Note 12 — 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; Europe, Middle East & Africa; Greater China; and Asia Pacific & Latin America, and include results for the NIKE, Jordan and Hurley brands.

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 represent 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 primarily 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 November 30,						Six Months Ended November 30,
(In millions)	2018			2017			2018			2017
REVENUES
North America	$	3,782		$	3,485		$	7,927		$	7,409
Europe, Middle East & Africa	2,313			2,133			4,920			4,477
Greater China	1,544			1,222			2,923			2,330
Asia Pacific & Latin America	1,298			1,273			2,568			2,462
Global Brand Divisions	9			23			25			43
Total NIKE Brand	8,946			8,136			18,363			16,721
Converse	425			408			952			891
Corporate	3			10			7			12
TOTAL NIKE, INC. REVENUES	$	9,374		$	8,554		$	19,322		$	17,624
EARNINGS BEFORE INTEREST AND TAXES
North America	$	884		$	783		$	1,961		$	1,785
Europe, Middle East & Africa	450			337			951			788
Greater China	561			378			1,063			772
Asia Pacific & Latin America	321			291			644			551
Global Brand Divisions	(826		)	(602		)	(1,644		)	(1,277		)
Total NIKE Brand	1,390			1,187			2,975			2,619
Converse	44			48			142			137
Corporate	(423		)	(343		)	(825		)	(776		)
Total NIKE, Inc. Earnings Before Interest and Taxes	1,011			892			2,292			1,980
Interest expense (income), net	14			13			25			29
TOTAL NIKE, INC. INCOME BEFORE INCOME TAXES	$	997		$	879		$	2,267		$	1,951



	As of November 30,		As of May 31,
(In millions)	2018		2018
ACCOUNTS RECEIVABLE, NET⁽¹⁾
North America	$	1,644	$	1,443
Europe, Middle East & Africa	1,122		870
Greater China	326		101
Asia Pacific & Latin America	863		720
Global Brand Divisions	120		102
Total NIKE Brand	4,075		3,236
Converse	251		240
Corporate	20		22
TOTAL ACCOUNTS RECEIVABLE, NET	$	4,346	$	3,498
INVENTORIES
North America	$	2,282	$	2,270
Europe, Middle East & Africa	1,302		1,433
Greater China	690		580
Asia Pacific & Latin America	719		687
Global Brand Divisions	94		91
Total NIKE Brand	5,087		5,061
Converse	249		268
Corporate	52		(68		)
TOTAL INVENTORIES	$	5,388	$	5,261
PROPERTY, PLANT AND EQUIPMENT, NET
North America	$	854	$	848
Europe, Middle East & Africa	891		849
Greater China	238		256
Asia Pacific & Latin America	318		339
Global Brand Divisions	608		597
Total NIKE Brand	2,909		2,889
Converse	109		115
Corporate	1,570		1,450
TOTAL PROPERTY, PLANT AND EQUIPMENT, NET	$	4,588	$	4,454


(1)	Accounts receivable, net as of November 30, 2018 reflects the Company’s fiscal 2019 adoption of Topic 606. Refer to Note 1 — Summary of Significant Accounting Policies for additional information on the adoption of the new standard.