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May 31, 2008. Such a hypothetical loss in fair value of our derivatives would be offset by increases in the value
of the underlying transactions being hedged. The average monthly change in the fair values of foreign currency
forward and foreign currency option derivative instruments was $207.4 million and $32.3 million during fiscal
2009 and fiscal 2008, respectively.
The instruments not included in the VaR are intercompany loans denominated in non-functional currencies,
fixed interest rate Japanese yen denominated debt, fixed interest rate U.S. dollar denominated debt and interest
rate swaps. Intercompany loans and related interest amounts are eliminated in consolidation. Furthermore, our
non-functional currency intercompany loans are substantially hedged against foreign exchange risk through the
use of forward contracts, which are included in the VaR calculation above. We, therefore, consider the interest
rate and foreign currency market risks associated with our non-functional currency intercompany loans to be
immaterial to our consolidated financial position, results from operations and cash flows.
Details of third party debt and interest rate swaps are provided in the table below. The table presents
principal cash flows and related weighted average interest rates by expected maturity dates. Weighted average
interest rates for the fixed rate swapped to floating rate debt reflect the effective interest rates as of May 31, 2009.
Expected Maturity Date
Year Ended May 31,
2010 2011 2012 2013 2014 Thereafter Total Fair Value
(In millions, except interest rates)
Foreign Exchange Risk
Japanese Yen Functional Currency
Long Term Japanese yen debt — Fixed rate
Principal payments ................. $ 6.9 $6.9 $167.1 $ 6.9 $6.9 $ 44.7 $239.4 $235.9
Average interest rate ................ 2.4% 2.4% 3.4% 2.4% 2.4% 2.4% 2.5%
Interest Rate Risk
Japanese Yen Functional Currency
Long-term Japanese yen debt — Fixed rate
Principal payments ................. $ 6.9 $6.9 $167.1 $ 6.9 $6.9 $ 44.7 $239.4 $235.9
Average interest rate ................ 2.4% 2.4% 3.4% 2.4% 2.4% 2.4% 2.5%
U.S. Dollar Functional Currency
Long-term U.S. dollar debt — Fixed rate
swapped to Floating rate
Principal payments ................. $25.0 $ — $ — $40.0 $ — $100.0 $165.0 $169.0
Average interest rate ................ 3.1% — — 3.1% — 1.6% 2.2%
Long-term U.S. dollar debt — Fixed rate
Principal payments ................. $ — $— $ — $ — $— $ 50.0 $ 50.0 $ 51.5
Average interest rate ................ — — — — — 4.7% 4.7%
The fixed interest rate Japanese yen denominated debts were issued by and are accounted for by one of our
Japanese subsidiaries. Accordingly, the monthly re-measurement of these instruments due to changes in foreign
exchange rates is recognized in accumulated other comprehensive income upon the consolidation of this
subsidiary.
In fiscal 2003, we entered into a receive-floating, pay-fixed interest rate swap related to a Japanese yen
denominated intercompany loan with one of our Japanese subsidiaries. This interest rate swap was not designated
as a hedge instrument under FAS 133. Accordingly, changes in the fair value of the swap were recorded to
consolidated net income each period. The change in fair value of the swap was not material for the years ended
May 31, 2009, 2008 and 2007. Both the intercompany loan and the related interest rate swap matured during
fiscal 2009.
Item 8. Financial Statements and Supplemental Data
Management of NIKE, Inc. is responsible for the information and representations contained in this report.
The financial statements have been prepared in conformity with the generally accepted accounting principles we
considered appropriate in the circumstances and include some amounts based on our best estimates and
judgments. Other financial information in this report is consistent with these financial statements.
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