Nike 2015 Annual Report Download - page 67

PART II
The following table presents the fair values of derivative instruments included within the Consolidated Balance Sheets as of May 31, 2015 and 2014:
Asset Derivatives Liability Derivatives
(In millions)
Balance Sheet
Location 2015 2014
Balance Sheet
Location 2015 2014
Derivatives formally designated
as hedging instruments:
Foreign exchange forwards
and options Prepaid expenses and other current assets $ 825 $ 76 Accrued liabilities $ 140 $ 57
Interest rate swaps Prepaid expenses and
other current assets 78 — Accrued liabilities — —
Foreign exchange forwards
and options Deferred income taxes and other assets 520 26 Deferred income taxes
and other liabilities 41
Interest rate swaps Deferred income taxes
and other assets —6
Deferred income taxes
and other liabilities ——
Total derivatives formally
designated as hedging
instruments
1,423 108 144 58
Derivatives not designated as
hedging instruments:
Foreign exchange forwards
and options Prepaid expenses and other current assets 209 25 Accrued liabilities 20 27
Embedded derivatives Prepaid expenses and
other current assets 2 — Accrued liabilities 2 —
Embedded derivatives Deferred income taxes
and other assets 5—
Deferred income taxes
and other liabilities 9—
Total derivatives not designated
as hedging instruments 216 25 31 27
TOTAL DERIVATIVES $ 1,639 $ 133 $ 175 $ 85
The following tables present the amounts affecting the Consolidated Statements of Income for years ended May 31, 2015, 2014 and 2013:
(In millions)
Amount of Gain (Loss)
Recognized in Other
Comprehensive Income
on Derivatives(1)
Amount of Gain (Loss)
Reclassified From Accumulated
Other Comprehensive Income into Income(1)
Year Ended May 31, Location of Gain (Loss)
Reclassified From Accumulated Other
Comprehensive Income Into Income(1)
Year Ended May 31,
2015 2014 2013 2015 2014 2013
Derivatives designated as cash flow hedges:
Foreign exchange forwards and options $ (202) $ (48) $ 42 Revenues $ (95) $ 14 $ (19)
Foreign exchange forwards and options 1,109 (78) 67 Cost of sales 220 12 113
Foreign exchange forwards and options — 4 (3) Total selling and administrative expense — — 2
Foreign exchange forwards and options 497 (21) 33 Other (income) expense, net 136 10 9
Interest rate swaps 76 — — Interest expense (income), net — — —
Total designated cash flow hedges $1,480 $(143) $ 139 $261 $ 36 $105
Derivatives designated as net investment hedges:
Foreign exchange forwards and options $ — $ — $ — Other (income) expense, net $ — $ — $ —
(1) For the years ended May 31, 2015, 2014 and 2013, the amounts recorded in Other (income) expense, net as a result of hedge ineffectiveness and the discontinuance of cash flow hedges
because the forecasted transactions were no longer probable of occurring were immaterial.
Amount of Gain (Loss) Recognized in
Income on Derivatives
Location of Gain (Loss) Recognized
in Income on Derivatives
Year Ended May 31,
(In millions) 2015 2014 2013
Derivatives designated as fair value hedges:
Interest rate swaps(1) $ 5 $ 5 $ 5 Interest expense (income), net
Derivatives not designated as hedging instruments:
Foreign exchange forwards and options $ 611 $ (75) $ 51 Other (income) expense, net
Embedded derivatives $ (1) $ (1) $ (4) Other (income) expense, net
(1) All interest rate swaps designated as fair value hedges meet the shortcut method requirements under the accounting standards for derivatives and hedging. Accordingly, changes in the
fair values of the interest rate swaps are considered to exactly offset changes in the fair value of the underlying long-term debt. Refer to “Fair Value Hedges” in this note for additional detail.
Refer to Note 6 — Fair Value Measurements for a description of how the
above financial instruments are valued and Note 14 — Accumulated Other
Comprehensive Income and the Consolidated Statements of Shareholders’
Equity for additional information on changes in Other comprehensive income
for the years ended May 31, 2015, 2014 and 2013.
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