Operating Segments

9 Months Ended

Feb. 28, 2014

Segment Reporting [Abstract]

Operating Segments

NOTE 12 — Operating Segments

The Company’s operating segments are evidence of the structure of the Company's internal organization. The Company's operating segments have changed beginning in the first quarter of fiscal 2014 to mirror the changes in the structure of the Company’s internal organization that were effective during the first quarter of fiscal 2014. The NIKE Brand segments continue to be defined by geographic regions for operations participating in NIKE Brand sales activity and also include the results of NIKE Golf and Hurley, which are now managed within the geographies. Previously, NIKE Golf and Hurley were combined with Converse and reported as "Other Businesses."

Each NIKE Brand geographic segment operates predominantly in one industry: the design, development, marketing and selling of athletic footwear, apparel, and equipment. The Company’s reportable operating segments for the NIKE Brand are: North America, Western Europe, Central & Eastern Europe, Greater China, Japan, and Emerging Markets. The Company’s NIKE Brand Direct to Consumer operations are managed within each geographic operating segment. Converse is also a reportable segment for NIKE, Inc., and operates in one industry: the design, marketing, licensing, and selling of casual sneakers, apparel, and accessories. Prior period segment information has been restated to reflect these changes.

Global Brand Divisions is included within the NIKE Brand for presentation purposes to align with the way management views the Company. Global Brand Divisions primarily represent NIKE Brand licensing businesses that are not part of a geographic operating segment, demand creation and operating overhead expenses that are centrally managed for the NIKE Brand, and costs associated with product development and supply chain operations.

Corporate consists largely of unallocated general and administrative expenses, including 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 certain hedge gains and losses; 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 (income), 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 the Company's centrally managed foreign exchange risk management program, standard foreign currency rates are assigned twice per year to each NIKE Brand entity in the Company's geographic operating segments and Converse. 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 Converse 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 the Company's 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.

	Three Months Ended February 28,						Nine Months Ended February 28,
(In millions)	2014			2013			2014			2013
REVENUE
North America	$	3,069		$	2,737		$	9,005		$	8,167
Western Europe	1,292			1,057			3,667			3,141
Central & Eastern Europe	356			303			1,017			882
Greater China	697			641			1,900			1,800
Japan	177			195			545			632
Emerging Markets	937			867			2,869			2,838
Global Brand Divisions	26			29			89			84
Total NIKE Brand	6,554			5,829			19,092			17,544
Converse	420			361			1,274			1,095
Corporate	(2		)	(3		)	8			(23		)
TOTAL NIKE CONSOLIDATED REVENUES	$	6,972		$	6,187		$	20,374		$	18,616
EARNINGS BEFORE INTEREST AND TAXES
North America	$	726		$	653		$	2,188		$	1,863
Western Europe	275			179			663			501
Central & Eastern Europe	79			64			208			155
Greater China	234			218			601			570
Japan	21			24			92			92
Emerging Markets	229			216			682			735
Global Brand Divisions	(533		)	(414		)	(1,461		)	(1,280		)
Total NIKE Brand	1,031			940			2,973			2,636
Converse	133			121			402			336
Corporate	(272		)	(205		)	(710		)	(608		)
Total NIKE Consolidated Earnings Before Interest and Taxes	892			856			2,665			2,364
Interest expense (income), net	9			(2		)	25			(6		)
TOTAL NIKE CONSOLIDATED EARNINGS BEFORE TAXES	$	883		$	858		$	2,640		$	2,370

	As of February 28,		As of May 31,
(In millions)	2014		2013
ACCOUNTS RECEIVABLE, NET
North America	$	1,559	$	1,459
Western Europe	379		375
Central & Eastern Europe	310		287
Greater China	51		56
Japan	113		154
Emerging Markets	669		574
Global Brand Divisions	45		29
Total NIKE Brand	3,126		2,934
Converse	214		131
Corporate	15		52
TOTAL ACCOUNTS RECEIVABLE, NET	$	3,355	$	3,117
INVENTORIES
North America	$	1,764	$	1,668
Western Europe	635		562
Central & Eastern Europe	215		207
Greater China	240		209
Japan	105		69
Emerging Markets	638		567
Global Brand Divisions	13		34
Total NIKE Brand	3,610		3,316
Converse	207		210
Corporate	8		4
TOTAL INVENTORIES	$	3,825	$	3,530
PROPERTY, PLANT AND EQUIPMENT, NET
North America	$	518	$	424
Western Europe	355		327
Central & Eastern Europe	48		44
Greater China	218		213
Japan	257		269
Emerging Markets	113		89
Global Brand Divisions	559		472
Total NIKE Brand	2,068		1,838
Converse	59		52
Corporate	609		562
TOTAL PROPERTY, PLANT AND EQUIPMENT, NET	$	2,736	$	2,452