Derivative Financial Instruments

3 Months Ended

Jan. 27, 2012

Derivative Financial Instruments [Abstract]

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 January 27, 2012.

At January 27, 2012, we had $10,010notional amount of foreign currency contracts that mature during fiscal year 2012. These foreign currency contracts have been designated as cash flow hedges with unrealized gains or losses recorded in accumulated other comprehensive income (loss). Realized gains and losses were recognized in other expense (income) when they occurred. At January 28, 2011, we had $9,256 notional amount of foreign currency contracts maturing in fiscal year 2011. There was no ineffectiveness for these hedges during the quarters ended January 27, 2012 or January 28, 2011.

During the first quarter of 2012, we settled $200,000 notional amount of treasury locks as a result of issuing $400,000 of Senior Notes on January 13, 2012, yielding a pretax loss of $27,875. This loss is reflected, net of tax, in accumulated other comprehensive income (loss) in our Condensed Consolidated Balance Sheets as of January 27, 2012. The unamortized loss will be reclassified ratably to our Condensed Consolidated Statements of Operations as an increase to interest expense over the term of the related debt. The unamortized loss will be partially offset by previously settled contracts with unamortized net gains. There was no material ineffectiveness of these hedges for the quarters ended January 27, 2012 and January 28, 2011.

At January 27, 2012, we had no interest rate derivative contracts. We had $50,000 notional amount of interest rate derivative contracts in place as of January 28, 2011. These contracts were designated as cash flow hedges, to pay fixed rates of interest and receive a floating interest rate based on LIBOR. Prior to maturity, the interest rate derivative contracts were reflected at fair value in the Condensed Consolidated Balance Sheets. Unrealized gains and losses were recorded in accumulated other comprehensive income (loss). Amounts to be received or paid under the contracts were recognized as interest expense over the life of the contracts. There was no ineffectiveness for these derivatives during the quarter January 28, 2011.

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

	Fair Value at January 27, 2012		Fair Value at October 28, 2011		Fair Value at January 28, 2011
	Level 21		Level 21		Level 21
Assets
Prepaid expenses and other:
Foreign currency contracts	$	157	$	3	$	—
Total Assets	$	157	$	3	$	—
Liabilities
Accrued liabilities other:
Foreign currency contracts	$	—	$	—	$	251
Treasury lock contracts		—		20,005		—
Interest rate derivative contracts		—		—		47
Total Liabilities	$	—	$	20,005	$	298

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 Statements of Operations for the quarter ended January 27, 2012 and January 28, 2011, respectively, are as follows:

Quarter Ended January 27, 2012	Amount of Gain (Loss) recognized in AOCI2			Statement of Operations Classification	Gain (Loss) in Income2
Derivatives designated as cash flow hedges
Foreign currency contracts	$	154		Other income / (expense), net	$	182
Treasury lock contracts		(8,028	)	Interest expense		157
Total derivatives designated as cash flow hedges	$	(7,874	)		$	339
Quarter Ended January 28, 2011	Amount of Gain (Loss) recognized in AOCI2			Statement of Operations Classification	Gain (Loss) in Income2
Derivatives designated as cash flow hedges
Foreign currency contracts	$	115		Other income / (expense), net	$	(74	)
Treasury lock contracts		(391	)	Interest expense		391
Interest rate derivative contracts		338		Interest expense		(341	)
Total derivatives designated as cash flow hedges	$	62			$	(24	)

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 quarterly derivative activity.