Stockholders' Equity

6 Months Ended

Jun. 01, 2012

Equity [Abstract]

STOCKHOLDERS' EQUITY

STOCKHOLDERS’ EQUITY

Retained Earnings

The changes in retained earnings for the six months ended June 1, 2012 were as follows (in thousands): 

Balance as of December 2, 2011	$	6,528,735
Net income	409,085
Re-issuance of treasury stock	(266,590		)
Balance as of June 1, 2012	$	6,671,230

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 six months ended June 1, 2012 and June 3, 2011 (in thousands):

	Three Months						Six Months
	2012			2011			2012			2011
	Increase/(Decrease)						Increase/(Decrease)
Net income	$	223,876		$	229,436		$	409,085		$	464,027
Other comprehensive income:
Available-for-sale securities:
Unrealized gains / losses on available-for-sale securities	(7,297		)	5,898			5,568			5,845
Reclassification adjustment for gains on available-for-sale     securities recognized during the period	(413		)	(630		)	(911		)	(1,174		)
Subtotal available-for-sale securities	(7,710		)	5,268			4,657			4,671
Derivatives designated as hedging instruments:
Unrealized gains on derivative instruments	10,191			100			22,772			33
Reclassification adjustment for gains on derivative     instruments recognized during the period	(10,661		)	(184		)	(21,009		)	(184		)
Subtotal derivatives designated as hedging      instruments	(470		)	(84		)	1,763			(151		)
Foreign currency translation adjustments	(17,952		)	20,463			(15,755		)	32,394
Other comprehensive income	(26,132		)	25,647			(9,335		)	36,914
Total comprehensive income, net of taxes	$	197,744		$	255,083		$	399,750		$	500,941

The following table sets forth the components of accumulated other comprehensive income, net of related taxes, as of June 1, 2012 and December 2, 2011 (in thousands):

	2012			2011
Net unrealized gains on available-for-sale securities:
Unrealized gains on available-for-sale securities	$	11,559		$	10,810
Unrealized losses on available-for-sale securities	(885		)	(4,794		)
Total net unrealized gains on available-for-sale securities	10,674			6,016
Net unrealized gains on derivative instruments designated as hedging instruments	15,115			13,354
Cumulative foreign currency translation adjustments	(5,174		)	10,580
Total accumulated other comprehensive income, net of taxes	$	20,615		$	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 six months ended June 1, 2012 and June 3, 2011, we entered into structured stock repurchase agreements with large financial institutions, whereupon we provided them with prepayments of $305.0 million and $545.0 million, respectively. With these structured stock repurchase agreements entered into during the six months ended June 1, 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 six months ended June 1, 2012, we repurchased approximately 7.1 million shares at an average price of $32.38 through structured repurchase agreements entered into during the six months ended June 1, 2012. During the six months ended June 3, 2011, we repurchased approximately 16.3 million shares at an average price of $33.53 through structured repurchase agreements entered into during the six months ended June 3, 2011.

As of June 1, 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 June 1, 2012, approximately $76.1 million in prepayments remained under these agreements. As of 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 June 1, 2012, we have not entered into any stock repurchase agreements under the new authority.