Note 18 — Operating Segments and Related Information

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. In fiscal 2009, the Company initiated a reorganization of the NIKE Brand into a new model consisting of six geographies. Effective June 1, 2009, the Company’s new reportable operating segments for the NIKE Brand are: North America, Western Europe, Central and Eastern Europe, Greater China, Japan, and Emerging Markets. Previously, NIKE Brand operations were organized into the following four geographic regions: U.S., Europe, Middle East and Africa (collectively, “EMEA”), Asia Pacific, and Americas. 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, selling, general and administrative 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 International Limited. Activities represented in the “Other” category are immaterial for individual disclosure.

Revenues as shown below represent sales to external customers for each segment. Intercompany revenues have been eliminated and are immaterial for separate 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.

Effective June 1, 2009, 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 taxes in the Consolidated Statements of Income. Reconciling items for EBIT represent corporate expense items that are not allocated to the operating segments for management reporting. Previously, the Company evaluated performance of individual operating segments based on pre-tax income or income before income taxes.

As part of the Company’s centrally managed foreign exchange risk management program, standard foreign currency rates are assigned to each NIKE Brand entity in our geographic operating segments and are used to record any non-functional currency revenues or product purchases into the entity’s functional currency. Geographic operating segment revenues and cost of sales reflect use of these standard rates. For all NIKE Brand operating segments, 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 centrally managed foreign exchange risk management program and other conversion gains and losses. Prior to June 1, 2010, foreign currency results, including hedge results and other conversion gains and losses generated by the Western Europe and Central & Eastern Europe geographies were recorded in their respective geographic results.

Additions to long-lived assets as presented in the following table represent capital expenditures.

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 2011 presentation, as South Africa became part of the Emerging Markets operating segment beginning June 1, 2010. Previously, South Africa was part of the Central & Eastern Europe operating segment.


	Year Ended May 31,
	2011			2010			2009
	(In millions)
Revenue
North America	$	7,578		$	6,696		$	6,778
Western Europe		3,810			3,892			4,139
Central & Eastern Europe		1,031			993			1,247
Greater China		2,060			1,742			1,743
Japan		766			882			926
Emerging Markets		2,736			2,199			1,828
Global Brand Divisions		123			105			96

Total NIKE Brand		18,104			16,509			16,757
Other Businesses		2,747			2,530			2,419
Corporate		11			(25	)		—

Total NIKE Consolidated Revenues	$	20,862		$	19,014		$	19,176

Earnings Before Interest and Taxes
North America	$	1,750		$	1,538		$	1,429
Western Europe		721			856			939
Central & Eastern Europe		233			253			394
Greater China		777			637			575
Japan		114			180			205
Emerging Markets		688			521			364
Global Brand Divisions		(998	)		(867	)		(811	)

Total NIKE Brand		3,285			3,118			3,095
Other Businesses⁽¹⁾		334			299			(193	)
Corporate⁽²⁾		(771	)		(894	)		(955	)

Total NIKE Consolidated Earnings Before Interest and Taxes		2,848			2,523			1,947
Interest expense (income), net		4			6			(10	)

Total NIKE Consolidated Earnings Before Taxes	$	2,844		$	2,517		$	1,957

Additions to Long-lived Assets
North America	$	79		$	45		$	99
Western Europe		75			59			70
Central & Eastern Europe		5			4			7
Greater China		43			80			59
Japan		9			12			10
Emerging Markets		21			11			12
Global Brand Divisions		44			30			37

Total NIKE Brand		276			241			294
Other Businesses		38			52			90
Corporate		118			42			72

Total Additions to Long-lived Assets	$	432		$	335		$	456

Depreciation
North America	$	70		$	65		$	64
Western Europe		52			57			51
Central & Eastern Europe		4			4			4
Greater China		19			11			7
Japan		22			26			30
Emerging Markets		14			12			10
Global Brand Divisions		39			33			43

Total NIKE Brand		220			208			209
Other Businesses		44			46			38
Corporate		71			70			88

Total Depreciation	$	335		$	324		$	335

⁽¹⁾

During the year ended May 31, 2009, the Other category included a pre-tax charge of $401 million for the impairment of goodwill, intangible and other assets of Umbro, which was recorded in the third quarter of fiscal 2009. See Note 4 — Identifiable Intangible Assets, Goodwill and Umbro Impairment for more information.

⁽²⁾

During the year ended May 31, 2009, Corporate expense included pre-tax charges of $195 million for the Company’s restructuring activities, which were completed in the fourth quarter of fiscal 2009. See Note 16 — Restructuring Charges for more information.


	Year Ended May 31,
	2011		2010
	(In millions)
Accounts Receivable, net
North America	$	1,069	$	848
Western Europe		500		402
Central & Eastern Europe		290		271
Greater China		140		129
Japan		153		167
Emerging Markets		466		350
Global Brand Divisions		23		22

Total NIKE Brand		2,641		2,189
Other Businesses		471		442
Corporate		26		19

Total Accounts Receivable, net	$	3,138	$	2,650

Inventories
North America	$	1,034	$	768
Western Europe		434		347
Central & Eastern Europe		145		102
Greater China		152		104
Japan		82		68
Emerging Markets		429		285
Global Brand Divisions		25		20

Total NIKE Brand		2,301		1,694
Other Businesses		414		347
Corporate		—		—

Total Inventories	$	2,715	$	2,041

Property, Plant and Equipment, net
North America	$	330	$	325
Western Europe		338		282
Central & Eastern Europe		13		11
Greater China		179		146
Japan		360		333
Emerging Markets		58		48
Global Brand Divisions		116		99

Total NIKE Brand		1,394		1,244
Other Businesses		164		167
Corporate		557		521

Total Property, Plant and Equipment, net	$	2,115	$	1,932

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 primarily include external sales by Cole Haan, Converse, Hurley, NIKE Golf, and Umbro.


	Year Ended May 31,
	2011		2010		2009
	(In millions)
Footwear	$	11,493	$	10,332	$	10,307
Apparel		5,475		5,037		5,245
Equipment		1,013		1,035		1,110
Other		2,881		2,610		2,514

	$	20,862	$	19,014	$	19,176

Revenues and Long-Lived Assets by Geographic Area. Geographical area information is similar to what was shown previously under operating segments with the exception of the Other activity, which has been allocated to the geographical areas based on the location where the sales originated. Revenues derived in the United States were $8,956 million, $7,914 million, and $8,020 million for the years ended May 31, 2011, 2010, and 2009, 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 Japan, Belgium and China. Long-lived assets attributable to operations in the United States, which are comprised of net property, plant & equipment, were $1,115 million, $1,070 million, and $1,143 million at May 31, 2011, 2010, and 2009, respectively. Long-lived assets attributable to operations in Japan were $363 million, $336 million, and $322 million at May 31, 2011, 2010 and 2009, respectively. Long-lived assets attributable to operations in Belgium were $182 million, $164 million, and $191 million at May 31, 2011, 2010, and 2009, respectively. Long-lived assets attributable to operations in China were $175 million, $144 million, and $76 million at May 31, 2011, 2010, and 2009, respectively.

Major Customers. No customer accounted for 10% or more of the Company's net sales during the years ended May 31, 2011, 2010, and 2009.