Operating Segments

3 Months Ended

Aug. 31, 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.

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, demand creation and operating overhead expense that include product creation and design expenses 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 AUGUST 31,
(Dollars in millions)	2020		2019
REVENUES
North America	$	4,225	$	4,293
Europe, Middle East & Africa	2,910		2,773
Greater China	1,780		1,679
Asia Pacific & Latin America	1,099		1,345
Global Brand Divisions	4		6
Total NIKE Brand	10,018		10,096
Converse	563		555
Corporate	13		9
TOTAL NIKE, INC. REVENUES	$	10,594	$	10,660
EARNINGS BEFORE INTEREST AND TAXES
North America	$	1,302	$	1,100
Europe, Middle East & Africa	692		609
Greater China	688		669
Asia Pacific & Latin America	280		341
Global Brand Divisions	(853)		(857)
Converse	168		138
Corporate	(497)		(424)
Interest expense (income), net	65		15
TOTAL NIKE, INC. INCOME BEFORE INCOME TAXES	$	1,715	$	1,561


	AUGUST 31,		MAY 31,
(Dollars in millions)	2020		2020
ACCOUNTS RECEIVABLE, NET
North America	$	1,256	$	1,020
Europe, Middle East & Africa	1,439		712
Greater China	271		321
Asia Pacific & Latin America⁽¹⁾	504		425
Global Brand Divisions	81		65
Total NIKE Brand	3,551		2,543
Converse	213		149
Corporate	49		57
TOTAL ACCOUNTS RECEIVABLE, NET	$	3,813	$	2,749
INVENTORIES
North America	$	2,541	$	3,077
Europe, Middle East & Africa	1,891		2,070
Greater China	1,113		882
Asia Pacific & Latin America⁽¹⁾	753		770
Global Brand Divisions	137		137
Total NIKE Brand	6,435		6,936
Converse	293		341
Corporate	(23)		90
TOTAL INVENTORIES	$	6,705	$	7,367


	AUGUST 31,		MAY 31,
(Dollars in millions)	2020		2020
PROPERTY, PLANT AND EQUIPMENT, NET
North America	$	637	$	645
Europe, Middle East & Africa	938		885
Greater China	224		214
Asia Pacific & Latin America⁽¹⁾	305		296
Global Brand Divisions	867		830
Total NIKE Brand	2,971		2,870
Converse	76		80
Corporate	1,922		1,916
TOTAL PROPERTY, PLANT AND EQUIPMENT, NET	$	4,969	$	4,866

(1)Excludes assets held-for-sale as of August 31, 2020 and May 31, 2020. See Note 13 — Acquisitions and Divestitures for additional information.