FORM 10-Q
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NIKE, Inc.
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(Exact name of registrant as specified in its charter)
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OREGON
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93-0584541
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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One Bowerman Drive,
Beaverton, Oregon
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97005-6453
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(Address of principal executive offices)
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(Zip Code)
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Registrant’s telephone number, including area code: (503) 671-6453
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Large accelerated filer
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þ
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Accelerated filer
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¨
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Non-accelerated filer
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¨
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(Do not check if a smaller reporting company)
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Smaller Reporting Company
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¨
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Class A
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353,251,752
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Class B
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1,349,896,678
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1,703,148,430
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Page
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ITEM 1.
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ITEM 2.
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ITEM 3.
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ITEM 4.
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ITEM 1.
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ITEM 1A.
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ITEM 2.
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ITEM 6.
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NIKE, Inc. Unaudited Condensed Consolidated Balance Sheets
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November 30,
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May 31,
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||||
(In millions)
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2015
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2015
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||||
ASSETS
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||||
Current assets:
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||||
Cash and equivalents (Note 4)
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$
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3,851
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$
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3,852
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Short-term investments (Note 4)
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2,265
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2,072
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Accounts receivable, net
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3,437
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3,358
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Inventories (Note 2)
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4,600
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4,337
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Deferred income taxes (Note 7)
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405
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389
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Prepaid expenses and other current assets (Notes 4 and 10)
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2,197
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1,968
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Total current assets
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16,755
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15,976
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Property, plant and equipment, net
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3,235
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3,011
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Identifiable intangible assets, net
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281
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281
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Goodwill
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131
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131
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Deferred income taxes and other assets (Notes 4, 7 and 10)
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2,181
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2,201
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TOTAL ASSETS
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$
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22,583
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$
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21,600
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LIABILITIES AND SHAREHOLDERS’ EQUITY
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||||
Current liabilities:
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||||
Current portion of long-term debt (Note 6)
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$
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5
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$
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107
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Notes payable (Note 4)
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99
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74
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Accounts payable
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1,915
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2,131
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Accrued liabilities (Notes 3, 4 and 10)
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3,451
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3,951
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Income taxes payable (Note 7)
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41
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71
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Total current liabilities
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5,511
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6,334
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Long-term debt (Note 6)
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2,067
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1,079
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Deferred income taxes and other liabilities (Notes 4, 7 and 10)
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1,600
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1,480
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Commitments and contingencies (Note 13)
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Redeemable preferred stock
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—
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—
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Shareholders’ equity:
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Common stock at stated value:
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Class A convertible — 353 and 355 shares outstanding
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—
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—
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Class B — 1,354 and 1,357 shares outstanding
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3
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3
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Capital in excess of stated value
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7,408
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6,773
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Accumulated other comprehensive income (Note 11)
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1,107
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1,246
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Retained earnings
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4,887
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4,685
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Total shareholders’ equity
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13,405
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12,707
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TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
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$
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22,583
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$
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21,600
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NIKE, Inc. Unaudited Condensed Consolidated Statements of Income
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Three Months Ended November 30,
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Six Months Ended November 30,
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||||||||||||
(In millions, except per share data)
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2015
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2014
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2015
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2014
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||||||||
Revenues
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$
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7,686
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$
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7,380
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$
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16,100
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$
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15,362
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Cost of sales
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4,185
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4,053
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8,604
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8,314
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Gross profit
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3,501
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3,327
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7,496
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7,048
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Demand creation expense
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769
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766
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1,601
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1,663
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Operating overhead expense
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1,791
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1,672
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3,536
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3,255
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Total selling and administrative expense
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2,560
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2,438
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5,137
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4,918
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Interest expense (income), net (Note 4 and 6)
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5
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9
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9
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18
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Other (income) expense, net (Note 10)
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(34
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)
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2
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(65
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)
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5
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Income before income taxes
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970
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878
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2,415
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2,107
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Income tax expense (Note 7)
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185
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223
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451
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490
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NET INCOME
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$
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785
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$
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655
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$
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1,964
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$
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1,617
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Earnings per common share:
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Basic (Note 9)
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$
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0.46
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$
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0.38
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$
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1.15
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$
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0.94
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Diluted (Note 9)
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$
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0.45
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$
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0.37
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$
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1.12
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$
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0.91
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Dividends declared per common share
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$
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0.16
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$
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0.14
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$
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0.30
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$
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0.26
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NIKE, Inc. Unaudited Condensed Consolidated Statements of Comprehensive Income
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Three Months Ended November 30,
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Six Months Ended November 30,
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||||||||||||
(In millions)
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2015
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2014
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2015
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2014
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||||||||
Net income
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$
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785
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$
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655
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$
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1,964
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$
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1,617
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Other comprehensive income (loss), net of tax:
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||||||||
Change in net foreign currency translation adjustment
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(29
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)
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(34
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)
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(110
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)
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(32
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)
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||||
Change in net gains (losses) on cash flow hedges
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290
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333
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(39
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)
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468
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||||
Change in net gains (losses) on other
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13
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2
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10
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4
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||||
Total other comprehensive income (loss), net of tax
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274
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301
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(139
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)
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440
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||||
TOTAL COMPREHENSIVE INCOME
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$
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1,059
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$
|
956
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$
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1,825
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|
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$
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2,057
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NIKE, Inc. Unaudited Condensed Consolidated Statements of Cash Flows
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Six Months Ended November 30,
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(In millions)
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2015
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2014
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||||
Cash provided by operations:
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Net income
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$
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1,964
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$
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1,617
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Income charges (credits) not affecting cash:
|
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Depreciation
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314
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301
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Deferred income taxes
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(39
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)
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49
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Stock-based compensation (Note 8)
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116
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|
92
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Amortization and other
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8
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15
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Net foreign currency adjustments
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74
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243
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Changes in certain working capital components and other assets and liabilities:
|
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(Increase) in accounts receivable
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(139
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)
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(177
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)
|
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(Increase) in inventories
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(354
|
)
|
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(318
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)
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(Increase) in prepaid expenses and other current assets
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(114
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)
|
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(58
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)
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(Decrease) in accounts payable, accrued liabilities and income taxes payable
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(794
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)
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(217
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)
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Cash provided by operations
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1,036
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|
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1,547
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Cash used by investing activities:
|
|
|
|
|
||||
Purchases of short-term investments
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(2,851
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)
|
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(2,588
|
)
|
||
Maturities of short-term investments
|
|
1,510
|
|
|
1,862
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Sales of short-term investments
|
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1,250
|
|
|
1,045
|
|
||
Additions to property, plant and equipment
|
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(615
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)
|
|
(487
|
)
|
||
Disposals of property, plant and equipment
|
|
9
|
|
|
2
|
|
||
Cash used by investing activities
|
|
(697
|
)
|
|
(166
|
)
|
||
Cash used by financing activities:
|
|
|
|
|
||||
Net proceeds from long-term debt issuance (Note 6)
|
|
981
|
|
|
—
|
|
||
Long-term debt payments, including current portion
|
|
(103
|
)
|
|
(4
|
)
|
||
Increase (decrease) in notes payable
|
|
33
|
|
|
(58
|
)
|
||
Payments on capital lease obligations
|
|
(3
|
)
|
|
(12
|
)
|
||
Proceeds from exercise of stock options and other stock issuances
|
|
328
|
|
|
313
|
|
||
Excess tax benefits from share-based payment arrangements
|
|
201
|
|
|
116
|
|
||
Repurchase of common stock
|
|
(1,240
|
)
|
|
(1,243
|
)
|
||
Dividends — common and preferred
|
|
(479
|
)
|
|
(416
|
)
|
||
Cash used by financing activities
|
|
(282
|
)
|
|
(1,304
|
)
|
||
Effect of exchange rate changes on cash and equivalents
|
|
(58
|
)
|
|
(24
|
)
|
||
Net (decrease) increase in cash and equivalents
|
|
(1
|
)
|
|
53
|
|
||
Cash and equivalents, beginning of period
|
|
3,852
|
|
|
2,220
|
|
||
CASH AND EQUIVALENTS, END OF PERIOD
|
|
$
|
3,851
|
|
|
$
|
2,273
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
||||
Non-cash additions to property, plant and equipment
|
|
$
|
201
|
|
|
$
|
141
|
|
Dividends declared and not paid
|
|
273
|
|
|
242
|
|
Notes to the Unaudited Condensed Consolidated Financial Statements
|
Note 1
|
||
Note 2
|
||
Note 3
|
||
Note 4
|
||
Note 5
|
||
Note 6
|
||
Note 7
|
||
Note 8
|
||
Note 9
|
||
Note 10
|
||
Note 11
|
||
Note 12
|
||
Note 13
|
NOTE 1 — Summary of Significant Accounting Policies
|
|
|
NIKE, Inc. Unaudited Condensed Consolidated Statements of Cash Flows
|
||||||||||
|
|
Six Months Ended November 30, 2014
|
||||||||||
(In millions)
|
|
As Reported
|
|
Adjustment
|
|
As Revised
|
||||||
Cash provided by operations:
|
|
|
|
|
|
|
||||||
Net income
|
|
$
|
1,617
|
|
|
$
|
—
|
|
|
$
|
1,617
|
|
Income charges (credits) not affecting cash:
|
|
|
|
|
|
|
||||||
Amortization and other
|
|
(54
|
)
|
|
69
|
|
|
15
|
|
|||
Net foreign currency adjustments
|
|
—
|
|
|
243
|
|
|
243
|
|
|||
Cash provided by operations
|
|
1,235
|
|
|
312
|
|
|
1,547
|
|
|||
Effect of exchange rate changes on cash and equivalents
|
|
288
|
|
|
(312
|
)
|
|
(24
|
)
|
|||
Net increase (decrease) in cash and equivalents
|
|
53
|
|
|
—
|
|
|
53
|
|
|||
Cash and equivalents, beginning of period
|
|
2,220
|
|
|
—
|
|
|
2,220
|
|
|||
CASH AND EQUIVALENTS, END OF PERIOD
|
|
$
|
2,273
|
|
|
$
|
—
|
|
|
$
|
2,273
|
|
NOTE 2 — Inventories
|
NOTE 3 — Accrued Liabilities
|
|
|
As of November 30,
|
|
As of May 31,
|
||||
(In millions)
|
|
2015
|
|
2015
|
||||
Collateral received from counterparties to hedging instruments
|
|
$
|
725
|
|
|
$
|
968
|
|
Compensation and benefits, excluding taxes
|
|
724
|
|
|
997
|
|
||
Dividends payable
|
|
273
|
|
|
240
|
|
||
Endorsement compensation
|
|
273
|
|
|
388
|
|
||
Fair value of derivatives
|
|
202
|
|
|
162
|
|
||
Taxes other than income taxes
|
|
192
|
|
|
174
|
|
||
Import and logistics costs
|
|
174
|
|
|
207
|
|
||
Advertising and marketing
|
|
135
|
|
|
117
|
|
||
Other
(1)
|
|
753
|
|
|
698
|
|
||
TOTAL ACCRUED LIABILITIES
|
|
$
|
3,451
|
|
|
$
|
3,951
|
|
(1)
|
Other consists of various accrued expenses with no individual item accounting for more than
5%
of the total Accrued liabilities balance at
November 30, 2015
and
May 31, 2015
.
|
NOTE 4 — Fair Value Measurements
|
•
|
Level 1: Quoted prices in active markets for identical assets or liabilities.
|
•
|
Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly; these include quoted prices for similar assets or liabilities in active markets and quoted prices for identical assets or liabilities in markets that are not active.
|
•
|
Level 3: Unobservable inputs for which there is little or no market data available, which require the reporting entity to develop its own assumptions.
|
|
|
As of November 30, 2015
|
||||||||||||||
(In millions)
|
|
Assets at Fair Value
|
|
Cash and Equivalents
|
|
Short-term Investments
|
|
Other Long-term Assets
|
||||||||
Cash
|
|
$
|
731
|
|
|
$
|
731
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Level 1:
|
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury securities
|
|
1,283
|
|
|
233
|
|
|
1,050
|
|
|
—
|
|
||||
Level 2:
|
|
|
|
|
|
|
|
|
||||||||
Time deposits
|
|
734
|
|
|
734
|
|
|
—
|
|
|
—
|
|
||||
U.S. Agency securities
|
|
1,015
|
|
|
250
|
|
|
765
|
|
|
—
|
|
||||
Commercial paper and bonds
|
|
781
|
|
|
331
|
|
|
450
|
|
|
—
|
|
||||
Money market funds
|
|
1,572
|
|
|
1,572
|
|
|
—
|
|
|
—
|
|
||||
Total Level 2:
|
|
4,102
|
|
|
2,887
|
|
|
1,215
|
|
|
—
|
|
||||
Level 3:
|
|
|
|
|
|
|
|
|
||||||||
Non-marketable preferred stock
|
|
17
|
|
|
—
|
|
|
—
|
|
|
17
|
|
||||
TOTAL
|
|
$
|
6,133
|
|
|
$
|
3,851
|
|
|
$
|
2,265
|
|
|
$
|
17
|
|
|
|
As of May 31, 2015
|
||||||||||||||
(In millions)
|
|
Assets at Fair Value
|
|
Cash and Equivalents
|
|
Short-term Investments
|
|
Other Long-term Assets
|
||||||||
Cash
|
|
$
|
615
|
|
|
$
|
615
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Level 1:
|
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury securities
|
|
869
|
|
|
225
|
|
|
644
|
|
|
—
|
|
||||
Level 2:
|
|
|
|
|
|
|
|
|
||||||||
Time deposits
|
|
684
|
|
|
684
|
|
|
—
|
|
|
—
|
|
||||
U.S. Agency securities
|
|
976
|
|
|
110
|
|
|
866
|
|
|
—
|
|
||||
Commercial paper and bonds
|
|
914
|
|
|
352
|
|
|
562
|
|
|
—
|
|
||||
Money market funds
|
|
1,866
|
|
|
1,866
|
|
|
—
|
|
|
—
|
|
||||
Total Level 2:
|
|
4,440
|
|
|
3,012
|
|
|
1,428
|
|
|
—
|
|
||||
Level 3:
|
|
|
|
|
|
|
|
|
||||||||
Non-marketable preferred stock
|
|
8
|
|
|
—
|
|
|
—
|
|
|
8
|
|
||||
TOTAL
|
|
$
|
5,932
|
|
|
$
|
3,852
|
|
|
$
|
2,072
|
|
|
$
|
8
|
|
|
|
As of November 30, 2015
|
||||||||||||||||||||||
|
|
Derivative Assets
|
|
Derivative Liabilities
|
||||||||||||||||||||
(In millions)
|
|
Assets at Fair Value
|
|
Other Current Assets
|
|
Other Long-term Assets
|
|
Liabilities at Fair Value
|
|
Accrued Liabilities
|
|
Other Long-term Liabilities
|
||||||||||||
Level 2:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Foreign exchange forwards and options
(1)
|
|
$
|
1,476
|
|
|
$
|
1,036
|
|
|
$
|
440
|
|
|
$
|
196
|
|
|
$
|
195
|
|
|
$
|
1
|
|
Embedded derivatives
|
|
7
|
|
|
2
|
|
|
5
|
|
|
10
|
|
|
2
|
|
|
8
|
|
||||||
Interest rate swaps
(2)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
5
|
|
|
—
|
|
||||||
TOTAL
|
|
$
|
1,483
|
|
|
$
|
1,038
|
|
|
$
|
445
|
|
|
$
|
211
|
|
|
$
|
202
|
|
|
$
|
9
|
|
(1)
|
If the foreign exchange derivative instruments had been netted on the Unaudited Condensed Consolidated Balance Sheets, the asset and liability positions each would have been reduced by
$196 million
as of
November 30, 2015
. As of that date, the Company had received
$725 million
of cash collateral from various counterparties related to these foreign exchange derivative instruments.
No
amount of collateral was posted on the Company’s derivative liability balance as
of
November 30, 2015
.
|
(2)
|
As
of
November 30, 2015
,
no
amount of cash collateral had been posted on the derivative liability balance related to the Company's interest rate swaps.
|
|
|
As of May 31, 2015
|
||||||||||||||||||||||
|
|
Derivative Assets
|
|
Derivative Liabilities
|
||||||||||||||||||||
(In millions)
|
|
Assets at Fair Value
|
|
Other Current Assets
|
|
Other Long-term Assets
|
|
Liabilities at Fair Value
|
|
Accrued Liabilities
|
|
Other Long-term Liabilities
|
||||||||||||
Level 2:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Foreign exchange forwards and options
(1)
|
|
$
|
1,554
|
|
|
$
|
1,034
|
|
|
$
|
520
|
|
|
$
|
164
|
|
|
$
|
160
|
|
|
$
|
4
|
|
Embedded derivatives
|
|
7
|
|
|
2
|
|
|
5
|
|
|
11
|
|
|
2
|
|
|
9
|
|
||||||
Interest rate swaps
(2)
|
|
78
|
|
|
78
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
TOTAL
|
|
$
|
1,639
|
|
|
$
|
1,114
|
|
|
$
|
525
|
|
|
$
|
175
|
|
|
$
|
162
|
|
|
$
|
13
|
|
(1)
|
If the foreign exchange derivative instruments had been netted on the Consolidated Balance Sheets, the asset and liability positions each would have been reduced by
$161 million
as of
May 31, 2015
. As of that date, the Company had received
$900 million
of cash collateral and
$74 million
of securities from various counterparties related to these foreign exchange derivative instruments.
No
amount of collateral was posted on the Company’s derivative liability balance as
of
May 31, 2015
.
|
(2)
|
As
of
May 31, 2015
, the
Company had received
$68 million
of cash collateral related to its interest rate swaps.
|
NOTE 5 — Short-Term Borrowings and Credit Lines
|
NOTE 6 — Long-Term Debt
|
|
|
|
|
|
|
|
|
Book Value Outstanding As of
|
|||||||||
Scheduled Maturity (Dollars and Yen in millions)
|
|
Original
Principal
|
|
Interest
Rate
|
|
Interest
Payments
|
|
November 30, 2015
|
|
May 31, 2015
|
|||||||
Corporate Bond Payables:
(1)
|
|
|
|
|
|
|
|
|
|
|
|||||||
October 15, 2015
(2)
|
|
$
|
100
|
|
|
5.15
|
%
|
|
Semi-Annually
|
|
$
|
—
|
|
|
$
|
101
|
|
May 1, 2023
(3)
|
|
$
|
500
|
|
|
2.25
|
%
|
|
Semi-Annually
|
|
499
|
|
|
499
|
|
||
May 1, 2043
(3)
|
|
$
|
500
|
|
|
3.63
|
%
|
|
Semi-Annually
|
|
499
|
|
|
499
|
|
||
November 1, 2045
(4)
|
|
$
|
1,000
|
|
|
3.88
|
%
|
|
Semi-Annually
|
|
991
|
|
|
—
|
|
||
Promissory Notes:
|
|
|
|
|
|
|
|
|
|
|
|||||||
April 1, 2017
(5)
|
|
$
|
40
|
|
|
6.20
|
%
|
|
Monthly
|
|
38
|
|
|
39
|
|
||
January 1, 2018
(5)
|
|
$
|
19
|
|
|
6.79
|
%
|
|
Monthly
|
|
19
|
|
|
19
|
|
||
Japanese Yen Notes:
|
|
|
|
|
|
|
|
|
|
|
|||||||
August 20, 2001 through November 20, 2020
(6)
|
|
¥
|
9,000
|
|
|
2.60
|
%
|
|
Quarterly
|
|
18
|
|
|
20
|
|
||
August 20, 2001 through November 20, 2020
(6)
|
|
¥
|
4,000
|
|
|
2.00
|
%
|
|
Quarterly
|
|
8
|
|
|
9
|
|
||
Total
|
|
|
|
|
|
|
|
2,072
|
|
|
1,186
|
|
|||||
Less current maturities
|
|
|
|
|
|
|
|
|
|
5
|
|
|
107
|
|
|||
TOTAL LONG-TERM DEBT
|
|
|
|
|
|
|
|
$
|
2,067
|
|
|
$
|
1,079
|
|
(1)
|
These senior unsecured obligations rank equally with the Company's other unsecured and unsubordinated indebtedness.
|
(2)
|
The Company had entered into interest rate swap agreements whereby the Company received fixed interest payments at the same rate as the note and paid variable interest payments based on the six-month LIBOR plus a spread. The swaps had the same notional amount and maturity date as the corresponding note.
On October 15, 2015, the Company repaid the long-term debt which had previously been hedged with these interest rate swaps. Accordingly, as of
November 30, 2015
, the Company had
no
interest rate swaps designated as fair value hedges.
|
(3)
|
The bonds are redeemable at the Company's option prior to February 1, 2023 and November 1, 2042, respectively, at a price equal to the greater of (i)
100%
of the aggregate principal amount of the notes to be redeemed or (ii) the sum of the present values of the remaining scheduled payments, plus in each case, accrued and unpaid interest. Subsequent to February 1, 2023 and November 1, 2042, respectively, the bonds also feature a par call provision, which allows for the bonds to be redeemed at a price equal to 100% of the aggregate principal amount of the notes being redeemed, plus accrued and unpaid interest.
|
(4)
|
The bonds are redeemable at the Company's option prior to May 1, 2045 at a price equal to the greater of (i)
100%
of the aggregate principal amount of the notes to be redeemed or (ii) the sum of the present values of the remaining scheduled payments, plus in each case, accrued and unpaid interest. Subsequent to May 1, 2045, the bonds also feature a par call provision, which allows for the bonds to be redeemed at a price equal to 100% of the aggregate principal amount of the notes being redeemed, plus accrued and unpaid interest.
|
(5)
|
The Company assumed a total of
$59 million
in bonds payable as part of its agreement to purchase certain Corporate properties; this was treated as a non-cash financing transaction. The property serves as collateral for the debt. The purchase of these properties was accounted for as a business combination where the total consideration of
$85 million
was allocated to the land and buildings acquired; no other tangible or intangible assets or liabilities resulted from the purchase. The bonds mature in 2017 and 2018 and the Company does not have the ability to re-negotiate the terms of the debt agreements and would incur significant financial penalties if the notes were paid-off prior to maturity. Subsequent to November 30, 2015, the notes due January 1, 2018 were legally defeased and an insignificant loss on defeasance will be recognized in the third quarter of fiscal 2016.
|
(6)
|
NIKE Logistics YK assumed a total of
¥13 billion
in loans as part of its agreement to purchase a distribution center in Japan, which serves as collateral for the loans. These loans mature in equal quarterly installments during the period
August 20, 2001
through
November 20, 2020
.
|
NOTE 7 — Income Taxes
|
NOTE 8 — Common Stock and Stock-Based Compensation
|
|
|
Three Months Ended November 30,
|
|
Six Months Ended November 30,
|
||||||||||||
(In millions)
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Stock options
(1)
|
|
$
|
45
|
|
|
$
|
35
|
|
|
$
|
84
|
|
|
$
|
65
|
|
ESPPs
|
|
8
|
|
|
6
|
|
|
15
|
|
|
12
|
|
||||
Restricted stock
|
|
9
|
|
|
8
|
|
|
17
|
|
|
15
|
|
||||
TOTAL STOCK-BASED COMPENSATION EXPENSE
|
|
$
|
62
|
|
|
$
|
49
|
|
|
$
|
116
|
|
|
$
|
92
|
|
(1)
|
Expense for stock options includes the expense associated with stock appreciation rights. Accelerated stock option expense is recorded for employees eligible for accelerated stock option vesting upon retirement. Accelerated stock option expense was
$8 million
and
$5 million
for the
three month periods ended
November 30, 2015
and
2014
, respectively, and
$14 million
and
$9 million
for the
six month periods ended
November 30, 2015
and
2014
, respectively.
|
|
|
Six Months Ended November 30,
|
||||
|
|
2015
|
|
2014
|
||
Dividend yield
|
|
1.0
|
%
|
|
1.2
|
%
|
Expected volatility
|
|
23.6
|
%
|
|
23.6
|
%
|
Weighted average expected life (in years)
|
|
5.8
|
|
|
5.8
|
|
Risk-free interest rate
|
|
1.7
|
%
|
|
1.7
|
%
|
NOTE 9 — Earnings Per Share
|
|
|
Three Months Ended November 30,
|
|
Six Months Ended November 30,
|
||||||||||||
(In millions, except per share data)
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Determination of shares:
|
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding
|
|
1,706.5
|
|
|
1,726.2
|
|
|
1,707.8
|
|
|
1,728.0
|
|
||||
Assumed conversion of dilutive stock options and awards
|
|
44.9
|
|
|
43.4
|
|
|
45.6
|
|
|
43.6
|
|
||||
DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
|
|
1,751.4
|
|
|
1,769.6
|
|
|
1,753.4
|
|
|
1,771.6
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Earnings per common share:
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
$
|
0.46
|
|
|
$
|
0.38
|
|
|
$
|
1.15
|
|
|
$
|
0.94
|
|
Diluted
|
|
$
|
0.45
|
|
|
$
|
0.37
|
|
|
$
|
1.12
|
|
|
$
|
0.91
|
|
NOTE 10 — Risk Management and Derivatives
|
|
|
Derivative Assets
|
|
Derivative Liabilities
|
||||||||||||||||
(In millions)
|
|
Balance Sheet
Location
|
|
November 30,
2015 |
|
May 31,
2015 |
|
Balance Sheet
Location
|
|
November 30,
2015 |
|
May 31,
2015 |
||||||||
Derivatives formally designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign exchange forwards and options
|
|
Prepaid expenses and other current assets
|
|
$
|
860
|
|
|
$
|
825
|
|
|
Accrued liabilities
|
|
$
|
75
|
|
|
$
|
140
|
|
Interest rate swaps
|
|
Prepaid expenses and other current assets
|
|
—
|
|
|
78
|
|
|
Accrued liabilities
|
|
5
|
|
|
—
|
|
||||
Foreign exchange forwards and options
|
|
Deferred income taxes and other assets
|
|
414
|
|
|
520
|
|
|
Deferred income taxes and other liabilities
|
|
1
|
|
|
4
|
|
||||
Total derivatives formally designated as hedging instruments
|
|
|
|
1,274
|
|
|
1,423
|
|
|
|
|
81
|
|
|
144
|
|
||||
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign exchange forwards and options
|
|
Prepaid expenses and other current assets
|
|
176
|
|
|
209
|
|
|
Accrued liabilities
|
|
120
|
|
|
20
|
|
||||
Embedded derivatives
|
|
Prepaid expenses and other current assets
|
|
2
|
|
|
2
|
|
|
Accrued liabilities
|
|
2
|
|
|
2
|
|
||||
Foreign exchange forwards and options
|
|
Deferred income taxes and other assets
|
|
26
|
|
|
—
|
|
|
Deferred income taxes and other liabilities
|
|
—
|
|
|
—
|
|
||||
Embedded derivatives
|
|
Deferred income taxes and other assets
|
|
5
|
|
|
5
|
|
|
Deferred income taxes and other liabilities
|
|
8
|
|
|
9
|
|
||||
Total derivatives not designated as hedging instruments
|
|
|
|
209
|
|
|
216
|
|
|
|
|
130
|
|
|
31
|
|
||||
TOTAL DERIVATIVES
|
|
|
|
$
|
1,483
|
|
|
$
|
1,639
|
|
|
|
|
$
|
211
|
|
|
$
|
175
|
|
(In millions)
|
Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivatives
(1)
|
|
Amount of Gain (Loss) Reclassified From Accumulated Other Comprehensive Income into Income
(1)
|
||||||||||||||
Three Months Ended November 30,
|
|
Location of Gain (Loss) Reclassified From Accumulated Other Comprehensive Income into Income
|
|
Three Months Ended November 30,
|
|||||||||||||
2015
|
|
2014
|
|
|
2015
|
|
2014
|
||||||||||
Derivatives designated as cash flow hedges:
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign exchange forwards and options
|
$
|
(39
|
)
|
|
$
|
(4
|
)
|
|
Revenues
|
|
$
|
(29
|
)
|
|
$
|
(19
|
)
|
Foreign exchange forwards and options
|
309
|
|
|
280
|
|
|
Cost of sales
|
|
125
|
|
|
21
|
|
||||
Foreign exchange forwards and options
|
187
|
|
|
103
|
|
|
Other (income) expense, net
|
|
39
|
|
|
13
|
|
||||
Interest rate swaps
|
(50
|
)
|
|
—
|
|
|
Interest expense (income), net
|
|
—
|
|
|
—
|
|
||||
Total designated cash flow hedges
|
$
|
407
|
|
|
$
|
379
|
|
|
|
|
$
|
135
|
|
|
$
|
15
|
|
(1)
|
For the
three months ended November 30, 2015
and
2014
, the amounts recorded in
Other (income) expense, net
as a result of hedge ineffectiveness and the discontinuance of cash flow hedges because the forecasted transactions were no longer probable of occurring were immaterial.
|
(In millions) |
Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivatives
(1)
|
|
Amount of Gain (Loss) Reclassified From Accumulated Other Comprehensive Income into Income
(1)
|
||||||||||||||
Six Months Ended November 30,
|
|
Location of Gain (Loss) Reclassified From Accumulated Other Comprehensive Income into Income
|
|
Six Months Ended November 30,
|
|||||||||||||
2015
(2)
|
|
2014
|
|
|
2015
(2)
|
|
2014
|
||||||||||
Derivatives designated as cash flow hedges:
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign exchange forwards and options
|
$
|
(10
|
)
|
|
$
|
(42
|
)
|
|
Revenues
|
|
$
|
(75
|
)
|
|
$
|
(36
|
)
|
Foreign exchange forwards and options
|
205
|
|
|
399
|
|
|
Cost of sales
|
|
298
|
|
|
13
|
|
||||
Foreign exchange forwards and options
|
—
|
|
|
—
|
|
|
Total selling and administrative expense
|
|
—
|
|
|
—
|
|
||||
Foreign exchange forwards and options
|
122
|
|
|
140
|
|
|
Other (income) expense, net
|
|
100
|
|
|
18
|
|
||||
Interest rate swaps
|
(50
|
)
|
|
—
|
|
|
Interest expense (income), net
|
|
—
|
|
|
—
|
|
||||
Total designated cash flow hedges
|
$
|
267
|
|
|
$
|
497
|
|
|
|
|
$
|
323
|
|
|
$
|
(5
|
)
|
(1)
|
For the
six months ended November 30, 2015
and
2014
, the amounts recorded in
Other (income) expense, net
as a result of hedge ineffectiveness and the discontinuance of cash flow hedges because the forecasted transactions were no longer probable of occurring were immaterial.
|
(2)
|
Certain amounts have been updated to reflect the proper classification of
$40 million
between Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivatives and Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Income for the three months ended August 31, 2015.
|
|
|
Amount of Gain (Loss) Recognized in Income on Derivatives
|
|
Location of Gain (Loss)
Recognized in Income on Derivatives
|
||||||||||||||
|
|
Three Months Ended November 30,
|
|
Six Months Ended November 30,
|
|
|||||||||||||
(In millions)
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|||||||||
Derivatives designated as fair value hedges:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Interest rate swaps
(1)
|
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
2
|
|
|
$
|
2
|
|
|
Interest expense (income), net
|
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign exchange forwards and options
|
|
63
|
|
|
185
|
|
|
34
|
|
|
278
|
|
|
Other (income) expense, net
|
||||
Embedded derivatives
|
|
—
|
|
|
2
|
|
|
—
|
|
|
1
|
|
|
Other (income) expense, net
|
(1)
|
All interest rate swaps designated as fair value hedges meet the shortcut method requirements under the accounting standards for derivatives and hedging. Accordingly, changes in the fair values of the interest rate swaps are considered to exactly offset changes in the fair value of the underlying long-term debt. Refer to “Fair Value Hedges” in this note for additional detail.
|
NOTE 11 — Accumulated Other Comprehensive Income
|
(In millions)
|
|
Foreign Currency Translation Adjustment
(1)(2)
|
|
Cash Flow Hedges
|
|
Net Investment Hedges
(1)(2)
|
|
Other
|
|
Total
|
||||||||||
Balance at August 31, 2015
|
|
$
|
(112
|
)
|
|
$
|
891
|
|
|
$
|
115
|
|
|
$
|
(61
|
)
|
|
$
|
833
|
|
Other comprehensive gains (losses) before reclassifications
(3)
|
|
(29
|
)
|
|
425
|
|
|
—
|
|
|
11
|
|
|
407
|
|
|||||
Reclassifications to net income of previously deferred (gains) losses
(4)
|
|
—
|
|
|
(135
|
)
|
|
—
|
|
|
2
|
|
|
(133
|
)
|
|||||
Other comprehensive income (loss)
|
|
(29
|
)
|
|
290
|
|
|
—
|
|
|
13
|
|
|
274
|
|
|||||
Balance at November 30, 2015
|
|
$
|
(141
|
)
|
|
$
|
1,181
|
|
|
$
|
115
|
|
|
$
|
(48
|
)
|
|
$
|
1,107
|
|
(1)
|
The accumulated foreign currency translation adjustment and net investment hedge gains/losses related to an investment in a foreign subsidiary are reclassified to
Net income
upon sale or upon complete or substantially complete liquidation of the respective entity.
|
(2)
|
Beginning balances have been updated to reflect the proper classification of
$20 million
of deferred tax balances between Foreign Currency Translation Adjustment and Net Investment Hedges.
|
(3)
|
Net of tax benefit (expense) of $
0 million
, $
18 million
, $
0 million
, $
(2) million
and $
16 million
, respectively.
|
(4)
|
Net of tax (benefit) expense of $
0 million
, $
0 million
, $
0 million
, $
0 million
and $
0 million
, respectively.
|
(In millions)
|
|
Foreign Currency Translation Adjustment
(1)(2)
|
|
Cash Flow Hedges
(3)
|
|
Net Investment Hedges
(1)(2)
|
|
Other
|
|
Total
|
||||||||||
Balance at May 31, 2015
|
|
$
|
(31
|
)
|
|
$
|
1,220
|
|
|
$
|
115
|
|
|
$
|
(58
|
)
|
|
$
|
1,246
|
|
Other comprehensive gains (losses) before reclassifications
(4)
|
|
(110
|
)
|
|
283
|
|
|
—
|
|
|
11
|
|
|
184
|
|
|||||
Reclassifications to net income of previously deferred (gains) losses
(5)
|
|
—
|
|
|
(322
|
)
|
|
—
|
|
|
(1
|
)
|
|
(323
|
)
|
|||||
Other comprehensive income (loss)
|
|
(110
|
)
|
|
(39
|
)
|
|
—
|
|
|
10
|
|
|
(139
|
)
|
|||||
Balance at November 30, 2015
|
|
$
|
(141
|
)
|
|
$
|
1,181
|
|
|
$
|
115
|
|
|
$
|
(48
|
)
|
|
$
|
1,107
|
|
(1)
|
The accumulated foreign currency translation adjustment and net investment hedge gains/losses related to an investment in a foreign subsidiary are reclassified to
Net income
upon sale or upon complete or substantially complete liquidation of the respective entity.
|
(2)
|
Beginning balances have been updated to reflect the proper classification of
$20 million
of deferred tax balances between Foreign Currency Translation Adjustment and Net Investment Hedges.
|
(3)
|
Certain amounts have been updated to reflect the proper classification of
$40 million
between Other comprehensive gains (losses) before reclassifications and Reclassifications to net income of previously deferred (gains) losses for the three months ended August 31, 2015.
|
(4)
|
Net of tax benefit (expense) of $
0 million
, $
16 million
, $
0 million
, $
(2) million
and $
14 million
, respectively.
|
(5)
|
Net of tax (benefit) expense of $
0 million
, $
1 million
, $
0 million
, $
0 million
and $
1 million
, respectively.
|
(In millions)
|
|
Foreign Currency Translation Adjustment
(1)(2)
|
|
Cash Flow Hedges
|
|
Net Investment Hedges
(1)(2)
|
|
Other
|
|
Total
|
||||||||||
Balance at August 31, 2014
|
|
$
|
(9
|
)
|
|
$
|
167
|
|
|
$
|
115
|
|
|
$
|
(49
|
)
|
|
$
|
224
|
|
Other comprehensive gains (losses) before reclassifications
(3)
|
|
(34
|
)
|
|
351
|
|
|
—
|
|
|
9
|
|
|
326
|
|
|||||
Reclassifications to net income of previously deferred (gains) losses
(4)
|
|
—
|
|
|
(18
|
)
|
|
—
|
|
|
(7
|
)
|
|
(25
|
)
|
|||||
Other comprehensive income (loss)
|
|
(34
|
)
|
|
333
|
|
|
—
|
|
|
2
|
|
|
301
|
|
|||||
Balance at November 30, 2014
|
|
$
|
(43
|
)
|
|
$
|
500
|
|
|
$
|
115
|
|
|
$
|
(47
|
)
|
|
$
|
525
|
|
(1)
|
The accumulated foreign currency translation adjustment and net investment hedge gains/losses related to an investment in a foreign subsidiary are reclassified to
Net income
upon sale or upon complete or substantially complete liquidation of the respective entity.
|
(2)
|
Beginning and ending balances have been updated to reflect the proper classification of
$20 million
of deferred tax balances between Foreign Currency Translation Adjustment and Net Investment Hedges.
|
(3)
|
Net of tax benefit (expense) of $
11 million
, $
(28) million
, $
0 million
, $
(1) million
and $
(18) million
, respectively.
|
(4)
|
Net of tax (benefit) expense of $
0 million
, $
(3) million
, $
0 million
, $
2 million
and $
(1) million
, respectively.
|
(In millions)
|
|
Foreign Currency Translation Adjustment
(1)(2)
|
|
Cash Flow Hedges
|
|
Net Investment Hedges
(1)(2)
|
|
Other
|
|
Total
|
||||||||||
Balance at May 31, 2014
|
|
$
|
(11
|
)
|
|
$
|
32
|
|
|
$
|
115
|
|
|
$
|
(51
|
)
|
|
$
|
85
|
|
Other comprehensive gains (losses) before reclassifications
(3)
|
|
(32
|
)
|
|
470
|
|
|
—
|
|
|
14
|
|
|
452
|
|
|||||
Reclassifications to net income of previously deferred (gains) losses
(4)
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
(10
|
)
|
|
(12
|
)
|
|||||
Other comprehensive income (loss)
|
|
(32
|
)
|
|
468
|
|
|
—
|
|
|
4
|
|
|
440
|
|
|||||
Balance at November 30, 2014
|
|
$
|
(43
|
)
|
|
$
|
500
|
|
|
$
|
115
|
|
|
$
|
(47
|
)
|
|
$
|
525
|
|
(1)
|
The accumulated foreign currency translation adjustment and net investment hedge gains/losses related to an investment in a foreign subsidiary are reclassified to
Net income
upon sale or upon complete or substantially complete liquidation of the respective entity.
|
(2)
|
Beginning and ending balances have been updated to reflect the proper classification of
$20 million
of deferred tax balances between Foreign Currency Translation Adjustment and Net Investment Hedges.
|
(3)
|
Net of tax benefit (expense) of $
0 million
, $
(27) million
, $
0 million
, $
(3) million
and $
(30) million
, respectively.
|
(4)
|
Net of tax (benefit) expense of $
0 million
, $
(7) million
, $
0 million
, $
3 million
and $
(4) million
, respectively.
|
|
|
Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Income
|
|
Location of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Income
|
||||||||||||||
|
|
Three Months Ended November 30,
|
|
Six Months Ended November 30,
|
|
|||||||||||||
(In millions)
|
|
2015
|
|
2014
|
|
2015
(1)
|
|
2014
|
|
|||||||||
Gains (losses) on cash flow hedges:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign exchange forwards and options
|
|
$
|
(29
|
)
|
|
$
|
(19
|
)
|
|
$
|
(75
|
)
|
|
$
|
(36
|
)
|
|
Revenues
|
Foreign exchange forwards and options
|
|
125
|
|
|
21
|
|
|
298
|
|
|
13
|
|
|
Cost of sales
|
||||
Foreign exchange forwards and options
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Total selling and administrative expense
|
||||
Foreign exchange forwards and options
|
|
39
|
|
|
13
|
|
|
100
|
|
|
18
|
|
|
Other (income) expense, net
|
||||
Total before tax
|
|
135
|
|
|
15
|
|
|
323
|
|
|
(5
|
)
|
|
|
||||
Tax (expense) benefit
|
|
—
|
|
|
3
|
|
|
(1
|
)
|
|
7
|
|
|
|
||||
Gain (loss) net of tax
|
|
135
|
|
|
18
|
|
|
322
|
|
|
2
|
|
|
|
||||
Gains (losses) on other
|
|
(2
|
)
|
|
9
|
|
|
1
|
|
|
13
|
|
|
Other (income) expense, net
|
||||
Total before tax
|
|
(2
|
)
|
|
9
|
|
|
1
|
|
|
13
|
|
|
|
||||
Tax (expense)
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
(3
|
)
|
|
|
||||
Gain (loss) net of tax
|
|
(2
|
)
|
|
7
|
|
|
1
|
|
|
10
|
|
|
|
||||
Total net gain (loss) reclassified for the period
|
|
$
|
133
|
|
|
$
|
25
|
|
|
$
|
323
|
|
|
$
|
12
|
|
|
|
NOTE 12 — Operating Segments
|
|
|
Three Months Ended November 30,
|
|
Six Months Ended November 30,
|
||||||||||||
(In millions)
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
REVENUES
|
|
|
|
|
|
|
|
|
||||||||
North America
|
|
$
|
3,547
|
|
|
$
|
3,241
|
|
|
$
|
7,346
|
|
|
$
|
6,754
|
|
Western Europe
|
|
1,299
|
|
|
1,312
|
|
|
2,940
|
|
|
3,025
|
|
||||
Central & Eastern Europe
|
|
326
|
|
|
347
|
|
|
727
|
|
|
740
|
|
||||
Greater China
|
|
938
|
|
|
758
|
|
|
1,824
|
|
|
1,437
|
|
||||
Japan
|
|
205
|
|
|
199
|
|
|
384
|
|
|
359
|
|
||||
Emerging Markets
|
|
984
|
|
|
1,075
|
|
|
1,950
|
|
|
2,009
|
|
||||
Global Brand Divisions
|
|
18
|
|
|
27
|
|
|
44
|
|
|
56
|
|
||||
Total NIKE Brand
|
|
7,317
|
|
|
6,959
|
|
|
15,215
|
|
|
14,380
|
|
||||
Converse
|
|
398
|
|
|
434
|
|
|
953
|
|
|
1,009
|
|
||||
Corporate
|
|
(29
|
)
|
|
(13
|
)
|
|
(68
|
)
|
|
(27
|
)
|
||||
TOTAL NIKE CONSOLIDATED REVENUES
|
|
$
|
7,686
|
|
|
$
|
7,380
|
|
|
$
|
16,100
|
|
|
$
|
15,362
|
|
EARNINGS BEFORE INTEREST AND TAXES
|
|
|
|
|
|
|
|
|
||||||||
North America
|
|
$
|
882
|
|
|
$
|
785
|
|
|
$
|
1,924
|
|
|
$
|
1,755
|
|
Western Europe
|
|
307
|
|
|
261
|
|
|
792
|
|
|
665
|
|
||||
Central & Eastern Europe
|
|
76
|
|
|
57
|
|
|
174
|
|
|
126
|
|
||||
Greater China
|
|
327
|
|
|
258
|
|
|
657
|
|
|
476
|
|
||||
Japan
|
|
47
|
|
|
29
|
|
|
83
|
|
|
40
|
|
||||
Emerging Markets
|
|
241
|
|
|
236
|
|
|
499
|
|
|
392
|
|
||||
Global Brand Divisions
|
|
(625
|
)
|
|
(554
|
)
|
|
(1,249
|
)
|
|
(1,088
|
)
|
||||
Total NIKE Brand
|
|
1,255
|
|
|
1,072
|
|
|
2,880
|
|
|
2,366
|
|
||||
Converse
|
|
85
|
|
|
88
|
|
|
232
|
|
|
274
|
|
||||
Corporate
|
|
(365
|
)
|
|
(273
|
)
|
|
(688
|
)
|
|
(515
|
)
|
||||
Total NIKE Consolidated Earnings Before Interest and Taxes
|
|
975
|
|
|
887
|
|
|
2,424
|
|
|
2,125
|
|
||||
Interest expense (income), net
|
|
5
|
|
|
9
|
|
|
9
|
|
|
18
|
|
||||
TOTAL NIKE CONSOLIDATED EARNINGS BEFORE TAXES
|
|
$
|
970
|
|
|
$
|
878
|
|
|
$
|
2,415
|
|
|
$
|
2,107
|
|
|
|
As of November 30,
|
|
As of May 31,
|
||||
(In millions)
|
|
2015
|
|
2015
|
||||
ACCOUNTS RECEIVABLE, NET
|
|
|
|
|
||||
North America
|
|
$
|
1,764
|
|
|
$
|
1,737
|
|
Western Europe
|
|
372
|
|
|
344
|
|
||
Central & Eastern Europe
|
|
206
|
|
|
242
|
|
||
Greater China
|
|
116
|
|
|
84
|
|
||
Japan
|
|
102
|
|
|
134
|
|
||
Emerging Markets
|
|
536
|
|
|
461
|
|
||
Global Brand Divisions
|
|
87
|
|
|
88
|
|
||
Total NIKE Brand
|
|
3,183
|
|
|
3,090
|
|
||
Converse
|
|
241
|
|
|
258
|
|
||
Corporate
|
|
13
|
|
|
10
|
|
||
TOTAL ACCOUNTS RECEIVABLE, NET
|
|
$
|
3,437
|
|
|
$
|
3,358
|
|
INVENTORIES
|
|
|
|
|
||||
North America
|
|
$
|
2,389
|
|
|
$
|
2,207
|
|
Western Europe
|
|
754
|
|
|
699
|
|
||
Central & Eastern Europe
|
|
158
|
|
|
169
|
|
||
Greater China
|
|
356
|
|
|
249
|
|
||
Japan
|
|
113
|
|
|
94
|
|
||
Emerging Markets
|
|
464
|
|
|
528
|
|
||
Global Brand Divisions
|
|
35
|
|
|
32
|
|
||
Total NIKE Brand
|
|
4,269
|
|
|
3,978
|
|
||
Converse
|
|
242
|
|
|
237
|
|
||
Corporate
|
|
89
|
|
|
122
|
|
||
TOTAL INVENTORIES
|
|
$
|
4,600
|
|
|
$
|
4,337
|
|
PROPERTY, PLANT AND EQUIPMENT, NET
|
|
|
|
|
||||
North America
|
|
$
|
702
|
|
|
$
|
632
|
|
Western Europe
|
|
490
|
|
|
451
|
|
||
Central & Eastern Europe
|
|
47
|
|
|
47
|
|
||
Greater China
|
|
234
|
|
|
254
|
|
||
Japan
|
|
205
|
|
|
205
|
|
||
Emerging Markets
|
|
105
|
|
|
103
|
|
||
Global Brand Divisions
|
|
510
|
|
|
484
|
|
||
Total NIKE Brand
|
|
2,293
|
|
|
2,176
|
|
||
Converse
|
|
125
|
|
|
122
|
|
||
Corporate
|
|
817
|
|
|
713
|
|
||
TOTAL PROPERTY, PLANT AND EQUIPMENT, NET
|
|
$
|
3,235
|
|
|
$
|
3,011
|
|
NOTE 13 — Commitments and Contingencies
|
Results of Operations
|
|
|
Three Months Ended November 30,
|
|
Six Months Ended November 30,
|
||||||||||||||||||
(Dollars in millions, except per share data)
|
|
2015
|
|
2014
|
|
% Change
|
|
2015
|
|
2014
|
|
% Change
|
||||||||||
Revenues
|
|
$
|
7,686
|
|
|
$
|
7,380
|
|
|
4
|
%
|
|
$
|
16,100
|
|
|
$
|
15,362
|
|
|
5
|
%
|
Cost of sales
|
|
4,185
|
|
|
4,053
|
|
|
3
|
%
|
|
8,604
|
|
|
8,314
|
|
|
3
|
%
|
||||
Gross profit
|
|
3,501
|
|
|
3,327
|
|
|
5
|
%
|
|
7,496
|
|
|
7,048
|
|
|
6
|
%
|
||||
Gross margin %
|
|
45.6
|
%
|
|
45.1
|
%
|
|
|
|
46.6
|
%
|
|
45.9
|
%
|
|
|
||||||
Demand creation expense
|
|
769
|
|
|
766
|
|
|
0
|
%
|
|
1,601
|
|
|
1,663
|
|
|
-4
|
%
|
||||
Operating overhead expense
|
|
1,791
|
|
|
1,672
|
|
|
7
|
%
|
|
3,536
|
|
|
3,255
|
|
|
9
|
%
|
||||
Total selling and administrative expense
|
|
2,560
|
|
|
2,438
|
|
|
5
|
%
|
|
5,137
|
|
|
4,918
|
|
|
4
|
%
|
||||
% of Revenues
|
|
33.3
|
%
|
|
33.0
|
%
|
|
|
|
31.9
|
%
|
|
32.0
|
%
|
|
|
||||||
Interest expense (income), net
|
|
5
|
|
|
9
|
|
|
—
|
|
|
9
|
|
|
18
|
|
|
—
|
|
||||
Other (income) expense, net
|
|
(34
|
)
|
|
2
|
|
|
—
|
|
|
(65
|
)
|
|
5
|
|
|
—
|
|
||||
Income before income taxes
|
|
970
|
|
|
878
|
|
|
10
|
%
|
|
2,415
|
|
|
2,107
|
|
|
15
|
%
|
||||
Income tax expense
|
|
185
|
|
|
223
|
|
|
-17
|
%
|
|
451
|
|
|
490
|
|
|
-8
|
%
|
||||
Effective tax rate
|
|
19.1
|
%
|
|
25.4
|
%
|
|
|
|
18.7
|
%
|
|
23.3
|
%
|
|
|
||||||
Net income
|
|
$
|
785
|
|
|
$
|
655
|
|
|
20
|
%
|
|
$
|
1,964
|
|
|
$
|
1,617
|
|
|
21
|
%
|
Diluted earnings per common share
|
|
$
|
0.45
|
|
|
$
|
0.37
|
|
|
22
|
%
|
|
$
|
1.12
|
|
|
$
|
0.91
|
|
|
23
|
%
|
Consolidated Operating Results
|
|
Three Months Ended November 30,
|
|
Six Months Ended November 30,
|
||||||||||||||||||||||||
(Dollars in millions)
|
2015
|
|
2014
(1)
|
|
% Change
|
|
% Change Excluding Currency
Changes
(2)
|
|
2015
|
|
2014
(1)
|
|
% Change
|
|
% Change Excluding Currency
Changes
(2)
|
||||||||||||
NIKE, Inc. Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
NIKE Brand Revenues by:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Footwear
|
$
|
4,592
|
|
|
$
|
4,267
|
|
|
8
|
%
|
|
16
|
%
|
|
$
|
9,715
|
|
|
$
|
8,968
|
|
|
8
|
%
|
|
17
|
%
|
Apparel
|
2,362
|
|
|
2,285
|
|
|
3
|
%
|
|
10
|
%
|
|
4,703
|
|
|
4,521
|
|
|
4
|
%
|
|
11
|
%
|
||||
Equipment
|
345
|
|
|
380
|
|
|
-9
|
%
|
|
-1
|
%
|
|
753
|
|
|
835
|
|
|
-10
|
%
|
|
-2
|
%
|
||||
Global Brand Divisions
(3)
|
18
|
|
|
27
|
|
|
-33
|
%
|
|
-26
|
%
|
|
44
|
|
|
56
|
|
|
-21
|
%
|
|
-11
|
%
|
||||
Total NIKE Brand Revenues
|
7,317
|
|
|
6,959
|
|
|
5
|
%
|
|
13
|
%
|
|
15,215
|
|
|
14,380
|
|
|
6
|
%
|
|
14
|
%
|
||||
Converse
|
398
|
|
|
434
|
|
|
-8
|
%
|
|
-5
|
%
|
|
953
|
|
|
1,009
|
|
|
-6
|
%
|
|
-1
|
%
|
||||
Corporate
(4)
|
(29
|
)
|
|
(13
|
)
|
|
—
|
|
|
—
|
|
|
(68
|
)
|
|
(27
|
)
|
|
—
|
|
|
—
|
|
||||
TOTAL NIKE, INC. REVENUES
|
$
|
7,686
|
|
|
$
|
7,380
|
|
|
4
|
%
|
|
12
|
%
|
|
$
|
16,100
|
|
|
$
|
15,362
|
|
|
5
|
%
|
|
13
|
%
|
Supplemental NIKE Brand Revenues Details:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
NIKE Brand Revenues by:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Sales to Wholesale Customers
|
$
|
5,558
|
|
|
$
|
5,452
|
|
|
2
|
%
|
|
9
|
%
|
|
$
|
11,498
|
|
|
$
|
11,141
|
|
|
3
|
%
|
|
11
|
%
|
Sales Direct to Consumer
|
1,741
|
|
|
1,480
|
|
|
18
|
%
|
|
26
|
%
|
|
3,673
|
|
|
3,183
|
|
|
15
|
%
|
|
23
|
%
|
||||
Global Brand Divisions
(3)
|
18
|
|
|
27
|
|
|
-33
|
%
|
|
-26
|
%
|
|
44
|
|
|
56
|
|
|
-21
|
%
|
|
-11
|
%
|
||||
TOTAL NIKE BRAND REVENUES
|
$
|
7,317
|
|
|
$
|
6,959
|
|
|
5
|
%
|
|
13
|
%
|
|
$
|
15,215
|
|
|
$
|
14,380
|
|
|
6
|
%
|
|
14
|
%
|
(1)
|
Certain prior year amounts have been reclassified to conform to fiscal 2016 presentation. These changes had no impact on previously reported results of operations or shareholders' equity.
|
(2)
|
Results have been restated using actual exchange rates in use during the comparative prior year period to enhance the visibility of the underlying business trends by excluding the impact of translation arising from foreign currency exchange rate fluctuations.
|
(3)
|
Global Brand Divisions revenues are primarily attributable to NIKE Brand licensing businesses that are not part of a geographic operating segment.
|
(4)
|
Corporate revenues primarily consist of foreign currency hedge gains and losses related to revenues generated by entities within the NIKE Brand geographic operating segments and Converse but managed through our central foreign exchange risk management program.
|
|
|
Reported Futures
Orders
|
|
Futures Orders
Excluding Currency Changes
(1)
|
||
North America
|
|
14
|
%
|
|
14
|
%
|
Western Europe
|
|
17
|
%
|
|
25
|
%
|
Central & Eastern Europe
|
|
3
|
%
|
|
13
|
%
|
Greater China
|
|
31
|
%
|
|
34
|
%
|
Japan
|
|
26
|
%
|
|
32
|
%
|
Emerging Markets
|
|
0
|
%
|
|
14
|
%
|
TOTAL NIKE BRAND FUTURES ORDERS
|
|
15
|
%
|
|
20
|
%
|
(1)
|
Reported futures have been restated using prior year exchange rates for the comparative period to enhance the visibility of the underlying business trends, excluding the impact of foreign currency exchange rate fluctuations.
|
|
|
Three Months Ended November 30,
|
|
Six Months Ended November 30,
|
||||||||||||||||||
(Dollars in millions)
|
|
2015
|
|
2014
|
|
% Change
|
|
2015
|
|
2014
|
|
% Change
|
||||||||||
Gross profit
|
|
$
|
3,501
|
|
|
$
|
3,327
|
|
|
5
|
%
|
|
$
|
7,496
|
|
|
$
|
7,048
|
|
|
6
|
%
|
Gross margin %
|
|
45.6
|
%
|
|
45.1
|
%
|
|
50
|
bps
|
|
46.6
|
%
|
|
45.9
|
%
|
|
70
|
bps
|
•
|
Higher NIKE Brand average net selling prices (increasing gross margin approximately 260 basis points for the second quarter and 240 basis points for the first six months) primarily due to shifts in mix to higher-priced products and, to a lesser extent, increased prices, in part reflecting inflationary conditions in certain territories;
|
•
|
Higher NIKE Brand product costs (decreasing gross margin approximately 90 basis points for the second quarter and 100 basis points for the first six months) largely due to shifts in mix to higher-cost products as well as labor input cost inflation;
|
•
|
Our higher-margin NIKE Brand DTC business had an insignificant impact on gross margin for the second quarter as the favorable impact due to growth was largely offset by lower margins due to increased liquidation efforts in the quarter, primarily in North America; for the first six months, growth in NIKE Brand DTC increased gross margin approximately 20 basis points;
|
•
|
Higher other costs (decreasing gross margin approximately 50 basis points for both the second quarter and first six months) primarily driven by higher warehousing expenses in North America, due to additional investments in infrastructure, and higher product design and development costs; and
|
•
|
Unfavorable changes in foreign currency exchange rates, including hedges (decreasing gross margin approximately 50 basis points for the second quarter and 30 basis points for the first six months).
|
|
|
Three Months Ended November 30,
|
|
Six Months Ended November 30,
|
||||||||||||||||||
(Dollars in millions)
|
|
2015
|
|
2014
|
|
% Change
|
|
2015
|
|
2014
|
|
% Change
|
||||||||||
Demand creation expense
(1)
|
|
$
|
769
|
|
|
$
|
766
|
|
|
0
|
%
|
|
$
|
1,601
|
|
|
$
|
1,663
|
|
|
-4
|
%
|
Operating overhead expense
|
|
1,791
|
|
|
1,672
|
|
|
7
|
%
|
|
3,536
|
|
|
3,255
|
|
|
9
|
%
|
||||
Total selling and administrative expense
|
|
$
|
2,560
|
|
|
$
|
2,438
|
|
|
5
|
%
|
|
$
|
5,137
|
|
|
$
|
4,918
|
|
|
4
|
%
|
% of Revenues
|
|
33.3
|
%
|
|
33.0
|
%
|
|
30 bps
|
|
|
31.9
|
%
|
|
32.0
|
%
|
|
(10) bps
|
|
(1)
|
Demand creation expense consists of advertising and promotion costs, including costs of endorsement contracts, television, digital and print advertising, brand events and retail brand presentation.
|
|
|
Three Months Ended November 30,
|
|
Six Months Ended November 30,
|
||||||||||||
(In millions)
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Other (income) expense, net
|
|
$
|
(34
|
)
|
|
$
|
2
|
|
|
$
|
(65
|
)
|
|
$
|
5
|
|
|
|
Three Months Ended November 30,
|
|
Six Months Ended November 30,
|
||||||||||||||
|
|
2015
|
|
2014
|
|
% Change
|
|
2015
|
|
2014
|
|
% Change
|
||||||
Effective tax rate
|
|
19.1
|
%
|
|
25.4
|
%
|
|
(630) bps
|
|
|
18.7
|
%
|
|
23.3
|
%
|
|
(460) bps
|
|
Operating Segments
|
|
|
Three Months Ended November 30,
|
|
Six Months Ended November 30,
|
||||||||||||||||||||||||
(Dollars in millions)
|
|
2015
|
|
2014
(1)
|
|
% Change
|
|
% Change Excluding Currency Changes
(2)
|
|
2015
|
|
2014
(1)
|
|
% Change
|
|
% Change Excluding Currency Changes
(2)
|
||||||||||||
North America
|
|
$
|
3,547
|
|
|
$
|
3,241
|
|
|
9
|
%
|
|
10
|
%
|
|
$
|
7,346
|
|
|
$
|
6,754
|
|
|
9
|
%
|
|
9
|
%
|
Western Europe
|
|
1,299
|
|
|
1,312
|
|
|
-1
|
%
|
|
12
|
%
|
|
2,940
|
|
|
3,025
|
|
|
-3
|
%
|
|
13
|
%
|
||||
Central & Eastern Europe
|
|
326
|
|
|
347
|
|
|
-6
|
%
|
|
15
|
%
|
|
727
|
|
|
740
|
|
|
-2
|
%
|
|
21
|
%
|
||||
Greater China
|
|
938
|
|
|
758
|
|
|
24
|
%
|
|
28
|
%
|
|
1,824
|
|
|
1,437
|
|
|
27
|
%
|
|
29
|
%
|
||||
Japan
|
|
205
|
|
|
199
|
|
|
3
|
%
|
|
17
|
%
|
|
384
|
|
|
359
|
|
|
7
|
%
|
|
25
|
%
|
||||
Emerging Markets
|
|
984
|
|
|
1,075
|
|
|
-8
|
%
|
|
11
|
%
|
|
1,950
|
|
|
2,009
|
|
|
-3
|
%
|
|
15
|
%
|
||||
Global Brand Divisions
(3)
|
|
18
|
|
|
27
|
|
|
-33
|
%
|
|
-26
|
%
|
|
44
|
|
|
56
|
|
|
-21
|
%
|
|
-11
|
%
|
||||
Total NIKE Brand Revenues
|
|
7,317
|
|
|
6,959
|
|
|
5
|
%
|
|
13
|
%
|
|
15,215
|
|
|
14,380
|
|
|
6
|
%
|
|
14
|
%
|
||||
Converse
|
|
398
|
|
|
434
|
|
|
-8
|
%
|
|
-5
|
%
|
|
953
|
|
|
1,009
|
|
|
-6
|
%
|
|
-1
|
%
|
||||
Corporate
(4)
|
|
(29
|
)
|
|
(13
|
)
|
|
—
|
|
|
—
|
|
|
(68
|
)
|
|
(27
|
)
|
|
—
|
|
|
—
|
|
||||
TOTAL NIKE, INC. REVENUES
|
|
$
|
7,686
|
|
|
$
|
7,380
|
|
|
4
|
%
|
|
12
|
%
|
|
$
|
16,100
|
|
|
$
|
15,362
|
|
|
5
|
%
|
|
13
|
%
|
(1)
|
Certain prior year amounts have been reclassified to conform to fiscal 2016 presentation. These changes had no impact on previously reported results of operations or shareholders' equity.
|
(2)
|
Results have been restated using actual exchange rates in use during the comparative prior year period to enhance the visibility of the underlying business trends by excluding the impact of translation arising from foreign currency exchange rate fluctuations.
|
(3)
|
Global Brand Divisions revenues are primarily attributable to NIKE Brand licensing businesses that are not part of a geographic operating segment.
|
(4)
|
Corporate revenues primarily consist of foreign currency hedge gains and losses related to revenues generated by entities within the NIKE Brand geographic operating segments and Converse but managed through our central foreign exchange risk management program.
|
|
|
Three Months Ended November 30,
|
|
Six Months Ended November 30,
|
||||||||||||||||||
(Dollars in millions)
|
|
2015
|
|
2014
(1)
|
|
% Change
|
|
2015
|
|
2014
(1)
|
|
% Change
|
||||||||||
North America
|
|
$
|
882
|
|
|
$
|
785
|
|
|
12
|
%
|
|
$
|
1,924
|
|
|
$
|
1,755
|
|
|
10
|
%
|
Western Europe
|
|
307
|
|
|
261
|
|
|
18
|
%
|
|
792
|
|
|
665
|
|
|
19
|
%
|
||||
Central & Eastern Europe
|
|
76
|
|
|
57
|
|
|
33
|
%
|
|
174
|
|
|
126
|
|
|
38
|
%
|
||||
Greater China
|
|
327
|
|
|
258
|
|
|
27
|
%
|
|
657
|
|
|
476
|
|
|
38
|
%
|
||||
Japan
|
|
47
|
|
|
29
|
|
|
62
|
%
|
|
83
|
|
|
40
|
|
|
108
|
%
|
||||
Emerging Markets
|
|
241
|
|
|
236
|
|
|
2
|
%
|
|
499
|
|
|
392
|
|
|
27
|
%
|
||||
Global Brand Divisions
|
|
(625
|
)
|
|
(554
|
)
|
|
-13
|
%
|
|
(1,249
|
)
|
|
(1,088
|
)
|
|
-15
|
%
|
||||
Total NIKE Brand
|
|
1,255
|
|
|
1,072
|
|
|
17
|
%
|
|
2,880
|
|
|
2,366
|
|
|
22
|
%
|
||||
Converse
|
|
85
|
|
|
88
|
|
|
-3
|
%
|
|
232
|
|
|
274
|
|
|
-15
|
%
|
||||
Corporate
|
|
(365
|
)
|
|
(273
|
)
|
|
-34
|
%
|
|
(688
|
)
|
|
(515
|
)
|
|
-34
|
%
|
||||
TOTAL CONSOLIDATED EARNINGS BEFORE INTEREST AND TAXES
|
|
975
|
|
|
887
|
|
|
10
|
%
|
|
2,424
|
|
|
2,125
|
|
|
14
|
%
|
||||
Interest expense (income), net
|
|
5
|
|
|
9
|
|
|
—
|
|
|
9
|
|
|
18
|
|
|
—
|
|
||||
TOTAL CONSOLIDATED INCOME BEFORE INCOME TAXES
|
|
$
|
970
|
|
|
$
|
878
|
|
|
10
|
%
|
|
$
|
2,415
|
|
|
$
|
2,107
|
|
|
15
|
%
|
(1)
|
Certain prior year amounts have been reclassified to conform to fiscal 2016 presentation. These changes had no impact on previously reported results of operations or shareholders' equity.
|
|
|
Three Months Ended November 30,
|
|
Six Months Ended November 30,
|
||||||||||||||||||||||||
(Dollars in millions)
|
|
2015
|
|
2014
|
|
% Change
|
|
% Change Excluding Currency Changes
|
|
2015
|
|
2014
|
|
% Change
|
|
% Change Excluding Currency Changes
|
||||||||||||
Revenues by:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Footwear
|
|
$
|
2,162
|
|
|
$
|
1,925
|
|
|
12
|
%
|
|
13
|
%
|
|
$
|
4,528
|
|
|
$
|
4,108
|
|
|
10
|
%
|
|
11
|
%
|
Apparel
|
|
1,221
|
|
|
1,131
|
|
|
8
|
%
|
|
8
|
%
|
|
2,468
|
|
|
2,235
|
|
|
10
|
%
|
|
11
|
%
|
||||
Equipment
|
|
164
|
|
|
185
|
|
|
-11
|
%
|
|
-12
|
%
|
|
350
|
|
|
411
|
|
|
-15
|
%
|
|
-15
|
%
|
||||
TOTAL REVENUES
|
|
$
|
3,547
|
|
|
$
|
3,241
|
|
|
9
|
%
|
|
10
|
%
|
|
$
|
7,346
|
|
|
$
|
6,754
|
|
|
9
|
%
|
|
9
|
%
|
Revenues by:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Sales to Wholesale Customers
|
|
$
|
2,678
|
|
|
$
|
2,497
|
|
|
7
|
%
|
|
8
|
%
|
|
$
|
5,427
|
|
|
$
|
5,049
|
|
|
7
|
%
|
|
8
|
%
|
Sales Direct to Consumer
|
|
869
|
|
|
744
|
|
|
17
|
%
|
|
17
|
%
|
|
1,919
|
|
|
1,705
|
|
|
13
|
%
|
|
13
|
%
|
||||
TOTAL REVENUES
|
|
$
|
3,547
|
|
|
$
|
3,241
|
|
|
9
|
%
|
|
10
|
%
|
|
$
|
7,346
|
|
|
$
|
6,754
|
|
|
9
|
%
|
|
9
|
%
|
EARNINGS BEFORE INTEREST AND TAXES
|
|
$
|
882
|
|
|
$
|
785
|
|
|
12
|
%
|
|
|
|
$
|
1,924
|
|
|
$
|
1,755
|
|
|
10
|
%
|
|
|
|
|
Three Months Ended November 30,
|
|
Six Months Ended November 30,
|
||||||||||||||||||||||||
(Dollars in millions)
|
|
2015
|
|
2014
|
|
% Change
|
|
% Change Excluding Currency Changes
|
|
2015
|
|
2014
|
|
% Change
|
|
% Change Excluding Currency Changes
|
||||||||||||
Revenues by:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Footwear
|
|
$
|
845
|
|
|
$
|
864
|
|
|
-2
|
%
|
|
11
|
%
|
|
$
|
1,973
|
|
|
$
|
1,991
|
|
|
-1
|
%
|
|
15
|
%
|
Apparel
|
|
391
|
|
|
384
|
|
|
2
|
%
|
|
15
|
%
|
|
825
|
|
|
881
|
|
|
-6
|
%
|
|
8
|
%
|
||||
Equipment
|
|
63
|
|
|
64
|
|
|
-2
|
%
|
|
11
|
%
|
|
142
|
|
|
153
|
|
|
-7
|
%
|
|
7
|
%
|
||||
TOTAL REVENUES
|
|
$
|
1,299
|
|
|
$
|
1,312
|
|
|
-1
|
%
|
|
12
|
%
|
|
$
|
2,940
|
|
|
$
|
3,025
|
|
|
-3
|
%
|
|
13
|
%
|
Revenues by:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Sales to Wholesale Customers
|
|
$
|
977
|
|
|
$
|
1,025
|
|
|
-5
|
%
|
|
8
|
%
|
|
$
|
2,257
|
|
|
$
|
2,413
|
|
|
-6
|
%
|
|
9
|
%
|
Sales Direct to Consumer
|
|
322
|
|
|
287
|
|
|
12
|
%
|
|
26
|
%
|
|
683
|
|
|
612
|
|
|
12
|
%
|
|
29
|
%
|
||||
TOTAL REVENUES
|
|
$
|
1,299
|
|
|
$
|
1,312
|
|
|
-1
|
%
|
|
12
|
%
|
|
$
|
2,940
|
|
|
$
|
3,025
|
|
|
-3
|
%
|
|
13
|
%
|
EARNINGS BEFORE INTEREST AND TAXES
|
|
$
|
307
|
|
|
$
|
261
|
|
|
18
|
%
|
|
|
|
$
|
792
|
|
|
$
|
665
|
|
|
19
|
%
|
|
|
|
|
Three Months Ended November 30,
|
|
Six Months Ended November 30,
|
||||||||||||||||||||||||
(Dollars in millions)
|
|
2015
|
|
2014
|
|
% Change
|
|
% Change Excluding Currency Changes
|
|
2015
|
|
2014
|
|
% Change
|
|
% Change Excluding Currency Changes
|
||||||||||||
Revenues by:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Footwear
|
|
$
|
183
|
|
|
$
|
180
|
|
|
2
|
%
|
|
23
|
%
|
|
$
|
421
|
|
|
$
|
403
|
|
|
4
|
%
|
|
28
|
%
|
Apparel
|
|
126
|
|
|
149
|
|
|
-15
|
%
|
|
5
|
%
|
|
259
|
|
|
284
|
|
|
-9
|
%
|
|
13
|
%
|
||||
Equipment
|
|
17
|
|
|
18
|
|
|
-6
|
%
|
|
19
|
%
|
|
47
|
|
|
53
|
|
|
-11
|
%
|
|
11
|
%
|
||||
TOTAL REVENUES
|
|
$
|
326
|
|
|
$
|
347
|
|
|
-6
|
%
|
|
15
|
%
|
|
$
|
727
|
|
|
$
|
740
|
|
|
-2
|
%
|
|
21
|
%
|
Revenues by:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Sales to Wholesale Customers
|
|
$
|
277
|
|
|
$
|
302
|
|
|
-8
|
%
|
|
10
|
%
|
|
$
|
627
|
|
|
$
|
653
|
|
|
-4
|
%
|
|
17
|
%
|
Sales Direct to Consumer
|
|
49
|
|
|
45
|
|
|
9
|
%
|
|
44
|
%
|
|
100
|
|
|
87
|
|
|
15
|
%
|
|
51
|
%
|
||||
TOTAL REVENUES
|
|
$
|
326
|
|
|
$
|
347
|
|
|
-6
|
%
|
|
15
|
%
|
|
$
|
727
|
|
|
$
|
740
|
|
|
-2
|
%
|
|
21
|
%
|
EARNINGS BEFORE INTEREST AND TAXES
|
|
$
|
76
|
|
|
$
|
57
|
|
|
33
|
%
|
|
|
|
$
|
174
|
|
|
$
|
126
|
|
|
38
|
%
|
|
|
|
|
Three Months Ended November 30,
|
|
Six Months Ended November 30,
|
||||||||||||||||||||||||
(Dollars in millions)
|
|
2015
|
|
2014
|
|
% Change
|
|
% Change Excluding Currency Changes
|
|
2015
|
|
2014
|
|
% Change
|
|
% Change Excluding Currency Changes
|
||||||||||||
Revenues by:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Footwear
|
|
$
|
600
|
|
|
$
|
463
|
|
|
30
|
%
|
|
34
|
%
|
|
$
|
1,199
|
|
|
$
|
903
|
|
|
33
|
%
|
|
35
|
%
|
Apparel
|
|
306
|
|
|
266
|
|
|
15
|
%
|
|
19
|
%
|
|
552
|
|
|
468
|
|
|
18
|
%
|
|
20
|
%
|
||||
Equipment
|
|
32
|
|
|
29
|
|
|
10
|
%
|
|
14
|
%
|
|
73
|
|
|
66
|
|
|
11
|
%
|
|
12
|
%
|
||||
TOTAL REVENUES
|
|
$
|
938
|
|
|
$
|
758
|
|
|
24
|
%
|
|
28
|
%
|
|
$
|
1,824
|
|
|
$
|
1,437
|
|
|
27
|
%
|
|
29
|
%
|
Revenues by:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Sales to Wholesale Customers
|
|
$
|
657
|
|
|
$
|
564
|
|
|
16
|
%
|
|
20
|
%
|
|
$
|
1,291
|
|
|
$
|
1,072
|
|
|
20
|
%
|
|
22
|
%
|
Sales Direct to Consumer
|
|
281
|
|
|
194
|
|
|
45
|
%
|
|
51
|
%
|
|
533
|
|
|
365
|
|
|
46
|
%
|
|
49
|
%
|
||||
TOTAL REVENUES
|
|
$
|
938
|
|
|
$
|
758
|
|
|
24
|
%
|
|
28
|
%
|
|
$
|
1,824
|
|
|
$
|
1,437
|
|
|
27
|
%
|
|
29
|
%
|
EARNINGS BEFORE INTEREST AND TAXES
|
|
$
|
327
|
|
|
$
|
258
|
|
|
27
|
%
|
|
|
|
$
|
657
|
|
|
$
|
476
|
|
|
38
|
%
|
|
|
|
|
Three Months Ended November 30,
|
|
Six Months Ended November 30,
|
||||||||||||||||||||||||
(Dollars in millions)
|
|
2015
|
|
2014
|
|
% Change
|
|
% Change Excluding Currency Changes
|
|
2015
|
|
2014
|
|
% Change
|
|
% Change Excluding Currency Changes
|
||||||||||||
Revenues by:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Footwear
|
|
$
|
128
|
|
|
$
|
108
|
|
|
19
|
%
|
|
36
|
%
|
|
$
|
250
|
|
|
$
|
208
|
|
|
20
|
%
|
|
41
|
%
|
Apparel
|
|
63
|
|
|
75
|
|
|
-16
|
%
|
|
-4
|
%
|
|
106
|
|
|
121
|
|
|
-12
|
%
|
|
2
|
%
|
||||
Equipment
|
|
14
|
|
|
16
|
|
|
-13
|
%
|
|
-7
|
%
|
|
28
|
|
|
30
|
|
|
-7
|
%
|
|
8
|
%
|
||||
TOTAL REVENUES
|
|
$
|
205
|
|
|
$
|
199
|
|
|
3
|
%
|
|
17
|
%
|
|
$
|
384
|
|
|
$
|
359
|
|
|
7
|
%
|
|
25
|
%
|
Revenues by:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Sales to Wholesale Customers
|
|
$
|
144
|
|
|
$
|
150
|
|
|
-4
|
%
|
|
9
|
%
|
|
$
|
258
|
|
|
$
|
259
|
|
|
0
|
%
|
|
16
|
%
|
Sales Direct to Consumer
|
|
61
|
|
|
49
|
|
|
24
|
%
|
|
44
|
%
|
|
126
|
|
|
100
|
|
|
26
|
%
|
|
49
|
%
|
||||
TOTAL REVENUES
|
|
$
|
205
|
|
|
$
|
199
|
|
|
3
|
%
|
|
17
|
%
|
|
$
|
384
|
|
|
$
|
359
|
|
|
7
|
%
|
|
25
|
%
|
EARNINGS BEFORE INTEREST AND TAXES
|
|
$
|
47
|
|
|
$
|
29
|
|
|
62
|
%
|
|
|
|
$
|
83
|
|
|
$
|
40
|
|
|
108
|
%
|
|
|
|
|
Three Months Ended November 30,
|
|
Six Months Ended November 30,
|
||||||||||||||||||||||||
(Dollars in millions)
|
|
2015
|
|
2014
|
|
% Change
|
|
% Change Excluding Currency Changes
|
|
2015
|
|
2014
|
|
% Change
|
|
% Change Excluding Currency Changes
|
||||||||||||
Revenues by:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Footwear
|
|
$
|
674
|
|
|
$
|
727
|
|
|
-7
|
%
|
|
12
|
%
|
|
$
|
1,344
|
|
|
$
|
1,355
|
|
|
-1
|
%
|
|
17
|
%
|
Apparel
|
|
255
|
|
|
280
|
|
|
-9
|
%
|
|
10
|
%
|
|
493
|
|
|
532
|
|
|
-7
|
%
|
|
10
|
%
|
||||
Equipment
|
|
55
|
|
|
68
|
|
|
-19
|
%
|
|
4
|
%
|
|
113
|
|
|
122
|
|
|
-7
|
%
|
|
13
|
%
|
||||
TOTAL REVENUES
|
|
$
|
984
|
|
|
$
|
1,075
|
|
|
-8
|
%
|
|
11
|
%
|
|
$
|
1,950
|
|
|
$
|
2,009
|
|
|
-3
|
%
|
|
15
|
%
|
Revenues by:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Sales to Wholesale Customers
|
|
$
|
825
|
|
|
$
|
914
|
|
|
-10
|
%
|
|
9
|
%
|
|
$
|
1,638
|
|
|
$
|
1,695
|
|
|
-3
|
%
|
|
14
|
%
|
Sales Direct to Consumer
|
|
159
|
|
|
161
|
|
|
-1
|
%
|
|
25
|
%
|
|
312
|
|
|
314
|
|
|
-1
|
%
|
|
23
|
%
|
||||
TOTAL REVENUES
|
|
$
|
984
|
|
|
$
|
1,075
|
|
|
-8
|
%
|
|
11
|
%
|
|
$
|
1,950
|
|
|
$
|
2,009
|
|
|
-3
|
%
|
|
15
|
%
|
EARNINGS BEFORE INTEREST AND TAXES
|
|
$
|
241
|
|
|
$
|
236
|
|
|
2
|
%
|
|
|
|
$
|
499
|
|
|
$
|
392
|
|
|
27
|
%
|
|
|
|
|
Three Months Ended November 30,
|
|
Six Months Ended November 30,
|
||||||||||||||||||||||||
(Dollars in millions)
|
|
2015
|
|
2014
|
|
% Change
|
|
% Change Excluding Currency Changes
|
|
2015
|
|
2014
|
|
% Change
|
|
% Change Excluding Currency Changes
|
||||||||||||
Revenues
|
|
$
|
18
|
|
|
$
|
27
|
|
|
-33
|
%
|
|
-26
|
%
|
|
$
|
44
|
|
|
$
|
56
|
|
|
-21
|
%
|
|
-11
|
%
|
(Loss) Before Interest and Taxes
|
|
$
|
(625
|
)
|
|
$
|
(554
|
)
|
|
13
|
%
|
|
|
|
$
|
(1,249
|
)
|
|
$
|
(1,088
|
)
|
|
15
|
%
|
|
|
|
|
Three Months Ended November 30,
|
|
Six Months Ended November 30,
|
||||||||||||||||||||||||
(Dollars in millions)
|
|
2015
|
|
2014
|
|
% Change
|
|
% Change Excluding Currency Changes
|
|
2015
|
|
2014
|
|
% Change
|
|
% Change Excluding Currency Changes
|
||||||||||||
Revenues
|
|
$
|
398
|
|
|
$
|
434
|
|
|
-8
|
%
|
|
-5
|
%
|
|
$
|
953
|
|
|
$
|
1,009
|
|
|
-6
|
%
|
|
-1
|
%
|
Earnings Before Interest and Taxes
|
|
$
|
85
|
|
|
$
|
88
|
|
|
-3
|
%
|
|
|
|
$
|
232
|
|
|
$
|
274
|
|
|
-15
|
%
|
|
|
|
|
Three Months Ended November 30,
|
|
Six Months Ended November 30,
|
||||||||||||||||||
(Dollars in millions)
|
|
2015
|
|
2014
|
|
% Change
|
|
2015
|
|
2014
|
|
% Change
|
||||||||||
Revenues
|
|
$
|
(29
|
)
|
|
$
|
(13
|
)
|
|
—
|
|
|
$
|
(68
|
)
|
|
$
|
(27
|
)
|
|
—
|
|
(Loss) Before Interest and Taxes
|
|
$
|
(365
|
)
|
|
$
|
(273
|
)
|
|
34
|
%
|
|
$
|
(688
|
)
|
|
$
|
(515
|
)
|
|
34
|
%
|
•
|
a change of $60 million for the second quarter and $102 million for the first six months of fiscal 2016 from net foreign currency gains to net foreign currency losses related to the difference between actual foreign currency exchange rates and standard foreign currency exchange rates assigned to the NIKE Brand geographic operating segments and Converse, net of hedge gains and losses; these losses are reported as a component of consolidated gross margin;
|
•
|
an increase of $38 million for the second quarter and $98 million for the first six months of fiscal 2016 in corporate overhead expense driven primarily by corporate initiatives to support the growth of the business and performance-based compensation; and
|
•
|
a beneficial change of $11 million for the second quarter and $42 million for the first six months of fiscal 2016 from net foreign currency losses to net foreign currency gains, from the re-measurement of monetary assets and liabilities denominated in non-functional currencies and the impact of certain foreign currency derivative instruments
,
reported as a component of consolidated
Other (income) expense, net
.
|
Foreign Currency Exposures and Hedging Practices
|
•
|
Product Costs — NIKE’s product costs are exposed to fluctuations in foreign currencies in the following ways:
|
1.
|
Product purchases denominated in currencies other than the functional currency of the transacting entity:
|
a.
|
Certain NIKE entities, including those supporting our North America, Greater China, Japan and European geographies, purchase product from the NTC, a wholly-owned sourcing hub that buys NIKE branded products from third-party factories, predominantly in U.S. Dollars. The NTC, whose functional currency is the U.S. Dollar, then sells the products to NIKE entities in their respective functional currencies. When the NTC sells to a NIKE entity with a different functional currency, the result is a foreign currency exposure for the NTC.
|
b.
|
Other NIKE entities purchase product directly from third-party factories in U.S. Dollars. These purchases generate a foreign currency exposure for those NIKE entities with a functional currency other than the U.S. Dollar.
|
2.
|
Factory input costs: NIKE operates a foreign currency adjustment program with certain factories. The program is designed to more effectively manage foreign currency risk by assuming certain of the factories’ foreign currency exposures, some of which are natural offsets to our existing foreign currency exposures. Under this program, our payments to these factories are adjusted for rate fluctuations in the basket of currencies (“factory currency exposure index”) in which the labor, materials and overhead costs incurred by the factories in the production of NIKE branded products (“factory input costs”) are denominated.
|
•
|
Non-Functional Currency Denominated External Sales — A portion of our Western Europe and Central & Eastern Europe geography revenues, as well as a portion of our Converse European operations revenues, are earned in currencies other than the Euro (e.g. the British Pound) but are recognized at a subsidiary that uses the Euro as its functional currency. These sales generate a foreign currency exposure.
|
•
|
Other Costs — Non-functional currency denominated costs, such as endorsement contracts, also generate foreign currency risk, though to a lesser extent. In certain cases, the Company has also entered into other contractual agreements, which have payments that are indexed to foreign currencies and create embedded derivative contracts that are recorded at fair value through
Other (income) expense, net
.
Refer to
Note 10 — Risk Management and Derivatives
in the accompanying Notes to the Unaudited Condensed Consolidated Financial Statements for additional detail.
|
•
|
Non-Functional Currency Denominated Monetary Assets and Liabilities — Our global subsidiaries have various assets and liabilities, primarily receivables and payables, including intercompany receivables and payables, denominated in currencies other than their functional currencies. These balance sheet items are subject to re-measurement which may create fluctuations in
Other (income) expense, net
within our consolidated results of operations.
|
Liquidity and Capital Resources
|
Description of Commitment
|
|
Cash Payments Due During the Year Ending May 31,
|
||||||||||||||||||||||||||
(In millions)
|
|
Remainder of 2016
|
|
2017
|
|
2018
|
|
2019
|
|
2020
|
|
Thereafter
|
|
Total
|
||||||||||||||
Endorsement Contracts
(1)
|
|
$
|
505
|
|
|
$
|
1,017
|
|
|
$
|
951
|
|
|
$
|
753
|
|
|
$
|
595
|
|
|
$
|
3,198
|
|
|
$
|
7,019
|
|
(1)
|
The amounts listed for endorsement contracts represent approximate amounts of base compensation and minimum guaranteed royalty fees we are obligated to pay athlete, sport team and league endorsers of our products. Actual payments under some contracts may be higher than the amounts listed as these contracts provide for bonuses to be paid to the endorsers based upon athletic achievements and/or royalties on product sales in future periods. Actual payments under some contracts may also be lower as these contracts include provisions for reduced payments if athletic performance declines in future periods.
|
Recently Issued Accounting Standards
|
Critical Accounting Policies
|
|
|
Expected Maturity Date
Year Ending May 31,
|
||||||||||||||||||||||||||||||
(Dollars in millions)
|
|
Remainder of 2016
|
|
2017
|
|
2018
|
|
2019
|
|
2020
|
|
Thereafter
|
|
Total
|
|
Fair Value
|
||||||||||||||||
Interest Rate Risk
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Long-term U.S. Dollar debt — Fixed rate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Principal payments
|
|
$
|
—
|
|
|
$
|
38
|
|
|
$
|
18
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,000
|
|
|
$
|
2,057
|
|
|
$
|
1,992
|
|
Average interest rate
|
|
6.4
|
%
|
|
6.2
|
%
|
|
6.8
|
%
|
|
0.0
|
%
|
|
0.0
|
%
|
|
3.4
|
%
|
|
3.5
|
%
|
|
|
|||||||||
Anticipated long-term U.S. Dollar debt issuance — Floating rate swapped to fixed rate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Notional
(1)
|
|
$
|
—
|
|
|
$
|
500
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
500
|
|
|
$
|
5
|
|
Weighted-average fixed rate
|
|
0.0
|
%
|
|
2.4
|
%
|
|
0.0
|
%
|
|
0.0
|
%
|
|
0.0
|
%
|
|
0.0
|
%
|
|
|
|
|
||||||||||
Weighted-average floating rate
|
|
0.0
|
%
|
|
0.4
|
%
|
|
0.0
|
%
|
|
0.0
|
%
|
|
0.0
|
%
|
|
0.0
|
%
|
|
|
|
|
Period
|
|
Total Number of Shares Purchased
|
|
Average Price Paid per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
(1)
|
|
Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs
(In millions)
|
||||||
September 1 — September 30, 2015
|
|
6,768,764
|
|
|
$
|
56.05
|
|
|
6,768,764
|
|
|
$
|
1,082
|
|
October 1 — October 31, 2015
|
|
1,739,392
|
|
|
$
|
61.71
|
|
|
1,739,392
|
|
|
$
|
975
|
|
November 1 — November 30, 2015
|
|
2,666,600
|
|
|
$
|
62.01
|
|
|
2,666,600
|
|
|
$
|
809
|
|
|
|
11,174,756
|
|
|
$
|
58.35
|
|
|
11,174,756
|
|
|
|
(1)
|
On September 19, 2012, we announced that our Board of Directors authorized the repurchase of
$8 billion
of our shares of Class B Common Stock under a four-year share repurchase program. We intend to use excess cash, future cash from operations and/or proceeds from debt to fund repurchases under the share repurchase program.
|
|
|
|
3.1†
|
|
Restated Articles of Incorporation, as amended.
|
3.2
|
|
Third Restated Bylaws, as amended (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed June 21, 2013).
|
4.1
|
|
Restated Articles of Incorporation, as amended (see Exhibit 3.1).
|
4.2
|
|
Third Restated Bylaws, as amended (see Exhibit 3.2).
|
10.1
|
|
Executive Performance Sharing Plan (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed September 23, 2015).
|
10.2
|
|
Stock Incentive Plan, as amended (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed September 23, 2015).
|
31.1†
|
|
Rule 13(a)-14(a) Certification of Chief Executive Officer.
|
31.2†
|
|
Rule 13(a)-14(a) Certification of Chief Financial Officer.
|
32.1†
|
|
Section 1350 Certificate of Chief Executive Officer.
|
32.2†
|
|
Section 1350 Certificate of Chief Financial Officer.
|
101.INS
|
|
XBRL Instance Document.
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document.
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document.
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
†
|
Furnished herewith
|
|
|
|
NIKE, Inc.
an Oregon Corporation
|
|
|
|
/S/ ANDREW CAMPION
|
|
Andrew Campion
Chief Financial Officer and Authorized Officer
|
|
|
|
3.1†
|
|
Restated Articles of Incorporation, as amended.
|
3.2
|
|
Third Restated Bylaws, as amended (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed June 21, 2013).
|
4.1
|
|
Restated Articles of Incorporation, as amended (see Exhibit 3.1).
|
4.2
|
|
Third Restated Bylaws, as amended (see Exhibit 3.2).
|
10.1
|
|
Executive Performance Sharing Plan (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed September 23, 2015).
|
10.2
|
|
Stock Incentive Plan, as amended (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed September 23, 2015).
|
31.1†
|
|
Rule 13(a)-14(a) Certification of Chief Executive Officer.
|
31.2†
|
|
Rule 13(a)-14(a) Certification of Chief Financial Officer.
|
32.1†
|
|
Section 1350 Certificate of Chief Executive Officer.
|
32.2†
|
|
Section 1350 Certificate of Chief Financial Officer.
|
101.INS
|
|
XBRL Instance Document.
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document.
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document.
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
†
|
Furnished herewith
|
Dated:
|
January 6, 2016
|
|
|
|
/s/ Mark G. Parker
|
|
|
Mark G. Parker
|
|
|
Chief Executive Officer
|
Dated:
|
January 6, 2016
|
|
|
|
/s/ Andrew Campion
|
|
|
Andrew Campion
Chief Financial Officer
|
Dated:
|
January 6, 2016
|
|
|
|
/s/ Mark G. Parker
|
|
|
Mark G. Parker
|
|
|
Chief Executive Officer
|
Dated:
|
January 6, 2016
|
|
|
|
/s/ Andrew Campion
|
|
|
Andrew Campion
Chief Financial Officer
|