Operating Segments

3 Months Ended

Aug. 31, 2016

Segment Reporting [Abstract]

Operating Segments

Note 10 — Operating Segments

The Company’s operating segments are evidence of the structure of the Company's internal organization. The NIKE Brand segments are defined by geographic regions for operations participating in NIKE Brand sales activity.

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, and include results for the NIKE, Jordan and Hurley brands. The Company’s NIKE Brand Direct to Consumer (DTC) operations are managed within each geographic operating segment. Converse is also a reportable segment for the Company, and operates in one industry: the design, marketing, licensing and selling of casual sneakers, apparel and accessories.

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 represents NIKE Brand licensing businesses that are not part of a geographic operating segment, and demand creation, operating overhead and product creation and design expenses that are centrally managed for the NIKE Brand.

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, benefit and compensation programs, including stock-based compensation; and certain foreign currency gains and losses, including certain hedge gains and losses.

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 tax expense in the Consolidated Statements of Income.

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 to Converse. These rates are set approximately nine and twelve months in advance of the future selling seasons to which they relate (specifically, for each currency, one standard rate applies to the fall and holiday selling seasons and one standard rate applies to the spring and summer selling seasons) 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, net, Inventories and Property, plant and equipment, net for operating segments are regularly reviewed by management and are therefore provided below.

	Three months ended August 31,
(In millions)	2016			2015
REVENUES
North America	$	4,031		$	3,799
Western Europe	1,763			1,641
Central & Eastern Europe	440			401
Greater China	1,020			886
Japan	245			179
Emerging Markets	945			966
Global Brand Divisions	15			26
Total NIKE Brand	8,459			7,898
Converse	574			555
Corporate	28			(39		)
TOTAL NIKE CONSOLIDATED REVENUES	$	9,061		$	8,414
EARNINGS BEFORE INTEREST AND TAXES
North America	$	1,004		$	1,042
Western Europe	392			485
Central & Eastern Europe	81			98
Greater China	371			330
Japan	50			36
Emerging Markets	171			258
Global Brand Divisions	(771		)	(624		)
Total NIKE Brand	1,298			1,625
Converse	153			147
Corporate	(163		)	(323		)
Total NIKE Consolidated Earnings Before Interest and Taxes	1,288			1,449
Interest expense (income), net	7			4
TOTAL NIKE CONSOLIDATED INCOME BEFORE INCOME TAXES	$	1,281		$	1,445

	As of August 31,			As of May 31,
(In millions)	2016			2016
ACCOUNTS RECEIVABLE, NET
North America	$	1,571		$	1,689
Western Europe	569			378
Central & Eastern Europe	261			194
Greater China	90			74
Japan	116			129
Emerging Markets	519			409
Global Brand Divisions	92			76
Total NIKE Brand	3,218			2,949
Converse	298			270
Corporate	10			22
TOTAL ACCOUNTS RECEIVABLE, NET	$	3,526		$	3,241
INVENTORIES
North America	$	2,268		$	2,363
Western Europe	939			929
Central & Eastern Europe	200			210
Greater China	428			375
Japan	170			146
Emerging Markets	558			478
Global Brand Divisions	47			35
Total NIKE Brand	4,610			4,536
Converse	306			306
Corporate	(20		)	(4		)
TOTAL INVENTORIES	$	4,896		$	4,838
PROPERTY, PLANT AND EQUIPMENT, NET
North America	$	738		$	742
Western Europe	586			589
Central & Eastern Europe	47			50
Greater China	224			234
Japan	236			223
Emerging Markets	120			109
Global Brand Divisions	493			511
Total NIKE Brand	2,444			2,458
Converse	123			125
Corporate	1,005			937
TOTAL PROPERTY, PLANT AND EQUIPMENT, NET	$	3,572		$	3,520