Operating Segments

9 Months Ended

Feb. 29, 2020

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 (EMEA); Greater China; and Asia Pacific & Latin America (APLA), and include results for the NIKE and Jordan brands, with results for the Hurley brand included in North America. Refer to Note 14 — Acquisitions and Divestitures for information regarding the divestiture of the Company's wholly owned subsidiary, Hurley, and the planned transition of NIKE Brand businesses in certain countries within APLA to third-party distributors.

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. For the three and nine months ended February 29, 2020, Corporate includes the non-recurring impairment charge, recognized as a result of the Company's decision to transition its operations in Brazil, Argentina, Chile and Uruguay to third-party distributors. This charge primarily reflects the anticipated release of associated non-cash cumulative foreign currency translation losses. For more information regarding this charge, refer to Note 14 — Acquisitions and Divestitures.

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						NINE MONTHS ENDED
(Dollars in millions)	FEBRUARY 29, 2020			FEBRUARY 28, 2019			FEBRUARY 29, 2020			FEBRUARY 28, 2019
REVENUES
North America	$	3,979		$	3,810		$	12,254		$	11,737
Europe, Middle East & Africa	2,709			2,435			8,019			7,355
Greater China	1,506			1,588			5,032			4,511
Asia Pacific & Latin America	1,414			1,307			4,227			3,875
Global Brand Divisions	8			8			24			33
Total NIKE Brand	9,616			9,148			29,556			27,511
Converse	506			463			1,541			1,415
Corporate	(18		)	—			(7		)	7
TOTAL NIKE, INC. REVENUES	$	10,104		$	9,611		$	31,090		$	28,933
EARNINGS BEFORE INTEREST AND TAXES
North America	$	937		$	916		$	2,912		$	2,877
Europe, Middle East & Africa	575			538			1,694			1,489
Greater China	556			639			1,919			1,702
Asia Pacific & Latin America	387			339			1,105			983
Global Brand Divisions	(895		)	(788		)	(2,624		)	(2,432		)
Converse	96			79			324			221
Corporate	(763		)	(420		)	(1,600		)	(1,245		)
Interest expense (income), net	12			12			39			37
TOTAL NIKE, INC. INCOME BEFORE INCOME TAXES	$	881		$	1,291		$	3,691		$	3,558



	FEBRUARY 29,		MAY 31,
(Dollars in millions)	2020		2019
ACCOUNTS RECEIVABLE, NET
North America	$	1,747	$	1,718
Europe, Middle East & Africa	1,297		1,164
Greater China	398		245
Asia Pacific & Latin America⁽¹⁾	587		771
Global Brand Divisions	108		105
Total NIKE Brand	4,137		4,003
Converse	290		243
Corporate	46		26
TOTAL ACCOUNTS RECEIVABLE, NET	$	4,473	$	4,272
INVENTORIES
North America	$	2,222	$	2,328
Europe, Middle East & Africa	1,501		1,390
Greater China	916		693
Asia Pacific & Latin America⁽¹⁾	614		694
Global Brand Divisions	198		126
Total NIKE Brand	5,451		5,231
Converse	280		269
Corporate	76		122
TOTAL INVENTORIES	$	5,807	$	5,622



	FEBRUARY 29,		MAY 31,
(Dollars in millions)	2020		2019
PROPERTY, PLANT AND EQUIPMENT, NET
North America	$	655	$	814
Europe, Middle East & Africa	857		929
Greater China	219		237
Asia Pacific & Latin America⁽¹⁾	298		326
Global Brand Divisions	800		665
Total NIKE Brand	2,829		2,971
Converse	84		100
Corporate	1,870		1,673
TOTAL PROPERTY, PLANT AND EQUIPMENT, NET	$	4,783	$	4,744

(1)

Excludes assets held-for-sale as of February 29, 2020. See Note 14 — Acquisitions and Divestitures for additional information.