Stockholders' Equity

3 Months Ended

Mar. 02, 2012

Equity [Abstract]

STOCKHOLDERS' EQUITY

STOCKHOLDERS’ EQUITY

Retained Earnings

The changes in retained earnings for the three months ended March 2, 2012 were as follows (in thousands): 

Balance as of December 2, 2011	$	6,528,735
Net income	185,209
Re-issuance of treasury stock	(216,874		)
Balance as of March 2, 2012	$	6,497,070

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 months ended March 2, 2012 and March 4, 2011 (in thousands):

	2012			2011
	Increase/(Decrease)
Net income	$	185,209		$	234,591
Other comprehensive income:
Available-for-sale securities:
Unrealized gains (losses) on available-for-sale securities	12,864			(53		)
Reclassification adjustment for gains on available-for-sale     securities recognized during the period	(497		)	(544		)
Subtotal available-for-sale securities	12,367			(597		)
Derivatives designated as hedging instruments:
Unrealized gains on derivative instruments	12,581			(67		)
Reclassification adjustment for gains on derivative     instruments recognized during the period	(10,348		)	—
Subtotal derivatives designated as hedging      instruments	2,233			(67		)
Foreign currency translation adjustments	2,198			11,931
Other comprehensive income	16,798			11,267
Total comprehensive income, net of taxes	$	202,007		$	245,858

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

	2012			2011
Net unrealized gains on available-for-sale securities:
Unrealized gains on available-for-sale securities	$	19,060		$	10,810
Unrealized losses on available-for-sale securities	(676		)	(4,794		)
Total net unrealized gains on available-for-sale securities	18,384			6,016
Net unrealized gains on derivative instruments designated as hedging instruments	15,586			13,354
Cumulative foreign currency translation adjustments	12,778			10,580
Total accumulated other comprehensive income, net of taxes	$	46,748		$	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.

We currently have authority granted by our Board of Directors to repurchase up to $1.6 billion in common stock through the end of fiscal 2012.

During the three months ended March 2, 2012 and March 4, 2011, we entered into a structured stock repurchase agreement with a large financial institution, whereupon we provided them with a prepayment of $80.0 million and $125.0 million, respectively. 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 three months ended March 2, 2012, we repurchased approximately 1.8 million shares at an average price of $30.07 through structured repurchase agreements entered into during the three months ended March 2, 2012. During the three months ended March 4, 2011, we repurchased approximately 2.5 million shares at an average price of $32.84 through structured repurchase agreements entered into during the three months ended March 4, 2011.

As of March 2, 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 March 2, 2012, approximately $26.8 million in prepayments remained under these agreements. As of December 2, 2011, no prepayments remained under these agreements.

Subsequent to March 2, 2012, as part of our $1.6 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 $225.0 million. This amount will be classified as treasury stock on our Consolidated Balance Sheets. Upon completion of the $225.0 million stock repurchase agreement, there is no remaining balance under our current authority, although the Board of Directors could grant additional authority in the future. See Note 16 for further discussion of our stock repurchase program.