Nike 2011 Annual Report Download - page 47

47NIKE,INC.-Form10-K
PARTII
Note8Long-Term Debt
NOTE7 Short-Term Borrowings and Credit Lines
Notespayable to banks and interest-bearing accounts payable to Sojitz Corporation of America (“Sojitz America”) as of May31,2011 and 2010, are summarized below:
(Inmillions)
May31,
2011 2010
Borrowings Interest Rate Borrowings Interest Rate
Notespayable:
U.S. operations 35 —(1) 18 —(1)
Non-U.S. operations 152 7.05%(1) 121 6.35%(1)
$ 187 $ 139
Sojitz America $ 111 0.99% $ 88 1.07%
(1) Weighted average interest rate includes non-interest bearing overdrafts.
The carrying amounts refl ected in the consolidated balance sheet for notes
payable approximate fair value.
The Company purchases through Sojitz America certain athletic footwear,
apparel and equipment it acquires from non-U.S. suppliers. These purchases
are for the Company’s operations outside of the UnitedStates, Europe and
Japan. Accounts payable to Sojitz America are generally due up to 60 days
after shipment of goods from the foreign port. The interest rate on such
accounts payable is the 60-day London Interbank Offered Rate (“LIBOR”) as
of the beginning of the month of the invoice date, plus 0.75%.
As of May31,2011 and 2010, the Company had no amounts outstanding
under its commercial paper program.
In December2006, the Company entered into a $1billion revolving credit
facility with a group of banks. The facility matures in December2012. Based
on the Company’s current long-term senior unsecured debt ratings of A+ and
A1 from Standard and Poor’s Corporation and Moody’s Investor Services,
respectively, the interest rate charged on any outstanding borrowings would
be the prevailing LIBOR plus 0.15%. The facility fee is 0.05% of the total
commitment. Under this agreement, the Company must maintain, among other
things, certain minimum specifi ed fi nancial ratios with which the Company
was in compliance at May31,2011. No amounts were outstanding under
this facility as of May31,2011 and 2010.
NOTE8 Long-Term Debt
Long-term debt, net of unamortized premiums and discounts and swap fair value adjustments, is comprised of the following:
(Inmillions)
May31,
2011 2010
5.66% Corporate bond, payable July23,2012 $ 26 $ 27
5.40% Corporate bond, payable August7,2012 16 16
4.70% Corporate bond, payable October1,2013 50 50
5.15% Corporate bond, payable October15,2015 114 112
4.30% Japanese Yen note, payable June26,2011 130 116
1.52% Japanese Yen note, payable February14,2012 62 55
2.60%Japanese Yen note, maturing August20,2001 through November20,2020 54 53
2.00%Japanese Yen note, maturingAugust20,2001 through November20,2020 24 24
Total 476 453
Less current maturities 200 7
$ 276 $ 446
The scheduled maturity of long-term debt in each of theyears ending
May31,2012 through 2016 are $200million, $48million, $58million, $8million
and $109million, at face value, respectively.
The Company’s long-term debt is recorded at adjusted cost, net of amortized
premiums and discounts and interest rate swap fair value adjustments.
The fair value of long-term debt is estimated based upon quoted prices for
similar instruments. The fair value of the Company’s long-term debt, including
the current portion, was approximately $482million at May31,2011 and
$453million at May31,2010.
In fi scalyears 2003 and 2004, the Company issued a total of $240million in
medium-term notes of which $190million, at face value, were outstanding
at May31,2011. The outstanding notes have coupon rates that range from
4.70% to 5.66% and maturity dates ranging from July2012 to October2015.
For each of these notes, except the $50million note maturing in October2013,
the Company has entered into interest rate swap agreements whereby the
Company receives fi xed interest payments at the same rate as the notes
and pays variable interest payments based on the six-month LIBOR plus a
spread. Each swap has the same notional amount and maturity date as the
corresponding note. At May31,2011, the interest rates payable on these
swap agreements ranged from approximately 0.3% to 1.0%.
In June1996, one of the Company’s wholly owned Japanese subsidiaries,
NIKE Logistics YK, borrowed ¥10.5billion (approximately $130million as
of May31,2011) in a private placement with a maturity of June26,2011.
Interest is paid semi-annually. The agreement provides for early retirement
of the borrowing.
In July1999, NIKE Logistics YK assumed a total of ¥13.0billion in loans as
part of its agreement to purchase a distribution center in Japan, which serves
as collateral for the loans. These loans mature in equal quarterly installments
during the period August20,2001 through November20,2020. Interest is
also paid quarterly. As of May31,2011, ¥6.3billion (approximately $78million)
in loans remain outstanding.
In February2007, NIKE Logistics YK entered into a ¥5.0billion (approximately
$62million as of May31,2011) term loan that replaced certain intercompany
borrowings and matures on February14,2012. The interest rate on the loan
is approximately 1.5% and interest is paid semi-annually.