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Table of Contents NIKE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The activity in the restructuring accrual for the years ended May 31, 2010 and 2009 is as follows (in millions):
Restructuring accrual — June 1, 2008 $ —
Severance and related costs 195.0
Cash payments (29.4)
Non−cash stock option and restricted stock expense (19.5)
Foreign currency translation and other 3.5
Restructuring accrual — May 31, 2009 149.6
Cash payments (142.6)
Foreign currency translation and other 1.2
Restructuring accrual — May 31, 2010 $ 8.2
The accrual balance as of May 31, 2010 will be relieved throughout the first half of fiscal year 2011, as final severance payments are completed. The
restructuring accrual is included in Accrued liabilities in the Consolidated Balance Sheet.
Note 17 — Divestitures
On December 17, 2007, the Company completed the sale of the Starter brand business to Iconix Brand Group, Inc. for $60.0 million in cash. This
transaction resulted in a gain of $28.6 million during the year ended May 31, 2008.
On April 17, 2008, the Company completed the sale of NIKE Bauer Hockey for $189.2 million in cash to a group of private investors (“the Buyer”).
The sale resulted in a net gain of $32.0 million recorded in the fourth quarter of the year ended May 31, 2008. This gain included the recognition of a $46.3
million cumulative foreign currency translation adjustment previously included in accumulated other comprehensive income. As part of the terms of the sale
agreement, the Company granted the Buyer a royalty free limited license for the use of certain NIKE trademarks for a transitional period of approximately
two years. The Company deferred $41.0 million of the sale proceeds related to this license agreement, to be recognized over the license period.
The gains resulting from these divestitures are reflected in other (income) expense, net and in the corporate expense line in the segment presentation
of earnings before interest and taxes in Note 19 — Operating Segments and Related Information.
Note 18 — Risk Management and Derivatives
The Company is exposed to global market risks, including the effect of changes in foreign currency exchange rates and interest rates, and uses
derivatives to manage financial exposures that occur in the normal course of business. The Company does not hold or issue derivatives for speculative
trading purposes.
The Company formally documents all relationships between hedging instruments and hedged items, as well as its risk management objective and
strategy for undertaking hedge transactions. This process includes linking all derivatives to either specific firm commitments or forecasted transactions. The
Company also enters into foreign exchange forwards to mitigate the change in fair value of specific assets and liabilities on the balance sheet, which are not
designated as hedging instruments under the accounting standards for derivatives and hedging. Accordingly, changes in the fair value of hedges of recorded
balance sheet positions are recognized
83