Nike 2014 Annual Report Download - page 64

PART II
The weighted average contractual life remaining for options outstanding and
options exercisable at May 31, 2014 was 6.0 years and 4.6 years,
respectively. The aggregate intrinsic value for options outstanding and
exercisable at May 31, 2014 was $2,391 million and $1,682 million,
respectively. The aggregate intrinsic value was the amount by which the
market value of the underlying stock exceeded the exercise price of the
options. The total intrinsic value of the options exercised during the years
ended May 31, 2014, 2013, and 2012 was $474 million, $293 million, and
$453 million, respectively.
In addition to the 1990 Plan, the Company gives employees the right to
purchase shares at a discount to the market price under employee stock
purchase plans (“ESPPs”). Employees are eligible to participate through
payroll deductions of up to 10% of their compensation. At the end of each six-
month offering period, shares are purchased by the participants at 85% of the
lower of the fair market value at the beginning or the end of the offering period.
Employees purchased 1.4 million, 1.6 million, and 1.7 million shares during
each of the three years ended May 31, 2014, 2013 and 2012, respectively.
From time to time, the Company grants restricted stock units and restricted
stock to key employees under the 1990 Plan. The number of shares
underlying such awards granted to employees during the years ended
May 31, 2014, 2013, and 2012 were 0.3 million, 1.6 million, and 0.7 million
with weighted average values per share of $63.89, $46.86, and $49.49,
respectively. Recipients of restricted stock are entitled to cash dividends and
to vote their respective shares throughout the period of restriction. Recipients
of restricted stock units are entitled to dividend equivalent cash payments
upon vesting. The value of all grants of restricted stock and restricted stock
units was established by the market price on the date of grant. During the
years ended May 31, 2014, 2013, and 2012, the aggregate fair value of
restricted stock and restricted stock units vested was $28 million, $25 million,
and $22 million, respectively, determined as of the date of vesting. As of
May 31, 2014, the Company had $61 million of unrecognized compensation
costs from restricted stock units to be recognized in Total selling and
administrative expense over a weighted average period of 2.7 years.
NOTE 12 — Earnings Per Share
The following is a reconciliation from Basic earnings per common share to Diluted earnings per common share. Options to purchase an additional 0.1 million,
0.1 million, and 0.2 million shares of common stock were outstanding at May 31, 2014, 2013, and 2012, respectively, but were not included in the computation of
Diluted earnings per common share because the options were anti-dilutive.
Year Ended May 31,
(In millions, except per share data) 2014 2013 2012
Determination of shares:
Weighted average common shares outstanding 883.4 897.3 920.0
Assumed conversion of dilutive stock options and awards 22.4 19.1 19.6
DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 905.8 916.4 939.6
Earnings per share from continuing operations:
Basic earnings per common share $ 3.05 $ 2.74 $ 2.45
Diluted earnings per common share $ 2.97 $ 2.68 $ 2.40
Earnings per share from discontinued operations:
Basic earnings per common share $ — $ 0.02 $ (0.05)
Diluted earnings per common share $ — $ 0.02 $ (0.05)
Basic earnings per common share for NIKE, Inc. $ 3.05 $ 2.76 $ 2.40
Diluted earnings per common share for NIKE, Inc. $ 2.97 $ 2.70 $ 2.35
NOTE 13 — Benefit Plans
The Company has a qualified 401(k) Savings and Profit Sharing Plan to which
all U.S. employees who work at least 1,000 hours in a year are able to
participate. The Company matches a portion of employee contributions.
Company contributions to the savings plan were $51 million, $46 million, and
$42 million for the years ended May 31, 2014, 2013, and 2012, respectively,
and are included in Total selling and administrative expense. The terms of the
plan also allow for annual discretionary profit sharing contributions to the
accounts of eligible employees by the Company as determined by the Board
of Directors. Contributions of $49 million, $47 million, and $40 million were
made to the plan and are included in Total selling and administrative expense
for the years ended May 31, 2014, 2013, and 2012, respectively.
The Company also has a Long-Term Incentive Plan (“LTIP”) that was adopted
by the Board of Directors and approved by shareholders in September 1997
and later amended in fiscal 2007. The Company recognized $46 million, $50
million, and $51 million of Total selling and administrative expense related to
cash awards under the LTIP during the years ended May 31, 2014, 2013, and
2012, respectively.
The Company allows certain highly compensated employees and non-
employee directors of the Company to defer compensation under a
nonqualified deferred compensation plan. Deferred compensation plan
liabilities were $390 million and $326 million at May 31, 2014 and May 31,
2013, respectively, and classified as long-term in Deferred income taxes and
other liabilities.
The Company has pension plans in various countries worldwide. The pension
plans are only available to local employees and are generally government
mandated. The liability related to the unfunded pension liabilities of the plans
was $100 million and $104 million at May 31, 2014 and May 31, 2013,
respectively, which was primarily classified as long-term in Deferred income
taxes and other liabilities.
NIKE, INC. 2014 Annual Report and Notice of Annual Meeting 107
FORM 10-K