and March 1, 2019 were as follows: (in millions) 2020 2019 Digital Media $ 2,058 $ 1,664 Digital Experience 739 612 Publishing 28 29 Total $ 2,825 $ 2,305 Contract Balances A receivable is recorded when an unconditional right to invoice and receive payment exists, such that only the passage of time is required before payment of consideration is due. Included in trade receivables on the condensed consolidated balance sheets are unbilled receivable balances which have not yet been invoiced, and are typically related to license revenue or services which are delivered prior to invoicing occurring. As of February 28, 2020 , the balance of trade receivables, net of allowances for doubtful accounts, was $1.39 billion , inclusive of unbilled receivables of $114 million . As of November 29, 2019 , the balance of trade receivables, net of allowances for doubtful accounts, was $1.53 billion , inclusive of unbilled receivables of $149 million . We maintain an allowance for doubtful accounts which reflects our best estimate of potentially uncollectible trade receivables and is based on both specific and general reserves. The allowance for doubtful accounts was $9 million and $10 million as of February 28, 2020 and November 29, 2019 , respectively. A contract asset is recognized when a conditional right to consideration exists and transfer of control has occurred. Contract assets are included in prepaid expenses and other current assets for the current portion and other assets for the long-term portion on the condensed consolidated balance sheets. Contract assets were $76 million and $64 million as of February 28, 2020 and November 29, 2019 , respectively. Deferred revenue primarily consists of billings or payments received in advance of revenue recognition from subscription services, including non-cancellable and non-refundable committed funds and refundable customer deposits. Deferred revenue is recognized as revenue when transfer of control to customers has occurred. As of February 28, 2020 , the balance of deferred revenue was $3.61 billion , which includes $45 million of refundable customer deposits. Arrangements with some of our enterprise customers with non-cancellable and non-refundable committed funds provide options to either renew monthly on-premise term-based licenses or use some or all funds to purchase other Adobe products or services. Non-cancellable and non-refundable committed funds related to these agreements comprised approximately 6% of the total deferred revenue. As of November 29, 2019 , the balance of deferred revenue was $3.50 billion . During the three months ended February 28, 2020 , approximately $1.47 billion of revenue was recognized that was included in the balance of deferred revenue as of November 29, 2019 . Transaction price allocated to remaining performance obligations represents contracted revenue that has not yet been recognized, which includes deferred revenue and unbilled amounts that will be recognized as revenue in future periods. As of February 28, 2020 , remaining performance obligations were approximately $9.91 billion . Non-cancellable and non-refundable funds related to some of our enterprise customer agreements referred to in the paragraph above comprised approximately 5% of the total remaining performance obligations. Approximately 74% of the remaining performance obligations, excluding the aforementioned enterprise customer agreements, are expected to be recognized over the next 12 months with the remainder recognized thereafter. Incremental costs of obtaining a contract with a customer are capitalized if we expect the benefit of those costs to be longer than one year and primarily relate to sales commissions paid to our sales force personnel. Capitalized contract acquisition costs are included in prepaid expenses and other current assets for the current portion and other assets for the long-term portion on the condensed consolidated balance sheets. Capitalized contract acquisition costs were $505 million and $474 million as of February 28, 2020 and November 29, 2019 , respectively. As part of our revenue reserves, we record refund liabilities for amounts that may be subject to future refunds, which include sales returns reserves and customer rebates and credits. Refund liabilities are included in accrued expenses on the condensed consolidated balance sheets. Refund liabilities were $122 million and $126 million as of February 28, 2020 and November 29, 2019 , respectively. |
Acquisitions
Acquisitions | 3 Months Ended |
Feb. 28, 2020 | |
Business Combinations [Abstract] | |
ACQUISITIONS | ACQUISITIONS On January 23, 2019 , we completed the acquisition of Allegorithmic, a privately-held 3D editing and authoring software company for gaming and entertainment, and integrated it into our Digital Media reportable segment. Prior to the acquisition, we held an equity interest in Allegorithmic that was accounted for as an equity-method investment. We acquired the remaining equity interest for approximately $106 million in cash consideration. The total purchase price, inclusive of the acquisition-date fair-value of our pre-existing equity interest, was approximately $161 million . In conjunction with the acquisition, we separately recognized an investment gain of approximately $42 million , which represents the difference between the $55 million acquisition-date fair value of our pre-existing equity interest and our previous carrying amount. Under the acquisition method of accounting, the total final purchase price was allocated to Allegorithmic’s net tangible and intangible assets based upon their estimated fair values as of the acquisition date. The excess purchase price over the value of the net tangible and identifiable intangible assets was recorded as goodwill. Of the total purchase price, $126 million was allocated to goodwill that was non-deductible for tax purposes, $45 million to identifiable intangible assets and the remainder to net liabilities assumed. Pro forma financial information has not been presented as the impact to our condensed consolidated financial statements was not material. |
Cash, Cash Equivalents and Shor
Cash, Cash Equivalents and Short-Term Investments | 3 Months Ended |
Feb. 28, 2020 | |
Cash, Cash Equivalents, and Short-term Investments [Abstract] | |
CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS | CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS Cash equivalents consist of highly liquid marketable debt securities with remaining maturities of three months or less at the date of purchase. We classify our investments in marketable debt securities as “available-for-sale.” We carry these investments at fair value, based on quoted market prices or other readily available market information. Unrealized gains and losses, net of taxes, are included in accumulated other comprehensive income, which is reflected as a separate component of stockholders’ equity in our condensed consolidated balance sheets. Gains and losses are determined using the specific identification method and recognized when realized in our condensed consolidated statements of income. When we have determined that an other-than-temporary decline in fair value has occurred, the amount of the decline that is related to a credit loss is recognized in income. Cash, cash equivalents and short-term investments consisted of the following as of February 28, 2020 : (in millions) Amortized Cost Unrealized Gains Unrealized Losses Estimated Fair Value Current assets: Cash $ 473 $ — $ — $ 473 Cash equivalents: Corporate debt securities 45 — — 45 Money market mutual funds 2,143 — — 2,143 Time deposits 27 — — 27 Total cash equivalents 2,215 — — 2,215 Total cash and cash equivalents 2,688 — — 2,688 Short-term fixed income securities: Asset-backed securities 95 1 — 96 Corporate debt securities 1,368 8 — 1,376 Municipal securities 11 — — 11 Total short-term investments 1,474 9 — 1,483 Total cash, cash equivalents and short-term investments $ 4,162 $ 9 $ — $ 4,171 Cash, cash equivalents and short-term investments consisted of the following as of November 29, 2019 : (in millions) Amortized Cost Unrealized Gains Unrealized Losses Estimated Fair Value Current assets: Cash $ 467 $ — $ — $ 467 Cash equivalents: Corporate debt securities 46 — — 46 Money market mutual funds 2,049 — — 2,049 Time deposits 88 — — 88 Total cash equivalents 2,183 — — 2,183 Total cash and cash equivalents 2,650 — — 2,650 Short-term fixed income securities: Asset-backed securities 89 — — 89 Corporate debt securities 1,408 4 — 1,412 Municipal securities 18 — — 18 U.S. Treasury securities 8 — — 8 Total short-term investments 1,523 4 — 1,527 Total cash, cash equivalents and short-term investments $ 4,173 $ 4 $ — $ 4,177 See Note 5 for further information regarding the fair value of our financial instruments. We had immaterial gross unrealized losses related to our available-for-sale securities as of February 28, 2020 and November 29, 2019 . The following table summarizes the fair value of our available-for-sale securities that have been in a continuous unrealized loss position as of February 28, 2020 and November 29, 2019 : (in millions) 2020 2019 Less Than Twelve Months More Than Twelve Months Less Than Twelve Months More Than Twelve Months Corporate debt securities $ 70 $ 9 $ 235 $ 44 Asset-backed securities 3 — 7 7 Municipal securities — — 3 — Total $ 73 $ 9 $ 245 $ 51 There were 4 securities and 38 securities in an unrealized loss position for more than twelve months at February 28, 2020 and at November 29, 2019 , respectively. There were 27 securities and 115 securities in an unrealized loss position for less than twelve months at February 28, 2020 and at November 29, 2019 , respectively. The following table summarizes the cost and estimated fair value of short-term fixed income securities classified as short-term investments based on stated effective maturities as of February 28, 2020 : (in millions) Amortized Cost Estimated Fair Value Due within one year $ 922 $ 925 Due between one and two years 364 367 Due between two and three years 188 191 Total $ 1,474 $ 1,483 We review our debt securities classified as short-term investments on a regular basis to evaluate whether or not any security has experienced an other-than-temporary decline in fair value. We consider factors such as the length of time and extent to which the market value has been less than the cost, the financial condition and near-term prospects of the issuer and our intent to sell, or whether it is more likely than not we will be required to sell the investment before recovery of the investment’s amortized cost basis. If we believe that an other-than-temporary decline exists in one of these securities, we write down these investments to fair value. The portion of the write-down related to credit loss would be recorded to other income (expense), net in our condensed consolidated statements of income. Any portion not related to credit loss would be recorded to accumulated other comprehensive income, which is reflected as a separate component of stockholders’ equity in our condensed consolidated balance sheets. During the three months ended February 28, 2020 and March 1, 2019 , we did not consider any of our investments to be other-than-temporarily impaired. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Feb. 28, 2020 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS Assets and Liabilities Measured and Recorded at Fair Value on a Recurring Basis We measure certain financial assets and liabilities at fair value on a recurring basis. There have been no transfers between fair value measurement levels during the three months ended February 28, 2020 . The fair value of our financial assets and liabilities at February 28, 2020 was determined using the following inputs: (in millions) Fair Value Measurements at Reporting Date Using Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs Total (Level 1) (Level 2) (Level 3) Assets: Cash equivalents: Corporate debt securities $ 45 $ — $ 45 $ — Money market mutual funds 2,143 2,143 — Time deposits 27 27 — Short-term investments: Asset-backed securities 96 — 96 — Corporate debt securities 1,376 — 1,376 — Municipal securities 11 — 11 — Prepaid expenses and other current assets: Foreign currency derivatives 33 — 33 — Other assets: Deferred compensation plan assets 98 4 94 — Total assets $ 3,829 $ 2,174 $ 1,655 $ — Liabilities: Accrued expenses: Foreign currency derivatives $ 8 $ — $ 8 $ — The fair value of our financial assets and liabilities at November 29, 2019 was determined using the following inputs: (in millions) Fair Value Measurements at Reporting Date Using Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs Total (Level 1) (Level 2) (Level 3) Assets: Cash equivalents: Corporate debt securities $ 46 $ — $ 46 $ — Money market mutual funds 2,049 2,049 — — Time deposits 88 88 — — Short-term investments: Asset-backed securities 89 — 89 — Corporate debt securities 1,412 — 1,412 — Municipal securities 18 — 18 — U.S. Treasury securities 8 — 8 — Prepaid expenses and other current assets: Foreign currency derivatives 29 — 29 — Other assets: Deferred compensation plan assets 94 5 89 — Total assets $ 3,833 $ 2,142 $ 1,691 $ — Liabilities: Accrued expenses: Treasury lock derivatives $ 30 $ — $ 30 $ — Foreign currency derivatives 3 — 3 — Total liabilities $ 33 $ — $ 33 $ — See Note 4 for further information regarding the fair value of our financial instruments. Our fixed income available-for-sale debt securities consist of high quality, investment grade securities from diverse issuers with a weighted average credit rating of A+. We value these securities based on pricing from independent pricing vendors who use matrix pricing valuation techniques including market approach methodologies that model information generated by market transactions involving identical or comparable assets, as well as discounted cash flow methodologies. Inputs include quoted prices in active markets for identical assets or inputs other than quoted prices that are observable either directly or indirectly in determining fair value, including benchmark yields, issuer spreads off benchmark yields, interest rates and U.S. Treasury or swap curves. We therefore classify all of our fixed income available-for-sale securities as Level 2. We perform routine procedures such as comparing prices obtained from multiple independent sources to ensure that appropriate fair values are recorded. The fair values of our money market mutual funds and time deposits are based on the closing price of these assets as of the reporting date. We classify our money market mutual funds and time deposits as Level 1. Our Level 2 over-the-counter foreign currency derivatives are valued using pricing models and discounted cash flow methodologies based on observable foreign exchange and interest rate data at the measurement date. Our deferred compensation plan assets consist of money market and other mutual funds. Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis The fair value of our debt was $4.31 billion as of February 28, 2020 , based on observable market prices in less active markets and categorized as Level 2. See Note 14 for further details regarding our debt. |
Derivative Financial Instrument
Derivative Financial Instruments | 3 Months Ended |
Feb. 28, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVATIVE FINANCIAL INSTRUMENTS | DERIVATIVE FINANCIAL INSTRUMENTS We may use derivatives to partially offset our business exposure to foreign currency and interest rate risk on expected future cash flows, and certain existing assets and liabilities. We do not use any of our derivative instruments for trading purposes. We enter into master netting arrangements to mitigate credit risk in derivative transactions by permitting net settlement of transactions with the same counterparty. We do not offset fair value amounts recognized for derivative instruments under master netting arrangements. We also enter into collateral security agreements with certain of our counterparties to exchange cash collateral when the net fair value of certain derivative instruments fluctuates from contractually established thresholds. Collateral posted is included in prepaid expenses and other current assets and collateral received is included in accrued expenses on our condensed consolidated balance sheets. Cash Flow Hedges In countries outside the United States, we transact business in U.S. Dollars and in various other currencies. We may use foreign exchange option contracts or forward contracts to hedge a portion of our forecasted foreign currency denominated revenue. These foreign exchange contracts, carried at fair value, have maturities of up to twelve months . In June 2019, in anticipation of refinancing our $2.25 billion term loan due April 30, 2020 (“Term Loan”) and $900 million 4.75% fixed interest rate senior notes due February 1, 2020 (“2020 Notes”), we entered into Treasury lock agreements with large financial institutions which fixed benchmark U.S. Treasury rates for an aggregate notional amount of $1 billion of our future debt issuance. These derivative instruments hedged the impact of changes in the benchmark interest rate to future interest payments and were settled upon debt issuance in the first quarter of fiscal 2020. We incurred a loss related to the settlement of the instruments which is amortized to interest expense over the term of our debt due February 1, 2030. See Note 14 for further details regarding our debt. To receive hedge accounting treatment, all hedging relationships are formally documented at the inception of the hedge, and the hedges must be highly effective in offsetting changes to future cash flows on hedged transactions. We record changes in fair value of these cash flow hedges in accumulated other comprehensive income (loss) in our condensed consolidated balance sheets, until the forecasted transaction occurs. When the forecasted transaction affects earnings, we reclassify the related gain or loss on the foreign currency and Treasury lock cash flow hedges to revenue and interest expense, respectively. In the event the underlying forecasted transaction does not occur, or it becomes probable that it will not occur, we reclassify the gain or loss on the related cash flow hedge from accumulated other comprehensive income (loss) to the same income statement line item as the hedged item. We evaluate hedge effectiveness at the inception of the hedge prospectively, and on an ongoing basis both retrospectively and prospectively. If we do not elect hedge accounting, or the contract does not qualify for hedge accounting treatment, the changes in fair value from period to period are recorded in the same income statement line item as the hedged item. Effective in the third quarter of fiscal 2019, all changes in fair value of our foreign currency cash flow hedges are recorded in accumulated other comprehensive income (loss). Prior to this, we recorded the time value of purchased contracts in other income (expense), net in our condensed consolidated statements of income. Fair Value Hedges During the third quarter of fiscal 2014, we entered into interest rate swaps designated as fair value hedge related to our 2020 Notes. The interest rate swaps converted the fixed interest rate on the 2020 Notes to a floating interest rate based on the London Interbank Offered Rate (“LIBOR”). See Note 14 for further details regarding our debt. The interest rate swaps were accounted for as fair value hedges and substantially offset the changes in fair value of the hedged portion of the underlying debt that were attributable to the changes in market risk. Therefore, the gains and losses related to changes in the fair value of the interest rate swaps were included in other income (expense), net in our condensed consolidated statements of income. During the first quarter of fiscal 2020, our 2020 Notes became due and were paid in conjunction with our debt refinancing. As of February 28, 2020 , the interest rate swap agreements had matured and were no longer recognized in our condensed consolidated financial statements. Non-Designated Hedges Our derivatives not designated as hedging instruments consist of foreign currency forward contracts that we primarily use to hedge monetary assets and liabilities denominated in non-functional currencies. The changes in fair value of these contracts is recorded to other income (expense), net in our condensed consolidated statements of income. Changes in the fair value of the underlying assets and liabilities associated with the hedged risk are generally offset by the changes in the fair value of the related contracts. The fair value of derivative instruments on our condensed consolidated balance sheets as of February 28, 2020 and November 29, 2019 were as follows: (in millions) 2020 2019 Fair Value Asset Derivatives Fair Value Liability Derivatives Fair Value Asset Derivatives Fair Value Liability Derivatives Derivatives designated as hedging instruments: Foreign exchange option contracts (1) (2) $ 25 $ — $ 26 $ — Treasury lock (1) — — — 30 Derivatives not designated as hedging instruments: Foreign exchange forward contracts (1) 8 8 3 3 Total derivatives $ 33 $ 8 $ 29 $ 33 _________________________________________ (1) Fair value asset derivatives are included in prepaid expenses and other current assets and fair value liability derivatives are included in accrued expenses on our condensed consolidated balance sheets. (2) Net derivatives gain expected to be recognized into revenue within the next 18 months , of which $8 million is expected within the next 12 months. Gains (losses) on derivative instruments, net of tax, recognized in our condensed consolidated statements of comprehensive income for the three months ended February 28, 2020 and March 1, 2019 were as follows: (in millions) 2020 2019 Derivatives in cash flow hedging relationships: Foreign exchange option contracts $ 2 $ (9 ) Treasury lock $ (1 ) $ — The effects of derivative instruments on our condensed consolidated statements of income for the three months ended February 28, 2020 and March 1, 2019 were as follows: (in millions) 2020 2019 Revenue Other Income (Expense), Net Revenue Other Income (Expense), Net Derivatives in cash flow hedging relationships: Foreign exchange option contracts (1) Net gain (loss) reclassified from accumulated other comprehensive income into income, net of tax $ 7 $ — $ 9 $ — Amount excluded from effectiveness testing and ineffective portion $ — $ — $ — $ (12 ) Derivatives not designated as hedging relationships: Foreign exchange forward contracts $ — $ (1 ) $ — $ (2 ) _________________________________________ (1) Starting the third quarter of fiscal 2019, all changes in the fair value of our foreign currency cash flow hedges are recorded in accumulated other comprehensive income. |
Goodwill and Other Intangibles
Goodwill and Other Intangibles | 3 Months Ended |
Feb. 28, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND OTHER INTANGIBLES | GOODWILL AND OTHER INTANGIBLES Goodwill as of February 28, 2020 and November 29, 2019 was $10.69 billion for both periods presented. Other intangible assets subject to amortization as of February 28, 2020 and November 29, 2019 were as follows: (in millions) 2020 2019 Cost Accumulated Amortization Net Cost Accumulated Amortization Net Customer contracts and relationships $ 1,219 $ (468 ) $ 751 $ 1,219 $ (436 ) $ 783 Purchased technology 759 (255 ) 504 759 (223 ) 536 Trademarks 384 (85 ) 299 384 (73 ) 311 Other 228 (156 ) 72 227 (136 ) 91 Other intangibles, net $ 2,590 $ (964 ) $ 1,626 $ 2,589 $ (868 ) $ 1,721 Amortization expense related to other intangibles was $96 million and $105 million for the three months ended February 28, 2020 and March 1, 2019 , respectively. Of these amounts, $54 million and $58 million were included in cost of sales for the three months ended February 28, 2020 and March 1, 2019 , respectively. As of February 28, 2020 , we expect amortization expense in future periods to be as follows: (in millions) Other Intangibles Remainder of 2020 $ 269 2021 255 2022 223 2023 214 2024 202 Thereafter 463 Total expected amortization expense $ 1,626 |
Accrued Expenses
Accrued Expenses | 3 Months Ended |
Feb. 28, 2020 | |
Payables and Accruals [Abstract] | |
ACCRUED EXPENSES | ACCRUED EXPENSES Accrued expenses as of February 28, 2020 and November 29, 2019 consisted of the following: (in millions) 2020 2019 Accrued compensation and benefits $ 389 $ 318 Accrued bonuses 93 222 Refund liabilities 122 126 Accrued media costs 98 118 Accrued corporate marketing 84 80 Taxes payable 74 83 Royalties payable 72 62 Fair value of derivatives 8 33 Accrued interest expense 7 29 Accrued building rent — 99 Other 294 229 Accrued expenses $ 1,241 $ 1,399 Accrued media costs primarily relate to our advertising platform offerings. We accrue for media costs related to impressions purchased from third-party ad inventory sources. Other primarily includes general corporate accruals for local and regional expenses, including accruals for fees associated with the cancellation of corporate events. Beginning the first quarter of fiscal 2020, as a result of ASC 842 adoption, accrued building rent is recorded as a reduction to our operating lease right-of-use assets on our condensed consolidated balance sheets. |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Feb. 28, 2020 | |
Share-based Payment Arrangement [Abstract] | |
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION Restricted Stock Units Restricted stock unit activity for the three months ended February 28, 2020 was as follows: Number of Shares (in millions) Weighted Average Grant Date Fair Value Aggregate Fair Value (1) (in millions) Beginning outstanding balance 8.6 $ 211.95 Awarded 2.7 $ 350.46 Released (2.7 ) $ 177.06 Forfeited (0.2 ) $ 235.76 Ending outstanding balance 8.4 $ 266.34 $ 2,896 Expected to vest 7.5 $ 263.96 $ 2,593 _________________________________________ (1) The aggregate fair value is calculated using the closing stock price as of February 28, 2020 of $345.12 . The total fair value of restricted stock units vested during the three months ended February 28, 2020 was $950 million . Performance Shares In the first quarter of fiscal 2020, the Executive Compensation Committee approved the 2020 Performance Share Program, the terms of which are similar to prior year programs that are still outstanding. For information regarding our Performance Share Programs including the terms, see “Note 12. Stock-Based Compensation” of our Annual Report on Form 10-K for the fiscal year ended November 29, 2019 . As of February 28, 2020 , the shares awarded under our 2020, 2019 and 2018 Performance Share Programs remain outstanding and are yet to be achieved. Performance share activity for the three months ended February 28, 2020 was as follows: Number of Shares (in millions) Weighted Average Grant Date Fair Value Aggregate Fair Value (1) (in millions) Beginning outstanding balance 1.0 $ 199.78 Awarded 0.6 $ 271.62 Achieved (0.8 ) $ 118.84 Forfeited — $ 295.33 Ending outstanding balance 0.8 $ 326.37 $ 271 Expected to vest 0.7 $ 319.26 $ 237 _________________________________________ (1) The aggregate fair value is calculated using the closing stock price as of February 28, 2020 of $345.12 . Under our Performance Share Programs, participants generally have the ability to receive up to 200% of the target number of shares originally granted. Shares awarded during the three months ended February 28, 2020 include 0.4 million additional shares awarded for the final achievement of the 2017 Performance Share Program which was certified in the first quarter of fiscal 2020 . The remaining awarded shares were for the 2020 Performance Share Program. Shares achieved during the three months ended February 28, 2020 resulted from 200% achievement of target for the 2017 Performance Share Program. The total fair value of performance shares achieved during the three months ended February 28, 2020 was $264 million . Employee Stock Purchase Plan The assumptions used to value employee stock purchase rights during the three months ended February 28, 2020 and March 1, 2019 were as follows: 2020 2019 Expected life (in years) 0.5 - 2.0 0.5 - 2.0 Volatility 24% - 29% 35% - 37% Risk free interest rate 1.56% - 1.58% 2.47% - 2.63% Employees purchased 0.4 million shares at an average price of $196.45 and 0.5 million shares at an average price of $129.23 for the three months ended February 28, 2020 and March 1, 2019 , respectively. The intrinsic value of shares purchased during the three months ended February 28, 2020 and March 1, 2019 was $56 million and $51 million , respectively. The intrinsic value is calculated as the difference between the market value on the date of purchase and the purchase price of the shares. Compensation Costs As of February 28, 2020 , there was $2.08 billion of unrecognized compensation cost, adjusted for estimated forfeitures, related to non-vested stock-based awards and purchase rights which will be recognized over a weighted average period of 2.5 years. Total unrecognized compensation cost will be adjusted for future changes in estimated forfeitures. Total stock-based compensation costs included in our condensed consolidated statements of income for the three months ended February 28, 2020 and March 1, 2019 were as follows: (in millions) 2020 2019 Income Statement Classifications Restricted Stock Units and Performance Share Awards Stock Purchase Rights and Options Restricted Stock Units and Performance Share Awards Stock Cost of revenue $ 12 $ 3 $ 9 $ 4 Research and development 101 9 76 9 Sales and marketing 55 10 52 10 General and administrative 25 2 22 3 Total $ 193 $ 24 $ 159 $ 26 |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) | 3 Months Ended |
Feb. 28, 2020 | |
Stockholders' Equity Note [Abstract] | |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) The components of accumulated other comprehensive income (loss) and activity, net of related taxes, as of February 28, 2020 were as follows: (in millions) November 29, Increase / Decrease Reclassification Adjustments February 28, Unrealized gains on available-for-sale securities $ 4 $ 4 $ — (1) $ 8 Net unrealized gains / losses on derivative instruments designated as hedging instruments (22 ) 1 (2 ) (2) (23 ) Cumulative foreign currency translation adjustments (170 ) (4 ) — (174 ) Total accumulated other comprehensive income (loss), net of taxes $ (188 ) $ 1 $ (2 ) $ (189 ) _________________________________________ (1) Reclassification adjustments for gains / losses on available-for-sale securities are classified in other income (expense), net. (2) Reclassification adjustments for gains / losses on foreign currency hedges are classified in revenue and reclassification adjustments for gains / losses on Treasury lock hedges are classified in interest expense. Taxes related to each component of other comprehensive income (loss) for the three months ended February 28, 2020 and March 1, 2019 were not significant. |
Stock Repurchase Program (Notes
Stock Repurchase Program (Notes) | 3 Months Ended |
Feb. 28, 2020 | |
Share Repurchase Program [Abstract] | |
SHARE REPURCHASE PROGRAM | STOCK REPURCHASE PROGRAM To facilitate our stock repurchase program, designed to return value to our stockholders and minimize dilution from stock issuances, we may repurchase shares in the open market or enter into structured repurchase agreements with third parties. In May 2018, our Board of Directors granted us an authority to repurchase up to $8 billion in common stock through the end of fiscal 2021. During the three months ended February 28, 2020 and March 1, 2019 , we entered into several structured stock repurchase agreements with large financial institutions, whereupon we provided them with prepayments totaling $850 million and $500 million , respectively. We enter into these agreements in order to take advantage of repurchasing shares at a guaranteed discount to the Volume Weighted Average Price (“VWAP”) of our common stock over a specified period of time. We only enter into such transactions when the discount that we receive is higher than the foregone return on our cash prepayments to the financial institutions. There were no explicit commissions or fees on these structured repurchases. Under the terms of the agreements, there is no requirement for the financial institutions to return any portion of the prepayment to us. The financial institutions agree to deliver shares to us at monthly intervals during the contract term. The parameters used to calculate the number of shares deliverable are: the total notional amount of the contract, the number of trading days in the contract, the number of trading days in the interval and the average VWAP of our stock during the interval less the agreed upon discount. During the three months ended February 28, 2020 , we repurchased approximately 2.4 million shares at an average price of $332.59 through structured repurchase agreements entered into during fiscal 2019 and the three months ended February 28, 2020 . During the three months ended March 1, 2019 we repurchased approximately 2.1 million shares at an average price of $237.13 through structured repurchase agreements entered into during fiscal 2018 and the three months ended March 1, 2019 . For the three months ended February 28, 2020 , the prepayments were classified as treasury stock on our condensed consolidated balance sheets at the payment date, though only shares physically delivered to us by February 28, 2020 were excluded from the computation of earnings per share. As of February 28, 2020 , $284 million of prepayment remained under this agreement. Subsequent to February 28, 2020 , as part of the May 2018 stock repurchase authority, we entered into a structured stock repurchase agreement with a large financial institution whereupon we provided them with a prepayment of $850 million . Upon completion of the $850 million stock repurchase agreement, $3.4 billion |
Net Income Per Share
Net Income Per Share | 3 Months Ended |
Feb. 28, 2020 | |
Earnings Per Share [Abstract] | |
NET INCOME PER SHARE | NET INCOME PER SHARE The following table sets forth the computation of basic and diluted net income per share for the three months ended February 28, 2020 and March 1, 2019 : (in millions, except per share data) 2020 2019 Net income $ 955 $ 674 Shares used to compute basic net income per share 482.4 488.1 Dilutive potential common shares: Restricted stock units and performance share awards 5.0 5.7 Stock purchase rights and options 0.4 0.4 Shares used to compute diluted net income per share 487.8 494.2 Basic net income per share $ 1.98 $ 1.38 Diluted net income per share $ 1.96 $ 1.36 Anti-dilutive potential common shares (1) 1.1 0.3 _________________________________________ (1) Potential common stock equivalents not included in the calculation of diluted net income per share as the effect would have been anti-dilutive. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Feb. 28, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Royalties We have royalty commitments associated with the licensing of certain offerings. Royalty expense is generally based on a dollar amount per unit sold or a percentage of the underlying revenue. Indemnifications In the ordinary course of business, we provide indemnifications of varying scope to customers and channel partners against claims of intellectual property infringement made by third parties arising from the use of our products and from time to time, we are subject to claims by our customers under these indemnification provisions. Historically, costs related to these indemnification provisions have not been significant and we are unable to estimate the maximum potential impact of these indemnification provisions on our future results of operations. To the extent permitted under Delaware law, we have agreements whereby we indemnify our officers and directors for certain events or occurrences while the officer or director is or was serving at our request in such capacity. The indemnification period covers all pertinent events and occurrences during the officer’s or director’s lifetime. The maximum potential amount of future payments we could be required to make under these indemnification agreements is unlimited; however, we have director and officer insurance coverage that reduces our exposure and enables us to recover a portion of any future amounts paid. We believe the estimated fair value of these indemnification agreements in excess of applicable insurance coverage is minimal. Legal Proceedings In connection with disputes relating to the validity or alleged infringement of third-party intellectual property rights, including patent rights, we have been, are currently and may in the future be subject to claims, negotiations or complex, protracted litigation. Intellectual property disputes and litigation may be very costly and can be disruptive to our business operations by diverting the attention and energies of management and key technical personnel. Although we have successfully defended or resolved past litigation and disputes, we may not prevail in any ongoing or future litigation and disputes. Third-party intellectual property disputes could subject us to significant liabilities, require us to enter into royalty and licensing arrangements on unfavorable terms, prevent us from licensing certain of our products or offering certain of our services, subject us to injunctions restricting our sale of products or services, cause severe disruptions to our operations or the markets in which we compete, or require us to satisfy indemnification commitments with our customers including contractual provisions under various license arrangements and service agreements. In addition to intellectual property disputes, we are subject to legal proceedings, claims and investigations in the ordinary course of business, including claims relating to commercial, employment and other matters. Some of these disputes and legal proceedings may include speculative claims for substantial or indeterminate amounts of damages. We consider all claims on a quarterly basis in accordance with GAAP and based on known facts assess whether potential losses are considered reasonably possible, probable and estimable. Based upon this assessment, we then evaluate disclosure requirements and whether to accrue for such claims in our financial statements. This determination is then reviewed and discussed with our Audit Committee and our independent registered public accounting firm. We make a provision for a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These provisions are reviewed at least quarterly and adjusted to reflect the impacts of negotiations, settlements, rulings, advice of legal counsel and other information and events pertaining to a particular case. Unless otherwise specifically disclosed in this note, we have determined that no provision for liability nor disclosure is required related to any claim against us because: (a) there is not a reasonable possibility that a loss exceeding amounts already recognized (if any) may be incurred with respect to such claim; (b) a reasonably possible loss or range of loss cannot be estimated; or (c) such estimate or provision for liability is immaterial. All legal costs associated with litigation are expensed as incurred. Litigation is inherently unpredictable. However, we believe that we have valid defenses with respect to the legal matters pending against us. It is possible, nevertheless, that our consolidated financial position, cash flows or results of operations could be negatively affected by an unfavorable resolution of one or more of such proceedings, claims or investigations. In connection with our anti-piracy efforts, conducted both internally and through organizations such as the Business Software Alliance, from time to time we undertake litigation against alleged copyright infringers. Such lawsuits may lead to counter-claims alleging improper use of litigation or violation of other laws. We believe we have valid defenses with respect to such counter-claims; however, it is possible that our consolidated financial position, cash flows or results of operations could be negatively affected in any particular period by the resolution of one or more of these counter-claims. |
Debt
Debt | 3 Months Ended |
Feb. 28, 2020 | |
Debt Disclosure [Abstract] | |
Debt | DEBT The carrying values of our borrowings as of February 28, 2020 and November 29, 2019 were as follows: (dollars in millions) Issuance Date Due Date Effective Interest Rate February 28, 2020 November 29, 2019 4.75% 2020 Notes February 2010 February 2020 4.92% $ — $ 900 1.70% 2023 Notes February 2020 February 2023 1.92% 500 — 1.90% 2025 Notes February 2020 February 2025 2.07% 500 — 3.25% 2025 Notes January 2015 February 2025 3.67% 1,000 1,000 2.15% 2027 Notes February 2020 February 2027 2.26% 850 — 2.30% 2030 Notes February 2020 February 2030 2.69% 1,300 — Term Loan October 2018 April 2020 2.47% — 2,250 Total debt outstanding, at par $ 4,150 $ 4,150 Less current portion of debt — (3,150 ) Unamortized discount and debt issuance costs (37 ) (11 ) Carrying value of long-term debt $ 4,113 $ 989 Current portion of debt, at par $ — $ 3,150 Unamortized discount and debt issuance costs — (1 ) Carrying value of current debt $ — $ 3,149 Term Loan In October 2018, we entered into a credit agreement providing a $2.25 billion senior unsecured term loan (“Term Loan”) with a maturity date of April 30, 2020. The Term Loan ranked equally with our other unsecured and unsubordinated indebtedness. There were no scheduled principal amortization payments prior to maturity and the Term Loan may be prepaid and terminated at our election at any time without penalty or premium. At our election, the Term Loan bore interest at either (i) LIBOR plus a margin, based on our debt ratings, ranging from 0.500% to 1.000% or (ii) a base rate plus a margin, based on our debt ratings, ranging from 0.040% to 0.110% . The related issuance costs were amortized to interest expense over the Term Loan period using the effective interest method. Interest was payable periodically, in arrears, at the end of each interest period we elect. The Term Loan was paid and terminated in conjunction with our debt refinancing during the first quarter of fiscal 2020. 2020 Notes In February 2010, we issued $900 million of 4.75% senior notes due February 1, 2020 (“2020 Notes”). The related discount and issuance costs were amortized to interest expense over the term of the 2020 Notes using the effective interest method. The 2020 Notes became due and were paid in conjunction with our debt refinancing during the first quarter of fiscal 2020. We entered into interest rate swaps with a total notional amount of $900 million designated as a fair value hedge related to our 2020 Notes in fiscal 2014. The interest rate swaps effectively converted the fixed interest rate on our 2020 Notes to a floating interest rate based on LIBOR. The interest rate swap agreements also matured during the first quarter of fiscal 2020. See Note 6 for further details regarding our interest rate swap derivatives. Debt Refinancing In February 2020, we issued $500 million of 1.70% senior notes due February 1, 2023 (“2023 Notes”), $500 million of 1.90% senior notes due February 1, 2025 (“1.90% 2025 Notes”), $850 million of 2.15% senior notes due February 1, 2027 (“2027 Notes”) and $1.30 billion of 2.30% senior notes due February 1, 2030 (“2030 Notes”). Interest is payable semi-annually on these notes in arrears on February 1 and August 1 commencing on August 1, 2020 . Our total proceeds were approximately $3.14 billion , used for general corporate purposes including repayment of the 2020 Notes and Term Loan, and were net of an issuance discount of $6 million . In addition, we incurred total issuance costs of approximately $21 million . Both the discount and issuance costs are being amortized to interest expense over the respective terms of the senior notes using the effective interest method. In June 2019, in anticipation of our debt refinancing, we entered into Treasury lock agreements with large financial institutions which fixed benchmark U.S. Treasury rates for an aggregate notional amount of $1 billion of our future debt issuance. These derivative instruments hedged the impact of changes in the benchmark interest rate to future interest payments. Upon debt issuance, the Treasury lock agreements were settled and we incurred a loss which is amortized to interest expense over the term of our 2030 Notes using the effective interest method. See Note 6 for further details regarding our Treasury lock agreements. 3.25% 2025 Notes In January 2015, we issued $1 billion of 3.25% senior notes due February 1, 2025 (“3.25% 2025 Notes”) which remain outstanding as of February 28, 2020 . The related discount and issuance costs were amortized to interest expense over the term of the 3.25% 2025 Notes using the effective interest method. Interest is payable semi-annually, in arrears on February 1 and August 1. As of February 28, 2020 , our outstanding notes payable consists of the 2023 Notes, 1.90% 2025 Notes, 3.25% 2025 Notes, 2027 Notes and 2030 Notes (collectively, the “Notes”). Based on quoted prices in inactive markets, the total fair value of our outstanding Notes was $4.31 billion as of February 28, 2020 . Our Notes rank equally with our other unsecured and unsubordinated indebtedness. We may redeem the notes at any time, subject to a make-whole premium. In addition, upon the occurrence of certain change of control triggering events, we may be required to repurchase the notes, at a price equal to 101% of their principal amount, plus accrued and unpaid interest to the date of repurchase. The notes also include covenants that limit our ability to grant liens on assets and to enter into sale and leaseback transactions, subject to significant allowances. As of February 28, 2020 , we were in compliance with all of the covenants. Revolving Credit Agreement In October 2018, we entered into a credit agreement (“Revolving Credit Agreement”), providing for a five-year $1 billion senior unsecured revolving credit facility, which replaced our previous five-year $1 billion senior unsecured revolving credit agreement dated as of March 2, 2012 (as amended, the “Prior Revolving Credit Agreement”). In addition, we incurred issuance costs of $1 million which is amortized to interest expense over the term using the straight-line method. The Revolving Credit Agreement provides for loans to Adobe and certain of its subsidiaries that may be designated from time to time as additional borrowers. Pursuant to the terms of the Revolving Credit Agreement, we may, subject to the agreement of lenders to provide additional commitments, obtain up to an additional $500 million in commitments, for a maximum aggregate commitment of $1.5 billion . At our election, loans under the Revolving Credit Agreement will bear interest at either (i) LIBOR plus a margin, based on our debt ratings, ranging from 0.585% to 1.015% or (ii) a base rate, which is defined as the highest of (a) the agent’s prime rate, (b) the federal funds effective rate plus 0.500% or (c) LIBOR plus 1.00% plus a margin, based on our debt ratings, ranging from 0.000% to 0.015% . In addition, facility fees determined according to our debt ratings are payable on the aggregate commitments, regardless of usage, quarterly in an amount ranging from 0.04% to 0.11% per annum. We are permitted to permanently reduce the aggregate commitment under the Revolving Credit Agreement at any time. Subject to certain conditions stated in the Revolving Credit Agreement, Adobe and any of its subsidiaries designated as additional borrowers may borrow, prepay and re-borrow amounts at any time during the term of the Revolving Credit Agreement. The Revolving Credit Agreement contains customary representations, warranties, affirmative and negative covenants, including a financial covenant, events of default and indemnification provisions in favor of the lenders. The negative covenants include restrictions regarding the incurrence of liens and indebtedness, certain merger and acquisition transactions, dispositions and other matters, all subject to certain exceptions. The financial covenant, based on a quarterly financial test, requires us not to exceed a maximum leverage ratio. The facility will terminate and all amounts owing thereunder will be due and payable on the maturity date unless (a) the commitments are terminated earlier upon the occurrence of certain events, including an event of default, or (b) the maturity date is further extended upon our request, subject to the agreement of the lenders. As of February 28, 2020 , there were no outstanding borrowings under this Credit Agreement and we were in compliance with all covenants. |
Leases (Notes)
Leases (Notes) | 3 Months Ended |
Feb. 28, 2020 | |
Leases [Abstract] | |
LEASES | LEASES We lease certain facilities and data centers under non-cancellable operating lease arrangements that expire at various dates through 2031 . We also have one land lease that expires in 2091. We account for lease and non-lease components as a single lease component for our facilities and data center leases. We apply the accounting requirements of ASC 842 to short-term leases. Therefore, leases with an initial term of 12 months or less are recorded on the balance sheet, with lease expense for these leases recognized on a straight-line basis over the lease term. Our lease agreements do not contain any material residual value guarantees, material variable payment provisions or material restrictive covenants. Operating lease expense was $28 million for the three months ended February 28, 2020 , which we recognized in cost of revenue and operating expenses in our condensed consolidated statements of income. The operating lease expense includes immaterial variable lease costs and is net of immaterial sublease income. Supplemental cash flow information for the three months ended February 28, 2020 related to operating leases was as follows: (in millions) Cash paid for amounts included in the measurement of operating lease liabilities $ 24 Right-of-use assets obtained in exchange for operating lease liabilities $ 7 The weighted-average remaining lease term and weighted-average discount rate for our operating lease liabilities as of February 28, 2020 were 9 years and 2.35% , respectively. As of February 28, 2020 , the maturities of lease liabilities under operating leases are as follows: (in millions) Fiscal Year Operating Leases (1) Remainder of 2020 $ 73 2021 93 2022 80 2023 65 2024 55 Thereafter 302 Total lease liabilities $ 668 Less: Imputed interest 70 Present value of lease liabilities $ 598 _________________________________________ (1) Operating lease payments exclude $57 million of legally binding minimum lease payments for leases signed but not yet commenced. Future minimum rental payments and future minimum sublease income for our operating leases as of November 29, 2019 , prior to our adoption of the new leases standard, were as follows: (in millions) Operating Leases Fiscal Year Future Minimum Rental Payments Future Minimum Sublease Income 2020 $ 98 $ 10 2021 92 9 2022 81 6 2023 69 2 2024 61 — Thereafter 338 — Total $ 739 $ 27 |
Non-Operating Income (Expense)
Non-Operating Income (Expense) | 3 Months Ended |
Feb. 28, 2020 | |
Other Income and Expenses [Abstract] | |
NON-OPERATING INCOME (EXPENSE) | NON-OPERATING INCOME (EXPENSE) Non-operating income (expense) for the three months ended February 28, 2020 and March 1, 2019 included the following: (in millions) 2020 2019 Interest expense $ (33 ) $ (41 ) Investment gains (losses), net: Realized investment gains $ 3 $ 44 Unrealized investment losses (6 ) — Investment gains (losses), net $ (3 ) $ 44 Other income (expense), net: Interest income $ 19 $ 16 Foreign exchange gains (losses) (1 ) (12 ) Other income (expense), net $ 18 $ 4 Non-operating income (expense), net $ (18 ) $ 7 |
Basis of Presentation and Sum_2
Basis of Presentation and Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Feb. 28, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | We have prepared the accompanying unaudited condensed consolidated financial statements pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Pursuant to these rules and regulations, we have condensed or omitted certain information and footnote disclosures we normally include in our annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). In management’s opinion, we have made all adjustments (consisting only of normal, recurring adjustments, except as otherwise indicated) necessary to fairly present our financial position, results of operations and cash flows. Our interim period operating results do not necessarily indicate the results that may be expected for any other interim period or for the full fiscal year. These financial statements and accompanying notes should be read in conjunction with the consolidated financial statements and notes thereto in our Annual Report on Form 10-K for the fiscal year ended November 29, 2019 on file with the SEC (our “Annual Report”). |
Reclassifications | Reclassification Certain immaterial prior year amounts have been reclassified to conform to current year presentation in the condensed consolidated statements of cash flows and notes to condensed consolidated financial statements. |
Recently Adopted Accounting Guidance | Recently Adopted Accounting Guidance On February 24, 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842), (“ASC 842”), a new standard related to leases to increase transparency and comparability among organizations by requiring the recognition of right-of-use (“ROU”) assets and lease liabilities on the balance sheet for all leases with terms greater than twelve months, including for those leases classified as operating leases under the legacy standard (“ASC 840”). Under ASC 842, added disclosures are required as compared to ASC 840 to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. On November 30, 2019, the beginning of our fiscal year 2020, we adopted ASC 842 using the alternative modified retrospective transition method provided in ASU 2018-11, Leases (Topic 842): Targeted Improvements. Under this method, we recorded ROU assets and lease liabilities of approximately $519 million and $618 million , respectively, at the adoption date and did not include any retrospective adjustments to comparative periods to reflect the adoption of ASC 842. The lease liabilities reflect the remaining minimum rental payments for our existing leases as of the adoption date, discounted using our incremental borrowing rate for each lease. The standard had no impact on our consolidated net income or cash flows. We elected the package of practical expedients permitted under the transition guidance, which allowed us to carry forward our assessments on whether a contract was or contains a lease, our historical lease classification and our initial direct costs for any leases that existed prior to adoption date. We also elected the practical expedient that allowed us to carry forward our accounting treatment for existing land easements. We did not elect the hindsight practical expedient to determine the lease term for existing leases. On August 28, 2017, the FASB issued ASU No. 2017-12, Derivatives and Hedging, requiring expanded hedge accounting for both non-financial and financial risk components and refining the measurement of hedge results to better reflect an entity’s hedging strategies. The updated standard also amends the presentation and disclosure requirements and changes how entities assess hedge effectiveness. On November 30, 2019, the beginning of our fiscal year 2020, we adopted the accounting requirements of the updated standard utilizing the modified retrospective method of transition. The adoption of this standard did not have a material impact on our condensed consolidated financial statements and related disclosures. |
Leases [Policy Text Block] | Leases We determine if an arrangement is or contains a lease at contract inception. In certain of our lease arrangements, primarily those related to our data center arrangements, judgment is required in determining if a contract contains a lease. For these arrangements, there is judgment in evaluating if the arrangement involves an identified asset that is physically distinct or whether we have the right to substantially all of the capacity of an identified asset that is not physically distinct. In arrangements that involved an identified asset, there is also judgment in evaluating if we have the right to direct the use of that asset. We do not have any finance leases. Operating leases are recorded in our condensed consolidated balance sheets. ROU assets and lease liabilities are measured at the lease commencement date based on the present value of the remaining lease payments over the lease term, determined using the discount rate for the lease at the commencement date. Because the rate implicit in our leases is not readily determinable, we use our incremental borrowing rate as the discount rate, which approximates the interest rate at which we could borrow on a collateralized basis with similar terms and payments and in similar economic environments. Our leases have remaining lease terms of up to 12 years , some of which include options to extend the lease for up to 9 years and options to terminate the lease within 1 year . Optional periods to extend the lease, including by not exercising a termination option, are included in the lease term when it is reasonably certain that the option will be exercised. We also have one land lease that expires in 2091. Operating lease expense is recognized on a straight-line basis over the lease term. We account for lease and non-lease components, principally common area maintenance for our facilities leases, as a single lease component for our facilities and data center leases. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Not Yet Effective On June 16, 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses, requiring the measurement and recognition of expected credit losses for financial assets held at amortized cost, which include our accounts receivable and contract assets. The standard also requires that we recognize credit impairment losses related to our available-for-sale debt securities through an allowance for credit losses instead of a reduction in the cost basis. The effective date of the new standard for public companies is for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years. Early adoption is permitted. The new standard must be adopted using a modified retrospective transition with a cumulative effect adjustment recorded to opening retained earnings as of the initial adoption date. The updated standard is effective for us beginning in the first quarter of fiscal 2021 and we do not plan to early adopt. We are currently evaluating the effect that the standard will have on our condensed consolidated financial statements and related disclosures. With the exception of the new standard discussed above, there have been no other recent accounting pronouncements or changes in accounting pronouncements during the three months ended February 28, 2020 , as compared to the recent accounting pronouncements described in our Annual Report, that are of significance or potential significance to us. |
Derivative Financial Instrume_2
Derivative Financial Instruments (Policies) | 3 Months Ended |
Feb. 28, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivatives Policy | Cash Flow Hedges In countries outside the United States, we transact business in U.S. Dollars and in various other currencies. We may use foreign exchange option contracts or forward contracts to hedge a portion of our forecasted foreign currency denominated revenue. These foreign exchange contracts, carried at fair value, have maturities of up to twelve months . In June 2019, in anticipation of refinancing our $2.25 billion term loan due April 30, 2020 (“Term Loan”) and $900 million 4.75% fixed interest rate senior notes due February 1, 2020 (“2020 Notes”), we entered into Treasury lock agreements with large financial institutions which fixed benchmark U.S. Treasury rates for an aggregate notional amount of $1 billion of our future debt issuance. These derivative instruments hedged the impact of changes in the benchmark interest rate to future interest payments and were settled upon debt issuance in the first quarter of fiscal 2020. We incurred a loss related to the settlement of the instruments which is amortized to interest expense over the term of our debt due February 1, 2030. See Note 14 for further details regarding our debt. To receive hedge accounting treatment, all hedging relationships are formally documented at the inception of the hedge, and the hedges must be highly effective in offsetting changes to future cash flows on hedged transactions. We record changes in fair value of these cash flow hedges in accumulated other comprehensive income (loss) in our condensed consolidated balance sheets, until the forecasted transaction occurs. When the forecasted transaction affects earnings, we reclassify the related gain or loss on the foreign currency and Treasury lock cash flow hedges to revenue and interest expense, respectively. In the event the underlying forecasted transaction does not occur, or it becomes probable that it will not occur, we reclassify the gain or loss on the related cash flow hedge from accumulated other comprehensive income (loss) to the same income statement line item as the hedged item. We evaluate hedge effectiveness at the inception of the hedge prospectively, and on an ongoing basis both retrospectively and prospectively. If we do not elect hedge accounting, or the contract does not qualify for hedge accounting treatment, the changes in fair value from period to period are recorded in the same income statement line item as the hedged item. Effective in the third quarter of fiscal 2019, all changes in fair value of our foreign currency cash flow hedges are recorded in accumulated other comprehensive income (loss). Prior to this, we recorded the time value of purchased contracts in other income (expense), net in our condensed consolidated statements of income. Fair Value Hedges During the third quarter of fiscal 2014, we entered into interest rate swaps designated as fair value hedge related to our 2020 Notes. The interest rate swaps converted the fixed interest rate on the 2020 Notes to a floating interest rate based on the London Interbank Offered Rate (“LIBOR”). See Note 14 for further details regarding our debt. The interest rate swaps were accounted for as fair value hedges and substantially offset the changes in fair value of the hedged portion of the underlying debt that were attributable to the changes in market risk. Therefore, the gains and losses related to changes in the fair value of the interest rate swaps were included in other income (expense), net in our condensed consolidated statements of income. During the first quarter of fiscal 2020, our 2020 Notes became due and were paid in conjunction with our debt refinancing. As of February 28, 2020 , the interest rate swap agreements had matured and were no longer recognized in our condensed consolidated financial statements. Non-Designated Hedges Our derivatives not designated as hedging instruments consist of foreign currency forward contracts that we primarily use to hedge monetary assets and liabilities denominated in non-functional currencies. The changes in fair value of these contracts is recorded to other income (expense), net in our condensed consolidated statements of income. Changes in the fair value of the underlying assets and liabilities associated with the hedged risk are generally offset by the changes in the fair value of the related contracts. |
Revenue (Tables)
Revenue (Tables) | 3 Months Ended |
Feb. 28, 2020 | |
Revenue [Abstract] | |
Disaggregation of Revenue | Segment Information Our segment results for the three months ended February 28, 2020 and March 1, 2019 were as follows: (dollars in millions) Digital Media Digital Experience Publishing Total Three months ended February 28, 2020 Revenue $ 2,169 $ 858 $ 64 $ 3,091 Cost of revenue 87 361 4 452 Gross profit $ 2,082 $ 497 $ 60 $ 2,639 Gross profit as a percentage of revenue 96 % 58 % 94 % 85 % Three months ended March 1, 2019 Revenue $ 1,777 $ 743 $ 81 $ 2,601 Cost of revenue 68 324 5 397 Gross profit $ 1,709 $ 419 $ 76 $ 2,204 Gross profit as a percentage of revenue 96 % 56 % 93 % 85 % Revenue by geographic area for the three months ended February 28, 2020 and March 1, 2019 were as follows: (in millions) 2020 2019 Americas $ 1,797 $ 1,510 EMEA 817 703 APAC 477 388 Total $ 3,091 $ 2,601 Revenue by major offerings in our Digital Media reportable segment for the three months ended February 28, 2020 and March 1, 2019 were as follows: (in millions) 2020 2019 Creative Cloud $ 1,818 $ 1,495 Document Cloud 351 282 Total $ 2,169 $ 1,777 Subscription revenue by segment for the three months ended February 28, 2020 and March 1, 2019 were as follows: (in millions) 2020 2019 Digital Media $ 2,058 $ 1,664 Digital Experience 739 612 Publishing 28 29 Total $ 2,825 $ 2,305 |
Cash, Cash Equivalents and Sh_2
Cash, Cash Equivalents and Short-Term Investments (Tables) | 3 Months Ended |
Feb. 28, 2020 | |
Cash, Cash Equivalents, and Short-term Investments [Abstract] | |
Cash Cash Equivalents and Short term Investments | Cash, cash equivalents and short-term investments consisted of the following as of February 28, 2020 : (in millions) Amortized Cost Unrealized Gains Unrealized Losses Estimated Fair Value Current assets: Cash $ 473 $ — $ — $ 473 Cash equivalents: Corporate debt securities 45 — — 45 Money market mutual funds 2,143 — — 2,143 Time deposits 27 — — 27 Total cash equivalents 2,215 — — 2,215 Total cash and cash equivalents 2,688 — — 2,688 Short-term fixed income securities: Asset-backed securities 95 1 — 96 Corporate debt securities 1,368 8 — 1,376 Municipal securities 11 — — 11 Total short-term investments 1,474 9 — 1,483 Total cash, cash equivalents and short-term investments $ 4,162 $ 9 $ — $ 4,171 Cash, cash equivalents and short-term investments consisted of the following as of November 29, 2019 : (in millions) Amortized Cost Unrealized Gains Unrealized Losses Estimated Fair Value Current assets: Cash $ 467 $ — $ — $ 467 Cash equivalents: Corporate debt securities 46 — — 46 Money market mutual funds 2,049 — — 2,049 Time deposits 88 — — 88 Total cash equivalents 2,183 — — 2,183 Total cash and cash equivalents 2,650 — — 2,650 Short-term fixed income securities: Asset-backed securities 89 — — 89 Corporate debt securities 1,408 4 — 1,412 Municipal securities 18 — — 18 U.S. Treasury securities 8 — — 8 Total short-term investments 1,523 4 — 1,527 Total cash, cash equivalents and short-term investments $ 4,173 $ 4 $ — $ 4,177 |
Fair Value of Available-for-Sale Securities in a continuous loss position | We had immaterial gross unrealized losses related to our available-for-sale securities as of February 28, 2020 and November 29, 2019 . The following table summarizes the fair value of our available-for-sale securities that have been in a continuous unrealized loss position as of February 28, 2020 and November 29, 2019 : (in millions) 2020 2019 Less Than Twelve Months More Than Twelve Months Less Than Twelve Months More Than Twelve Months Corporate debt securities $ 70 $ 9 $ 235 $ 44 Asset-backed securities 3 — 7 7 Municipal securities — — 3 — Total $ 73 $ 9 $ 245 $ 51 |
Cost and Estimated Fair Value of Debt Securities | The following table summarizes the cost and estimated fair value of short-term fixed income securities classified as short-term investments based on stated effective maturities as of February 28, 2020 : (in millions) Amortized Cost Estimated Fair Value Due within one year $ 922 $ 925 Due between one and two years 364 367 Due between two and three years 188 191 Total $ 1,474 $ 1,483 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Feb. 28, 2020 | |
Fair Value Disclosures [Abstract] | |
Financial assets and liabilities at fair value on a recurring basis | The fair value of our financial assets and liabilities at February 28, 2020 was determined using the following inputs: (in millions) Fair Value Measurements at Reporting Date Using Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs Total (Level 1) (Level 2) (Level 3) Assets: Cash equivalents: Corporate debt securities $ 45 $ — $ 45 $ — Money market mutual funds 2,143 2,143 — Time deposits 27 27 — Short-term investments: Asset-backed securities 96 — 96 — Corporate debt securities 1,376 — 1,376 — Municipal securities 11 — 11 — Prepaid expenses and other current assets: Foreign currency derivatives 33 — 33 — Other assets: Deferred compensation plan assets 98 4 94 — Total assets $ 3,829 $ 2,174 $ 1,655 $ — Liabilities: Accrued expenses: Foreign currency derivatives $ 8 $ — $ 8 $ — The fair value of our financial assets and liabilities at November 29, 2019 was determined using the following inputs: (in millions) Fair Value Measurements at Reporting Date Using Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs Total (Level 1) (Level 2) (Level 3) Assets: Cash equivalents: Corporate debt securities $ 46 $ — $ 46 $ — Money market mutual funds 2,049 2,049 — — Time deposits 88 88 — — Short-term investments: Asset-backed securities 89 — 89 — Corporate debt securities 1,412 — 1,412 — Municipal securities 18 — 18 — U.S. Treasury securities 8 — 8 — Prepaid expenses and other current assets: Foreign currency derivatives 29 — 29 — Other assets: Deferred compensation plan assets 94 5 89 — Total assets $ 3,833 $ 2,142 $ 1,691 $ — Liabilities: Accrued expenses: Treasury lock derivatives $ 30 $ — $ 30 $ — Foreign currency derivatives 3 — 3 — Total liabilities $ 33 $ — $ 33 $ — |
Derivative Financial Instrume_3
Derivative Financial Instruments (Tables) | 3 Months Ended |
Feb. 28, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Fair Value of Derivative Instruments | The fair value of derivative instruments on our condensed consolidated balance sheets as of February 28, 2020 and November 29, 2019 were as follows: (in millions) 2020 2019 Fair Value Asset Derivatives Fair Value Liability Derivatives Fair Value Asset Derivatives Fair Value Liability Derivatives Derivatives designated as hedging instruments: Foreign exchange option contracts (1) (2) $ 25 $ — $ 26 $ — Treasury lock (1) — — — 30 Derivatives not designated as hedging instruments: Foreign exchange forward contracts (1) 8 8 3 3 Total derivatives $ 33 $ 8 $ 29 $ 33 _________________________________________ (1) Fair value asset derivatives are included in prepaid expenses and other current assets and fair value liability derivatives are included in accrued expenses on our condensed consolidated balance sheets. (2) Net derivatives gain expected to be recognized into revenue within the next 18 months , of which $8 million is expected within the next 12 months. |
Schedule of Derivative Instruments, Effect on Other Comprehensive Income (Loss) | Gains (losses) on derivative instruments, net of tax, recognized in our condensed consolidated statements of comprehensive income for the three months ended February 28, 2020 and March 1, 2019 were as follows: (in millions) 2020 2019 Derivatives in cash flow hedging relationships: Foreign exchange option contracts $ 2 $ (9 ) Treasury lock $ (1 ) $ — |
Schedule of Derivative Instruments, Effect on Statements of Income | The effects of derivative instruments on our condensed consolidated statements of income for the three months ended February 28, 2020 and March 1, 2019 were as follows: (in millions) 2020 2019 Revenue Other Income (Expense), Net Revenue Other Income (Expense), Net Derivatives in cash flow hedging relationships: Foreign exchange option contracts (1) Net gain (loss) reclassified from accumulated other comprehensive income into income, net of tax $ 7 $ — $ 9 $ — Amount excluded from effectiveness testing and ineffective portion $ — $ — $ — $ (12 ) Derivatives not designated as hedging relationships: Foreign exchange forward contracts $ — $ (1 ) $ — $ (2 ) _________________________________________ (1) Starting the third quarter of fiscal 2019, all changes in the fair value of our foreign currency cash flow hedges are recorded in accumulated other comprehensive income. |
Goodwill and Other Intangibles
Goodwill and Other Intangibles (Tables) | 3 Months Ended |
Feb. 28, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Other intangible assets | Other intangible assets subject to amortization as of February 28, 2020 and November 29, 2019 were as follows: (in millions) 2020 2019 Cost Accumulated Amortization Net Cost Accumulated Amortization Net Customer contracts and relationships $ 1,219 $ (468 ) $ 751 $ 1,219 $ (436 ) $ 783 Purchased technology 759 (255 ) 504 759 (223 ) 536 Trademarks 384 (85 ) 299 384 (73 ) 311 Other 228 (156 ) 72 227 (136 ) 91 Other intangibles, net $ 2,590 $ (964 ) $ 1,626 $ 2,589 $ (868 ) $ 1,721 |
Amortization expense in future periods | As of February 28, 2020 , we expect amortization expense in future periods to be as follows: (in millions) Other Intangibles Remainder of 2020 $ 269 2021 255 2022 223 2023 214 2024 202 Thereafter 463 Total expected amortization expense $ 1,626 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 3 Months Ended |
Feb. 28, 2020 | |
Payables and Accruals [Abstract] | |
Accrued Expenses | Accrued expenses as of February 28, 2020 and November 29, 2019 consisted of the following: (in millions) 2020 2019 Accrued compensation and benefits $ 389 $ 318 Accrued bonuses 93 222 Refund liabilities 122 126 Accrued media costs 98 118 Accrued corporate marketing 84 80 Taxes payable 74 83 Royalties payable 72 62 Fair value of derivatives 8 33 Accrued interest expense 7 29 Accrued building rent — 99 Other 294 229 Accrued expenses $ 1,241 $ 1,399 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 3 Months Ended |
Feb. 28, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Restricted Stock Unit Activity | Restricted stock unit activity for the three months ended February 28, 2020 was as follows: Number of Shares (in millions) Weighted Average Grant Date Fair Value Aggregate Fair Value (1) (in millions) Beginning outstanding balance 8.6 $ 211.95 Awarded 2.7 $ 350.46 Released (2.7 ) $ 177.06 Forfeited (0.2 ) $ 235.76 Ending outstanding balance 8.4 $ 266.34 $ 2,896 Expected to vest 7.5 $ 263.96 $ 2,593 _________________________________________ (1) The aggregate fair value is calculated using the closing stock price as of February 28, 2020 of $345.12 |
Performance Share Activity | Performance share activity for the three months ended February 28, 2020 was as follows: Number of Shares (in millions) Weighted Average Grant Date Fair Value Aggregate Fair Value (1) (in millions) Beginning outstanding balance 1.0 $ 199.78 Awarded 0.6 $ 271.62 Achieved (0.8 ) $ 118.84 Forfeited — $ 295.33 Ending outstanding balance 0.8 $ 326.37 $ 271 Expected to vest 0.7 $ 319.26 $ 237 _________________________________________ (1) The aggregate fair value is calculated using the closing stock price as of February 28, 2020 of $345.12 |
Employee Stock Purchase Plan, Valuation Assumptions | The assumptions used to value employee stock purchase rights during the three months ended February 28, 2020 and March 1, 2019 were as follows: 2020 2019 Expected life (in years) 0.5 - 2.0 0.5 - 2.0 Volatility 24% - 29% 35% - 37% Risk free interest rate 1.56% - 1.58% 2.47% - 2.63% |
Stock-Based Compensation, Income Statement Location | Total stock-based compensation costs included in our condensed consolidated statements of income for the three months ended February 28, 2020 and March 1, 2019 were as follows: (in millions) 2020 2019 Income Statement Classifications Restricted Stock Units and Performance Share Awards Stock Purchase Rights and Options Restricted Stock Units and Performance Share Awards Stock Cost of revenue $ 12 $ 3 $ 9 $ 4 Research and development 101 9 76 9 Sales and marketing 55 10 52 10 General and administrative 25 2 22 3 Total $ 193 $ 24 $ 159 $ 26 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (Loss) (Tables) | 3 Months Ended |
Feb. 28, 2020 | |
Stockholders' Equity Note [Abstract] | |
Schedule of Accumulated Other Comprehensive Income (Loss) | The components of accumulated other comprehensive income (loss) and activity, net of related taxes, as of February 28, 2020 were as follows: (in millions) November 29, Increase / Decrease Reclassification Adjustments February 28, Unrealized gains on available-for-sale securities $ 4 $ 4 $ — (1) $ 8 Net unrealized gains / losses on derivative instruments designated as hedging instruments (22 ) 1 (2 ) (2) (23 ) Cumulative foreign currency translation adjustments (170 ) (4 ) — (174 ) Total accumulated other comprehensive income (loss), net of taxes $ (188 ) $ 1 $ (2 ) $ (189 ) _________________________________________ (1) Reclassification adjustments for gains / losses on available-for-sale securities are classified in other income (expense), net. (2) Reclassification adjustments for gains / losses on foreign currency hedges are classified in revenue and reclassification adjustments for gains / losses on Treasury lock hedges are classified in interest expense. |
Net Income Per Share (Tables)
Net Income Per Share (Tables) | 3 Months Ended |
Feb. 28, 2020 | |
Earnings Per Share [Abstract] | |
Net Income Per Share | The following table sets forth the computation of basic and diluted net income per share for the three months ended February 28, 2020 and March 1, 2019 : (in millions, except per share data) 2020 2019 Net income $ 955 $ 674 Shares used to compute basic net income per share 482.4 488.1 Dilutive potential common shares: Restricted stock units and performance share awards 5.0 5.7 Stock purchase rights and options 0.4 0.4 Shares used to compute diluted net income per share 487.8 494.2 Basic net income per share $ 1.98 $ 1.38 Diluted net income per share $ 1.96 $ 1.36 Anti-dilutive potential common shares (1) 1.1 0.3 _________________________________________ (1) Potential common stock equivalents not included in the calculation of diluted net income per share as the effect would have been anti-dilutive. |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Feb. 28, 2020 | |
Debt Disclosure [Abstract] | |
Carrying value of outstanding debt | The carrying values of our borrowings as of February 28, 2020 and November 29, 2019 were as follows: (dollars in millions) Issuance Date Due Date Effective Interest Rate February 28, 2020 November 29, 2019 4.75% 2020 Notes February 2010 February 2020 4.92% $ — $ 900 1.70% 2023 Notes February 2020 February 2023 1.92% 500 — 1.90% 2025 Notes February 2020 February 2025 2.07% 500 — 3.25% 2025 Notes January 2015 February 2025 3.67% 1,000 1,000 2.15% 2027 Notes February 2020 February 2027 2.26% 850 — 2.30% 2030 Notes February 2020 February 2030 2.69% 1,300 — Term Loan October 2018 April 2020 2.47% — 2,250 Total debt outstanding, at par $ 4,150 $ 4,150 Less current portion of debt — (3,150 ) Unamortized discount and debt issuance costs (37 ) (11 ) Carrying value of long-term debt $ 4,113 $ 989 Current portion of debt, at par $ — $ 3,150 Unamortized discount and debt issuance costs — (1 ) Carrying value of current debt $ — $ 3,149 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Feb. 28, 2020 | |
Leases [Abstract] | |
Lease, Cost | Supplemental cash flow information for the three months ended February 28, 2020 related to operating leases was as follows: (in millions) Cash paid for amounts included in the measurement of operating lease liabilities $ 24 Right-of-use assets obtained in exchange for operating lease liabilities $ 7 |
Operating Lease Liability, Maturity | As of February 28, 2020 , the maturities of lease liabilities under operating leases are as follows: (in millions) Fiscal Year Operating Leases (1) Remainder of 2020 $ 73 2021 93 2022 80 2023 65 2024 55 Thereafter 302 Total lease liabilities $ 668 Less: Imputed interest 70 Present value of lease liabilities $ 598 _________________________________________ (1) Operating lease payments exclude $57 million of legally binding minimum lease payments for leases signed but not yet commenced. Future minimum rental payments and future minimum sublease income for our operating leases as of November 29, 2019 , prior to our adoption of the new leases standard, were as follows: (in millions) Operating Leases Fiscal Year Future Minimum Rental Payments Future Minimum Sublease Income 2020 $ 98 $ 10 2021 92 9 2022 81 6 2023 69 2 2024 61 — Thereafter 338 — Total $ 739 $ 27 |
Non-Operating Income (Expense)
Non-Operating Income (Expense) (Tables) | 3 Months Ended |
Feb. 28, 2020 | |
Other Income and Expenses [Abstract] | |
Non-Operating Income (Expense) | Non-operating income (expense) for the three months ended February 28, 2020 and March 1, 2019 included the following: (in millions) 2020 2019 Interest expense $ (33 ) $ (41 ) Investment gains (losses), net: Realized investment gains $ 3 $ 44 Unrealized investment losses (6 ) — Investment gains (losses), net $ (3 ) $ 44 Other income (expense), net: Interest income $ 19 $ 16 Foreign exchange gains (losses) (1 ) (12 ) Other income (expense), net $ 18 $ 4 Non-operating income (expense), net $ (18 ) $ 7 |
Basis of Presentation and Sum_3
Basis of Presentation and Summary of Significant Accounting Policies (Details Numeric) - USD ($) $ in Millions | Feb. 28, 2020 | Nov. 30, 2019 | Nov. 29, 2019 | [1] |
Basis of Presentation and Summary of Significant Accounting Policies [Abstract] | ||||
Operating lease right-of-use asset, net | $ 504 | $ 519 | $ 0 | |
Operating lease liability | $ 598 | $ 618 | ||
Operating lease, maximum remaining term | 12 years | |||
Operating lease, option to extend, maximum remaining term | 9 years | |||
Operating lease, option to terminate, minimum remaining term | 1 year | |||
[1] | The condensed consolidated balance sheet as of November 29, 2019 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. |
Revenue (Details 1)
Revenue (Details 1) - USD ($) $ in Millions | 3 Months Ended | |
Feb. 28, 2020 | Mar. 01, 2019 | |
Segment Reporting Information | ||
Revenues | $ 3,091 | $ 2,601 |
Cost of revenue | 452 | 397 |
Gross profit | $ 2,639 | $ 2,204 |
Gross profit as a percentage of revenue | 85.00% | 85.00% |
Digital Media | ||
Segment Reporting Information | ||
Revenues | $ 2,169 | $ 1,777 |
Cost of revenue | 87 | 68 |
Gross profit | $ 2,082 | $ 1,709 |
Gross profit as a percentage of revenue | 96.00% | 96.00% |
Digital Experience | ||
Segment Reporting Information | ||
Revenues | $ 858 | $ 743 |
Cost of revenue | 361 | 324 |
Gross profit | $ 497 | $ 419 |
Gross profit as a percentage of revenue | 58.00% | 56.00% |
Publishing | ||
Segment Reporting Information | ||
Revenues | $ 64 | $ 81 |
Cost of revenue | 4 | 5 |
Gross profit | $ 60 | $ 76 |
Gross profit as a percentage of revenue | 94.00% | 93.00% |
Revenue (Details 2)
Revenue (Details 2) - USD ($) $ in Millions | 3 Months Ended | |
Feb. 28, 2020 | Mar. 01, 2019 | |
Revenues | ||
Revenues | $ 3,091 | $ 2,601 |
Americas | ||
Revenues | ||
Revenues | 1,797 | 1,510 |
EMEA | ||
Revenues | ||
Revenues | 817 | 703 |
APAC | ||
Revenues | ||
Revenues | $ 477 | $ 388 |
Revenue (Details 3)
Revenue (Details 3) - USD ($) $ in Millions | 3 Months Ended | |
Feb. 28, 2020 | Mar. 01, 2019 | |
Revenue from External Customer | ||
Revenues | $ 3,091 | $ 2,601 |
Digital Media | ||
Revenue from External Customer | ||
Creative Cloud | 1,818 | 1,495 |
Document Cloud | 351 | 282 |
Revenues | $ 2,169 | $ 1,777 |
Revenue (Details 4)
Revenue (Details 4) - USD ($) $ in Millions | 3 Months Ended | |
Feb. 28, 2020 | Mar. 01, 2019 | |
Disaggregation of Revenue | ||
Subscription | $ 2,825 | $ 2,305 |
Digital Media | ||
Disaggregation of Revenue | ||
Subscription | 2,058 | 1,664 |
Digital Experience | ||
Disaggregation of Revenue | ||
Subscription | 739 | 612 |
Publishing | ||
Disaggregation of Revenue | ||
Subscription | $ 28 | $ 29 |
Revenue (Details Numeric)
Revenue (Details Numeric) - USD ($) $ in Millions | 3 Months Ended | ||
Feb. 28, 2020 | Nov. 29, 2019 | ||
Trade receivables, net of allowances for doubtful accounts | $ 1,389 | $ 1,535 | [1] |
Unbilled receivables | 114 | 149 | |
Allowances for doubtful accounts | 9 | 10 | |
Contract assets | 76 | 64 | |
Deferred revenue | 3,610 | 3,500 | |
Deferred revenue recognized that was included in the beginning balance | 1,470 | ||
Remaining performance obligations | $ 9,910 | ||
Non-Cancellable Committed Funds, Deferred Revenue, Percentage | 6.00% | ||
Non-Cancellable Comitted Funds, Remaining Performance Obligation, Percentage | 5.00% | ||
Percent of Remaining performance obligations expected to be recognized in next 12 months | 74.00% | ||
Capitalized contract acquisition costs | $ 505 | 474 | |
Refund liabilities | 122 | $ 126 | |
Refundable Customer Deposits | |||
Deferred revenue | $ 45 | ||
[1] | The condensed consolidated balance sheet as of November 29, 2019 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. |
Acquisitions (Details Numeric)
Acquisitions (Details Numeric) - Allegorithmic $ in Millions | Jan. 23, 2019USD ($) |
Business Acquisition | |
Business combination, purchase price for remaining interest | $ 106 |
Total estimated purchase price | 161 |
Business combination, step acquisition, equity interest in acquiree, remeasurement gain (loss), net | 42 |
Business combination, step acquisition, equity interest in acquiree, fair value | 55 |
Goodwill, acquired during period | 126 |
Business combination, Identifiable assets acquired | $ 45 |
Cash, Cash Equivalents and Sh_3
Cash, Cash Equivalents and Short-Term Investments (Details) - USD ($) $ in Millions | Feb. 28, 2020 | Nov. 29, 2019 |
Schedule of Available-for-sale Securities | ||
Amortized Cost | $ 4,162 | $ 4,173 |
Unrealized Gains | 9 | 4 |
Unrealized Losses | 0 | 0 |
Estimated Fair Value, Total cash, cash equivalents and short-term investments | 4,171 | 4,177 |
Cash and cash equivalents | ||
Schedule of Available-for-sale Securities | ||
Amortized Cost | 2,688 | 2,650 |
Unrealized Gains | 0 | 0 |
Unrealized Losses | 0 | 0 |
Cash and Cash Equivalents, Fair Value Disclosure | 2,688 | 2,650 |
Cash | ||
Schedule of Available-for-sale Securities | ||
Amortized Cost | 473 | 467 |
Unrealized Gains | 0 | 0 |
Unrealized Losses | 0 | 0 |
Cash and Cash Equivalents, Fair Value Disclosure | 473 | 467 |
Cash equivalents | ||
Schedule of Available-for-sale Securities | ||
Amortized Cost | 2,215 | 2,183 |
Unrealized Gains | 0 | 0 |
Unrealized Losses | 0 | 0 |
Cash and Cash Equivalents, Fair Value Disclosure | 2,215 | 2,183 |
Cash equivalents | Corporate debt securities | ||
Schedule of Available-for-sale Securities | ||
Amortized Cost | 45 | 46 |
Unrealized Gains | 0 | 0 |
Unrealized Losses | 0 | 0 |
Cash and Cash Equivalents, Fair Value Disclosure | 45 | 46 |
Cash equivalents | Money market mutual funds | ||
Schedule of Available-for-sale Securities | ||
Amortized Cost | 2,143 | 2,049 |
Unrealized Gains | 0 | 0 |
Unrealized Losses | 0 | 0 |
Cash and Cash Equivalents, Fair Value Disclosure | 2,143 | 2,049 |
Cash equivalents | Time deposits | ||
Schedule of Available-for-sale Securities | ||
Amortized Cost | 27 | 88 |
Unrealized Gains | 0 | 0 |
Unrealized Losses | 0 | 0 |
Cash and Cash Equivalents, Fair Value Disclosure | 27 | 88 |
Short-term fixed income securities | ||
Schedule of Available-for-sale Securities | ||
Amortized Cost | 1,474 | 1,523 |
Unrealized Gains | 9 | 4 |
Unrealized Losses | 0 | 0 |
Estimated Fair Value, short-term investments | 1,483 | 1,527 |
Short-term fixed income securities | Asset-backed securities | ||
Schedule of Available-for-sale Securities | ||
Amortized Cost | 95 | 89 |
Unrealized Gains | 1 | 0 |
Unrealized Losses | 0 | 0 |
Estimated Fair Value, short-term investments | 96 | 89 |
Short-term fixed income securities | Corporate debt securities | ||
Schedule of Available-for-sale Securities | ||
Amortized Cost | 1,368 | 1,408 |
Unrealized Gains | 8 | 4 |
Unrealized Losses | 0 | 0 |
Estimated Fair Value, short-term investments | 1,376 | 1,412 |
Short-term fixed income securities | Municipal securities | ||
Schedule of Available-for-sale Securities | ||
Amortized Cost | 11 | 18 |
Unrealized Gains | 0 | 0 |
Unrealized Losses | 0 | 0 |
Estimated Fair Value, short-term investments | $ 11 | 18 |
Short-term fixed income securities | U.S. Treasury securities | ||
Schedule of Available-for-sale Securities | ||
Amortized Cost | 8 | |
Unrealized Gains | 0 | |
Unrealized Losses | 0 | |
Estimated Fair Value, short-term investments | $ 8 |
Cash, Cash Equivalents and Sh_4
Cash, Cash Equivalents and Short-Term Investments (Details 1) $ in Millions | Feb. 28, 2020USD ($)securities | Nov. 29, 2019USD ($)securities |
Schedule of Available-for-sale Securities | ||
Available-for-sale securities, continuous unrealized loss position, less than twelve months, fair value | $ 73 | $ 245 |
Available-for-sale securities in a continuous unrealized loss position for more than twelve months, fair value | $ 9 | $ 51 |
Fair Value and Gross Unrealized Losses Related to Available-For-Sale Securities | ||
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions, Less than One Year | securities | 27 | 115 |
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions, Greater than or Equal to One Year | securities | 4 | 38 |
Corporate debt securities | ||
Schedule of Available-for-sale Securities | ||
Available-for-sale securities, continuous unrealized loss position, less than twelve months, fair value | $ 70 | $ 235 |
Available-for-sale securities in a continuous unrealized loss position for more than twelve months, fair value | 9 | 44 |
Asset-backed securities | ||
Schedule of Available-for-sale Securities | ||
Available-for-sale securities, continuous unrealized loss position, less than twelve months, fair value | 3 | 7 |
Available-for-sale securities in a continuous unrealized loss position for more than twelve months, fair value | 0 | 7 |
Municipal securities | ||
Schedule of Available-for-sale Securities | ||
Available-for-sale securities, continuous unrealized loss position, less than twelve months, fair value | 0 | 3 |
Available-for-sale securities in a continuous unrealized loss position for more than twelve months, fair value | $ 0 | $ 0 |
Cash, Cash Equivalents and Sh_5
Cash, Cash Equivalents and Short-Term Investments (Details 2) $ in Millions | Feb. 28, 2020USD ($) |
Amortized cost of short-term fixed income securities | |
Due within one year, Amortized Cost | $ 922 |
Due between one and two years, Amortized Cost | 364 |
Due between two and three years, Amortized Cost | 188 |
Total, Amortized Cost | 1,474 |
Estimated fair value of short-term fixed income securities | |
Due within one year, Estimated Fair value | 925 |
Due between one and two years, Estimated Fair value | 367 |
Due between two and three years, Estimated Fair value | 191 |
Total, Estimated Fair value | $ 1,483 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) $ in Millions | Feb. 28, 2020USD ($) |
Senior Notes | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions | |
Debt Instrument, Fair Value Disclosure | $ 4,310 |
Fair Value Measurements (Deta_2
Fair Value Measurements (Details 1) - Fair Value, Measurements, Recurring - USD ($) $ in Millions | Feb. 28, 2020 | Nov. 29, 2019 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Foreign Currency Contracts, Asset, Fair Value Disclosure | $ 33 | $ 29 |
Deferred Compensation Plan Assets | 98 | 94 |
Assets, Fair Value Disclosure | 3,829 | 3,833 |
Treasury Lock Derivative, at Fair Value, Net | 30 | |
Foreign Currency Contracts, Liability, Fair Value Disclosure | 8 | 3 |
Financial and Nonfinancial Liabilities, Fair Value Disclosure | 33 | |
Asset-backed securities | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Estimated Fair Value, short-term investments | 96 | 89 |
Corporate debt securities | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Cash and Cash Equivalents, Fair Value Disclosure | 45 | 46 |
Estimated Fair Value, short-term investments | 1,376 | 1,412 |
Money market mutual funds | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Cash and Cash Equivalents, Fair Value Disclosure | 2,143 | 2,049 |
Municipal securities | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Estimated Fair Value, short-term investments | 11 | 18 |
Time deposits | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Cash and Cash Equivalents, Fair Value Disclosure | 27 | 88 |
U.S. Treasury securities | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Estimated Fair Value, short-term investments | 8 | |
Fair Value, Inputs, Level 1 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Foreign Currency Contracts, Asset, Fair Value Disclosure | 0 | 0 |
Deferred Compensation Plan Assets | 4 | 5 |
Assets, Fair Value Disclosure | 2,174 | 2,142 |
Treasury Lock Derivative, at Fair Value, Net | 0 | |
Foreign Currency Contracts, Liability, Fair Value Disclosure | 0 | 0 |
Financial and Nonfinancial Liabilities, Fair Value Disclosure | 0 | |
Fair Value, Inputs, Level 1 | Asset-backed securities | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Estimated Fair Value, short-term investments | 0 | 0 |
Fair Value, Inputs, Level 1 | Corporate debt securities | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Cash and Cash Equivalents, Fair Value Disclosure | 0 | 0 |
Estimated Fair Value, short-term investments | 0 | 0 |
Fair Value, Inputs, Level 1 | Money market mutual funds | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Cash and Cash Equivalents, Fair Value Disclosure | 2,143 | 2,049 |
Fair Value, Inputs, Level 1 | Municipal securities | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Estimated Fair Value, short-term investments | 0 | 0 |
Fair Value, Inputs, Level 1 | Time deposits | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Cash and Cash Equivalents, Fair Value Disclosure | 27 | 88 |
Fair Value, Inputs, Level 1 | U.S. Treasury securities | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Estimated Fair Value, short-term investments | 0 | |
Fair Value, Inputs, Level 2 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Foreign Currency Contracts, Asset, Fair Value Disclosure | 33 | 29 |
Deferred Compensation Plan Assets | 94 | 89 |
Assets, Fair Value Disclosure | 1,655 | 1,691 |
Treasury Lock Derivative, at Fair Value, Net | 30 | |
Foreign Currency Contracts, Liability, Fair Value Disclosure | 8 | 3 |
Financial and Nonfinancial Liabilities, Fair Value Disclosure | 33 | |
Fair Value, Inputs, Level 2 | Asset-backed securities | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Estimated Fair Value, short-term investments | 96 | 89 |
Fair Value, Inputs, Level 2 | Corporate debt securities | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Cash and Cash Equivalents, Fair Value Disclosure | 45 | 46 |
Estimated Fair Value, short-term investments | 1,376 | 1,412 |
Fair Value, Inputs, Level 2 | Money market mutual funds | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Cash and Cash Equivalents, Fair Value Disclosure | 0 | |
Fair Value, Inputs, Level 2 | Municipal securities | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Estimated Fair Value, short-term investments | 11 | 18 |
Fair Value, Inputs, Level 2 | Time deposits | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Cash and Cash Equivalents, Fair Value Disclosure | 0 | |
Fair Value, Inputs, Level 2 | U.S. Treasury securities | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Estimated Fair Value, short-term investments | 8 | |
Fair Value, Inputs, Level 3 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Foreign Currency Contracts, Asset, Fair Value Disclosure | 0 | 0 |
Deferred Compensation Plan Assets | 0 | 0 |
Assets, Fair Value Disclosure | 0 | 0 |
Treasury Lock Derivative, at Fair Value, Net | 0 | |
Foreign Currency Contracts, Liability, Fair Value Disclosure | 0 | 0 |
Financial and Nonfinancial Liabilities, Fair Value Disclosure | 0 | |
Fair Value, Inputs, Level 3 | Asset-backed securities | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Estimated Fair Value, short-term investments | 0 | 0 |
Fair Value, Inputs, Level 3 | Corporate debt securities | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Cash and Cash Equivalents, Fair Value Disclosure | 0 | 0 |
Estimated Fair Value, short-term investments | 0 | 0 |
Fair Value, Inputs, Level 3 | Money market mutual funds | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Cash and Cash Equivalents, Fair Value Disclosure | 0 | 0 |
Fair Value, Inputs, Level 3 | Municipal securities | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Estimated Fair Value, short-term investments | 0 | 0 |
Fair Value, Inputs, Level 3 | Time deposits | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Cash and Cash Equivalents, Fair Value Disclosure | $ 0 | 0 |
Fair Value, Inputs, Level 3 | U.S. Treasury securities | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Estimated Fair Value, short-term investments | $ 0 |
Derivative Financial Instrume_4
Derivative Financial Instruments (Details 1) - USD ($) $ in Millions | Feb. 28, 2020 | Nov. 29, 2019 | |
Derivative, Fair Value, Net | |||
Fair value asset derivatives | $ 33 | $ 29 | |
Fair value liability derivatives | 8 | 33 | |
Designated as Hedging Instrument | Foreign Exchange Option Contracts | |||
Derivative, Fair Value, Net | |||
Fair value asset derivatives | [1],[2] | 25 | 26 |
Fair value liability derivatives | [1],[2] | $ 0 | 0 |
Maximum Length of Time, Foreign Currency Cash Flow Hedge | 18 months | ||
Foreign Currency Cash Flow Hedge Gain (Loss) to be Reclassified During Next 12 Months | $ 8 | ||
Designated as Hedging Instrument | Treasury Lock | |||
Derivative, Fair Value, Net | |||
Fair value asset derivatives | [1] | 0 | 0 |
Fair value liability derivatives | [1] | 0 | 30 |
Derivatives not designated as hedging instruments | Foreign Exchange Forward Contracts | |||
Derivative, Fair Value, Net | |||
Fair value asset derivatives | [1] | 8 | 3 |
Fair value liability derivatives | [1] | $ 8 | $ 3 |
[1] | Fair value asset derivatives are included in prepaid expenses and other current assets and fair value liability derivatives are included in accrued expenses on our condensed consolidated balance sheets. | ||
[2] | Net derivatives gain expected to be recognized into revenue within the next 18 months , of which $8 million is expected within the next 12 months. |
Derivative Financial Instrume_5
Derivative Financial Instruments (Details 2) - Designated as Hedging Instrument - Cash Flow Hedging - USD ($) $ in Millions | 3 Months Ended | |
Feb. 28, 2020 | Mar. 01, 2019 | |
Foreign Exchange Option Contracts | ||
Derivative Instruments, Gain (Loss) | ||
Other Comprehensive Income (Loss), Unrealized Gain (Loss) on Derivatives Arising During Period, before Tax | $ 2 | $ (9) |
Treasury Lock | ||
Derivative Instruments, Gain (Loss) | ||
Other Comprehensive Income (Loss), Unrealized Gain (Loss) on Derivatives Arising During Period, before Tax | $ (1) | $ 0 |
Derivative Financial Instrume_6
Derivative Financial Instruments (Details 3) - USD ($) $ in Millions | 3 Months Ended | ||
Feb. 28, 2020 | Mar. 01, 2019 | ||
Designated as Hedging Instrument | Revenue | Cash Flow Hedging | Foreign Exchange Option Contracts | |||
Derivative Instruments, Gain (Loss) | |||
Derivative Instruments, Gain (Loss) Reclassified from Accumulated OCI into Income, Effective Portion, Net | [1] | $ 7 | $ 9 |
Derivative Instruments, Gain (Loss) Recognized in Income, Ineffective Portion and Amount Excluded from Effectiveness Testing, Net | [1] | 0 | 0 |
Designated as Hedging Instrument | Other Income (Expense), Net | Cash Flow Hedging | Foreign Exchange Option Contracts | |||
Derivative Instruments, Gain (Loss) | |||
Derivative Instruments, Gain (Loss) Reclassified from Accumulated OCI into Income, Effective Portion, Net | [1] | 0 | 0 |
Derivative Instruments, Gain (Loss) Recognized in Income, Ineffective Portion and Amount Excluded from Effectiveness Testing, Net | [1] | 0 | (12) |
Derivatives not designated as hedging instruments | Revenue | Foreign Exchange Forward Contracts | |||
Derivative Instruments, Gain (Loss) | |||
Derivative Instruments Not Designated as Hedging Instruments, Gain (Loss), Net | 0 | 0 | |
Derivatives not designated as hedging instruments | Other Income (Expense), Net | Foreign Exchange Forward Contracts | |||
Derivative Instruments, Gain (Loss) | |||
Derivative Instruments Not Designated as Hedging Instruments, Gain (Loss), Net | $ (1) | $ (2) | |
[1] | Starting the third quarter of fiscal 2019, all changes in the fair value of our foreign currency cash flow hedges are recorded in accumulated other comprehensive income. |
Derivative Financial Instrume_7
Derivative Financial Instruments (Details Numeric) - USD ($) $ in Millions | 3 Months Ended | |||||
Feb. 28, 2020 | Nov. 29, 2019 | Jun. 07, 2019 | Oct. 17, 2018 | Jun. 13, 2014 | Feb. 01, 2010 | |
Term Loan | ||||||
Derivatives and Hedging | ||||||
Term Loan, amount outstanding | $ 2,250 | $ 2,250 | ||||
Notes 2020 | ||||||
Derivatives and Hedging | ||||||
Debt Instrument, Face Amount | $ 900 | $ 900 | ||||
Debt Instrument, Interest Rate, Stated Percentage | 4.75% | |||||
Fair Value Hedging | ||||||
Derivatives and Hedging | ||||||
Derivative, Notional Amount | $ 900 | |||||
Foreign Exchange Contract | Cash Flow Hedging | ||||||
Derivatives and Hedging | ||||||
Maximum Remaining Maturity of Foreign Currency Derivatives | 12 months | |||||
Designated as Hedging Instrument | Treasury Lock | Cash Flow Hedging | ||||||
Derivatives and Hedging | ||||||
Derivative, Notional Amount | $ 1,000 |
Goodwill and Other Intangible_2
Goodwill and Other Intangibles (Details) - USD ($) $ in Millions | Feb. 28, 2020 | Nov. 29, 2019 | |
Finite-Lived Intangible Assets | |||
Cost | $ 2,590 | $ 2,589 | |
Accumulated Amortization | (964) | (868) | |
Net | 1,626 | 1,721 | [1] |
Customer contracts and relationships | |||
Finite-Lived Intangible Assets | |||
Cost | 1,219 | 1,219 | |
Accumulated Amortization | (468) | (436) | |
Net | 751 | 783 | |
Purchased technology | |||
Finite-Lived Intangible Assets | |||
Cost | 759 | 759 | |
Accumulated Amortization | (255) | (223) | |
Net | 504 | 536 | |
Trademarks | |||
Finite-Lived Intangible Assets | |||
Cost | 384 | 384 | |
Accumulated Amortization | (85) | (73) | |
Net | 299 | 311 | |
Other | |||
Finite-Lived Intangible Assets | |||
Cost | 228 | 227 | |
Accumulated Amortization | (156) | (136) | |
Net | $ 72 | $ 91 | |
[1] | The condensed consolidated balance sheet as of November 29, 2019 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. |
Goodwill and Other Intangible_3
Goodwill and Other Intangibles (Details 1) - Other intangibles $ in Millions | Feb. 28, 2020USD ($) |
Amortization Expense in Future Periods | |
Remainder of 2020 | $ 269 |
2021 | 255 |
2022 | 223 |
2023 | 214 |
2024 | 202 |
Thereafter | 463 |
Total expected amortization expense | $ 1,626 |
Goodwill and Other Intangible_4
Goodwill and Other Intangibles (Details Numeric) - USD ($) $ in Millions | 3 Months Ended | |||
Feb. 28, 2020 | Mar. 01, 2019 | Nov. 29, 2019 | [1] | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Goodwill | $ 10,691 | $ 10,691 | ||
Finite-Lived Intangible Assets | ||||
Amortization of other intangible assets | 96 | $ 105 | ||
Amortization included in cost of sales | $ 54 | $ 58 | ||
[1] | The condensed consolidated balance sheet as of November 29, 2019 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. |
Accrued Expenses (Details)
Accrued Expenses (Details) - USD ($) $ in Millions | Feb. 28, 2020 | Nov. 29, 2019 | |
Accrued Expense | |||
Accrued compensation and benefits | $ 389 | $ 318 | |
Accrued bonuses | 93 | 222 | |
Refund liabilities | 122 | 126 | |
Accrued media costs | 98 | 118 | |
Accrued corporate marketing | 84 | 80 | |
Taxes payable | 74 | 83 | |
Royalties payable | 72 | 62 | |
Fair value of derivatives | 8 | 33 | |
Accrued interest expense | 7 | 29 | |
Accrued building rent | 0 | 99 | |
Other | 294 | 229 | |
Accrued expenses | $ 1,241 | $ 1,399 | [1] |
[1] | The condensed consolidated balance sheet as of November 29, 2019 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | |
Feb. 28, 2020USD ($)$ / sharesshares | ||
Weighted Average Grant Date Fair Values | ||
Share Price | $ 345.12 | |
Restricted Stock Units (RSUs) | ||
Shares Activity | ||
Beginning outstanding balance, Shares | shares | 8.6 | |
Awarded, Shares | shares | 2.7 | |
Released, Shares | shares | (2.7) | |
Forfeited, Shares | shares | (0.2) | |
Ending outstanding balance, Shares | shares | 8.4 | |
Expected to vest, Shares | shares | 7.5 | |
Weighted Average Grant Date Fair Values | ||
Beginning outstanding balance, Weighted average grant date fair value | $ 211.95 | |
Awarded, Weighted average grant date fair value | 350.46 | |
Released, Weighted average grant date fair value | 177.06 | |
Forfeited, Weighted average grant date fair value | 235.76 | |
Ending outstanding balance, Weighted average grant date fair value | 266.34 | |
Expected to vest, Weighted average grant date fair value | $ 263.96 | |
Ending outstanding balance, Aggregate fair value | $ | $ 2,896 | [1] |
Expected to vest, Aggregate fair value | $ | $ 2,593 | [1] |
[1] | The aggregate fair value is calculated using the closing stock price as of February 28, 2020 of $345.12 |
Stock-Based Compensation (Det_2
Stock-Based Compensation (Details 1) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | |
Feb. 28, 2020USD ($)$ / sharesshares | ||
Weighted Average Grant Date Fair Values | ||
Share Price | $ 345.12 | |
Performance Shares | ||
Shares Activity | ||
Beginning outstanding balance, Shares | shares | 1 | |
Awarded, Shares | shares | 0.6 | |
Achieved, Shares | shares | (0.8) | |
Forfeited, Shares | shares | 0 | |
Ending outstanding balance, Shares | shares | 0.8 | |
Expected to vest, Shares | shares | 0.7 | |
Weighted Average Grant Date Fair Values | ||
Beginning outstanding balance, Weighted average grant date fair value | $ 199.78 | |
Awarded, Weighted average grant date fair value | 271.62 | |
Achieved, Weighted average grant date fair value | 118.84 | |
Forfeited, Weighted average grant date fair value | 295.33 | |
Ending outstanding balance, Weighted average grant date fair value | 326.37 | |
Expected to vest, Weighted average grant date fair value | $ 319.26 | |
Ending outstanding balance, Aggregate fair value | $ | $ 271 | [1] |
Expected to vest, Aggregate fair value | $ | $ 237 | [1] |
[1] | The aggregate fair value is calculated using the closing stock price as of February 28, 2020 of $345.12 |
Stock-Based Compensation (Det_3
Stock-Based Compensation (Details 2) - Employee Stock Purchase Plan | 3 Months Ended | |
Feb. 28, 2020 | Mar. 01, 2019 | |
Valuation Assumptions Volatility Range | ||
From | 24.00% | 35.00% |
To | 29.00% | 37.00% |
Valuation Assumptions Risk Free Interest Rate Range | ||
From | 1.56% | 2.47% |
To | 1.58% | 2.63% |
From | ||
Valuation Assumptions Expected Life (In Years) | ||
Expected life (in years) | 6 months | 6 months |
To | ||
Valuation Assumptions Expected Life (In Years) | ||
Expected life (in years) | 2 years | 2 years |
Stock-Based Compensation (Det_4
Stock-Based Compensation (Details 3) - USD ($) $ in Millions | 3 Months Ended | |
Feb. 28, 2020 | Mar. 01, 2019 | |
Restricted Stock Units and Performance Share Awards | ||
Total stock-based compensation costs | ||
Stock-based compensation costs | $ 193 | $ 159 |
Stock Purchase Rights and Options | ||
Total stock-based compensation costs | ||
Stock-based compensation costs | 24 | 26 |
Cost of Revenue | Restricted Stock Units and Performance Share Awards | ||
Total stock-based compensation costs | ||
Stock-based compensation costs | 12 | 9 |
Cost of Revenue | Stock Purchase Rights and Options | ||
Total stock-based compensation costs | ||
Stock-based compensation costs | 3 | 4 |
Research and Development | Restricted Stock Units and Performance Share Awards | ||
Total stock-based compensation costs | ||
Stock-based compensation costs | 101 | 76 |
Research and Development | Stock Purchase Rights and Options | ||
Total stock-based compensation costs | ||
Stock-based compensation costs | 9 | 9 |
Sales and Marketing | Restricted Stock Units and Performance Share Awards | ||
Total stock-based compensation costs | ||
Stock-based compensation costs | 55 | 52 |
Sales and Marketing | Stock Purchase Rights and Options | ||
Total stock-based compensation costs | ||
Stock-based compensation costs | 10 | 10 |
General and Administrative | Restricted Stock Units and Performance Share Awards | ||
Total stock-based compensation costs | ||
Stock-based compensation costs | 25 | 22 |
General and Administrative | Stock Purchase Rights and Options | ||
Total stock-based compensation costs | ||
Stock-based compensation costs | $ 2 | $ 3 |
Stock-Based Compensation (Det_5
Stock-Based Compensation (Details Numeric) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | Feb. 28, 2020 | Feb. 28, 2020 | Mar. 01, 2019 |
Stock Based Compensation (Numeric) | |||
Unrecognized compensation cost, non-vested awards | $ 2,080 | $ 2,080 | |
Period for recognition, unrecognized compensation cost | 2 years 6 months | ||
Restricted Stock Units (RSUs) | |||
Share-based Compensation Arrangement by Share-based Payment Award | |||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period, Fair Value | 950 | ||
Performance Shares | |||
Share-based Compensation Arrangement by Share-based Payment Award | |||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period, Fair Value | $ 264 | ||
Maximum Target Percentage Allowed Under Program | 200.00% | ||
Employee Stock Purchase Plan | |||
Stock Based Compensation (Numeric) | |||
Shares Purchased, ESPP | 0.4 | 0.5 | |
Average purchase price of shares, ESPP | $ 196.45 | $ 196.45 | $ 129.23 |
Total Intrinsic Value Of Shares Purchased | $ 56 | $ 51 | |
Program 2017 | Performance Shares | |||
Share-based Compensation Arrangement by Share-based Payment Award | |||
Actual Percentage Achieved | 200.00% | ||
Actual Shares Achieved | 0.4 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income (Loss) (Details 1) - USD ($) $ in Millions | 3 Months Ended | |||
Feb. 28, 2020 | Mar. 01, 2019 | |||
Gross unrealized gains, available-for-sale securities | ||||
Beginning balance, unrealized gains on available-for-sale securities | $ 4 | |||
Gross unrealized gains on available for sale securities, increase or decrease | 4 | |||
Gross unrealized gains on available for sale securities, reclassification adjustments, Net of Tax | [1] | 0 | ||
Ending balance, unrealized gains on available-for-sale securities | 8 | |||
Net unrealized gains on derivatives designated as hedging instruments | ||||
Beginning balance, net unrealized gains on derivative instruments designated as hedging instruments | (22) | |||
Net unrealized gains on derivative instruments designated as hedging instruments, increase or decrease | 1 | $ (9) | ||
Net unrealized gains on derivative instruments designated as hedging instruments, reclassification adjustments | (2) | [2] | (8) | |
Ending balance, net unrealized gains on derivative instruments designated as hedging instruments | (23) | |||
Cumulative foreign currency translation adjustments | ||||
Beginning balance, cumulative foreign currency translation adjustments | (170) | |||
Cumulative foreign currency translation adjustment, increase or decrease | (4) | $ 2 | ||
Cumulative foreign currency translation adjustment, reclassification adjustments | 0 | |||
Ending balance, cumulative foreign currency translation adjustments | (174) | |||
Accumulated other comprehensive income totals | ||||
Beginning balance, total accumulated other comprehensive income, net of taxes | [3] | (188) | ||
Accumulated other comprehensive income, increase or decrease | 1 | |||
Accumulated other comprehensive income, reclassification adjustments | (2) | |||
Ending balance, total accumulated other comprehensive income, net of taxes | $ (189) | |||
[1] | Reclassification adjustments for gains / losses on available-for-sale securities are classified in other income (expense), net. | |||
[2] | Reclassification adjustments for gains / losses on foreign currency hedges are classified in revenue and reclassification adjustments for gains / losses on Treasury lock hedges are classified in interest expense. | |||
[3] | The condensed consolidated balance sheet as of November 29, 2019 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. |
Stock Repurchase Program (Detai
Stock Repurchase Program (Details Numeric) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 1 Months Ended | 3 Months Ended | ||
Mar. 25, 2020 | Feb. 28, 2020 | Mar. 01, 2019 | May 21, 2018 | |
Stock Repurchase Program, Authorized Amount | $ 8,000 | |||
Payments for Repurchase of Common Stock | $ 850 | $ 500 | ||
Treasury Stock, Shares, Acquired | 2.4 | 2.1 | ||
Treasury Stock Acquired, Average Cost Per Share | $ 332.59 | $ 237.13 | ||
Up Front Payments Treasury Stock Remaining Balance | $ 284 | |||
Subsequent Event | ||||
Payments for Repurchase of Common Stock | $ 850 | |||
Stock Repurchase Program, Remaining Authorized Repurchase Amount | $ 3,400 |
Net Income Per Share (Details)
Net Income Per Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | ||
Feb. 28, 2020 | Mar. 01, 2019 | ||
Earnings Per Share [Abstract] | |||
Net income | $ 955 | $ 674 | |
Shares used to compute basic net income per share | 482.4 | 488.1 | |
Dilutive potential common shares: | |||
Unvested restricted stock and performance share awards | 5 | 5.7 | |
ESPP and stock options | 0.4 | 0.4 | |
Shares used to compute diluted net income per share | 487.8 | 494.2 | |
Basic net income per share | $ 1.98 | $ 1.38 | |
Diluted net income per share | $ 1.96 | $ 1.36 | |
Anti-dilutive potential common shares | [1] | 1.1 | 0.3 |
[1] | Potential common stock equivalents not included in the calculation of diluted net income per share as the effect would have been anti-dilutive. |
Debt (Details Numeric 1)
Debt (Details Numeric 1) - USD ($) $ in Millions | Feb. 28, 2020 | Feb. 03, 2020 | Nov. 29, 2019 | Oct. 17, 2018 | Jan. 21, 2015 | Feb. 01, 2010 | |
Debt Instrument | |||||||
Long-term Debt, Gross | $ 4,150 | $ 4,150 | |||||
Long-term Debt and Lease Obligation, Current | 0 | (3,150) | |||||
Debt instrument, unamortized discount and issuance costs, noncurrent | (37) | (11) | |||||
Debt instrument, unamortized discount, current | 0 | (1) | |||||
Long-term Debt | 4,113 | 989 | [1] | ||||
Debt, Current | $ 0 | 3,149 | [1] | ||||
Notes 2020 | |||||||
Debt Instrument | |||||||
Debt Instrument, Face Amount | 900 | $ 900 | |||||
Debt Instrument, Interest Rate, Effective Percentage | 4.92% | ||||||
Notes 2023 | |||||||
Debt Instrument | |||||||
Debt Instrument, Face Amount | $ 500 | $ 500 | |||||
Debt Instrument, Interest Rate, Effective Percentage | 1.92% | ||||||
Notes 1.90% 2025 | |||||||
Debt Instrument | |||||||
Debt Instrument, Face Amount | $ 500 | 500 | |||||
Debt Instrument, Interest Rate, Effective Percentage | 2.07% | ||||||
Notes 3.25% 2025 | |||||||
Debt Instrument | |||||||
Debt Instrument, Face Amount | $ 1,000 | 1,000 | $ 1,000 | ||||
Debt Instrument, Interest Rate, Effective Percentage | 3.67% | ||||||
Notes 2027 | |||||||
Debt Instrument | |||||||
Debt Instrument, Face Amount | $ 850 | 850 | |||||
Debt Instrument, Interest Rate, Effective Percentage | 2.26% | ||||||
Notes 2030 | |||||||
Debt Instrument | |||||||
Debt Instrument, Face Amount | $ 1,300 | $ 1,300 | |||||
Debt Instrument, Interest Rate, Effective Percentage | 2.69% | ||||||
Term Loan | |||||||
Debt Instrument | |||||||
Debt Instrument, Interest Rate, Effective Percentage | 2.47% | ||||||
Term Loan, amount outstanding | $ 2,250 | $ 2,250 | |||||
[1] | The condensed consolidated balance sheet as of November 29, 2019 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. |
Debt (Details Numeric 2)
Debt (Details Numeric 2) - Term Loan - USD ($) $ in Millions | Nov. 29, 2019 | Oct. 17, 2018 |
Debt Instrument | ||
Term Loan, amount outstanding | $ 2,250 | $ 2,250 |
Scenarioi | Minimum | ||
Debt Instrument | ||
Margin Added to LIBOR to Determine Interest Rate | 0.50% | |
Scenarioi | Maximum | ||
Debt Instrument | ||
Margin Added to LIBOR to Determine Interest Rate | 1.00% | |
Scenarioii | Minimum | ||
Debt Instrument | ||
Margin Added to Base Rate to Determine Interest Rate | 0.04% | |
Scenarioii | Maximum | ||
Debt Instrument | ||
Margin Added to Base Rate to Determine Interest Rate | 0.11% |
Debt (Details Numeric 3)
Debt (Details Numeric 3) - USD ($) $ in Millions | Feb. 03, 2020 | Feb. 28, 2020 | Mar. 01, 2019 | Nov. 29, 2019 | Jun. 07, 2019 | Jan. 21, 2015 | Jun. 13, 2014 | Feb. 01, 2010 | |
Debt Instrument | |||||||||
Proceeds from issuance of debt | $ 3,144 | $ 0 | |||||||
Debt, Current | 0 | $ 3,149 | [1] | ||||||
Notes 2023 | |||||||||
Debt Instrument | |||||||||
Debt Instrument, Face Amount | $ 500 | $ 500 | |||||||
Debt Instrument, Interest Rate, Stated Percentage | 1.70% | ||||||||
Debt Instrument, Interest Rate, Effective Percentage | 1.92% | ||||||||
Notes 2020 | |||||||||
Debt Instrument | |||||||||
Debt Instrument, Face Amount | 900 | $ 900 | |||||||
Debt Instrument, Interest Rate, Stated Percentage | 4.75% | ||||||||
Debt Instrument, Interest Rate, Effective Percentage | 4.92% | ||||||||
Notes 3.25% 2025 | |||||||||
Debt Instrument | |||||||||
Debt Instrument, Face Amount | $ 1,000 | $ 1,000 | $ 1,000 | ||||||
Debt Instrument, Interest Rate, Stated Percentage | 3.25% | ||||||||
Debt Instrument, Interest Rate, Effective Percentage | 3.67% | ||||||||
Senior Notes | |||||||||
Debt Instrument | |||||||||
Debt Instrument, Fair Value Disclosure | $ 4,310 | ||||||||
Outstanding Notes | |||||||||
Debt Instrument | |||||||||
Repurchase notes at price of their principal amount plus accrued and unpaid interest | 101.00% | ||||||||
Notes 1.90% 2025 | |||||||||
Debt Instrument | |||||||||
Debt Instrument, Face Amount | $ 500 | $ 500 | |||||||
Debt Instrument, Interest Rate, Stated Percentage | 1.90% | ||||||||
Debt Instrument, Interest Rate, Effective Percentage | 2.07% | ||||||||
Notes 2027 | |||||||||
Debt Instrument | |||||||||
Debt Instrument, Face Amount | $ 850 | $ 850 | |||||||
Debt Instrument, Interest Rate, Stated Percentage | 2.15% | ||||||||
Debt Instrument, Interest Rate, Effective Percentage | 2.26% | ||||||||
Notes 2030 | |||||||||
Debt Instrument | |||||||||
Debt Instrument, Face Amount | $ 1,300 | $ 1,300 | |||||||
Debt Instrument, Interest Rate, Stated Percentage | 2.30% | ||||||||
Debt Instrument, Interest Rate, Effective Percentage | 2.69% | ||||||||
Notes 2023, 1.90% 2025, 2027, and 2030 | |||||||||
Debt Instrument | |||||||||
Proceeds from issuance of debt | $ 3,140 | ||||||||
Debt Instrument, Unamortized Discount | 6 | ||||||||
Unamortized Debt Issuance Expense | $ 21 | ||||||||
Fair Value Hedging | |||||||||
Debt Instrument | |||||||||
Derivative, Notional Amount | $ 900 | ||||||||
Treasury Lock | Designated as Hedging Instrument | Cash Flow Hedging | |||||||||
Debt Instrument | |||||||||
Derivative, Notional Amount | $ 1,000 | ||||||||
[1] | The condensed consolidated balance sheet as of November 29, 2019 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. |
Debt (Details Numeric 4)
Debt (Details Numeric 4) - Revolving Credit Facility - USD ($) $ in Millions | 3 Months Ended | ||
Feb. 28, 2020 | Oct. 17, 2018 | Mar. 02, 2012 | |
Debt Instrument | |||
Revolving Credit Agreement, Borrowing Capacity | $ 1,000 | $ 1,000 | |
Unamortized Debt Issuance Expense | 1 | ||
Option To Request Additional Commitments On Credit Facility | 500 | ||
Revolving Credit Agreement, Maximum Borrowing Capacity | $ 1,500 | ||
Minimum | |||
Debt Instrument | |||
Commitment Fee Percentage | 0.04% | ||
Maximum | |||
Debt Instrument | |||
Commitment Fee Percentage | 0.11% | ||
Scenarioi | Minimum | |||
Debt Instrument | |||
Margin Added to LIBOR to Determine Interest Rate | 0.585% | ||
Scenarioi | Maximum | |||
Debt Instrument | |||
Margin Added to LIBOR to Determine Interest Rate | 1.015% | ||
Scenarioii | |||
Debt Instrument | |||
Percentage Added to Effective Funds Rate in Determining Interest Rate | 0.50% | ||
Percentage Added to LIBOR in Determining Interest Rate | 1.00% | ||
Scenarioii | Minimum | |||
Debt Instrument | |||
Margin Added to LIBOR to Determine Interest Rate | 0.00% | ||
Scenarioii | Maximum | |||
Debt Instrument | |||
Margin Added to LIBOR to Determine Interest Rate | 0.015% |
Leases (Details 1)
Leases (Details 1) $ in Millions | 3 Months Ended |
Feb. 28, 2020USD ($) | |
Leases [Abstract] | |
Cash paid for amounts included in the measurement of operating lease liabilities | $ 24 |
Right-of-use assets obtained in exchange for operating lease liabilities | $ 7 |
Leases (Details 2)
Leases (Details 2) - USD ($) $ in Millions | Feb. 28, 2020 | Nov. 30, 2019 | Nov. 29, 2019 | |
Maturities of Lease Liabilities Table, ASC 842 | ||||
Remainder of Fiscal Year | $ 73 | |||
Due Year Two | 93 | |||
Due Year Three | 80 | |||
Due Year Four | 65 | |||
Due Year Five | 55 | |||
Due Thereafter | 302 | |||
Total lease liabilities | [1] | 668 | ||
Less: Imputed interest | (70) | |||
Present value of lease liabilities | 598 | $ 618 | ||
Lessee, Operating Lease, Lease Not Yet Commenced, Amount | $ 57 | |||
Maturities of Future Minimum Rental Payments and Sublease Income, ASC 840 | ||||
Future Minimum Payments, Due in One Year | $ 98 | |||
Future Minimum Payments, Due in Two Years | 92 | |||
Future Minimum Payments, Due in Three Years | 81 | |||
Future Minimum Payments, Due in Four Years | 69 | |||
Future Minimum Payments, Due in Five Years | 61 | |||
Future Minimum Payments, Due Thereafter | 338 | |||
Future Minimum Payments Due | 739 | |||
Future Minimum Payments Receivable, in One Year | 10 | |||
Future Minimum Payments Receivable, in Two Years | 9 | |||
Future Minimum Payments Receivable, in Three Years | 6 | |||
Future Minimum Payments Receivable, in Four Years | 2 | |||
Future Minimum Payments Receivable, in Five Years | 0 | |||
Future Minimum Payments Receivable, Thereafter | 0 | |||
Future Minimum Payments Receivable | $ 27 | |||
[1] | Operating lease payments exclude $57 million of legally binding minimum lease payments for leases signed but not yet commenced. |
Leases (Details Numeric)
Leases (Details Numeric) $ in Millions | 3 Months Ended |
Feb. 28, 2020USD ($) | |
Leases [Abstract] | |
Operating lease expense | $ 28 |
Operating Lease, Weighted Average Remaining Lease Term | 9 years |
Operating Lease, Weighted Average Discount Rate, Percent | 2.35% |
Non-Operating Income (Expense_2
Non-Operating Income (Expense) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Feb. 28, 2020 | Mar. 01, 2019 | |
Other Income and Expenses [Abstract] | ||
Interest expense | $ (33) | $ (41) |
Investment gains (losses), net: | ||
Realized investment gains | 3 | 44 |
Unrealized investment losses | (6) | 0 |
Investment gains (losses), net | (3) | 44 |
Other income (expense), net: | ||
Interest income | 19 | 16 |
Foreign exchange gains (losses) | (1) | (12) |
Other income (expense), net | 18 | 4 |
Non-operating income (expense), net | $ (18) | $ 7 |