Derivative Financial Instruments

6 Months Ended

Apr. 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 April 27, 2012.

At April 27, 2012, we had $6,583notional 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 April 29, 2011, we had $6,454 and $3,005 notional amount of foreign currency contracts that matured in fiscal year 2011 and 2012, respectively. There was no material ineffectiveness related to these hedges during the quarter or year-to-date periods ended April 27, 2012 or April 29, 2011.

At April 27, 2012, we had no treasury lock contracts in place. During the first quarter of 2012, we settled $200,000 notional amount of treasury lock contracts as a result of issuing $400,000 of Senior Notes, yielding a pretax loss of $27,875. This loss was recognized net of tax, in accumulated other comprehensive income in the first quarter of fiscal year 2012. The accumulated other comprehensive income amount in our Condensed Consolidated Balance Sheets as of April 27, 2012 represents the unamortized gains and losses, net of tax, from our settled contracts. Unamortized gains and losses are reclassified ratably to interest expense in our Condensed Consolidated Statements of Operations over the term of the related debt. 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 issuances. 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 as of April 29, 2011 represents the unrealized gains and losses, net of tax, from our current contracts and unamortized net gains, net of tax, from our settled contracts. There was no material ineffectiveness related to these hedges for the 2012 and 2011 fiscal periods.

At April 27, 2012, we had no interest rate derivative contracts. We had $50,000 notional amount of interest rate derivative contracts that matured in the second quarter of 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 related to these derivatives during the quarter or year-to-date periods ended April 29, 2011.

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

	Fair Value at April 27, 2012		Fair Value at October 28, 2011		Fair Value at April 29, 2011
	Level 21		Level 21		Level 21
Assets
Prepaid expenses and other:
Foreign currency contracts	$	—	$	3	$	—
Total Assets	$	—	$	3	$	—
Liabilities
Accrued liabilities other:
Foreign currency contracts	$	182	$	—	$	634
Treasury lock contracts		—		20,005		788
Total Liabilities	$	182	$	20,005	$	1,422

¹ The fair value is calculated as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). Our derivative financial instruments are categorized as Level 2 assets or liabilities as they have observable inputs, other than those included in Level 1, based on quoted prices for similar assets and liabilities in active markets, or quoted prices for identical assets and liabilities in inactive markets. The fair market value was estimated using market data for the components of the derivatives financial instruments. See Note 1 in Notes to Consolidated Financial Statements in our Form 10-K for more information on fair value measurements. There were no transfers of derivative financial instruments between Level 1 and Level 2 of the fair value hierarchy as of April 27, 2012, October 28, 2011 or April 29, 2011.

Derivative gains (losses) recognized in AOCI ² and on the Condensed Consolidated Statements of Operations for the three and six-month periods ended April 27, 2012 and April 29, 2011, respectively, are as follows:

Three Months Ended April 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	$	(340	)	Other income / (expense), net	$	170
Treasury lock contracts		303		Interest expense		(302	)
Total derivatives designated as cash flow hedges	$	(37	)		$	(132	)
Three Months Ended April 29, 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	$	(383	)	Other income / (expense), net	$	(160	)
Treasury lock contracts		(1,179	)	Interest expense		391
Interest rate derivative contracts		47		Interest expense		(47	)
Total derivatives designated as cash flow hedges	$	(1,515	)		$	184

Six Months Ended April 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	$	(186	)	Other income / (expense), net	$	352
Treasury lock contracts		(7,725	)	Interest expense		(145	)
Total derivatives designated as cash flow hedges	$	(7,911	)		$	207
Six Months Ended April 29, 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	$	(269	)	Other income / (expense), net	$	(234	)
Treasury lock contracts		(1,570	)	Interest expense		782
Interest rate derivative contracts		385		Interest expense		(388	)
Total derivatives designated as cash flow hedges	$	(1,454	)		$	160

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.