Operating Segments:

9 Months Ended

Feb. 29, 2012

Operating Segments:

NOTE 12—Operating Segments:

The Company’s operating segments are evidence of the structure of the Company’s internal organization. The major segments are defined by geographic regions for operations participating in NIKE Brand sales activity excluding NIKE Golf. Each NIKE Brand geographic segment operates predominantly in one industry: the design, development, marketing and selling of sports and fitness footwear, apparel, and equipment. The Company’s reportable operating segments for the NIKE Brand are: North America, Western Europe, Central & Eastern Europe, Greater China, Japan, and Emerging Markets. The Company’s NIKE Brand Direct to Consumer operations are managed within each geographic segment.

The Company’s “Other” category is broken into two components for presentation purposes to align with the way management views the Company. The “Global Brand Divisions” category primarily represents NIKE Brand licensing businesses that are not part of a geographic operating segment, demand creation and operating overhead expenses that are centrally managed for the NIKE Brand and costs associated with product development and supply chain operations. The “Other Businesses” category primarily consists of the activities of Cole Haan, Converse Inc., Hurley International LLC, NIKE Golf and Umbro Ltd. Activities represented in the “Other” category are considered immaterial for individual disclosure.

Corporate consists of unallocated general and administrative expenses, which includes expenses associated with centrally managed departments, depreciation and amortization related to the Company’s headquarters, unallocated insurance and benefit programs, including stock-based compensation, certain foreign currency gains and losses, including hedge gains and losses, certain corporate eliminations and other items.

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, net and income taxes in the unaudited condensed consolidated statements of income. Reconciling items for EBIT represent corporate expense items that are not allocated to the operating segments for management reporting.

As part of our centrally managed foreign exchange risk management program, standard foreign currency rates are assigned twice per year to each NIKE Brand entity in our geographic operating segments and certain Other Businesses. These rates are set approximately nine months in advance of the future selling season 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 certain Other Businesses reflect use of these standard rates to record non-functional currency product purchases into 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 our centrally managed foreign exchange risk management program and other conversion gains and losses.

Accounts receivable, inventories and property, plant and equipment for operating segments are regularly reviewed by management and are therefore provided below.

Certain prior year amounts have been reclassified to conform to fiscal 2012 presentation.

	Three Months Ended February 29 and 28,						Nine Months Ended February 29 and 28,
	2012			2011			2012			2011
	(in millions)
Revenues
North America		2,149			1,836			6,415			5,440
Western Europe		962			922			3,105			2,851
Central & Eastern Europe		275			253			870			746
Greater China		694			554			1,872			1,496
Japan		201			195			589			550
Emerging Markets		793			643			2,540			1,989
Global Brand Divisions		27			22			85			67
Total NIKE Brand		5,101			4,425			15,476			13,139
Other Businesses		753			671			2,199			2,013
Corporate		(8	)		(17	)		(17	)		(56	)
Total NIKE Consolidated Revenues		5,846			5,079			17,658			15,096
	Three Months Ended February 29 and 28,						Nine Months Ended February 29 and 28,
	2012			2011			2012			2011
	(in millions)
Earnings Before Interest and Taxes
North America		496			419			1,448			1,218
Western Europe		149			163			464			588
Central & Eastern Europe		60			59			163			177
Greater China		273			213			664			551
Japan		24			31			93			94
Emerging Markets		215			173			652			491
Global Brand Divisions		(292	)		(237	)		(826	)		(703	)
Total NIKE Brand		925			821			2,658			2,416
Other Businesses		87			85			230			253
Corporate		(242	)		(199	)		(645	)		(598	)
Total NIKE Consolidated Earnings Before Interest and Taxes		770			707			2,243			2,071
Interest expense, net		0			0			3			0
Total NIKE Consolidated Income Before Income Taxes		770			707			2,240			2,071

	February 29, 2012		May 31, 2011
	(in millions)
Accounts Receivable, net
North America	$	1,163	$	1,069
Western Europe		450		500
Central & Eastern Europe		284		290
Greater China		201		140
Japan		119		153
Emerging Markets		528		466
Global Brand Divisions		35		23
Total NIKE Brand		2,780		2,641
Other Businesses		493		471
Corporate		23		26
Total NIKE Consolidated Accounts Receivable, net	$	3,296	$	3,138
Inventories
North America	$	1,159	$	1,035
Western Europe		531		463
Central & Eastern Europe		163		150
Greater China		230		154
Japan		103		84
Emerging Markets		548		440
Global Brand Divisions		30		25
Total NIKE Brand		2,764		2,351
Other Businesses		576		416
Corporate		16		(52	)
Total NIKE Consolidated Inventories	$	3,356	$	2,715
Property, Plant and Equipment, net
North America	$	354	$	330
Western Europe		333		338
Central & Eastern Europe		28		13
Greater China		186		179
Japan		352		360
Emerging Markets		61		58
Global Brand Divisions		184		116
Total NIKE Brand		1,498		1,394
Other Businesses		148		164
Corporate		559		557
Total NIKE Consolidated Property, Plant and Equipment, net	$	2,205	$	2,115