Derivatives And Hedging Activities

12 Months Ended

Apr. 27, 2012

Derivatives And Hedging Activities [Abstract]

Derivatives And Hedging Activities

12. Derivatives and Hedging Activities

We use derivative instruments to manage exposures to foreign currency risk. Our primary objective in holding derivatives is to reduce the volatility of earnings and cash flows associated with changes in foreign currency exchange rates. The program is not designated for trading or speculative purposes. Our derivatives expose us to credit risk to the extent that the counterparties may be unable to meet the terms of the agreement. We seek to mitigate such risk by limiting our counterparties to major financial institutions. In addition, the potential risk of loss with any one counterparty resulting from this type of credit risk is monitored on an ongoing basis. We also have in place a master netting arrangement to mitigate the credit risk of our counterparty and potentially to reduce our losses due to counterparty nonperformance. All contracts have a maturity of less than six months.

Our major foreign currency exchange exposures and related hedging programs are described below:

Balance Sheet. We utilize monthly foreign currency forward and options contracts to hedge exchange rate fluctuations related to certain foreign-currency-denominated monetary assets and liabilities, primarily intercompany receivables and payables. These foreign currency forward and option contracts are not designated as hedging instruments and do not subject us to material balance sheet risk due to exchange rate movements because the gains and losses on these contracts are intended to offset the gains and losses in the underlying foreign-currency-denominated monetary assets and liabilities being hedged and the net amount is included in earnings.

Forecasted Transactions. We use currency forward contracts to hedge exposures related to forecasted sales denominated in certain foreign currencies. These contracts are designated and qualify as cash flow hedges and in general, closely match the underlying forecasted transactions in duration. The contracts are carried on the consolidated balance sheets at fair value, and the effective portion of the contracts' gains and losses resulting from changes in fair value is recorded in AOCI until the forecasted transaction is recognized in the consolidated statements of operations. When the forecasted transaction occurs, we reclassify the related gains or losses on the cash flow hedges into net revenues. If the underlying forecasted transactions do not occur, or it becomes probable that they will not occur, within the defined hedge period, the gains or losses on the related cash flow hedges are reclassified from AOCI and recognized immediately in earnings. We measure the effectiveness of hedges of forecasted transactions on a monthly basis by comparing the fair values of the designated currency forward contracts with the fair values of the forecasted transactions. Any ineffective portion of the derivative hedging gain or loss, as well as changes in the fair value of the derivative's time value (which are excluded from the assessment of hedge effectiveness), is recognized in current period earnings.

Over the next 12 months, we expect an immaterial amount of derivative net losses recorded in AOCI as of April 27, 2012 will be reclassified into net revenues. The maximum length of time over which forecasted foreign currency denominated revenues are hedged is six months.

The notional value of our outstanding foreign currency forward purchase contracts that were entered into to hedge forecasted foreign denominated sales and our foreign-currency-denominated monetary asset and liability exposures consisted of the following (in millions):

	April 27, 2012		April 29, 2011
Cash Flow Hedges
Euro	$	96.9	$	104.0
British Pound Sterling		29.8		20.9
Balance Sheet Contracts
Euro		267.4		253.7
British Pound Sterling		86.4		70.8
Australian Dollar		54.3		34.4
Canadian Dollar		38.5		56.0
Other		68.5		52.6

As of April 27, 2012 and April 29, 2011, the fair value of our short-term foreign currency contracts was not material. We did not recognize any gains and losses in earnings due to hedge ineffectiveness for any period presented.

The effect of derivative instruments designated as cash flow hedges recognized in net revenues on our consolidated statements of operations was as follows (in millions):

	Year ended April 27, 2012				Year Ended April 29, 2011				Year Ended April 30, 2010
Derivatives in Cash Flow Hedging Relationships	Gain Recognized in AOCI		Gain Reclassified from AOCI into Income		Gain Recognized in AOCI		Gain Reclassified from AOCI into Income		Loss Recognized in AOCI			Loss Reclassified from AOCI into Income
Foreign exchange forward purchase contracts	$	20.6	$	18.9	$	3.2	$	6.1	$	(0.5	)	$	(1.7	)

The effect of derivative instruments not designated as hedges recognized in other income (expense), net on our consolidated statements of operations was as follows (in millions):

	Year Ended
	April 27, 2012		April 29, 2011			April 30, 2010
Derivatives Not Designated as Hedging Instruments	Gain (Loss) Recognized into Income
Foreign exchange forward contracts	$	21.0	$	(20.6	)	$	8.2