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Table of Contents NIKE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Note 14 — Accumulated Other Comprehensive Income
The components of accumulated other comprehensive income, net of tax, are as follows:
May 31,
2010 2009
(In millions)
Cumulative translation adjustment and other $ (94.6) $ 64.6
Net deferred gain on net investment hedge derivatives 107.3 62.5
Net deferred gain on cash flow hedge derivatives 202.1 240.4
$214.8 $367.5
Note 15 — Commitments and Contingencies
The Company leases space for certain of its offices, warehouses and retail stores under leases expiring from 1 to 25 years after May 31, 2010. Rent
expense was $416.1 million, $397.0 million and $344.2 million for the years ended May 31, 2010, 2009 and 2008, respectively. Amounts of minimum
future annual rental commitments under non−cancelable operating leases in each of the five years ending May 31, 2011 through 2015 are $334.4 million,
$264.0 million, $219.9 million, $177.2 million, $148.0 million, respectively, and $465.8 million in later years.
As of May 31, 2010 and 2009, the Company had letters of credit outstanding totaling $101.1 million and $154.8 million, respectively. These letters of
credit were generally issued for the purchase of inventory.
In connection with various contracts and agreements, the Company provides routine indemnifications relating to the enforceability of intellectual
property rights, coverage for legal issues that arise and other items where the Company is acting as the guarantor. Currently, the Company has several such
agreements in place. However, based on the Company’s historical experience and the estimated probability of future loss, the Company has determined that
the fair value of such indemnifications is not material to the Company’s financial position or results of operations.
In the ordinary course of its business, the Company is involved in various legal proceedings involving contractual and employment relationships,
product liability claims, trademark rights, and a variety of other matters. The Company does not believe there are any pending legal proceedings that will
have a material impact on the Company’s financial position or results of operations.
Note 16 — Restructuring Charges
During fiscal 2009, the Company took necessary steps to streamline its management structure, enhance consumer focus, drive innovation more
quickly to market and establish a more scalable, long−term cost structure. As a result, the Company reduced its global workforce by approximately 5% and
incurred pre−tax restructuring charges of $195 million, primarily consisting of severance costs related to the workforce reduction. As nearly all of the
restructuring activities were completed in fiscal 2009, the Company does not expect to recognize additional costs in future periods relating to these actions.
The restructuring charge is reflected in the corporate expense line in the segment presentation of earnings before interest and taxes in Note 19 — Operating
Segments and Related Information.
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