XML 27 R12.htm IDEA: XBRL DOCUMENT v2.4.0.6
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
 6 Months Ended
Apr. 29, 2012
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES [Abstract]  
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
NOTE 6 - DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
     
The Company utilizes derivative instruments to reduce its exposure to the effects of the variability of interest rates and foreign currencies on its financial performance when it believes such action is warranted. Historically, the Company has been a party to derivative instruments to hedge either the variability of cash flows of a prospective transaction or the fair value of a recorded asset or liability. In certain instances, the Company has designated these transactions as hedging instruments. However, whether or not a derivative was designated as being a hedging instrument, the Company's purpose for engaging in the derivative has always been for risk management (and not speculative) purposes. The Company historically has not been a party to a significant number of derivative instruments and does not expect its derivative activity to significantly increase in the foreseeable future.

In addition to the utilization of derivative instruments discussed above, the Company attempts to minimize its risk of foreign currency exchange rate variability by, whenever possible, procuring production materials within the same country that it will utilize the materials in manufacturing, and by selling to customers from manufacturing sites within the country in which the customers are located.

In May 2009, in connection with an amendment to its credit facility, the Company issued 2.1 million warrants, each exercisable for one share of the Company's common stock at an exercise price of $0.01 per share. Forty percent of the warrants were exercisable upon issuance, and the remaining balance was to become exercisable in twenty percent increments at various points in time after October 31, 2009. As a result of certain net cash settleable put provisions within the warrant agreement, the warrants were recorded as a liability in the Company's consolidated balance sheet. As of the issuance date and for future periods that such warrants remained outstanding, the Company had adjusted the liability based upon the current fair value of the warrants, with any changes in their fair value being recognized in earnings. Due to the warrants' exercise price of $0.01 per share, their fair value approximated the market price of the Company's common stock. Approximately 1.2 million of these warrants were cancelled as a result of the Company's early repayment of certain amounts under its credit facility during the year ended November 1, 2009, and the associated liability was reduced accordingly. During the three month period ended January 29, 2012, all of the 0.2 million of these warrants that remained outstanding were exercised. In connection with this exercise, the Company recognized a gain of $0.1 million, included in investment and other income, net, in its condensed consolidated statements of operations. Warrant exercises during the three and six month periods ended May 1, 2011, resulted in the Company recognizing losses of $0.7 million and $0.8 million, respectively, which were also included in investment and other income (expense), net. See Note 5 for disclosures related to other common stock warrants.

A portion of an existing loss on a cash flow hedge in the amount of $0.1 million is expected to be reclassified into earnings over the next twelve months.

The table below presents the effect of derivative instruments on the Company's condensed consolidated balance sheets at April 29, 2012 and October 30, 2011.
 
Derivatives
Not Designated
as Hedging
Fair Value at
Instruments Under
April 29,
October 30,
ASC 815
Balance Sheet Location
2012
2011
Warrants on common stock
Other liabilities
$-$1,147
 
The table below presents the effect of derivative instruments on the Company's condensed consolidated statements of operations for the three and six month periods ended April 29, 2012 and May 1, 2011.
 
Amount of Gain (Loss) Recognized
Derivatives
Related to Derivative Instruments
Not Designated
Three Months Ended
Six Months Ended
as Hedging
Location of Gain (Loss)
Instruments Under
Related to
April 29,
May 1,
April 29,
May 1,
ASC 815
Derivative Instruments
2012
2011
2012
2011
Warrants on common stock
Investment and other income (expense), net
$-$(745)$94$(820)