Nike (NKE)

Corporate Expense

Fiscal 2009 Compared to Fiscal 2008

Corporate expense consists of unallocated general and administrative expenses, which includes expenses associated with centrally managed departments, depreciation and amortization related to the Company’s corporate headquarters, unallocated insurance and benefit programs, foreign currency gains and losses, including hedge gains and losses, corporate eliminations and other items.

The increase in corporate expense in fiscal 2009 was primarily attributable to pre-tax restructuring charges of $195 million, consisting primarily of cash charges related to severance costs.

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Foreign currency gains and losses include conversion gains and losses generated by our centrally managed foreign currency hedging program and other conversion gains and losses. Foreign currency gains and losses also include gains and losses resulting from the difference between actual foreign currency rates and standard rates assigned to our regions. With the exception of foreign currency gains and losses generated by the EMEA Region and Other businesses, which are reported within their respective operating results, substantially all of the Company’s remaining conversion gains and losses as well as standard to actual foreign currency gains and losses reside at Corporate. In fiscal 2009, foreign currency conversion gains (losses) reported in Corporate expense totaled $45.9 million compared to ($76.3) million in fiscal 2008, which was primarily driven by a net gain from currency hedges in fiscal 2009 versus a net hedge loss in fiscal 2008.

Fiscal 2008 Compared to Fiscal 2007

The increase in corporate expense from fiscal 2007 to fiscal 2008 was primarily driven by increased employee compensation expense due to the increase in centralized corporate functions, higher performance-based compensation as well as increased investments in demand creation, including other spending around the Beijing Summer Olympics.

In fiscal 2008, foreign currency conversion loss reported in Corporate expense totaled $76.3 million compared to $31.7 million in fiscal 2007, which was primarily driven by a larger net loss from currency hedges in fiscal 2008 versus 2007.