Derivative Financial Instruments

6 Months Ended

Apr. 29, 2011

Derivative Financial Instruments

Derivative Financial Instruments

NOTE 8: DERIVATIVE FINANCIAL INSTRUMENTS

We use derivative financial instruments to manage well-defined interest rate and foreign currency exchange risks. We enter into derivative financial instruments with high-credit-quality counterparties and diversify our positions among such counterparties to reduce our exposure to credit losses. We do not have any credit-risk-related contingent features in our derivative contracts as of April 29, 2011.

In the second quarter of 2011, our aggregate $50,000 notional amount of interest rate swap contracts matured. These contracts were designated as cash flow hedges, to pay fixed rates of interest and receive a floating interest rate based on LIBOR. We had $50,000 notional amount of interest rate swap contracts in place as of April 30, 2010. There was no ineffectiveness for these swaps during the quarter or year-to-date periods ended April 29, 2011 and April 30, 2010. Prior to maturity, the interest rate swap contracts were reflected at fair value in the condensed consolidated balance sheet. Unrealized gains and losses were recorded in accumulated other comprehensive income. Amounts to be received or paid under the contracts were recognized as interest expense over the life of the contracts.

At April 29, 2011, we had $6,454 and $3,005 notional amount of foreign currency contracts that mature during fiscal year 2011 and 2012, respectively. These foreign currency contracts have been designated as cash flow hedges with unrealized gains or losses recorded in accumulated other comprehensive income. Realized gains and losses will be recognized in Other Expense (Income) when they occur. At April 30, 2010, we had approximately $8,430 notional amount of foreign currency contracts maturing during fiscal years 2010 and 2011. There was no ineffectiveness for these hedges during the quarter or year-to-date periods ended April 29, 2011 or April 30, 2010.

At April 29, 2011, we had $100,000 notional amount of treasury locks to hedge, or lock-in, interest rates on anticipated long-term debt to be issued. We designated the treasury locks as cash flow hedges with unrealized gains and losses recorded, net of tax, to accumulated other comprehensive income. The accumulated other comprehensive income amount in our condensed consolidated balance sheet represents the unrealized gains and losses, net of tax, from our current contracts and the unamortized gain, net of tax, from our settled contracts. The unamortized gain from our settled contracts is reclassified ratably to our condensed statements of income as a decrease to interest expense over the term of the related bond issuance. At April 30, 2010 we had no treasury lock contracts in place.

Our derivative assets and liabilities subject to fair value measurement disclosures are the following:

	Fair Value at April 29, 2011		Fair Value at April 30, 2010
	Level 2 1		Level 2 1
Assets
Prepaid expenses and other:
Foreign currency contracts	$	—	$	181
Total Assets	$	—	$	181
Liabilities
Accrued liabilities other:
Foreign currency contracts	$	634	$	—
Treasury lock contracts		788		—
Interest rate swap contracts		—		980
Total Liabilities	$	1,422	$	980

¹ See Note 1 in Notes to Consolidated Financial Statements in our Form 10-K for more information on fair value measurements.

Derivative gains (losses) recognized in AOCI ² and on the Condensed Consolidated Statement of Income for the three and six-month periods ended April 29, 2011 and April 30, 2010, respectively, are as follows:

Three Months Ended April 29, 2011	Amount of Gain (Loss) recognized in AOCI2			Statement of Income Classification	Gain (Loss) in Income2
Derivatives designated as cash flow hedges
Foreign currency contracts	$	(383	)	Other income / (expense), net	$	(160	)
Treasury lock contracts		(1,179	)	Interest expense		391
Interest rate swap contracts		47		Interest expense		(47	)
Total derivatives designated as cash flow hedges	$	(1,515	)		$	184

Three Months Ended April 30, 2010	Amount of Gain (Loss) recognized in AOCI2			Statement of Income Classification	Gain (Loss) in Income2
Derivatives designated as cash flow hedges
Foreign currency contracts	$	60		Other income / (expense), net	$	(17	)
Treasury lock contracts		(391	)	Interest expense		391
Interest rate swap contracts		327		Interest expense		(347	)
Total derivatives designated as cash flow hedges	$	(4	)		$	27
Six Months Ended April 29, 2011		Amount of Gain (Loss) recognized in AOCI2		Statement of Income Classification	Gain (Loss) in Income2
Derivatives designated as cash flow hedges
Foreign currency contracts	$	(269	)	Other income / (expense), net	$	(234	)
Treasury lock contracts		(1,570	)	Interest expense		782
Interest rate swap contracts		385		Interest expense		(388	)
Total derivatives designated as cash flow hedges	$	(1,454	)		$	160
Six Months Ended April 30, 2010	Amount of Gain (Loss) recognized in AOCI2			Statement of Income Classification	Gain (Loss) in Income2
Derivatives designated as cash flow hedges
Foreign currency contracts	$	352		Other income / (expense), net	$	(161	)
Treasury lock contracts		(782	)	Interest expense		782
Interest rate swap contracts		496		Interest expense		(688	)
Total derivatives designated as cash flow hedges	$	66			$	(67	)

² Accumulated other comprehensive income (loss) (AOCI) is included on the Condensed Consolidated Balance Sheet in the Stockholders' Equity section and is reported net of tax. The amounts disclosed in the above table are reported pretax and represent the respective period derivative activity.