Nike 2003 Annual Report Download - page 46

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NIKE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
been disclosed in the Company’s previous annual 10-K filings, and the applicable disclosures in this report are
here in Note 1 and Note 10. At this time, the Company plans to continue to account for stock-based
compensation using the intrinsic value method prescribed in Accounting Principles Board Opinion No. 25,
“Accounting for Stock Issued to Employees,” rather than change to the FAS 123 fair value method.
In January 2003, the FASB issued FASB Interpretation No. 46, “Consolidation of Variable Interest Entities”
(FIN 46). This interpretation of Accounting Research Bulletin No. 51, “Consolidated Financial Statements”,
addresses consolidation of variable interest entities. FIN 46 requires certain variable interest entities to be
consolidated by the primary beneficiary if the entity does not effectively disperse risks among the parties
involved. The provisions of FIN 46 are effective immediately for those variable interest entities created after
January 31, 2003. The provisions are effective for the first period beginning after June 15, 2003 for those variable
interests held prior to February 1, 2003. The Company does not currently have any variable interest entities as
defined in FIN 46. Accordingly, the Company does not expect the provisions of FIN 46 to affect the Company’s
consolidated financial position or results of operations.
Note 2 — Inventories
Inventories by major classification are as follows:
May 31,
2003 2002
(In millions)
Finished goods ................................................... $1,484.1 $1,348.2
Work-in-progress ................................................ 15.2 13.0
Raw materials ................................................... 15.6 12.6
$1,514.9 $1,373.8
Note 3 — Property, Plant and Equipment
Property, plant and equipment includes the following:
May 31,
2003 2002
(In millions)
Land........................................................... $ 191.1 $ 178.3
Buildings ....................................................... 785.0 739.9
Machineryandequipment.......................................... 1,538.7 1,356.9
Leasehold improvements ........................................... 433.4 394.2
Construction in process ............................................ 40.6 72.4
2,988.8 2,741.7
Less accumulated depreciation ...................................... 1,368.0 1,127.2
$1,620.8 $1,614.5
Capitalized interest was $0.8 million, $1.7 million and $8.4 million for the years ended May 31, 2003, 2002
and 2001, respectively.
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