The Company purchases through Nissho Iwai American Corporation ("NIAC") substantially all of the athletic footwear and apparel it acquires from non-U.S. suppliers. Accounts payable to NIAC are generally due up to 120 days after shipment of goods from the foreign port. Interest on such accounts payable accrues at the ninety day London Interbank Offered Rate (LIBOR) as of the beginning of the month of the invoice date, plus .30%.
At May 31, 1998 and 1997, the Company had no outstanding borrowings under its $500 million unsecured multiple option facility with eleven banks, which matures on October 31, 2002, and on May 31, 1998 the Company had no outstanding borrowings under its $250 million unsecured multiple option facility with ten banks, which matures on May 20, 1999. These agreements contain optional borrowing alternatives consisting of a committed revolving loan facility and a competitive bid facility. The interest rate charged on both the $500 million and the $250 million agreements, is determined by the borrowing option and, under the committed revolving loan facility, is either the LIBOR rate plus .19% or the higher of the Fed Funds rate plus .50% or the Prime Rate. The $500 million and the $250 million agreements provide for annual fees of .07%, and .045% respectively, of the total commitment. Under these agreements, the Company must maintain, among other things, certain minimum specified financial ratios with which the Company was in compliance at May 31, 1998.
Ratings for the Company to issue commercial paper, which is required to be supported by committed and uncommitted lines of credit, are A1 by Standard and Poor's Corporation and P1 by Moody's Investor Service. At May 31, 1998 there was $91.6 million outstanding and at May 31, 1997 there were no amounts outstanding under these arrangements.
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