Arbitration dispute between Nike's subsidiary & Alon International
17 May '06
2 min read
NIKE Inc announced an arbitration ruling arising from a contract dispute between the company's Converse subsidiary and Alon International, S.A., a former licensee for Converse in Brazil, Argentina, Paraguay and Uruguay.
The arbitrator awarded Alon $52.5 million in damages, plus legal fees, less some amounts previously paid to Alon. This potential liability had not been accrued by Nike, and will likely result in a charge to earnings for company's fiscal 2006 fourth quarter ending May 31, 2006.
"We disagree with the ruling and will exercise our legal right to challenge both the award and the amount of damages," said Nike Inc General Counsel Jim Carter.
Standard confidentiality provisions in arbitration rules forbid the company from commenting on substance of ruling.
The actual amount of fourth quarter charge will be decided by arbitrator's final determination of attorney's fees, as well as Nike's assessment of the likely outcome of any further proceedings.
Nike expects to report its fourth quarter and fiscal 2006 year-end earnings near the end of June 2006; the company has not yet announced the exact date.
NIKE Inc based near Beaverton, Oregon is the world's leading designer, marketer and distributor of authentic athletic footwear, apparel, equipment and accessories for a wide variety of sports and fitness activities.
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