Operating Segments and Related Information

12 Months Ended

May 31, 2017

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.

In June 2017, NIKE, Inc. announced a new company alignment designed to allow NIKE to better serve the consumer personally, at scale. As a result of this organizational realignment, beginning in fiscal 2018, the Company's reportable operating segments for the NIKE Brand will be: North America; Europe, Middle East and Africa; Greater China; and Asia Pacific and Latin America.

The Company’s NIKE Brand Direct to Consumer (DTC) operations are, and will continue to be, 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 represents 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 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. Additions to long-lived assets as presented in the following table represent capital expenditures.

	Year Ended May 31,
(In millions)	2017			2016			2015
REVENUES
North America	$	15,216		$	14,764		$	13,740
Western Europe	6,211			5,884			5,705
Central & Eastern Europe	1,487			1,431			1,421
Greater China	4,237			3,785			3,067
Japan	1,014			869			755
Emerging Markets	3,995			3,701			3,898
Global Brand Divisions	73			73			115
Total NIKE Brand	32,233			30,507			28,701
Converse	2,042			1,955			1,982
Corporate	75			(86		)	(82		)
TOTAL NIKE, INC. REVENUES	$	34,350		$	32,376		$	30,601
EARNINGS BEFORE INTEREST AND TAXES
North America	$	3,875		$	3,763		$	3,645
Western Europe	1,203			1,434			1,275
Central & Eastern Europe	244			289			249
Greater China	1,507			1,372			993
Japan	224			174			100
Emerging Markets	816			892			818
Global Brand Divisions	(2,677		)	(2,596		)	(2,267		)
Total NIKE Brand	5,192			5,328			4,813
Converse	477			487			517
Corporate	(724		)	(1,173		)	(1,097		)
Total NIKE, Inc. Earnings Before Interest and Taxes	4,945			4,642			4,233
Interest expense (income), net	59			19			28
TOTAL NIKE, INC. INCOME BEFORE INCOME TAXES	$	4,886		$	4,623		$	4,205
ADDITIONS TO LONG-LIVED ASSETS
North America	$	223		$	242		$	208
Western Europe	162			215			216
Central & Eastern Europe	10			17			20
Greater China	51			44			69
Japan	21			13			15
Emerging Markets	39			51			37
Global Brand Divisions	278			258			225
Total NIKE Brand	784			840			790
Converse	30			39			69
Corporate	387			312			144
TOTAL ADDITIONS TO LONG-LIVED ASSETS	$	1,201		$	1,191		$	1,003
DEPRECIATION
North America	$	140		$	133		$	121
Western Europe	91			72			75
Central & Eastern Europe	13			12			12
Greater China	54			48			46
Japan	18			18			22
Emerging Markets	38			25			27
Global Brand Divisions	233			230			210
Total NIKE Brand	587			538			513
Converse	28			27			18
Corporate	91			84			75
TOTAL DEPRECIATION	$	706		$	649		$	606

	As of May 31,
(In millions)	2017			2016
ACCOUNTS RECEIVABLE, NET
North America	$	1,798		$	1,689
Western Europe	410			378
Central & Eastern Europe	228			194
Greater China	102			74
Japan	151			129
Emerging Markets	594			409
Global Brand Divisions	86			76
Total NIKE Brand	3,369			2,949
Converse	297			270
Corporate	11			22
TOTAL ACCOUNTS RECEIVABLE, NET	$	3,677		$	3,241
INVENTORIES
North America	$	2,218		$	2,363
Western Europe	1,035			929
Central & Eastern Europe	251			210
Greater China	463			375
Japan	127			146
Emerging Markets	608			478
Global Brand Divisions	68			35
Total NIKE Brand	4,770			4,536
Converse	286			306
Corporate	(1		)	(4		)
TOTAL INVENTORIES	$	5,055		$	4,838
PROPERTY, PLANT AND EQUIPMENT, NET
North America	$	819		$	742
Western Europe	658			589
Central & Eastern Europe	48			50
Greater China	225			234
Japan	223			223
Emerging Markets	120			109
Global Brand Divisions	533			511
Total NIKE Brand	2,626			2,458
Converse	125			125
Corporate	1,238			937
TOTAL PROPERTY, PLANT AND EQUIPMENT, NET	$	3,989		$	3,520

Revenues by Major Product Lines 

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

	Year Ended May 31,
(In millions)	2017		2016		2015
Footwear	$	21,081	$	19,871	$	18,318
Apparel	9,654		9,067		8,637
Equipment	1,425		1,496		1,631
Other	2,190		1,942		2,015
TOTAL NIKE, INC. REVENUES	$	34,350	$	32,376	$	30,601

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 $15,778 million, $15,304 million and $14,180 million for the years ended May 31, 2017, 2016 and 2015, 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 $2,629 million and $2,241 million at May 31, 2017 and 2016, respectively. Long-lived assets attributable to operations in Belgium were $390 million and $348 million at May 31, 2017 and 2016, respectively. Long-lived assets attributable to operations in China were $232 million and $240 million at May 31, 2017 and 2016, respectively. Long-lived assets attributable to operations in Japan were $223 million and $223 million at May 31, 2017 and 2016, respectively.

Major Customers

No customer accounted for 10% or more of the Company’s net revenues during the years ended May 31, 2017, 2016 and 2015.