Nike 2015 Annual Report Download - page 59

PART II
As of May 31, 2014
Derivative Assets Derivative Liabilities
(In millions)
Assets
at Fair
Value
Other
Current
Assets
Other
Long-
term
Assets
Liabilities
at Fair
Value
Accrued
Liabilities
Other
Long-
term
Liabilities
Level 2:
Foreign exchange forwards and options(1) $ 127 $ 101 $ 26 $ 85 $ 84 $ 1
Interest rate swaps 6 — 6 — — —
TOTAL $ 133 $ 101 $ 32 $ 85 $ 84 $ 1
(1) If the foreign exchange derivative financial instruments had been netted in the Consolidated Balance Sheets, the asset and liability positions each would have been reduced by $63 million
as of May 31, 2014. No amounts of collateral were received or posted on the Company’s derivative assets and liabilities as of May 31, 2014.
Available-for-sale securities comprise investments in U.S. Treasury and
Agency securities, money market funds, corporate commercial paper and
bonds. These securities are valued using market prices on both active
markets (Level 1) and less active markets (Level 2). The gross realized gains
and losses on sales of available-for-sale securities were immaterial for the
fiscal years ended May 31, 2015 and 2014. Unrealized gains and losses on
available-for-sale securities included in Other comprehensive income were
immaterial as of May 31, 2015 and 2014.
The Company regularly reviews its available-for-sale securities for other-than-
temporary impairment. For the years ended May 31, 2015 and 2014, the
Company did not consider its securities to be other-than-temporarily impaired
and accordingly, did not recognize any impairment losses.
As of May 31, 2015, the Company held $1,808 million of available-for-sale
securities with maturity dates within one year and $264 million with maturity
dates over one year and less than five years within Short-term investments on
the Consolidated Balance Sheets.
Included in Interest expense (income), net was interest income related to the
Company’s available-for-sale securities of $6 million, $5 million and $4 million
for the years ended May 31, 2015, 2014 and 2013, respectively.
The Company’s Level 3 assets comprise investments in certain non-
marketable preferred stock. These Level 3 investments are an immaterial
portion of the Company’s portfolio. Changes in Level 3 investment assets
were immaterial during the years ended May 31, 2015 and 2014.
Derivative financial instruments include foreign exchange forwards and
options, embedded derivatives and interest rate swaps. Refer to Note 17 —
Risk Management and Derivatives for additional detail.
No transfers among the levels within the fair value hierarchy occurred during
the years ended May 31, 2015 or 2014.
As of May 31, 2015 and 2014, the Company had no assets or liabilities that
were required to be measured at fair value on a non-recurring basis.
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.
At May 31, 2015, the Company had $150 million of outstanding receivables
related to its investments in reverse repurchase agreements recorded within
Prepaid expenses and other current assets on the Consolidated Balance
Sheet. The carrying amount of these agreements approximates their fair value
based upon observable inputs other than quoted prices (Level 2). The reverse
repurchase agreements are fully collateralized.
NOTE 7 — Short-Term Borrowings and Credit Lines
Notes payable and interest-bearing accounts payable to Sojitz Corporation of America (“Sojitz America”) as of May 31, 2015 and 2014 are summarized below:
As of May 31,
2015 2014
(Dollars in millions) Borrowings Interest Rate Borrowings Interest Rate
Notes payable:
U.S. operations $ — 0.00%(1) $ — 0.00%(1)
Non-U.S. operations 74 12.39%(1) 167 10.04%(1)
TOTAL NOTES PAYABLE $ 74 $ 167
Interest-bearing accounts payable:
Sojitz America $ 78 0.98% $ 60 0.94%
(1) Weighted average interest rate includes non-interest bearing overdrafts.
The carrying amounts reflected in the Consolidated Balance Sheets for Notes
payable approximate fair value.
The Company purchases through Sojitz America certain NIKE Brand
products it acquires from non-U.S. suppliers. These purchases are for
products sold in certain countries in the Company’s Emerging Markets
geographic operating segment and Canada, excluding products produced
and sold in the same country. 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, 2015 and 2014, the Company had no amounts outstanding
under its commercial paper program.
On November 1, 2011, the Company entered into a committed credit facility
agreement with a syndicate of banks which provides for up to $1 billion of
borrowings with the option to increase borrowings to $1.5 billion with lender
approval. Following an extension agreement on September 17, 2013
between the Company and the syndicate of banks, the facility matures
November 1, 2017. Based on the Company’s current long-term senior
unsecured debt ratings of AA- 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 0.445%. The
facility fee is 0.055% of the total commitment. Under this committed credit
facility, the Company must maintain, among other things, certain minimum
specified financial ratios with which the Company was in compliance at
May 31, 2015. No amounts were outstanding under this facility as of May 31,
2015 or 2014.
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