Operating Segments

3 Months Ended

Aug. 31, 2017

Segment Reporting [Abstract]

Operating Segments

Note 11 — 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. In June 2017, NIKE, Inc. announced a new company alignment designed to allow NIKE to better serve the consumer personally, at scale. As a result of this organizational realignment, the Company’s reportable operating segments for the NIKE Brand are: North America; Europe, Middle East & Africa; Greater China; and Asia Pacific & Latin America, and include results for the NIKE, Jordan and Hurley brands. Certain prior year amounts have been reclassified to conform to fiscal 2018 presentation. This includes reclassified operating segment data to reflect the changes in the Company’s operating structure, which became effective June 1, 2017. These changes had no impact on previously reported consolidated statements of income, balance sheets, statements of cash flows or statements of shareholders’ equity.

The Company’s NIKE Direct 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 Unaudited Condensed 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 the 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)	2017			2016
REVENUES
North America	$	3,924		$	4,031
Europe, Middle East & Africa	2,344			2,262
Greater China	1,108			1,020
Asia Pacific & Latin America	1,189			1,131
Global Brand Divisions	20			15
Total NIKE Brand	8,585			8,459
Converse	483			574
Corporate	2			28
TOTAL NIKE, INC. REVENUES	$	9,070		$	9,061
EARNINGS BEFORE INTEREST AND TAXES
North America	$	1,002		$	1,004
Europe, Middle East & Africa	451			485
Greater China	394			371
Asia Pacific & Latin America	260			209
Global Brand Divisions	(675		)	(771		)
Total NIKE Brand	1,432			1,298
Converse	89			153
Corporate	(433		)	(163		)
Total NIKE, Inc. Earnings Before Interest and Taxes	1,088			1,288
Interest expense (income), net	16			7
TOTAL NIKE, INC. INCOME BEFORE INCOME TAXES	$	1,072		$	1,281

	As of August 31,			As of May 31,
(In millions)	2017			2017
ACCOUNTS RECEIVABLE, NET
North America	$	1,759		$	1,798
Europe, Middle East & Africa	972			690
Greater China	112			102
Asia Pacific & Latin America	696			693
Global Brand Divisions	88			86
Total NIKE Brand	3,627			3,369
Converse	229			297
Corporate	15			11
TOTAL ACCOUNTS RECEIVABLE, NET	$	3,871		$	3,677
INVENTORIES
North America	$	2,222		$	2,218
Europe, Middle East & Africa	1,359			1,327
Greater China	537			463
Asia Pacific & Latin America	769			694
Global Brand Divisions	72			68
Total NIKE Brand	4,959			4,770
Converse	274			286
Corporate	(22		)	(1		)
TOTAL INVENTORIES	$	5,211		$	5,055
PROPERTY, PLANT AND EQUIPMENT, NET
North America	$	827		$	819
Europe, Middle East & Africa	731			709
Greater China	229			225
Asia Pacific & Latin America	343			340
Global Brand Divisions	543			533
Total NIKE Brand	2,673			2,626
Converse	122			125
Corporate	1,291			1,238
TOTAL PROPERTY, PLANT AND EQUIPMENT, NET	$	4,086		$	3,989