Operating Segments and Related Information

12 Months Ended

May 31, 2016

Segment Reporting [Abstract]

Operating Segments and Related Information

NOTE 17 — Operating Segments and Related Information

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, Western Europe, Central & Eastern Europe, Greater China, Japan and Emerging Markets, and include results for the NIKE, Jordan and Hurley brands. The Company’s NIKE Brand Direct to Consumer operations are managed within each geographic operating segment. Converse is also a reportable segment for the Company, and operates in one industry: the design, marketing, licensing and selling of casual 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, operating overhead and product creation and design expenses that are centrally managed for the NIKE Brand.

Corporate consists largely 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 (commonly referred to as “EBIT”), which represents Net income before Interest expense (income), net and Income tax expense in the 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 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. Additions to long-lived assets as presented in the following table represent capital expenditures.

Certain prior year amounts have been reclassified to conform to fiscal 2016 presentation.

	Year Ended May 31,
(In millions)	2016			2015			2014
REVENUES
North America	$	14,764		$	13,740		$	12,299
Western Europe	5,884			5,705			4,979
Central & Eastern Europe	1,431			1,421			1,387
Greater China	3,785			3,067			2,602
Japan	869			755			771
Emerging Markets	3,701			3,898			3,949
Global Brand Divisions	73			115			125
Total NIKE Brand	30,507			28,701			26,112
Converse	1,955			1,982			1,684
Corporate	(86		)	(82		)	3
TOTAL NIKE CONSOLIDATED REVENUES	$	32,376		$	30,601		$	27,799
EARNINGS BEFORE INTEREST AND TAXES
North America	$	3,763		$	3,645		$	3,077
Western Europe	1,434			1,275			855
Central & Eastern Europe	289			249			279
Greater China	1,372			993			816
Japan	174			100			131
Emerging Markets	892			818			952
Global Brand Divisions	(2,596		)	(2,267		)	(1,993		)
Total NIKE Brand	5,328			4,813			4,117
Converse	487			517			496
Corporate	(1,173		)	(1,097		)	(1,036		)
Total NIKE Consolidated Earnings Before Interest and Taxes	4,642			4,233			3,577
Interest expense (income), net	19			28			33
TOTAL NIKE CONSOLIDATED INCOME BEFORE INCOME TAXES	$	4,623		$	4,205		$	3,544
ADDITIONS TO LONG-LIVED ASSETS
North America	$	242		$	208		$	240
Western Europe	215			216			120
Central & Eastern Europe	17			20			19
Greater China	44			69			63
Japan	13			15			9
Emerging Markets	51			37			55
Global Brand Divisions	258			225			225
Total NIKE Brand	840			790			731
Converse	39			69			30
Corporate	312			144			161
TOTAL ADDITIONS TO LONG-LIVED ASSETS	$	1,191		$	1,003		$	922
DEPRECIATION
North America	$	133		$	121		$	109
Western Europe	72			75			71
Central & Eastern Europe	12			12			11
Greater China	48			46			38
Japan	18			22			19
Emerging Markets	25			27			25
Global Brand Divisions	230			210			175
Total NIKE Brand	538			513			448
Converse	27			18			16
Corporate	84			75			54
TOTAL DEPRECIATION	$	649		$	606		$	518

	As of May 31,
(In millions)	2016			2015
ACCOUNTS RECEIVABLE, NET
North America	$	1,689		$	1,737
Western Europe	378			344
Central & Eastern Europe	194			242
Greater China	74			84
Japan	129			134
Emerging Markets	409			461
Global Brand Divisions	76			88
Total NIKE Brand	2,949			3,090
Converse	270			258
Corporate	22			10
TOTAL ACCOUNTS RECEIVABLE, NET	$	3,241		$	3,358
INVENTORIES
North America	$	2,363		$	2,207
Western Europe	929			699
Central & Eastern Europe	210			169
Greater China	375			249
Japan	146			94
Emerging Markets	478			528
Global Brand Divisions	35			32
Total NIKE Brand	4,536			3,978
Converse	306			237
Corporate	(4		)	122
TOTAL INVENTORIES	$	4,838		$	4,337
PROPERTY, PLANT AND EQUIPMENT, NET
North America	$	742		$	632
Western Europe	589			451
Central & Eastern Europe	50			47
Greater China	234			254
Japan	223			205
Emerging Markets	109			103
Global Brand Divisions	511			484
Total NIKE Brand	2,458			2,176
Converse	125			122
Corporate	937			713
TOTAL PROPERTY, PLANT AND EQUIPMENT, NET	$	3,520		$	3,011

Revenues by Major Product Lines 

Revenues to external customers for NIKE Brand products are attributable to sales of footwear, apparel and equipment. Other revenues to external customers consist primarily of sales by Converse.

	Year Ended May 31,
(In millions)	2016		2015		2014
Footwear	$	19,871	$	18,318	$	16,208
Apparel	9,067		8,637		8,109
Equipment	1,496		1,631		1,670
Other	1,942		2,015		1,812
TOTAL NIKE CONSOLIDATED REVENUES	$	32,376	$	30,601	$	27,799

Revenues and Long-Lived Assets by Geographic Area

After allocation of revenues for Global Brand Divisions, Converse and Corporate to geographical areas based on the location where the sales originated, revenues by geographical area are essentially the same as reported above for the NIKE Brand operating segments with the exception of the United States. Revenues derived in the United States were $15,304 million, $14,180 million and $12,711 million for the years ended May 31, 2016, 2015 and 2014, respectively. The Company’s largest concentrations of long-lived assets primarily consist of the Company’s world headquarters and distribution facilities in the United States and distribution facilities in Belgium, China and Japan. Long-lived assets attributable to operations in the United States, which are primarily composed of net property, plant & equipment, were $2,241 million and $1,877 million at May 31, 2016 and 2015, respectively. Long-lived assets attributable to operations in Belgium were $348 million and $234 million at May 31, 2016 and 2015, respectively. Long-lived assets attributable to operations in China were $240 million and $267 million at May 31, 2016 and 2015, respectively. Long-lived assets attributable to operations in Japan were $223 million and $205 million at May 31, 2016 and 2015, respectively.

Major Customers

No customer accounted for 10% or more of the Company’s net revenues during the years ended May 31, 2016, 2015 and 2014.