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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☑
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Accelerated filer
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☐
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Smaller reporting company
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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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Emerging growth company
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☐
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Class A
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329,065,752
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Class B
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1,282,693,640
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1,611,759,392
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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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February 28,
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May 31,
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||||
(In millions)
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2018
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2017
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||||
ASSETS
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||||
Current assets:
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||||
Cash and equivalents
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$
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3,662
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|
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$
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3,808
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Short-term investments
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1,089
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2,371
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Accounts receivable, net
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3,792
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3,677
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Inventories
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5,366
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5,055
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Prepaid expenses and other current assets
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1,446
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1,150
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Total current assets
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15,355
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16,061
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Property, plant and equipment, net
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4,298
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3,989
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Identifiable intangible assets, net
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282
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283
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Goodwill
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139
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139
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Deferred income taxes and other assets
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2,478
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2,787
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TOTAL ASSETS
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$
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22,552
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$
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23,259
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LIABILITIES AND SHAREHOLDERS’ EQUITY
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||||
Current liabilities:
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||||
Current portion of long-term debt
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$
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6
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$
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6
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Notes payable
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11
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325
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||
Accounts payable
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1,961
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2,048
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Accrued liabilities
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3,727
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3,011
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Income taxes payable
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78
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84
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Total current liabilities
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5,783
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5,474
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Long-term debt
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3,469
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3,471
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Deferred income taxes and other liabilities
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3,518
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1,907
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Commitments and contingencies (Note 12)
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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 — 329 and 329 shares outstanding
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—
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—
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Class B — 1,290 and 1,314 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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9,325
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8,638
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Accumulated other comprehensive loss
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(624
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)
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(213
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)
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Retained earnings
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1,078
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3,979
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Total shareholders’ equity
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9,782
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12,407
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TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
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$
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22,552
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$
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23,259
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NIKE, Inc. Unaudited Condensed Consolidated Statements of Income
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Three Months Ended February 28,
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Nine Months Ended February 28,
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||||||||||||
(In millions, except per share data)
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2018
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2017
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2018
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2017
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Revenues
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$
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8,984
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$
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8,432
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$
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26,608
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$
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25,673
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Cost of sales
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5,046
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4,682
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15,030
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14,184
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Gross profit
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3,938
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3,750
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11,578
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11,489
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Demand creation expense
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862
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749
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2,594
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2,552
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Operating overhead expense
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1,905
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1,747
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5,797
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5,346
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Total selling and administrative expense
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2,767
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2,496
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8,391
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7,898
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Interest expense (income), net
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13
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19
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42
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41
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Other (income) expense, net
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(1
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)
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(88
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)
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35
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|
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(168
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)
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Income before income taxes
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1,159
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1,323
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3,110
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3,718
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Income tax expense
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2,080
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182
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2,314
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486
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NET (LOSS) INCOME
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$
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(921
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)
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$
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1,141
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$
|
796
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$
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3,232
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(Loss) earnings per common share:
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Basic
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$
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(0.57
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)
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$
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0.69
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$
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0.49
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$
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1.95
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Diluted
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$
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(0.57
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)
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$
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0.68
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$
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0.48
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$
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1.91
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Dividends declared per common share
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$
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0.20
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$
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0.18
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$
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0.58
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$
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0.52
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NIKE, Inc. Unaudited Condensed Consolidated Statements of Comprehensive Income
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Three Months Ended February 28,
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Nine Months Ended February 28,
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(In millions)
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2018
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2017
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2018
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2017
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Net (loss) income
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$
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(921
|
)
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$
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1,141
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$
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796
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$
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3,232
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Other comprehensive (loss) income, net of tax:
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Change in net foreign currency translation adjustment
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51
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12
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65
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1
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||||
Change in net gains (losses) on cash flow hedges
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(107
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)
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(175
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)
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(494
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)
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(92
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)
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||||
Change in net gains (losses) on other
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2
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(7
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)
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1
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2
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Total other comprehensive (loss) income, net of tax
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(54
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)
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(170
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)
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(428
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)
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(89
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)
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||||
TOTAL COMPREHENSIVE (LOSS) INCOME
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$
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(975
|
)
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$
|
971
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$
|
368
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$
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3,143
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NIKE, Inc. Unaudited Condensed Consolidated Statements of Cash Flows
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Nine Months Ended February 28,
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(In millions)
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2018
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2017
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||||
Cash provided by operations:
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Net income
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$
|
796
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$
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3,232
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Income charges (credits) not affecting cash:
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Depreciation
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551
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521
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Deferred income taxes
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564
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(199
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)
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Stock-based compensation
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158
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|
|
162
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Amortization and other
|
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23
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|
|
7
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Net foreign currency adjustments
|
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(130
|
)
|
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(90
|
)
|
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Changes in certain working capital components and other assets and liabilities:
|
|
|
|
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||||
Decrease (increase) in accounts receivable
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3
|
|
|
(546
|
)
|
||
(Increase) in inventories
|
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(245
|
)
|
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(157
|
)
|
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(Increase) in prepaid expenses and other current and non-current assets
|
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(474
|
)
|
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(152
|
)
|
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Increase in accounts payable, accrued liabilities and other current and non-current liabilities
|
|
1,439
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|
|
106
|
|
||
Cash provided by operations
|
|
2,685
|
|
|
2,884
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Cash provided (used) by investing activities:
|
|
|
|
|
||||
Purchases of short-term investments
|
|
(3,644
|
)
|
|
(4,029
|
)
|
||
Maturities of short-term investments
|
|
3,101
|
|
|
2,433
|
|
||
Sales of short-term investments
|
|
1,797
|
|
|
1,905
|
|
||
Additions to property, plant and equipment
|
|
(728
|
)
|
|
(776
|
)
|
||
Disposals of property, plant and equipment
|
|
—
|
|
|
13
|
|
||
Other investing activities
|
|
—
|
|
|
(34
|
)
|
||
Cash provided (used) by investing activities
|
|
526
|
|
|
(488
|
)
|
||
Cash used by financing activities:
|
|
|
|
|
||||
Net proceeds from long-term debt issuance
|
|
—
|
|
|
1,482
|
|
||
Long-term debt payments, including current portion
|
|
(4
|
)
|
|
(43
|
)
|
||
(Decrease) increase in notes payable
|
|
(314
|
)
|
|
24
|
|
||
Payments on capital lease and other financing obligations
|
|
(16
|
)
|
|
(14
|
)
|
||
Proceeds from exercise of stock options and other stock issuances
|
|
554
|
|
|
339
|
|
||
Repurchase of common stock
|
|
(2,694
|
)
|
|
(2,429
|
)
|
||
Dividends — common and preferred
|
|
(920
|
)
|
|
(834
|
)
|
||
Tax payments for net share settlement of equity awards
|
|
(54
|
)
|
|
(8
|
)
|
||
Cash used by financing activities
|
|
(3,448
|
)
|
|
(1,483
|
)
|
||
Effect of exchange rate changes on cash and equivalents
|
|
91
|
|
|
(30
|
)
|
||
Net (decrease) increase in cash and equivalents
|
|
(146
|
)
|
|
883
|
|
||
Cash and equivalents, beginning of period
|
|
3,808
|
|
|
3,138
|
|
||
CASH AND EQUIVALENTS, END OF PERIOD
|
|
$
|
3,662
|
|
|
$
|
4,021
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
||||
Non-cash additions to property, plant and equipment
|
|
$
|
190
|
|
|
$
|
248
|
|
Dividends declared and not paid
|
|
324
|
|
|
303
|
|
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 1 — Summary of Significant Accounting Policies
|
Note 2 — Inventories
|
Note 3 — Accrued Liabilities
|
|
|
As of February 28,
|
|
As of May 31,
|
||||
(In millions)
|
|
2018
|
|
2017
|
||||
Compensation and benefits, excluding taxes
|
|
$
|
886
|
|
|
$
|
871
|
|
Fair value of derivatives
|
|
539
|
|
|
168
|
|
||
Endorsement compensation
|
|
354
|
|
|
396
|
|
||
Dividends payable
|
|
324
|
|
|
300
|
|
||
Import and logistics costs
|
|
293
|
|
|
257
|
|
||
Taxes other than income taxes payable
|
|
244
|
|
|
196
|
|
||
Advertising and marketing
|
|
182
|
|
|
125
|
|
||
Other
(1)
|
|
905
|
|
|
698
|
|
||
TOTAL ACCRUED LIABILITIES
|
|
$
|
3,727
|
|
|
$
|
3,011
|
|
(1)
|
Other consists of various accrued expenses with no individual item accounting for more than
5%
of the total Accrued liabilities balance at
February 28, 2018
and
May 31, 2017
.
|
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 or similar 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 February 28, 2018
|
||||||||||||||
(In millions)
|
|
Assets at Fair Value
|
|
Cash and Equivalents
|
|
Short-term Investments
|
|
Other Long-term Assets
|
||||||||
Cash
|
|
$
|
620
|
|
|
$
|
620
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Level 1:
|
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury securities
|
|
865
|
|
|
150
|
|
|
715
|
|
|
—
|
|
||||
Level 2:
|
|
|
|
|
|
|
|
|
||||||||
Time deposits
|
|
773
|
|
|
769
|
|
|
4
|
|
|
—
|
|
||||
U.S. Agency securities
|
|
45
|
|
|
—
|
|
|
45
|
|
|
—
|
|
||||
Commercial paper and bonds
|
|
477
|
|
|
152
|
|
|
325
|
|
|
—
|
|
||||
Money market funds
|
|
1,971
|
|
|
1,971
|
|
|
—
|
|
|
—
|
|
||||
Total Level 2:
|
|
3,266
|
|
|
2,892
|
|
|
374
|
|
|
—
|
|
||||
Level 3:
|
|
|
|
|
|
|
|
|
||||||||
Non-marketable preferred stock
|
|
11
|
|
|
—
|
|
|
—
|
|
|
11
|
|
||||
TOTAL
|
|
$
|
4,762
|
|
|
$
|
3,662
|
|
|
$
|
1,089
|
|
|
$
|
11
|
|
|
|
As of May 31, 2017
|
||||||||||||||
(In millions)
|
|
Assets at Fair Value
|
|
Cash and Equivalents
|
|
Short-term Investments
|
|
Other Long-term Assets
|
||||||||
Cash
|
|
$
|
505
|
|
|
$
|
505
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Level 1:
|
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury securities
|
|
1,545
|
|
|
159
|
|
|
1,386
|
|
|
—
|
|
||||
Level 2:
|
|
|
|
|
|
|
|
|
||||||||
Time deposits
|
|
813
|
|
|
769
|
|
|
44
|
|
|
—
|
|
||||
U.S. Agency securities
|
|
522
|
|
|
150
|
|
|
372
|
|
|
—
|
|
||||
Commercial paper and bonds
|
|
820
|
|
|
251
|
|
|
569
|
|
|
—
|
|
||||
Money market funds
|
|
1,974
|
|
|
1,974
|
|
|
—
|
|
|
—
|
|
||||
Total Level 2:
|
|
4,129
|
|
|
3,144
|
|
|
985
|
|
|
—
|
|
||||
Level 3:
|
|
|
|
|
|
|
|
|
||||||||
Non-marketable preferred stock
|
|
10
|
|
|
—
|
|
|
—
|
|
|
10
|
|
||||
TOTAL
|
|
$
|
6,189
|
|
|
$
|
3,808
|
|
|
$
|
2,371
|
|
|
$
|
10
|
|
|
|
As of February 28, 2018
|
||||||||||||||||||||||
|
|
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)
|
|
$
|
83
|
|
|
$
|
65
|
|
|
$
|
18
|
|
|
$
|
648
|
|
|
$
|
536
|
|
|
$
|
112
|
|
Embedded derivatives
|
|
13
|
|
|
2
|
|
|
11
|
|
|
8
|
|
|
3
|
|
|
5
|
|
||||||
TOTAL
|
|
$
|
96
|
|
|
$
|
67
|
|
|
$
|
29
|
|
|
$
|
656
|
|
|
$
|
539
|
|
|
$
|
117
|
|
(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
$83 million
as of
February 28, 2018
. As of that date, the Company had posted
$354 million
of cash collateral to various counterparties related to foreign exchange derivative instruments.
No
amount of collateral was received on the Company
’
s derivative asset balance as of
February 28, 2018
.
|
|
|
As of May 31, 2017
|
||||||||||||||||||||||
|
|
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)
|
|
$
|
231
|
|
|
$
|
216
|
|
|
$
|
15
|
|
|
$
|
246
|
|
|
$
|
166
|
|
|
$
|
80
|
|
Embedded derivatives
|
|
10
|
|
|
1
|
|
|
9
|
|
|
8
|
|
|
2
|
|
|
6
|
|
||||||
TOTAL
|
|
$
|
241
|
|
|
$
|
217
|
|
|
$
|
24
|
|
|
$
|
254
|
|
|
$
|
168
|
|
|
$
|
86
|
|
(1)
|
If the foreign exchange derivative instruments had been netted on the Condensed Consolidated Balance Sheets, the asset and liability positions each would have been reduced by
$187 million
as of
May 31, 2017
. As of that date,
no
amount of cash collateral had been received or posted on the derivative asset and liability balances related to foreign exchange derivative instruments.
|
Note 5 — Short-Term Borrowings and Credit Lines
|
Note 6 — Income Taxes
|
Note 7 — Common Stock and Stock-Based Compensation
|
|
|
Three Months Ended February 28,
|
|
Nine Months Ended February 28,
|
||||||||||||
(In millions)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Stock options
(1)
|
|
$
|
38
|
|
|
$
|
35
|
|
|
$
|
110
|
|
|
$
|
110
|
|
ESPPs
|
|
7
|
|
|
7
|
|
|
24
|
|
|
27
|
|
||||
Restricted stock
|
|
10
|
|
|
9
|
|
|
24
|
|
|
25
|
|
||||
TOTAL STOCK-BASED COMPENSATION EXPENSE
|
|
$
|
55
|
|
|
$
|
51
|
|
|
$
|
158
|
|
|
$
|
162
|
|
(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
$6 million
and
$3 million
for the
three months ended February 28, 2018
and
2017
, respectively, and
$14 million
and
$11 million
for the
nine months ended February 28, 2018
and
2017
, respectively.
|
|
|
Nine Months Ended February 28,
|
||||
|
|
2018
|
|
2017
|
||
Dividend yield
|
|
1.2
|
%
|
|
1.1
|
%
|
Expected volatility
|
|
16.4
|
%
|
|
17.4
|
%
|
Weighted average expected life (in years)
|
|
6.0
|
|
|
6.0
|
|
Risk-free interest rate
|
|
2.0
|
%
|
|
1.3
|
%
|
Note 8 — Earnings Per Share
|
|
|
Three Months Ended February 28,
|
|
Nine Months Ended February 28,
|
||||||||||||
(In millions, except per share data)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Determination of shares:
|
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding
|
|
1,623.5
|
|
|
1,653.1
|
|
|
1,629.9
|
|
|
1,661.5
|
|
||||
Assumed conversion of dilutive stock options and awards
|
|
—
|
|
|
33.2
|
|
|
35.8
|
|
|
34.9
|
|
||||
DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
|
|
1,623.5
|
|
|
1,686.3
|
|
|
1,665.7
|
|
|
1,696.4
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
(Loss) earnings per common share:
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
$
|
(0.57
|
)
|
|
$
|
0.69
|
|
|
$
|
0.49
|
|
|
$
|
1.95
|
|
Diluted
|
|
$
|
(0.57
|
)
|
|
$
|
0.68
|
|
|
$
|
0.48
|
|
|
$
|
1.91
|
|
Note 9 — Risk Management and Derivatives
|
|
|
Derivative Assets
|
|
Derivative Liabilities
|
||||||||||||||||
(In millions)
|
|
Balance Sheet
Location
|
|
February 28,
2018 |
|
May 31,
2017 |
|
Balance Sheet
Location
|
|
February 28,
2018 |
|
May 31,
2017 |
||||||||
Derivatives formally designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign exchange forwards and options
|
|
Prepaid expenses and other current assets
|
|
$
|
42
|
|
|
$
|
113
|
|
|
Accrued liabilities
|
|
$
|
403
|
|
|
$
|
59
|
|
Foreign exchange forwards and options
|
|
Deferred income taxes and other assets
|
|
18
|
|
|
13
|
|
|
Deferred income taxes and other liabilities
|
|
112
|
|
|
73
|
|
||||
Total derivatives formally designated as hedging instruments
|
|
|
|
60
|
|
|
126
|
|
|
|
|
515
|
|
|
132
|
|
||||
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign exchange forwards and options
|
|
Prepaid expenses and other current assets
|
|
23
|
|
|
103
|
|
|
Accrued liabilities
|
|
133
|
|
|
107
|
|
||||
Embedded derivatives
|
|
Prepaid expenses and other current assets
|
|
2
|
|
|
1
|
|
|
Accrued liabilities
|
|
3
|
|
|
2
|
|
||||
Foreign exchange forwards and options
|
|
Deferred income taxes and other assets
|
|
—
|
|
|
2
|
|
|
Deferred income taxes and other liabilities
|
|
—
|
|
|
7
|
|
||||
Embedded derivatives
|
|
Deferred income taxes and other assets
|
|
11
|
|
|
9
|
|
|
Deferred income taxes and other liabilities
|
|
5
|
|
|
6
|
|
||||
Total derivatives not designated as hedging instruments
|
|
|
|
36
|
|
|
115
|
|
|
|
|
141
|
|
|
122
|
|
||||
TOTAL DERIVATIVES
|
|
|
|
$
|
96
|
|
|
$
|
241
|
|
|
|
|
$
|
656
|
|
|
$
|
254
|
|
(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 February 28,
|
|
Location of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Income
|
|
Three Months Ended February 28,
|
|||||||||||||
2018
|
|
2017
|
|
|
2018
|
|
2017
|
||||||||||
Derivatives designated as cash flow hedges:
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign exchange forwards and options
|
$
|
7
|
|
|
$
|
5
|
|
|
Revenues
|
|
$
|
9
|
|
|
$
|
24
|
|
Foreign exchange forwards and options
|
(118
|
)
|
|
(5
|
)
|
|
Cost of sales
|
|
(41
|
)
|
|
87
|
|
||||
Foreign exchange forwards and options
|
—
|
|
|
(3
|
)
|
|
Total selling and administrative expense
|
|
—
|
|
|
—
|
|
||||
Foreign exchange forwards and options
|
(47
|
)
|
|
4
|
|
|
Other (income) expense, net
|
|
(15
|
)
|
|
67
|
|
||||
Interest rate swaps
(2)
|
—
|
|
|
—
|
|
|
Interest expense (income), net
|
|
(1
|
)
|
|
(2
|
)
|
||||
Total designated cash flow hedges
|
$
|
(158
|
)
|
|
$
|
1
|
|
|
|
|
$
|
(48
|
)
|
|
$
|
176
|
|
(1)
|
For the
three months ended February 28, 2018
and
2017
, 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)
|
Gains and losses associated with terminated interest rate swaps, which were previously designated as cash flow hedges and recorded in
Accumulated other comprehensive income
, will be released through
Interest expense (income), net
over the term of the issued debt.
|
(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)
|
||||||||||||||
Nine Months Ended February 28,
|
|
Location of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Income
|
|
Nine Months Ended February 28,
|
|||||||||||||
2018
|
|
2017
|
|
|
2018
|
|
2017
|
||||||||||
Derivatives designated as cash flow hedges:
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign exchange forwards and options
|
$
|
26
|
|
|
$
|
45
|
|
|
Revenues
|
|
$
|
24
|
|
|
$
|
96
|
|
Foreign exchange forwards and options
|
(382
|
)
|
|
244
|
|
|
Cost of sales
|
|
(17
|
)
|
|
260
|
|
||||
Foreign exchange forwards and options
|
1
|
|
|
(1
|
)
|
|
Total selling and administrative expense
|
|
—
|
|
|
—
|
|
||||
Foreign exchange forwards and options
|
(169
|
)
|
|
149
|
|
|
Other (income) expense, net
|
|
(33
|
)
|
|
141
|
|
||||
Interest rate swaps
(2)
|
—
|
|
|
(54
|
)
|
|
Interest expense (income), net
|
|
(5
|
)
|
|
(2
|
)
|
||||
Total designated cash flow hedges
|
$
|
(524
|
)
|
|
$
|
383
|
|
|
|
|
$
|
(31
|
)
|
|
$
|
495
|
|
(1)
|
For the
nine months ended February 28, 2018
and
2017
, 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)
|
Gains and losses associated with terminated interest rate swaps, which were previously designated as cash flow hedges and recorded in
Accumulated other comprehensive income
, will be released through
Interest expense (income), net
over the term of the issued debt.
|
|
|
Amount of Gain (Loss) Recognized in Income on Derivatives
|
|
Location of Gain (Loss)
Recognized in Income on Derivatives
|
||||||||||||||
|
|
Three Months Ended February 28,
|
|
Nine Months Ended February 28,
|
|
|||||||||||||
(In millions)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|||||||||
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign exchange forwards and options
|
|
$
|
(101
|
)
|
|
$
|
(66
|
)
|
|
$
|
(270
|
)
|
|
$
|
101
|
|
|
Other (income) expense, net
|
Embedded derivatives
|
|
1
|
|
|
(1
|
)
|
|
(3
|
)
|
|
(2
|
)
|
|
Other (income) expense, net
|
Note 10 — Accumulated Other Comprehensive Income
|
(In millions)
|
|
Foreign Currency Translation Adjustment
(1)
|
|
Cash Flow Hedges
|
|
Net Investment Hedges
(1)
|
|
Other
|
|
Total
|
||||||||||
Balance at November 30, 2017
|
|
$
|
(177
|
)
|
|
$
|
(439
|
)
|
|
$
|
115
|
|
|
$
|
(86
|
)
|
|
$
|
(587
|
)
|
Other comprehensive (loss) income:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Other comprehensive gains (losses) before reclassifications
(2)
|
|
51
|
|
|
(156
|
)
|
|
—
|
|
|
(15
|
)
|
|
(120
|
)
|
|||||
Reclassifications to net income of previously deferred (gains) losses
(3)
|
|
—
|
|
|
49
|
|
|
—
|
|
|
17
|
|
|
66
|
|
|||||
Total other comprehensive (loss) income
|
|
51
|
|
|
(107
|
)
|
|
—
|
|
|
2
|
|
|
(54
|
)
|
|||||
Reclassifications to retained earnings in accordance with ASU 2018-02
(4)
|
|
24
|
|
|
(7
|
)
|
|
—
|
|
|
—
|
|
|
17
|
|
|||||
Balance at February 28, 2018
|
|
$
|
(102
|
)
|
|
$
|
(553
|
)
|
|
$
|
115
|
|
|
$
|
(84
|
)
|
|
$
|
(624
|
)
|
(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)
|
Net of tax benefit (expense) of
$0 million
,
$2 million
,
$0 million
,
$0 million
and
$2 million
, respectively.
|
(3)
|
Net of tax (benefit) expense of
$0 million
,
$1 million
,
$0 million
,
$1 million
and
$2 million
, respectively.
|
(4)
|
Refer to
Note 1 — Summary of Significant Accounting Policies
f
or additional information on the adoption of ASU 2018-02 during the third quarter of fiscal 2018.
|
(In millions)
|
|
Foreign Currency Translation Adjustment
(1)
|
|
Cash Flow Hedges
|
|
Net Investment Hedges
(1)
|
|
Other
|
|
Total
|
||||||||||
Balance at May 31, 2017
|
|
$
|
(191
|
)
|
|
$
|
(52
|
)
|
|
$
|
115
|
|
|
$
|
(85
|
)
|
|
$
|
(213
|
)
|
Other comprehensive (loss) income:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Other comprehensive gains (losses) before reclassifications
(2)
|
|
65
|
|
|
(523
|
)
|
|
—
|
|
|
(35
|
)
|
|
(493
|
)
|
|||||
Reclassifications to net income of previously deferred (gains) losses
(3)
|
|
—
|
|
|
29
|
|
|
—
|
|
|
36
|
|
|
65
|
|
|||||
Total other comprehensive (loss) income
|
|
65
|
|
|
(494
|
)
|
|
—
|
|
|
1
|
|
|
(428
|
)
|
|||||
Reclassifications to retained earnings in accordance with ASU 2018-02
(4)
|
|
24
|
|
|
(7
|
)
|
|
—
|
|
|
—
|
|
|
17
|
|
|||||
Balance at February 28, 2018
|
|
$
|
(102
|
)
|
|
$
|
(553
|
)
|
|
$
|
115
|
|
|
$
|
(84
|
)
|
|
$
|
(624
|
)
|
(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)
|
Net of tax benefit (expense) of
$(23) million
,
$1 million
,
$0 million
,
$0 million
and
$(22) million
, respectively.
|
(3)
|
Net of tax (benefit) expense of
$0 million
,
$(2) million
,
$0 million
,
$1 million
and
$(1) million
, respectively.
|
(4)
|
Refer to
Note 1 — Summary of Significant Accounting Policies
for additional information on the adoption of ASU 2018-02 during the third quarter of fiscal 2018.
|
(In millions)
|
|
Foreign Currency Translation Adjustment
(1)
|
|
Cash Flow Hedges
|
|
Net Investment Hedges
(1)
|
|
Other
|
|
Total
|
||||||||||
Balance at November 30, 2016
|
|
$
|
(218
|
)
|
|
$
|
546
|
|
|
$
|
115
|
|
|
$
|
(44
|
)
|
|
$
|
399
|
|
Other comprehensive (loss) income:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Other comprehensive gains (losses) before reclassifications
(2)
|
|
13
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
15
|
|
|||||
Reclassifications to net income of previously deferred (gains) losses
(3)
|
|
(1
|
)
|
|
(177
|
)
|
|
—
|
|
|
(7
|
)
|
|
(185
|
)
|
|||||
Total other comprehensive (loss) income
|
|
12
|
|
|
(175
|
)
|
|
—
|
|
|
(7
|
)
|
|
(170
|
)
|
|||||
Balance at February 28, 2017
|
|
$
|
(206
|
)
|
|
$
|
371
|
|
|
$
|
115
|
|
|
$
|
(51
|
)
|
|
$
|
229
|
|
(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)
|
Net of tax benefit (expense) of $
0 million
, $
1 million
, $
0 million
, $
(1) million
and $
0 million
, respectively.
|
(3)
|
Net of tax (benefit) expense of $
0 million
, $
(1) million
, $
0 million
, $
2 million
and $
1 million
, respectively.
|
(In millions)
|
|
Foreign Currency Translation Adjustment
(1)
|
|
Cash Flow Hedges
|
|
Net Investment Hedges
(1)
|
|
Other
|
|
Total
|
||||||||||
Balance at May 31, 2016
|
|
$
|
(207
|
)
|
|
$
|
463
|
|
|
$
|
115
|
|
|
$
|
(53
|
)
|
|
$
|
318
|
|
Other comprehensive (loss) income:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Other comprehensive gains (losses) before reclassifications
(2)
|
|
2
|
|
|
406
|
|
|
—
|
|
|
18
|
|
|
426
|
|
|||||
Reclassifications to net income of previously deferred (gains) losses
(3)
|
|
(1
|
)
|
|
(498
|
)
|
|
—
|
|
|
(16
|
)
|
|
(515
|
)
|
|||||
Total other comprehensive (loss) income
|
|
1
|
|
|
(92
|
)
|
|
—
|
|
|
2
|
|
|
(89
|
)
|
|||||
Balance at February 28, 2017
|
|
$
|
(206
|
)
|
|
$
|
371
|
|
|
$
|
115
|
|
|
$
|
(51
|
)
|
|
$
|
229
|
|
(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)
|
Net of tax benefit (expense) of $
0 million
, $
23 million
, $
0 million
, $
0 million
and $
23 million
, respectively.
|
(3)
|
Net of tax (benefit) expense of $
0 million
, $
(3) million
, $
0 million
, $
1 million
and $
(2) 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 February 28,
|
|
Nine Months Ended February 28,
|
|
|||||||||||||
(In millions)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|||||||||
Gains (losses) on foreign currency translation adjustment
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
Other (income) expense, net
|
Total before tax
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|
|
||||
Tax (expense) benefit
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
||||
Gain (loss) net of tax
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|
|
||||
Gains (losses) on cash flow hedges:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign exchange forwards and options
|
|
$
|
9
|
|
|
$
|
24
|
|
|
$
|
24
|
|
|
$
|
96
|
|
|
Revenues
|
Foreign exchange forwards and options
|
|
(41
|
)
|
|
87
|
|
|
(17
|
)
|
|
260
|
|
|
Cost of sales
|
||||
Foreign exchange forwards and options
|
|
(15
|
)
|
|
67
|
|
|
(33
|
)
|
|
141
|
|
|
Other (income) expense, net
|
||||
Interest rate swaps
|
|
(1
|
)
|
|
(2
|
)
|
|
(5
|
)
|
|
(2
|
)
|
|
Interest expense (income), net
|
||||
Total before tax
|
|
(48
|
)
|
|
176
|
|
|
(31
|
)
|
|
495
|
|
|
|
||||
Tax (expense) benefit
|
|
(1
|
)
|
|
1
|
|
|
2
|
|
|
3
|
|
|
|
||||
Gain (loss) net of tax
|
|
(49
|
)
|
|
177
|
|
|
(29
|
)
|
|
498
|
|
|
|
||||
Gains (losses) on other
|
|
(16
|
)
|
|
9
|
|
|
(35
|
)
|
|
17
|
|
|
Other (income) expense, net
|
||||
Total before tax
|
|
(16
|
)
|
|
9
|
|
|
(35
|
)
|
|
17
|
|
|
|
||||
Tax (expense) benefit
|
|
(1
|
)
|
|
(2
|
)
|
|
(1
|
)
|
|
(1
|
)
|
|
|
||||
Gain (loss) net of tax
|
|
(17
|
)
|
|
7
|
|
|
(36
|
)
|
|
16
|
|
|
|
||||
Total net gain (loss) reclassified for the period
|
|
$
|
(66
|
)
|
|
$
|
185
|
|
|
$
|
(65
|
)
|
|
$
|
515
|
|
|
|
Note 11 — Operating Segments
|
|
|
Three Months Ended February 28,
|
|
Nine Months Ended February 28,
|
||||||||||||
(In millions)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
REVENUES
|
|
|
|
|
|
|
|
|
||||||||
North America
|
|
$
|
3,571
|
|
|
$
|
3,782
|
|
|
$
|
10,980
|
|
|
$
|
11,463
|
|
Europe, Middle East & Africa
|
|
2,299
|
|
|
1,925
|
|
|
6,776
|
|
|
5,979
|
|
||||
Greater China
|
|
1,336
|
|
|
1,075
|
|
|
3,666
|
|
|
3,150
|
|
||||
Asia Pacific & Latin America
|
|
1,268
|
|
|
1,122
|
|
|
3,730
|
|
|
3,459
|
|
||||
Global Brand Divisions
|
|
21
|
|
|
19
|
|
|
64
|
|
|
55
|
|
||||
Total NIKE Brand
|
|
8,495
|
|
|
7,923
|
|
|
25,216
|
|
|
24,106
|
|
||||
Converse
|
|
483
|
|
|
498
|
|
|
1,374
|
|
|
1,488
|
|
||||
Corporate
|
|
6
|
|
|
11
|
|
|
18
|
|
|
79
|
|
||||
TOTAL NIKE, INC. REVENUES
|
|
$
|
8,984
|
|
|
$
|
8,432
|
|
|
$
|
26,608
|
|
|
$
|
25,673
|
|
EARNINGS BEFORE INTEREST AND TAXES
|
|
|
|
|
|
|
|
|
||||||||
North America
|
|
$
|
840
|
|
|
$
|
980
|
|
|
$
|
2,625
|
|
|
$
|
2,896
|
|
Europe, Middle East & Africa
|
|
417
|
|
|
361
|
|
|
1,205
|
|
|
1,159
|
|
||||
Greater China
|
|
496
|
|
|
381
|
|
|
1,268
|
|
|
1,127
|
|
||||
Asia Pacific & Latin America
|
|
298
|
|
|
228
|
|
|
849
|
|
|
703
|
|
||||
Global Brand Divisions
|
|
(649
|
)
|
|
(598
|
)
|
|
(1,926
|
)
|
|
(1,988
|
)
|
||||
Total NIKE Brand
|
|
1,402
|
|
|
1,352
|
|
|
4,021
|
|
|
3,897
|
|
||||
Converse
|
|
69
|
|
|
109
|
|
|
206
|
|
|
340
|
|
||||
Corporate
|
|
(299
|
)
|
|
(119
|
)
|
|
(1,075
|
)
|
|
(478
|
)
|
||||
Total NIKE, Inc. Earnings Before Interest and Taxes
|
|
1,172
|
|
|
1,342
|
|
|
3,152
|
|
|
3,759
|
|
||||
Interest expense (income), net
|
|
13
|
|
|
19
|
|
|
42
|
|
|
41
|
|
||||
TOTAL NIKE, INC. INCOME BEFORE INCOME TAXES
|
|
$
|
1,159
|
|
|
$
|
1,323
|
|
|
$
|
3,110
|
|
|
$
|
3,718
|
|
|
|
As of February 28,
|
|
As of May 31,
|
||||
(In millions)
|
|
2018
|
|
2017
|
||||
ACCOUNTS RECEIVABLE, NET
|
|
|
|
|
||||
North America
|
|
$
|
1,594
|
|
|
$
|
1,798
|
|
Europe, Middle East & Africa
|
|
929
|
|
|
690
|
|
||
Greater China
|
|
136
|
|
|
102
|
|
||
Asia Pacific & Latin America
|
|
734
|
|
|
693
|
|
||
Global Brand Divisions
|
|
101
|
|
|
86
|
|
||
Total NIKE Brand
|
|
3,494
|
|
|
3,369
|
|
||
Converse
|
|
274
|
|
|
297
|
|
||
Corporate
|
|
24
|
|
|
11
|
|
||
TOTAL ACCOUNTS RECEIVABLE, NET
|
|
$
|
3,792
|
|
|
$
|
3,677
|
|
INVENTORIES
|
|
|
|
|
||||
North America
|
|
$
|
2,242
|
|
|
$
|
2,218
|
|
Europe, Middle East & Africa
|
|
1,457
|
|
|
1,327
|
|
||
Greater China
|
|
613
|
|
|
463
|
|
||
Asia Pacific & Latin America
|
|
787
|
|
|
694
|
|
||
Global Brand Divisions
|
|
97
|
|
|
68
|
|
||
Total NIKE Brand
|
|
5,196
|
|
|
4,770
|
|
||
Converse
|
|
277
|
|
|
286
|
|
||
Corporate
|
|
(107
|
)
|
|
(1
|
)
|
||
TOTAL INVENTORIES
|
|
$
|
5,366
|
|
|
$
|
5,055
|
|
PROPERTY, PLANT AND EQUIPMENT, NET
|
|
|
|
|
||||
North America
|
|
$
|
833
|
|
|
$
|
819
|
|
Europe, Middle East & Africa
|
|
794
|
|
|
709
|
|
||
Greater China
|
|
253
|
|
|
225
|
|
||
Asia Pacific & Latin America
|
|
350
|
|
|
340
|
|
||
Global Brand Divisions
|
|
556
|
|
|
533
|
|
||
Total NIKE Brand
|
|
2,786
|
|
|
2,626
|
|
||
Converse
|
|
118
|
|
|
125
|
|
||
Corporate
|
|
1,394
|
|
|
1,238
|
|
||
TOTAL PROPERTY, PLANT AND EQUIPMENT, NET
|
|
$
|
4,298
|
|
|
$
|
3,989
|
|
Note 12 — Commitments and Contingencies
|
Results of Operations
|
|
|
Three Months Ended February 28,
|
|
Nine Months Ended February 28,
|
||||||||||||||||||
(Dollars in millions, except per share data)
|
|
2018
|
|
2017
|
|
% Change
|
|
2018
|
|
2017
|
|
% Change
|
||||||||||
Revenues
|
|
$
|
8,984
|
|
|
$
|
8,432
|
|
|
7
|
%
|
|
$
|
26,608
|
|
|
$
|
25,673
|
|
|
4
|
%
|
Cost of sales
|
|
5,046
|
|
|
4,682
|
|
|
8
|
%
|
|
15,030
|
|
|
14,184
|
|
|
6
|
%
|
||||
Gross profit
|
|
3,938
|
|
|
3,750
|
|
|
5
|
%
|
|
11,578
|
|
|
11,489
|
|
|
1
|
%
|
||||
Gross margin
|
|
43.8
|
%
|
|
44.5
|
%
|
|
|
|
43.5
|
%
|
|
44.8
|
%
|
|
|
||||||
Demand creation expense
|
|
862
|
|
|
749
|
|
|
15
|
%
|
|
2,594
|
|
|
2,552
|
|
|
2
|
%
|
||||
Operating overhead expense
|
|
1,905
|
|
|
1,747
|
|
|
9
|
%
|
|
5,797
|
|
|
5,346
|
|
|
8
|
%
|
||||
Total selling and administrative expense
|
|
2,767
|
|
|
2,496
|
|
|
11
|
%
|
|
8,391
|
|
|
7,898
|
|
|
6
|
%
|
||||
% of revenues
|
|
30.8
|
%
|
|
29.6
|
%
|
|
|
|
31.5
|
%
|
|
30.8
|
%
|
|
|
||||||
Interest expense (income), net
|
|
13
|
|
|
19
|
|
|
—
|
|
|
42
|
|
|
41
|
|
|
—
|
|
||||
Other (income) expense, net
|
|
(1
|
)
|
|
(88
|
)
|
|
—
|
|
|
35
|
|
|
(168
|
)
|
|
—
|
|
||||
Income before income taxes
|
|
1,159
|
|
|
1,323
|
|
|
-12
|
%
|
|
3,110
|
|
|
3,718
|
|
|
-16
|
%
|
||||
Income tax expense
|
|
2,080
|
|
|
182
|
|
|
1,043
|
%
|
|
2,314
|
|
|
486
|
|
|
376
|
%
|
||||
Effective tax rate
|
|
179.5
|
%
|
|
13.8
|
%
|
|
|
|
74.4
|
%
|
|
13.1
|
%
|
|
|
||||||
NET (LOSS) INCOME
|
|
$
|
(921
|
)
|
|
$
|
1,141
|
|
|
-181
|
%
|
|
$
|
796
|
|
|
$
|
3,232
|
|
|
-75
|
%
|
Diluted (loss) earnings per common share
|
|
$
|
(0.57
|
)
|
|
$
|
0.68
|
|
|
-184
|
%
|
|
$
|
0.48
|
|
|
$
|
1.91
|
|
|
-75
|
%
|
Consolidated Operating Results
|
|
Three Months Ended February 28,
|
|
Nine Months Ended February 28,
|
||||||||||||||||||||||||
(Dollars in millions)
|
2018
|
|
2017
|
|
% Change
|
|
% Change Excluding Currency
Changes (1) |
|
2018
|
|
2017
|
|
% Change
|
|
% Change Excluding Currency
Changes (1) |
||||||||||||
NIKE, Inc. Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
NIKE Brand Revenues by:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Footwear
|
$
|
5,605
|
|
|
$
|
5,314
|
|
|
5
|
%
|
|
2
|
%
|
|
$
|
16,124
|
|
|
$
|
15,608
|
|
|
3
|
%
|
|
2
|
%
|
Apparel
|
2,555
|
|
|
2,269
|
|
|
13
|
%
|
|
9
|
%
|
|
7,968
|
|
|
7,353
|
|
|
8
|
%
|
|
7
|
%
|
||||
Equipment
|
314
|
|
|
321
|
|
|
-2
|
%
|
|
-6
|
%
|
|
1,060
|
|
|
1,090
|
|
|
-3
|
%
|
|
-4
|
%
|
||||
Global Brand Divisions
(2)
|
21
|
|
|
19
|
|
|
11
|
%
|
|
11
|
%
|
|
64
|
|
|
55
|
|
|
16
|
%
|
|
15
|
%
|
||||
TOTAL NIKE BRAND
|
8,495
|
|
|
7,923
|
|
|
7
|
%
|
|
4
|
%
|
|
25,216
|
|
|
24,106
|
|
|
5
|
%
|
|
3
|
%
|
||||
Converse
|
483
|
|
|
498
|
|
|
-3
|
%
|
|
-8
|
%
|
|
1,374
|
|
|
1,488
|
|
|
-8
|
%
|
|
-10
|
%
|
||||
Corporate
(3)
|
6
|
|
|
11
|
|
|
—
|
|
|
—
|
|
|
18
|
|
|
79
|
|
|
—
|
|
|
—
|
|
||||
TOTAL NIKE, INC. REVENUES
|
$
|
8,984
|
|
|
$
|
8,432
|
|
|
7
|
%
|
|
3
|
%
|
|
$
|
26,608
|
|
|
$
|
25,673
|
|
|
4
|
%
|
|
2
|
%
|
Supplemental NIKE Brand Revenues Details:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
NIKE Brand Revenues by:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Sales to Wholesale Customers
|
$
|
5,863
|
|
|
$
|
5,618
|
|
|
4
|
%
|
|
1
|
%
|
|
$
|
17,522
|
|
|
$
|
17,316
|
|
|
1
|
%
|
|
0
|
%
|
Sales through NIKE Direct
|
2,611
|
|
|
2,286
|
|
|
14
|
%
|
|
10
|
%
|
|
7,630
|
|
|
6,735
|
|
|
13
|
%
|
|
12
|
%
|
||||
Global Brand Divisions
(2)
|
21
|
|
|
19
|
|
|
11
|
%
|
|
11
|
%
|
|
64
|
|
|
55
|
|
|
16
|
%
|
|
15
|
%
|
||||
TOTAL NIKE BRAND REVENUES
|
$
|
8,495
|
|
|
$
|
7,923
|
|
|
7
|
%
|
|
4
|
%
|
|
$
|
25,216
|
|
|
$
|
24,106
|
|
|
5
|
%
|
|
3
|
%
|
(1)
|
The percentage change has been calculated 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, which is considered a non-GAAP financial measure.
|
(2)
|
Global Brand Divisions revenues are primarily attributable to NIKE Brand licensing businesses that are not part of a geographic operating segment.
|
(3)
|
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 February 28,
|
|
Nine Months Ended February 28,
|
||||||||||||||||||
(Dollars in millions)
|
|
2018
|
|
2017
|
|
% Change
|
|
2018
|
|
2017
|
|
% Change
|
||||||||||
Gross profit
|
|
$
|
3,938
|
|
|
$
|
3,750
|
|
|
5
|
%
|
|
$
|
11,578
|
|
|
$
|
11,489
|
|
|
1
|
%
|
Gross margin
|
|
43.8
|
%
|
|
44.5
|
%
|
|
(70) bps
|
|
43.5
|
%
|
|
44.8
|
%
|
|
(130) bps
|
|
•
|
Lower NIKE Brand full-price ASP, on a wholesale equivalent basis, (decreasing gross margin approximately 50 basis points for the third quarter and 30 basis points for the first nine months) primarily due to product mix;
|
•
|
Lower NIKE Brand product costs, on a wholesale equivalent basis, (increasing gross margin approximately 80 basis points for the third quarter and 20 basis points for the first nine months) driven by product mix;
|
•
|
Unfavorable changes in net foreign currency exchange rates, including hedges, (decreasing gross margin approximately 90 basis points for the third quarter and 110 basis points in the first nine months);
|
•
|
Growth in our higher margin NIKE Direct business for the third quarter (increasing gross margin approximately 30 basis points) in part reflecting favorable off-price mix; for the first nine months, NIKE Direct margin was lower (decreasing gross margin approximately 20 basis points), reflecting a slightly higher mix of off-price sales; and
|
•
|
Higher other costs for the third quarter (decreasing gross margin approximately 40 basis points) primarily reflecting higher obsolescence and third-party royalty costs; for the first nine months, other costs were lower (increasing gross margin approximately 20 basis points).
|
|
|
Three Months Ended February 28,
|
|
Nine Months Ended February 28,
|
||||||||||||||||||
(Dollars in millions)
|
|
2018
|
|
2017
|
|
% Change
|
|
2018
|
|
2017
|
|
% Change
|
||||||||||
Demand creation expense
(1)
|
|
$
|
862
|
|
|
$
|
749
|
|
|
15
|
%
|
|
$
|
2,594
|
|
|
$
|
2,552
|
|
|
2
|
%
|
Operating overhead expense
|
|
1,905
|
|
|
1,747
|
|
|
9
|
%
|
|
5,797
|
|
|
5,346
|
|
|
8
|
%
|
||||
Total selling and administrative expense
|
|
$
|
2,767
|
|
|
$
|
2,496
|
|
|
11
|
%
|
|
$
|
8,391
|
|
|
$
|
7,898
|
|
|
6
|
%
|
% of revenues
|
|
30.8
|
%
|
|
29.6
|
%
|
|
120
|
bps
|
|
31.5
|
%
|
|
30.8
|
%
|
|
70
|
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 February 28,
|
|
Nine Months Ended February 28,
|
||||||||||||
(In millions)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Other (income) expense, net
|
|
$
|
(1
|
)
|
|
$
|
(88
|
)
|
|
$
|
35
|
|
|
$
|
(168
|
)
|
|
|
Three Months Ended February 28,
|
|
Nine Months Ended February 28,
|
||||||||||||||
|
|
2018
|
|
2017
|
|
% Change
|
|
2018
|
|
2017
|
|
% Change
|
||||||
Effective tax rate
|
|
179.5
|
%
|
|
13.8
|
%
|
|
—
|
|
|
74.4
|
%
|
|
13.1
|
%
|
|
—
|
|
Operating Segments
|
|
|
Three Months Ended February 28,
|
|
Nine Months Ended February 28,
|
||||||||||||||||||||||||
(Dollars in millions)
|
|
2018
|
|
2017
(1)
|
|
% Change
|
|
% Change Excluding Currency Changes
(2)
|
|
2018
|
|
2017
(1)
|
|
% Change
|
|
% Change Excluding Currency Changes
(2)
|
||||||||||||
North America
|
|
$
|
3,571
|
|
|
$
|
3,782
|
|
|
-6
|
%
|
|
-6
|
%
|
|
$
|
10,980
|
|
|
$
|
11,463
|
|
|
-4
|
%
|
|
-4
|
%
|
Europe, Middle East & Africa
|
|
2,299
|
|
|
1,925
|
|
|
19
|
%
|
|
9
|
%
|
|
6,776
|
|
|
5,979
|
|
|
13
|
%
|
|
9
|
%
|
||||
Greater China
|
|
1,336
|
|
|
1,075
|
|
|
24
|
%
|
|
19
|
%
|
|
3,666
|
|
|
3,150
|
|
|
16
|
%
|
|
15
|
%
|
||||
Asia Pacific & Latin America
|
|
1,268
|
|
|
1,122
|
|
|
13
|
%
|
|
11
|
%
|
|
3,730
|
|
|
3,459
|
|
|
8
|
%
|
|
8
|
%
|
||||
Global Brand Divisions
(3)
|
|
21
|
|
|
19
|
|
|
11
|
%
|
|
11
|
%
|
|
64
|
|
|
55
|
|
|
16
|
%
|
|
15
|
%
|
||||
TOTAL NIKE BRAND
|
|
8,495
|
|
|
7,923
|
|
|
7
|
%
|
|
4
|
%
|
|
25,216
|
|
|
24,106
|
|
|
5
|
%
|
|
3
|
%
|
||||
Converse
|
|
483
|
|
|
498
|
|
|
-3
|
%
|
|
-8
|
%
|
|
1,374
|
|
|
1,488
|
|
|
-8
|
%
|
|
-10
|
%
|
||||
Corporate
(4)
|
|
6
|
|
|
11
|
|
|
—
|
|
|
—
|
|
|
18
|
|
|
79
|
|
|
—
|
|
|
—
|
|
||||
TOTAL NIKE, INC. REVENUES
|
|
$
|
8,984
|
|
|
$
|
8,432
|
|
|
7
|
%
|
|
3
|
%
|
|
$
|
26,608
|
|
|
$
|
25,673
|
|
|
4
|
%
|
|
2
|
%
|
(1)
|
Certain prior year amounts have been reclassified to conform to fiscal 2018 presentation. This includes reclassified operating segment data to reflect the changes in the Company
’
s operating structure, which became effective June 1, 2017. These changes had no impact on previously reported consolidated results of operations or shareholders
’
equity.
|
(2)
|
The percentage change has been calculated 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, which is considered a non-GAAP financial measure.
|
(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 February 28,
|
|
Nine Months Ended February 28,
|
||||||||||||||||||
(Dollars in millions)
|
|
2018
|
|
2017
(1)
|
|
% Change
|
|
2018
|
|
2017
(1)
|
|
% Change
|
||||||||||
North America
|
|
$
|
840
|
|
|
$
|
980
|
|
|
-14
|
%
|
|
$
|
2,625
|
|
|
$
|
2,896
|
|
|
-9
|
%
|
Europe, Middle East & Africa
|
|
417
|
|
|
361
|
|
|
16
|
%
|
|
1,205
|
|
|
1,159
|
|
|
4
|
%
|
||||
Greater China
|
|
496
|
|
|
381
|
|
|
30
|
%
|
|
1,268
|
|
|
1,127
|
|
|
13
|
%
|
||||
Asia Pacific & Latin America
|
|
298
|
|
|
228
|
|
|
31
|
%
|
|
849
|
|
|
703
|
|
|
21
|
%
|
||||
Global Brand Divisions
|
|
(649
|
)
|
|
(598
|
)
|
|
-9
|
%
|
|
(1,926
|
)
|
|
(1,988
|
)
|
|
3
|
%
|
||||
TOTAL NIKE BRAND
|
|
1,402
|
|
|
1,352
|
|
|
4
|
%
|
|
4,021
|
|
|
3,897
|
|
|
3
|
%
|
||||
Converse
|
|
69
|
|
|
109
|
|
|
-37
|
%
|
|
206
|
|
|
340
|
|
|
-39
|
%
|
||||
Corporate
|
|
(299
|
)
|
|
(119
|
)
|
|
-151
|
%
|
|
(1,075
|
)
|
|
(478
|
)
|
|
-125
|
%
|
||||
TOTAL NIKE, INC. EARNINGS BEFORE INTEREST AND TAXES
|
|
1,172
|
|
|
1,342
|
|
|
-13
|
%
|
|
3,152
|
|
|
3,759
|
|
|
-16
|
%
|
||||
Interest expense (income), net
|
|
13
|
|
|
19
|
|
|
—
|
|
|
42
|
|
|
41
|
|
|
—
|
|
||||
TOTAL NIKE, INC. INCOME BEFORE INCOME TAXES
|
|
$
|
1,159
|
|
|
$
|
1,323
|
|
|
-12
|
%
|
|
$
|
3,110
|
|
|
$
|
3,718
|
|
|
-16
|
%
|
(1)
|
Certain prior year amounts have been reclassified to conform to fiscal 2018 presentation. This includes reclassified operating segment data to reflect the changes in the Company
’
s operating structure, which became effective June 1, 2017. These changes had no impact on previously reported consolidated results of operations or shareholders
’
equity.
|
|
|
Three Months Ended February 28,
|
|
Nine Months Ended February 28,
|
||||||||||||||||||||||||
(Dollars in millions)
|
|
2018
|
|
2017
|
|
% Change
|
|
% Change Excluding Currency Changes
|
|
2018
|
|
2017
|
|
% Change
|
|
% Change Excluding Currency Changes
|
||||||||||||
Revenues by:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Footwear
|
|
$
|
2,293
|
|
|
$
|
2,490
|
|
|
-8
|
%
|
|
-8
|
%
|
|
$
|
6,797
|
|
|
$
|
7,227
|
|
|
-6
|
%
|
|
-6
|
%
|
Apparel
|
|
1,153
|
|
|
1,154
|
|
|
0
|
%
|
|
0
|
%
|
|
3,731
|
|
|
3,744
|
|
|
0
|
%
|
|
0
|
%
|
||||
Equipment
|
|
125
|
|
|
138
|
|
|
-9
|
%
|
|
-9
|
%
|
|
452
|
|
|
492
|
|
|
-8
|
%
|
|
-8
|
%
|
||||
TOTAL REVENUES
|
|
$
|
3,571
|
|
|
$
|
3,782
|
|
|
-6
|
%
|
|
-6
|
%
|
|
$
|
10,980
|
|
|
$
|
11,463
|
|
|
-4
|
%
|
|
-4
|
%
|
Revenues by:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Sales to Wholesale Customers
|
|
$
|
2,382
|
|
|
$
|
2,650
|
|
|
-10
|
%
|
|
-10
|
%
|
|
$
|
7,507
|
|
|
$
|
8,111
|
|
|
-7
|
%
|
|
-8
|
%
|
Sales through NIKE Direct
|
|
1,189
|
|
|
1,132
|
|
|
5
|
%
|
|
5
|
%
|
|
3,473
|
|
|
3,352
|
|
|
4
|
%
|
|
4
|
%
|
||||
TOTAL REVENUES
|
|
$
|
3,571
|
|
|
$
|
3,782
|
|
|
-6
|
%
|
|
-6
|
%
|
|
$
|
10,980
|
|
|
$
|
11,463
|
|
|
-4
|
%
|
|
-4
|
%
|
EARNINGS BEFORE INTEREST AND TAXES
|
|
$
|
840
|
|
|
$
|
980
|
|
|
-14
|
%
|
|
|
|
$
|
2,625
|
|
|
$
|
2,896
|
|
|
-9
|
%
|
|
|
|
|
Three Months Ended February 28,
|
|
Nine Months Ended February 28,
|
||||||||||||||||||||||||
(Dollars in millions)
|
|
2018
|
|
2017
|
|
% Change
|
|
% Change Excluding Currency Changes
|
|
2018
|
|
2017
|
|
% Change
|
|
% Change Excluding Currency Changes
|
||||||||||||
Revenues by:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Footwear
|
|
$
|
1,489
|
|
|
$
|
1,271
|
|
|
17
|
%
|
|
7
|
%
|
|
$
|
4,250
|
|
|
$
|
3,844
|
|
|
11
|
%
|
|
6
|
%
|
Apparel
|
|
713
|
|
|
566
|
|
|
26
|
%
|
|
15
|
%
|
|
2,199
|
|
|
1,838
|
|
|
20
|
%
|
|
15
|
%
|
||||
Equipment
|
|
97
|
|
|
88
|
|
|
10
|
%
|
|
0
|
%
|
|
327
|
|
|
297
|
|
|
10
|
%
|
|
6
|
%
|
||||
TOTAL REVENUES
|
|
$
|
2,299
|
|
|
$
|
1,925
|
|
|
19
|
%
|
|
9
|
%
|
|
$
|
6,776
|
|
|
$
|
5,979
|
|
|
13
|
%
|
|
9
|
%
|
Revenues by:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Sales to Wholesale Customers
|
|
$
|
1,705
|
|
|
$
|
1,428
|
|
|
19
|
%
|
|
9
|
%
|
|
$
|
4,952
|
|
|
$
|
4,474
|
|
|
11
|
%
|
|
6
|
%
|
Sales through NIKE Direct
|
|
594
|
|
|
497
|
|
|
20
|
%
|
|
9
|
%
|
|
1,824
|
|
|
1,505
|
|
|
21
|
%
|
|
16
|
%
|
||||
TOTAL REVENUES
|
|
$
|
2,299
|
|
|
$
|
1,925
|
|
|
19
|
%
|
|
9
|
%
|
|
$
|
6,776
|
|
|
$
|
5,979
|
|
|
13
|
%
|
|
9
|
%
|
EARNINGS BEFORE INTEREST AND TAXES
|
|
$
|
417
|
|
|
$
|
361
|
|
|
16
|
%
|
|
|
|
$
|
1,205
|
|
|
$
|
1,159
|
|
|
4
|
%
|
|
|
|
|
Three Months Ended February 28,
|
|
Nine Months Ended February 28,
|
||||||||||||||||||||||||
(Dollars in millions)
|
|
2018
|
|
2017
|
|
% Change
|
|
% Change Excluding Currency Changes
|
|
2018
|
|
2017
|
|
% Change
|
|
% Change Excluding Currency Changes
|
||||||||||||
Revenues by:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Footwear
|
|
$
|
939
|
|
|
$
|
776
|
|
|
21
|
%
|
|
16
|
%
|
|
$
|
2,493
|
|
|
$
|
2,155
|
|
|
16
|
%
|
|
14
|
%
|
Apparel
|
|
368
|
|
|
271
|
|
|
36
|
%
|
|
30
|
%
|
|
1,074
|
|
|
895
|
|
|
20
|
%
|
|
19
|
%
|
||||
Equipment
|
|
29
|
|
|
28
|
|
|
4
|
%
|
|
-4
|
%
|
|
99
|
|
|
100
|
|
|
-1
|
%
|
|
-2
|
%
|
||||
TOTAL REVENUES
|
|
$
|
1,336
|
|
|
$
|
1,075
|
|
|
24
|
%
|
|
19
|
%
|
|
$
|
3,666
|
|
|
$
|
3,150
|
|
|
16
|
%
|
|
15
|
%
|
Revenues by:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Sales to Wholesale Customers
|
|
$
|
848
|
|
|
$
|
703
|
|
|
21
|
%
|
|
16
|
%
|
|
$
|
2,286
|
|
|
$
|
2,071
|
|
|
10
|
%
|
|
9
|
%
|
Sales through NIKE Direct
|
|
488
|
|
|
372
|
|
|
31
|
%
|
|
25
|
%
|
|
1,380
|
|
|
1,079
|
|
|
28
|
%
|
|
26
|
%
|
||||
TOTAL REVENUES
|
|
$
|
1,336
|
|
|
$
|
1,075
|
|
|
24
|
%
|
|
19
|
%
|
|
$
|
3,666
|
|
|
$
|
3,150
|
|
|
16
|
%
|
|
15
|
%
|
EARNINGS BEFORE INTEREST AND TAXES
|
|
$
|
496
|
|
|
$
|
381
|
|
|
30
|
%
|
|
|
|
$
|
1,268
|
|
|
$
|
1,127
|
|
|
13
|
%
|
|
|
|
|
Three Months Ended February 28,
|
|
Nine Months Ended February 28,
|
||||||||||||||||||||||||
(Dollars in millions)
|
|
2018
|
|
2017
|
|
% Change
|
|
% Change Excluding Currency Changes
|
|
2018
|
|
2017
|
|
% Change
|
|
% Change Excluding Currency Changes
|
||||||||||||
Revenues by:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Footwear
|
|
$
|
884
|
|
|
$
|
777
|
|
|
14
|
%
|
|
12
|
%
|
|
$
|
2,584
|
|
|
$
|
2,382
|
|
|
8
|
%
|
|
9
|
%
|
Apparel
|
|
321
|
|
|
278
|
|
|
15
|
%
|
|
13
|
%
|
|
964
|
|
|
876
|
|
|
10
|
%
|
|
11
|
%
|
||||
Equipment
|
|
63
|
|
|
67
|
|
|
-6
|
%
|
|
-7
|
%
|
|
182
|
|
|
201
|
|
|
-9
|
%
|
|
-9
|
%
|
||||
TOTAL REVENUES
|
|
$
|
1,268
|
|
|
$
|
1,122
|
|
|
13
|
%
|
|
11
|
%
|
|
$
|
3,730
|
|
|
$
|
3,459
|
|
|
8
|
%
|
|
8
|
%
|
Revenues by:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Sales to Wholesale Customers
|
|
$
|
928
|
|
|
$
|
837
|
|
|
11
|
%
|
|
9
|
%
|
|
$
|
2,777
|
|
|
$
|
2,660
|
|
|
4
|
%
|
|
5
|
%
|
Sales through NIKE Direct
|
|
340
|
|
|
285
|
|
|
19
|
%
|
|
16
|
%
|
|
953
|
|
|
799
|
|
|
19
|
%
|
|
20
|
%
|
||||
TOTAL REVENUES
|
|
$
|
1,268
|
|
|
$
|
1,122
|
|
|
13
|
%
|
|
11
|
%
|
|
$
|
3,730
|
|
|
$
|
3,459
|
|
|
8
|
%
|
|
8
|
%
|
EARNINGS BEFORE INTEREST AND TAXES
|
|
$
|
298
|
|
|
$
|
228
|
|
|
31
|
%
|
|
|
|
$
|
849
|
|
|
$
|
703
|
|
|
21
|
%
|
|
|
|
|
Three Months Ended February 28,
|
|
Nine Months Ended February 28,
|
||||||||||||||||||||||||
(Dollars in millions)
|
|
2018
|
|
2017
|
|
% Change
|
|
% Change Excluding Currency Changes
|
|
2018
|
|
2017
|
|
% Change
|
|
% Change Excluding Currency Changes
|
||||||||||||
Revenues
|
|
$
|
21
|
|
|
$
|
19
|
|
|
11
|
%
|
|
11
|
%
|
|
$
|
64
|
|
|
$
|
55
|
|
|
16
|
%
|
|
15
|
%
|
(Loss) Before Interest and Taxes
|
|
$
|
(649
|
)
|
|
$
|
(598
|
)
|
|
9
|
%
|
|
|
|
$
|
(1,926
|
)
|
|
$
|
(1,988
|
)
|
|
-3
|
%
|
|
|
|
|
Three Months Ended February 28,
|
|
Nine Months Ended February 28,
|
||||||||||||||||||||||||
(Dollars in millions)
|
|
2018
|
|
2017
|
|
% Change
|
|
% Change Excluding Currency Changes
|
|
2018
|
|
2017
|
|
% Change
|
|
% Change Excluding Currency Changes
|
||||||||||||
Revenues
|
|
$
|
483
|
|
|
$
|
498
|
|
|
-3
|
%
|
|
-8
|
%
|
|
$
|
1,374
|
|
|
$
|
1,488
|
|
|
-8
|
%
|
|
-10
|
%
|
Earnings Before Interest and Taxes
|
|
$
|
69
|
|
|
$
|
109
|
|
|
-37
|
%
|
|
|
|
$
|
206
|
|
|
$
|
340
|
|
|
-39
|
%
|
|
|
|
|
Three Months Ended February 28,
|
|
Nine Months Ended February 28,
|
||||||||||||||||||
(Dollars in millions)
|
|
2018
|
|
2017
|
|
% Change
|
|
2018
|
|
2017
|
|
% Change
|
||||||||||
Revenues
|
|
$
|
6
|
|
|
$
|
11
|
|
|
—
|
|
|
$
|
18
|
|
|
$
|
79
|
|
|
—
|
|
(Loss) Before Interest and Taxes
|
|
$
|
(299
|
)
|
|
$
|
(119
|
)
|
|
151
|
%
|
|
$
|
(1,075
|
)
|
|
$
|
(478
|
)
|
|
125
|
%
|
•
|
a detrimental change of $59 million and $210 million for the third quarter and first nine months of fiscal 2018, respectively, 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 results are reported as a component of consolidated gross margin;
|
•
|
a detrimental change in net foreign currency gains and losses of $90 million and $208 million for the third quarter and first nine months of fiscal 2018, respectively, related to 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
; and
|
•
|
an unfavorable change of $31 million for the third quarter of fiscal 2018, largely due to higher operating overhead expense; for the first nine months of fiscal 2018, an unfavorable change of $179 million, primarily due to higher operating overhead expense driven by one-time wage-related costs associated with our organizational realignment in the first half of fiscal 2018.
|
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 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 NIKE Brand and Converse revenues associated with European operations 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 9 — 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 2018
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
Thereafter
|
|
Total
|
||||||||||||||
Transition Tax Related to the Tax Act
(1)
|
|
$
|
—
|
|
|
$
|
108
|
|
|
$
|
108
|
|
|
$
|
108
|
|
|
$
|
108
|
|
|
$
|
918
|
|
|
$
|
1,350
|
|
(1)
|
Represents a provisional estimate of the future cash payments due as part of the transition tax on deemed repatriation of undistributed earnings of foreign subsidiaries, which is reflected net of foreign tax credits we expect to utilize. Actual amounts could vary as we complete our analysis of the Tax Act. Refer to
Note 6 — Income Taxes
in the accompanying Notes to the Unaudited Condensed Consolidated Financial Statements for further information.
|
New Accounting Pronouncements
|
Critical Accounting Policies
|
Period
|
|
Total Number of Shares Purchased
|
|
Average Price Paid per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
|
Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs
(In millions)
|
||||||
December 1 — December 31, 2017
|
|
530,869
|
|
|
$
|
59.97
|
|
|
530,869
|
|
|
$
|
5,779
|
|
January 1 — January 31, 2018
|
|
6,451,969
|
|
|
$
|
65.49
|
|
|
6,451,969
|
|
|
$
|
5,357
|
|
February 1 — February 28, 2018
|
|
7,620,000
|
|
|
$
|
66.60
|
|
|
7,620,000
|
|
|
$
|
4,849
|
|
|
|
14,602,838
|
|
|
$
|
65.87
|
|
|
14,602,838
|
|
|
|
|
|
|
3.1
|
|
|
3.2
|
|
|
4.1
|
|
|
4.2
|
|
|
4.3
|
|
|
10.1
|
|
|
10.2
|
|
|
31.1†
|
|
|
31.2†
|
|
|
32.1†
|
|
|
32.2†
|
|
|
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
|
*
|
Management contract or compensatory plan or arrangement.
|
|
|
|
NIKE, Inc.
an Oregon Corporation
|
|
|
|
/S/ ANDREW CAMPION
|
|
Andrew Campion
Chief Financial Officer and Authorized Officer
|
Grant Terms
|
Grant Details
|
Participant
|
|
Type of Option
|
|
Shares
|
|
Grant Date
|
|
Exercise Price
|
|
Expiration Date
|
|
Shares
|
Vesting Dates
|
|
|
|
|
|
|
a)
|
Death or Disability.
If the Participant’s employment or service with the Company terminates because of death or total disability (within the meaning of Section 22(e)(3) of the Code), the Option shall, following the receipt and processing by the Company of any necessary and appropriate documentation in connection with the Participant’s termination (the “Processing Period”), become exercisable in full and may be exercised at any time before the first to occur of (i) the Expiration Date and (ii) the date that is four (4) years after the date of termination.
|
b)
|
Normal Retirement.
If the Participant’s employment or service with the Company terminates because of the Participant’s “normal retirement”, as defined in the Plan, before the first anniversary of the Grant Date, the Option shall immediately terminate and be forfeited. If the Participant’s employment or service with the Company terminates because of the Participant’s normal retirement on or after the first anniversary of the Grant Date, the Option shall, following the Processing Period, vest in full and may be exercised at any time before the first to occur of (i) the Expiration Date and (ii) the date that is four (4) years after the date of termination. As set forth in the Plan, “normal retirement” applies when the Participant is at least sixty (60) years of age with five years of service with the Company.
|
c)
|
Early Retirement
. If the Participant’s employment or service with the Company terminates because of the Participant’s “early retirement”, as defined in the Plan, before the first anniversary of the Grant Date, the Option shall immediately terminate and be forfeited. If the Participant’s employment or service with the Company terminates because of the Participant’s early retirement on or after the first anniversary of the Grant Date, the Option shall continue to vest according to the schedule specified in this Agreement with no forfeiture of any portion of the Option resulting from such termination, and the Option may be exercised at any time before the first to occur of (i) the Expiration Date and (ii) the date that is
|
d)
|
Absence on Leave.
Absence on leave or on account of illness or disability under rules established by the committee of the Board of Directors of the Company appointed to administer the Plan (the “Committee”) shall not be deemed an interruption of employment or service.
|
e)
|
Change in Control.
In the event of a Change in Control, treatment shall be pursuant to the terms provided in the Plan.
|
a)
|
If, during the period of the Participant’s employment or service with the Company or an Employer (the “Employment Period”) or at any time thereafter, the Participant has committed or engaged in a breach of confidentiality, or an unauthorized disclosure or use of inside information, customer lists, trade secrets or other confidential information of the Company or any of its subsidiaries or otherwise has breached any employee invention and secrecy agreement or similar agreement with the Company or any of its subsidiaries;
|
b)
|
If, during the Employment Period or at any time thereafter, the Participant has committed or engaged in an act of theft, embezzlement or fraud, breached any covenant not to compete or non-solicitation or non-disclosure agreement or similar agreement with the Company or any of its subsidiaries, or materially breached any other agreement to which the Participant is a party with the Company or any of its subsidiaries;
|
c)
|
Pursuant to any applicable securities, tax or stock exchange laws, rules or regulations relating to the recoupment or clawback of incentive compensation, as in effect from time to time; or
|
d)
|
Pursuant to the NIKE, Inc. Policy for Recoupment of Incentive Compensation as approved by the Committee and in effect on the Grant Date, or such other policy for clawback or recoupment of incentive compensation as may subsequently be approved from time to time by the Committee.
|
e)
|
If, during the Employment Period or the one (1) year period thereafter (the “Restriction Period”), the Participant, directly or indirectly, owns, manages, controls or participates in the ownership, management or control of, or becomes employed by, consults for or becomes connected in any manner with, any business engaged anywhere in the world in the athletic footwear, athletic apparel or sports equipment, sports electronics/technology and sports accessories business or any other business that directly competes with the then-current existing or reasonably anticipated business of the Company or any of its parent, subsidiaries or affiliated corporations (a “Competitor”). The Company has the option, in its sole discretion, to elect to waive all or a portion of the Restriction Period or to limit the definition of Competitor.
|
a)
|
Method of Exercise.
Subject to Section 5(b), the Option may be exercised from time to time, to the extent then vested, only by notice in writing from the Participant to the Company, or a broker designated by the Company, of the Participant’s binding commitment to purchase Shares, specifying the number of Shares the Participant desires to purchase under the Option and the date on which the Participant agrees to complete the transaction and, if required to comply with the U.S. Securities Act of 1933, as amended, containing a representation that it is the Participant’s intention to acquire the Shares for investment and not with a view to distribution (the “Exercise Notice”). On or before the date specified for completion of the purchase, the Participant must pay the Company the full exercise price of those Shares by any of the following methods at the election of the Participant: (a) cash payment by wire transfer; (b) delivery of an Exercise Notice, together with irrevocable instructions to a broker to deliver promptly to the Company the amount of sale proceeds required to pay the full exercise price; (c) if allowed by the Committee, withholding by the Company of Shares otherwise issuable upon exercise; or (d) a combination of (a), (b) and/or (c). Unless the Committee determines otherwise, no Shares shall be issued upon exercise of the Option until full payment for the Shares has been made, including all taxes (as set forth in Section 7 below) that the Company and/or Employer have to withhold.
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b)
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Deemed Exercise.
Notwithstanding Section 5(a), the Participant acknowledges that, except as otherwise provided in Appendix B or determined by the Committee, any portion of the Option that has vested and is exercisable immediately prior to the Expiration Date or Cancellation Date shall be deemed to have been exercised by the Participant at such time, provided (i) the Participant has accepted the Option and this Agreement, (ii) the fair market value of one Share exceeds the exercise price per Share, and (iii) the Option remains outstanding on the last day of its full term. For the avoidance of doubt, the Option that terminates upon the Cancellation Date, shall be deemed to have remained outstanding on the
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a)
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Conditions on Obligations.
The Company shall not be obligated to issue Shares upon exercise of the Option if the Company is advised by its legal counsel that such issuance would violate applicable U.S. or non-U.S. state or federal laws or regulations, including securities laws or exchange control regulations.
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b)
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Imposition of Other Requirements.
The Company reserves the right to impose other requirements upon the Participant’s participation in the Plan, on the Option and on any Shares acquired under the Plan, to the extent the Company determines it is necessary or advisable for legal or administrative reasons, and to require the Participant to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.
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c)
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Amendments.
The Company may at any time amend this Agreement, provided that no amendment that adversely impacts the rights of the Participant under this Agreement may be made without the Participant’s written consent.
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d)
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Committee Determinations.
The Participant agrees to accept as binding, conclusive and final all decisions and interpretations of the Committee or other administrator of the Plan as to the provisions of the Plan or this Agreement or any questions arising thereunder or hereunder.
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e)
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Severability.
The provisions of this Agreement are severable and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable.
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f)
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Governing Law; Attorneys’ Fees.
The Option grant and the provisions of this Agreement are governed by, and subject to, the laws of the State of Oregon. For purposes of litigating any dispute that arises under this grant or the Agreement, the parties hereby submit to and consent to the exclusive jurisdiction of, and agree that such litigation shall exclusively be conducted in, the courts of Washington County, Oregon or the United States District Court for the District of Oregon, where this grant is made and/or to be performed. In the event either party institutes litigation hereunder, the prevailing party shall be entitled to reasonable attorneys’ fees to be set by the trial court and, upon any appeal, the appellate court.
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a)
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No Right to Employment or Service.
Nothing in the Plan or this Agreement shall (i) confer upon the Participant any right to be continued in the employment of an Employer or interfere in any way with the Employer’s right to terminate the Participant’s employment at will at any time, for any reason, with or without Cause, or to decrease the Participant’s
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b)
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No Advice Regarding Grant.
The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Participant’s participation in the Plan, or the Participant’s acquisition or sale of the underlying Shares. The Participant is hereby advised to consult with the Participant’s own personal tax, legal and financial advisors regarding the Participant’s participation in the Plan before taking any action related to the Plan.
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c)
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Transfer of Rights and Benefits; Successors.
This Agreement shall be binding upon, and shall inure to the benefit of and be enforceable by, the Company’s successors and assigns. Subject to the restrictions on transfer of this Agreement, this Agreement shall be binding upon the Participant’s heirs, executors, administrators, successors and assigns.
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The Participant also authorizes any transfer of Data, as may be required, to E*TRADE Corporate Financial Services, Inc. or such other stock plan service provider as may be selected by the Company from time to time, which is assisting the Company with the implementation, administration and management of the Plan and/or with whom any shares acquired upon exercise of the Option are deposited. The Participant acknowledges that these recipients may be located in the Participant’s country or elsewhere, and that the recipient’s country (
e.g.
, the United States) may have different data privacy laws and protections to the Participant’s country, which may not give the same level of protection to Data. The Participant understands that he or she may request a list with the names and addresses of any potential recipients of Data by contacting his or her local human resources representative. The Participant authorizes the Company, the stock plan service provider and any other possible recipients which may assist the Company (presently or in the future) with implementing, administering and managing the Participant’s participation in the Plan to receive, possess, use, retain and transfer Data, in electronic or other form, for the sole purpose of implementing, administering and managing the Participant’s participation in the Plan. The Participant understands that Data will be held only as long as is necessary to implement, administer and manage his or her participation in the Plan. The Participant understands that he or she may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case, without cost, by contacting in writing his or her local human resources representative, whose contact details are Mari McBurney, 30 Pasir Panjang Rd #10-31/32, 117440, Singapore; +65 6216 7812; mari.mcburney@nike.com. Further, the Participant understands that he or she is providing the consents herein on a purely voluntary basis. If the Participant does not consent, or if the Participant later seeks to revoke the consent, his or her employment status or service and career with the Employer will not be affected; the only consequence of refusing or withdrawing the consent is that the Company would not be able to grant future stock options or other equity awards to the Participant or administer or maintain such awards. Therefore, the Participant understands that refusing or withdrawing his or her consent may affect his or her ability to participate in the Plan. For more information on the consequences of the refusal to consent or withdrawal of consent, the Participant understands that he or she may contact his or her local human resources representative.
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Peserta juga memberi kuasa untuk membuat apa-apa pemindahan Data, sebagaimana yang diperlukan, kepada E*TRADE Corporate Financial Services, Inc. atau pembekal perkhidmatan pelan saham yang lain sebagaimana yang dipilih oleh Syarikat dari semasa ke semasa, yang membantu Syarikat dalam pelaksanaan, yang membantu Syarikat dalam pelaksanaan, pentadbiran dan pengurusan Pelan dan/atau dengan sesiapa yang mendepositkan syer-syer yang diperolehi melalui pelaksanaan Opsyen. Peserta mengakui bahawa penerima-penerima ini mungkin berada di negara Peserta atau di tempat lain, dan bahawa negara penerima (contohnya, Amerika Syarikat) mungkin mempunyai undang-undang privasi data dan perlindungan yang berbeza daripada negara Peserta, yang mungkin tidak boleh memberi tahap perlindungan yang sama kepada Data. Peserta faham bahawa dia boleh meminta senarai nama dan alamat mana-mana individu atau parti yang mungkin akan menjadi penerima Data dengan menghubungi wakil sumber manusia tempatannya. Peserta memberi kuasa kepada Syarikat, pembekal perkhidmatan pelan saham dan mana-mana penerima lain yang mungkin membantu Syarikat (masa sekarang atau pada masa depan) untuk melaksanakan, mentadbir dan menguruskan penyertaan Peserta dalam Pelan untuk menerima, memiliki, menggunakan, mengekalkan dan memindahkan Data, dalam bentuk elektronik atau lain-lain, semata-mata dengan tujuan untuk melaksanakan, mentadbir dan menguruskan penyertaan Peserta dalam Pelan tersebut. Peserta faham bahawa Data akan dipegang hanya untuk tempoh yang diperlukan untuk melaksanakan, mentadbir dan menguruskan penyertaannya dalam Pelan tersebut. Peserta faham bahawa dia boleh, pada bila-bila masa, melihat Data, meminta maklumat tambahan mengenai penyimpanan dan pemprosesan Data, meminta bahawa pindaan-pindaan dilaksanakan ke atas Data atau menolak atau menarik balik persetujuan dalam ini, dalam mana-mana kes, tanpa kos, dengan menghubungi secara bertulis wakil sumber manusia tempatannya, di mana butir-butir hubungannya adalah Mari McBurney, 30 Pasir Panjang Rd #10-31/32, 117440, Singapore; +65 6216 7812; mari.mcburney@nike.com. Selanjutnya, Peserta memahami bahawa dia memberikan persetujuan di sini secara sukarela. Jika Peserta tidak bersetuju, atau jika Peserta kemudian membatalkan persetujuannya, status pekerjaan atau perkhidmatan dan kerjayanya dengan Majikan tidak akan terjejas; satu-satunya akibat jika dia tidak bersetuju atau menarik balik persetujuannya adalah bahawa Syarikat tidak akan dapat memberikan opsyen saham pada masa depan atau anugerah ekuiti lain kepada Peserta atau mentadbir atau mengekalkan anugerah tersebut. Oleh itu, Peserta faham bahawa keengganan atau penarikan balik persetujuannya boleh menjejaskan keupayaannya untuk mengambil bahagian dalam Pelan tersebut. Untuk maklumat lanjut mengenai akibat keengganannya untuk memberikan keizinan atau penarikan balik keizinan, Peserta fahami bahawa dia boleh menghubungi wakil sumber manusia tempatannya .
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Grant Terms
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Grant Details
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Participant
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RSUs
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Grant Date
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Units
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Vesting Dates
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a)
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Death or Disability.
If the Participant’s employment or service with the Company terminates because of death or total disability (within the meaning of Section 22(e)(3) of the Code), the RSUs shall immediately vest in full.
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b)
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Absence on Leave.
Absence on leave or on account of illness or disability under rules established by the committee of the Board of Directors of the Company appointed to administer the Plan (the “Committee”) shall not be deemed an interruption of employment or service.
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c)
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Change in Control.
In the event of a Change in Control, treatment shall be pursuant to the terms provided in the Plan, provided that “Good Reason” shall have the meaning provided in the Plan, except that:
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i)
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clause (A) of the “Good Reason” definition shall be replaced in its entirety with the following language: “the assignment of a different title, job or responsibilities that results in a material decrease in the level of responsibility of the award holder after Shareholder Approval, if applicable, or the Change in Control when compared to the award holder’s level of responsibility for the Company’s operations prior to Shareholder Approval, if applicable, or the Change in Control; provided that Good Reason shall not exist if the award holder continues to have the same or a greater general level of responsibility for Company operations after the Change in Control as the award holder had prior to the Change in Control even if the Company operations are a subsidiary or division of the surviving company,” and
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ii)
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the following language shall be added to the end of the “Good Reason” definition: “Notwithstanding any provision in this Agreement or the Plan to the contrary, a termination of an employment or other service relationship by the
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a)
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If, during the period of the Participant’s employment or service with the Company or an Employer (the “Employment Period”) or at any time thereafter, the Participant has committed or engaged in a breach of confidentiality, or an unauthorized disclosure or use of inside information, customer lists, trade secrets or other confidential information of the Company or any of its subsidiaries or otherwise has breached any employee invention and secrecy agreement or similar agreement with the Company or any of its subsidiaries;
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b)
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If, during the Employment Period or at any time thereafter, the Participant has committed or engaged in an act of theft, embezzlement or fraud, breached any covenant not to compete or non-solicitation or non-disclosure agreement or similar agreement with the Company or any of its subsidiaries, or materially breached any other agreement to which the Participant is a party with the Company or any of its subsidiaries;
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c)
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Pursuant to any applicable securities, tax or stock exchange laws, rules or regulations relating to the recoupment or clawback of incentive compensation, as in effect from time to time;
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d)
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Pursuant to the NIKE, Inc. Policy for Recoupment of Incentive Compensation as approved by the Committee and in effect on the Grant Date, or such other policy for clawback or recoupment of incentive compensation as may subsequently be approved from time to time by the Committee; or
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e)
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If, during the Employment Period or the one (1) year period thereafter (the “Restriction Period”), the Participant, directly or indirectly, owns, manages, controls or participates in the ownership, management or control of, or becomes employed by, consults for or becomes connected in any manner with, any business engaged anywhere in the world in the athletic footwear, athletic apparel or sports equipment, sports electronics/technology and sports accessories business or any other business that directly competes with the then-current existing or reasonably anticipated business of the Company or any of its parent, subsidiaries or affiliated corporations (a “Competitor”); the Company has the option, in its sole discretion, to elect to waive all or a portion of the Restriction Period or to limit the definition of Competitor.
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a)
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The Participant acknowledges that, regardless of any action taken by the Company
or, if different, the Employer, the ultimate liability for all income tax, social insurance, payroll tax, fringe benefits tax, payment on account or other tax-related items related to the Participant’s participation in the Plan and legally applicable to the Participant or deemed by the Company or the Employer to be an appropriate charge to the Participant even if technically due by the Company or the Employer (“Tax-Related Items”) is and remains the Participant’s responsibility and may exceed the amount actually
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b)
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The Participant shall, immediately upon notification of the amount due, if any, pay to the Company by wire transfer, or irrevocably instruct a broker to pay from stock sales proceeds, amounts necessary to satisfy any applicable federal, state and local tax withholding requirements. If additional withholding is or becomes required (as a result of vesting or settlement of any RSUs or as a result of the disposition of Shares acquired pursuant to the vesting of any RSUs) beyond any amount deposited before delivery of the Shares, the Participant shall pay such amount to the Company, by wire transfer, on demand. If the Participant fails to pay the amount demanded, the Company or the Employer may withhold that amount from other amounts payable to the Participant, including salary, subject to applicable law.
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a)
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Conditions on Obligations.
The Company shall not be obligated to issue Shares upon vesting of the RSUs if the Company is advised by its legal counsel that such issuance would violate applicable U.S. or non-U.S. state or federal laws or regulations, including securities laws or exchange control regulations.
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b)
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Imposition of Other Requirements.
The Company reserves the right to impose other requirements upon the Participant’s participation in the Plan, on the RSUs and on any Shares acquired under the Plan, to the extent the Company determines it is necessary or advisable for legal or administrative reasons, and to require the Participant to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.
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c)
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Amendments.
The Company may at any time amend this Agreement, provided that no amendment that adversely impacts the rights of the Participant under this Agreement may be made without the Participant’s written consent.
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d)
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Committee Determinations.
The Participant agrees to accept as binding, conclusive and final all decisions and interpretations of the Committee or other administrator of the Plan as to the provisions of the Plan or this Agreement or any questions arising thereunder or hereunder.
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e)
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Severability.
The provisions of this Agreement are severable and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable.
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f)
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Governing Law; Attorneys’ Fees.
The RSUs and the provisions of this Agreement are governed by, and subject to, the laws of the State of Oregon. For purposes of litigating any dispute that arises under this grant or the Agreement, the parties hereby submit to and consent to the exclusive jurisdiction of, and agree that such litigation shall exclusively be conducted in, the courts of Washington County, Oregon or the United States District Court for the District of Oregon, where this grant is made and/or to be performed. In the event either party institutes litigation hereunder, the prevailing party shall be entitled to reasonable attorneys’ fees to be set by the trial court and, upon any appeal, the appellate court.
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g)
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Section 409A.
The parties intend that this Agreement and the benefits provided hereunder be exempt from the requirements of Section 409A of the Code to the maximum extent possible, whether pursuant to the short-term deferral exception described in Treasury Regulation Section 1.409A-1(b)(4) or otherwise. To the extent Section 409A of the Code is applicable to this Agreement and such benefits, the parties intend that this Agreement and such benefits comply with the deferral, payout, and other limitations and restrictions imposed under Section 409A of the Code. Notwithstanding any other provision of this Agreement or any other agreement to the contrary, this Agreement shall be interpreted, operated and administered in a manner consistent with such intentions. Without limiting the generality of the foregoing, any delivery or distribution contemplated under this Agreement will be made to a Participant who is a “specified employee” (as defined in the NIKE, Inc. Deferred Compensation Plan or any subsequent deferred compensation plan of the Company, as in effect from time to time) at the time of a “separation from service” (within the meaning of Section 409A of the Code) within thirty (30) days following the earlier of (i) the expiration of the six-month period following the Participant’s separation from service, and (ii) the Participant’s death, to the extent such delayed payment is otherwise required to avoid a prohibited distribution under Section 409A of the Code. For purposes of Section 409A of the Code, each payment or benefit payable pursuant to this Agreement shall be treated as a separate payment. Notwithstanding the foregoing, this Agreement and the Plan may be amended by the Company at any time, without the consent of any party, to the extent necessary or desirable to satisfy any of the requirements under Section 409A of the Code, but the Company shall not be under any obligation to make any such amendment. Nothing in this Agreement or the Plan shall provide a basis for any person to take action against the Company or any affiliate based on matters covered by Section 409A of the Code, including the tax treatment of any amount paid or RSUs granted under this Agreement, and neither the Company nor any of its affiliates shall under any circumstances have any liability to the Participant or his or her estate or any other party for any taxes, penalties or interest due on amounts paid or payable under this Agreement, including taxes, penalties or interest imposed under Section 409A of the Code.
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a)
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No Right to Employment or Service.
Nothing in the Plan or this Agreement shall (i) confer upon the Participant any right to be continued in the employment of an Employer or interfere in any way with the Employer’s right to terminate the Participant’s employment at will at any time, for any reason, with or without Cause, or to decrease the Participant’s compensation or benefits, or (ii) confer upon the Participant any right to be retained or employed by the Employer or to the continuation, extension, renewal or modification of any compensation, contract or arrangement with or by the Employer. The determination of whether to grant any RSUs under the Plan is made by the Company in its sole discretion. The grant of the RSUs shall not confer upon the Participant any right to receive any additional RSUs or other award under the Plan or otherwise.
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b)
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No Advice Regarding Grant.
The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Participant’s participation in the Plan, or the Participant’s acquisition or sale of the underlying Shares. The Participant is hereby advised to consult with the Participant’s own personal tax, legal and financial advisors regarding the Participant’s participation in the Plan before taking any action related to the Plan.
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c)
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Transfer of Rights and Benefits; Successors.
This Agreement shall be binding upon, and shall inure to the benefit of and be enforceable by, the Company’s successors and assigns. Subject to the restrictions on transfer of this Agreement, this Agreement shall be binding upon the Participant’s heirs, executors, administrators, successors and assigns.
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1.1
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the Plan is established voluntarily by the Company, it is discretionary in nature and it may be modified, amended, suspended or terminated by the Company at any time, to the extent permitted by the Plan;
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1.2
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the grant of the RSUs is exceptional, voluntary and occasional and does not create any contractual or other right to receive future grants of RSUs, or benefits in lieu of RSUs, even if RSUs have been granted in the past;
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1.3
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all decisions with respect to future RSUs or other grants, if any, will be at the sole discretion of the Company;
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1.4
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the RSUs grant and the Participant’s participation in the Plan shall not create a right to employment or be interpreted as forming an employment or services contract with the Company;
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1.5
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the Participant is voluntarily participating in the Plan;
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1.6
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the RSUs and the Shares subject to the RSUs, and the income from and value of same, are not intended to replace any pension rights or compensation;
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1.7
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the RSUs and the Shares subject to the RSUs, and the income from and value of same, are not part of normal or expected compensation for any purpose, including for purposes of calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, holiday pay, long-service awards, pension or retirement or welfare benefits or similar payments;
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1.8
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unless otherwise agreed with the Company, the RSUs and the Shares subject to the RSUs, and the income from and value of same, are not granted for, or in connection with, any service the Participant may provide as a director of any parent or subsidiary corporation of the Company;
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1.9
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the future value of the underlying Shares is unknown, indeterminable and cannot be predicted with certainty;
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1.10
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no claim or entitlement to compensation or damages shall arise from forfeiture of the RSUs resulting from the termination of the Participant’s employment or other service relationship (for any reason whatsoever whether or not later found to be invalid or in breach of employment laws in the jurisdiction where the Participant is employed or the terms of the Participant’s employment agreement, if any), and in consideration of the grant of the RSUs, the Participant agrees not to institute any claim against the Company, any parent or subsidiary corporation of the Company, including the Employer;
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1.11
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unless otherwise provided in the Plan or by the Company in its discretion, the Shares and benefits evidenced by this Agreement do not create any entitlement to have the Shares or any such benefits transferred to, or assumed by, another company nor to be exchanged, cashed out or substituted for, in connection with any corporation transaction affecting the Shares; and
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1.12
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neither the Company, the Employer nor any parent or other subsidiary corporation of the Company shall be liable for any foreign exchange rate fluctuation between the Participant’s local currency and the United States Dollar that may affect the value of the RSUs or of any amounts due to the Participant pursuant to the Dividend Equivalent Payment or the subsequent sale of any Shares acquired upon vesting of the RSUs.
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The Participant also authorizes any transfer of Data, as may be required, to E*TRADE Corporate Financial Services, Inc., or such other stock plan service provider as may be selected by the Company in the future, which is assisting the Company with the implementation, administration and management of the Plan and/or with whom any Shares acquired upon vesting and settlement of the RSUs are deposited. The Participant acknowledges that these recipients may be located in his or her country or elsewhere, and that the recipient’s country (e.g., the United States) may have different data privacy laws and protections to the Participant’s country, which may not give the same level of protection to Data. The Participant understands that he or she may request a list with the names and addresses of any potential recipients of Data by contacting his or her local human resources representative. The Participant authorizes the Company, the stock plan service provider and any other possible recipients which may assist the Company (presently or in the future) with implementing, administering and managing the Participant’s participation in the Plan to receive, possess, use, retain and transfer Data, in electronic or other form, for the sole purpose of implementing, administering and managing the Participant’s participation in the Plan. The Participant understands that Data will be held only as long as is necessary to implement, administer and manage his or her participation in the Plan. The Participant understands that he or she may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case, without cost, by contacting in writing his or her local human resources representative, whose contact details are Mari McBurney, 30 Pasir Panjang Rd #10-31/32, 117440, Singapore; +65 6216 7812; mari.mcburney@nike.com. Further, the Participant understands that he or she is providing the consents herein on a purely voluntary basis. If the Participant does not consent, or if the Participant later seeks to revoke the consent, his or her employment status or service and career with the Employer will not be affected; the only consequence of refusing or withdrawing the consent is that the Company would not be able to grant future RSUs or other equity awards to the Participant or administer or maintain such awards. Therefore, the Participant understands that refusing or withdrawing his or her consent may affect his or her ability to participate in the Plan. For more information on the consequences of the refusal to consent or withdrawal of consent, the Participant understands that he or she may contact his or her local human resources representative.
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The Participant also authorizes any transfer of Data, as may be required, to E*TRADE Corporate Financial Services, Inc., or such other stock plan service provider as may be selected by the Company in the future, which is assisting the Company with the implementation, administration and management of the Plan and/or with whom any Shares acquired upon vesting and settlement of the RSUs are deposited. The Participant acknowledges that these recipients may be located in his or her country or elsewhere, and that the recipient’s country (e.g., the United States) may have different data privacy laws and protections to the Participant’s country, which may not give the same level of protection to Data. The Participant understands that he or she may request a list with the names and addresses of any potential recipients of Data by contacting his or her local human resources representative. The Participant authorizes the Company, the stock plan service provider and any other possible recipients which may assist the Company (presently or in the future) with implementing, administering and managing the Participant’s participation in the Plan to receive, possess, use, retain and transfer Data, in electronic or other form, for the sole purpose of implementing, administering and managing the Participant’s participation in the Plan. The Participant understands that Data will be held only as long as is necessary to implement, administer and manage his or her participation in the Plan. The Participant understands that he or she may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case, without cost, by contacting in writing his or her local human resources representative, whose contact details are Mari McBurney, 30 Pasir Panjang Rd #10-31/32, 117440, Singapore; +65 6216 7812; mari.mcburney@nike.com. Further, the Participant understands that he or she is providing the consents herein on a purely voluntary basis. If the Participant does not consent, or if the Participant later seeks to revoke the consent, his or her employment status or service and career with the Employer will not be affected; the only consequence of refusing or withdrawing the consent is that the Company would not be able to grant future RSUs or other equity awards to the Participant or administer or maintain such awards. Therefore, the Participant understands that refusing or withdrawing his or her consent may affect his or her ability to participate in the Plan. For more information on the consequences of the refusal to consent or withdrawal of consent, the Participant understands that he or she may contact his or her local human resources representative.
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Dated:
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April 5, 2018
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/s/ Mark G. Parker
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Mark G. Parker
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Chief Executive Officer
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Dated:
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April 5, 2018
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/s/ Andrew Campion
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Andrew Campion
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Chief Financial Officer
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Dated:
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April 5, 2018
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/s/ Mark G. Parker
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Mark G. Parker
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Chief Executive Officer
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Dated:
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April 5, 2018
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/s/ Andrew Campion
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Andrew Campion
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Chief Financial Officer
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