Nike 2009 Annual Report Download - page 69

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NIKE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Note 5 — Accrued Liabilities
Accrued liabilities include the following:
May 31,
2009 2008
(In millions)
Compensation and benefits, excluding taxes ........................... $ 491.9 $ 538.0
Endorser compensation ............................................ 237.1 203.5
Taxes other than income taxes ...................................... 161.9 147.6
Restructuring charges(1) ........................................... 149.6 —
Dividends payable ................................................ 121.4 112.9
Advertising and marketing ......................................... 97.6 121.4
Fair value of derivatives ........................................... 68.9 173.3
Import and logistics costs .......................................... 59.4 78.8
Other(2) ......................................................... 396.1 386.4
$1,783.9 $1,761.9
(1) Accrued restructuring charges primarily consist of severance costs relating to the Company’s restructuring
activities that took place during the fourth quarter of fiscal 2009. See Note 16 — Restructuring Charges for
more information.
(2) Other consists of various accrued expenses and no individual item accounted for more than 5% of the
balance at May 31, 2009 or 2008.
Note 6 — Fair Value Measurements
Effective June 1, 2008, the Company adopted FAS 157, “Fair Value Measurements” for financial assets and
liabilities. FAS 157 establishes a hierarchy that prioritizes fair value measurements based on the types of inputs
used for the various valuation techniques (market approach, income approach, and cost approach). FAS 157 is
applied under existing accounting pronouncements that require or permit fair value measurements and,
accordingly, does not require any new fair value measurements.
The levels of hierarchy are described below:
• Level 1: Observable inputs such as quoted prices in active markets for identical assets or liabilities.
• Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or
indirectly; these include quoted prices for similar assets or liabilities in active markets and quoted
prices for identical or similar assets or liabilities in markets that are not active.
• Level 3: Unobservable inputs in which there is little or no market data available, which require the
reporting entity to develop its own assumptions.
The Company’s assessment of the significance of a particular input to the fair value measurement in its
entirety requires judgment and considers factors specific to the asset or liability. Financial assets and liabilities
are classified in their entirety based on the most stringent level of input that is significant to the fair value
measurement.
The following table presents information about the Company’s financial assets and liabilities measured at
fair value on a recurring basis as of May 31, 2009 and indicates the fair value hierarchy of the valuation
techniques utilized by the Company to determine such fair value.
67