Nike 2016 Annual Report Download - page 57

PART II
NOTE 6 — Fair Value Measurements
The following tables present information about the Company’s financial assets and liabilities measured at fair value on a recurring basis as of May 31, 2016 and
2015, and indicate the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value. Refer to Note 1 — Summary of
Significant Accounting Policies for additional detail regarding the Company’s fair value measurement methodology.
As of May 31, 2016
(In millions)
Assets at Fair
Value
Cash
Equivalents
Short-term
Investments
Other Long-term
Assets
Cash $ 774 $ 774 $ — $ —
Level 1:
U.S. Treasury securities 1,265 100 1,165 —
Level 2:
Time deposits 831 827 4 —
U.S. Agency securities 679 — 679 —
Commercial paper and bonds 733 262 471 —
Money market funds 1,175 1,175 — —
Total level 2 3,418 2,264 1,154 —
Level 3:
Non-marketable preferred stock 10 — — 10
TOTAL $ 5,467 $ 3,138 $ 2,319 $ 10
As of May 31, 2015
(In millions)
Assets at Fair
Value
Cash
Equivalents
Short-term
Investments
Other Long-term
Assets
Cash $ 615 $ 615 $ — $ —
Level 1:
U.S. Treasury securities 869 225 644 —
Level 2:
Time deposits 684 684 — —
U.S. Agency securities 976 110 866 —
Commercial paper and bonds 914 352 562 —
Money market funds 1,866 1,866 — —
Total level 2 4,440 3,012 1,428 —
Level 3:
Non-marketable preferred stock 8 — — 8
TOTAL $ 5,932 $ 3,852 $ 2,072 $ 8
The Company elects to record the gross assets and liabilities of its derivative
financial instruments on the Consolidated Balance Sheets. The Company’s
derivative financial instruments are subject to master netting arrangements
that allow for the offset of assets and liabilities in the event of default or early
termination of the contract. Any amounts of cash collateral received related to
these instruments associated with the Company’s credit-related contingent
features are recorded in Cash and equivalents and Accrued liabilities,the
latter of which would further offset against the Company’s derivative asset
balance (refer to Note 16 — Risk Management and Derivatives). Cash
collateral received related to the Company’s credit related contingent features
is presented in the Cash provided by operations component of the
Consolidated Statements of Cash Flows. Any amounts of non-cash collateral
received, such as securities, are not recorded on the Consolidated Balance
Sheets pursuant to the accounting standards for non-cash collateral received.
The following tables present information about the Company’s derivative assets and liabilities measured at fair value on a recurring basis as of May 31,
2016 and 2015, and indicate the level in the fair value hierarchy in which the Company classifies the fair value measurement.
As of May 31, 2016
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) $ 603 $ 487 $ 116 $ 145 $ 115 $ 30
Embedded derivatives 7 2 5 9 2 7
Interest rate swaps(2) 77—4545—
TOTAL $ 617 $ 496 $ 121 $ 199 $ 162 $ 37
(1) If the foreign exchange derivative instruments had been netted in the Consolidated Balance Sheets, the asset and liability positions each would have been reduced by $136 million as of
May 31, 2016. As of that date, the Company had received $105 million of cash collateral from various counterparties related to these foreign exchange derivative instruments. No amount
of collateral was posted on the Company’s derivative liability balance as of May 31, 2016.
(2) As of May 31, 2016, no amount of cash collateral had been received or posted on the derivative asset and liability balances related to the Company’s interest rate swaps.
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