Nike 2011 Annual Report Download - page 46

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46 NIKE,INC.-Form10-K
PARTII
Note6Fair Value Measurements
(Inmillions)
May31,2010
Fair Value
MeasurementsUsing Assets/Liabilities
atFair Value BalanceSheetClassifi cationLevel1 Level2 Level3
ASSETS
Derivatives:
Foreign exchange forwards and options $ — $ 420 $ — $ 420 Other current assets and other long-termassets
Interest rate swap contracts — 15 — 15 Other current assets and other long-term assets
Total derivatives — 435 — 435
Available-for-sale securities:
U.S. Treasury securities 1,232 — — 1,232 Cash equivalents
Commercial paper and bonds — 462 — 462 Cash equivalents
Money market funds — 685 — 685 Cash equivalents
U.S. Treasury securities 1,085 — — 1,085 Short-term investments
U.S. Agency securities — 298 — 298 Short-term investments
Commercial paper and bonds — 684 — 684 Short-term investments
Total available-for-sale securities 2,317 2,129 — 4,446
TOTAL ASSETS $ 2,317 $ 2,564 $ — $ 4,881
LIABILITIES
Derivatives:
Foreign exchange forwards and options $ — $ 165 $ — $ 165 Accruedliabilitiesand otherlong-termliabilities
TOTAL LIABILITIES $ — $ 165 $ — $ 165
Derivative fi nancial instruments include foreign currency forwards, option
contracts and interest rate swaps.The fair value of these derivatives contracts
is determined using observable market inputs such as the forward pricing
curve, currency volatilities, currency correlations and interest rates, and
considers nonperformance risk of the Company and that of its counterparties.
Adjustments relating to these risks were not material for theyears ended
May31,2011 and 2010.
Available-for-sale securities are primarily comprised of investments in U.S.
Treasury and agency securities, commercial paper, bonds and money market
funds.These securities are valued using market prices on both active markets
(level1) and less active markets (level2).Level1 instrument valuations are
obtained from real-time quotes for transactions in active exchange markets
involving identical assets.Level2 instrument valuations are obtained from
readily-available pricing sources for comparable instruments.
As of May31,2011 and 2010, the Company had no material Level3
measurements and no assets or liabilities measured at fair value on a non-
recurring basis.
Short-Term Investments
As of May31,2011 and 2010, short-term investments consisted of available-
for-sale securities. As of May31,2011, the Company held $2,253million of
available-for-sale securities with maturity dates within one year and $330million
with maturity dates over one year and less than fi veyears within short-term
investments. As of May31,2010, the Company held $1,900million of
available-for-sale securities with maturity dates within one year and $167million
with maturity dates over one year and less than fi veyears within short-term
investments.
Short-term investments classifi ed as available-for-sale consist of the following at fair value:
(Inmillions)
As of May31,
2011 2010
Available-for-sale investments:
U.S. treasury and agencies $ 1,781 $ 1,383
Commercial paper and bonds 802 684
TOTAL AVAILABLE-FOR-SALE INVESTMENTS $ 2,583 $ 2,067
Included in interest expense (income), net for theyears ended
May31,2011,2010, and 2009 was interest income of $30million, $30million,
and $50million, respectively, related to cash and equivalents and short-term
investments.
For fair value information regarding notes payable and long-term debt, refer
to Note7— Short-Term Borrowings and Credit Lines and Note8— Long-
Term Debt.