OREGON
|
93-0584541
|
(State or other jurisdiction of incorporation)
|
(IRS Employer Identification No.)
|
One Bowerman Drive, Beaverton, Oregon
|
97005-6453
|
(Address of principal executive offices)
|
(Zip Code)
|
(503) 671-6453
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SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
|
|
Class B Common Stock
|
New York Stock Exchange
|
(Title of each class)
|
(Name of each exchange on which registered)
|
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
|
||
NONE
|
As of November 30, 2017, the aggregate market values of the Registrant
’
s Common Stock held by non-affiliates were:
|
||||
|
Class A
|
$
|
4,475,052,736
|
|
|
Class B
|
78,093,099,655
|
|
|
|
|
$
|
82,568,152,391
|
|
|
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Page
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ITEM 1.
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ITEM 1A.
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ITEM 1B.
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ITEM 2.
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ITEM 3.
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ITEM 4.
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ITEM 5.
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ITEM 6.
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ITEM 7.
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ITEM 7A.
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ITEM 8.
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ITEM 9.
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ITEM 9A.
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ITEM 9B.
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(Except for the information set forth under “Executive Officers of the Registrant” in Item 1 above, Part III is incorporated by reference from the Proxy Statement for the NIKE, Inc. 2018 Annual Meeting of Shareholders.)
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ITEM 10.
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ITEM 11.
|
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ITEM 12.
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ITEM 13.
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ITEM 14.
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ITEM 15.
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ITEM 16.
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General
|
Products
|
Sales and Marketing
|
United States Market
|
U.S. Retail Stores
|
Number
|
|
NIKE Brand factory stores
|
220
|
|
NIKE Brand in-line stores (including employee-only stores)
|
31
|
|
Converse stores (including factory stores)
|
112
|
|
Hurley stores (including factory and employee stores)
|
29
|
|
TOTAL
|
392
|
|
International Markets
|
Non-U.S. Retail Stores
|
Number
|
|
NIKE Brand factory stores
|
664
|
|
NIKE Brand in-line stores (including employee-only stores)
|
65
|
|
Converse stores (including factory stores)
|
61
|
|
TOTAL
|
790
|
|
Significant Customer
|
Product Research, Design and Development
|
Manufacturing
|
International Operations and Trade
|
Competition
|
•
|
Product attributes such as quality; performance and reliability; new product innovation and development and consumer price/value.
|
•
|
Consumer connection and affinity for brands and products, developed through marketing and promotion; social media interaction; customer support and service; identification with prominent and influential athletes, public figures, coaches, teams, colleges and sports leagues who endorse our brands and use our products and active engagement through sponsored sporting events and clinics.
|
•
|
Effective sourcing and distribution of products, with attractive merchandising and presentation at retail, both in-store and online.
|
Trademarks and Patents
|
Employees
|
Executive Officers of the Registrant
|
•
|
Slower consumer spending may result in reduced demand for our products, reduced orders from retailers for our products, order cancellations, lower revenues, higher discounts, increased inventories and lower gross margins.
|
•
|
In the future, we may be unable to access financing in the credit and capital markets at reasonable rates in the event we find it desirable to do so.
|
•
|
We conduct transactions in various currencies, which increases our exposure to fluctuations in foreign currency exchange rates relative to the U.S. Dollar. Continued volatility in the markets and exchange rates for foreign currencies and contracts in foreign currencies, including in response to certain policies advocated or implemented by the U.S. presidential administration, could have a significant impact on our reported operating results and financial condition.
|
•
|
Continued volatility in the availability and prices for commodities and raw materials we use in our products and in our supply chain (such as cotton or petroleum derivatives) could have a material adverse effect on our costs, gross margins and profitability.
|
•
|
If retailers of our products experience declining revenues or experience difficulty obtaining financing in the capital and credit markets to purchase our products, this could result in reduced orders for our products, order cancellations, late retailer payments, extended payment terms, higher accounts receivable, reduced cash flows, greater expense associated with collection efforts and increased bad debt expense.
|
•
|
If retailers of our products experience severe financial difficulty, some may become insolvent and cease business operations, which could negatively impact the sale of our products to consumers.
|
•
|
If contract manufacturers of our products or other participants in our supply chain experience difficulty obtaining financing in the capital and credit markets to purchase raw materials or to finance capital equipment and other general working capital needs, it may result in delays or non-delivery of shipments of our products.
|
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)
|
||||||
March 1 — March 31, 2018
|
|
8,602,814
|
|
|
$
|
65.94
|
|
|
8,602,814
|
|
|
$
|
4,282
|
|
April 1 — April 30, 2018
|
|
7,823,991
|
|
|
$
|
67.08
|
|
|
7,823,991
|
|
|
$
|
3,757
|
|
May 1 — May 31, 2018
|
|
6,625,000
|
|
|
$
|
69.63
|
|
|
6,625,000
|
|
|
$
|
3,296
|
|
|
|
23,051,805
|
|
|
$
|
67.39
|
|
|
23,051,805
|
|
|
|
Performance Graph
|
(In millions, except per share data and financial ratios)
|
Financial History
|
||||||||||||||||||
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|||||||||||
Year Ended May 31,
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues
|
$
|
36,397
|
|
|
$
|
34,350
|
|
|
$
|
32,376
|
|
|
$
|
30,601
|
|
|
$
|
27,799
|
|
Gross profit
|
15,956
|
|
|
15,312
|
|
|
14,971
|
|
|
14,067
|
|
|
12,446
|
|
|||||
Gross margin
|
43.8
|
%
|
|
44.6
|
%
|
|
46.2
|
%
|
|
46.0
|
%
|
|
44.8
|
%
|
|||||
Net income
|
1,933
|
|
|
4,240
|
|
|
3,760
|
|
|
3,273
|
|
|
2,693
|
|
|||||
Earnings per common share:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
1.19
|
|
|
2.56
|
|
|
2.21
|
|
|
1.90
|
|
|
1.52
|
|
|||||
Diluted
|
1.17
|
|
|
2.51
|
|
|
2.16
|
|
|
1.85
|
|
|
1.49
|
|
|||||
Weighted average common shares outstanding
|
1,623.8
|
|
|
1,657.8
|
|
|
1,697.9
|
|
|
1,723.5
|
|
|
1,766.7
|
|
|||||
Diluted weighted average common shares outstanding
|
1,659.1
|
|
|
1,692.0
|
|
|
1,742.5
|
|
|
1,768.8
|
|
|
1,811.6
|
|
|||||
Cash dividends declared per common share
|
0.78
|
|
|
0.70
|
|
|
0.62
|
|
|
0.54
|
|
|
0.47
|
|
|||||
Cash flow from operations
(1)
|
4,955
|
|
|
3,846
|
|
|
3,399
|
|
|
4,906
|
|
|
3,158
|
|
|||||
Price range of common stock:
|
|
|
|
|
|
|
|
|
|
||||||||||
High
|
73.49
|
|
|
60.33
|
|
|
68.19
|
|
|
52.75
|
|
|
40.13
|
|
|||||
Low
|
50.35
|
|
|
49.01
|
|
|
47.25
|
|
|
36.57
|
|
|
29.56
|
|
|||||
At May 31,
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and equivalents
|
$
|
4,249
|
|
|
$
|
3,808
|
|
|
$
|
3,138
|
|
|
$
|
3,852
|
|
|
$
|
2,220
|
|
Short-term investments
|
996
|
|
|
2,371
|
|
|
2,319
|
|
|
2,072
|
|
|
2,922
|
|
|||||
Inventories
|
5,261
|
|
|
5,055
|
|
|
4,838
|
|
|
4,337
|
|
|
3,947
|
|
|||||
Working capital
|
9,094
|
|
|
10,587
|
|
|
9,667
|
|
|
9,225
|
|
|
8,319
|
|
|||||
Total assets
|
22,536
|
|
|
23,259
|
|
|
21,379
|
|
|
21,590
|
|
|
18,579
|
|
|||||
Long-term debt
|
3,468
|
|
|
3,471
|
|
|
1,993
|
|
|
1,072
|
|
|
1,191
|
|
|||||
Capital lease obligations
|
75
|
|
|
27
|
|
|
15
|
|
|
5
|
|
|
74
|
|
|||||
Redeemable preferred stock
|
0.3
|
|
|
0.3
|
|
|
0.3
|
|
|
0.3
|
|
|
0.3
|
|
|||||
Shareholders’ equity
|
9,812
|
|
|
12,407
|
|
|
12,258
|
|
|
12,707
|
|
|
10,824
|
|
|||||
Year-end stock price
|
71.80
|
|
|
52.99
|
|
|
55.22
|
|
|
50.84
|
|
|
38.46
|
|
|||||
Market capitalization
|
114,983
|
|
|
87,084
|
|
|
92,867
|
|
|
87,044
|
|
|
66,921
|
|
|||||
Financial Ratios:
|
|
|
|
|
|
|
|
|
|
||||||||||
Return on equity
(2)
|
17.4
|
%
|
|
34.4
|
%
|
|
30.1
|
%
|
|
27.8
|
%
|
|
24.6
|
%
|
|||||
Return on assets
(2)
|
8.4
|
%
|
|
19.0
|
%
|
|
17.5
|
%
|
|
16.3
|
%
|
|
14.9
|
%
|
|||||
Inventory turns
|
4.0
|
|
|
3.8
|
|
|
3.8
|
|
|
4.0
|
|
|
4.1
|
|
|||||
Current ratio at May 31
|
2.5
|
|
|
2.9
|
|
|
2.8
|
|
|
2.5
|
|
|
2.7
|
|
|||||
Price/Earnings ratio at May 31
(2)
|
61.4
|
|
|
21.1
|
|
|
25.6
|
|
|
27.5
|
|
|
25.9
|
|
(1)
|
Prior year amounts have been updated to reflect the adoption of Accounting Standards Update No. 2016-09, Compensation — Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. As a result of adoption, the Company reclassified cash inflows of $177 million, $281 million, $218 million and $132 million for the years ended May 31, 2017, 2016, 2015 and 2014, respectively, related to excess tax benefits from share-based payment awards, from Cash used by financing activities to Cash provided by operations. Additionally, the Company reclassified cash outflows of $29 million, $22 million, $8 million and $13 million for the years ended May 31, 2017, 2016, 2015 and 2014, respectively, related to tax payments for the net settlement of share-based payment awards, from Cash provided by operations to Cash used by financing activities within the Consolidated Statements of Cash Flows. Refer to
Note 1 — Summary of Significant Accounting Policies
for additional information.
|
(2)
|
Certain fiscal 2018 financial ratios reflect the impact of the Tax Cuts and Jobs Act. Refer to
Note 9 — Income Taxes
for additional information.
|
Selected Quarterly Financial Data
|
(Unaudited)
(In millions, except per share data)
|
|
1st Quarter
|
|
2nd Quarter
|
|
3rd Quarter
|
|
4th Quarter
|
||||||||||||||||||||||||
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
(1)
|
|
2017
|
|
2018
|
|
2017
|
||||||||||||||||||
Revenues
|
|
$
|
9,070
|
|
|
$
|
9,061
|
|
|
$
|
8,554
|
|
|
$
|
8,180
|
|
|
$
|
8,984
|
|
|
$
|
8,432
|
|
|
$
|
9,789
|
|
|
$
|
8,677
|
|
Gross profit
|
|
3,962
|
|
|
4,123
|
|
|
3,678
|
|
|
3,616
|
|
|
3,938
|
|
|
3,750
|
|
|
4,378
|
|
|
3,823
|
|
||||||||
Gross margin
|
|
43.7
|
%
|
|
45.5
|
%
|
|
43.0
|
%
|
|
44.2
|
%
|
|
43.8
|
%
|
|
44.5
|
%
|
|
44.7
|
%
|
|
44.1
|
%
|
||||||||
Net income (loss)
|
|
950
|
|
|
1,249
|
|
|
767
|
|
|
842
|
|
|
(921
|
)
|
|
1,141
|
|
|
1,137
|
|
|
1,008
|
|
||||||||
Earnings (loss) per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Basic
|
|
0.58
|
|
|
0.75
|
|
|
0.47
|
|
|
0.51
|
|
|
(0.57
|
)
|
|
0.69
|
|
|
0.71
|
|
|
0.61
|
|
||||||||
Diluted
|
|
0.57
|
|
|
0.73
|
|
|
0.46
|
|
|
0.50
|
|
|
(0.57
|
)
|
|
0.68
|
|
|
0.69
|
|
|
0.60
|
|
||||||||
Weighted average common shares outstanding
|
|
1,639.1
|
|
|
1,672.0
|
|
|
1,627.0
|
|
|
1,659.1
|
|
|
1,623.5
|
|
|
1,653.1
|
|
|
1,605.7
|
|
|
1,646.9
|
|
||||||||
Diluted weighted average common shares outstanding
|
|
1,676.9
|
|
|
1,708.9
|
|
|
1,660.9
|
|
|
1,693.2
|
|
|
1,623.5
|
|
|
1,686.3
|
|
|
1,641.2
|
|
|
1,678.6
|
|
||||||||
Cash dividends declared per common share
|
|
0.18
|
|
|
0.16
|
|
|
0.20
|
|
|
0.18
|
|
|
0.20
|
|
|
0.18
|
|
|
0.20
|
|
|
0.18
|
|
||||||||
Price range of common stock:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
High
|
|
60.53
|
|
|
60.33
|
|
|
61.21
|
|
|
59.18
|
|
|
70.25
|
|
|
58.42
|
|
|
73.49
|
|
|
59.00
|
|
||||||||
Low
|
|
50.79
|
|
|
51.48
|
|
|
50.35
|
|
|
49.01
|
|
|
59.24
|
|
|
50.06
|
|
|
63.21
|
|
|
50.81
|
|
(1)
|
The third quarter of fiscal 2018 reflects the impact from the enactment of the Tax Cuts and Jobs Act. Refer to
Note 9 — Income Taxes
for additional information.
|
•
|
High single-digit revenue growth;
|
•
|
Gross margin expansion of as much as 50 basis points
;
|
•
|
Slight selling and administrative expense leverage;
|
•
|
Mid-teens earnings per share growth; and
|
•
|
Low-thirties percentage rate of return on invested capital.
|
Results of Operations
|
(Dollars in millions, except per share data)
|
|
Fiscal 2018
|
|
Fiscal 2017
|
|
% Change
|
|
Fiscal 2016
|
|
% Change
|
||||||||
Revenues
|
|
$
|
36,397
|
|
|
$
|
34,350
|
|
|
6
|
%
|
|
$
|
32,376
|
|
|
6
|
%
|
Cost of sales
|
|
20,441
|
|
|
19,038
|
|
|
7
|
%
|
|
17,405
|
|
|
9
|
%
|
|||
Gross profit
|
|
15,956
|
|
|
15,312
|
|
|
4
|
%
|
|
14,971
|
|
|
2
|
%
|
|||
Gross margin
|
|
43.8
|
%
|
|
44.6
|
%
|
|
|
|
46.2
|
%
|
|
|
|||||
Demand creation expense
|
|
3,577
|
|
|
3,341
|
|
|
7
|
%
|
|
3,278
|
|
|
2
|
%
|
|||
Operating overhead expense
|
|
7,934
|
|
|
7,222
|
|
|
10
|
%
|
|
7,191
|
|
|
0
|
%
|
|||
Total selling and administrative expense
|
|
11,511
|
|
|
10,563
|
|
|
9
|
%
|
|
10,469
|
|
|
1
|
%
|
|||
% of revenues
|
|
31.6
|
%
|
|
30.8
|
%
|
|
|
|
32.3
|
%
|
|
|
|||||
Interest expense (income), net
|
|
54
|
|
|
59
|
|
|
—
|
|
|
19
|
|
|
—
|
|
|||
Other expense (income), net
|
|
66
|
|
|
(196
|
)
|
|
—
|
|
|
(140
|
)
|
|
—
|
|
|||
Income before income taxes
|
|
4,325
|
|
|
4,886
|
|
|
-11
|
%
|
|
4,623
|
|
|
6
|
%
|
|||
Income tax expense
|
|
2,392
|
|
|
646
|
|
|
270
|
%
|
|
863
|
|
|
-25
|
%
|
|||
Effective tax rate
|
|
55.3
|
%
|
|
13.2
|
%
|
|
|
|
18.7
|
%
|
|
|
|||||
NET INCOME
|
|
$
|
1,933
|
|
|
$
|
4,240
|
|
|
-54
|
%
|
|
$
|
3,760
|
|
|
13
|
%
|
Diluted earnings per common share
|
|
$
|
1.17
|
|
|
$
|
2.51
|
|
|
-53
|
%
|
|
$
|
2.16
|
|
|
16
|
%
|
Consolidated Operating Results
|
(Dollars in millions)
|
Fiscal 2018
|
Fiscal 2017
(1)
|
% Change
|
% Change Excluding Currency Changes
(2)
|
Fiscal 2016
(1)
|
% Change
|
% Change Excluding Currency Changes
(2)
|
||||||||||
NIKE, Inc. Revenues:
|
|
|
|
|
|
|
|
||||||||||
NIKE Brand Revenues by:
|
|
|
|
|
|
|
|
||||||||||
Footwear
|
$
|
22,268
|
|
$
|
21,081
|
|
6
|
%
|
4
|
%
|
$
|
19,871
|
|
6
|
%
|
8
|
%
|
Apparel
|
10,733
|
|
9,654
|
|
11
|
%
|
9
|
%
|
9,067
|
|
6
|
%
|
9
|
%
|
|||
Equipment
|
1,396
|
|
1,425
|
|
-2
|
%
|
-4
|
%
|
1,496
|
|
-5
|
%
|
-3
|
%
|
|||
Global Brand Divisions
(3)
|
88
|
|
73
|
|
21
|
%
|
12
|
%
|
73
|
|
0
|
%
|
2
|
%
|
|||
Total NIKE Brand Revenues
|
34,485
|
|
32,233
|
|
7
|
%
|
5
|
%
|
30,507
|
|
6
|
%
|
8
|
%
|
|||
Converse
|
1,886
|
|
2,042
|
|
-8
|
%
|
-11
|
%
|
1,955
|
|
4
|
%
|
6
|
%
|
|||
Corporate
(4)
|
26
|
|
75
|
|
—
|
|
—
|
|
(86
|
)
|
—
|
|
—
|
|
|||
TOTAL NIKE, INC. REVENUES
|
$
|
36,397
|
|
$
|
34,350
|
|
6
|
%
|
4
|
%
|
$
|
32,376
|
|
6
|
%
|
8
|
%
|
Supplemental NIKE Brand Revenues Details:
|
|
|
|
|
|
|
|
||||||||||
NIKE Brand Revenues by:
|
|
|
|
|
|
|
|
||||||||||
Sales to Wholesale Customers
|
$
|
23,969
|
|
$
|
23,078
|
|
4
|
%
|
2
|
%
|
$
|
22,577
|
|
2
|
%
|
5
|
%
|
Sales through NIKE Direct
|
10,428
|
|
9,082
|
|
15
|
%
|
12
|
%
|
7,857
|
|
16
|
%
|
18
|
%
|
|||
Global Brand Divisions
(3)
|
88
|
|
73
|
|
21
|
%
|
12
|
%
|
73
|
|
0
|
%
|
2
|
%
|
|||
TOTAL NIKE BRAND REVENUES
|
$
|
34,485
|
|
$
|
32,233
|
|
7
|
%
|
5
|
%
|
$
|
30,507
|
|
6
|
%
|
8
|
%
|
NIKE Brand Revenues on a Wholesale Equivalent Basis:
(5)
|
|
|
|
|
|
|
|
||||||||||
Sales to Wholesale Customers
|
$
|
23,969
|
|
$
|
23,078
|
|
4
|
%
|
2
|
%
|
$
|
22,577
|
|
2
|
%
|
5
|
%
|
Sales from our Wholesale Operations to NIKE Direct Operations
|
6,332
|
|
5,616
|
|
13
|
%
|
10
|
%
|
4,672
|
|
20
|
%
|
22
|
%
|
|||
TOTAL NIKE BRAND WHOLESALE EQUIVALENT REVENUES
|
$
|
30,301
|
|
$
|
28,694
|
|
6
|
%
|
4
|
%
|
$
|
27,249
|
|
5
|
%
|
8
|
%
|
NIKE Brand Wholesale Equivalent Revenues by:
(5)
|
|
|
|
|
|
|
|
||||||||||
Men’s
|
$
|
17,114
|
|
$
|
16,041
|
|
7
|
%
|
5
|
%
|
$
|
15,410
|
|
4
|
%
|
6
|
%
|
Women’s
|
6,915
|
|
6,644
|
|
4
|
%
|
2
|
%
|
6,296
|
|
6
|
%
|
8
|
%
|
|||
Young Athletes’
|
4,906
|
|
4,838
|
|
1
|
%
|
-1
|
%
|
4,560
|
|
6
|
%
|
8
|
%
|
|||
Others
(6)
|
1,366
|
|
1,171
|
|
17
|
%
|
13
|
%
|
983
|
|
19
|
%
|
21
|
%
|
|||
TOTAL NIKE BRAND WHOLESALE EQUIVALENT REVENUES
|
$
|
30,301
|
|
$
|
28,694
|
|
6
|
%
|
4
|
%
|
$
|
27,249
|
|
5
|
%
|
8
|
%
|
NIKE Brand Wholesale Equivalent Revenues by:
(5)
|
|
|
|
|
|
|
|
||||||||||
Running
|
$
|
5,198
|
|
$
|
4,860
|
|
7
|
%
|
5
|
%
|
$
|
4,401
|
|
10
|
%
|
13
|
%
|
NIKE Basketball
|
1,494
|
|
1,292
|
|
16
|
%
|
14
|
%
|
1,378
|
|
-6
|
%
|
-5
|
%
|
|||
Jordan Brand
|
2,856
|
|
3,098
|
|
-8
|
%
|
-9
|
%
|
2,753
|
|
13
|
%
|
13
|
%
|
|||
Football (Soccer)
|
2,146
|
|
1,984
|
|
8
|
%
|
5
|
%
|
2,143
|
|
-7
|
%
|
-4
|
%
|
|||
Training
|
3,126
|
|
3,080
|
|
1
|
%
|
0
|
%
|
3,150
|
|
-2
|
%
|
-1
|
%
|
|||
Sportswear
|
10,018
|
|
8,988
|
|
11
|
%
|
8
|
%
|
8,129
|
|
11
|
%
|
14
|
%
|
|||
Others
(7)
|
5,463
|
|
5,392
|
|
1
|
%
|
0
|
%
|
5,295
|
|
2
|
%
|
3
|
%
|
|||
TOTAL NIKE BRAND WHOLESALE EQUIVALENT REVENUES
|
$
|
30,301
|
|
$
|
28,694
|
|
6
|
%
|
4
|
%
|
$
|
27,249
|
|
5
|
%
|
8
|
%
|
(1)
|
Certain prior year amounts have been reclassified to conform to fiscal 2018 presentation. These changes had no impact on previously reported consolidated results of operations or shareholders’ equity.
|
(2)
|
The percent 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.
|
(5)
|
References to NIKE Brand wholesale equivalent revenues, which are considered non-GAAP financial measures, are intended to provide context as to the total size of our NIKE Brand market footprint if we had no NIKE Direct operations. NIKE Brand wholesale equivalent revenues consist of (1) sales to external wholesale customers and (2) internal sales from our wholesale operations to our NIKE Direct operations, which are charged at prices comparable to those charged to external wholesale customers.
|
(6)
|
Others include all unisex products, equipment and other products not allocated to Men’s, Women’s and Young Athletes’, as well as certain adjustments that are not allocated to products designated by gender or age.
|
(7)
|
Others include all other categories and certain adjustments that are not allocated at the category level.
|
(Dollars in millions)
|
|
Fiscal 2018
|
|
|
Fiscal 2017
|
|
|
% Change
|
|
Fiscal 2016
|
|
|
% Change
|
|||||
Gross profit
|
|
$
|
15,956
|
|
|
$
|
15,312
|
|
|
4
|
%
|
|
$
|
14,971
|
|
|
2
|
%
|
Gross margin
|
|
43.8
|
%
|
|
44.6
|
%
|
|
(80
|
) bps
|
|
46.2
|
%
|
|
(160
|
) bps
|
•
|
Unfavorable changes in net foreign currency exchange rates, including hedges (decreasing gross margin approximately 90 basis points);
|
•
|
Lower NIKE Direct margin (decreasing gross margin approximately 10 basis points) reflecting higher mix of off-price sales in the first half of fiscal 2018, which was partially offset by margin expansion in the second half of fiscal 2018;
|
•
|
NIKE Brand full-price ASP, net of discounts, on a wholesale equivalent basis, which was flat for fiscal 2018 as higher discounts in the first half of fiscal 2018 were offset by higher full-price ASP in the second half of the year; and
|
•
|
NIKE Brand product costs, on a wholesale equivalent basis, which were flat.
|
•
|
Higher NIKE Brand full-price ASP, net of discounts, on a wholesale equivalent basis (increasing gross margin approximately 70 basis points) aligned with our strategy to deliver innovative, premium products to the consumer;
|
•
|
Higher NIKE Brand product costs (decreasing gross margin approximately 100 basis points) as an increase in the mix of higher cost products and labor input cost inflation more than offset lower material input costs;
|
•
|
Unfavorable changes in net foreign currency exchange rates, including hedges (decreasing gross margin approximately 90 basis points); and
|
•
|
Lower NIKE Direct margins (decreasing gross margin approximately 20 basis points) reflecting the impact of higher off-price sales.
|
(Dollars in millions)
|
|
Fiscal 2018
|
|
|
Fiscal 2017
|
|
|
% Change
|
|
Fiscal 2016
|
|
|
% Change
|
|||||
Demand creation expense
(1)
|
|
$
|
3,577
|
|
|
$
|
3,341
|
|
|
7
|
%
|
|
$
|
3,278
|
|
|
2
|
%
|
Operating overhead expense
|
|
7,934
|
|
|
7,222
|
|
|
10
|
%
|
|
7,191
|
|
|
0
|
%
|
|||
Total selling and administrative expense
|
|
$
|
11,511
|
|
|
$
|
10,563
|
|
|
9
|
%
|
|
$
|
10,469
|
|
|
1
|
%
|
% of revenues
|
|
31.6
|
%
|
|
30.8
|
%
|
|
80
|
bps
|
|
32.3
|
%
|
|
(150
|
) bps
|
(1)
|
Demand creation expense consists of advertising and promotion costs, including costs of endorsement contracts, complimentary product, television, digital and print advertising and media costs, brand events and retail brand presentation.
|
(In millions)
|
|
Fiscal 2018
|
|
|
Fiscal 2017
|
|
|
Fiscal 2016
|
|
|||
Other expense (income), net
|
|
$
|
66
|
|
|
$
|
(196
|
)
|
|
$
|
(140
|
)
|
|
|
Fiscal 2018
|
|
|
Fiscal 2017
|
|
|
% Change
|
|
Fiscal 2016
|
|
|
% Change
|
||
Effective tax rate
|
|
55.3
|
%
|
|
13.2
|
%
|
|
4,210
|
bps
|
|
18.7
|
%
|
|
(550
|
) bps
|
Operating Segments
|
(Dollars in millions)
|
|
Fiscal 2018
|
|
Fiscal 2017
(1)
|
|
% Change
|
|
% Change Excluding Currency Changes
(2)
|
|
Fiscal 2016
(1)
|
|
% Change
|
|
% Change Excluding Currency Changes
(2)
|
||||||||||
North America
|
|
$
|
14,855
|
|
|
$
|
15,216
|
|
|
-2
|
%
|
|
-2
|
%
|
|
$
|
14,764
|
|
|
3
|
%
|
|
3
|
%
|
Europe, Middle East & Africa
|
|
9,242
|
|
|
7,970
|
|
|
16
|
%
|
|
9
|
%
|
|
7,568
|
|
|
5
|
%
|
|
10
|
%
|
|||
Greater China
|
|
5,134
|
|
|
4,237
|
|
|
21
|
%
|
|
18
|
%
|
|
3,785
|
|
|
12
|
%
|
|
17
|
%
|
|||
Asia Pacific & Latin America
|
|
5,166
|
|
|
4,737
|
|
|
9
|
%
|
|
10
|
%
|
|
4,317
|
|
|
10
|
%
|
|
13
|
%
|
|||
Global Brand Divisions
(3)
|
|
88
|
|
|
73
|
|
|
21
|
%
|
|
12
|
%
|
|
73
|
|
|
0
|
%
|
|
2
|
%
|
|||
TOTAL NIKE BRAND
|
|
34,485
|
|
|
32,233
|
|
|
7
|
%
|
|
5
|
%
|
|
30,507
|
|
|
6
|
%
|
|
8
|
%
|
|||
Converse
|
|
1,886
|
|
|
2,042
|
|
|
-8
|
%
|
|
-11
|
%
|
|
1,955
|
|
|
4
|
%
|
|
6
|
%
|
|||
Corporate
(4)
|
|
26
|
|
|
75
|
|
|
—
|
|
|
—
|
|
|
(86
|
)
|
|
—
|
|
|
—
|
|
|||
TOTAL NIKE, INC. REVENUES
|
|
$
|
36,397
|
|
|
$
|
34,350
|
|
|
6
|
%
|
|
4
|
%
|
|
$
|
32,376
|
|
|
6
|
%
|
|
8
|
%
|
(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 percent 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 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.
|
(Dollars in millions)
|
|
Fiscal 2018
|
|
Fiscal 2017
(1)
|
|
% Change
|
|
Fiscal 2016
(1)
|
|
% Change
|
||||||||
North America
|
|
$
|
3,600
|
|
|
$
|
3,875
|
|
|
-7
|
%
|
|
$
|
3,763
|
|
|
3
|
%
|
Europe, Middle East & Africa
|
|
1,587
|
|
|
1,507
|
|
|
5
|
%
|
|
1,787
|
|
|
-16
|
%
|
|||
Greater China
|
|
1,807
|
|
|
1,507
|
|
|
20
|
%
|
|
1,372
|
|
|
10
|
%
|
|||
Asia Pacific & Latin America
|
|
1,189
|
|
|
980
|
|
|
21
|
%
|
|
1,002
|
|
|
-2
|
%
|
|||
Global Brand Divisions
|
|
(2,658
|
)
|
|
(2,677
|
)
|
|
1
|
%
|
|
(2,596
|
)
|
|
-3
|
%
|
|||
TOTAL NIKE BRAND
|
|
5,525
|
|
|
5,192
|
|
|
6
|
%
|
|
5,328
|
|
|
-3
|
%
|
|||
Converse
|
|
310
|
|
|
477
|
|
|
-35
|
%
|
|
487
|
|
|
-2
|
%
|
|||
Corporate
|
|
(1,456
|
)
|
|
(724
|
)
|
|
-101
|
%
|
|
(1,173
|
)
|
|
38
|
%
|
|||
TOTAL NIKE, INC. EARNINGS BEFORE INTEREST AND TAXES
|
|
4,379
|
|
|
4,945
|
|
|
-11
|
%
|
|
4,642
|
|
|
7
|
%
|
|||
Interest expense (income), net
|
|
54
|
|
|
59
|
|
|
—
|
|
|
19
|
|
|
—
|
|
|||
TOTAL NIKE, INC. INCOME BEFORE INCOME TAXES
|
|
$
|
4,325
|
|
|
$
|
4,886
|
|
|
-11
|
%
|
|
$
|
4,623
|
|
|
6
|
%
|
(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.
|
(Dollars in millions)
|
|
Fiscal 2018
|
|
Fiscal 2017
|
|
% Change
|
|
% Change Excluding Currency Changes
|
|
Fiscal 2016
|
|
% Change
|
|
% Change Excluding Currency Changes
|
||||||||||
Revenues by:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Footwear
|
|
$
|
9,322
|
|
|
$
|
9,684
|
|
|
-4
|
%
|
|
-4
|
%
|
|
$
|
9,299
|
|
|
4
|
%
|
|
4
|
%
|
Apparel
|
|
4,938
|
|
|
4,886
|
|
|
1
|
%
|
|
1
|
%
|
|
4,746
|
|
|
3
|
%
|
|
3
|
%
|
|||
Equipment
|
|
595
|
|
|
646
|
|
|
-8
|
%
|
|
-8
|
%
|
|
719
|
|
|
-10
|
%
|
|
-10
|
%
|
|||
TOTAL REVENUES
|
|
$
|
14,855
|
|
|
$
|
15,216
|
|
|
-2
|
%
|
|
-2
|
%
|
|
$
|
14,764
|
|
|
3
|
%
|
|
3
|
%
|
Revenues by:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Sales to Wholesale Customers
|
|
$
|
10,159
|
|
|
$
|
10,756
|
|
|
-6
|
%
|
|
-6
|
%
|
|
$
|
10,674
|
|
|
1
|
%
|
|
1
|
%
|
Sales through NIKE Direct
|
|
4,696
|
|
|
4,460
|
|
|
5
|
%
|
|
5
|
%
|
|
4,090
|
|
|
9
|
%
|
|
9
|
%
|
|||
TOTAL REVENUES
|
|
$
|
14,855
|
|
|
$
|
15,216
|
|
|
-2
|
%
|
|
-2
|
%
|
|
$
|
14,764
|
|
|
3
|
%
|
|
3
|
%
|
EARNINGS BEFORE INTEREST
AND TAXES
|
|
$
|
3,600
|
|
|
$
|
3,875
|
|
|
-7
|
%
|
|
|
|
$
|
3,763
|
|
|
3
|
%
|
|
|
(Dollars in millions)
|
|
Fiscal 2018
|
|
Fiscal 2017
|
|
% Change
|
|
% Change Excluding Currency Changes
|
|
Fiscal 2016
|
|
% Change
|
|
% Change Excluding Currency Changes
|
||||||||||
Revenues by:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Footwear
|
|
$
|
5,875
|
|
|
$
|
5,192
|
|
|
13
|
%
|
|
6
|
%
|
|
$
|
5,043
|
|
|
3
|
%
|
|
8
|
%
|
Apparel
|
|
2,940
|
|
|
2,395
|
|
|
23
|
%
|
|
16
|
%
|
|
2,149
|
|
|
11
|
%
|
|
17
|
%
|
|||
Equipment
|
|
427
|
|
|
383
|
|
|
11
|
%
|
|
6
|
%
|
|
376
|
|
|
2
|
%
|
|
7
|
%
|
|||
TOTAL REVENUES
|
|
$
|
9,242
|
|
|
$
|
7,970
|
|
|
16
|
%
|
|
9
|
%
|
|
$
|
7,568
|
|
|
5
|
%
|
|
10
|
%
|
Revenues by:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Sales to Wholesale Customers
|
|
$
|
6,765
|
|
|
$
|
5,917
|
|
|
14
|
%
|
|
8
|
%
|
|
$
|
5,869
|
|
|
1
|
%
|
|
5
|
%
|
Sales through NIKE Direct
|
|
2,477
|
|
|
2,053
|
|
|
21
|
%
|
|
13
|
%
|
|
1,699
|
|
|
21
|
%
|
|
27
|
%
|
|||
TOTAL REVENUES
|
|
$
|
9,242
|
|
|
$
|
7,970
|
|
|
16
|
%
|
|
9
|
%
|
|
$
|
7,568
|
|
|
5
|
%
|
|
10
|
%
|
EARNINGS BEFORE INTEREST AND TAXES
|
|
$
|
1,587
|
|
|
$
|
1,507
|
|
|
5
|
%
|
|
|
|
$
|
1,787
|
|
|
-16
|
%
|
|
|
(Dollars in millions)
|
|
Fiscal 2018
|
|
Fiscal 2017
|
|
% Change
|
|
% Change Excluding Currency Changes
|
|
Fiscal 2016
|
|
% Change
|
|
% Change Excluding Currency Changes
|
||||||||||
Revenues by:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Footwear
|
|
$
|
3,496
|
|
|
$
|
2,920
|
|
|
20
|
%
|
|
16
|
%
|
|
$
|
2,599
|
|
|
12
|
%
|
|
18
|
%
|
Apparel
|
|
1,508
|
|
|
1,188
|
|
|
27
|
%
|
|
23
|
%
|
|
1,055
|
|
|
13
|
%
|
|
18
|
%
|
|||
Equipment
|
|
130
|
|
|
129
|
|
|
1
|
%
|
|
-1
|
%
|
|
131
|
|
|
-2
|
%
|
|
3
|
%
|
|||
TOTAL REVENUES
|
|
$
|
5,134
|
|
|
$
|
4,237
|
|
|
21
|
%
|
|
18
|
%
|
|
$
|
3,785
|
|
|
12
|
%
|
|
17
|
%
|
Revenues by:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Sales to Wholesale Customers
|
|
$
|
3,216
|
|
|
$
|
2,774
|
|
|
16
|
%
|
|
13
|
%
|
|
$
|
2,623
|
|
|
6
|
%
|
|
11
|
%
|
Sales through NIKE Direct
|
|
1,918
|
|
|
1,463
|
|
|
31
|
%
|
|
27
|
%
|
|
1,162
|
|
|
26
|
%
|
|
32
|
%
|
|||
TOTAL REVENUES
|
|
$
|
5,134
|
|
|
$
|
4,237
|
|
|
21
|
%
|
|
18
|
%
|
|
$
|
3,785
|
|
|
12
|
%
|
|
17
|
%
|
EARNINGS BEFORE INTEREST AND TAXES
|
|
$
|
1,807
|
|
|
$
|
1,507
|
|
|
20
|
%
|
|
|
|
$
|
1,372
|
|
|
10
|
%
|
|
|
(Dollars in millions)
|
|
Fiscal 2018
|
|
Fiscal 2017
|
|
% Change
|
|
% Change Excluding Currency Changes
|
|
Fiscal 2016
|
|
% Change
|
|
% Change Excluding Currency Changes
|
||||||||||
Revenues by:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Footwear
|
|
$
|
3,575
|
|
|
$
|
3,285
|
|
|
9
|
%
|
|
9
|
%
|
|
$
|
2,930
|
|
|
12
|
%
|
|
16
|
%
|
Apparel
|
|
1,347
|
|
|
1,185
|
|
|
14
|
%
|
|
15
|
%
|
|
1,117
|
|
|
6
|
%
|
|
9
|
%
|
|||
Equipment
|
|
244
|
|
|
267
|
|
|
-9
|
%
|
|
-8
|
%
|
|
270
|
|
|
-1
|
%
|
|
-1
|
%
|
|||
TOTAL REVENUES
|
|
$
|
5,166
|
|
|
$
|
4,737
|
|
|
9
|
%
|
|
10
|
%
|
|
$
|
4,317
|
|
|
10
|
%
|
|
13
|
%
|
Revenues by:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Sales to Wholesale Customers
|
|
$
|
3,829
|
|
|
$
|
3,631
|
|
|
5
|
%
|
|
6
|
%
|
|
$
|
3,411
|
|
|
6
|
%
|
|
10
|
%
|
Sales through NIKE Direct
|
|
1,337
|
|
|
1,106
|
|
|
21
|
%
|
|
21
|
%
|
|
906
|
|
|
22
|
%
|
|
21
|
%
|
|||
TOTAL REVENUES
|
|
$
|
5,166
|
|
|
$
|
4,737
|
|
|
9
|
%
|
|
10
|
%
|
|
$
|
4,317
|
|
|
10
|
%
|
|
13
|
%
|
EARNINGS BEFORE INTEREST
AND TAXES
|
|
$
|
1,189
|
|
|
$
|
980
|
|
|
21
|
%
|
|
|
|
$
|
1,002
|
|
|
-2
|
%
|
|
|
(Dollars in millions)
|
|
Fiscal 2018
|
|
Fiscal 2017
|
|
% Change
|
|
% Change Excluding Currency Changes
|
|
Fiscal 2016
|
|
% Change
|
|
% Change Excluding Currency Changes
|
||||||||||
Revenues
|
|
$
|
88
|
|
|
$
|
73
|
|
|
21
|
%
|
|
12
|
%
|
|
$
|
73
|
|
|
0
|
%
|
|
2
|
%
|
(Loss) Before Interest and Taxes
|
|
$
|
(2,658
|
)
|
|
$
|
(2,677
|
)
|
|
-1
|
%
|
|
|
|
$
|
(2,596
|
)
|
|
3
|
%
|
|
|
(Dollars in millions)
|
|
Fiscal 2018
|
|
Fiscal 2017
|
|
% Change
|
|
% Change Excluding Currency Changes
|
|
Fiscal 2016
|
|
% Change
|
|
% Change Excluding Currency Changes
|
||||||||||
Revenues
|
|
$
|
1,886
|
|
|
$
|
2,042
|
|
|
-8
|
%
|
|
-11
|
%
|
|
$
|
1,955
|
|
|
4
|
%
|
|
6
|
%
|
Earnings Before Interest and Taxes
|
|
$
|
310
|
|
|
$
|
477
|
|
|
-35
|
%
|
|
|
|
$
|
487
|
|
|
-2
|
%
|
|
|
(Dollars in millions)
|
|
Fiscal 2018
|
|
Fiscal 2017
|
|
% Change
|
|
Fiscal 2016
|
|
% Change
|
||||||||
Revenues
|
|
$
|
26
|
|
|
$
|
75
|
|
|
—
|
|
|
$
|
(86
|
)
|
|
—
|
|
(Loss) Before Interest and Taxes
|
|
$
|
(1,456
|
)
|
|
$
|
(724
|
)
|
|
101
|
%
|
|
$
|
(1,173
|
)
|
|
-38
|
%
|
•
|
a detrimental change in net foreign currency gains and losses of $281 million 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 expense (income), net
;
|
•
|
an unfavorable change of $255 million, primarily due to higher operating overhead expense driven by higher wage-related costs, in part reflecting one-time costs associated with our organizational realignment in the first half of fiscal 2018, as well as higher administrative costs; and
|
•
|
a detrimental change of $196 million 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 beneficial change of $280 million 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 beneficial change of $115 million, primarily driven by lower variable compensation and administrative costs in operating overhead expense; and
|
•
|
an increase in net foreign currency gains of $54 million 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 expense (income), net.
|
Foreign Currency Exposures and Hedging Practices
|
•
|
Product Costs — NIKE’s product costs are exposed to fluctuations in foreign currencies in the following ways:
|
1.
|
Product purchases denominated in currencies other than the functional currency of the transacting entity:
|
a.
|
Certain NIKE entities 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. NTC sales to a NIKE entity with a different functional currency result in 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 EMEA geography revenues, as well as a portion of our Converse European operations revenues, are earned in currencies other than the Euro (e.g., the British Pound) but are recognized at a subsidiary that uses the Euro as its functional currency. These sales generate a foreign currency exposure.
|
•
|
Other Costs — Non-functional currency denominated costs, such as endorsement contracts, also generate foreign currency risk, though to a lesser extent. In certain cases, the Company has entered into contractual agreements which have payments indexed to foreign currencies that create embedded derivative contracts recorded at fair value through
Other expense (income), net
.
Refer to
Note 16 — Risk Management and Derivatives
in the accompanying Notes to the 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 expense (income), 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)
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
Thereafter
|
|
Total
|
||||||||||||||
Operating Leases
|
|
$
|
589
|
|
|
$
|
523
|
|
|
$
|
472
|
|
|
$
|
412
|
|
|
$
|
361
|
|
|
$
|
1,608
|
|
|
$
|
3,965
|
|
Capital Leases and Other Financing Obligations
(1)
|
|
44
|
|
|
37
|
|
|
40
|
|
|
38
|
|
|
36
|
|
|
229
|
|
|
424
|
|
|||||||
Long-Term Debt
(2)
|
|
115
|
|
|
115
|
|
|
112
|
|
|
109
|
|
|
609
|
|
|
4,713
|
|
|
5,773
|
|
|||||||
Endorsement Contracts
(3)
|
|
1,391
|
|
|
1,306
|
|
|
1,158
|
|
|
1,266
|
|
|
942
|
|
|
4,438
|
|
|
10,501
|
|
|||||||
Product Purchase Obligations
(4)
|
|
4,566
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,566
|
|
|||||||
Other Purchase Obligations
(5)
|
|
1,437
|
|
|
512
|
|
|
281
|
|
|
92
|
|
|
70
|
|
|
254
|
|
|
2,646
|
|
|||||||
Transition Tax Related to the Tax Act
(6)
|
|
94
|
|
|
94
|
|
|
94
|
|
|
94
|
|
|
94
|
|
|
702
|
|
|
1,172
|
|
|||||||
TOTAL
|
|
$
|
8,236
|
|
|
$
|
2,587
|
|
|
$
|
2,157
|
|
|
$
|
2,011
|
|
|
$
|
2,112
|
|
|
$
|
11,944
|
|
|
$
|
29,047
|
|
(1)
|
Capital leases and other financing obligations include payments related to build-to-suit lease arrangements.
|
(2)
|
The cash payments due for long-term debt include estimated interest payments. Estimates of interest payments are based on outstanding principal amounts, applicable fixed interest rates or currently effective interest rates as of
May 31, 2018
(if variable), timing of scheduled payments and the term of the debt obligations.
|
(3)
|
The amounts listed for endorsement contracts represent approximate amounts of base compensation and minimum guaranteed royalty fees we are obligated to pay athlete, public figure, sport team and league endorsers of our products. Actual payments under some contracts may be higher than the amounts listed as these contracts provide for bonuses to be paid to the endorsers based upon athletic achievements and/or royalties on product sales in future periods. Actual payments under some contracts may also be lower as these contracts include provisions for reduced payments if athletic performance declines in future periods.
|
(4)
|
We generally order product at least four to five months in advance of sale based primarily on advanced orders received from external wholesale customers and internal orders from our NIKE Direct in-line stores and digital commerce operations. The amounts listed for product purchase obligations represent agreements (including open purchase orders) to purchase products in the ordinary course of business that are enforceable and legally binding and specify all significant terms. In some cases, prices are subject to change throughout the production process.
|
(5)
|
Other purchase obligations primarily include construction, service and marketing commitments, including marketing commitments associated with endorsement contracts, made in the ordinary course of business. The amounts represent the minimum payments required by legally binding contracts and agreements that specify all significant terms, including open purchase orders for non-product purchases.
|
(6)
|
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 9 — Income Taxes in the accompanying Notes to the Financial Statements for additional information.
|
|
Outstanding as
of May 31, 2018
|
||
(In millions)
|
|||
Notes payable, due at mutually agreed-upon dates within one year of issuance or on demand
|
$
|
336
|
|
Payable to Sojitz America for the purchase of inventories, generally due 60 days after shipment of goods from a foreign port
|
61
|
|
New Accounting Pronouncements
|
Critical Accounting Policies
|
Market Risk Measurement
|
|
|
Expected Maturity Date
Year Ending May 31,
|
||||||||||||||||||||||||||||||
(Dollars in millions)
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
Thereafter
|
|
Total
|
|
Fair
Value
|
||||||||||||||||
Foreign Exchange Risk
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Japanese Yen Functional Currency
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Long-term Japanese Yen debt — Fixed rate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Principal payments
|
|
$
|
6
|
|
|
$
|
6
|
|
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
15
|
|
|
$
|
16
|
|
Average interest rate
|
|
2.4
|
%
|
|
2.4
|
%
|
|
2.4
|
%
|
|
0.0
|
%
|
|
0.0
|
%
|
|
0.0
|
%
|
|
2.4
|
%
|
|
|
|||||||||
Interest Rate Risk
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Japanese Yen Functional Currency
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Long-term Japanese Yen debt — Fixed rate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Principal payments
|
|
$
|
6
|
|
|
$
|
6
|
|
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
15
|
|
|
$
|
16
|
|
Average interest rate
|
|
2.4
|
%
|
|
2.4
|
%
|
|
2.4
|
%
|
|
0.0
|
%
|
|
0.0
|
%
|
|
0.0
|
%
|
|
2.4
|
%
|
|
|
|||||||||
U.S. Dollar Functional Currency
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Long-term U.S. Dollar debt — Fixed rate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Principal payments
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
500
|
|
|
$
|
3,000
|
|
|
$
|
3,500
|
|
|
$
|
3,279
|
|
Average interest rate
|
|
0.0
|
%
|
|
0.0
|
%
|
|
0.0
|
%
|
|
0.0
|
%
|
|
2.3
|
%
|
|
3.3
|
%
|
|
3.1
|
%
|
|
|
Management’s Annual Report on Internal Control Over Financial Reporting
|
Mark G. Parker
|
Andrew Campion
|
Chairman, President and Chief Executive Officer
|
Chief Financial Officer
|
Report of Independent Registered Public Accounting Firm
|
NIKE, Inc. Consolidated Statements of Income
|
|
|
Year Ended May 31,
|
||||||||||
(In millions, except per share data)
|
|
2018
|
|
2017
|
|
2016
|
||||||
Revenues
|
|
$
|
36,397
|
|
|
$
|
34,350
|
|
|
$
|
32,376
|
|
Cost of sales
|
|
20,441
|
|
|
19,038
|
|
|
17,405
|
|
|||
Gross profit
|
|
15,956
|
|
|
15,312
|
|
|
14,971
|
|
|||
Demand creation expense
|
|
3,577
|
|
|
3,341
|
|
|
3,278
|
|
|||
Operating overhead expense
|
|
7,934
|
|
|
7,222
|
|
|
7,191
|
|
|||
Total selling and administrative expense
|
|
11,511
|
|
|
10,563
|
|
|
10,469
|
|
|||
Interest expense (income), net
|
|
54
|
|
|
59
|
|
|
19
|
|
|||
Other expense (income), net
|
|
66
|
|
|
(196
|
)
|
|
(140
|
)
|
|||
Income before income taxes
|
|
4,325
|
|
|
4,886
|
|
|
4,623
|
|
|||
Income tax expense
|
|
2,392
|
|
|
646
|
|
|
863
|
|
|||
NET INCOME
|
|
$
|
1,933
|
|
|
$
|
4,240
|
|
|
$
|
3,760
|
|
|
|
|
|
|
|
|
||||||
Earnings per common share:
|
|
|
|
|
|
|
||||||
Basic
|
|
$
|
1.19
|
|
|
$
|
2.56
|
|
|
$
|
2.21
|
|
Diluted
|
|
$
|
1.17
|
|
|
$
|
2.51
|
|
|
$
|
2.16
|
|
|
|
|
|
|
|
|
||||||
Dividends declared per common share
|
|
$
|
0.78
|
|
|
$
|
0.70
|
|
|
$
|
0.62
|
|
NIKE, Inc. Consolidated Statements of Comprehensive Income
|
|
|
Year Ended May 31,
|
||||||||||
(In millions)
|
|
2018
|
|
2017
|
|
2016
|
||||||
Net income
|
|
$
|
1,933
|
|
|
$
|
4,240
|
|
|
$
|
3,760
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
||||||
Change in net foreign currency translation adjustment
|
|
(6
|
)
|
|
16
|
|
|
(176
|
)
|
|||
Change in net gains (losses) on cash flow hedges
|
|
76
|
|
|
(515
|
)
|
|
(757
|
)
|
|||
Change in net gains (losses) on other
|
|
34
|
|
|
(32
|
)
|
|
5
|
|
|||
Total other comprehensive income (loss), net of tax
|
|
104
|
|
|
(531
|
)
|
|
(928
|
)
|
|||
TOTAL COMPREHENSIVE INCOME
|
|
$
|
2,037
|
|
|
$
|
3,709
|
|
|
$
|
2,832
|
|
NIKE, Inc. Consolidated Balance Sheets
|
|
|
May 31,
|
||||||
(In millions)
|
|
2018
|
|
2017
|
||||
ASSETS
|
|
|
|
|
||||
Current assets:
|
|
|
|
|
||||
Cash and equivalents
|
|
$
|
4,249
|
|
|
$
|
3,808
|
|
Short-term investments
|
|
996
|
|
|
2,371
|
|
||
Accounts receivable, net
|
|
3,498
|
|
|
3,677
|
|
||
Inventories
|
|
5,261
|
|
|
5,055
|
|
||
Prepaid expenses and other current assets
|
|
1,130
|
|
|
1,150
|
|
||
Total current assets
|
|
15,134
|
|
|
16,061
|
|
||
Property, plant and equipment, net
|
|
4,454
|
|
|
3,989
|
|
||
Identifiable intangible assets, net
|
|
285
|
|
|
283
|
|
||
Goodwill
|
|
154
|
|
|
139
|
|
||
Deferred income taxes and other assets
|
|
2,509
|
|
|
2,787
|
|
||
TOTAL ASSETS
|
|
$
|
22,536
|
|
|
$
|
23,259
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
||||
Current portion of long-term debt
|
|
$
|
6
|
|
|
$
|
6
|
|
Notes payable
|
|
336
|
|
|
325
|
|
||
Accounts payable
|
|
2,279
|
|
|
2,048
|
|
||
Accrued liabilities
|
|
3,269
|
|
|
3,011
|
|
||
Income taxes payable
|
|
150
|
|
|
84
|
|
||
Total current liabilities
|
|
6,040
|
|
|
5,474
|
|
||
Long-term debt
|
|
3,468
|
|
|
3,471
|
|
||
Deferred income taxes and other liabilities
|
|
3,216
|
|
|
1,907
|
|
||
Commitments and contingencies (Note 15)
|
|
|
|
|
|
|
||
Redeemable preferred stock
|
|
—
|
|
|
—
|
|
||
Shareholders’ equity:
|
|
|
|
|
||||
Common stock at stated value:
|
|
|
|
|
||||
Class A convertible — 329 and 329 shares outstanding
|
|
—
|
|
|
—
|
|
||
Class B — 1,272 and 1,314 shares outstanding
|
|
3
|
|
|
3
|
|
||
Capital in excess of stated value
|
|
6,384
|
|
|
5,710
|
|
||
Accumulated other comprehensive loss
|
|
(92
|
)
|
|
(213
|
)
|
||
Retained earnings
|
|
3,517
|
|
|
6,907
|
|
||
Total shareholders’ equity
|
|
9,812
|
|
|
12,407
|
|
||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
$
|
22,536
|
|
|
$
|
23,259
|
|
NIKE, Inc. Consolidated Statements of Cash Flows
|
|
|
Year Ended May 31,
|
||||||||||
(In millions)
|
|
2018
|
|
2017
|
|
2016
|
||||||
Cash provided by operations:
|
|
|
|
|
|
|
||||||
Net income
|
|
$
|
1,933
|
|
|
$
|
4,240
|
|
|
$
|
3,760
|
|
Adjustments to reconcile net income to net cash provided by operations:
|
|
|
|
|
|
|
||||||
Depreciation
|
|
747
|
|
|
706
|
|
|
649
|
|
|||
Deferred income taxes
|
|
647
|
|
|
(273
|
)
|
|
(80
|
)
|
|||
Stock-based compensation
|
|
218
|
|
|
215
|
|
|
236
|
|
|||
Amortization and other
|
|
27
|
|
|
10
|
|
|
13
|
|
|||
Net foreign currency adjustments
|
|
(99
|
)
|
|
(117
|
)
|
|
98
|
|
|||
Changes in certain working capital components and other assets and liabilities:
|
|
|
|
|
|
|
||||||
Decrease (increase) in accounts receivable
|
|
187
|
|
|
(426
|
)
|
|
60
|
|
|||
(Increase) in inventories
|
|
(255
|
)
|
|
(231
|
)
|
|
(590
|
)
|
|||
Decrease (increase) in prepaid expenses and other current and non-current assets
|
|
35
|
|
|
(120
|
)
|
|
(161
|
)
|
|||
Increase (decrease) in accounts payable, accrued liabilities and other current and non-current liabilities
|
|
1,515
|
|
|
(158
|
)
|
|
(586
|
)
|
|||
Cash provided by operations
|
|
4,955
|
|
|
3,846
|
|
|
3,399
|
|
|||
Cash provided (used) by investing activities:
|
|
|
|
|
|
|
||||||
Purchases of short-term investments
|
|
(4,783
|
)
|
|
(5,928
|
)
|
|
(5,367
|
)
|
|||
Maturities of short-term investments
|
|
3,613
|
|
|
3,623
|
|
|
2,924
|
|
|||
Sales of short-term investments
|
|
2,496
|
|
|
2,423
|
|
|
2,386
|
|
|||
Investments in reverse repurchase agreements
|
|
—
|
|
|
—
|
|
|
150
|
|
|||
Additions to property, plant and equipment
|
|
(1,028
|
)
|
|
(1,105
|
)
|
|
(1,143
|
)
|
|||
Disposals of property, plant and equipment
|
|
3
|
|
|
13
|
|
|
10
|
|
|||
Other investing activities
|
|
(25
|
)
|
|
(34
|
)
|
|
6
|
|
|||
Cash provided (used) by investing activities
|
|
276
|
|
|
(1,008
|
)
|
|
(1,034
|
)
|
|||
Cash used by financing activities:
|
|
|
|
|
|
|
||||||
Net proceeds from long-term debt issuance
|
|
—
|
|
|
1,482
|
|
|
981
|
|
|||
Long-term debt payments, including current portion
|
|
(6
|
)
|
|
(44
|
)
|
|
(106
|
)
|
|||
Increase (decrease) in notes payable
|
|
13
|
|
|
327
|
|
|
(67
|
)
|
|||
Payments on capital lease and other financing obligations
|
|
(23
|
)
|
|
(17
|
)
|
|
(7
|
)
|
|||
Proceeds from exercise of stock options and other stock issuances
|
|
733
|
|
|
489
|
|
|
507
|
|
|||
Repurchase of common stock
|
|
(4,254
|
)
|
|
(3,223
|
)
|
|
(3,238
|
)
|
|||
Dividends — common and preferred
|
|
(1,243
|
)
|
|
(1,133
|
)
|
|
(1,022
|
)
|
|||
Tax payments for net share settlement of equity awards
|
|
(55
|
)
|
|
(29
|
)
|
|
(22
|
)
|
|||
Cash used by financing activities
|
|
(4,835
|
)
|
|
(2,148
|
)
|
|
(2,974
|
)
|
|||
Effect of exchange rate changes on cash and equivalents
|
|
45
|
|
|
(20
|
)
|
|
(105
|
)
|
|||
Net increase (decrease) in cash and equivalents
|
|
441
|
|
|
670
|
|
|
(714
|
)
|
|||
Cash and equivalents, beginning of year
|
|
3,808
|
|
|
3,138
|
|
|
3,852
|
|
|||
CASH AND EQUIVALENTS, END OF YEAR
|
|
$
|
4,249
|
|
|
$
|
3,808
|
|
|
$
|
3,138
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
|
||||||
Cash paid during the year for:
|
|
|
|
|
|
|
||||||
Interest, net of capitalized interest
|
|
$
|
125
|
|
|
$
|
98
|
|
|
$
|
70
|
|
Income taxes
|
|
529
|
|
|
703
|
|
|
748
|
|
|||
Non-cash additions to property, plant and equipment
|
|
294
|
|
|
266
|
|
|
252
|
|
|||
Dividends declared and not paid
|
|
320
|
|
|
300
|
|
|
271
|
|
NIKE, Inc. Consolidated Statements of Shareholders’ Equity
|
|
|
Common Stock
|
|
Capital in
Excess
of Stated
Value
|
|
Accumulated
Other
Comprehensive
Income
|
|
Retained
Earnings
|
|
Total
|
||||||||||||||||||||
|
|
Class A
|
|
Class B
|
|
|||||||||||||||||||||||||
(In millions, except per share data)
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|||||||||||||||||||||
Balance at May 31, 2015
|
|
355
|
|
|
$
|
—
|
|
|
1,357
|
|
|
$
|
3
|
|
|
$
|
4,165
|
|
|
$
|
1,246
|
|
|
$
|
7,293
|
|
|
$
|
12,707
|
|
Stock options exercised
|
|
|
|
|
|
22
|
|
|
|
|
680
|
|
|
|
|
|
|
680
|
|
|||||||||||
Conversion to Class B Common Stock
|
|
(2
|
)
|
|
—
|
|
|
2
|
|
|
—
|
|
|
|
|
|
|
|
|
—
|
|
|||||||||
Repurchase of Class B Common Stock
|
|
|
|
|
|
(55
|
)
|
|
|
|
(148
|
)
|
|
|
|
(3,090
|
)
|
|
(3,238
|
)
|
||||||||||
Dividends on common stock ($0.62 per share) and preferred stock ($0.10 per share)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,053
|
)
|
|
(1,053
|
)
|
||||||||||||
Issuance of shares to employees, net of shares withheld for employee taxes
|
|
|
|
|
|
3
|
|
|
|
|
105
|
|
|
|
|
(11
|
)
|
|
94
|
|
||||||||||
Stock-based compensation
|
|
|
|
|
|
|
|
|
|
236
|
|
|
|
|
|
|
236
|
|
||||||||||||
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,760
|
|
|
3,760
|
|
||||||||||||
Other comprehensive income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
(928
|
)
|
|
|
|
(928
|
)
|
||||||||||||
Balance at May 31, 2016
|
|
353
|
|
|
$
|
—
|
|
|
1,329
|
|
|
$
|
3
|
|
|
$
|
5,038
|
|
|
$
|
318
|
|
|
$
|
6,899
|
|
|
$
|
12,258
|
|
Stock options exercised
|
|
|
|
|
|
17
|
|
|
|
|
525
|
|
|
|
|
|
|
525
|
|
|||||||||||
Conversion to Class B Common Stock
|
|
(24
|
)
|
|
—
|
|
|
24
|
|
|
—
|
|
|
|
|
|
|
|
|
—
|
|
|||||||||
Repurchase of Class B Common Stock
|
|
|
|
|
|
(60
|
)
|
|
|
|
(189
|
)
|
|
|
|
(3,060
|
)
|
|
(3,249
|
)
|
||||||||||
Dividends on common stock ($0.70 per share) and preferred stock ($0.10 per share)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,159
|
)
|
|
(1,159
|
)
|
||||||||||||
Issuance of shares to employees, net of shares withheld for employee taxes
|
|
|
|
|
|
4
|
|
|
|
|
121
|
|
|
|
|
(13
|
)
|
|
108
|
|
||||||||||
Stock-based compensation
|
|
|
|
|
|
|
|
|
|
215
|
|
|
|
|
|
|
215
|
|
||||||||||||
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,240
|
|
|
4,240
|
|
||||||||||||
Other comprehensive income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
(531
|
)
|
|
|
|
(531
|
)
|
||||||||||||
Balance at May 31, 2017
|
|
329
|
|
|
$
|
—
|
|
|
1,314
|
|
|
$
|
3
|
|
|
$
|
5,710
|
|
|
$
|
(213
|
)
|
|
$
|
6,907
|
|
|
$
|
12,407
|
|
Stock options exercised
|
|
|
|
|
|
24
|
|
|
|
|
600
|
|
|
|
|
|
|
600
|
|
|||||||||||
Conversion to Class B Common Stock
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
—
|
|
|||||||||
Repurchase of Class B Common Stock
|
|
|
|
|
|
(70
|
)
|
|
|
|
(254
|
)
|
|
|
|
(4,013
|
)
|
|
(4,267
|
)
|
||||||||||
Dividends on common stock ($0.78 per share) and preferred stock ($0.10 per share)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,265
|
)
|
|
(1,265
|
)
|
||||||||||||
Issuance of shares to employees, net of shares withheld for employee taxes
|
|
|
|
|
|
4
|
|
|
|
|
110
|
|
|
|
|
(28
|
)
|
|
82
|
|
||||||||||
Stock-based compensation
|
|
|
|
|
|
|
|
|
|
218
|
|
|
|
|
|
|
218
|
|
||||||||||||
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,933
|
|
|
1,933
|
|
||||||||||||
Other comprehensive income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
104
|
|
|
|
|
104
|
|
||||||||||||
Reclassifications to retained earnings in accordance with ASU 2018-02
|
|
|
|
|
|
|
|
|
|
|
|
17
|
|
|
(17
|
)
|
|
—
|
|
|||||||||||
Balance at May 31, 2018
|
|
329
|
|
|
$
|
—
|
|
|
1,272
|
|
|
$
|
3
|
|
|
$
|
6,384
|
|
|
$
|
(92
|
)
|
|
$
|
3,517
|
|
|
$
|
9,812
|
|
Note 1
|
||
Note 2
|
||
Note 3
|
||
Note 4
|
||
Note 5
|
||
Note 6
|
||
Note 7
|
||
Note 8
|
||
Note 9
|
||
Note 10
|
||
Note 11
|
||
Note 12
|
||
Note 13
|
||
Note 14
|
||
Note 15
|
||
Note 16
|
||
Note 17
|
NOTE 1 — Summary of Significant Accounting Policies
|
•
|
Level 1: Quoted prices in active markets for identical assets or liabilities.
|
•
|
Level 2: Inputs other than observable quoted prices 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 with little or no market data available, which require the reporting entity to develop its own assumptions.
|
NOTE 2 — Inventories
|
NOTE 3 — Property, Plant and Equipment
|
|
|
As of May 31,
|
||||||
(In millions)
|
|
2018
|
|
2017
|
||||
Land and improvements
|
|
$
|
331
|
|
|
$
|
285
|
|
Buildings
|
|
2,195
|
|
|
1,564
|
|
||
Machinery, equipment and internal-use software
|
|
4,230
|
|
|
3,867
|
|
||
Leasehold improvements
|
|
1,494
|
|
|
1,484
|
|
||
Construction in process
|
|
641
|
|
|
758
|
|
||
Total property, plant and equipment, gross
|
|
8,891
|
|
|
7,958
|
|
||
Less accumulated depreciation
|
|
4,437
|
|
|
3,969
|
|
||
TOTAL PROPERTY, PLANT AND EQUIPMENT, NET
|
|
$
|
4,454
|
|
|
$
|
3,989
|
|
NOTE 4 — Identifiable Intangible Assets and Goodwill
|
|
|
As of May 31,
|
||||||||||||||||||||||
|
|
2018
|
|
2017
|
||||||||||||||||||||
(In millions)
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
||||||||||||
Acquired trademarks and other
|
|
$
|
22
|
|
|
$
|
18
|
|
|
$
|
4
|
|
|
$
|
19
|
|
|
$
|
17
|
|
|
$
|
2
|
|
Indefinite-lived trademarks
|
|
281
|
|
|
—
|
|
|
281
|
|
|
281
|
|
|
—
|
|
|
281
|
|
||||||
INDENTIFIABLE INTANGIBLE ASSETS, NET
|
|
$
|
303
|
|
|
$
|
18
|
|
|
$
|
285
|
|
|
$
|
300
|
|
|
$
|
17
|
|
|
$
|
283
|
|
NOTE 5 — Accrued Liabilities
|
|
|
As of May 31,
|
||||||
(In millions)
|
|
2018
|
|
2017
|
||||
Compensation and benefits, excluding taxes
|
|
$
|
897
|
|
|
$
|
871
|
|
Endorsement compensation
|
|
425
|
|
|
396
|
|
||
Dividends payable
|
|
320
|
|
|
300
|
|
||
Import and logistics costs
|
|
268
|
|
|
257
|
|
||
Taxes other than income taxes payable
|
|
224
|
|
|
196
|
|
||
Fair value of derivatives
|
|
184
|
|
|
168
|
|
||
Advertising and marketing
|
|
140
|
|
|
125
|
|
||
Collateral received from counterparties to hedging instruments
|
|
23
|
|
|
—
|
|
||
Other
(1)
|
|
788
|
|
|
698
|
|
||
TOTAL ACCRUED LIABILITIES
|
|
$
|
3,269
|
|
|
$
|
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
May 31, 2018
and
2017
.
|
NOTE 6 — Fair Value Measurements
|
|
|
As of May 31, 2018
|
||||||||||||||
(In millions)
|
|
Assets at Fair Value
|
|
Cash Equivalents
|
|
Short-term Investments
|
|
Other Long-term Assets
|
||||||||
Cash
|
|
$
|
415
|
|
|
$
|
415
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Level 1:
|
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury securities
|
|
1,178
|
|
|
500
|
|
|
678
|
|
|
—
|
|
||||
Level 2:
|
|
|
|
|
|
|
|
|
||||||||
Time deposits
|
|
925
|
|
|
907
|
|
|
18
|
|
|
—
|
|
||||
U.S. Agency securities
|
|
102
|
|
|
100
|
|
|
2
|
|
|
—
|
|
||||
Commercial paper and bonds
|
|
451
|
|
|
153
|
|
|
298
|
|
|
—
|
|
||||
Money market funds
|
|
2,174
|
|
|
2,174
|
|
|
—
|
|
|
—
|
|
||||
Total level 2
|
|
3,652
|
|
|
3,334
|
|
|
318
|
|
|
—
|
|
||||
Level 3:
|
|
|
|
|
|
|
|
|
||||||||
Non-marketable preferred stock
|
|
11
|
|
|
—
|
|
|
—
|
|
|
11
|
|
||||
TOTAL
|
|
$
|
5,256
|
|
|
$
|
4,249
|
|
|
$
|
996
|
|
|
$
|
11
|
|
|
|
As of May 31, 2017
|
||||||||||||||
(In millions)
|
|
Assets at Fair Value
|
|
Cash 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 May 31, 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)
|
|
$
|
389
|
|
|
$
|
237
|
|
|
$
|
152
|
|
|
$
|
182
|
|
|
$
|
182
|
|
|
$
|
—
|
|
Embedded derivatives
|
|
11
|
|
|
3
|
|
|
8
|
|
|
8
|
|
|
2
|
|
|
6
|
|
||||||
TOTAL
|
|
$
|
400
|
|
|
$
|
240
|
|
|
$
|
160
|
|
|
$
|
190
|
|
|
$
|
184
|
|
|
$
|
6
|
|
(1)
|
If the foreign exchange derivative instruments had been netted in the Consolidated Balance Sheets, the asset and liability positions each would have been reduced by
$182 million
as of
May 31, 2018
. As of that date, the Company had received
$23 million
of cash collateral from various counterparties related to these foreign exchange derivative instruments.
No
amount of collateral was posted on the Company
’
s derivative liability balance as of May 31, 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 in the 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 balance related to these foreign exchange derivative instruments.
|
NOTE 7 — Short-Term Borrowings and Credit Lines
|
|
|
As of May 31,
|
|
|||||||||||||
|
|
2018
|
|
2017
|
||||||||||||
(Dollars in millions)
|
|
Borrowings
|
|
|
Interest Rate
|
|
Borrowings
|
|
|
Interest Rate
|
||||||
Notes payable:
|
|
|
|
|
|
|
|
|
|
|
||||||
Commercial paper
|
|
$
|
325
|
|
|
1.77
|
%
|
|
|
$
|
325
|
|
|
0.86
|
%
|
|
U.S. operations
|
|
1
|
|
|
0.00
|
%
|
(1)
|
|
—
|
|
|
0.00
|
%
|
(1)
|
||
Non-U.S. operations
|
|
10
|
|
|
18.11
|
%
|
(1)
|
|
—
|
|
|
0.00
|
%
|
(1)
|
||
TOTAL NOTES PAYABLE
|
|
$
|
336
|
|
|
|
|
|
$
|
325
|
|
|
|
|
||
Interest-bearing accounts payable:
|
|
|
|
|
|
|
|
|
|
|
||||||
Sojitz America
|
|
$
|
61
|
|
|
2.82
|
%
|
|
|
$
|
51
|
|
|
1.78
|
%
|
|
(1)
|
Weighted average interest rate includes non-interest bearing overdrafts.
|
NOTE 8 — Long-Term Debt
|
|
|
|
|
|
|
|
|
Book Value Outstanding
as of May 31,
|
|||||||||
Scheduled Maturity (Dollars and Yen in millions)
|
|
Original
Principal
|
|
Interest
Rate
|
|
Interest
Payments
|
|
2018
|
|
2017
|
|||||||
Corporate Bond Payables:
(1)(2)
|
|
|
|
|
|
|
|
|
|
|
|||||||
May 1, 2023
|
|
$
|
500
|
|
|
2.25
|
%
|
|
Semi-Annually
|
|
$
|
498
|
|
|
$
|
497
|
|
November 1, 2026
|
|
$
|
1,000
|
|
|
2.38
|
%
|
|
Semi-Annually
|
|
994
|
|
|
993
|
|
||
May 1, 2043
|
|
$
|
500
|
|
|
3.63
|
%
|
|
Semi-Annually
|
|
495
|
|
|
495
|
|
||
November 1, 2045
|
|
$
|
1,000
|
|
|
3.88
|
%
|
|
Semi-Annually
|
|
982
|
|
|
981
|
|
||
November 1, 2046
|
|
$
|
500
|
|
|
3.38
|
%
|
|
Semi-Annually
|
|
490
|
|
|
490
|
|
||
Japanese Yen Notes:
(3)
|
|
|
|
|
|
|
|
|
|
|
|||||||
August 20, 2001 through November 20, 2020
|
|
¥
|
9,000
|
|
|
2.60
|
%
|
|
Quarterly
|
|
10
|
|
|
14
|
|
||
August 20, 2001 through November 20, 2020
|
|
¥
|
4,000
|
|
|
2.00
|
%
|
|
Quarterly
|
|
5
|
|
|
7
|
|
||
Total
|
|
|
|
|
|
|
|
3,474
|
|
|
3,477
|
|
|||||
Less current maturities
|
|
|
|
|
|
|
|
|
|
6
|
|
|
6
|
|
|||
TOTAL LONG-TERM DEBT
|
|
|
|
|
|
|
|
$
|
3,468
|
|
|
$
|
3,471
|
|
(1)
|
These senior unsecured obligations rank equally with the Company’s other unsecured and unsubordinated indebtedness.
|
(2)
|
The bonds are redeemable at the Company’s option up to three months prior to the scheduled maturity date for the bonds maturing in 2023 and 2026, and up to six months prior to the scheduled maturity date for the bonds maturing in 2043, 2045 and 2046, at a price equal to the greater of (i)
100%
of the aggregate principal amount of the notes to be redeemed or (ii) the sum of the present values of the remaining scheduled payments, plus in each case, accrued and unpaid interest. Within three and six months to scheduled maturity, respectively, the bonds also feature a par call provision, which allows for the bonds to be redeemed at a price equal to
100%
of the aggregate principal amount of the notes being redeemed, plus accrued and unpaid interest.
|
(3)
|
NIKE Logistics YK assumed a total of
¥13.0 billion
in loans as part of its agreement to purchase a distribution center in Japan, which serves as collateral for the loans. These loans mature in equal quarterly installments during the period August 20, 2001 through November 20, 2020.
|
NOTE 9 — Income Taxes
|
|
|
Year Ended May 31,
|
||||||||||
(In millions)
|
|
2018
|
|
2017
|
|
2016
|
||||||
Income before income taxes:
|
|
|
|
|
|
|
||||||
United States
|
|
$
|
744
|
|
|
$
|
1,240
|
|
|
$
|
956
|
|
Foreign
|
|
3,581
|
|
|
3,646
|
|
|
3,667
|
|
|||
TOTAL INCOME BEFORE INCOME TAXES
|
|
$
|
4,325
|
|
|
$
|
4,886
|
|
|
$
|
4,623
|
|
|
|
Year Ended May 31,
|
||||||||||
(In millions)
|
|
2018
|
|
2017
|
|
2016
|
||||||
Current:
|
|
|
|
|
|
|
||||||
United States
|
|
|
|
|
|
|
||||||
Federal
|
|
$
|
1,167
|
|
|
$
|
398
|
|
|
$
|
304
|
|
State
|
|
45
|
|
|
82
|
|
|
71
|
|
|||
Foreign
|
|
533
|
|
|
439
|
|
|
568
|
|
|||
Total
|
|
1,745
|
|
|
919
|
|
|
943
|
|
|||
Deferred:
|
|
|
|
|
|
|
||||||
United States
|
|
|
|
|
|
|
||||||
Federal
|
|
595
|
|
|
(279
|
)
|
|
(57
|
)
|
|||
State
|
|
25
|
|
|
(9
|
)
|
|
(16
|
)
|
|||
Foreign
|
|
27
|
|
|
15
|
|
|
(7
|
)
|
|||
Total
|
|
647
|
|
|
(273
|
)
|
|
(80
|
)
|
|||
TOTAL INCOME TAX EXPENSE
|
|
$
|
2,392
|
|
|
$
|
646
|
|
|
$
|
863
|
|
|
|
Year Ended May 31,
|
|||||||
|
|
2018
|
|
2017
|
|
2016
|
|||
Federal income tax rate
|
|
29.2
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
State taxes, net of federal benefit
|
|
1.2
|
%
|
|
1.1
|
%
|
|
1.1
|
%
|
Foreign earnings
|
|
-18.4
|
%
|
|
-20.7
|
%
|
|
-18.2
|
%
|
Transition tax related to the Tax Act
|
|
43.3
|
%
|
|
—
|
%
|
|
—
|
%
|
Remeasurement of deferred tax assets and liabilities related to the Tax Act
|
|
3.7
|
%
|
|
—
|
%
|
|
—
|
%
|
Excess tax benefits from share-based compensation
|
|
-5.3
|
%
|
|
—
|
%
|
|
—
|
%
|
Resolution of a U.S. tax matter
|
|
—
|
%
|
|
-3.2
|
%
|
|
—
|
%
|
Other, net
|
|
1.6
|
%
|
|
1.0
|
%
|
|
0.8
|
%
|
EFFECTIVE INCOME TAX RATE
|
|
55.3
|
%
|
|
13.2
|
%
|
|
18.7
|
%
|
|
|
As of May 31,
|
||||||
(In millions)
|
|
2018
|
|
2017
|
||||
Deferred tax assets:
|
|
|
|
|
||||
Inventories
|
|
$
|
73
|
|
|
$
|
90
|
|
Sales return reserves
|
|
104
|
|
|
130
|
|
||
Deferred compensation
|
|
250
|
|
|
348
|
|
||
Stock-based compensation
|
|
135
|
|
|
225
|
|
||
Reserves and accrued liabilities
|
|
102
|
|
|
88
|
|
||
Net operating loss carry-forwards
|
|
88
|
|
|
84
|
|
||
Foreign tax credit carry-forwards
|
|
—
|
|
|
208
|
|
||
Undistributed earnings of foreign subsidiaries
|
|
—
|
|
|
173
|
|
||
Other
|
|
106
|
|
|
106
|
|
||
Total deferred tax assets
|
|
858
|
|
|
1,452
|
|
||
Valuation allowance
|
|
(95
|
)
|
|
(82
|
)
|
||
Total deferred tax assets after valuation allowance
|
|
763
|
|
|
1,370
|
|
||
Deferred tax liabilities:
|
|
|
|
|
||||
Foreign withholding tax on undistributed earnings of foreign subsidiaries
|
|
(155
|
)
|
|
—
|
|
||
Property, plant and equipment
|
|
(167
|
)
|
|
(254
|
)
|
||
Intangibles
|
|
(77
|
)
|
|
(90
|
)
|
||
Other
|
|
(26
|
)
|
|
(2
|
)
|
||
Total deferred tax liabilities
|
|
(425
|
)
|
|
(346
|
)
|
||
NET DEFERRED TAX ASSET
|
|
$
|
338
|
|
|
$
|
1,024
|
|
|
|
As of May 31,
|
||||||||||
(In millions)
|
|
2018
|
|
2017
|
|
2016
|
||||||
Unrecognized tax benefits, beginning of the period
|
|
$
|
461
|
|
|
$
|
506
|
|
|
$
|
438
|
|
Gross increases related to prior period tax positions
|
|
19
|
|
|
31
|
|
|
49
|
|
|||
Gross decreases related to prior period tax positions
|
|
(12
|
)
|
|
(163
|
)
|
|
(20
|
)
|
|||
Gross increases related to current period tax positions
|
|
249
|
|
|
115
|
|
|
81
|
|
|||
Settlements
|
|
—
|
|
|
(12
|
)
|
|
(13
|
)
|
|||
Lapse of statute of limitations
|
|
(20
|
)
|
|
(21
|
)
|
|
(17
|
)
|
|||
Changes due to currency translation
|
|
1
|
|
|
5
|
|
|
(12
|
)
|
|||
UNRECOGNIZED TAX BENEFITS, END OF THE PERIOD
|
|
$
|
698
|
|
|
$
|
461
|
|
|
$
|
506
|
|
|
|
Year Ending May 31,
|
||||||||||||||||||||||||||
(In millions)
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
2023-2039
|
|
Indefinite
|
|
|
Total
|
|
||||||||||||
Net operating losses
|
|
$
|
1
|
|
|
$
|
5
|
|
|
$
|
2
|
|
|
$
|
1
|
|
|
$
|
91
|
|
|
$
|
189
|
|
|
$
|
289
|
|
NOTE 10 — Redeemable Preferred Stock
|
NOTE 11 — Common Stock and Stock-Based Compensation
|
|
|
Year Ended May 31,
|
||||||||||
(In millions)
|
|
2018
|
|
2017
|
|
2016
|
||||||
Stock options
(1)
|
|
$
|
149
|
|
|
$
|
145
|
|
|
$
|
171
|
|
ESPPs
|
|
34
|
|
|
36
|
|
|
31
|
|
|||
Restricted stock
|
|
35
|
|
|
34
|
|
|
34
|
|
|||
TOTAL STOCK-BASED COMPENSATION EXPENSE
|
|
$
|
218
|
|
|
$
|
215
|
|
|
$
|
236
|
|
(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
$18 million
,
$14 million
and
$30 million
for the years ended
May 31, 2018
,
2017
and
2016
, respectively.
|
|
|
Year Ended May 31,
|
|||||||
|
|
2018
|
|
2017
|
|
2016
|
|||
Dividend yield
|
|
1.2
|
%
|
|
1.1
|
%
|
|
1.0
|
%
|
Expected volatility
|
|
16.4
|
%
|
|
17.4
|
%
|
|
23.6
|
%
|
Weighted average expected life (in years)
|
|
6.0
|
|
|
6.0
|
|
|
5.8
|
|
Risk-free interest rate
|
|
2.0
|
%
|
|
1.3
|
%
|
|
1.7
|
%
|
|
|
Shares
(1)
|
|
Weighted Average
Option Price
|
|||
|
|
(In millions)
|
|
|
|||
Options outstanding May 31, 2015
|
|
116.2
|
|
|
$
|
23.50
|
|
Exercised
|
|
(22.5
|
)
|
|
17.75
|
|
|
Forfeited
|
|
(2.3
|
)
|
|
39.96
|
|
|
Granted
|
|
20.6
|
|
|
56.41
|
|
|
Options outstanding May 31, 2016
|
|
112.0
|
|
|
30.38
|
|
|
Exercised
|
|
(17.1
|
)
|
|
20.42
|
|
|
Forfeited
|
|
(2.3
|
)
|
|
49.47
|
|
|
Granted
|
|
12.2
|
|
|
57.81
|
|
|
Options outstanding May 31, 2017
|
|
104.8
|
|
|
34.79
|
|
|
Exercised
|
|
(24.1
|
)
|
|
25.07
|
|
|
Forfeited
|
|
(4.3
|
)
|
|
55.31
|
|
|
Granted
|
|
16.8
|
|
|
59.08
|
|
|
Options outstanding May 31, 2018
|
|
93.2
|
|
|
$
|
40.73
|
|
Options exercisable at May 31,
|
|
|
|
|
|||
2016
|
|
66.5
|
|
|
$
|
21.48
|
|
2017
|
|
67.9
|
|
|
26.03
|
|
|
2018
|
|
58.5
|
|
|
31.60
|
|
(1)
|
Includes stock appreciation rights transactions.
|
NOTE 12 — Earnings Per Share
|
|
|
Year Ended May 31,
|
||||||||||
(In millions, except per share data)
|
|
2018
|
|
2017
|
|
2016
|
||||||
Determination of shares:
|
|
|
|
|
|
|
||||||
Weighted average common shares outstanding
|
|
1,623.8
|
|
|
1,657.8
|
|
|
1,697.9
|
|
|||
Assumed conversion of dilutive stock options and awards
|
|
35.3
|
|
|
34.2
|
|
|
44.6
|
|
|||
DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
|
|
1,659.1
|
|
|
1,692.0
|
|
|
1,742.5
|
|
|||
|
|
|
|
|
|
|
||||||
Earnings per common share:
|
|
|
|
|
|
|
||||||
Basic
|
|
$
|
1.19
|
|
|
$
|
2.56
|
|
|
$
|
2.21
|
|
Diluted
|
|
$
|
1.17
|
|
|
$
|
2.51
|
|
|
$
|
2.16
|
|
NOTE 13 — Benefit Plans
|
NOTE 14 — Accumulated Other Comprehensive Income
|
(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 income (loss):
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Other comprehensive gains (losses) before reclassifications
(2)
|
|
(6
|
)
|
|
(52
|
)
|
|
—
|
|
|
2
|
|
|
(56
|
)
|
|||||
Reclassifications to net income of previously deferred (gains) losses
(3)
|
|
—
|
|
|
128
|
|
|
—
|
|
|
32
|
|
|
160
|
|
|||||
Total other comprehensive income (loss)
|
|
(6
|
)
|
|
76
|
|
|
—
|
|
|
34
|
|
|
104
|
|
|||||
Reclassifications to retained earnings in accordance with ASU 2018-02
(4)
|
|
24
|
|
|
(7
|
)
|
|
—
|
|
|
—
|
|
|
17
|
|
|||||
Balance at May 31, 2018
|
|
$
|
(173
|
)
|
|
$
|
17
|
|
|
$
|
115
|
|
|
$
|
(51
|
)
|
|
$
|
(92
|
)
|
(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 $
(24) million
, $
(3) million
, $
0 million
, $
(4) million
and $
(31) million
, respectively.
|
(3)
|
Net of tax (benefit) expense of $
0 million
, $
(3) million
, $
0 million
, $
0 million
and $
(3) 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 May 31, 2016
|
|
$
|
(207
|
)
|
|
$
|
463
|
|
|
$
|
115
|
|
|
$
|
(53
|
)
|
|
$
|
318
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Other comprehensive gains (losses) before reclassifications
(2)
|
|
15
|
|
|
118
|
|
|
—
|
|
|
(14
|
)
|
|
119
|
|
|||||
Reclassifications to net income of previously deferred (gains) losses
(3)
|
|
1
|
|
|
(633
|
)
|
|
—
|
|
|
(18
|
)
|
|
(650
|
)
|
|||||
Total other comprehensive income (loss)
|
|
16
|
|
|
(515
|
)
|
|
—
|
|
|
(32
|
)
|
|
(531
|
)
|
|||||
Balance at May 31, 2017
|
|
$
|
(191
|
)
|
|
$
|
(52
|
)
|
|
$
|
115
|
|
|
$
|
(85
|
)
|
|
$
|
(213
|
)
|
(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
, $
24 million
, $
0 million
, $
3 million
and $
27 million
, respectively.
|
(3)
|
Net of tax (benefit) expense of $
0 million
, $
(3) million
, $
0 million
, $
(3) million
and $
(6) 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
|
||||||
|
|
||||||||
|
|
Year Ended May 31,
|
|||||||
(In millions)
|
|
2018
|
|
2017
|
|||||
Gains (losses) on foreign currency translation adjustment
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
Other expense (income), net
|
Total before tax
|
|
—
|
|
|
(1
|
)
|
|
||
Tax (expense) benefit
|
|
—
|
|
|
—
|
|
|
||
Gain (loss) net of tax
|
|
—
|
|
|
(1
|
)
|
|
||
Gains (losses) on cash flow hedges:
|
|
|
|
|
|
||||
Foreign exchange forwards and options
|
|
34
|
|
|
96
|
|
Revenues
|
||
Foreign exchange forwards and options
|
|
(90
|
)
|
|
339
|
|
Cost of sales
|
||
Foreign exchange forwards and options
|
|
1
|
|
|
—
|
|
Total selling and administrative expense
|
||
Foreign exchange forwards and options
|
|
(69
|
)
|
|
199
|
|
Other expense (income), net
|
||
Interest rate swaps
|
|
(7
|
)
|
|
(4
|
)
|
Interest expense (income), net
|
||
Total before tax
|
|
(131
|
)
|
|
630
|
|
|
||
Tax (expense) benefit
|
|
3
|
|
|
3
|
|
|
||
Gain (loss) net of tax
|
|
(128
|
)
|
|
633
|
|
|
||
Gains (losses) on other
|
|
(32
|
)
|
|
15
|
|
Other expense (income), net
|
||
Total before tax
|
|
(32
|
)
|
|
15
|
|
|
||
Tax (expense) benefit
|
|
—
|
|
|
3
|
|
|
||
Gain (loss) net of tax
|
|
(32
|
)
|
|
18
|
|
|
||
Total net gain (loss) reclassified for the period
|
|
$
|
(160
|
)
|
|
$
|
650
|
|
|
NOTE 15 — Commitments and Contingencies
|
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
Thereafter
|
|
Total
|
||||||||||||||
Operating leases
|
|
$
|
589
|
|
|
$
|
523
|
|
|
$
|
472
|
|
|
$
|
412
|
|
|
$
|
361
|
|
|
$
|
1,608
|
|
|
$
|
3,965
|
|
Capital leases and other financing obligations
(1)
|
|
$
|
44
|
|
|
$
|
37
|
|
|
$
|
40
|
|
|
$
|
38
|
|
|
$
|
36
|
|
|
$
|
229
|
|
|
$
|
424
|
|
(1)
|
Capital leases and other financing obligations include payments related to build-to-suit lease arrangements.
|
NOTE 16 — Risk Management and Derivatives
|
|
|
Derivative Assets
|
|
Derivative Liabilities
|
||||||||||||||||
(In millions)
|
|
Balance Sheet
Location
|
|
2018
|
|
2017
|
|
Balance Sheet
Location
|
|
2018
|
|
2017
|
||||||||
Derivatives formally designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign exchange forwards and options
|
|
Prepaid expenses and other current assets
|
|
$
|
118
|
|
|
$
|
113
|
|
|
Accrued liabilities
|
|
$
|
156
|
|
|
$
|
59
|
|
Foreign exchange forwards and options
|
|
Deferred income taxes and other assets
|
|
152
|
|
|
13
|
|
|
Deferred income taxes and other liabilities
|
|
—
|
|
|
73
|
|
||||
Total derivatives formally designated as hedging instruments
|
|
|
|
270
|
|
|
126
|
|
|
|
|
156
|
|
|
132
|
|
||||
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign exchange forwards and options
|
|
Prepaid expenses and other current assets
|
|
119
|
|
|
103
|
|
|
Accrued liabilities
|
|
26
|
|
|
107
|
|
||||
Embedded derivatives
|
|
Prepaid expenses and other current assets
|
|
3
|
|
|
1
|
|
|
Accrued liabilities
|
|
2
|
|
|
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
|
|
8
|
|
|
9
|
|
|
Deferred income taxes and other liabilities
|
|
6
|
|
|
6
|
|
||||
Total derivatives not designated as hedging instruments
|
|
|
|
130
|
|
|
115
|
|
|
|
|
34
|
|
|
122
|
|
||||
TOTAL DERIVATIVES
|
|
|
|
$
|
400
|
|
|
$
|
241
|
|
|
|
|
$
|
190
|
|
|
$
|
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)
|
||||||||||||||||||||||
Year Ended May 31,
|
|
Location of Gain (Loss) Reclassified From
Accumulated Other Comprehensive Income into Income
|
|
Year Ended May 31,
|
||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
2018
|
|
2017
|
|
2016
|
|
|
2018
|
|
2017
|
|
2016
|
|||||||||||||||
Derivatives designated as cash flow hedges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Foreign exchange forwards and options
|
|
$
|
19
|
|
|
$
|
72
|
|
|
$
|
90
|
|
|
Revenues
|
|
$
|
34
|
|
|
$
|
96
|
|
|
$
|
(88
|
)
|
Foreign exchange forwards and options
|
|
(50
|
)
|
|
43
|
|
|
(57
|
)
|
|
Cost of sales
|
|
(90
|
)
|
|
339
|
|
|
586
|
|
||||||
Foreign exchange forwards and options
|
|
1
|
|
|
(4
|
)
|
|
—
|
|
|
Total selling and administrative expense
|
|
1
|
|
|
—
|
|
|
—
|
|
||||||
Foreign exchange forwards and options
|
|
(19
|
)
|
|
37
|
|
|
(25
|
)
|
|
Other expense (income), net
|
|
(69
|
)
|
|
199
|
|
|
219
|
|
||||||
Interest rate swaps
(2)
|
|
—
|
|
|
(54
|
)
|
|
(83
|
)
|
|
Interest expense (income), net
|
|
(7
|
)
|
|
(4
|
)
|
|
—
|
|
||||||
Total designated cash flow hedges
|
|
$
|
(49
|
)
|
|
$
|
94
|
|
|
$
|
(75
|
)
|
|
|
|
$
|
(131
|
)
|
|
$
|
630
|
|
|
$
|
717
|
|
(1)
|
For the years ended
May 31, 2018
,
2017
and
2016
, the amounts recorded in
Other expense (income), 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
|
||||||||||
|
|
Year Ended May 31,
|
|
|||||||||||
(In millions)
|
|
2018
|
|
2017
|
|
2016
|
|
|||||||
Derivatives designated as fair value hedges:
|
|
|
|
|
|
|
|
|
||||||
Interest rate swaps
(1)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2
|
|
|
Interest expense (income), net
|
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
||||||
Foreign exchange forwards and options
|
|
(57
|
)
|
|
(44
|
)
|
|
(68
|
)
|
|
Other expense (income), net
|
|||
Embedded derivatives
|
|
$
|
(4
|
)
|
|
$
|
(2
|
)
|
|
$
|
(2
|
)
|
|
Other expense (income), net
|
(1)
|
All interest rate swaps designated as fair value hedges meet the shortcut method requirements under the accounting standards for derivatives and hedging. Accordingly, changes in the fair values of the interest rate swaps are considered to exactly offset changes in the fair value of the underlying long-term debt. Refer to “Fair Value Hedges” in this note for additional detail.
|
NOTE 17 — Operating Segments and Related Information
|
|
|
Year Ended May 31,
|
||||||||||
(In millions)
|
|
2018
|
|
2017
|
|
2016
|
||||||
REVENUES
|
|
|
|
|
|
|
||||||
North America
|
|
$
|
14,855
|
|
|
$
|
15,216
|
|
|
$
|
14,764
|
|
Europe, Middle East & Africa
|
|
9,242
|
|
|
7,970
|
|
|
7,568
|
|
|||
Greater China
|
|
5,134
|
|
|
4,237
|
|
|
3,785
|
|
|||
Asia Pacific & Latin America
|
|
5,166
|
|
|
4,737
|
|
|
4,317
|
|
|||
Global Brand Divisions
|
|
88
|
|
|
73
|
|
|
73
|
|
|||
Total NIKE Brand
|
|
34,485
|
|
|
32,233
|
|
|
30,507
|
|
|||
Converse
|
|
1,886
|
|
|
2,042
|
|
|
1,955
|
|
|||
Corporate
|
|
26
|
|
|
75
|
|
|
(86
|
)
|
|||
TOTAL NIKE, INC. REVENUES
|
|
$
|
36,397
|
|
|
$
|
34,350
|
|
|
$
|
32,376
|
|
EARNINGS BEFORE INTEREST AND TAXES
|
|
|
|
|
|
|
||||||
North America
|
|
$
|
3,600
|
|
|
$
|
3,875
|
|
|
$
|
3,763
|
|
Europe, Middle East & Africa
|
|
1,587
|
|
|
1,507
|
|
|
1,787
|
|
|||
Greater China
|
|
1,807
|
|
|
1,507
|
|
|
1,372
|
|
|||
Asia Pacific & Latin America
|
|
1,189
|
|
|
980
|
|
|
1,002
|
|
|||
Global Brand Divisions
|
|
(2,658
|
)
|
|
(2,677
|
)
|
|
(2,596
|
)
|
|||
Total NIKE Brand
|
|
5,525
|
|
|
5,192
|
|
|
5,328
|
|
|||
Converse
|
|
310
|
|
|
477
|
|
|
487
|
|
|||
Corporate
|
|
(1,456
|
)
|
|
(724
|
)
|
|
(1,173
|
)
|
|||
Total NIKE, Inc. Earnings Before Interest and Taxes
|
|
4,379
|
|
|
4,945
|
|
|
4,642
|
|
|||
Interest expense (income), net
|
|
54
|
|
|
59
|
|
|
19
|
|
|||
TOTAL NIKE, INC. INCOME BEFORE INCOME TAXES
|
|
$
|
4,325
|
|
|
$
|
4,886
|
|
|
$
|
4,623
|
|
ADDITIONS TO LONG-LIVED ASSETS
|
|
|
|
|
|
|
||||||
North America
|
|
$
|
196
|
|
|
$
|
223
|
|
|
$
|
242
|
|
Europe, Middle East & Africa
|
|
240
|
|
|
173
|
|
|
234
|
|
|||
Greater China
|
|
76
|
|
|
51
|
|
|
44
|
|
|||
Asia Pacific & Latin America
|
|
49
|
|
|
59
|
|
|
62
|
|
|||
Global Brand Divisions
|
|
286
|
|
|
278
|
|
|
258
|
|
|||
Total NIKE Brand
|
|
847
|
|
|
784
|
|
|
840
|
|
|||
Converse
|
|
22
|
|
|
30
|
|
|
39
|
|
|||
Corporate
|
|
325
|
|
|
387
|
|
|
312
|
|
|||
TOTAL ADDITIONS TO LONG-LIVED ASSETS
|
|
$
|
1,194
|
|
|
$
|
1,201
|
|
|
$
|
1,191
|
|
DEPRECIATION
|
|
|
|
|
|
|
||||||
North America
|
|
$
|
160
|
|
|
$
|
140
|
|
|
$
|
133
|
|
Europe, Middle East & Africa
|
|
116
|
|
|
106
|
|
|
85
|
|
|||
Greater China
|
|
56
|
|
|
54
|
|
|
48
|
|
|||
Asia Pacific & Latin America
|
|
55
|
|
|
54
|
|
|
42
|
|
|||
Global Brand Divisions
|
|
217
|
|
|
233
|
|
|
230
|
|
|||
Total NIKE Brand
|
|
604
|
|
|
587
|
|
|
538
|
|
|||
Converse
|
|
33
|
|
|
28
|
|
|
27
|
|
|||
Corporate
|
|
110
|
|
|
91
|
|
|
84
|
|
|||
TOTAL DEPRECIATION
|
|
$
|
747
|
|
|
$
|
706
|
|
|
$
|
649
|
|
|
|
As of May 31,
|
||||||
(In millions)
|
|
2018
|
|
2017
|
||||
ACCOUNTS RECEIVABLE, NET
|
|
|
|
|
||||
North America
|
|
$
|
1,443
|
|
|
$
|
1,798
|
|
Europe, Middle East & Africa
|
|
870
|
|
|
690
|
|
||
Greater China
|
|
101
|
|
|
102
|
|
||
Asia Pacific & Latin America
|
|
720
|
|
|
693
|
|
||
Global Brand Divisions
|
|
102
|
|
|
86
|
|
||
Total NIKE Brand
|
|
3,236
|
|
|
3,369
|
|
||
Converse
|
|
240
|
|
|
297
|
|
||
Corporate
|
|
22
|
|
|
11
|
|
||
TOTAL ACCOUNTS RECEIVABLE, NET
|
|
$
|
3,498
|
|
|
$
|
3,677
|
|
INVENTORIES
|
|
|
|
|
||||
North America
|
|
$
|
2,270
|
|
|
$
|
2,218
|
|
Europe, Middle East & Africa
|
|
1,433
|
|
|
1,327
|
|
||
Greater China
|
|
580
|
|
|
463
|
|
||
Asia Pacific & Latin America
|
|
687
|
|
|
694
|
|
||
Global Brand Divisions
|
|
91
|
|
|
68
|
|
||
Total NIKE Brand
|
|
5,061
|
|
|
4,770
|
|
||
Converse
|
|
268
|
|
|
286
|
|
||
Corporate
|
|
(68
|
)
|
|
(1
|
)
|
||
TOTAL INVENTORIES
|
|
$
|
5,261
|
|
|
$
|
5,055
|
|
PROPERTY, PLANT AND EQUIPMENT, NET
|
|
|
|
|
||||
North America
|
|
$
|
848
|
|
|
$
|
819
|
|
Europe, Middle East & Africa
|
|
849
|
|
|
709
|
|
||
Greater China
|
|
256
|
|
|
225
|
|
||
Asia Pacific & Latin America
|
|
339
|
|
|
340
|
|
||
Global Brand Divisions
|
|
597
|
|
|
533
|
|
||
Total NIKE Brand
|
|
2,889
|
|
|
2,626
|
|
||
Converse
|
|
115
|
|
|
125
|
|
||
Corporate
|
|
1,450
|
|
|
1,238
|
|
||
TOTAL PROPERTY, PLANT AND EQUIPMENT, NET
|
|
$
|
4,454
|
|
|
$
|
3,989
|
|
|
|
Year Ended May 31,
|
||||||||||
(In millions)
|
|
2018
|
|
2017
|
|
2016
|
||||||
Footwear
|
|
$
|
22,268
|
|
|
$
|
21,081
|
|
|
$
|
19,871
|
|
Apparel
|
|
10,733
|
|
|
9,654
|
|
|
9,067
|
|
|||
Equipment
|
|
1,396
|
|
|
1,425
|
|
|
1,496
|
|
|||
Other
|
|
2,000
|
|
|
2,190
|
|
|
1,942
|
|
|||
TOTAL NIKE, INC. REVENUES
|
|
$
|
36,397
|
|
|
$
|
34,350
|
|
|
$
|
32,376
|
|
(a)
|
The following documents are filed as part of this report:
|
|
|
|
Form 10-K
Page No.
|
|
|
|
1.
|
Financial Statements:
|
|
|
|
|
|
Report of Independent Registered Public Accounting Firm
|
|
|
|
|
|
Consolidated Statements of Income for each of the three years ended May 31, 2018, May 31, 2017 and May 31, 2016
|
|
|
|
|
|
Consolidated Statements of Comprehensive Income for each of the three years ended May 31, 2018, May 31, 2017 and May 31, 2016
|
|
|
|
|
|
Consolidated Balance Sheets at May 31, 2018 and May 31, 2017
|
|
|
|
|
|
Consolidated Statements of Cash Flows for each of the three years ended May 31, 2018, May 31, 2017 and May 31, 2016
|
|
|
|
|
|
Consolidated Statements of Shareholders’ Equity for each of the three years ended May 31, 2018, May 31, 2017 and May 31, 2016
|
|
|
|
|
|
Notes to Consolidated Financial Statements
|
|
|
|
|
2.
|
Financial Statement Schedule:
|
|
|
|
|
|
II — Valuation and Qualifying Accounts for the years ended May 31, 2018, 2017 and 2016
|
|
|
|
|
|
All other schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto.
|
|
|
|
|
3.
|
Exhibits:
|
|
|
|
3.1
|
|
3.2
|
|
4.1
|
|
4.2
|
|
4.3
|
|
4.4
|
|
4.5
|
|
10.1
|
|
10.2
|
|
10.3
|
|
10.4
|
|
10.5
|
10.6
|
|
10.7
|
|
10.8
|
|
10.9
|
|
10.10
|
|
10.11
|
|
10.12
|
|
10.13
|
|
10.14
|
|
10.15
|
|
10.16
|
|
10.17
|
|
10.18
|
|
10.19
|
|
10.20
|
|
10.21
|
|
10.22
|
|
12.1
|
|
21
|
|
23
|
|
31.1
|
|
31.2
|
|
32
|
|
101.INS
|
XBRL Instance Document
|
101.SCH
|
XBRL Taxonomy Extension Schema
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase
|
101.DEF
|
XBRL Taxonomy Extension Definition Document
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase
|
(In millions)
|
|
Balance at
Beginning of Period
|
|
Charged to Costs
and Expenses
|
|
Charged to Other Accounts
(1)
|
|
Write-Offs, Net
|
|
Balance at End
of Period
|
||||||||||
Sales returns reserve
|
|
|
|
|
|
|
|
|
|
|
||||||||||
For the year ended May 31, 2016
|
|
$
|
379
|
|
|
$
|
788
|
|
|
$
|
(15
|
)
|
|
$
|
(708
|
)
|
|
$
|
444
|
|
For the year ended May 31, 2017
|
|
444
|
|
|
696
|
|
|
3
|
|
|
(800
|
)
|
|
343
|
|
|||||
For the year ended May 31, 2018
|
|
343
|
|
|
640
|
|
|
5
|
|
|
(658
|
)
|
|
330
|
|
|||||
Allowance for doubtful accounts
(2)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
For the year ended May 31, 2016
|
|
$
|
78
|
|
|
$
|
52
|
|
|
$
|
(2
|
)
|
|
$
|
(85
|
)
|
|
$
|
43
|
|
For the year ended May 31, 2017
|
|
43
|
|
|
16
|
|
|
—
|
|
|
(40
|
)
|
|
19
|
|
|||||
For the year ended May 31, 2018
|
|
19
|
|
|
19
|
|
|
—
|
|
|
(8
|
)
|
|
30
|
|
(1)
|
Amounts included in this column primarily relate to foreign currency translation.
|
(2)
|
Includes both current and non-current portions of the allowance for doubtful accounts. The non-current portion is included in Deferred income taxes and other assets on the Consolidated Balance Sheets.
|
NIKE, INC.
|
||
By:
|
|
/s/ MARK G. PARKER
|
|
|
Mark G. Parker
|
|
|
Chairman, President and Chief Executive Officer
|
Date:
|
|
July 24, 2018
|
|
|
|
Signature
|
Title
|
Date
|
PRINCIPAL EXECUTIVE OFFICER AND DIRECTOR:
|
|
|
/s/ MARK G. PARKER
Mark G. Parker
|
Chairman, President and Chief Executive Officer
|
July 24, 2018
|
PRINCIPAL FINANCIAL OFFICER:
|
|
|
/s/ ANDREW CAMPION
Andrew Campion
|
Chief Financial Officer
|
July 24, 2018
|
PRINCIPAL ACCOUNTING OFFICER:
|
|
|
/s/ CHRIS L. ABSTON
Chris L. Abston
|
Corporate Controller
|
July 24, 2018
|
DIRECTORS:
|
|
|
/s/ CATHLEEN A. BENKO
Cathleen A. Benko
|
Director
|
July 24, 2018
|
/s/ ELIZABETH J. COMSTOCK
Elizabeth J. Comstock
|
Director
|
July 24, 2018
|
/s/ JOHN G. CONNORS
John G. Connors
|
Director
|
July 24, 2018
|
/s/ TIMOTHY D. COOK
Timothy D. Cook
|
Director
|
July 24, 2018
|
/s/ JOHN J. DONAHOE II
John J. Donahoe II
|
Director
|
July 24, 2018
|
/s/ ALAN B. GRAF, JR.
Alan B. Graf, Jr.
|
Director
|
July 24, 2018
|
/s/ PETER B. HENRY
Peter B. Henry
|
Director
|
July 24, 2018
|
/s/ TRAVIS A. KNIGHT
Travis A. Knight
|
Director
|
July 24, 2018
|
/s/ JOHN C. LECHLEITER
John C. Lechleiter
|
Director
|
July 24, 2018
|
/s/ MICHELLE A. PELUSO
Michelle A. Peluso
|
Director
|
July 24, 2018
|
/s/ JOHNATHAN A. RODGERS
Johnathan A. Rodgers
|
Director
|
July 24, 2018
|
/s/ JOHN R. THOMPSON, JR.
John R. Thompson, Jr.
|
Director
|
July 24, 2018
|
A.
|
This Covenant Not to Compete and Non-Disclosure Agreement is executed upon EMPLOYEE's bona fide advancement with NIKE and is a condition of such advancement. Employee acknowledges that he/she was informed in a written job offer at least two weeks before starting work in his/her new position that this Covenant Not to Compete and Non-Disclosure Agreement is required and is a condition of advancement.
|
B.
|
Over the course of EMPLOYEE's employment with NIKE, EMPLOYEE will be or has been exposed to and/or is in a position to develop confidential information peculiar to NIKE's business and not generally known to the public as defined below ("Protected Information"). It is anticipated that EMPLOYEE will continue to be exposed to Protected Information of greater sensitivity as EMPLOYEE advances in the company, and this Agreement will remain in effect in the event EMPLOYEE advances and until EMPLOYEE leaves the company or it is superseded by a new written agreement executed by the parties.
|
C.
|
The nature of NIKE's business is highly competitive, and disclosure of any Protected Information would result in severe damage to NIKE and be difficult to measure.
|
D.
|
NIKE makes use of its Protected Information throughout the world. Protected information of NIKE can be used to NIKE’s detriment anywhere in the world.
|
1.
|
Covenant Not to Compete
|
(a)
|
Competition Restriction.
During EMPLOYEE’s employment at NIKE, under the terms of any employment contract or otherwise, and for one (1) year thereafter (the "Restriction Period"), EMPLOYEE will not directly or indirectly own, manage, control or participate in the ownership, management or control of, or be employed by, consult for or be connected in any manner
|
(b)
|
Extension of Time.
In the event EMPLOYEE breaches this covenant not to compete, the Restriction Period shall automatically toll from the date of the first breach, and all subsequent breaches, until the resolution of the breach through private settlement, judicial or other action, including all appeals. The Restriction Period shall continue upon the effective date of any such settlement, judicial or other resolution. NIKE shall not be obligated to pay EMPLOYEE the additional compensation described in paragraph 1.1 below during any period of time in which this Agreement is tolled due to EMPLOYEE's breach. In the event EMPLOYEE receives such additional compensation after any such breach, EMPLOYEE must immediately reimburse NIKE in the amount of all such compensation upon the receipt of a written request by NIKE.
|
(c)
|
Waiver of Non-Compete.
NIKE 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 by giving EMPLOYEE seven (7) days' prior notice of such election. In the event all or a portion of the Restriction Period is waived or the definition of Competitor is limited, NIKE shall not be obligated to pay EMPLOYEE for any period of time as to which the covenant not to compete has been waived.
|
(d)
|
Additional Consideration.
As additional consideration for the covenant not to compete described above, should NIKE terminate EMPLOYEE's employment without cause and elect to enforce the non-competition agreement, while the Restriction Period is in effect, NIKE shall pay EMPLOYEE a monthly payment equal to one hundred percent (100%) of EMPLOYEE's last monthly base salary. Except where prohibited by law, if NIKE terminates EMPLOYEE for "cause," no additional consideration will be owed to EMPLOYEE under this Agreement, and the covenant not to compete will remain enforceable. For purposes of this Agreement only, "cause" shall mean (i) insubordination, (ii) acts of dishonesty, (iii) involvement in illegal activities where such involvement in illegal activities violates NIKE policies, places NIKE at risk or has or could damage NIKE's reputation in the community or any of its related or subsidiary companies, (iv) violation of NIKE's anti-harassment or anti-discrimination policy or (v) gross neglect of EMPLOYEE'S duties or willful misconduct that, in either case, results in economic harm to NIKE or harm to NIKE's reputation. Nothing in this paragraph or Agreement alters the employment-at-will relationship between NIKE and EMPLOYEE.
|
(e)
|
Withholding and Offset.
NIKE reserves the right to withhold from Additional Consideration payable to EMPLOYEE all federal, state and local taxes as shall be required, as well as any other amounts authorized or required by NIKE policy. NIKE reserves the right, exercisable in its sole discretion, to reduce the amount of Additional Consideration by amounts that EMPLOYEE owes NIKE, including but not limited to any payments due to NIKE in accordance
|
2.
|
Subsequent Employer.
EMPLOYEE agrees to notify NIKE at the time of separation of employment of the name of EMPLOYEE's new employer, if known. EMPLOYEE further agrees to disclose to NIKE the name of any subsequent employer during the Restriction Period, wherever located and regardless of whether such employer is a competitor of NIKE.
|
3.
|
Non-Disclosure Agreement
|
(a)
|
Protected Information Defined.
"Protected Information" shall mean all proprietary information, in whatever form and format, of NIKE and all information provided to NIKE by third parties that NIKE is obligated to keep confidential. EMPLOYEE agrees that any and all information to which EMPLOYEE has access concerning NIKE projects and internal NIKE information is Protected Information, whether in verbal form, machine-readable form, written or other tangible form, and whether designated as confidential or unmarked. Without limiting the foregoing, Protected Information includes trade secrets and competitively sensitive business or professional information (regardless of whether such information constitutes a trade secret) relating to NIKE's research and development activities, its intellectual property and the filing or pendency of patent applications, confidential techniques, methods, styles, designs, design concepts and ideas, customer and vendor lists, contract factory lists, pricing information, manufacturing plans, business and marketing plans or strategy, product development plans, product launch plans, financial information, sales information, methods of operation, manufacturing processes and methods, products and personnel information.
|
(b)
|
Excluded Information.
Notwithstanding paragraph 3(a), Protected Information excludes any information that is or becomes part of the public domain through no act or failure to act on the part of EMPLOYEE. Specifically, EMPLOYEE shall be permitted to retain as part of his or her personal portfolio copies of EMPLOYEE's original artwork and designs, provided EMPLOYEE presents those personal portfolio copies to his or her supervisor for review and approval and provided the artwork or designs have become part of the public domain. In any dispute between the parties with respect to this exclusion, the burden of proof will be on EMPLOYEE, and such proof will be by clear and convincing evidence.
|
(c)
|
Employee's Obligations.
During the period of employment by NIKE and for a period of two (2) years thereafter, EMPLOYEE will hold in confidence and protect all Protected Information and will not, at any time, directly or indirectly, use any Protected Information for any purpose outside the scope of EMPLOYEE's employment with NIKE or disclose any Protected Information to any third person or organization without the prior written consent of NIKE. Specifically, but not by way of limitation, EMPLOYEE will not ever copy, transmit, reproduce, summarize, quote, publish or make any commercial or other use whatsoever of any Protected Information without the prior written consent of NIKE. EMPLOYEE will also take reasonable security precautions and such other actions as may be necessary to ensure that there is no use or disclosure, intentional or inadvertent, of Protected Information in violation of this Agreement.
|
4.
|
Return of Protected Information.
At the request of NIKE at any time, and in any event, upon termination of employment, EMPLOYEE shall immediately return to NIKE all Protected
|
5.
|
Unauthorized Use.
During the period of employment with NIKE and thereafter, EMPLOYEE will notify NIKE immediately if EMPLOYEE becomes aware of the unauthorized possession, use or knowledge of any Protected Information by any person employed or not employed by NIKE at the time of such possession, use or knowledge. EMPLOYEE will cooperate with NIKE in the investigation of any such incident and will cooperate with NIKE in any litigation with third parties deemed necessary by NIKE to protect the Protected Information. NIKE shall provide reasonable reimbursement to EMPLOYEE for each hour so engaged, and that amount shall not be diminished by operation of any payment under paragraph 1(d) of this Agreement.
|
6.
|
Non-Solicitation/Non-Recruitment.
During the term of this Agreement and for a period of one (1) year thereafter, EMPLOYEE will not directly or indirectly solicit, divert or hire away (or attempt to solicit, divert or hire away) to or for himself or any other company or business organization any NIKE employee, whether or not such employee is a full-time employee or temporary employee and whether or not such employment is pursuant to a written agreement or is at will or any independent contractor working for NIKE.
|
7.
|
Accounting of Profits.
EMPLOYEE agrees that, if EMPLOYEE should violate any term of this Agreement, NIKE shall be entitled to an accounting and repayment of all profits, compensation, commissions, remuneration or benefits that EMPLOYEE directly or indirectly has realized and/or may realize as a result of or in connection with any such violation (including the return of any additional consideration paid by NIKE pursuant to paragraph 1(d) above). Such remedy shall be in addition to and not in limitation of any injunctive relief or other rights or remedies to which NIKE may be entitled at law or in equity.
|
8.
|
General Provisions.
|
(a)
|
Survival.
This Agreement shall continue in effect after the termination of EMPLOYEE's employment, regardless of the reason for termination.
|
(b)
|
Waiver.
No waiver, amendment, modification or cancellation of any term or condition of this Agreement will be effective unless executed in writing by both parties. No written waiver will excuse the performance of any act other than the act or acts specifically referred to therein.
|
(c)
|
Severability.
Each provision herein will be treated as a separate and independent clause, and unenforceability of any one clause will in no way impact the enforceability of any other clause. Should any of the provisions in this Agreement be found to be unreasonable or invalid by a court of competent jurisdiction, such provision will be enforceable to the maximum extent enforceable by the law of that jurisdiction.
|
(d)
|
Applicable Law/Jurisdiction.
This Agreement, and EMPLOYEE's employment hereunder, shall be construed according to the laws of the state of Oregon. EMPLOYEE further hereby submits to the jurisdiction of, and agrees that exclusive jurisdiction over and venue for, any action or proceeding arising out of or relating to this Agreement shall lie in the state and federal courts located in Oregon.
|
__________________________
|
_____________________________
|
Signature
|
Signature
|
___________________________
|
_____________________________
|
Name
|
Name
|
_________________
|
_____________________________
|
Date
|
Title
|
1.
|
Performance Award
. Subject to the terms and conditions set forth in this Letter, you are hereby awarded a discretionary cash award (the “
Award
”) of $[AMOUNT]. Your Award will be paid (less applicable taxes required to be withheld with respect to such payment) in [a lump sum] [installments] on [date(s)], subject to your continued employment with the Company through the payment date.
|
2.
|
Clawback
. The Award is subject to the NIKE, Inc. Policy for Recoupment of Incentive Compensation and any applicable securities, tax and stock exchange laws, rules, regulations and requirements relating to the recoupment or clawback of incentive compensation.
|
3.
|
No Right to Employment
. For the avoidance of doubt, this Letter does not give you the right to be retained in the employment of the Company or any of its subsidiaries. The Company reserves the right to terminate you at any time for any reason, notwithstanding the existence of this Letter.
|
4.
|
No Assignment
. Except as otherwise required by applicable law, none of your interests, benefits, payments, claims or rights under this Letter Agreement shall be subject in any manner to any claims of any of your creditors or beneficiaries, nor to alienation by anticipation, sale, transfer, assignment, bankruptcy, pledge, attachment, charge or encumbrance of any kind, and any attempt to take any such action shall be null and void.
|
5.
|
Applicable Law
. This Letter and all rights thereunder shall be governed by and construed in accordance with the laws of the State of Oregon, without giving effect to the conflict of laws principles thereof.
|
NIKE, Inc.
|
||
|
||
By
|
|
|
|
Name:
|
|
|
Title:
|
|
EXHIBIT 12.1 NIKE, Inc. Computation of Ratio of Earnings to Fixed Charges
|
|
Year Ended May 31,
|
||||||||||||||||||
(In millions)
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
||||||||||
Income before income taxes
|
$
|
4,325
|
|
|
$
|
4,886
|
|
|
$
|
4,623
|
|
|
$
|
4,205
|
|
|
$
|
3,544
|
|
Capitalized interest, net of amortization
|
(10
|
)
|
|
(8
|
)
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|||||
Adjusted income before income taxes
|
4,315
|
|
|
4,878
|
|
|
4,620
|
|
|
4,205
|
|
|
3,544
|
|
|||||
Add fixed charges:
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense
(1)(2)
|
149
|
|
|
121
|
|
|
74
|
|
|
60
|
|
|
58
|
|
|||||
Interest component of leases
(3)
|
125
|
|
|
102
|
|
|
66
|
|
|
59
|
|
|
53
|
|
|||||
Total fixed charges
|
274
|
|
|
223
|
|
|
140
|
|
|
119
|
|
|
111
|
|
|||||
Earnings before income taxes and fixed charges
|
$
|
4,589
|
|
|
$
|
5,101
|
|
|
$
|
4,760
|
|
|
$
|
4,324
|
|
|
$
|
3,655
|
|
Ratio of earnings to total fixed charges
|
16.7
|
|
|
22.9
|
|
|
34.0
|
|
|
36.3
|
|
|
32.9
|
|
(1)
|
Interest expense includes interest both expensed and capitalized and amortization of premiums, discounts and capitalized expenses related to indebtedness.
|
(2)
|
Interest expense does not include interest related to uncertain tax positions.
|
(3)
|
Represents the portion of rental expense which management believes approximates the interest component of operating leases.
|
Entity Name
|
Jurisdiction of Formation
|
Accelerator Studio LLC
|
Delaware
|
Air Manufacturing Innovation Vietnam LLC
|
Vietnam
|
All Star C.V.
|
Netherlands
|
American Converse S.L.U.
|
Spain
|
American NIKE S.L.U.
|
Spain
|
A.S. Roma Merchandising S.R.L.
|
Italy
|
BRS NIKE Taiwan Inc.
|
Taiwan
|
Converse (Asia Pacific) Limited
|
Hong Kong
|
Converse Canada Corp.
|
Canada
|
Converse Canada Holding B.V.
|
Netherlands
|
Converse Deutschland GmbH
|
Germany
|
Converse do Brasil Ltda.
|
Brazil
|
Converse Europe Limited
|
United Kingdom
|
Converse Footwear Technical Service (Zhongshan) Co., Ltd.
|
People’s Republic of China
|
Converse France S.A.S.
|
France
|
Converse Hong Kong Holding Company Limited
|
Hong Kong
|
Converse Hong Kong Limited
|
Hong Kong
|
Converse Inc.
|
Delaware
|
Converse Korea LLC
|
South Korea
|
Converse Netherlands B.V.
|
Netherlands
|
Converse Retail B.V.
|
Netherlands
|
Converse Retail GmbH
|
Austria
|
Converse Retail Italy S.r.l.
|
Italy
|
Converse Retail (UK) Limited
|
United Kingdom
|
Converse Sporting Goods (China) Co., Ltd.
|
People’s Republic of China
|
Converse Trading Company B.V.
|
Netherlands
|
F.C. Internazionale Merchandising s.r.l.
|
Italy
|
French Football Merchandising S.A.S.
|
France
|
Hurley 999, S.L.U.
|
Spain
|
Hurley Australia Pty. Ltd.
|
Australia
|
Hurley International LLC
|
Oregon
|
Hurley Phantom C.V.
|
Netherlands
|
LATAM Comercio de Productos Esportivos Ltda.
|
Brazil
|
NIKE 360 Holding B.V.
|
Netherlands
|
NIKE 360 Jordan with Limited Liability
|
Jordan
|
NIKE Air Ace B.V.
|
Netherlands
|
NIKE Amplify LLC
|
Delaware
|
NIKE Argentina S.R.L.
|
Argentina
|
NIKE Asia Holding B.V.
|
Netherlands
|
NIKE Australia Pty. Ltd.
|
Australia
|
NIKE Barcelona Merchandising S.L.U
|
Spain
|
NIKE Blazer LLC
|
Delaware
|
NIKE Canada Corp.
|
Canada
|
NIKE Canada Holding B.V.
|
Netherlands
|
NIKE Chelsea Merchandising Limited
|
United Kingdom
|
NIKE Chile B.V.
|
Netherlands
|
NIKE China Holding HK Limited
|
Hong Kong
|
NIKE Codrus Coöperatief U.A.
|
Netherlands
|
Entity Name
|
Jurisdiction of Formation
|
NIKE Commercial (China) Co., Ltd.
|
People’s Republic of China
|
NIKE CR d.o.o
|
Croatia
|
NIKE Czech s.r.o.
|
Czech Republic
|
NIKE de Chile Ltda.
|
Chile
|
NIKE de Mexico, S. de R.L. de C.V.
|
Mexico
|
NIKE Denmark ApS
|
Denmark
|
NIKE Deutschland GmbH
|
Germany
|
NIKE do Brasil Comercio e Participacoes Ltda.
|
Brazil
|
NIKE Europe Holding B.V.
|
Netherlands
|
NIKE European Operations Netherlands B.V.
|
Netherlands
|
NIKE Finance Ltd.
|
Bermuda
|
NIKE Finland OY
|
Finland
|
NIKE France S.A.S.
|
France
|
NIKE Fuel B.V.
|
Netherlands
|
NIKE Fundamentals C.V.
|
Netherlands
|
NIKE Galaxy Holding B.V.
|
Netherlands
|
NIKE Gesellschaft m.b.H.
|
Austria
|
NIKE Glide C.V.
|
Netherlands
|
NIKE Global Holding B.V.
|
Netherlands
|
NIKE GLOBAL SERVICES PTE. LTD.
|
Singapore
|
NIKE Global Trading B.V.
|
Netherlands
|
NIKE GLOBAL TRADING PTE. LTD.
|
Singapore
|
NIKE Group Holding B.V.
|
Netherlands
|
NIKE Hellas EPE
|
Greece
|
NIKE Holding, LLC
|
Delaware
|
NIKE Hong Kong Limited
|
Hong Kong
|
NIKE Hungary LLC
|
Hungary
|
NIKE IHM, Inc.
|
Missouri
|
NIKE India Holding B.V.
|
Netherlands
|
NIKE India Private Limited
|
India
|
NIKE Innovate C.V.
|
Netherlands
|
NIKE International Holding B.V.
|
Netherlands
|
NIKE International Holding, Inc.
|
Delaware
|
NIKE International LLC
|
Delaware
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NIKE International Ltd.
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Bermuda
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NIKE Israel Ltd.
|
Israel
|
NIKE Italy S.R.L.
|
Italy
|
NIKE Japan Corp.
|
Japan
|
NIKE Japan Group LLC
|
Japan
|
NIKE Korea LLC
|
South Korea
|
NIKE Laser Holding B.V.
|
Netherlands
|
NIKE Licenciamentos Ltda.
|
Brazil
|
NIKE Logistics Yugen Kaisha
|
Japan
|
NIKE Magista, Inc.
|
Delaware
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NIKE Mercurial Corp.
|
Delaware
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NIKE Mercurial Hong Kong Limited
|
Hong Kong
|
NIKE Mercurial I Limited
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United Kingdom
|
NIKE Mexico Holdings, LLC
|
Delaware
|
NIKE New Zealand Company
|
New Zealand
|
NIKE Norway AS
|
Norway
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Entity Name
|
Jurisdiction of Formation
|
NIKE NZ Holding B.V.
|
Netherlands
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NIKE Offshore Holding B.V.
|
Netherlands
|
NIKE Quantum Force C.V.
|
Netherlands
|
NIKE Panama S. de R.L.
|
Panama
|
NIKE Philippines, Inc.
|
Philippines
|
NIKE Poland Sp. z o.o.
|
Poland
|
NIKE Retail B.V.
|
Netherlands
|
NIKE Retail Hellas Ltd.
|
Greece
|
NIKE Retail Israel Ltd.
|
Israel
|
NIKE Retail LLC
|
Russia
|
NIKE Retail Poland Sp. z o.o.
|
Poland
|
NIKE Retail Services, Inc.
|
Oregon
|
NIKE Retail Turkey
|
Turkey
|
NIKE Roshe, Inc.
|
Delaware
|
NIKE Russia LLC
|
Russia
|
NIKE SALES (MALAYSIA) SDN. BHD.
|
Malaysia
|
NIKE Shox Ltd.
|
Israel
|
NIKE SINGAPORE PTE. LTD.
|
Singapore
|
NIKE Slovakia s.r.o.
|
Slovakia
|
NIKE Sourcing India Private Limited
|
India
|
NIKE Sourcing (Guangzhou) Co., Ltd.
|
People’s Republic of China
|
NIKE South Africa (Proprietary) Limited
|
South Africa
|
NIKE South Africa Holdings LLC
|
Delaware
|
NIKE Sphere C.V.
|
Netherlands
|
NIKE Spiridon, Inc.
|
Delaware
|
NIKE Sports (China) Company, Ltd.
|
People’s Republic of China
|
NIKE Sweden AB
|
Sweden
|
NIKE Swift B.V.
|
Netherlands
|
NIKE (Switzerland) GmbH
|
Switzerland
|
NIKE Taiwan Limited
|
Taiwan
|
NIKE (Thailand) Limited
|
Thailand
|
NIKE TN, Inc.
|
Oregon
|
NIKE Trading Company B.V.
|
Netherlands
|
NIKE UK Holding B.V.
|
Netherlands
|
NIKE (UK) Limited
|
United Kingdom
|
NIKE Uptempo C.V.
|
Netherlands
|
NIKE USA, Inc.
|
Oregon
|
NIKE Vapor Jet LLC
|
Delaware
|
NIKE Vapor Ltd.
|
United Kingdom
|
NIKE Victory Cooperatief U.A.
|
Netherlands
|
NIKE Vietnam Limited Liability Company
|
Vietnam
|
NIKE Vision, Timing and Techlab, LP
|
Texas
|
NIKE Vomero Cooperatief U.A.
|
Netherlands
|
NIKE Wholesale LLC
|
Slovenia
|
North West Merchandising Limited
|
United Kingdom
|
PT Hurley Indonesia
|
Indonesia
|
PT NIKE Indonesia
|
Indonesia
|
Triax Insurance, Inc.
|
Hawaii
|
Twin Dragons Global Limited
|
Hong Kong
|
Twin Dragons Holding B.V.
|
Netherlands
|
Entity Name
|
Jurisdiction of Formation
|
Yugen Kaisha Hurley Japan
|
Japan
|
Dated:
|
July 24, 2018
|
|
|
|
/s/ Mark G. Parker
|
|
|
Mark G. Parker
|
|
|
Chief Executive Officer
|
Dated:
|
July 24, 2018
|
|
|
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/s/ Andrew Campion
|
|
|
Andrew Campion
Chief Financial Officer
|
Dated:
|
July 24, 2018
|
|
|
|
/s/ Mark G. Parker
|
|
|
Mark G. Parker
|
|
|
Chief Executive Officer
|
Dated:
|
July 24, 2018
|
|
|
|
/s/ Andrew Campion
|
|
|
Andrew Campion
Chief Financial Officer
|