Nike 2012 Annual Report Download - page 63

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PART II
Corporate consists of unallocated general and administrative expenses,
which include expenses associated with centrally managed departments,
depreciation and amortization related to the Company’s headquarters,
unallocated insurance and benefit programs, including stock-based
compensation, certain foreign currency gains and losses, including hedge
gains and losses, certain corporate eliminations and other items.
The primary financial measure used by the Company to evaluate performance
of individual operating segments is earnings before interest and taxes
(commonly referred to as “EBIT”), which represents net income before interest
expense, net and income taxes in the consolidated statements of income.
Reconciling items for EBIT represent corporate expense items that are not
allocated to the operating segments for management reporting.
As part of our centrally managed foreign exchange risk management
program, standard foreign currency rates are assigned twice per year to each
NIKE Brand entity in our geographic operating segments and certain Other
Businesses. These rates are set approximately nine months in advance of the
future selling season based on average market spot rates in the calendar
month preceding the date they are established. Inventories and cost of sales
for geographic operating segments and certain Other Businesses reflect use
of these standard rates to record non-functional currency product purchases
in the entity’s functional currency. Differences between assigned standard
foreign currency rates and actual market rates are included in Corporate,
together with foreign currency hedge gains and losses generated from our
centrally managed foreign exchange risk management program and other
conversion gains and losses.
Accounts receivable, inventories and property, plant and equipment for
operating segments are regularly reviewed by management and are therefore
provided below. Additions to long-lived assets as presented in the following
table represent capital expenditures.
Certain prior year amounts have been reclassified to conform to fiscal 2012
presentation.
NIKE, INC. Š2012 Form 10-K 63