Operating Segments

6 Months Ended

Nov. 30, 2019

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 and Jordan brands, with results for the Hurley brand included in North America.

On October 29, 2019, the Company signed a definitive agreement to sell the assets and liabilities of its wholly-owned subsidiary brand, Hurley. As of November 30, 2019, the related assets and liabilities were classified as held-for-sale on the Unaudited Condensed Consolidated Balance Sheets. The transaction closed on December 6, 2019, subsequent to the end of the second quarter of fiscal 2020. The impacts of the divestiture are not material to the Company.

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 athletic lifestyle 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 and operating overhead expense, including product creation and design expenses that are centrally managed for the NIKE Brand, as well as costs associated with NIKE Direct global digital operations and enterprise technology.

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 (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,
(Dollars in millions)	2019			2018			2019			2018
REVENUES
North America	$	3,982		$	3,782		$	8,275		$	7,927
Europe, Middle East & Africa	2,537			2,313			5,310			4,920
Greater China	1,847			1,544			3,526			2,923
Asia Pacific & Latin America	1,468			1,298			2,813			2,568
Global Brand Divisions	10			9			16			25
Total NIKE Brand	9,844			8,946			19,940			18,363
Converse	480			425			1,035			952
Corporate	2			3			11			7
TOTAL NIKE, INC. REVENUES	$	10,326		$	9,374		$	20,986		$	19,322
EARNINGS BEFORE INTEREST AND TAXES
North America	$	875		$	884		$	1,975		$	1,961
Europe, Middle East & Africa	510			450			1,119			951
Greater China	694			561			1,363			1,063
Asia Pacific & Latin America	377			321			718			644
Global Brand Divisions	(872		)	(826		)	(1,729		)	(1,644		)
Converse	90			44			228			142
Corporate	(413		)	(423		)	(837		)	(825		)
Interest expense (income), net	12			14			27			25
TOTAL NIKE, INC. INCOME BEFORE INCOME TAXES	$	1,249		$	997		$	2,810		$	2,267



	NOVEMBER 30,		MAY 31,
(Dollars in millions)	2019		2019
ACCOUNTS RECEIVABLE, NET
North America	$	1,905	$	1,718
Europe, Middle East & Africa	1,210		1,164
Greater China	366		245
Asia Pacific & Latin America	916		771
Global Brand Divisions	103		105
Total NIKE Brand	4,500		4,003
Converse	254		243
Corporate	38		26
TOTAL ACCOUNTS RECEIVABLE, NET	$	4,792	$	4,272
INVENTORIES
North America	$	2,357	$	2,328
Europe, Middle East & Africa	1,577		1,390
Greater China	840		693
Asia Pacific & Latin America	849		694
Global Brand Divisions	185		126
Total NIKE Brand	5,808		5,231
Converse	285		269
Corporate	106		122
TOTAL INVENTORIES	$	6,199	$	5,622



	NOVEMBER 30,		MAY 31,
(Dollars in millions)	2019		2019
PROPERTY, PLANT AND EQUIPMENT, NET
North America	$	658	$	814
Europe, Middle East & Africa	843		929
Greater China	219		237
Asia Pacific & Latin America	320		326
Global Brand Divisions	776		665
Total NIKE Brand	2,816		2,971
Converse	88		100
Corporate	1,764		1,673
TOTAL PROPERTY, PLANT AND EQUIPMENT, NET	$	4,668	$	4,744