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 NIKE Brand 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 February 28,						Nine Months Ended February 28,
(In millions)	2018			2017			2018			2017
REVENUES
North America	$	3,571		$	3,782		$	10,980		$	11,463
Europe, Middle East & Africa	2,299			1,925			6,776			5,979
Greater China	1,336			1,075			3,666			3,150
Asia Pacific & Latin America	1,268			1,122			3,730			3,459
Global Brand Divisions	21			19			64			55
Total NIKE Brand	8,495			7,923			25,216			24,106
Converse	483			498			1,374			1,488
Corporate	6			11			18			79
TOTAL NIKE, INC. REVENUES	$	8,984		$	8,432		$	26,608		$	25,673
EARNINGS BEFORE INTEREST AND TAXES
North America	$	840		$	980		$	2,625		$	2,896
Europe, Middle East & Africa	417			361			1,205			1,159
Greater China	496			381			1,268			1,127
Asia Pacific & Latin America	298			228			849			703
Global Brand Divisions	(649		)	(598		)	(1,926		)	(1,988		)
Total NIKE Brand	1,402			1,352			4,021			3,897
Converse	69			109			206			340
Corporate	(299		)	(119		)	(1,075		)	(478		)
Total NIKE, Inc. Earnings Before Interest and Taxes	1,172			1,342			3,152			3,759
Interest expense (income), net	13			19			42			41
TOTAL NIKE, INC. INCOME BEFORE INCOME TAXES	$	1,159		$	1,323		$	3,110		$	3,718



	As of February 28,			As of May 31,
(In millions)	2018			2017
ACCOUNTS RECEIVABLE, NET
North America	$	1,594		$	1,798
Europe, Middle East & Africa	929			690
Greater China	136			102
Asia Pacific & Latin America	734			693
Global Brand Divisions	101			86
Total NIKE Brand	3,494			3,369
Converse	274			297
Corporate	24			11
TOTAL ACCOUNTS RECEIVABLE, NET	$	3,792		$	3,677
INVENTORIES
North America	$	2,242		$	2,218
Europe, Middle East & Africa	1,457			1,327
Greater China	613			463
Asia Pacific & Latin America	787			694
Global Brand Divisions	97			68
Total NIKE Brand	5,196			4,770
Converse	277			286
Corporate	(107		)	(1		)
TOTAL INVENTORIES	$	5,366		$	5,055
PROPERTY, PLANT AND EQUIPMENT, NET
North America	$	833		$	819
Europe, Middle East & Africa	794			709
Greater China	253			225
Asia Pacific & Latin America	350			340
Global Brand Divisions	556			533
Total NIKE Brand	2,786			2,626
Converse	118			125
Corporate	1,394			1,238
TOTAL PROPERTY, PLANT AND EQUIPMENT, NET	$	4,298		$	3,989