Oregon
|
93-0584541
|
||
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
|
|||
Class B Common Stock
|
NKE
|
New York Stock Exchange
|
|
(Title of each class)
|
(Trading symbol)
|
(Name of each exchange on which registered)
|
|
THREE MONTHS ENDED AUGUST 31,
|
|||||
(In millions, except per share data)
|
2019
|
2018
|
||||
Revenues
|
$
|
10,660
|
|
$
|
9,948
|
|
Cost of sales
|
5,789
|
|
5,551
|
|
||
Gross profit
|
4,871
|
|
4,397
|
|
||
Demand creation expense
|
1,018
|
|
964
|
|
||
Operating overhead expense
|
2,310
|
|
2,099
|
|
||
Total selling and administrative expense
|
3,328
|
|
3,063
|
|
||
Interest expense (income), net
|
15
|
|
11
|
|
||
Other (income) expense, net
|
(33
|
)
|
53
|
|
||
Income before income taxes
|
1,561
|
|
1,270
|
|
||
Income tax expense
|
194
|
|
178
|
|
||
NET INCOME
|
$
|
1,367
|
|
$
|
1,092
|
|
Earnings per common share:
|
|
|
||||
Basic
|
$
|
0.87
|
|
$
|
0.69
|
|
Diluted
|
$
|
0.86
|
|
$
|
0.67
|
|
Weighted average common shares outstanding:
|
|
|
||||
Basic
|
1,562.4
|
|
1,594.0
|
|
||
Diluted
|
1,597.5
|
|
1,634.4
|
|
|
THREE MONTHS ENDED AUGUST 31,
|
|||||
(Dollars in millions)
|
2019
|
2018
|
||||
Net income
|
$
|
1,367
|
|
$
|
1,092
|
|
Other comprehensive income (loss), net of tax:
|
|
|
||||
Change in net foreign currency translation adjustment
|
(89
|
)
|
(128
|
)
|
||
Change in net gains (losses) on cash flow hedges
|
36
|
|
193
|
|
||
Change in net gains (losses) on other
|
2
|
|
(3
|
)
|
||
Total other comprehensive income (loss), net of tax
|
(51
|
)
|
62
|
|
||
TOTAL COMPREHENSIVE INCOME
|
$
|
1,316
|
|
$
|
1,154
|
|
|
AUGUST 31,
|
|
MAY 31,
|
||||
(Dollars in millions)
|
2019
|
|
2019
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and equivalents
|
$
|
3,446
|
|
|
$
|
4,466
|
|
Short-term investments
|
198
|
|
|
197
|
|
||
Accounts receivable, net
|
4,656
|
|
|
4,272
|
|
||
Inventories
|
5,835
|
|
|
5,622
|
|
||
Prepaid expenses and other current assets
|
2,093
|
|
|
1,968
|
|
||
Total current assets
|
16,228
|
|
|
16,525
|
|
||
Property, plant and equipment, net
|
4,615
|
|
|
4,744
|
|
||
Operating lease right-of-use assets, net
|
2,832
|
|
|
—
|
|
||
Identifiable intangible assets, net
|
279
|
|
|
283
|
|
||
Goodwill
|
224
|
|
|
154
|
|
||
Deferred income taxes and other assets
|
2,071
|
|
|
2,011
|
|
||
TOTAL ASSETS
|
$
|
26,249
|
|
|
$
|
23,717
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Current portion of long-term debt
|
$
|
6
|
|
|
$
|
6
|
|
Notes payable
|
250
|
|
|
9
|
|
||
Accounts payable
|
2,716
|
|
|
2,612
|
|
||
Current portion of operating lease liabilities
|
427
|
|
|
—
|
|
||
Accrued liabilities
|
4,455
|
|
|
5,010
|
|
||
Income taxes payable
|
216
|
|
|
229
|
|
||
Total current liabilities
|
8,070
|
|
|
7,866
|
|
||
Long-term debt
|
3,463
|
|
|
3,464
|
|
||
Operating lease liabilities
|
2,675
|
|
|
—
|
|
||
Deferred income taxes and other liabilities
|
2,841
|
|
|
3,347
|
|
||
Redeemable preferred stock
|
—
|
|
|
—
|
|
||
Shareholders' equity:
|
|
|
|
||||
Common stock at stated value:
|
|
|
|
||||
Class A convertible — 315 and 315 shares outstanding
|
—
|
|
|
—
|
|
||
Class B — 1,245 and 1,253 shares outstanding
|
3
|
|
|
3
|
|
||
Capital in excess of stated value
|
7,296
|
|
|
7,163
|
|
||
Accumulated other comprehensive income (loss)
|
180
|
|
|
231
|
|
||
Retained earnings
|
1,721
|
|
|
1,643
|
|
||
Total shareholders' equity
|
9,200
|
|
|
9,040
|
|
||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
|
$
|
26,249
|
|
|
$
|
23,717
|
|
|
THREE MONTHS ENDED AUGUST 31,
|
|||||
(Dollars in millions)
|
2019
|
2018
|
||||
Cash provided by operations:
|
|
|
||||
Net income
|
$
|
1,367
|
|
$
|
1,092
|
|
Adjustments to reconcile net income to net cash provided by operations:
|
|
|
||||
Depreciation
|
169
|
|
178
|
|
||
Deferred income taxes
|
(42
|
)
|
18
|
|
||
Stock-based compensation
|
80
|
|
41
|
|
||
Amortization and other
|
6
|
|
3
|
|
||
Net foreign currency adjustments
|
49
|
|
166
|
|
||
Changes in certain working capital components and other assets and liabilities:
|
|
|
||||
(Increase) decrease in accounts receivable
|
(456
|
)
|
(294
|
)
|
||
(Increase) decrease in inventories
|
(270
|
)
|
(25
|
)
|
||
(Increase) decrease in prepaid expenses, operating lease right-of-use assets and other current and non-current assets
|
38
|
|
(83
|
)
|
||
Increase (decrease) in accounts payable, accrued liabilities, operating lease liabilities and other current and non-current liabilities
|
(547
|
)
|
205
|
|
||
Cash provided by operations
|
394
|
|
1,301
|
|
||
Cash provided (used) by investing activities:
|
|
|
||||
Purchases of short-term investments
|
(504
|
)
|
(980
|
)
|
||
Maturities of short-term investments
|
16
|
|
400
|
|
||
Sales of short-term investments
|
533
|
|
586
|
|
||
Additions to property, plant and equipment
|
(284
|
)
|
(343
|
)
|
||
Other investing activities
|
(109
|
)
|
4
|
|
||
Cash provided (used) by investing activities
|
(348
|
)
|
(333
|
)
|
||
Cash used by financing activities:
|
|
|
||||
Increase (decrease) in notes payable
|
241
|
|
(321
|
)
|
||
Proceeds from exercise of stock options and other stock issuances
|
111
|
|
187
|
|
||
Repurchase of common stock
|
(999
|
)
|
(1,360
|
)
|
||
Dividends — common and preferred
|
(345
|
)
|
(320
|
)
|
||
Other financing activities
|
(18
|
)
|
(18
|
)
|
||
Cash used by financing activities
|
(1,010
|
)
|
(1,832
|
)
|
||
Effect of exchange rate changes on cash and equivalents
|
(56
|
)
|
(103
|
)
|
||
Net increase (decrease) in cash and equivalents
|
(1,020
|
)
|
(967
|
)
|
||
Cash and equivalents, beginning of period
|
4,466
|
|
4,249
|
|
||
CASH AND EQUIVALENTS, END OF PERIOD
|
$
|
3,446
|
|
$
|
3,282
|
|
Supplemental disclosure of cash flow information:
|
|
|
||||
Non-cash additions to property, plant and equipment
|
$
|
90
|
|
$
|
110
|
|
Dividends declared and not paid
|
344
|
|
318
|
|
|
COMMON STOCK
|
CAPITAL IN EXCESS OF STATED VALUE
|
|
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
|
|
RETAINED EARNINGS
|
|
TOTAL
|
|
||||||||||||||
|
CLASS A
|
|
CLASS B
|
||||||||||||||||||||
(In millions, except per share data)
|
SHARES
|
|
AMOUNT
|
|
|
SHARES
|
|
AMOUNT
|
|
||||||||||||||
Balance at May 31, 2019
|
315
|
|
$
|
—
|
|
|
1,253
|
|
$
|
3
|
|
$
|
7,163
|
|
$
|
231
|
|
$
|
1,643
|
|
$
|
9,040
|
|
Stock options exercised
|
|
|
|
4
|
|
|
116
|
|
|
|
116
|
|
|||||||||||
Conversion to Class B Common Stock
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
||||||||||
Repurchase of Class B Common Stock
|
|
|
|
(12
|
)
|
|
(55
|
)
|
|
(940
|
)
|
(995
|
)
|
||||||||||
Dividends on common stock ($0.22 per share) and preferred stock ($0.10 per share)
|
|
|
|
|
|
|
|
|
|
(344
|
)
|
(344
|
)
|
||||||||||
Issuance of shares to employees, net of shares withheld for employee taxes
|
|
|
|
|
|
|
(8
|
)
|
|
(4
|
)
|
(12
|
)
|
||||||||||
Stock-based compensation
|
|
|
|
|
|
|
80
|
|
|
|
|
80
|
|
||||||||||
Net income
|
|
|
|
|
|
|
|
|
|
1,367
|
|
1,367
|
|
||||||||||
Other comprehensive income (loss)
|
|
|
|
|
|
|
|
|
(51
|
)
|
|
|
(51
|
)
|
|||||||||
Adoption of ASC Topic 842 (Note 1)
|
|
|
|
|
|
|
|
|
|
(1
|
)
|
(1
|
)
|
||||||||||
Balance at August 31, 2019
|
315
|
|
$
|
—
|
|
|
1,245
|
|
$
|
3
|
|
$
|
7,296
|
|
$
|
180
|
|
$
|
1,721
|
|
$
|
9,200
|
|
|
COMMON STOCK
|
CAPITAL IN EXCESS OF STATED VALUE
|
|
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
|
|
RETAINED EARNINGS
|
|
TOTAL
|
|
||||||||||||||
|
CLASS A
|
|
CLASS B
|
||||||||||||||||||||
(In millions, except per share data)
|
SHARES
|
|
AMOUNT
|
|
|
SHARES
|
|
AMOUNT
|
|
||||||||||||||
Balance at May 31, 2018
|
329
|
|
$
|
—
|
|
|
1,272
|
|
$
|
3
|
|
$
|
6,384
|
|
$
|
(92
|
)
|
$
|
3,517
|
|
$
|
9,812
|
|
Stock options exercised
|
|
|
|
6
|
|
|
182
|
|
|
|
182
|
|
|||||||||||
Conversion to Class B Common Stock
|
(9
|
)
|
|
|
9
|
|
|
|
|
|
|
|
—
|
|
|||||||||
Repurchase of Class B Common Stock
|
|
|
|
(18
|
)
|
|
(69
|
)
|
|
(1,312
|
)
|
(1,381
|
)
|
||||||||||
Dividends on common stock ($0.20 per share) and preferred stock ($0.10 per share)
|
|
|
|
|
|
|
|
(318
|
)
|
(318
|
)
|
||||||||||||
Issuance of shares to employees, net of shares withheld for employee taxes
|
|
|
|
|
|
|
(13
|
)
|
|
(1
|
)
|
(14
|
)
|
||||||||||
Stock-based compensation
|
|
|
|
|
|
41
|
|
|
|
41
|
|
||||||||||||
Net income
|
|
|
|
|
|
|
|
1,092
|
|
1,092
|
|
||||||||||||
Other comprehensive income (loss)
|
|
|
|
|
|
|
|
62
|
|
|
62
|
|
|||||||||||
Adoption of ASU 2016-16
|
|
|
|
|
|
|
|
|
(507
|
)
|
(507
|
)
|
|||||||||||
Adoption of ASC Topic 606
|
|
|
|
|
|
|
|
23
|
|
23
|
|
||||||||||||
Balance at August 31, 2018
|
320
|
|
$
|
—
|
|
|
1,269
|
|
$
|
3
|
|
$
|
6,525
|
|
$
|
(30
|
)
|
$
|
2,494
|
|
$
|
8,992
|
|
Note 1
|
||
Note 2
|
||
Note 3
|
||
Note 4
|
||
Note 5
|
||
Note 6
|
||
Note 7
|
||
Note 8
|
||
Note 9
|
||
Note 10
|
||
Note 11
|
||
Note 12
|
||
Note 13
|
NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
NOTE 2 — INVENTORIES
|
NOTE 3 — ACCRUED LIABILITIES
|
|
AS OF AUGUST 31,
|
|
AS OF MAY 31,
|
||||
(Dollars in millions)
|
2019
|
|
2019
|
||||
Sales-related reserves
|
$
|
1,157
|
|
|
$
|
1,218
|
|
Compensation and benefits, excluding taxes
|
816
|
|
|
1,232
|
|
||
Endorsement compensation
|
434
|
|
|
424
|
|
||
Dividends payable
|
344
|
|
|
346
|
|
||
Import and logistics costs
|
330
|
|
|
296
|
|
||
Taxes other than income taxes payable
|
274
|
|
|
234
|
|
||
Collateral received from counterparties to hedging instruments
|
263
|
|
|
289
|
|
||
Advertising and marketing
|
132
|
|
|
114
|
|
||
Fair value of derivatives
|
54
|
|
|
52
|
|
||
Other(1)
|
651
|
|
|
805
|
|
||
TOTAL ACCRUED LIABILITIES
|
$
|
4,455
|
|
|
$
|
5,010
|
|
(1)
|
Other consists of various accrued expenses with no individual item accounting for more than 5% of the total Accrued liabilities balance at August 31, 2019 and May 31, 2019.
|
NOTE 4 — FAIR VALUE MEASUREMENTS
|
|
AS OF AUGUST 31, 2019
|
||||||||
(Dollars in millions)
|
ASSETS AT FAIR VALUE
|
|
CASH AND EQUIVALENTS
|
|
SHORT-TERM INVESTMENTS
|
|
|||
Cash
|
$
|
614
|
|
$
|
614
|
|
$
|
—
|
|
Level 1:
|
|
|
|
||||||
U.S. Treasury securities
|
361
|
|
200
|
|
161
|
|
|||
Level 2:
|
|
|
|
||||||
Commercial paper and bonds
|
31
|
|
—
|
|
31
|
|
|||
Money market funds
|
1,687
|
|
1,687
|
|
—
|
|
|||
Time deposits
|
949
|
|
945
|
|
4
|
|
|||
U.S. Agency securities
|
2
|
|
—
|
|
2
|
|
|||
Total Level 2
|
2,669
|
|
2,632
|
|
37
|
|
|||
TOTAL
|
$
|
3,644
|
|
$
|
3,446
|
|
$
|
198
|
|
|
AS OF MAY 31, 2019
|
||||||||
(Dollars in millions)
|
ASSETS AT FAIR VALUE
|
|
CASH AND EQUIVALENTS
|
|
SHORT-TERM INVESTMENTS
|
|
|||
Cash
|
$
|
853
|
|
$
|
853
|
|
$
|
—
|
|
Level 1:
|
|
|
|
||||||
U.S. Treasury securities
|
347
|
|
200
|
|
147
|
|
|||
Level 2:
|
|
|
|
||||||
Commercial paper and bonds
|
34
|
|
1
|
|
33
|
|
|||
Money market funds
|
1,637
|
|
1,637
|
|
—
|
|
|||
Time deposits
|
1,791
|
|
1,775
|
|
16
|
|
|||
U.S. Agency securities
|
1
|
|
—
|
|
1
|
|
|||
Total Level 2
|
3,463
|
|
3,413
|
|
50
|
|
|||
TOTAL
|
$
|
4,663
|
|
$
|
4,466
|
|
$
|
197
|
|
|
AS OF AUGUST 31, 2019
|
||||||||||||||||||
|
DERIVATIVE ASSETS
|
|
DERIVATIVE LIABILITIES
|
||||||||||||||||
(Dollars 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)
|
$
|
578
|
|
$
|
549
|
|
$
|
29
|
|
|
$
|
55
|
|
$
|
53
|
|
$
|
2
|
|
Embedded derivatives
|
3
|
|
3
|
|
—
|
|
|
1
|
|
1
|
|
—
|
|
||||||
TOTAL
|
$
|
581
|
|
$
|
552
|
|
$
|
29
|
|
|
$
|
56
|
|
$
|
54
|
|
$
|
2
|
|
(1)
|
If the foreign exchange derivative instruments had been netted on the Unaudited Condensed Consolidated Balance Sheets, the asset and liability positions each would have been reduced by $44 million as of August 31, 2019. As of that date, the Company had received $263 million of cash collateral from various counterparties related to foreign exchange derivative instruments. No amount of collateral was posted on the Company's derivative liability balance as of August 31, 2019.
|
|
AS OF MAY 31, 2019
|
||||||||||||||||||
|
DERIVATIVE ASSETS
|
|
DERIVATIVE LIABILITIES
|
||||||||||||||||
(Dollars 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)
|
$
|
611
|
|
$
|
611
|
|
$
|
—
|
|
|
$
|
51
|
|
$
|
51
|
|
$
|
—
|
|
Embedded derivatives
|
11
|
|
5
|
|
6
|
|
|
3
|
|
1
|
|
2
|
|
||||||
TOTAL
|
$
|
622
|
|
$
|
616
|
|
$
|
6
|
|
|
$
|
54
|
|
$
|
52
|
|
$
|
2
|
|
(1)
|
If the foreign exchange derivative instruments had been netted on the Consolidated Balance Sheets, the asset and liability positions each would have been reduced by $50 million as of May 31, 2019. As of that date, the Company had received $289 million of cash collateral from various counterparties related to foreign exchange derivative instruments. No amount of collateral was posted on the Company's derivative liability balance as of May 31, 2019.
|
NOTE 5 — SHORT-TERM BORROWINGS AND CREDIT LINES
|
NOTE 6 — INCOME TAXES
|
NOTE 7 — STOCK-BASED COMPENSATION
|
|
THREE MONTHS ENDED AUGUST 31,
|
|||||
(Dollars in millions)
|
2019
|
2018
|
||||
Stock options(1)
|
$
|
42
|
|
$
|
20
|
|
ESPPs
|
13
|
|
10
|
|
||
Restricted stock
|
25
|
|
11
|
|
||
TOTAL STOCK-BASED COMPENSATION EXPENSE
|
$
|
80
|
|
$
|
41
|
|
(1)
|
Expense for stock options includes the expense associated with stock appreciation rights. Accelerated stock option expense is recorded for employees meeting certain retirement eligibility requirements.
|
|
THREE MONTHS ENDED AUGUST 31,
|
|||
|
2019
|
2018
|
||
Dividend yield
|
1.1
|
%
|
1.0
|
%
|
Expected volatility
|
22.9
|
%
|
19.7
|
%
|
Weighted average expected life (in years)
|
6.0
|
|
6.0
|
|
Risk-free interest rate
|
1.7
|
%
|
2.9
|
%
|
NOTE 8 — EARNINGS PER SHARE
|
|
THREE MONTHS ENDED AUGUST 31,
|
|||||
(Dollars in millions, except per share data)
|
2019
|
2018
|
||||
Net income available to common stockholders
|
$
|
1,367
|
|
$
|
1,092
|
|
Determination of shares:
|
|
|
||||
Weighted average common shares outstanding
|
1,562.4
|
|
1,594.0
|
|
||
Assumed conversion of dilutive stock options and awards
|
35.1
|
|
40.4
|
|
||
DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
|
1,597.5
|
|
1,634.4
|
|
||
Earnings per common share:
|
|
|
||||
Basic
|
$
|
0.87
|
|
$
|
0.69
|
|
Diluted
|
$
|
0.86
|
|
$
|
0.67
|
|
NOTE 9 — RISK MANAGEMENT AND DERIVATIVES
|
|
DERIVATIVE ASSETS
|
|
DERIVATIVE LIABILITIES
|
||||||||||||||
|
BALANCE SHEET LOCATION
|
AUGUST 31,
|
|
MAY 31,
|
|
BALANCE SHEET LOCATION
|
AUGUST 31,
|
|
MAY 31,
|
||||||||
(Dollars in millions)
|
2019
|
|
2019
|
|
2019
|
|
2019
|
||||||||||
Derivatives formally designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign exchange forwards and options
|
Prepaid expenses and other current assets
|
$
|
494
|
|
|
$
|
509
|
|
|
Accrued liabilities
|
$
|
16
|
|
|
$
|
5
|
|
Foreign exchange forwards and options
|
Deferred income taxes and other assets
|
29
|
|
|
—
|
|
|
Deferred income taxes and other liabilities
|
2
|
|
|
—
|
|
||||
Total derivatives formally designated as hedging instruments
|
|
523
|
|
|
509
|
|
|
|
18
|
|
|
5
|
|
||||
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign exchange forwards and options
|
Prepaid expenses and other current assets
|
55
|
|
|
102
|
|
|
Accrued liabilities
|
37
|
|
|
46
|
|
||||
Embedded derivatives
|
Prepaid expenses and other current assets
|
3
|
|
|
5
|
|
|
Accrued liabilities
|
1
|
|
|
1
|
|
||||
Embedded derivatives
|
Deferred income taxes and other assets
|
—
|
|
|
6
|
|
|
Deferred income taxes and other liabilities
|
—
|
|
|
2
|
|
||||
Total derivatives not designated as hedging instruments
|
|
58
|
|
|
113
|
|
|
|
38
|
|
|
49
|
|
||||
TOTAL DERIVATIVES
|
|
$
|
581
|
|
|
$
|
622
|
|
|
|
$
|
56
|
|
|
$
|
54
|
|
|
THREE MONTHS ENDED AUGUST 31,
|
||||||||||||
|
2019
|
|
2018
|
||||||||||
(Dollars in millions)
|
TOTAL
|
|
AMOUNT OF
GAIN (LOSS) ON CASH FLOW HEDGE ACTIVITY |
|
|
TOTAL
|
|
AMOUNT OF
GAIN (LOSS) ON CASH FLOW HEDGE ACTIVITY |
|
||||
Revenues
|
$
|
10,660
|
|
$
|
8
|
|
|
$
|
9,948
|
|
$
|
5
|
|
Cost of sales
|
5,789
|
|
75
|
|
|
5,551
|
|
(44
|
)
|
||||
Other (income) expense, net
|
(33
|
)
|
46
|
|
|
53
|
|
(9
|
)
|
||||
Interest expense (income), net
|
15
|
|
(2
|
)
|
|
11
|
|
(2
|
)
|
(Dollars in millions)
|
AMOUNT OF GAIN (LOSS)
RECOGNIZED IN OTHER COMPREHENSIVE INCOME (LOSS) ON DERIVATIVES(1) |
|
AMOUNT OF GAIN (LOSS)
RECLASSIFIED FROM ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) INTO INCOME(1) |
||||||||||||
THREE MONTHS ENDED AUGUST 31,
|
|
LOCATION OF GAIN (LOSS)
RECLASSIFIED FROM ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) INTO INCOME |
|
THREE MONTHS ENDED AUGUST 31,
|
|||||||||||
2019
|
2018
|
|
|
2019
|
2018
|
||||||||||
Derivatives designated as
cash flow hedges: |
|
|
|
|
|
|
|
||||||||
Foreign exchange forwards
and options |
$
|
21
|
|
$
|
16
|
|
|
Revenues
|
|
$
|
8
|
|
$
|
5
|
|
Foreign exchange forwards
and options |
109
|
|
101
|
|
|
Cost of sales
|
|
75
|
|
(44
|
)
|
||||
Foreign exchange forwards
and options |
33
|
|
26
|
|
|
Other (income) expense, net
|
|
46
|
|
(9
|
)
|
||||
Interest rate swaps(2)
|
—
|
|
—
|
|
|
Interest expense (income), net
|
|
(2
|
)
|
(2
|
)
|
||||
Total designated cash
flow hedges |
$
|
163
|
|
$
|
143
|
|
|
|
|
$
|
127
|
|
$
|
(50
|
)
|
(1)
|
For the three months ended August 31, 2019 and 2018, the amounts recorded in Other (income) expense, net as a result of 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 (loss), will be released through Interest expense (income), net over the term of the issued debt.
|
|
AMOUNT OF GAIN (LOSS) RECOGNIZED
IN INCOME ON DERIVATIVES |
|
LOCATION OF GAIN (LOSS)
RECOGNIZED IN INCOME ON DERIVATIVES |
|||||
|
THREE MONTHS ENDED AUGUST 31,
|
|
||||||
(Dollars in millions)
|
2019
|
2018
|
|
|||||
Derivatives not designated as hedging instruments:
|
|
|
|
|
||||
Foreign exchange forwards and options
|
$
|
—
|
|
$
|
114
|
|
|
Other (income) expense, net
|
Embedded derivatives
|
(1
|
)
|
(2
|
)
|
|
Other (income) expense, net
|
NOTE 10 — ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
|
(Dollars in millions)
|
FOREIGN CURRENCY TRANSLATION ADJUSTMENT(1)
|
|
CASH FLOW HEDGES
|
|
NET INVESTMENT HEDGES(1)
|
|
OTHER
|
|
TOTAL
|
|
|||||
Balance at May 31, 2019
|
$
|
(346
|
)
|
$
|
520
|
|
$
|
115
|
|
$
|
(58
|
)
|
$
|
231
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
||||||||||
Other comprehensive gains (losses) before reclassifications(2)
|
(89
|
)
|
163
|
|
—
|
|
3
|
|
77
|
|
|||||
Reclassifications to net income of previously deferred (gains) losses(3)
|
—
|
|
(127
|
)
|
—
|
|
(1
|
)
|
(128
|
)
|
|||||
Total other comprehensive income (loss)
|
(89
|
)
|
36
|
|
—
|
|
2
|
|
(51
|
)
|
|||||
Balance at August 31, 2019
|
$
|
(435
|
)
|
$
|
556
|
|
$
|
115
|
|
$
|
(56
|
)
|
$
|
180
|
|
(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, $0 million, $0 million, $0 million and $0 million, respectively.
|
(3)
|
Net of tax (benefit) expense of $0 million, $0 million, $0 million, $0 million and $0 million, respectively.
|
(Dollars in millions)
|
FOREIGN CURRENCY TRANSLATION ADJUSTMENT(1)
|
|
CASH FLOW HEDGES
|
|
NET INVESTMENT HEDGES(1)
|
|
OTHER
|
|
TOTAL
|
|
|||||
Balance at May 31, 2018
|
$
|
(173
|
)
|
$
|
17
|
|
$
|
115
|
|
$
|
(51
|
)
|
$
|
(92
|
)
|
Other comprehensive income (loss):
|
|
|
|
|
|
||||||||||
Other comprehensive gains (losses) before reclassifications(2)
|
(128
|
)
|
142
|
|
—
|
|
4
|
|
18
|
|
|||||
Reclassifications to net income of previously deferred (gains) losses(3)
|
—
|
|
51
|
|
—
|
|
(7
|
)
|
44
|
|
|||||
Total other comprehensive income (loss)
|
(128
|
)
|
193
|
|
—
|
|
(3
|
)
|
62
|
|
|||||
Balance at August 31, 2018
|
$
|
(301
|
)
|
$
|
210
|
|
$
|
115
|
|
$
|
(54
|
)
|
$
|
(30
|
)
|
(1)
|
The accumulated foreign currency translation adjustment and net investment hedge gains/losses related to an investment in a foreign subsidiary are reclassified to Net income upon sale or upon complete or substantially complete liquidation of the respective entity.
|
(2)
|
Net of tax benefit (expense) of $0 million, $(1) million, $0 million, $0 million and $(1) million, respectively.
|
(3)
|
Net of tax (benefit) expense of $0 million, $1 million, $0 million, $0 million and $1 million, respectively.
|
|
AMOUNT OF GAIN (LOSS)
RECLASSIFIED FROM ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) INTO INCOME |
LOCATION OF GAIN (LOSS)
RECLASSIFIED FROM ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) INTO INCOME |
|||||
|
THREE MONTHS ENDED AUGUST 31,
|
||||||
(Dollars in millions)
|
2019
|
2018
|
|||||
Gains (losses) on cash flow hedges:
|
|
|
|
||||
Foreign exchange forwards and options
|
$
|
8
|
|
$
|
5
|
|
Revenues
|
Foreign exchange forwards and options
|
75
|
|
(44
|
)
|
Cost of sales
|
||
Foreign exchange forwards and options
|
46
|
|
(9
|
)
|
Other (income) expense, net
|
||
Interest rate swaps
|
(2
|
)
|
(2
|
)
|
Interest expense (income), net
|
||
Total before tax
|
127
|
|
(50
|
)
|
|
||
Tax (expense) benefit
|
—
|
|
(1
|
)
|
|
||
Gain (loss) net of tax
|
127
|
|
(51
|
)
|
|
||
Gains (losses) on other
|
1
|
|
7
|
|
Other (income) expense, net
|
||
Total before tax
|
1
|
|
7
|
|
|
||
Tax (expense) benefit
|
—
|
|
—
|
|
|
||
Gain (loss) net of tax
|
1
|
|
7
|
|
|
||
Total net gain (loss) reclassified for the period
|
$
|
128
|
|
$
|
(44
|
)
|
|
NOTE 11 — REVENUES
|
|
THREE MONTHS ENDED AUGUST 31, 2019
|
||||||||||||||||||||||||||
(Dollars in millions)
|
NORTH AMERICA
|
|
EUROPE, MIDDLE EAST & AFRICA
|
|
GREATER CHINA
|
|
ASIA PACIFIC & LATIN AMERICA
|
|
GLOBAL BRAND DIVISIONS
|
|
TOTAL NIKE BRAND
|
|
CONVERSE
|
|
CORPORATE
|
|
TOTAL NIKE, INC.
|
|
|||||||||
Revenues by:
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Footwear
|
$
|
2,669
|
|
$
|
1,758
|
|
$
|
1,164
|
|
$
|
930
|
|
$
|
—
|
|
$
|
6,521
|
|
$
|
496
|
|
$
|
—
|
|
$
|
7,017
|
|
Apparel
|
1,431
|
|
869
|
|
465
|
|
356
|
|
—
|
|
3,121
|
|
26
|
|
—
|
|
3,147
|
|
|||||||||
Equipment
|
193
|
|
146
|
|
50
|
|
59
|
|
—
|
|
448
|
|
9
|
|
—
|
|
457
|
|
|||||||||
Other(1)
|
—
|
|
—
|
|
—
|
|
—
|
|
6
|
|
6
|
|
24
|
|
9
|
|
39
|
|
|||||||||
TOTAL REVENUES
|
$
|
4,293
|
|
$
|
2,773
|
|
$
|
1,679
|
|
$
|
1,345
|
|
$
|
6
|
|
$
|
10,096
|
|
$
|
555
|
|
$
|
9
|
|
$
|
10,660
|
|
Revenues by:
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Sales to Wholesale Customers
|
$
|
2,864
|
|
$
|
2,042
|
|
$
|
986
|
|
$
|
950
|
|
$
|
—
|
|
$
|
6,842
|
|
$
|
367
|
|
$
|
—
|
|
$
|
7,209
|
|
Sales through Direct to Consumer
|
1,429
|
|
731
|
|
693
|
|
395
|
|
—
|
|
3,248
|
|
164
|
|
—
|
|
3,412
|
|
|||||||||
Other(1)
|
—
|
|
—
|
|
—
|
|
—
|
|
6
|
|
6
|
|
24
|
|
9
|
|
39
|
|
|||||||||
TOTAL REVENUES
|
$
|
4,293
|
|
$
|
2,773
|
|
$
|
1,679
|
|
$
|
1,345
|
|
$
|
6
|
|
$
|
10,096
|
|
$
|
555
|
|
$
|
9
|
|
$
|
10,660
|
|
(1)
|
Other revenues for Global Brand Divisions and Converse are primarily attributable to licensing businesses. Other revenues for Corporate 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 the Company's central foreign exchange risk management program.
|
|
THREE MONTHS ENDED AUGUST 31, 2018
|
||||||||||||||||||||||||||
(Dollars in millions)
|
NORTH AMERICA
|
|
EUROPE, MIDDLE EAST & AFRICA
|
|
GREATER CHINA
|
|
ASIA PACIFIC & LATIN AMERICA
|
|
GLOBAL BRAND DIVISIONS
|
|
TOTAL NIKE BRAND
|
|
CONVERSE
|
|
CORPORATE
|
|
TOTAL NIKE, INC.
|
|
|||||||||
Revenues by:
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Footwear
|
$
|
2,555
|
|
$
|
1,642
|
|
$
|
958
|
|
$
|
881
|
|
$
|
—
|
|
$
|
6,036
|
|
$
|
461
|
|
$
|
—
|
|
$
|
6,497
|
|
Apparel
|
1,407
|
|
830
|
|
380
|
|
332
|
|
—
|
|
2,949
|
|
30
|
|
—
|
|
2,979
|
|
|||||||||
Equipment
|
183
|
|
135
|
|
41
|
|
57
|
|
—
|
|
416
|
|
8
|
|
—
|
|
424
|
|
|||||||||
Other(1)
|
—
|
|
—
|
|
—
|
|
—
|
|
16
|
|
16
|
|
28
|
|
4
|
|
48
|
|
|||||||||
TOTAL REVENUES
|
$
|
4,145
|
|
$
|
2,607
|
|
$
|
1,379
|
|
$
|
1,270
|
|
$
|
16
|
|
$
|
9,417
|
|
$
|
527
|
|
$
|
4
|
|
$
|
9,948
|
|
Revenues by:
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Sales to Wholesale Customers
|
$
|
2,829
|
|
$
|
1,916
|
|
$
|
871
|
|
$
|
934
|
|
$
|
—
|
|
$
|
6,550
|
|
$
|
366
|
|
$
|
—
|
|
$
|
6,916
|
|
Sales through Direct to Consumer
|
1,316
|
|
691
|
|
508
|
|
336
|
|
—
|
|
2,851
|
|
133
|
|
—
|
|
2,984
|
|
|||||||||
Other(1)
|
—
|
|
—
|
|
—
|
|
—
|
|
16
|
|
16
|
|
28
|
|
4
|
|
48
|
|
|||||||||
TOTAL REVENUES
|
$
|
4,145
|
|
$
|
2,607
|
|
$
|
1,379
|
|
$
|
1,270
|
|
$
|
16
|
|
$
|
9,417
|
|
$
|
527
|
|
$
|
4
|
|
$
|
9,948
|
|
(1)
|
Other revenues for Global Brand Divisions and Converse are primarily attributable to licensing businesses. Other revenues for Corporate 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 the Company's central foreign exchange risk management program.
|
NOTE 12 — OPERATING SEGMENTS
|
|
THREE MONTHS ENDED AUGUST 31,
|
||||||
(Dollars in millions)
|
2019
|
|
2018
|
||||
REVENUES
|
|
|
|
||||
North America
|
$
|
4,293
|
|
|
$
|
4,145
|
|
Europe, Middle East & Africa
|
2,773
|
|
|
2,607
|
|
||
Greater China
|
1,679
|
|
|
1,379
|
|
||
Asia Pacific & Latin America
|
1,345
|
|
|
1,270
|
|
||
Global Brand Divisions
|
6
|
|
|
16
|
|
||
Total NIKE Brand
|
10,096
|
|
|
9,417
|
|
||
Converse
|
555
|
|
|
527
|
|
||
Corporate
|
9
|
|
|
4
|
|
||
TOTAL NIKE, INC. REVENUES
|
$
|
10,660
|
|
|
$
|
9,948
|
|
EARNINGS BEFORE INTEREST AND TAXES
|
|
|
|
||||
North America
|
$
|
1,100
|
|
|
$
|
1,077
|
|
Europe, Middle East & Africa
|
609
|
|
|
501
|
|
||
Greater China
|
669
|
|
|
502
|
|
||
Asia Pacific & Latin America
|
341
|
|
|
323
|
|
||
Global Brand Divisions
|
(857
|
)
|
|
(818
|
)
|
||
Converse
|
138
|
|
|
98
|
|
||
Corporate
|
(424
|
)
|
|
(402
|
)
|
||
Interest expense (income), net
|
15
|
|
|
11
|
|
||
TOTAL NIKE, INC. INCOME BEFORE INCOME TAXES
|
$
|
1,561
|
|
|
$
|
1,270
|
|
|
AS OF AUGUST 31,
|
|
AS OF MAY 31,
|
||||
(Dollars in millions)
|
2019
|
|
2019
|
||||
ACCOUNTS RECEIVABLE, NET
|
|
|
|
||||
North America
|
$
|
1,795
|
|
|
$
|
1,718
|
|
Europe, Middle East & Africa
|
1,321
|
|
|
1,164
|
|
||
Greater China
|
344
|
|
|
245
|
|
||
Asia Pacific & Latin America
|
789
|
|
|
771
|
|
||
Global Brand Divisions
|
114
|
|
|
105
|
|
||
Total NIKE Brand
|
4,363
|
|
|
4,003
|
|
||
Converse
|
249
|
|
|
243
|
|
||
Corporate
|
44
|
|
|
26
|
|
||
TOTAL ACCOUNTS RECEIVABLE, NET
|
$
|
4,656
|
|
|
$
|
4,272
|
|
INVENTORIES
|
|
|
|
||||
North America
|
$
|
2,271
|
|
|
$
|
2,328
|
|
Europe, Middle East & Africa
|
1,459
|
|
|
1,390
|
|
||
Greater China
|
775
|
|
|
693
|
|
||
Asia Pacific & Latin America
|
817
|
|
|
694
|
|
||
Global Brand Divisions
|
143
|
|
|
126
|
|
||
Total NIKE Brand
|
5,465
|
|
|
5,231
|
|
||
Converse
|
260
|
|
|
269
|
|
||
Corporate
|
110
|
|
|
122
|
|
||
TOTAL INVENTORIES
|
$
|
5,835
|
|
|
$
|
5,622
|
|
|
AS OF AUGUST 31,
|
|
AS OF MAY 31,
|
||||
(Dollars in millions)
|
2019
|
|
2019
|
||||
PROPERTY, PLANT AND EQUIPMENT, NET
|
|
|
|
||||
North America
|
$
|
665
|
|
|
$
|
814
|
|
Europe, Middle East & Africa
|
832
|
|
|
929
|
|
||
Greater China
|
220
|
|
|
237
|
|
||
Asia Pacific & Latin America
|
326
|
|
|
326
|
|
||
Global Brand Divisions
|
759
|
|
|
665
|
|
||
Total NIKE Brand
|
2,802
|
|
|
2,971
|
|
||
Converse
|
93
|
|
|
100
|
|
||
Corporate
|
1,720
|
|
|
1,673
|
|
||
TOTAL PROPERTY, PLANT AND EQUIPMENT, NET
|
$
|
4,615
|
|
|
$
|
4,744
|
|
NOTE 13 — LEASES
|
(Dollars in millions)
|
AS OF AUGUST 31, 2019(1)
|
||
Remainder of Fiscal 2020
|
$
|
405
|
|
Fiscal 2021
|
501
|
|
|
Fiscal 2022
|
439
|
|
|
Fiscal 2023
|
383
|
|
|
Fiscal 2024
|
343
|
|
|
Thereafter
|
1,482
|
|
|
Total undiscounted future cash flows related to lease payments
|
$
|
3,553
|
|
Less: Interest
|
451
|
|
|
Present value of lease liabilities
|
$
|
3,102
|
|
(1)
|
Excludes $410 million of future operating lease payments for lease agreements signed but not yet commenced.
|
|
AS OF MAY 31, 2019
|
||||||||
(Dollars in millions)
|
OPERATING LEASES
|
CAPITAL LEASES AND OTHER FINANCING OBLIGATIONS(1)
|
TOTAL
|
||||||
Fiscal 2020
|
$
|
553
|
|
$
|
32
|
|
$
|
585
|
|
Fiscal 2021
|
513
|
|
34
|
|
547
|
|
|||
Fiscal 2022
|
441
|
|
40
|
|
481
|
|
|||
Fiscal 2023
|
386
|
|
37
|
|
423
|
|
|||
Fiscal 2024
|
345
|
|
34
|
|
379
|
|
|||
Thereafter
|
1,494
|
|
197
|
|
1,691
|
|
|||
TOTAL
|
$
|
3,732
|
|
$
|
374
|
|
$
|
4,106
|
|
(1)
|
Capital leases and other financing obligations include payments related to build-to-suit lease arrangements.
|
|
AS OF AUGUST 31,
|
|
|
2019
|
|
Weighted-average remaining lease term (years)
|
8.8
|
|
Weighted-average discount rate
|
2.7
|
%
|
|
THREE MONTHS ENDED AUGUST 31,
|
||
(Dollars in millions)
|
2019
|
||
Cash paid for amounts included in the measurement of lease liabilities:
|
|
||
Operating cash flows from operating leases
|
$
|
136
|
|
Operating lease right-of-use assets obtained in exchange for new operating lease liabilities(1)
|
37
|
|
(1)
|
Excludes the amount initially capitalized in conjunction with the adoption of Topic 842.
|
|
THREE MONTHS ENDED AUGUST 31,
|
|||||||
(Dollars in millions, except per share data)
|
2019
|
2018
|
% CHANGE
|
|
||||
Revenues
|
$
|
10,660
|
|
$
|
9,948
|
|
7
|
%
|
Cost of sales
|
5,789
|
|
5,551
|
|
4
|
%
|
||
Gross profit
|
4,871
|
|
4,397
|
|
11
|
%
|
||
Gross margin
|
45.7
|
%
|
44.2
|
%
|
|
|||
Demand creation expense
|
1,018
|
|
964
|
|
6
|
%
|
||
Operating overhead expense
|
2,310
|
|
2,099
|
|
10
|
%
|
||
Total selling and administrative expense
|
3,328
|
|
3,063
|
|
9
|
%
|
||
% of revenues
|
31.2
|
%
|
30.8
|
%
|
|
|||
Interest expense (income), net
|
15
|
|
11
|
|
—
|
|
||
Other (income) expense, net
|
(33
|
)
|
53
|
|
—
|
|
||
Income before income taxes
|
1,561
|
|
1,270
|
|
23
|
%
|
||
Income tax expense
|
194
|
|
178
|
|
9
|
%
|
||
Effective tax rate
|
12.4
|
%
|
14.0
|
%
|
|
|||
NET INCOME
|
$
|
1,367
|
|
$
|
1,092
|
|
25
|
%
|
Diluted earnings per common share
|
$
|
0.86
|
|
$
|
0.67
|
|
28
|
%
|
|
THREE MONTHS ENDED AUGUST 31,
|
|||||||||
(Dollars in millions)
|
2019
|
2018
|
% CHANGE
|
|
% CHANGE EXCLUDING CURRENCY CHANGES(1)
|
|
||||
NIKE, Inc. Revenues:
|
|
|
|
|
||||||
NIKE Brand Revenues by:
|
|
|
|
|
||||||
Footwear
|
$
|
6,521
|
|
$
|
6,036
|
|
8
|
%
|
11
|
%
|
Apparel
|
3,121
|
|
2,949
|
|
6
|
%
|
9
|
%
|
||
Equipment
|
448
|
|
416
|
|
8
|
%
|
11
|
%
|
||
Global Brand Divisions(2)
|
6
|
|
16
|
|
-63
|
%
|
-58
|
%
|
||
Total NIKE Brand Revenues
|
10,096
|
|
9,417
|
|
7
|
%
|
10
|
%
|
||
Converse
|
555
|
|
527
|
|
5
|
%
|
8
|
%
|
||
Corporate(3)
|
9
|
|
4
|
|
—
|
|
—
|
|
||
TOTAL NIKE, INC. REVENUES
|
$
|
10,660
|
|
$
|
9,948
|
|
7
|
%
|
10
|
%
|
Supplemental NIKE Brand Revenues Details:
|
|
|
|
|
||||||
NIKE Brand Revenues by:
|
|
|
|
|
||||||
Sales to Wholesale Customers
|
$
|
6,842
|
|
$
|
6,550
|
|
4
|
%
|
8
|
%
|
Sales through NIKE Direct
|
3,248
|
|
2,851
|
|
14
|
%
|
17
|
%
|
||
Global Brand Divisions(2)
|
6
|
|
16
|
|
-63
|
%
|
-58
|
%
|
||
TOTAL NIKE BRAND REVENUES
|
$
|
10,096
|
|
$
|
9,417
|
|
7
|
%
|
10
|
%
|
(1)
|
The percent change excluding currency changes represents a non-GAAP financial measure. See "Use of Non-GAAP Financial Measures" for further information.
|
(2)
|
Global Brand Divisions revenues are primarily attributable to NIKE Brand licensing businesses that are not part of a geographic operating segment.
|
(3)
|
Corporate revenues primarily consist of foreign currency hedge gains and losses related to revenues generated by entities within the NIKE Brand geographic operating segments and Converse, but managed through our central foreign exchange risk management program.
|
|
THREE MONTHS ENDED AUGUST 31,
|
|||||||
(Dollars in millions)
|
2019
|
2018
|
% CHANGE
|
|
||||
Gross Profit
|
$
|
4,871
|
|
$
|
4,397
|
|
11
|
%
|
Gross Margin
|
45.7
|
%
|
44.2
|
%
|
150
|
bps
|
•
|
Higher NIKE Brand full-price ASP, net of discounts, on a wholesale equivalent basis, (increasing gross margin approximately 160 basis points);
|
•
|
Growth in our higher margin NIKE Direct business (increasing gross margin approximately 40 basis points);
|
•
|
Higher gross margin from Converse (increasing gross margin approximately 20 basis points);
|
•
|
Unfavorable changes in net foreign currency exchange rates, including hedges, (decreasing gross margin approximately 50 basis points); and
|
•
|
Higher NIKE Brand product costs, on a wholesale equivalent basis, (decreasing gross margin approximately 40 basis points).
|
|
THREE MONTHS ENDED AUGUST 31,
|
|||||||
(Dollars in millions)
|
2019
|
2018
|
% CHANGE
|
|
||||
Demand creation expense(1)
|
$
|
1,018
|
|
$
|
964
|
|
6
|
%
|
Operating overhead expense
|
2,310
|
|
2,099
|
|
10
|
%
|
||
Total selling and administrative expense
|
$
|
3,328
|
|
$
|
3,063
|
|
9
|
%
|
% of revenues
|
31.2
|
%
|
30.8
|
%
|
40
|
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.
|
|
|
THREE MONTHS ENDED AUGUST 31,
|
|||||
(Dollars in millions)
|
|
2019
|
2018
|
||||
Other (income) expense, net
|
|
$
|
(33
|
)
|
$
|
53
|
|
|
THREE MONTHS ENDED AUGUST 31,
|
||||
|
2019
|
2018
|
% CHANGE
|
||
Effective tax rate
|
12.4
|
%
|
14.0
|
%
|
(160) bps
|
|
THREE MONTHS ENDED AUGUST 31,
|
|||||||||
(Dollars in millions)
|
2019
|
2018
|
% CHANGE
|
|
% CHANGE EXCLUDING CURRENCY CHANGES(1)
|
|
||||
North America
|
$
|
4,293
|
|
$
|
4,145
|
|
4
|
%
|
4
|
%
|
Europe, Middle East & Africa
|
2,773
|
|
2,607
|
|
6
|
%
|
12
|
%
|
||
Greater China
|
1,679
|
|
1,379
|
|
22
|
%
|
27
|
%
|
||
Asia Pacific & Latin America
|
1,345
|
|
1,270
|
|
6
|
%
|
13
|
%
|
||
Global Brand Divisions(2)
|
6
|
|
16
|
|
-63
|
%
|
-58
|
%
|
||
TOTAL NIKE BRAND
|
10,096
|
|
9,417
|
|
7
|
%
|
10
|
%
|
||
Converse
|
555
|
|
527
|
|
5
|
%
|
8
|
%
|
||
Corporate(3)
|
9
|
|
4
|
|
—
|
|
—
|
|
||
TOTAL NIKE, INC. REVENUES
|
$
|
10,660
|
|
$
|
9,948
|
|
7
|
%
|
10
|
%
|
(1)
|
The percent change excluding currency changes represents a non-GAAP financial measure. See "Use of Non-GAAP Financial Measures" for further information.
|
(2)
|
Global Brand Divisions revenues are primarily attributable to NIKE Brand licensing businesses that are not part of a geographic operating segment.
|
(3)
|
Corporate revenues primarily consist of foreign currency hedge gains and losses related to revenues generated by entities within the NIKE Brand geographic operating segments and Converse, but managed through our central foreign exchange risk management program.
|
|
THREE MONTHS ENDED AUGUST 31,
|
|||||||
(Dollars in millions)
|
2019
|
2018
|
% CHANGE
|
|
||||
North America
|
$
|
1,100
|
|
$
|
1,077
|
|
2
|
%
|
Europe, Middle East & Africa
|
609
|
|
501
|
|
22
|
%
|
||
Greater China
|
669
|
|
502
|
|
33
|
%
|
||
Asia Pacific & Latin America
|
341
|
|
323
|
|
6
|
%
|
||
Global Brand Divisions
|
(857
|
)
|
(818
|
)
|
-5
|
%
|
||
TOTAL NIKE BRAND(1)
|
1,862
|
|
1,585
|
|
17
|
%
|
||
Converse
|
138
|
|
98
|
|
41
|
%
|
||
Corporate
|
(424
|
)
|
(402
|
)
|
-5
|
%
|
||
TOTAL NIKE, INC. EARNINGS BEFORE INTEREST AND TAXES(1)
|
1,576
|
|
1,281
|
|
23
|
%
|
||
Interest expense (income), net
|
15
|
|
11
|
|
—
|
|
||
TOTAL NIKE, INC. INCOME BEFORE INCOME TAXES
|
$
|
1,561
|
|
$
|
1,270
|
|
23
|
%
|
(1)
|
Total NIKE Brand EBIT and Total NIKE, Inc. EBIT represent non-GAAP financial measures. See "Use of Non-GAAP Financial Measures" for further information.
|
|
THREE MONTHS ENDED AUGUST 31,
|
|||||||||
(Dollars in millions)
|
2019
|
2018
|
% CHANGE
|
|
% CHANGE EXCLUDING CURRENCY CHANGES
|
|
||||
Revenues by:
|
|
|
|
|
||||||
Footwear
|
$
|
2,669
|
|
$
|
2,555
|
|
4
|
%
|
4
|
%
|
Apparel
|
1,431
|
|
1,407
|
|
2
|
%
|
2
|
%
|
||
Equipment
|
193
|
|
183
|
|
5
|
%
|
5
|
%
|
||
TOTAL REVENUES
|
$
|
4,293
|
|
$
|
4,145
|
|
4
|
%
|
4
|
%
|
Revenues by:
|
|
|
|
|
||||||
Sales to Wholesale Customers
|
$
|
2,864
|
|
$
|
2,829
|
|
1
|
%
|
1
|
%
|
Sales through NIKE Direct
|
1,429
|
|
1,316
|
|
9
|
%
|
9
|
%
|
||
TOTAL REVENUES
|
$
|
4,293
|
|
$
|
4,145
|
|
4
|
%
|
4
|
%
|
EARNINGS BEFORE INTEREST AND TAXES
|
$
|
1,100
|
|
$
|
1,077
|
|
2
|
%
|
|
|
THREE MONTHS ENDED AUGUST 31,
|
|||||||||
(Dollars in millions)
|
2019
|
2018
|
% CHANGE
|
|
% CHANGE EXCLUDING CURRENCY CHANGES
|
|
||||
Revenues by:
|
|
|
|
|
||||||
Footwear
|
$
|
1,758
|
|
$
|
1,642
|
|
7
|
%
|
13
|
%
|
Apparel
|
869
|
|
830
|
|
5
|
%
|
10
|
%
|
||
Equipment
|
146
|
|
135
|
|
8
|
%
|
13
|
%
|
||
TOTAL REVENUES
|
$
|
2,773
|
|
$
|
2,607
|
|
6
|
%
|
12
|
%
|
Revenues by:
|
|
|
|
|
||||||
Sales to Wholesale Customers
|
$
|
2,042
|
|
$
|
1,916
|
|
7
|
%
|
12
|
%
|
Sales through NIKE Direct
|
731
|
|
691
|
|
6
|
%
|
11
|
%
|
||
TOTAL REVENUES
|
$
|
2,773
|
|
$
|
2,607
|
|
6
|
%
|
12
|
%
|
EARNINGS BEFORE INTEREST AND TAXES
|
$
|
609
|
|
$
|
501
|
|
22
|
%
|
|
|
THREE MONTHS ENDED AUGUST 31,
|
|||||||||
(Dollars in millions)
|
2019
|
2018
|
% CHANGE
|
|
% CHANGE EXCLUDING CURRENCY CHANGES
|
|
||||
Revenues by:
|
|
|
|
|
||||||
Footwear
|
$
|
1,164
|
|
$
|
958
|
|
22
|
%
|
27
|
%
|
Apparel
|
465
|
|
380
|
|
22
|
%
|
28
|
%
|
||
Equipment
|
50
|
|
41
|
|
22
|
%
|
29
|
%
|
||
TOTAL REVENUES
|
$
|
1,679
|
|
$
|
1,379
|
|
22
|
%
|
27
|
%
|
Revenues by:
|
|
|
|
|
||||||
Sales to Wholesale Customers
|
$
|
986
|
|
$
|
871
|
|
13
|
%
|
19
|
%
|
Sales through NIKE Direct
|
693
|
|
508
|
|
36
|
%
|
42
|
%
|
||
TOTAL REVENUES
|
$
|
1,679
|
|
$
|
1,379
|
|
22
|
%
|
27
|
%
|
EARNINGS BEFORE INTEREST AND TAXES
|
$
|
669
|
|
$
|
502
|
|
33
|
%
|
|
|
THREE MONTHS ENDED AUGUST 31,
|
|||||||||
(Dollars in millions)
|
2019
|
2018
|
% CHANGE
|
|
% CHANGE EXCLUDING CURRENCY CHANGES
|
|
||||
Revenues by:
|
|
|
|
|
||||||
Footwear
|
$
|
930
|
|
$
|
881
|
|
6
|
%
|
12
|
%
|
Apparel
|
356
|
|
332
|
|
7
|
%
|
15
|
%
|
||
Equipment
|
59
|
|
57
|
|
4
|
%
|
10
|
%
|
||
TOTAL REVENUES
|
$
|
1,345
|
|
$
|
1,270
|
|
6
|
%
|
13
|
%
|
Revenues by:
|
|
|
|
|
||||||
Sales to Wholesale Customers
|
$
|
950
|
|
$
|
934
|
|
2
|
%
|
8
|
%
|
Sales through NIKE Direct
|
395
|
|
336
|
|
18
|
%
|
24
|
%
|
||
TOTAL REVENUES
|
$
|
1,345
|
|
$
|
1,270
|
|
6
|
%
|
13
|
%
|
EARNINGS BEFORE INTEREST AND TAXES
|
$
|
341
|
|
$
|
323
|
|
6
|
%
|
|
|
THREE MONTHS ENDED AUGUST 31,
|
|||||||||
(Dollars in millions)
|
2019
|
2018
|
% CHANGE
|
|
% CHANGE EXCLUDING CURRENCY CHANGES
|
|
||||
Revenues
|
$
|
6
|
|
$
|
16
|
|
-63
|
%
|
-58
|
%
|
Earnings (Loss) Before Interest and Taxes
|
$
|
(857
|
)
|
$
|
(818
|
)
|
-5
|
%
|
|
|
THREE MONTHS ENDED AUGUST 31,
|
|||||||||
(Dollars in millions)
|
2019
|
2018
|
% CHANGE
|
|
% CHANGE EXCLUDING CURRENCY CHANGES
|
|
||||
Revenues by:
|
|
|
|
|
||||||
Footwear
|
$
|
496
|
|
$
|
461
|
|
8
|
%
|
11
|
%
|
Apparel
|
26
|
|
30
|
|
-13
|
%
|
-11
|
%
|
||
Equipment
|
9
|
|
8
|
|
13
|
%
|
9
|
%
|
||
Other(1)
|
24
|
|
28
|
|
-14
|
%
|
-14
|
%
|
||
TOTAL REVENUES
|
$
|
555
|
|
$
|
527
|
|
5
|
%
|
8
|
%
|
Revenues by:
|
|
|
|
|
||||||
Sales to Wholesale Customers
|
$
|
367
|
|
$
|
366
|
|
0
|
%
|
4
|
%
|
Sales through NIKE Direct
|
164
|
|
133
|
|
23
|
%
|
26
|
%
|
||
Other(1)
|
24
|
|
28
|
|
-14
|
%
|
-15
|
%
|
||
TOTAL REVENUES
|
$
|
555
|
|
$
|
527
|
|
5
|
%
|
8
|
%
|
EARNINGS BEFORE INTEREST AND TAXES
|
$
|
138
|
|
$
|
98
|
|
41
|
%
|
|
(1)
|
Other revenues consist of territories serviced by third-party licensees who pay royalties to Converse for the use of its registered trademarks and other intellectual property rights. We do not own the Converse trademarks in Japan and accordingly do not earn revenues in Japan.
|
|
THREE MONTHS ENDED AUGUST 31,
|
|||||||
(Dollars in millions)
|
2019
|
2018
|
% CHANGE
|
|
||||
Revenues
|
$
|
9
|
|
$
|
4
|
|
—
|
|
Earnings (Loss) Before Interest and Taxes
|
$
|
(424
|
)
|
$
|
(402
|
)
|
-5
|
%
|
•
|
a favorable change in net foreign currency gains and losses of $62 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 (income) expense, net;
|
•
|
an unfavorable change of $14 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; and
|
•
|
an unfavorable change of $70 million, primarily due to higher operating overhead expense driven by higher wage-related costs.
|
•
|
Product Costs — Product purchases denominated in currencies other than the functional currency of the transacting entity and factory input costs from the foreign currency adjustments program with certain factories.
|
•
|
Non-Functional Currency Denominated External Sales — A portion of our NIKE Brand and Converse revenues associated with European operations are earned in currencies other than the Euro (e.g., the British Pound) but are recognized at a subsidiary that uses the Euro as its functional currency. These sales generate a foreign currency exposure.
|
•
|
Other Costs — Non-functional currency denominated costs, such as endorsement contracts, also generate foreign currency risk, though to a lesser extent.
|
•
|
Non-Functional Currency Denominated Monetary Assets and Liabilities — Our global subsidiaries have various assets and liabilities, primarily receivables and payables, including intercompany receivables and payables, denominated in currencies other than their functional currencies. These balance sheet items are subject to re-measurement which may create fluctuations in Other (income) expense, net within our consolidated results of operations.
|
PERIOD
|
TOTAL NUMBER OF SHARES PURCHASED
|
|
AVERAGE PRICE
PAID PER SHARE |
|
APPROXIMATE DOLLAR
VALUE OF SHARES THAT MAY YET BE PURCHASED UNDER THE PLANS OR PROGRAMS (IN MILLIONS) |
|
||
June 1 — June 30, 2019
|
3,728,038
|
|
$
|
83.01
|
|
$
|
13,705
|
|
July 1 — July 31, 2019
|
3,527,031
|
|
$
|
87.25
|
|
$
|
13,397
|
|
August 1 — August 31, 2019
|
4,606,132
|
|
$
|
81.97
|
|
$
|
13,019
|
|
|
11,861,201
|
|
$
|
83.87
|
|
|
|
|
3.
|
Exhibits:
|
3.1
|
|
3.2
|
|
4.1
|
|
4.2
|
|
4.3
|
|
31.1†
|
|
31.2†
|
|
32.1†
|
|
32.2†
|
|
101.INS
|
XBRL Instance Document.
|
101.SCH
|
XBRL Taxonomy Extension Schema Document.
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
101.DEF
|
XBRL Taxonomy Extension Definition Document.
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document.
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
NIKE, INC.
an Oregon Corporation
|
||
By:
|
|
/s/ ANDREW CAMPION
Andrew Campion
Chief Financial Officer and Authorized Officer
|
Date:
|
|
October 4, 2019
|
Dated:
|
October 4, 2019
|
|
|
|
/s/ Mark G. Parker
|
|
|
Mark G. Parker
|
|
|
Chief Executive Officer
|
Dated:
|
October 4, 2019
|
|
|
|
/s/ Andrew Campion
|
|
|
Andrew Campion
|
|
|
Chief Financial Officer
|
Dated:
|
October 4, 2019
|
|
|
|
/s/ Mark G. Parker
|
|
|
Mark G. Parker
|
|
|
Chief Executive Officer
|
Dated:
|
October 4, 2019
|
|
|
|
/s/ Andrew Campion
|
|
|
Andrew Campion
|
|
|
Chief Financial Officer
|