Stockholders' Equity

9 Months Ended

Aug. 30, 2013

Equity [Abstract]

STOCKHOLDERS' EQUITY

STOCKHOLDERS’ EQUITY

Retained Earnings

The changes in retained earnings for the nine months ended August 30, 2013 were as follows (in thousands): 

Balance as of November 30, 2012	$	7,003,003
Net income	224,665
Re-issuance of treasury stock	(349,452		)
Balance as of August 30, 2013	$	6,878,216

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 treasury stock 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.

The components of accumulated other comprehensive income and activity, net of related taxes, as of August 30, 2013 was as follows (in thousands):

	November 30, 2012			Increase / Decrease			Reclassification Adjustments				August 30, 2013
Net unrealized gains (losses) on available-for-sale securities:
Unrealized gains on available-for-sale securities	$	14,699		$	(4,905	)	$	(3,386	)		$	6,408
Unrealized losses on available-for-sale securities	(260		)	(7,405		)	1,060				(6,605		)
Net unrealized gains (losses) on available-for-sale securities	14,439			(12,310		)	(2,326		)	(1)	(197		)
Net unrealized gains on derivative instruments designated as hedging instruments	6,604			29,713			(32,880		)	(2)	3,437
Cumulative foreign currency translation adjustments	9,669			57			—				9,726
Total accumulated other comprehensive income, net of taxes	$	30,712		$	17,460		$	(35,206	)		$	12,966

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⁽¹⁾  Classified in interest and other income (expense), net.

⁽²⁾  Classified as revenue.

The following table sets forth the taxes related to each component of other comprehensive income for the three and nine months ended August 30, 2013 and August 31, 2012 (in thousands):

	Three Months						Nine Months
	2013			2012			2013			2012
Available-for-sale securities:
Unrealized gains / losses	$	117		$	(10	)	$	151		$	(682	)
Reclassification adjustments	(2		)	—			(2		)	(1		)
Subtotal available-for-sale securities	115			(10		)	149			(683		)
Derivatives designated as hedging instruments:
Unrealized gains on derivative instruments*	—			—			—			—
Reclassification adjustments*	—			—			—			—
Subtotal derivatives designated as hedging instruments	—			—			—			—
Foreign currency translation adjustments	372			750			(128		)	(2,035		)
Total taxes, other comprehensive income	$	487		$	740		$	21		$	(2,718	)

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^(*)   Taxes related to derivative instruments were zero based on the tax jurisdiction where the derivative instruments were executed.

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 $2.0 billion in common stock through the end of fiscal 2015. This stock repurchase program is similar to our previous $1.6 billion stock repurchase program which we exhausted during the second quarter of fiscal 2012.

During the nine months ended August 30, 2013 and August 31, 2012, we entered into structured stock repurchase agreements with large financial institutions, whereupon we provided them with prepayments of $700.0 million and $305.0 million, respectively. The $700.0 million prepayments during the nine months ended August 30, 2013 were under the new $2.0 billion stock repurchase authority while the $305.0 million prepayments during the nine months ended August 31, 2012 were under the previous $1.6 billion authority. 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 30, 2013, we repurchased approximately 13.7 million shares at an average price of $43.78 through structured repurchase agreements entered into during fiscal 2012 and the nine months ended August 30, 2013. 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.

As of August 30, 2013, the prepayments were classified as treasury stock on our Condensed Consolidated Balance Sheets at the payment date, though only shares delivered to us by the financial statement date were excluded from the computation of earnings per share. As of August 30, 2013, $134.3 million of prepayment remained under this agreement.

Subsequent to August 30, 2013, 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 $400.0 million. This amount will be classified as treasury stock on our Condensed Consolidated Balance Sheets. Upon completion of the $400.0 million stock repurchase agreement, $800.0 million remains under our current authority.