Nike 2009 Annual Report Download - page 43

product provided to the endorsers will depend on many factors including general playing conditions, the
number of sporting events in which they participate, and our own decisions regarding product and marketing
initiatives. In addition, the costs to design, develop, source, and purchase the products furnished to the
endorsers are incurred over a period of time and are not necessarily tracked separately from similar costs
incurred for products sold to customers.
(2) We generally order product at least four to five months in advance of sale based primarily on advanced
futures orders received from customers. The amounts listed for product purchase obligations represent
agreements (including open purchase orders) to purchase products in the ordinary course of business, that
are enforceable and legally binding and that specify all significant terms. In some cases, prices are subject to
change throughout the production process. The reported amounts exclude product purchase liabilities
included in accounts payable on the consolidated balance sheet as of May 31, 2009.
(3) Other amounts primarily include service and marketing commitments made in the ordinary course of
business. The amounts represent the minimum payments required by legally binding contracts and
agreements that specify all significant terms, including open purchase orders for non-product purchases. The
reported amounts exclude those liabilities included in accounts payable or accrued liabilities on the
consolidated balance sheet as of May 31, 2009.
The total liability for uncertain tax positions was $273.9 million, excluding related interest and penalties, at
May 31, 2009. We are not able to reasonably estimate when or if cash payments of the long-term liability for
uncertain tax positions will occur.
We also have the following outstanding short-term debt obligations as of May 31, 2009. Please refer to the
accompanying notes to the consolidated financial statements (Note 7 — Short-Term Borrowings and Credit
Lines) for further description and interest rates related to the short-term debt obligations listed below.
Outstanding as of
May 31, 2009
(In millions)
Notes payable, due at mutually agreed-upon dates within one year of issuance or on
demand ........................................................... $342.9
Payable to Sojitz America for the purchase of inventories, generally due 60 days
after shipment of goods from a foreign port ............................... $ 78.5
As of May 31, 2009, letters of credit of $154.8 million were outstanding, generally for the purchase of
inventory.
Capital Resources
In December 2008, we filed a shelf registration statement with the Securities and Exchange Commission
under which $760 million in debt securities may be issued. As of May 31, 2009, no debt securities had been
issued under this shelf registration. We may issue debt securities under the shelf registration in fiscal 2010
depending on general corporate needs.
As of May 31, 2009, we had no amounts outstanding under our multi-year, $1 billion revolving credit
facility in place with a group of banks. The facility matures in December 2012. Based on our current long-term
senior unsecured debt ratings of A+ and A1 from Standard and Poor’s Corporation and Moody’s Investor
Services, respectively, the interest rate charged on any outstanding borrowings would be the prevailing London
Interbank Offer Rate (“LIBOR”) plus 0.15%. The facility fee is 0.05% of the total commitment.
If our long-term debt rating were to decline, the facility fee and interest rate under our committed credit
facility would increase. Conversely, if our long-term debt rating were to improve, the facility fee and interest rate
would decrease. Changes in our long-term debt rating would not trigger acceleration of maturity of any then
outstanding borrowings or any future borrowings under the committed credit facility. Under this committed
credit facility, we have agreed to various covenants. These covenants include limits on our disposal of fixed
assets and the amount of debt secured by liens we may incur as well as a minimum capitalization ratio. In the
41