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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Nike Inc | NYSE:NKE | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
-0.07 | -0.08% | 92.34 | 93.65 | 91.87 | 93.08 | 5,784,714 | 01:00:00 |
FORM 10-Q
|
NIKE, Inc.
|
(Exact name of registrant as specified in its charter)
|
|
|
|
OREGON
|
|
93-0584541
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
|
|
|
One Bowerman Drive,
Beaverton, Oregon
|
|
97005-6453
|
(Address of principal executive offices)
|
|
(Zip Code)
|
Registrant
’
s telephone number, including area code: (503) 671-6453
|
Large accelerated filer
|
☑
|
Accelerated filer
|
☐
|
Smaller reporting company
|
☐
|
|
|
|
|
||
Non-accelerated filer
|
☐
|
(Do not check if a smaller reporting company)
|
|
Emerging growth company
|
☐
|
Class A
|
329,065,752
|
|
Class B
|
1,282,693,640
|
|
|
1,611,759,392
|
|
|
|
|
Page
|
||
ITEM 1.
|
||
|
||
|
||
|
||
|
||
|
||
ITEM 2.
|
||
ITEM 3.
|
||
ITEM 4.
|
||
|
|
|
|
||
ITEM 1.
|
||
ITEM 1A.
|
||
ITEM 2.
|
||
ITEM 6.
|
||
|
NIKE, Inc. Unaudited Condensed Consolidated Balance Sheets
|
|
|
February 28,
|
|
May 31,
|
||||
(In millions)
|
|
2018
|
|
2017
|
||||
ASSETS
|
|
|
|
|
||||
Current assets:
|
|
|
|
|
||||
Cash and equivalents
|
|
$
|
3,662
|
|
|
$
|
3,808
|
|
Short-term investments
|
|
1,089
|
|
|
2,371
|
|
||
Accounts receivable, net
|
|
3,792
|
|
|
3,677
|
|
||
Inventories
|
|
5,366
|
|
|
5,055
|
|
||
Prepaid expenses and other current assets
|
|
1,446
|
|
|
1,150
|
|
||
Total current assets
|
|
15,355
|
|
|
16,061
|
|
||
Property, plant and equipment, net
|
|
4,298
|
|
|
3,989
|
|
||
Identifiable intangible assets, net
|
|
282
|
|
|
283
|
|
||
Goodwill
|
|
139
|
|
|
139
|
|
||
Deferred income taxes and other assets
|
|
2,478
|
|
|
2,787
|
|
||
TOTAL ASSETS
|
|
$
|
22,552
|
|
|
$
|
23,259
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
||||
Current portion of long-term debt
|
|
$
|
6
|
|
|
$
|
6
|
|
Notes payable
|
|
11
|
|
|
325
|
|
||
Accounts payable
|
|
1,961
|
|
|
2,048
|
|
||
Accrued liabilities
|
|
3,727
|
|
|
3,011
|
|
||
Income taxes payable
|
|
78
|
|
|
84
|
|
||
Total current liabilities
|
|
5,783
|
|
|
5,474
|
|
||
Long-term debt
|
|
3,469
|
|
|
3,471
|
|
||
Deferred income taxes and other liabilities
|
|
3,518
|
|
|
1,907
|
|
||
Commitments and contingencies (Note 12)
|
|
|
|
|
|
|
||
Redeemable preferred stock
|
|
—
|
|
|
—
|
|
||
Shareholders’ equity:
|
|
|
|
|
||||
Common stock at stated value:
|
|
|
|
|
||||
Class A convertible — 329 and 329 shares outstanding
|
|
—
|
|
|
—
|
|
||
Class B — 1,290 and 1,314 shares outstanding
|
|
3
|
|
|
3
|
|
||
Capital in excess of stated value
|
|
9,325
|
|
|
8,638
|
|
||
Accumulated other comprehensive loss
|
|
(624
|
)
|
|
(213
|
)
|
||
Retained earnings
|
|
1,078
|
|
|
3,979
|
|
||
Total shareholders’ equity
|
|
9,782
|
|
|
12,407
|
|
||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
$
|
22,552
|
|
|
$
|
23,259
|
|
NIKE, Inc. Unaudited Condensed Consolidated Statements of Income
|
|
|
Three Months Ended February 28,
|
|
Nine Months Ended February 28,
|
||||||||||||
(In millions, except per share data)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Revenues
|
|
$
|
8,984
|
|
|
$
|
8,432
|
|
|
$
|
26,608
|
|
|
$
|
25,673
|
|
Cost of sales
|
|
5,046
|
|
|
4,682
|
|
|
15,030
|
|
|
14,184
|
|
||||
Gross profit
|
|
3,938
|
|
|
3,750
|
|
|
11,578
|
|
|
11,489
|
|
||||
Demand creation expense
|
|
862
|
|
|
749
|
|
|
2,594
|
|
|
2,552
|
|
||||
Operating overhead expense
|
|
1,905
|
|
|
1,747
|
|
|
5,797
|
|
|
5,346
|
|
||||
Total selling and administrative expense
|
|
2,767
|
|
|
2,496
|
|
|
8,391
|
|
|
7,898
|
|
||||
Interest expense (income), net
|
|
13
|
|
|
19
|
|
|
42
|
|
|
41
|
|
||||
Other (income) expense, net
|
|
(1
|
)
|
|
(88
|
)
|
|
35
|
|
|
(168
|
)
|
||||
Income before income taxes
|
|
1,159
|
|
|
1,323
|
|
|
3,110
|
|
|
3,718
|
|
||||
Income tax expense
|
|
2,080
|
|
|
182
|
|
|
2,314
|
|
|
486
|
|
||||
NET (LOSS) INCOME
|
|
$
|
(921
|
)
|
|
$
|
1,141
|
|
|
$
|
796
|
|
|
$
|
3,232
|
|
|
|
|
|
|
|
|
|
|
||||||||
(Loss) earnings per common share:
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
$
|
(0.57
|
)
|
|
$
|
0.69
|
|
|
$
|
0.49
|
|
|
$
|
1.95
|
|
Diluted
|
|
$
|
(0.57
|
)
|
|
$
|
0.68
|
|
|
$
|
0.48
|
|
|
$
|
1.91
|
|
|
|
|
|
|
|
|
|
|
||||||||
Dividends declared per common share
|
|
$
|
0.20
|
|
|
$
|
0.18
|
|
|
$
|
0.58
|
|
|
$
|
0.52
|
|
NIKE, Inc. Unaudited Condensed Consolidated Statements of Comprehensive Income
|
|
|
Three Months Ended February 28,
|
|
Nine Months Ended February 28,
|
||||||||||||
(In millions)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net (loss) income
|
|
$
|
(921
|
)
|
|
$
|
1,141
|
|
|
$
|
796
|
|
|
$
|
3,232
|
|
Other comprehensive (loss) income, net of tax:
|
|
|
|
|
|
|
|
|
||||||||
Change in net foreign currency translation adjustment
|
|
51
|
|
|
12
|
|
|
65
|
|
|
1
|
|
||||
Change in net gains (losses) on cash flow hedges
|
|
(107
|
)
|
|
(175
|
)
|
|
(494
|
)
|
|
(92
|
)
|
||||
Change in net gains (losses) on other
|
|
2
|
|
|
(7
|
)
|
|
1
|
|
|
2
|
|
||||
Total other comprehensive (loss) income, net of tax
|
|
(54
|
)
|
|
(170
|
)
|
|
(428
|
)
|
|
(89
|
)
|
||||
TOTAL COMPREHENSIVE (LOSS) INCOME
|
|
$
|
(975
|
)
|
|
$
|
971
|
|
|
$
|
368
|
|
|
$
|
3,143
|
|
NIKE, Inc. Unaudited Condensed Consolidated Statements of Cash Flows
|
|
|
Nine Months Ended February 28,
|
||||||
(In millions)
|
|
2018
|
|
2017
|
||||
Cash provided by operations:
|
|
|
|
|
||||
Net income
|
|
$
|
796
|
|
|
$
|
3,232
|
|
Income charges (credits) not affecting cash:
|
|
|
|
|
||||
Depreciation
|
|
551
|
|
|
521
|
|
||
Deferred income taxes
|
|
564
|
|
|
(199
|
)
|
||
Stock-based compensation
|
|
158
|
|
|
162
|
|
||
Amortization and other
|
|
23
|
|
|
7
|
|
||
Net foreign currency adjustments
|
|
(130
|
)
|
|
(90
|
)
|
||
Changes in certain working capital components and other assets and liabilities:
|
|
|
|
|
||||
Decrease (increase) in accounts receivable
|
|
3
|
|
|
(546
|
)
|
||
(Increase) in inventories
|
|
(245
|
)
|
|
(157
|
)
|
||
(Increase) in prepaid expenses and other current and non-current assets
|
|
(474
|
)
|
|
(152
|
)
|
||
Increase in accounts payable, accrued liabilities and other current and non-current liabilities
|
|
1,439
|
|
|
106
|
|
||
Cash provided by operations
|
|
2,685
|
|
|
2,884
|
|
||
Cash provided (used) by investing activities:
|
|
|
|
|
||||
Purchases of short-term investments
|
|
(3,644
|
)
|
|
(4,029
|
)
|
||
Maturities of short-term investments
|
|
3,101
|
|
|
2,433
|
|
||
Sales of short-term investments
|
|
1,797
|
|
|
1,905
|
|
||
Additions to property, plant and equipment
|
|
(728
|
)
|
|
(776
|
)
|
||
Disposals of property, plant and equipment
|
|
—
|
|
|
13
|
|
||
Other investing activities
|
|
—
|
|
|
(34
|
)
|
||
Cash provided (used) by investing activities
|
|
526
|
|
|
(488
|
)
|
||
Cash used by financing activities:
|
|
|
|
|
||||
Net proceeds from long-term debt issuance
|
|
—
|
|
|
1,482
|
|
||
Long-term debt payments, including current portion
|
|
(4
|
)
|
|
(43
|
)
|
||
(Decrease) increase in notes payable
|
|
(314
|
)
|
|
24
|
|
||
Payments on capital lease and other financing obligations
|
|
(16
|
)
|
|
(14
|
)
|
||
Proceeds from exercise of stock options and other stock issuances
|
|
554
|
|
|
339
|
|
||
Repurchase of common stock
|
|
(2,694
|
)
|
|
(2,429
|
)
|
||
Dividends — common and preferred
|
|
(920
|
)
|
|
(834
|
)
|
||
Tax payments for net share settlement of equity awards
|
|
(54
|
)
|
|
(8
|
)
|
||
Cash used by financing activities
|
|
(3,448
|
)
|
|
(1,483
|
)
|
||
Effect of exchange rate changes on cash and equivalents
|
|
91
|
|
|
(30
|
)
|
||
Net (decrease) increase in cash and equivalents
|
|
(146
|
)
|
|
883
|
|
||
Cash and equivalents, beginning of period
|
|
3,808
|
|
|
3,138
|
|
||
CASH AND EQUIVALENTS, END OF PERIOD
|
|
$
|
3,662
|
|
|
$
|
4,021
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
||||
Non-cash additions to property, plant and equipment
|
|
$
|
190
|
|
|
$
|
248
|
|
Dividends declared and not paid
|
|
324
|
|
|
303
|
|
Notes to the Unaudited Condensed Consolidated Financial Statements
|
Note 1
|
||
Note 2
|
||
Note 3
|
||
Note 4
|
||
Note 5
|
||
Note 6
|
||
Note 7
|
||
Note 8
|
||
Note 9
|
||
Note 10
|
||
Note 11
|
||
Note 12
|
Note 1 — Summary of Significant Accounting Policies
|
Note 2 — Inventories
|
Note 3 — Accrued Liabilities
|
|
|
As of February 28,
|
|
As of May 31,
|
||||
(In millions)
|
|
2018
|
|
2017
|
||||
Compensation and benefits, excluding taxes
|
|
$
|
886
|
|
|
$
|
871
|
|
Fair value of derivatives
|
|
539
|
|
|
168
|
|
||
Endorsement compensation
|
|
354
|
|
|
396
|
|
||
Dividends payable
|
|
324
|
|
|
300
|
|
||
Import and logistics costs
|
|
293
|
|
|
257
|
|
||
Taxes other than income taxes payable
|
|
244
|
|
|
196
|
|
||
Advertising and marketing
|
|
182
|
|
|
125
|
|
||
Other
(1)
|
|
905
|
|
|
698
|
|
||
TOTAL ACCRUED LIABILITIES
|
|
$
|
3,727
|
|
|
$
|
3,011
|
|
(1)
|
Other consists of various accrued expenses with no individual item accounting for more than
5%
of the total Accrued liabilities balance at
February 28, 2018
and
May 31, 2017
.
|
Note 4 — Fair Value Measurements
|
•
|
Level 1: Quoted prices in active markets for identical assets or liabilities.
|
•
|
Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly; these include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.
|
•
|
Level 3: Unobservable inputs for which there is little or no market data available, which require the reporting entity to develop its own assumptions.
|
|
|
As of February 28, 2018
|
||||||||||||||
(In millions)
|
|
Assets at Fair Value
|
|
Cash and Equivalents
|
|
Short-term Investments
|
|
Other Long-term Assets
|
||||||||
Cash
|
|
$
|
620
|
|
|
$
|
620
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Level 1:
|
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury securities
|
|
865
|
|
|
150
|
|
|
715
|
|
|
—
|
|
||||
Level 2:
|
|
|
|
|
|
|
|
|
||||||||
Time deposits
|
|
773
|
|
|
769
|
|
|
4
|
|
|
—
|
|
||||
U.S. Agency securities
|
|
45
|
|
|
—
|
|
|
45
|
|
|
—
|
|
||||
Commercial paper and bonds
|
|
477
|
|
|
152
|
|
|
325
|
|
|
—
|
|
||||
Money market funds
|
|
1,971
|
|
|
1,971
|
|
|
—
|
|
|
—
|
|
||||
Total Level 2:
|
|
3,266
|
|
|
2,892
|
|
|
374
|
|
|
—
|
|
||||
Level 3:
|
|
|
|
|
|
|
|
|
||||||||
Non-marketable preferred stock
|
|
11
|
|
|
—
|
|
|
—
|
|
|
11
|
|
||||
TOTAL
|
|
$
|
4,762
|
|
|
$
|
3,662
|
|
|
$
|
1,089
|
|
|
$
|
11
|
|
|
|
As of May 31, 2017
|
||||||||||||||
(In millions)
|
|
Assets at Fair Value
|
|
Cash and Equivalents
|
|
Short-term Investments
|
|
Other Long-term Assets
|
||||||||
Cash
|
|
$
|
505
|
|
|
$
|
505
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Level 1:
|
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury securities
|
|
1,545
|
|
|
159
|
|
|
1,386
|
|
|
—
|
|
||||
Level 2:
|
|
|
|
|
|
|
|
|
||||||||
Time deposits
|
|
813
|
|
|
769
|
|
|
44
|
|
|
—
|
|
||||
U.S. Agency securities
|
|
522
|
|
|
150
|
|
|
372
|
|
|
—
|
|
||||
Commercial paper and bonds
|
|
820
|
|
|
251
|
|
|
569
|
|
|
—
|
|
||||
Money market funds
|
|
1,974
|
|
|
1,974
|
|
|
—
|
|
|
—
|
|
||||
Total Level 2:
|
|
4,129
|
|
|
3,144
|
|
|
985
|
|
|
—
|
|
||||
Level 3:
|
|
|
|
|
|
|
|
|
||||||||
Non-marketable preferred stock
|
|
10
|
|
|
—
|
|
|
—
|
|
|
10
|
|
||||
TOTAL
|
|
$
|
6,189
|
|
|
$
|
3,808
|
|
|
$
|
2,371
|
|
|
$
|
10
|
|
|
|
As of February 28, 2018
|
||||||||||||||||||||||
|
|
Derivative Assets
|
|
Derivative Liabilities
|
||||||||||||||||||||
(In millions)
|
|
Assets at Fair Value
|
|
Other Current Assets
|
|
Other Long-term Assets
|
|
Liabilities at Fair Value
|
|
Accrued Liabilities
|
|
Other Long-term Liabilities
|
||||||||||||
Level 2:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Foreign exchange forwards and options
(1)
|
|
$
|
83
|
|
|
$
|
65
|
|
|
$
|
18
|
|
|
$
|
648
|
|
|
$
|
536
|
|
|
$
|
112
|
|
Embedded derivatives
|
|
13
|
|
|
2
|
|
|
11
|
|
|
8
|
|
|
3
|
|
|
5
|
|
||||||
TOTAL
|
|
$
|
96
|
|
|
$
|
67
|
|
|
$
|
29
|
|
|
$
|
656
|
|
|
$
|
539
|
|
|
$
|
117
|
|
(1)
|
If the foreign exchange derivative instruments had been netted on the Unaudited Condensed Consolidated Balance Sheets, the asset and liability positions each would have been reduced by
$83 million
as of
February 28, 2018
. As of that date, the Company had posted
$354 million
of cash collateral to various counterparties related to foreign exchange derivative instruments.
No
amount of collateral was received on the Company
’
s derivative asset balance as of
February 28, 2018
.
|
|
|
As of May 31, 2017
|
||||||||||||||||||||||
|
|
Derivative Assets
|
|
Derivative Liabilities
|
||||||||||||||||||||
(In millions)
|
|
Assets at Fair Value
|
|
Other Current Assets
|
|
Other Long-term Assets
|
|
Liabilities at Fair Value
|
|
Accrued Liabilities
|
|
Other Long-term Liabilities
|
||||||||||||
Level 2:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Foreign exchange forwards and options
(1)
|
|
$
|
231
|
|
|
$
|
216
|
|
|
$
|
15
|
|
|
$
|
246
|
|
|
$
|
166
|
|
|
$
|
80
|
|
Embedded derivatives
|
|
10
|
|
|
1
|
|
|
9
|
|
|
8
|
|
|
2
|
|
|
6
|
|
||||||
TOTAL
|
|
$
|
241
|
|
|
$
|
217
|
|
|
$
|
24
|
|
|
$
|
254
|
|
|
$
|
168
|
|
|
$
|
86
|
|
(1)
|
If the foreign exchange derivative instruments had been netted on the Condensed Consolidated Balance Sheets, the asset and liability positions each would have been reduced by
$187 million
as of
May 31, 2017
. As of that date,
no
amount of cash collateral had been received or posted on the derivative asset and liability balances related to foreign exchange derivative instruments.
|
Note 5 — Short-Term Borrowings and Credit Lines
|
Note 6 — Income Taxes
|
Note 7 — Common Stock and Stock-Based Compensation
|
|
|
Three Months Ended February 28,
|
|
Nine Months Ended February 28,
|
||||||||||||
(In millions)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Stock options
(1)
|
|
$
|
38
|
|
|
$
|
35
|
|
|
$
|
110
|
|
|
$
|
110
|
|
ESPPs
|
|
7
|
|
|
7
|
|
|
24
|
|
|
27
|
|
||||
Restricted stock
|
|
10
|
|
|
9
|
|
|
24
|
|
|
25
|
|
||||
TOTAL STOCK-BASED COMPENSATION EXPENSE
|
|
$
|
55
|
|
|
$
|
51
|
|
|
$
|
158
|
|
|
$
|
162
|
|
(1)
|
Expense for stock options includes the expense associated with stock appreciation rights. Accelerated stock option expense is recorded for employees eligible for accelerated stock option vesting upon retirement. Accelerated stock option expense was
$6 million
and
$3 million
for the
three months ended February 28, 2018
and
2017
, respectively, and
$14 million
and
$11 million
for the
nine months ended February 28, 2018
and
2017
, respectively.
|
|
|
Nine Months Ended February 28,
|
||||
|
|
2018
|
|
2017
|
||
Dividend yield
|
|
1.2
|
%
|
|
1.1
|
%
|
Expected volatility
|
|
16.4
|
%
|
|
17.4
|
%
|
Weighted average expected life (in years)
|
|
6.0
|
|
|
6.0
|
|
Risk-free interest rate
|
|
2.0
|
%
|
|
1.3
|
%
|
Note 8 — Earnings Per Share
|
|
|
Three Months Ended February 28,
|
|
Nine Months Ended February 28,
|
||||||||||||
(In millions, except per share data)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Determination of shares:
|
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding
|
|
1,623.5
|
|
|
1,653.1
|
|
|
1,629.9
|
|
|
1,661.5
|
|
||||
Assumed conversion of dilutive stock options and awards
|
|
—
|
|
|
33.2
|
|
|
35.8
|
|
|
34.9
|
|
||||
DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
|
|
1,623.5
|
|
|
1,686.3
|
|
|
1,665.7
|
|
|
1,696.4
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
(Loss) earnings per common share:
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
$
|
(0.57
|
)
|
|
$
|
0.69
|
|
|
$
|
0.49
|
|
|
$
|
1.95
|
|
Diluted
|
|
$
|
(0.57
|
)
|
|
$
|
0.68
|
|
|
$
|
0.48
|
|
|
$
|
1.91
|
|
Note 9 — Risk Management and Derivatives
|
|
|
Derivative Assets
|
|
Derivative Liabilities
|
||||||||||||||||
(In millions)
|
|
Balance Sheet
Location
|
|
February 28,
2018 |
|
May 31,
2017 |
|
Balance Sheet
Location
|
|
February 28,
2018 |
|
May 31,
2017 |
||||||||
Derivatives formally designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign exchange forwards and options
|
|
Prepaid expenses and other current assets
|
|
$
|
42
|
|
|
$
|
113
|
|
|
Accrued liabilities
|
|
$
|
403
|
|
|
$
|
59
|
|
Foreign exchange forwards and options
|
|
Deferred income taxes and other assets
|
|
18
|
|
|
13
|
|
|
Deferred income taxes and other liabilities
|
|
112
|
|
|
73
|
|
||||
Total derivatives formally designated as hedging instruments
|
|
|
|
60
|
|
|
126
|
|
|
|
|
515
|
|
|
132
|
|
||||
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign exchange forwards and options
|
|
Prepaid expenses and other current assets
|
|
23
|
|
|
103
|
|
|
Accrued liabilities
|
|
133
|
|
|
107
|
|
||||
Embedded derivatives
|
|
Prepaid expenses and other current assets
|
|
2
|
|
|
1
|
|
|
Accrued liabilities
|
|
3
|
|
|
2
|
|
||||
Foreign exchange forwards and options
|
|
Deferred income taxes and other assets
|
|
—
|
|
|
2
|
|
|
Deferred income taxes and other liabilities
|
|
—
|
|
|
7
|
|
||||
Embedded derivatives
|
|
Deferred income taxes and other assets
|
|
11
|
|
|
9
|
|
|
Deferred income taxes and other liabilities
|
|
5
|
|
|
6
|
|
||||
Total derivatives not designated as hedging instruments
|
|
|
|
36
|
|
|
115
|
|
|
|
|
141
|
|
|
122
|
|
||||
TOTAL DERIVATIVES
|
|
|
|
$
|
96
|
|
|
$
|
241
|
|
|
|
|
$
|
656
|
|
|
$
|
254
|
|
(In millions)
|
Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivatives
(1)
|
|
Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Income
(1)
|
||||||||||||||
Three Months Ended February 28,
|
|
Location of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Income
|
|
Three Months Ended February 28,
|
|||||||||||||
2018
|
|
2017
|
|
|
2018
|
|
2017
|
||||||||||
Derivatives designated as cash flow hedges:
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign exchange forwards and options
|
$
|
7
|
|
|
$
|
5
|
|
|
Revenues
|
|
$
|
9
|
|
|
$
|
24
|
|
Foreign exchange forwards and options
|
(118
|
)
|
|
(5
|
)
|
|
Cost of sales
|
|
(41
|
)
|
|
87
|
|
||||
Foreign exchange forwards and options
|
—
|
|
|
(3
|
)
|
|
Total selling and administrative expense
|
|
—
|
|
|
—
|
|
||||
Foreign exchange forwards and options
|
(47
|
)
|
|
4
|
|
|
Other (income) expense, net
|
|
(15
|
)
|
|
67
|
|
||||
Interest rate swaps
(2)
|
—
|
|
|
—
|
|
|
Interest expense (income), net
|
|
(1
|
)
|
|
(2
|
)
|
||||
Total designated cash flow hedges
|
$
|
(158
|
)
|
|
$
|
1
|
|
|
|
|
$
|
(48
|
)
|
|
$
|
176
|
|
(1)
|
For the
three months ended February 28, 2018
and
2017
, the amounts recorded in
Other (income) expense, net
as a result of hedge ineffectiveness and the discontinuance of cash flow hedges because the forecasted transactions were no longer probable of occurring were
immaterial
.
|
(2)
|
Gains and losses associated with terminated interest rate swaps, which were previously designated as cash flow hedges and recorded in
Accumulated other comprehensive income
, will be released through
Interest expense (income), net
over the term of the issued debt.
|
(In millions) |
Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivatives
(1)
|
|
Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Income
(1)
|
||||||||||||||
Nine Months Ended February 28,
|
|
Location of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Income
|
|
Nine Months Ended February 28,
|
|||||||||||||
2018
|
|
2017
|
|
|
2018
|
|
2017
|
||||||||||
Derivatives designated as cash flow hedges:
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign exchange forwards and options
|
$
|
26
|
|
|
$
|
45
|
|
|
Revenues
|
|
$
|
24
|
|
|
$
|
96
|
|
Foreign exchange forwards and options
|
(382
|
)
|
|
244
|
|
|
Cost of sales
|
|
(17
|
)
|
|
260
|
|
||||
Foreign exchange forwards and options
|
1
|
|
|
(1
|
)
|
|
Total selling and administrative expense
|
|
—
|
|
|
—
|
|
||||
Foreign exchange forwards and options
|
(169
|
)
|
|
149
|
|
|
Other (income) expense, net
|
|
(33
|
)
|
|
141
|
|
||||
Interest rate swaps
(2)
|
—
|
|
|
(54
|
)
|
|
Interest expense (income), net
|
|
(5
|
)
|
|
(2
|
)
|
||||
Total designated cash flow hedges
|
$
|
(524
|
)
|
|
$
|
383
|
|
|
|
|
$
|
(31
|
)
|
|
$
|
495
|
|
(1)
|
For the
nine months ended February 28, 2018
and
2017
, the amounts recorded in
Other (income) expense, net
as a result of hedge ineffectiveness and the discontinuance of cash flow hedges because the forecasted transactions were no longer probable of occurring were
immaterial
.
|
(2)
|
Gains and losses associated with terminated interest rate swaps, which were previously designated as cash flow hedges and recorded in
Accumulated other comprehensive income
, will be released through
Interest expense (income), net
over the term of the issued debt.
|
|
|
Amount of Gain (Loss) Recognized in Income on Derivatives
|
|
Location of Gain (Loss)
Recognized in Income on Derivatives
|
||||||||||||||
|
|
Three Months Ended February 28,
|
|
Nine Months Ended February 28,
|
|
|||||||||||||
(In millions)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|||||||||
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign exchange forwards and options
|
|
$
|
(101
|
)
|
|
$
|
(66
|
)
|
|
$
|
(270
|
)
|
|
$
|
101
|
|
|
Other (income) expense, net
|
Embedded derivatives
|
|
1
|
|
|
(1
|
)
|
|
(3
|
)
|
|
(2
|
)
|
|
Other (income) expense, net
|
Note 10 — Accumulated Other Comprehensive Income
|
(In millions)
|
|
Foreign Currency Translation Adjustment
(1)
|
|
Cash Flow Hedges
|
|
Net Investment Hedges
(1)
|
|
Other
|
|
Total
|
||||||||||
Balance at November 30, 2017
|
|
$
|
(177
|
)
|
|
$
|
(439
|
)
|
|
$
|
115
|
|
|
$
|
(86
|
)
|
|
$
|
(587
|
)
|
Other comprehensive (loss) income:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Other comprehensive gains (losses) before reclassifications
(2)
|
|
51
|
|
|
(156
|
)
|
|
—
|
|
|
(15
|
)
|
|
(120
|
)
|
|||||
Reclassifications to net income of previously deferred (gains) losses
(3)
|
|
—
|
|
|
49
|
|
|
—
|
|
|
17
|
|
|
66
|
|
|||||
Total other comprehensive (loss) income
|
|
51
|
|
|
(107
|
)
|
|
—
|
|
|
2
|
|
|
(54
|
)
|
|||||
Reclassifications to retained earnings in accordance with ASU 2018-02
(4)
|
|
24
|
|
|
(7
|
)
|
|
—
|
|
|
—
|
|
|
17
|
|
|||||
Balance at February 28, 2018
|
|
$
|
(102
|
)
|
|
$
|
(553
|
)
|
|
$
|
115
|
|
|
$
|
(84
|
)
|
|
$
|
(624
|
)
|
(1)
|
The accumulated foreign currency translation adjustment and net investment hedge gains/losses related to an investment in a foreign subsidiary are reclassified to
Net income
upon sale or upon complete or substantially complete liquidation of the respective entity.
|
(2)
|
Net of tax benefit (expense) of
$0 million
,
$2 million
,
$0 million
,
$0 million
and
$2 million
, respectively.
|
(3)
|
Net of tax (benefit) expense of
$0 million
,
$1 million
,
$0 million
,
$1 million
and
$2 million
, respectively.
|
(4)
|
Refer to
Note 1 — Summary of Significant Accounting Policies
f
or additional information on the adoption of ASU 2018-02 during the third quarter of fiscal 2018.
|
(In millions)
|
|
Foreign Currency Translation Adjustment
(1)
|
|
Cash Flow Hedges
|
|
Net Investment Hedges
(1)
|
|
Other
|
|
Total
|
||||||||||
Balance at May 31, 2017
|
|
$
|
(191
|
)
|
|
$
|
(52
|
)
|
|
$
|
115
|
|
|
$
|
(85
|
)
|
|
$
|
(213
|
)
|
Other comprehensive (loss) income:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Other comprehensive gains (losses) before reclassifications
(2)
|
|
65
|
|
|
(523
|
)
|
|
—
|
|
|
(35
|
)
|
|
(493
|
)
|
|||||
Reclassifications to net income of previously deferred (gains) losses
(3)
|
|
—
|
|
|
29
|
|
|
—
|
|
|
36
|
|
|
65
|
|
|||||
Total other comprehensive (loss) income
|
|
65
|
|
|
(494
|
)
|
|
—
|
|
|
1
|
|
|
(428
|
)
|
|||||
Reclassifications to retained earnings in accordance with ASU 2018-02
(4)
|
|
24
|
|
|
(7
|
)
|
|
—
|
|
|
—
|
|
|
17
|
|
|||||
Balance at February 28, 2018
|
|
$
|
(102
|
)
|
|
$
|
(553
|
)
|
|
$
|
115
|
|
|
$
|
(84
|
)
|
|
$
|
(624
|
)
|
(1)
|
The accumulated foreign currency translation adjustment and net investment hedge gains/losses related to an investment in a foreign subsidiary are reclassified to
Net income
upon sale or upon complete or substantially complete liquidation of the respective entity.
|
(2)
|
Net of tax benefit (expense) of
$(23) million
,
$1 million
,
$0 million
,
$0 million
and
$(22) million
, respectively.
|
(3)
|
Net of tax (benefit) expense of
$0 million
,
$(2) million
,
$0 million
,
$1 million
and
$(1) million
, respectively.
|
(4)
|
Refer to
Note 1 — Summary of Significant Accounting Policies
for additional information on the adoption of ASU 2018-02 during the third quarter of fiscal 2018.
|
(In millions)
|
|
Foreign Currency Translation Adjustment
(1)
|
|
Cash Flow Hedges
|
|
Net Investment Hedges
(1)
|
|
Other
|
|
Total
|
||||||||||
Balance at November 30, 2016
|
|
$
|
(218
|
)
|
|
$
|
546
|
|
|
$
|
115
|
|
|
$
|
(44
|
)
|
|
$
|
399
|
|
Other comprehensive (loss) income:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Other comprehensive gains (losses) before reclassifications
(2)
|
|
13
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
15
|
|
|||||
Reclassifications to net income of previously deferred (gains) losses
(3)
|
|
(1
|
)
|
|
(177
|
)
|
|
—
|
|
|
(7
|
)
|
|
(185
|
)
|
|||||
Total other comprehensive (loss) income
|
|
12
|
|
|
(175
|
)
|
|
—
|
|
|
(7
|
)
|
|
(170
|
)
|
|||||
Balance at February 28, 2017
|
|
$
|
(206
|
)
|
|
$
|
371
|
|
|
$
|
115
|
|
|
$
|
(51
|
)
|
|
$
|
229
|
|
(1)
|
The accumulated foreign currency translation adjustment and net investment hedge gains/losses related to an investment in a foreign subsidiary are reclassified to
Net income
upon sale or upon complete or substantially complete liquidation of the respective entity.
|
(2)
|
Net of tax benefit (expense) of $
0 million
, $
1 million
, $
0 million
, $
(1) million
and $
0 million
, respectively.
|
(3)
|
Net of tax (benefit) expense of $
0 million
, $
(1) million
, $
0 million
, $
2 million
and $
1 million
, respectively.
|
(In millions)
|
|
Foreign Currency Translation Adjustment
(1)
|
|
Cash Flow Hedges
|
|
Net Investment Hedges
(1)
|
|
Other
|
|
Total
|
||||||||||
Balance at May 31, 2016
|
|
$
|
(207
|
)
|
|
$
|
463
|
|
|
$
|
115
|
|
|
$
|
(53
|
)
|
|
$
|
318
|
|
Other comprehensive (loss) income:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Other comprehensive gains (losses) before reclassifications
(2)
|
|
2
|
|
|
406
|
|
|
—
|
|
|
18
|
|
|
426
|
|
|||||
Reclassifications to net income of previously deferred (gains) losses
(3)
|
|
(1
|
)
|
|
(498
|
)
|
|
—
|
|
|
(16
|
)
|
|
(515
|
)
|
|||||
Total other comprehensive (loss) income
|
|
1
|
|
|
(92
|
)
|
|
—
|
|
|
2
|
|
|
(89
|
)
|
|||||
Balance at February 28, 2017
|
|
$
|
(206
|
)
|
|
$
|
371
|
|
|
$
|
115
|
|
|
$
|
(51
|
)
|
|
$
|
229
|
|
(1)
|
The accumulated foreign currency translation adjustment and net investment hedge gains/losses related to an investment in a foreign subsidiary are reclassified to
Net income
upon sale or upon complete or substantially complete liquidation of the respective entity.
|
(2)
|
Net of tax benefit (expense) of $
0 million
, $
23 million
, $
0 million
, $
0 million
and $
23 million
, respectively.
|
(3)
|
Net of tax (benefit) expense of $
0 million
, $
(3) million
, $
0 million
, $
1 million
and $
(2) million
, respectively.
|
|
|
Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Income
|
|
Location of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Income
|
||||||||||||||
|
|
Three Months Ended February 28,
|
|
Nine Months Ended February 28,
|
|
|||||||||||||
(In millions)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|||||||||
Gains (losses) on foreign currency translation adjustment
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
Other (income) expense, net
|
Total before tax
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|
|
||||
Tax (expense) benefit
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
||||
Gain (loss) net of tax
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|
|
||||
Gains (losses) on cash flow hedges:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign exchange forwards and options
|
|
$
|
9
|
|
|
$
|
24
|
|
|
$
|
24
|
|
|
$
|
96
|
|
|
Revenues
|
Foreign exchange forwards and options
|
|
(41
|
)
|
|
87
|
|
|
(17
|
)
|
|
260
|
|
|
Cost of sales
|
||||
Foreign exchange forwards and options
|
|
(15
|
)
|
|
67
|
|
|
(33
|
)
|
|
141
|
|
|
Other (income) expense, net
|
||||
Interest rate swaps
|
|
(1
|
)
|
|
(2
|
)
|
|
(5
|
)
|
|
(2
|
)
|
|
Interest expense (income), net
|
||||
Total before tax
|
|
(48
|
)
|
|
176
|
|
|
(31
|
)
|
|
495
|
|
|
|
||||
Tax (expense) benefit
|
|
(1
|
)
|
|
1
|
|
|
2
|
|
|
3
|
|
|
|
||||
Gain (loss) net of tax
|
|
(49
|
)
|
|
177
|
|
|
(29
|
)
|
|
498
|
|
|
|
||||
Gains (losses) on other
|
|
(16
|
)
|
|
9
|
|
|
(35
|
)
|
|
17
|
|
|
Other (income) expense, net
|
||||
Total before tax
|
|
(16
|
)
|
|
9
|
|
|
(35
|
)
|
|
17
|
|
|
|
||||
Tax (expense) benefit
|
|
(1
|
)
|
|
(2
|
)
|
|
(1
|
)
|
|
(1
|
)
|
|
|
||||
Gain (loss) net of tax
|
|
(17
|
)
|
|
7
|
|
|
(36
|
)
|
|
16
|
|
|
|
||||
Total net gain (loss) reclassified for the period
|
|
$
|
(66
|
)
|
|
$
|
185
|
|
|
$
|
(65
|
)
|
|
$
|
515
|
|
|
|
Note 11 — Operating Segments
|
|
|
Three Months Ended February 28,
|
|
Nine Months Ended February 28,
|
||||||||||||
(In millions)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
REVENUES
|
|
|
|
|
|
|
|
|
||||||||
North America
|
|
$
|
3,571
|
|
|
$
|
3,782
|
|
|
$
|
10,980
|
|
|
$
|
11,463
|
|
Europe, Middle East & Africa
|
|
2,299
|
|
|
1,925
|
|
|
6,776
|
|
|
5,979
|
|
||||
Greater China
|
|
1,336
|
|
|
1,075
|
|
|
3,666
|
|
|
3,150
|
|
||||
Asia Pacific & Latin America
|
|
1,268
|
|
|
1,122
|
|
|
3,730
|
|
|
3,459
|
|
||||
Global Brand Divisions
|
|
21
|
|
|
19
|
|
|
64
|
|
|
55
|
|
||||
Total NIKE Brand
|
|
8,495
|
|
|
7,923
|
|
|
25,216
|
|
|
24,106
|
|
||||
Converse
|
|
483
|
|
|
498
|
|
|
1,374
|
|
|
1,488
|
|
||||
Corporate
|
|
6
|
|
|
11
|
|
|
18
|
|
|
79
|
|
||||
TOTAL NIKE, INC. REVENUES
|
|
$
|
8,984
|
|
|
$
|
8,432
|
|
|
$
|
26,608
|
|
|
$
|
25,673
|
|
EARNINGS BEFORE INTEREST AND TAXES
|
|
|
|
|
|
|
|
|
||||||||
North America
|
|
$
|
840
|
|
|
$
|
980
|
|
|
$
|
2,625
|
|
|
$
|
2,896
|
|
Europe, Middle East & Africa
|
|
417
|
|
|
361
|
|
|
1,205
|
|
|
1,159
|
|
||||
Greater China
|
|
496
|
|
|
381
|
|
|
1,268
|
|
|
1,127
|
|
||||
Asia Pacific & Latin America
|
|
298
|
|
|
228
|
|
|
849
|
|
|
703
|
|
||||
Global Brand Divisions
|
|
(649
|
)
|
|
(598
|
)
|
|
(1,926
|
)
|
|
(1,988
|
)
|
||||
Total NIKE Brand
|
|
1,402
|
|
|
1,352
|
|
|
4,021
|
|
|
3,897
|
|
||||
Converse
|
|
69
|
|
|
109
|
|
|
206
|
|
|
340
|
|
||||
Corporate
|
|
(299
|
)
|
|
(119
|
)
|
|
(1,075
|
)
|
|
(478
|
)
|
||||
Total NIKE, Inc. Earnings Before Interest and Taxes
|
|
1,172
|
|
|
1,342
|
|
|
3,152
|
|
|
3,759
|
|
||||
Interest expense (income), net
|
|
13
|
|
|
19
|
|
|
42
|
|
|
41
|
|
||||
TOTAL NIKE, INC. INCOME BEFORE INCOME TAXES
|
|
$
|
1,159
|
|
|
$
|
1,323
|
|
|
$
|
3,110
|
|
|
$
|
3,718
|
|
|
|
As of February 28,
|
|
As of May 31,
|
||||
(In millions)
|
|
2018
|
|
2017
|
||||
ACCOUNTS RECEIVABLE, NET
|
|
|
|
|
||||
North America
|
|
$
|
1,594
|
|
|
$
|
1,798
|
|
Europe, Middle East & Africa
|
|
929
|
|
|
690
|
|
||
Greater China
|
|
136
|
|
|
102
|
|
||
Asia Pacific & Latin America
|
|
734
|
|
|
693
|
|
||
Global Brand Divisions
|
|
101
|
|
|
86
|
|
||
Total NIKE Brand
|
|
3,494
|
|
|
3,369
|
|
||
Converse
|
|
274
|
|
|
297
|
|
||
Corporate
|
|
24
|
|
|
11
|
|
||
TOTAL ACCOUNTS RECEIVABLE, NET
|
|
$
|
3,792
|
|
|
$
|
3,677
|
|
INVENTORIES
|
|
|
|
|
||||
North America
|
|
$
|
2,242
|
|
|
$
|
2,218
|
|
Europe, Middle East & Africa
|
|
1,457
|
|
|
1,327
|
|
||
Greater China
|
|
613
|
|
|
463
|
|
||
Asia Pacific & Latin America
|
|
787
|
|
|
694
|
|
||
Global Brand Divisions
|
|
97
|
|
|
68
|
|
||
Total NIKE Brand
|
|
5,196
|
|
|
4,770
|
|
||
Converse
|
|
277
|
|
|
286
|
|
||
Corporate
|
|
(107
|
)
|
|
(1
|
)
|
||
TOTAL INVENTORIES
|
|
$
|
5,366
|
|
|
$
|
5,055
|
|
PROPERTY, PLANT AND EQUIPMENT, NET
|
|
|
|
|
||||
North America
|
|
$
|
833
|
|
|
$
|
819
|
|
Europe, Middle East & Africa
|
|
794
|
|
|
709
|
|
||
Greater China
|
|
253
|
|
|
225
|
|
||
Asia Pacific & Latin America
|
|
350
|
|
|
340
|
|
||
Global Brand Divisions
|
|
556
|
|
|
533
|
|
||
Total NIKE Brand
|
|
2,786
|
|
|
2,626
|
|
||
Converse
|
|
118
|
|
|
125
|
|
||
Corporate
|
|
1,394
|
|
|
1,238
|
|
||
TOTAL PROPERTY, PLANT AND EQUIPMENT, NET
|
|
$
|
4,298
|
|
|
$
|
3,989
|
|
Note 12 — Commitments and Contingencies
|
Results of Operations
|
|
|
Three Months Ended February 28,
|
|
Nine Months Ended February 28,
|
||||||||||||||||||
(Dollars in millions, except per share data)
|
|
2018
|
|
2017
|
|
% Change
|
|
2018
|
|
2017
|
|
% Change
|
||||||||||
Revenues
|
|
$
|
8,984
|
|
|
$
|
8,432
|
|
|
7
|
%
|
|
$
|
26,608
|
|
|
$
|
25,673
|
|
|
4
|
%
|
Cost of sales
|
|
5,046
|
|
|
4,682
|
|
|
8
|
%
|
|
15,030
|
|
|
14,184
|
|
|
6
|
%
|
||||
Gross profit
|
|
3,938
|
|
|
3,750
|
|
|
5
|
%
|
|
11,578
|
|
|
11,489
|
|
|
1
|
%
|
||||
Gross margin
|
|
43.8
|
%
|
|
44.5
|
%
|
|
|
|
43.5
|
%
|
|
44.8
|
%
|
|
|
||||||
Demand creation expense
|
|
862
|
|
|
749
|
|
|
15
|
%
|
|
2,594
|
|
|
2,552
|
|
|
2
|
%
|
||||
Operating overhead expense
|
|
1,905
|
|
|
1,747
|
|
|
9
|
%
|
|
5,797
|
|
|
5,346
|
|
|
8
|
%
|
||||
Total selling and administrative expense
|
|
2,767
|
|
|
2,496
|
|
|
11
|
%
|
|
8,391
|
|
|
7,898
|
|
|
6
|
%
|
||||
% of revenues
|
|
30.8
|
%
|
|
29.6
|
%
|
|
|
|
31.5
|
%
|
|
30.8
|
%
|
|
|
||||||
Interest expense (income), net
|
|
13
|
|
|
19
|
|
|
—
|
|
|
42
|
|
|
41
|
|
|
—
|
|
||||
Other (income) expense, net
|
|
(1
|
)
|
|
(88
|
)
|
|
—
|
|
|
35
|
|
|
(168
|
)
|
|
—
|
|
||||
Income before income taxes
|
|
1,159
|
|
|
1,323
|
|
|
-12
|
%
|
|
3,110
|
|
|
3,718
|
|
|
-16
|
%
|
||||
Income tax expense
|
|
2,080
|
|
|
182
|
|
|
1,043
|
%
|
|
2,314
|
|
|
486
|
|
|
376
|
%
|
||||
Effective tax rate
|
|
179.5
|
%
|
|
13.8
|
%
|
|
|
|
74.4
|
%
|
|
13.1
|
%
|
|
|
||||||
NET (LOSS) INCOME
|
|
$
|
(921
|
)
|
|
$
|
1,141
|
|
|
-181
|
%
|
|
$
|
796
|
|
|
$
|
3,232
|
|
|
-75
|
%
|
Diluted (loss) earnings per common share
|
|
$
|
(0.57
|
)
|
|
$
|
0.68
|
|
|
-184
|
%
|
|
$
|
0.48
|
|
|
$
|
1.91
|
|
|
-75
|
%
|
Consolidated Operating Results
|
|
Three Months Ended February 28,
|
|
Nine Months Ended February 28,
|
||||||||||||||||||||||||
(Dollars in millions)
|
2018
|
|
2017
|
|
% Change
|
|
% Change Excluding Currency
Changes (1) |
|
2018
|
|
2017
|
|
% Change
|
|
% Change Excluding Currency
Changes (1) |
||||||||||||
NIKE, Inc. Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
NIKE Brand Revenues by:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Footwear
|
$
|
5,605
|
|
|
$
|
5,314
|
|
|
5
|
%
|
|
2
|
%
|
|
$
|
16,124
|
|
|
$
|
15,608
|
|
|
3
|
%
|
|
2
|
%
|
Apparel
|
2,555
|
|
|
2,269
|
|
|
13
|
%
|
|
9
|
%
|
|
7,968
|
|
|
7,353
|
|
|
8
|
%
|
|
7
|
%
|
||||
Equipment
|
314
|
|
|
321
|
|
|
-2
|
%
|
|
-6
|
%
|
|
1,060
|
|
|
1,090
|
|
|
-3
|
%
|
|
-4
|
%
|
||||
Global Brand Divisions
(2)
|
21
|
|
|
19
|
|
|
11
|
%
|
|
11
|
%
|
|
64
|
|
|
55
|
|
|
16
|
%
|
|
15
|
%
|
||||
TOTAL NIKE BRAND
|
8,495
|
|
|
7,923
|
|
|
7
|
%
|
|
4
|
%
|
|
25,216
|
|
|
24,106
|
|
|
5
|
%
|
|
3
|
%
|
||||
Converse
|
483
|
|
|
498
|
|
|
-3
|
%
|
|
-8
|
%
|
|
1,374
|
|
|
1,488
|
|
|
-8
|
%
|
|
-10
|
%
|
||||
Corporate
(3)
|
6
|
|
|
11
|
|
|
—
|
|
|
—
|
|
|
18
|
|
|
79
|
|
|
—
|
|
|
—
|
|
||||
TOTAL NIKE, INC. REVENUES
|
$
|
8,984
|
|
|
$
|
8,432
|
|
|
7
|
%
|
|
3
|
%
|
|
$
|
26,608
|
|
|
$
|
25,673
|
|
|
4
|
%
|
|
2
|
%
|
Supplemental NIKE Brand Revenues Details:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
NIKE Brand Revenues by:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Sales to Wholesale Customers
|
$
|
5,863
|
|
|
$
|
5,618
|
|
|
4
|
%
|
|
1
|
%
|
|
$
|
17,522
|
|
|
$
|
17,316
|
|
|
1
|
%
|
|
0
|
%
|
Sales through NIKE Direct
|
2,611
|
|
|
2,286
|
|
|
14
|
%
|
|
10
|
%
|
|
7,630
|
|
|
6,735
|
|
|
13
|
%
|
|
12
|
%
|
||||
Global Brand Divisions
(2)
|
21
|
|
|
19
|
|
|
11
|
%
|
|
11
|
%
|
|
64
|
|
|
55
|
|
|
16
|
%
|
|
15
|
%
|
||||
TOTAL NIKE BRAND REVENUES
|
$
|
8,495
|
|
|
$
|
7,923
|
|
|
7
|
%
|
|
4
|
%
|
|
$
|
25,216
|
|
|
$
|
24,106
|
|
|
5
|
%
|
|
3
|
%
|
(1)
|
The percentage change has been calculated using actual exchange rates in use during the comparative prior year period to enhance the visibility of the underlying business trends by excluding the impact of translation arising from foreign currency exchange rate fluctuations, which is considered a non-GAAP financial measure.
|
(2)
|
Global Brand Divisions revenues are primarily attributable to NIKE Brand licensing businesses that are not part of a geographic operating segment.
|
(3)
|
Corporate revenues primarily consist of foreign currency hedge gains and losses related to revenues generated by entities within the NIKE Brand geographic operating segments and Converse, but managed through our central foreign exchange risk management program.
|
|
|
Three Months Ended February 28,
|
|
Nine Months Ended February 28,
|
||||||||||||||||||
(Dollars in millions)
|
|
2018
|
|
2017
|
|
% Change
|
|
2018
|
|
2017
|
|
% Change
|
||||||||||
Gross profit
|
|
$
|
3,938
|
|
|
$
|
3,750
|
|
|
5
|
%
|
|
$
|
11,578
|
|
|
$
|
11,489
|
|
|
1
|
%
|
Gross margin
|
|
43.8
|
%
|
|
44.5
|
%
|
|
(70) bps
|
|
43.5
|
%
|
|
44.8
|
%
|
|
(130) bps
|
|
•
|
Lower NIKE Brand full-price ASP, on a wholesale equivalent basis, (decreasing gross margin approximately 50 basis points for the third quarter and 30 basis points for the first nine months) primarily due to product mix;
|
•
|
Lower NIKE Brand product costs, on a wholesale equivalent basis, (increasing gross margin approximately 80 basis points for the third quarter and 20 basis points for the first nine months) driven by product mix;
|
•
|
Unfavorable changes in net foreign currency exchange rates, including hedges, (decreasing gross margin approximately 90 basis points for the third quarter and 110 basis points in the first nine months);
|
•
|
Growth in our higher margin NIKE Direct business for the third quarter (increasing gross margin approximately 30 basis points) in part reflecting favorable off-price mix; for the first nine months, NIKE Direct margin was lower (decreasing gross margin approximately 20 basis points), reflecting a slightly higher mix of off-price sales; and
|
•
|
Higher other costs for the third quarter (decreasing gross margin approximately 40 basis points) primarily reflecting higher obsolescence and third-party royalty costs; for the first nine months, other costs were lower (increasing gross margin approximately 20 basis points).
|
|
|
Three Months Ended February 28,
|
|
Nine Months Ended February 28,
|
||||||||||||||||||
(Dollars in millions)
|
|
2018
|
|
2017
|
|
% Change
|
|
2018
|
|
2017
|
|
% Change
|
||||||||||
Demand creation expense
(1)
|
|
$
|
862
|
|
|
$
|
749
|
|
|
15
|
%
|
|
$
|
2,594
|
|
|
$
|
2,552
|
|
|
2
|
%
|
Operating overhead expense
|
|
1,905
|
|
|
1,747
|
|
|
9
|
%
|
|
5,797
|
|
|
5,346
|
|
|
8
|
%
|
||||
Total selling and administrative expense
|
|
$
|
2,767
|
|
|
$
|
2,496
|
|
|
11
|
%
|
|
$
|
8,391
|
|
|
$
|
7,898
|
|
|
6
|
%
|
% of revenues
|
|
30.8
|
%
|
|
29.6
|
%
|
|
120
|
bps
|
|
31.5
|
%
|
|
30.8
|
%
|
|
70
|
bps
|
(1)
|
Demand creation expense consists of advertising and promotion costs, including costs of endorsement contracts, television, digital and print advertising, brand events and retail brand presentation.
|
|
|
Three Months Ended February 28,
|
|
Nine Months Ended February 28,
|
||||||||||||
(In millions)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Other (income) expense, net
|
|
$
|
(1
|
)
|
|
$
|
(88
|
)
|
|
$
|
35
|
|
|
$
|
(168
|
)
|
|
|
Three Months Ended February 28,
|
|
Nine Months Ended February 28,
|
||||||||||||||
|
|
2018
|
|
2017
|
|
% Change
|
|
2018
|
|
2017
|
|
% Change
|
||||||
Effective tax rate
|
|
179.5
|
%
|
|
13.8
|
%
|
|
—
|
|
|
74.4
|
%
|
|
13.1
|
%
|
|
—
|
|
Operating Segments
|
|
|
Three Months Ended February 28,
|
|
Nine Months Ended February 28,
|
||||||||||||||||||||||||
(Dollars in millions)
|
|
2018
|
|
2017
(1)
|
|
% Change
|
|
% Change Excluding Currency Changes
(2)
|
|
2018
|
|
2017
(1)
|
|
% Change
|
|
% Change Excluding Currency Changes
(2)
|
||||||||||||
North America
|
|
$
|
3,571
|
|
|
$
|
3,782
|
|
|
-6
|
%
|
|
-6
|
%
|
|
$
|
10,980
|
|
|
$
|
11,463
|
|
|
-4
|
%
|
|
-4
|
%
|
Europe, Middle East & Africa
|
|
2,299
|
|
|
1,925
|
|
|
19
|
%
|
|
9
|
%
|
|
6,776
|
|
|
5,979
|
|
|
13
|
%
|
|
9
|
%
|
||||
Greater China
|
|
1,336
|
|
|
1,075
|
|
|
24
|
%
|
|
19
|
%
|
|
3,666
|
|
|
3,150
|
|
|
16
|
%
|
|
15
|
%
|
||||
Asia Pacific & Latin America
|
|
1,268
|
|
|
1,122
|
|
|
13
|
%
|
|
11
|
%
|
|
3,730
|
|
|
3,459
|
|
|
8
|
%
|
|
8
|
%
|
||||
Global Brand Divisions
(3)
|
|
21
|
|
|
19
|
|
|
11
|
%
|
|
11
|
%
|
|
64
|
|
|
55
|
|
|
16
|
%
|
|
15
|
%
|
||||
TOTAL NIKE BRAND
|
|
8,495
|
|
|
7,923
|
|
|
7
|
%
|
|
4
|
%
|
|
25,216
|
|
|
24,106
|
|
|
5
|
%
|
|
3
|
%
|
||||
Converse
|
|
483
|
|
|
498
|
|
|
-3
|
%
|
|
-8
|
%
|
|
1,374
|
|
|
1,488
|
|
|
-8
|
%
|
|
-10
|
%
|
||||
Corporate
(4)
|
|
6
|
|
|
11
|
|
|
—
|
|
|
—
|
|
|
18
|
|
|
79
|
|
|
—
|
|
|
—
|
|
||||
TOTAL NIKE, INC. REVENUES
|
|
$
|
8,984
|
|
|
$
|
8,432
|
|
|
7
|
%
|
|
3
|
%
|
|
$
|
26,608
|
|
|
$
|
25,673
|
|
|
4
|
%
|
|
2
|
%
|
(1)
|
Certain prior year amounts have been reclassified to conform to fiscal 2018 presentation. This includes reclassified operating segment data to reflect the changes in the Company
’
s operating structure, which became effective June 1, 2017. These changes had no impact on previously reported consolidated results of operations or shareholders
’
equity.
|
(2)
|
The percentage change has been calculated using actual exchange rates in use during the comparative prior year period to enhance the visibility of the underlying business trends by excluding the impact of translation arising from foreign currency exchange rate fluctuations, which is considered a non-GAAP financial measure.
|
(3)
|
Global Brand Divisions revenues are primarily attributable to NIKE Brand licensing businesses that are not part of a geographic operating segment.
|
(4)
|
Corporate revenues primarily consist of foreign currency hedge gains and losses related to revenues generated by entities within the NIKE Brand geographic operating segments and Converse, but managed through our central foreign exchange risk management program.
|
|
|
Three Months Ended February 28,
|
|
Nine Months Ended February 28,
|
||||||||||||||||||
(Dollars in millions)
|
|
2018
|
|
2017
(1)
|
|
% Change
|
|
2018
|
|
2017
(1)
|
|
% Change
|
||||||||||
North America
|
|
$
|
840
|
|
|
$
|
980
|
|
|
-14
|
%
|
|
$
|
2,625
|
|
|
$
|
2,896
|
|
|
-9
|
%
|
Europe, Middle East & Africa
|
|
417
|
|
|
361
|
|
|
16
|
%
|
|
1,205
|
|
|
1,159
|
|
|
4
|
%
|
||||
Greater China
|
|
496
|
|
|
381
|
|
|
30
|
%
|
|
1,268
|
|
|
1,127
|
|
|
13
|
%
|
||||
Asia Pacific & Latin America
|
|
298
|
|
|
228
|
|
|
31
|
%
|
|
849
|
|
|
703
|
|
|
21
|
%
|
||||
Global Brand Divisions
|
|
(649
|
)
|
|
(598
|
)
|
|
-9
|
%
|
|
(1,926
|
)
|
|
(1,988
|
)
|
|
3
|
%
|
||||
TOTAL NIKE BRAND
|
|
1,402
|
|
|
1,352
|
|
|
4
|
%
|
|
4,021
|
|
|
3,897
|
|
|
3
|
%
|
||||
Converse
|
|
69
|
|
|
109
|
|
|
-37
|
%
|
|
206
|
|
|
340
|
|
|
-39
|
%
|
||||
Corporate
|
|
(299
|
)
|
|
(119
|
)
|
|
-151
|
%
|
|
(1,075
|
)
|
|
(478
|
)
|
|
-125
|
%
|
||||
TOTAL NIKE, INC. EARNINGS BEFORE INTEREST AND TAXES
|
|
1,172
|
|
|
1,342
|
|
|
-13
|
%
|
|
3,152
|
|
|
3,759
|
|
|
-16
|
%
|
||||
Interest expense (income), net
|
|
13
|
|
|
19
|
|
|
—
|
|
|
42
|
|
|
41
|
|
|
—
|
|
||||
TOTAL NIKE, INC. INCOME BEFORE INCOME TAXES
|
|
$
|
1,159
|
|
|
$
|
1,323
|
|
|
-12
|
%
|
|
$
|
3,110
|
|
|
$
|
3,718
|
|
|
-16
|
%
|
(1)
|
Certain prior year amounts have been reclassified to conform to fiscal 2018 presentation. This includes reclassified operating segment data to reflect the changes in the Company
’
s operating structure, which became effective June 1, 2017. These changes had no impact on previously reported consolidated results of operations or shareholders
’
equity.
|
|
|
Three Months Ended February 28,
|
|
Nine Months Ended February 28,
|
||||||||||||||||||||||||
(Dollars in millions)
|
|
2018
|
|
2017
|
|
% Change
|
|
% Change Excluding Currency Changes
|
|
2018
|
|
2017
|
|
% Change
|
|
% Change Excluding Currency Changes
|
||||||||||||
Revenues by:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Footwear
|
|
$
|
2,293
|
|
|
$
|
2,490
|
|
|
-8
|
%
|
|
-8
|
%
|
|
$
|
6,797
|
|
|
$
|
7,227
|
|
|
-6
|
%
|
|
-6
|
%
|
Apparel
|
|
1,153
|
|
|
1,154
|
|
|
0
|
%
|
|
0
|
%
|
|
3,731
|
|
|
3,744
|
|
|
0
|
%
|
|
0
|
%
|
||||
Equipment
|
|
125
|
|
|
138
|
|
|
-9
|
%
|
|
-9
|
%
|
|
452
|
|
|
492
|
|
|
-8
|
%
|
|
-8
|
%
|
||||
TOTAL REVENUES
|
|
$
|
3,571
|
|
|
$
|
3,782
|
|
|
-6
|
%
|
|
-6
|
%
|
|
$
|
10,980
|
|
|
$
|
11,463
|
|
|
-4
|
%
|
|
-4
|
%
|
Revenues by:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Sales to Wholesale Customers
|
|
$
|
2,382
|
|
|
$
|
2,650
|
|
|
-10
|
%
|
|
-10
|
%
|
|
$
|
7,507
|
|
|
$
|
8,111
|
|
|
-7
|
%
|
|
-8
|
%
|
Sales through NIKE Direct
|
|
1,189
|
|
|
1,132
|
|
|
5
|
%
|
|
5
|
%
|
|
3,473
|
|
|
3,352
|
|
|
4
|
%
|
|
4
|
%
|
||||
TOTAL REVENUES
|
|
$
|
3,571
|
|
|
$
|
3,782
|
|
|
-6
|
%
|
|
-6
|
%
|
|
$
|
10,980
|
|
|
$
|
11,463
|
|
|
-4
|
%
|
|
-4
|
%
|
EARNINGS BEFORE INTEREST AND TAXES
|
|
$
|
840
|
|
|
$
|
980
|
|
|
-14
|
%
|
|
|
|
$
|
2,625
|
|
|
$
|
2,896
|
|
|
-9
|
%
|
|
|
|
|
Three Months Ended February 28,
|
|
Nine Months Ended February 28,
|
||||||||||||||||||||||||
(Dollars in millions)
|
|
2018
|
|
2017
|
|
% Change
|
|
% Change Excluding Currency Changes
|
|
2018
|
|
2017
|
|
% Change
|
|
% Change Excluding Currency Changes
|
||||||||||||
Revenues by:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Footwear
|
|
$
|
1,489
|
|
|
$
|
1,271
|
|
|
17
|
%
|
|
7
|
%
|
|
$
|
4,250
|
|
|
$
|
3,844
|
|
|
11
|
%
|
|
6
|
%
|
Apparel
|
|
713
|
|
|
566
|
|
|
26
|
%
|
|
15
|
%
|
|
2,199
|
|
|
1,838
|
|
|
20
|
%
|
|
15
|
%
|
||||
Equipment
|
|
97
|
|
|
88
|
|
|
10
|
%
|
|
0
|
%
|
|
327
|
|
|
297
|
|
|
10
|
%
|
|
6
|
%
|
||||
TOTAL REVENUES
|
|
$
|
2,299
|
|
|
$
|
1,925
|
|
|
19
|
%
|
|
9
|
%
|
|
$
|
6,776
|
|
|
$
|
5,979
|
|
|
13
|
%
|
|
9
|
%
|
Revenues by:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Sales to Wholesale Customers
|
|
$
|
1,705
|
|
|
$
|
1,428
|
|
|
19
|
%
|
|
9
|
%
|
|
$
|
4,952
|
|
|
$
|
4,474
|
|
|
11
|
%
|
|
6
|
%
|
Sales through NIKE Direct
|
|
594
|
|
|
497
|
|
|
20
|
%
|
|
9
|
%
|
|
1,824
|
|
|
1,505
|
|
|
21
|
%
|
|
16
|
%
|
||||
TOTAL REVENUES
|
|
$
|
2,299
|
|
|
$
|
1,925
|
|
|
19
|
%
|
|
9
|
%
|
|
$
|
6,776
|
|
|
$
|
5,979
|
|
|
13
|
%
|
|
9
|
%
|
EARNINGS BEFORE INTEREST AND TAXES
|
|
$
|
417
|
|
|
$
|
361
|
|
|
16
|
%
|
|
|
|
$
|
1,205
|
|
|
$
|
1,159
|
|
|
4
|
%
|
|
|
|
|
Three Months Ended February 28,
|
|
Nine Months Ended February 28,
|
||||||||||||||||||||||||
(Dollars in millions)
|
|
2018
|
|
2017
|
|
% Change
|
|
% Change Excluding Currency Changes
|
|
2018
|
|
2017
|
|
% Change
|
|
% Change Excluding Currency Changes
|
||||||||||||
Revenues by:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Footwear
|
|
$
|
939
|
|
|
$
|
776
|
|
|
21
|
%
|
|
16
|
%
|
|
$
|
2,493
|
|
|
$
|
2,155
|
|
|
16
|
%
|
|
14
|
%
|
Apparel
|
|
368
|
|
|
271
|
|
|
36
|
%
|
|
30
|
%
|
|
1,074
|
|
|
895
|
|
|
20
|
%
|
|
19
|
%
|
||||
Equipment
|
|
29
|
|
|
28
|
|
|
4
|
%
|
|
-4
|
%
|
|
99
|
|
|
100
|
|
|
-1
|
%
|
|
-2
|
%
|
||||
TOTAL REVENUES
|
|
$
|
1,336
|
|
|
$
|
1,075
|
|
|
24
|
%
|
|
19
|
%
|
|
$
|
3,666
|
|
|
$
|
3,150
|
|
|
16
|
%
|
|
15
|
%
|
Revenues by:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Sales to Wholesale Customers
|
|
$
|
848
|
|
|
$
|
703
|
|
|
21
|
%
|
|
16
|
%
|
|
$
|
2,286
|
|
|
$
|
2,071
|
|
|
10
|
%
|
|
9
|
%
|
Sales through NIKE Direct
|
|
488
|
|
|
372
|
|
|
31
|
%
|
|
25
|
%
|
|
1,380
|
|
|
1,079
|
|
|
28
|
%
|
|
26
|
%
|
||||
TOTAL REVENUES
|
|
$
|
1,336
|
|
|
$
|
1,075
|
|
|
24
|
%
|
|
19
|
%
|
|
$
|
3,666
|
|
|
$
|
3,150
|
|
|
16
|
%
|
|
15
|
%
|
EARNINGS BEFORE INTEREST AND TAXES
|
|
$
|
496
|
|
|
$
|
381
|
|
|
30
|
%
|
|
|
|
$
|
1,268
|
|
|
$
|
1,127
|
|
|
13
|
%
|
|
|
|
|
Three Months Ended February 28,
|
|
Nine Months Ended February 28,
|
||||||||||||||||||||||||
(Dollars in millions)
|
|
2018
|
|
2017
|
|
% Change
|
|
% Change Excluding Currency Changes
|
|
2018
|
|
2017
|
|
% Change
|
|
% Change Excluding Currency Changes
|
||||||||||||
Revenues by:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Footwear
|
|
$
|
884
|
|
|
$
|
777
|
|
|
14
|
%
|
|
12
|
%
|
|
$
|
2,584
|
|
|
$
|
2,382
|
|
|
8
|
%
|
|
9
|
%
|
Apparel
|
|
321
|
|
|
278
|
|
|
15
|
%
|
|
13
|
%
|
|
964
|
|
|
876
|
|
|
10
|
%
|
|
11
|
%
|
||||
Equipment
|
|
63
|
|
|
67
|
|
|
-6
|
%
|
|
-7
|
%
|
|
182
|
|
|
201
|
|
|
-9
|
%
|
|
-9
|
%
|
||||
TOTAL REVENUES
|
|
$
|
1,268
|
|
|
$
|
1,122
|
|
|
13
|
%
|
|
11
|
%
|
|
$
|
3,730
|
|
|
$
|
3,459
|
|
|
8
|
%
|
|
8
|
%
|
Revenues by:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Sales to Wholesale Customers
|
|
$
|
928
|
|
|
$
|
837
|
|
|
11
|
%
|
|
9
|
%
|
|
$
|
2,777
|
|
|
$
|
2,660
|
|
|
4
|
%
|
|
5
|
%
|
Sales through NIKE Direct
|
|
340
|
|
|
285
|
|
|
19
|
%
|
|
16
|
%
|
|
953
|
|
|
799
|
|
|
19
|
%
|
|
20
|
%
|
||||
TOTAL REVENUES
|
|
$
|
1,268
|
|
|
$
|
1,122
|
|
|
13
|
%
|
|
11
|
%
|
|
$
|
3,730
|
|
|
$
|
3,459
|
|
|
8
|
%
|
|
8
|
%
|
EARNINGS BEFORE INTEREST AND TAXES
|
|
$
|
298
|
|
|
$
|
228
|
|
|
31
|
%
|
|
|
|
$
|
849
|
|
|
$
|
703
|
|
|
21
|
%
|
|
|
|
|
Three Months Ended February 28,
|
|
Nine Months Ended February 28,
|
||||||||||||||||||||||||
(Dollars in millions)
|
|
2018
|
|
2017
|
|
% Change
|
|
% Change Excluding Currency Changes
|
|
2018
|
|
2017
|
|
% Change
|
|
% Change Excluding Currency Changes
|
||||||||||||
Revenues
|
|
$
|
21
|
|
|
$
|
19
|
|
|
11
|
%
|
|
11
|
%
|
|
$
|
64
|
|
|
$
|
55
|
|
|
16
|
%
|
|
15
|
%
|
(Loss) Before Interest and Taxes
|
|
$
|
(649
|
)
|
|
$
|
(598
|
)
|
|
9
|
%
|
|
|
|
$
|
(1,926
|
)
|
|
$
|
(1,988
|
)
|
|
-3
|
%
|
|
|
|
|
Three Months Ended February 28,
|
|
Nine Months Ended February 28,
|
||||||||||||||||||||||||
(Dollars in millions)
|
|
2018
|
|
2017
|
|
% Change
|
|
% Change Excluding Currency Changes
|
|
2018
|
|
2017
|
|
% Change
|
|
% Change Excluding Currency Changes
|
||||||||||||
Revenues
|
|
$
|
483
|
|
|
$
|
498
|
|
|
-3
|
%
|
|
-8
|
%
|
|
$
|
1,374
|
|
|
$
|
1,488
|
|
|
-8
|
%
|
|
-10
|
%
|
Earnings Before Interest and Taxes
|
|
$
|
69
|
|
|
$
|
109
|
|
|
-37
|
%
|
|
|
|
$
|
206
|
|
|
$
|
340
|
|
|
-39
|
%
|
|
|
|
|
Three Months Ended February 28,
|
|
Nine Months Ended February 28,
|
||||||||||||||||||
(Dollars in millions)
|
|
2018
|
|
2017
|
|
% Change
|
|
2018
|
|
2017
|
|
% Change
|
||||||||||
Revenues
|
|
$
|
6
|
|
|
$
|
11
|
|
|
—
|
|
|
$
|
18
|
|
|
$
|
79
|
|
|
—
|
|
(Loss) Before Interest and Taxes
|
|
$
|
(299
|
)
|
|
$
|
(119
|
)
|
|
151
|
%
|
|
$
|
(1,075
|
)
|
|
$
|
(478
|
)
|
|
125
|
%
|
•
|
a detrimental change of $59 million and $210 million for the third quarter and first nine months of fiscal 2018, respectively, related to the difference between actual foreign currency exchange rates and standard foreign currency exchange rates assigned to the NIKE Brand geographic operating segments and Converse, net of hedge gains and losses; these results are reported as a component of consolidated gross margin;
|
•
|
a detrimental change in net foreign currency gains and losses of $90 million and $208 million for the third quarter and first nine months of fiscal 2018, respectively, related to the re-measurement of monetary assets and liabilities denominated in non-functional currencies and the impact of certain foreign currency derivative instruments
,
reported as a component of consolidated
Other (income) expense, net
; and
|
•
|
an unfavorable change of $31 million for the third quarter of fiscal 2018, largely due to higher operating overhead expense; for the first nine months of fiscal 2018, an unfavorable change of $179 million, primarily due to higher operating overhead expense driven by one-time wage-related costs associated with our organizational realignment in the first half of fiscal 2018.
|
Foreign Currency Exposures and Hedging Practices
|
•
|
Product Costs — NIKE’s product costs are exposed to fluctuations in foreign currencies in the following ways:
|
1.
|
Product purchases denominated in currencies other than the functional currency of the transacting entity:
|
a.
|
Certain NIKE entities purchase product from the NTC, a wholly-owned sourcing hub that buys NIKE branded products from third-party factories, predominantly in U.S. Dollars. The NTC, whose functional currency is the U.S. Dollar, then sells the products to NIKE entities in their respective functional currencies. When the NTC sells to a NIKE entity with a different functional currency, the result is a foreign currency exposure for the NTC.
|
b.
|
Other NIKE entities purchase product directly from third-party factories in U.S. Dollars. These purchases generate a foreign currency exposure for those NIKE entities with a functional currency other than the U.S. Dollar.
|
2.
|
Factory input costs: NIKE operates a foreign currency adjustment program with certain factories. The program is designed to more effectively manage foreign currency risk by assuming certain of the factories’ foreign currency exposures, some of which are natural offsets to our existing foreign currency exposures. Under this program, our payments to these factories are adjusted for rate fluctuations in the basket of currencies (“factory currency exposure index”) in which the labor, materials and overhead costs incurred by the factories in the production of NIKE branded products (“factory input costs”) are denominated.
|
•
|
Non-Functional Currency Denominated External Sales — A portion of our NIKE Brand and Converse revenues associated with European operations are earned in currencies other than the Euro (e.g. the British Pound) but are recognized at a subsidiary that uses the Euro as its functional currency. These sales generate a foreign currency exposure.
|
•
|
Other Costs — Non-functional currency denominated costs, such as endorsement contracts, also generate foreign currency risk, though to a lesser extent. In certain cases, the Company has also entered into other contractual agreements which have payments that are indexed to foreign currencies and create embedded derivative contracts that are recorded at fair value through
Other (income) expense, net
.
Refer to
Note 9 — Risk Management and Derivatives
in the accompanying Notes to the Unaudited Condensed Consolidated Financial Statements for additional detail.
|
•
|
Non-Functional Currency Denominated Monetary Assets and Liabilities — Our global subsidiaries have various assets and liabilities, primarily receivables and payables, including intercompany receivables and payables, denominated in currencies other than their functional currencies. These balance sheet items are subject to re-measurement which may create fluctuations in
Other (income) expense, net
within our consolidated results of operations.
|
Liquidity and Capital Resources
|
Description of Commitment
|
|
Cash Payments Due During the Year Ending May 31,
|
||||||||||||||||||||||||||
(In millions)
|
|
Remainder of 2018
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
Thereafter
|
|
Total
|
||||||||||||||
Transition Tax Related to the Tax Act
(1)
|
|
$
|
—
|
|
|
$
|
108
|
|
|
$
|
108
|
|
|
$
|
108
|
|
|
$
|
108
|
|
|
$
|
918
|
|
|
$
|
1,350
|
|
(1)
|
Represents a provisional estimate of the future cash payments due as part of the transition tax on deemed repatriation of undistributed earnings of foreign subsidiaries, which is reflected net of foreign tax credits we expect to utilize. Actual amounts could vary as we complete our analysis of the Tax Act. Refer to
Note 6 — Income Taxes
in the accompanying Notes to the Unaudited Condensed Consolidated Financial Statements for further information.
|
New Accounting Pronouncements
|
Critical Accounting Policies
|
Period
|
|
Total Number of Shares Purchased
|
|
Average Price Paid per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
|
Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs
(In millions)
|
||||||
December 1 — December 31, 2017
|
|
530,869
|
|
|
$
|
59.97
|
|
|
530,869
|
|
|
$
|
5,779
|
|
January 1 — January 31, 2018
|
|
6,451,969
|
|
|
$
|
65.49
|
|
|
6,451,969
|
|
|
$
|
5,357
|
|
February 1 — February 28, 2018
|
|
7,620,000
|
|
|
$
|
66.60
|
|
|
7,620,000
|
|
|
$
|
4,849
|
|
|
|
14,602,838
|
|
|
$
|
65.87
|
|
|
14,602,838
|
|
|
|
|
|
|
3.1
|
|
|
3.2
|
|
|
4.1
|
|
|
4.2
|
|
|
4.3
|
|
|
10.1
|
|
|
10.2
|
|
|
31.1†
|
|
|
31.2†
|
|
|
32.1†
|
|
|
32.2†
|
|
|
101.INS
|
|
XBRL Instance Document.
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document.
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document.
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
†
|
Furnished herewith
|
*
|
Management contract or compensatory plan or arrangement.
|
|
|
|
NIKE, Inc.
an Oregon Corporation
|
|
|
|
/S/ ANDREW CAMPION
|
|
Andrew Campion
Chief Financial Officer and Authorized Officer
|
1 Year Nike Chart |
1 Month Nike Chart |
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