Acquisitions And Divestitures

9 Months Ended

Feb. 29, 2020

NOTE 14 — ACQUISITIONS AND DIVESTITURES

ACQUISITIONS

During fiscal 2020 and 2019, the Company made multiple acquisitions focused on gaining new capabilities to fuel its Consumer Direct Offense strategy, serving consumers personally at a global scale. The impact of acquisitions, individually and in the aggregate, was not considered material to the Company’s Unaudited Condensed Consolidated Financial Statements.

DIVESTITURES

During the third quarter of fiscal 2020, as a result of the Company’s decision to transition its wholesale and direct to consumer operating model in certain countries within its APLA operating segment, the Company signed definitive agreements to sell its NIKE Brand businesses in Brazil, Argentina, Chile and Uruguay to third-party distributors. Specifically, NIKE entered into agreements to sell its operations in Argentina, Chile and Uruguay to Grupo Axo and to sell substantially all of its operations in Brazil to Grupo SBF S.A., through its wholly owned subsidiary. The Company will retain a small operation in Brazil focused on certain sports marketing assets, local manufacturing and Converse. These transactions are expected to close in the first half of fiscal 2021, with Grupo SBF S.A.’s transaction subject to Brazil Antitrust Authority approvals.

As a result of this decision, the related assets and liabilities of these entities were classified as held-for-sale on the Unaudited Condensed Consolidated Balance Sheets as of February 29, 2020, which consisted of the following:


•	Assets of $524 million, primarily consisting of $217 million of Inventories and $210 million of Accounts receivable, net which were reclassified to Prepaid expenses and other current assets on the Company’s Unaudited Condensed Consolidated Balance Sheets; and


•	Liabilities of $158 million, primarily consisting of $84 million of Accrued liabilities, as well as $60 million of Accounts Payable, which was reclassified to Accrued liabilities on the Company’s Unaudited Condensed Consolidated Balance Sheets.

Upon meeting the criteria for held-for-sale classification, the Company recognized a non-recurring impairment charge of $400 million within Other (income) expense, net on the Unaudited Condensed Consolidated Statements of Income, classified within Corporate, and a corresponding allowance within Accrued Liabilities on the Unaudited Condensed Consolidated Balance Sheets. This charge was primarily due to the anticipated release of non-cash cumulative foreign currency translation losses, which were included as part of the carrying value of the Argentina, Chile and Uruguay disposal groups when measuring for impairment. These losses will be reclassified from Accumulated other comprehensive income (loss) to Net income upon closure of the transaction. For more information see Note 4 — Fair Value Measurements.

On October 29, 2019, the Company signed a definitive agreement to sell the assets and liabilities of its wholly owned subsidiary brand, Hurley. The transaction closed on December 6, 2019, and the impacts of the divestiture are not considered material to the Company.