Stockholders' Equity

9 Months Ended

Aug. 31, 2012

Equity [Abstract]

STOCKHOLDERS' EQUITY

STOCKHOLDERS’ EQUITY

Retained Earnings

The changes in retained earnings for the nine months ended August 31, 2012 were as follows (in thousands): 

Balance as of December 2, 2011	$	6,528,735
Net income	610,442
Re-issuance of treasury stock	(323,802		)
Balance as of June 1, 2012	$	6,815,375

We account for treasury stock under the cost method. When treasury stock is re-issued at a price higher than its cost, the difference is recorded as a component of additional paid-in-capital in our Condensed Consolidated Balance Sheets. When treasury stock is re-issued at a price lower than its cost, the difference is recorded as a component of additional paid-in-capital to the extent that there are gains to offset the losses. If there are no treasury stock gains in additional paid-in-capital, the losses upon re-issuance of treasury stock are recorded as a component of retained earnings in our Condensed Consolidated Balance Sheets.

Comprehensive Income

The following table sets forth the activity for each component of comprehensive income, net of related taxes, for the three and nine months ended August 31, 2012 and September 2, 2011 (in thousands):

	Three Months						Nine Months
	2012			2011			2012			2011
	Increase/(Decrease)						Increase/(Decrease)
Net income	$	201,357		$	195,101		$	610,442		$	659,128
Other comprehensive income:
Available-for-sale securities:
Unrealized gains / losses on available-for-sale securities	5,688			(3,256		)	11,255			2,589
Reclassification adjustment for gains on available-for-sale     securities recognized during the period	(897		)	(428		)	(1,807		)	(1,602		)
Subtotal available-for-sale securities	4,791			(3,684		)	9,448			987
Derivatives designated as hedging instruments:
Unrealized gains on derivative instruments	(2,621		)	1,624			20,151			1,657
Reclassification adjustment for gains on derivative     instruments recognized during the period	(7,692		)	—			(28,701		)	(184		)
Subtotal derivatives designated as hedging      instruments	(10,313		)	1,624			(8,550		)	1,473
Foreign currency translation adjustments	7,417			6,912			(8,337		)	39,306
Other comprehensive income	1,895			4,852			(7,439		)	41,766
Total comprehensive income, net of taxes	$	203,252		$	199,953		$	603,003		$	700,894

The following table sets forth the components of accumulated other comprehensive income, net of related taxes, as of August 31, 2012 and December 2, 2011 (in thousands):

	2012			2011
Net unrealized gains on available-for-sale securities:
Unrealized gains on available-for-sale securities	$	15,635		$	10,810
Unrealized losses on available-for-sale securities	(171		)	(4,794		)
Total net unrealized gains on available-for-sale securities	15,464			6,016
Net unrealized gains on derivative instruments designated as hedging instruments	4,804			13,354
Cumulative foreign currency translation adjustments	2,243			10,580
Total accumulated other comprehensive income, net of taxes	$	22,511		$	29,950

Stock Repurchase Program

To facilitate our stock repurchase program, designed to return value to our stockholders and minimize dilution from stock issuances, we repurchase shares in the open market and also enter into structured repurchase agreements with third parties.

During the nine months ended August 31, 2012 and September 2, 2011, we entered into structured stock repurchase agreements with large financial institutions, whereupon we provided them with prepayments of $305.0 million and $695.0 million, respectively. With these structured stock repurchase agreements entered into during the nine months ended August 31, 2012, we have exhausted our $1.6 billion authority granted by our Board of Directors in fiscal 2010. 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 nine months ended August 31, 2012, we repurchased approximately 9.5 million shares at an average price of $32.17 through structured repurchase agreements entered into during the nine months ended August 31, 2012. During the nine months ended September 2, 2011, we repurchased approximately 19.8 million shares at an average price of $32.48 through structured repurchase agreements entered into during the nine months ended September 2, 2011.

As of August 31, 2012 and December 2, 2011, 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 the financial statement date were excluded from the computation of earnings per share. As of August 31, 2012 and December 2, 2011, no prepayments remained under these agreements.

In April 2012, the Board of Directors approved a new stock repurchase program granting the company authority to repurchase up to $2.0 billion in common stock through the end of fiscal 2015. The new stock repurchase program approved by our Board of Directors is similar to our previous $1.6 billion stock repurchase program. As of August 31, 2012, we had not entered into any stock repurchase agreements under the new authority.

Subsequent to August 31, 2012, as part of our $2.0 billion stock repurchase program, we entered into a structured stock repurchase agreement with a large financial institution whereupon we provided them with a prepayment of $100.0 million. This amount will be classified as treasury stock on our Condensed Consolidated Balance Sheets. Upon completion of the $100.0 million stock repurchase agreement, $1.9 billion remains under our current authority. See Note 16 for further discussion of our stock repurchase program.