Note 6 — Derivative Financial Instruments

The notional amounts and fair values of derivative instruments in our consolidated balance sheet were as follows:


	Notional Amounts (1)				Fair Value
	July 2,		January 1,		July 2,			January 1,
	2011		2011		2011			2011
Derivatives designated as hedging instruments recorded in:
Other current assets
Foreign exchange contracts	$	10,613	$	—	$	638		$	—

Accrued expenses
Foreign exchange contracts		11,456		71,253		(1,047	)		(5,078	)

Long-term debt
Interest rate contracts		178,125		184,375		(6,789	)		(9,252	)


		200,194		255,628		(7,198	)		(14,330	)


Derivatives not receiving hedge accounting treatment recorded in:
Other current assets
Foreign exchange contracts		324,489		347,108		272			585

Accrued expenses
Foreign exchange contracts		736,859		726,187		(8,188	)		(11,428	)


		1,061,348		1,073,295		(7,916	)		(10,843	)


Total	$	1,261,542	$	1,328,923	$	(15,114	)	$	(25,173	)


(1)		Notional amounts represent the gross amount of foreign currency bought or sold at maturity for foreign exchange contracts and the underlying principal amount in interest rate swap contracts.

The amount recognized in earnings on our derivative instruments, including ineffectiveness, was a net gain (loss) of $(10,858) and $41,397 for the thirteen weeks ended July 2, 2011 and July 3, 2010, respectively, and a net gain (loss) of $(40,955) and $53,422 for the twenty-six weeks ended July 2, 2011 and July 3, 2010, respectively, which was largely offset by the change in the fair value of the underlying hedged assets or liabilities. The gains or losses on derivative instruments are classified in our consolidated statement of income on a consistent basis with the classification of the change in fair value of the underlying hedged assets or liabilities. Unrealized gains (losses), net of taxes, of $5,386 and $(353) during the thirteen weeks ended July 2, 2011 and July 3, 2010, respectively, and $3,636 and $(637) during the twenty-six weeks ended July 2, 2011 and July 3, 2010, respectively, were reflected in accumulated other comprehensive income associated with our cash flow hedging transactions.

Cash Flow and Other Hedges

We have designated hedges consisting of an interest rate swap to hedge variable interest rates on a portion of our senior unsecured term loan and foreign currency forward contracts to hedge certain foreign currency-denominated intercompany loans and anticipated management fees. In addition, we also use foreign currency forward contracts that are not designated as hedges primarily to manage currency risk associated with foreign currency-denominated trade accounts receivable, accounts payable and intercompany loans.