# LongBench v2 / 66f41108821e116aacb30c41

task_id: 63fbcfdf-0fc8-5d1d-b3b8-84dff36ed4c7
task_key: train--66f41108821e116aacb30c41
task_revision_id: 3

{"choice_A":"2%","choice_B":"1%","choice_C":"3%","choice_D":"4%","context":"FORM 10-K \n(Mark One)\n☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934\nFOR THE FISCAL YEAR ENDED MAY 31, 2023 \nOR\n☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934\nFOR THE TRANSITION PERIOD FROM\nTO\n.\nCommission File No. 1-10635 \nNIKE, Inc. \n(Exact name of Registrant as specified in its charter)\nOregon\n93-0584541\n(State or other jurisdiction of incorporation)\n(IRS Employer Identification No.)\nOne Bowerman Drive, Beaverton, Oregon 97005-6453 \n(Address of principal executive offices and zip code)\n(503) 671-6453 \n(Registrant's telephone number, including area code)\nSECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:\nClass B Common Stock\nNKE\nNew York Stock Exchange\n(Title of each class)\n(Trading symbol)\n(Name of each exchange on which registered)\nSECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:\nNONE\nIndicate by check mark:\nYES\nNO\n• if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.\nþ\n¨\n• if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.\n¨\nþ\n• whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities \nExchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required \nto file such reports), and (2) has been subject to such filing requirements for the past 90 days.\nþ\n¨\n• whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to \nRule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period \nthat the registrant was required to submit such files).\nþ\n¨\n• whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth \ncompany. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of \nthe Exchange Act.\nLarge accelerated filer\nþ\nAccelerated filer ☐\nNon-accelerated filer ☐\nSmaller reporting company ☐\nEmerging growth company ☐\n• if an emerging growth company, if the registrant has elected not to use the extended transition period for \ncomplying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the \nExchange Act.\n¨\n• whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of \nits internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by \nthe registered public accounting firm that prepared or issued its audit report.\nþ\n• if securities are registered pursuant to Section 12(b) of the Act, whether the financial statements of the registrant \nincluded in the filing reflect the correction of an error to previously issued financial statements. \n¨\n• whether any of those error corrections are restatements that required a recovery analysis of incentive-based \ncompensation received by any of the registrant's executive officers during the relevant recovery period pursuant to \n§ 240.10D-1(b). \n¨\n• whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).\n☐\nþ\nAs of November 30, 2022, the aggregate market values of the Registrant's Common Stock held by non-affiliates were:\nClass A\n$ \n7,831,564,572 \nClass B\n136,467,702,472 \n$ \n144,299,267,044 \n\n\nAs of July 12, 2023, the number of shares of the Registrant's Common Stock outstanding were:\nClass A\n \n304,897,252 \nClass B\n \n1,225,074,356 \n \n1,529,971,608 \nDOCUMENTS INCORPORATED BY REFERENCE:\nParts of Registrant's Proxy Statement for the Annual Meeting of Shareholders to be held on September 12, 2023, are incorporated by reference into Part III \nof this report.\n\n\nNIKE, INC.\nANNUAL REPORT ON FORM 10-K\nTABLE OF CONTENTS\nPAGE\nPART I\n1\nITEM 1.\nBusiness\n1\nGeneral\n1\nProducts\n1\nSales and Marketing\n2\nOur Markets\n2\nSignificant Customer\n3\nProduct Research, Design and Development\n3\nManufacturing\n3\nInternational Operations and Trade\n4\nCompetition\n5\nTrademarks and Patents\n5\nHuman Capital Resources\n6\nAvailable Information and Websites\n7\nInformation about our Executive Officers\n8\nITEM 1A.\nRisk Factors\n9\nITEM 1B.\nUnresolved Staff Comments\n24\nITEM 2.\nProperties\n24\nITEM 3.\nLegal Proceedings\n24\nITEM 4.\nMine Safety Disclosures\n24\nPART II\n25\nITEM 5.\nMarket for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities\n25\nITEM 6.\nReserved\n27\nITEM 7.\nManagement's Discussion and Analysis of Financial Condition and Results of Operations\n28\nITEM 7A.\nQuantitative and Qualitative Disclosures about Market Risk\n49\nITEM 8.\nFinancial Statements and Supplementary Data\n51\nITEM 9.\nChanges in and Disagreements with Accountants on Accounting and Financial Disclosure\n91\nITEM 9A.\nControls and Procedures\n91\nITEM 9B.\nOther Information\n91\nITEM 9C.\nDisclosure Regarding Foreign Jurisdictions that Prevent Inspections\n91\nPART III\n92\n(Except for the information set forth under “Information about our Executive Officers” in Item 1 above, Part III is \nincorporated by reference from the Proxy Statement for the NIKE, Inc. 2023 Annual Meeting of Shareholders.)\nITEM 10.\nDirectors, Executive Officers and Corporate Governance\n92\nITEM 11.\nExecutive Compensation\n92\nITEM 12.\nSecurity Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters\n92\nITEM 13.\nCertain Relationships and Related Transactions and Director Independence\n92\nITEM 14.\nPrincipal Accountant Fees and Services\n92\nPART IV\n93\nITEM 15.\nExhibits and Financial Statement Schedules\n93\nITEM 16.\nForm 10-K Summary\n97\nSignatures\n99\n  \n\n\nPART I\nITEM 1. BUSINESS\nGENERAL\nNIKE, Inc. was incorporated in 1967 under the laws of the State of Oregon. As used in this Annual Report on Form 10-K (this \n\"Annual Report\"), the terms \"we,\" \"us,\" \"our,\" \"NIKE\" and the \"Company\" refer to NIKE, Inc. and its predecessors, subsidiaries \nand affiliates, collectively, unless the context indicates otherwise.\nOur principal business activity is the design, development and worldwide marketing and selling of athletic footwear, apparel, \nequipment, accessories and services. NIKE is the largest seller of athletic footwear and apparel in the world. We sell our products \nthrough NIKE Direct operations, which are comprised of both NIKE-owned retail stores and sales through our digital platforms \n(also referred to as \"NIKE Brand Digital\"), to retail accounts and to a mix of independent distributors, licensees and sales \nrepresentatives in nearly all countries around the world. We also offer interactive consumer services and experiences through our \ndigital platforms. Nearly all of our products are manufactured by independent contractors. Nearly all footwear and apparel \nproducts are manufactured outside the United States, while equipment products are manufactured both in the United States and \nabroad.\nAll references to fiscal 2023, 2022, 2021 and 2020 are to NIKE, Inc.'s fiscal years ended May 31, 2023, 2022, 2021 and 2020, \nrespectively. Any references to other fiscal years refer to a fiscal year ending on May 31 of that year.\nPRODUCTS\nOur NIKE Brand product offerings are aligned around our consumer construct focused on Men's, Women's and Kids'. We also \ndesign products specifically for the Jordan Brand and Converse. We believe this approach allows us to create products that \nbetter meet individual consumer needs while accelerating our largest growth opportunities.\nNIKE's athletic footwear products are designed primarily for specific athletic use, although a large percentage of the products are \nworn for casual or leisure purposes. We place considerable emphasis on innovation and high-quality construction in the \ndevelopment and manufacturing of our products. Our Men's, Women's and Jordan Brand footwear products currently lead in \nfootwear sales and we expect them to continue to do so.\nWe also sell sports apparel, which features the same trademarks and are sold predominantly through the same marketing and \ndistribution channels as athletic footwear. Our sports apparel, similar to our athletic footwear products, is designed primarily for \nathletic use, although many of the products are worn for casual or leisure purposes, and demonstrates our commitment to \ninnovation and high-quality construction. Our Men's and Women's apparel products currently lead in apparel sales and we expect \nthem to continue to do so. We often market footwear, apparel and accessories in \"collections\" of similar use or by category. We \nalso market apparel with licensed college and professional team and league logos.\nWe sell a line of performance equipment and accessories under the NIKE Brand name, including bags, socks, sport balls, \neyewear, timepieces, digital devices, bats, gloves, protective equipment and other equipment designed for sports activities. We \nalso sell small amounts of various plastic products to other manufacturers through our wholly-owned subsidiary, NIKE IHM, Inc., \ndoing business as Air Manufacturing Innovation.\nOur Jordan Brand designs, distributes and licenses athletic and casual footwear, apparel and accessories predominantly focused \non basketball performance and culture using the Jumpman trademark. Sales and operating results for Jordan Brand products are \nreported within the respective NIKE Brand geographic operating segments.\nOur wholly-owned subsidiary brand, Converse, headquartered in Boston, Massachusetts, designs, distributes and licenses \ncasual sneakers, apparel and accessories under the Converse, Chuck Taylor, All Star, One Star, Star Chevron and Jack Purcell \ntrademarks. Operating results of the Converse brand are reported on a stand-alone basis.\nIn addition to the products we sell to our wholesale customers and directly to consumers through our NIKE Direct operations, we \nhave also entered into license agreements that permit unaffiliated parties to manufacture and sell, using NIKE-owned trademarks, \ncertain apparel, digital devices and applications and other equipment designed for sports activities.\n2023 FORM 10-K   1    \n\n\nWe also offer interactive consumer services and experiences as well as digital products through our digital platforms, including \nfitness and activity apps; sport, fitness and wellness content; and digital services and features in retail stores that enhance the \nconsumer experience.\nSALES AND MARKETING\nWe experience moderate fluctuations in aggregate sales volume during the year. Historically, revenues in the first and fourth \nfiscal quarters have slightly exceeded those in the second and third fiscal quarters. However, the mix of product sales may vary \nconsiderably as a result of changes in seasonal and geographic demand for particular types of footwear, apparel and equipment, \nas well as other macroeconomic, strategic, operating and logistics-related factors.\nBecause NIKE is a consumer products company, the relative popularity and availability of various sports and fitness activities, as \nwell as changing design trends, affect the demand for our products. We must, therefore, respond to trends and shifts in consumer \npreferences by adjusting the mix of existing product offerings, developing new products, styles and categories and influencing \nsports and fitness preferences through extensive marketing. Failure to respond in a timely and adequate manner could have a \nmaterial adverse effect on our sales and profitability. This is a continuing risk. Refer to Item 1A. Risk Factors.\nOUR MARKETS\nWe report our NIKE Brand operations based on our internal geographic organization. Each NIKE Brand geographic segment \noperates predominantly in one industry: the design, development, marketing and selling of athletic footwear, apparel and \nequipment. The Company's reportable operating segments for the NIKE Brand are: North America; Europe, Middle East & Africa \n(\"EMEA\"); Greater China; and Asia Pacific & Latin America (\"APLA\"), and include results for the NIKE and Jordan brands. Sales \nthrough our NIKE Direct operations are managed within each geographic operating segment.\nConverse is also a reportable operating segment and operates predominately in one industry: the design, marketing, licensing \nand selling of casual sneakers, apparel and accessories. Converse direct to consumer operations, including digital commerce, \nare reported within the Converse operating segment results.\nUNITED STATES MARKET\nFor fiscal 2023, NIKE Brand and Converse sales in the United States accounted for approximately 43% of total revenues, \ncompared to 40% and 39% for fiscal 2022 and fiscal 2021, respectively. We sell our products to thousands of retail accounts in \nthe United States, including a mix of footwear stores, sporting goods stores, athletic specialty stores, department stores, skate, \ntennis and golf shops and other retail accounts. In the United States, we utilize NIKE sales offices to solicit such sales. During \nfiscal 2023, our three largest United States customers accounted for approximately 22% of sales in the United States.\nOur NIKE Direct and Converse direct to consumer operations sell our products to consumers through various digital platforms. In \naddition, our NIKE Direct and Converse direct to consumer operations sell products through the following number of retail stores \nin the United States:\nU.S. RETAIL STORES\nNUMBER\nNIKE Brand factory stores\n \n213 \nNIKE Brand in-line stores (including employee-only stores)\n \n74 \nConverse stores (including factory stores)\n \n82 \nTOTAL\n \n369 \nIn the United States, NIKE has eight significant distribution centers. Refer to Item 2. Properties for further information.\nNIKE, INC. \n \n     \n2\n\n\nINTERNATIONAL MARKETS\nFor fiscal 2023, non-U.S. NIKE Brand and Converse sales accounted for approximately 57% of total revenues, compared to 60% \nand 61% for fiscal 2022 and fiscal 2021, respectively. We sell our products to retail accounts through our own NIKE Direct \noperations and through a mix of independent distributors, licensees and sales representatives around the world. We sell to \nthousands of retail accounts and ship products from 67 distribution centers outside of the United States. Refer to Item 2. \nProperties for further information on distribution facilities outside of the United States. During fiscal 2023, NIKE's three largest \ncustomers outside of the United States accounted for approximately 14% of total non-U.S. sales.\nIn addition to NIKE-owned and Converse-owned digital commerce platforms in over 40 countries, our NIKE Direct and Converse \ndirect to consumer businesses operate the following number of retail stores outside the United States:\nNON-U.S. RETAIL STORES\nNUMBER\nNIKE Brand factory stores\n \n560 \nNIKE Brand in-line stores (including employee-only stores)\n \n49 \nConverse stores (including factory stores)\n \n54 \nTOTAL\n \n663 \nSIGNIFICANT CUSTOMER\nNo customer accounted for 10% or more of our consolidated net Revenues during fiscal 2023.\nPRODUCT RESEARCH, DESIGN AND DEVELOPMENT\nWe believe our research, design and development efforts are key factors in our success. Technical innovation in the design and \nmanufacturing process of footwear, apparel and athletic equipment receives continued emphasis as we strive to produce \nproducts that help to enhance athletic performance, reduce injury and maximize comfort, while decreasing our environmental \nimpact.\nIn addition to our own staff of specialists in the areas of biomechanics, chemistry, exercise physiology, engineering, digital \ntechnologies, industrial design, sustainability and related fields, we also utilize research committees and advisory boards made \nup of athletes, coaches, trainers, equipment managers, orthopedists, podiatrists, physicians and other experts who consult with \nus and review certain designs, materials and concepts for product and manufacturing, design and other process improvements \nand compliance with product safety regulations around the world. Employee athletes, athletes engaged under sports marketing \ncontracts and other athletes wear-test and evaluate products during the design and development process.\nAs we continue to develop new technologies, we are simultaneously focused on the design of innovative products and \nexperiences incorporating such technologies throughout our product categories and consumer applications. Using market \nintelligence and research, our various design teams identify opportunities to leverage new technologies in existing categories to \nrespond to consumer preferences. The proliferation of Nike Air, Zoom, Free, Dri-FIT, Flyknit, FlyEase, ZoomX, Air Max, React and \nForward technologies, among others, typifies our dedication to designing innovative products.\nMANUFACTURING\nNearly all of our footwear and apparel products are manufactured outside the United States by independent manufacturers \n(\"contract manufacturers\"), many of which operate multiple factories. We are also supplied, primarily indirectly, by a number of \nmaterials, or \"Tier 2\" suppliers, who provide the principal materials used in footwear and apparel finished goods products. As of \nMay 31, 2023, we had 146 strategic Tier 2 suppliers.\nAs of May 31, 2023, our contract manufacturers operated 123 finished goods footwear factories located in 11 countries. For fiscal \n2023, NIKE Brand footwear finished goods were manufactured by 15 contract manufacturers, many of which operate multiple \nfactories. The largest single finished goods footwear factory accounted for approximately 9% of total fiscal 2023 NIKE Brand \nfootwear production. For fiscal 2023, factories in Vietnam, Indonesia and China manufactured approximately 50%, 27% and 18% \nof total NIKE Brand footwear, respectively. For fiscal 2023, four footwear contract manufacturers each accounted for greater than \n10% of footwear production and in the aggregate accounted for approximately 58% of NIKE Brand footwear production.\nAs of May 31, 2023, our contract manufacturers operated 291 finished goods apparel factories located in 31 countries. For fiscal \n2023, NIKE Brand apparel finished goods were manufactured by 55 contract manufacturers, many of which operate multiple \nfactories. The largest single finished goods apparel factory accounted for approximately 8% of total fiscal 2023 NIKE Brand \napparel production. For fiscal 2023, factories in Vietnam, China and Cambodia manufactured approximately 29%, 18% and 16% \n2023 FORM 10-K   3    \n\n\nof total NIKE Brand apparel, respectively. For fiscal 2023, one apparel contract manufacturer accounted for more than 10% of \napparel production, and the top five contract manufacturers in the aggregate accounted for approximately 52% of NIKE Brand \napparel production.\nNIKE's contract manufacturers buy raw materials for the manufacturing of our footwear, apparel and equipment products. Most \nraw materials are available and purchased by those contract manufacturers in the countries where manufacturing takes place. \nThe principal materials used in our footwear products are natural and synthetic rubber, plastic compounds, foam cushioning \nmaterials, natural and synthetic leather, nylon, polyester and natural fiber textiles, as well as polyurethane films used to make \nNIKE Air-Sole cushioning components. During fiscal 2023, Air Manufacturing Innovation, a wholly-owned subsidiary, with facilities \nnear Beaverton, Oregon, in Dong Nai Province, Vietnam, and St. Charles, Missouri, as well as contract manufacturers in China \nand Vietnam, were our suppliers of NIKE Air-Sole cushioning components used in footwear.\nThe principal materials used in our apparel products are natural and synthetic fabrics, yarns and threads (both virgin and \nrecycled); specialized performance fabrics designed to efficiently wick moisture away from the body, retain heat and repel rain \nand/or snow; and plastic and metal hardware. \nIn fiscal 2023, we experienced ongoing supply chain volatility during the first part of the year, which improved gradually during the \ncourse of the year. We also experienced higher supply chain network costs primarily due to inflationary pressures during the year. \nDespite competition for certain materials during fiscal 2023, contract manufacturers were able to source sufficient quantities of \nraw materials for use in our footwear and apparel products. Refer to Item 1A. Risk Factors, for additional discussion of the impact \nof sourcing risks on our business.\nSince 1972, Sojitz Corporation of America (\"Sojitz America\"), a large Japanese trading company and the sole owner of our \nredeemable preferred stock, has performed import-export financing services for us.\nINTERNATIONAL OPERATIONS AND TRADE\nOur international operations and sources of supply are subject to the usual risks of doing business abroad, such as the \nimplementation of, or potential changes in, foreign and domestic trade policies, increases in import duties, anti-dumping \nmeasures, quotas, safeguard measures, trade restrictions, restrictions on the transfer of funds and, in certain parts of the world, \npolitical tensions, instability, conflicts, nationalism and terrorism, and resulting sanctions and other measures imposed in \nresponse to such issues. We have not, to date, been materially affected by any such risk but cannot predict the likelihood of such \nmaterial effects occurring in the future.\nIn recent years, uncertain global and regional economic and political conditions have affected international trade and increased \nprotectionist actions around the world. These trends are affecting many global manufacturing and service sectors, and the \nfootwear and apparel industries, as a whole, are not immune. Companies in our industry are facing trade protectionism in many \ndifferent regions, and, in nearly all cases, we are working together with industry groups to address trade issues and reduce the \nimpact to the industry, while observing applicable competition laws. Notwithstanding our efforts, protectionist measures have \nresulted in increases in the cost of our products, and additional measures, if implemented, could adversely affect sales and/or \nprofitability for NIKE, as well as the imported footwear and apparel industry as a whole.\nWe monitor protectionist trends and developments throughout the world that may materially impact our industry, and we engage \nin administrative and judicial processes to mitigate trade restrictions. We are actively monitoring actions that may result in \nadditional anti-dumping measures and could affect our industry. We are also monitoring for and advocating against other \nimpediments that may limit or delay customs clearance for imports of footwear, apparel and equipment. NIKE also advocates for \ntrade liberalization for footwear and apparel in a number of bilateral and multilateral free trade agreements. Changes in, and \nresponses to, U.S. trade policies, including the imposition of tariffs or penalties on imported goods or retaliatory measures by \nother countries, have negatively affected, and could in the future negatively affect, U.S. corporations, including NIKE, with \nbusiness operations and/or consumer markets in those countries, which could also make it necessary for us to change the way \nwe conduct business, either of which may have an adverse effect on our business, financial condition or our results of operations. \nIn addition, with respect to proposed trade restrictions, we work with a broad coalition of global businesses and trade \nassociations representing a wide variety of sectors to help ensure that any legislation enacted and implemented (i) addresses \nlegitimate and core concerns, (ii) is consistent with international trade rules and (iii) reflects and considers domestic economies \nand the important role they may play in the global economic community.\nWhere trade protection measures are implemented, we believe we have the ability to develop, over a period of time, adequate \nalternative sources of supply for the products obtained from our present suppliers. If events prevented us from acquiring products \nfrom our suppliers in a particular country, our operations could be temporarily disrupted and we could experience an adverse \nfinancial impact. However, we believe we could abate any such disruption, and that much of the adverse impact on supply would, \ntherefore, be of a short-term nature, although alternate sources of supply might not be as cost-effective and could have an \nongoing adverse impact on profitability.\nNIKE, INC.       \n4\n\n\nOur international operations are also subject to compliance with the U.S. Foreign Corrupt Practices Act (the \"FCPA\"), and other \nanti-bribery laws applicable to our operations. We source a significant portion of our products from, and have important consumer \nmarkets, outside of the United States. We have an ethics and compliance program to address compliance with the FCPA and \nsimilar laws by us, our employees, agents, suppliers and other partners. Refer to Item 1A. Risk Factors for additional information \non risks relating to our international operations.\nCOMPETITION\nThe athletic footwear, apparel and equipment industry is highly competitive on a worldwide basis. We compete internationally with \na significant number of athletic and leisure footwear companies, athletic and leisure apparel companies, sports equipment \ncompanies and large companies having diversified lines of athletic and leisure footwear, apparel and equipment, including \nadidas, Anta, ASICS, Li Ning, lululemon athletica, New Balance, Puma, Under Armour and V.F. Corporation, among others. The \nintense competition and the rapid changes in technology and consumer preferences in the markets for athletic and leisure \nfootwear and apparel and athletic equipment constitute significant risk factors in our operations. Refer to Item 1A. Risk Factors \nfor additional information.\nNIKE is the largest seller of athletic footwear and apparel in the world. Important aspects of competition in this industry are:\n• Product attributes such as quality; performance and reliability; new product style, design, innovation and development; as \nwell as consumer price/value.\n• Consumer connection, engagement and affinity for brands and products, developed through marketing, promotion and \ndigital experiences; social media interaction; customer support and service; identification with prominent and influential \nathletes, influencers, public figures, coaches, teams, colleges and sports leagues who endorse our brands and use our \nproducts and active engagement through sponsored sporting events and clinics. \n• Effective sourcing and distribution of products, with attractive merchandising and presentation at retail, both in-store and on \ndigital platforms.\nWe believe that we are competitive in all of these areas.\nTRADEMARKS AND PATENTS\nWe believe that our intellectual property rights are important to our brand, our success and our competitive position. We \nstrategically pursue available protections of these rights and vigorously protect them against third-party theft and infringement.\nWe use trademarks on nearly all of our products and packaging, and in our marketing materials, and believe having distinctive \nmarks that are readily identifiable is an important factor in creating a market for our goods, in identifying our brands and the \nCompany, and in distinguishing our goods from the goods of others. We consider our NIKE and Swoosh Design trademarks to be \namong our most valuable assets and we have registered these trademarks in over 190 jurisdictions worldwide. In addition, we \nown many other trademarks that we use in marketing our products. We own common law rights in the trade dress of several \ndistinctive shoe designs and elements. For certain trade dress, we have sought and obtained trademark registrations.\nWe have copyright protection in our designs, graphics, software applications, digital goods and other original works. When \nappropriate, we also obtain registered copyrights.\nWe file for, own and maintain many U.S. and foreign utility and design patents protecting components, technologies, materials, \nmanufacturing techniques, features, functionality, and industrial designs used in and for the manufacture of various athletic, \nperformance, and leisure footwear and apparel, including physical and digital versions thereof, athletic equipment, and digital \ndevices, and related software applications. These patents expire at various times.\nWe believe our success depends upon our capabilities in areas such as design, research and development, production and \nmarketing and is supported and protected by our intellectual property rights, such as trademarks, utility and design patents, \ncopyrights, and trade secrets, among others. \nWe have followed a policy of applying for and registering intellectual property rights in the United States and select foreign \ncountries on trademarks, inventions, innovations and designs that we deem valuable. We also continue to vigorously protect our \nintellectual property, including trademarks, patents and trade secrets against third-party infringement and misappropriation.\n2023 FORM 10-K   5    \n\n\nHUMAN CAPITAL RESOURCES\nAt NIKE, we consider the strength and effective management of our workforce to be essential to the ongoing success of our \nbusiness. We believe that it is important to attract, develop and retain a diverse and engaged workforce at all levels of our \nbusiness and that such a workforce fosters creativity and accelerates innovation. We are focused on building an increasingly \ndiverse talent pipeline that reflects our consumers, athletes and the communities we serve.\nCULTURE \nEach employee shapes NIKE's culture through behaviors and practices. This starts with our Maxims, which represent our core \nvalues and, along with our Code of Conduct, feature the fundamental behaviors that help anchor, inform and guide us and apply \nto all employees. Our mission is to bring inspiration and innovation to every athlete in the world, which includes the belief that if \nyou have a body, you are an athlete. We aim to do this by creating groundbreaking sport innovations, making our products more \nsustainably, building a creative and diverse global team, supporting the well-being of our employees and making a positive impact \nin communities where we live and work. Our mission is aligned with our deep commitment to maintaining an environment where \nall NIKE employees have the opportunity to reach their full potential, to connect to our brands and to shape our workplace \nculture. We believe providing for growth and retention of our employees is essential in fostering such a culture and are dedicated \nto giving access to training programs and career development opportunities, including trainings on NIKE's values, history and \nbusiness, trainings on developing leadership skills at all levels, tools and resources for managers and qualified tuition \nreimbursement opportunities. \nAs part of our commitment to empowering our employees to help shape our culture, we source employee feedback through our \nEngagement Survey program, including several corporate pulse surveys. The program provides every employee throughout the \nglobe an opportunity to provide confidential feedback on key areas known to drive employee engagement, including their \nsatisfaction with their managers, their work and the Company generally. The program also measures our employees’ emotional \ncommitment to NIKE as well as NIKE's culture of diversity, equity and inclusion. NIKE also provides multiple points of contact for \nemployees to speak up if they experience something that does not align with our values or otherwise violates our workplace \npolicies, even if they are uncertain what they observed or heard is a violation of company policy.\nAs part of our commitment to make a positive impact on our communities, we maintain a goal of investing 2% of our prior fiscal \nyear's pre-tax income into global communities. The focus of this investment continues to be inspiring kids to be active through \nplay and sport as well as uniting and inspiring communities to create a better and more equitable future for all. Our community \ninvestments are an important part of our culture in that we also support employees in giving back to community organizations \nthrough donations and volunteering, which are matched by the NIKE Foundation where eligible.\nEMPLOYEE BASE\nAs of May 31, 2023, we had approximately 83,700 employees worldwide, including retail and part-time employees. We also \nutilize independent contractors and temporary personnel to supplement our workforce.\nNone of our employees are represented by a union, except certain employees in the EMEA and APLA geographies are members \nof and/or represented by trade unions, as allowed or required by local law and/or collective bargaining agreements. Also, in some \ncountries outside of the United States, local laws require employee representation by works councils (which may be entitled to \ninformation and consultation on certain subsidiary decisions) or by organizations similar to a union. In certain European countries, \nwe are required by local law to enter into, and/or comply with, industry-wide or national collective bargaining agreements. NIKE \nhas never experienced a material interruption of operations due to labor disagreements.\nDIVERSITY, EQUITY AND INCLUSION\nDiversity, equity and inclusion (\"DE&I\") is a strategic priority for NIKE and we are committed to having an increasingly diverse \nteam and culture. We aim to foster an inclusive and accessible workplace through recruitment, development and retention of \ndiverse talent with the goal of expanding representation across all dimensions of diversity over the long term. We remain \ncommitted to the targets announced in fiscal 2021 for the Company to work toward by fiscal 2025, including increasing \nrepresentation of women in our global corporate workforce and leadership positions, as well as increasing representation of U.S. \nracial and ethnic minorities in our U.S. corporate workforce and at the Director level and above. \nWe continue to enhance our efforts to recruit diverse talent through our traditional channels and through initiatives, such as \npartnerships with athletes and sports-related organizations to create apprenticeship programs and new partnerships with \norganizations, colleges and universities that serve diverse populations. Additionally, we are prioritizing DE&I education so that all \nNIKE employees and leaders have the cultural awareness and understanding to lead inclusively and build diverse and inclusive \nteams. We also have Employee Networks, collectively known as NikeUNITED, representing various employee groups.\nNIKE, INC.       \n6\n\n\nOur DE&I focus extends beyond our workforce and includes our communities, which we support in a number of ways. We have \ncommitted to investments that aim to address racial inequality and improve diversity and representation in our communities. We \nalso are leveraging our global scale to accelerate business diversity, including investing in business training programs for women \nand increasing the proportion of services supplied by minority-owned businesses.\nCOMPENSATION AND BENEFITS \nNIKE's total rewards are intended to be competitive and equitable, meet the diverse needs of our global teammates and reinforce \nour values. We are committed to providing comprehensive, competitive and equitable pay and benefits to our employees, and we \nhave invested, and aim to continue to invest, in our employees through growth and development and holistic well-being \ninitiatives. Our initiatives in this area include: \n• We are committed to competitive pay and to reviewing our pay and promotion practices annually. \n• We have an annual company bonus plan and a retail-focused bonus plan applicable to all eligible employees. Both programs \nare focused on rewarding employees for company performance, which we believe reinforces our culture and rewards \nbehaviors that support collaboration and teamwork.\n• We provide comprehensive family care benefits in the U.S. and globally where practicable, including family planning \ncoverage, backup care and child/elder care assistance as well as an income-based childcare subsidy for eligible employees. \n• Our Military Leave benefit provides up to 12 weeks of paid time off every 12 months.\n• We offer free access to our Sport Centers at our world headquarters for our full-time employees and North America store \nemployees.\n• We provide employees free access to mindfulness and meditation resources, as well as live classes through our Sport \nCenters.\n• We provide all employees and their families globally with free and confidential visits with a mental health counselor through a \nthird-party provider and our global Employee Assistance Program (EAP).\n• We provide support to our employees in a variety of ways during times of crisis, including pay continuity under certain \ncircumstances, our natural disaster assistance program, and ongoing support for challenges related to the COVID-19 \npandemic.\n• We provide a hybrid work approach for the majority of employees, as well as a Four Week Flex, which provides employees \nan opportunity to work from a location of their choice for up to four weeks per year.\n• We offer a Well-Being Week where we close our corporate offices for a full-week in the summer and Well-Being Days for our \nteammates in our retail stores and distribution centers, and encourage our teammates to focus on their well-being.\n• We provide inclusive family planning benefits and transgender healthcare coverage for eligible employees covered on the \nU.S. Health Plan, including access to both restorative services and personal care.\n• We provide all U.S. employees with unlimited free financial coaching through a third-party provider.\nAdditional information related to our human capital strategy can be found in our FY22 NIKE, Inc. Impact Report, which is \navailable on the Impact section of about.nike.com. Information contained on or accessible through our websites is not \nincorporated into, and does not form a part of, this Annual Report or any other report or document we file with the SEC, and any \nreferences to our websites are intended to be inactive textual references only.\nAVAILABLE INFORMATION AND WEBSITES\nOur NIKE digital commerce website is located at www.nike.com. On our NIKE corporate website, located at investors.nike.com, \nwe post the following filings as soon as reasonably practicable after they are electronically filed with, or furnished to, the United \nStates Securities and Exchange Commission (the \"SEC\"): our annual report on Form 10-K, our quarterly reports on Form 10-Q, \nour current reports on Form 8-K and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the \nSecurities and Exchange Act of 1934, as amended. Our proxy statements are also posted on our corporate website. All such \nfilings on our corporate website are available free of charge. Copies of these filings are also available on the SEC's website at \nwww.sec.gov. Also available on our corporate website are the charters of the committees of our Board of Directors, as well as our \ncorporate governance guidelines and code of ethics. Copies of any of these documents will be provided in print to any \nshareholder who submits a request in writing to NIKE Investor Relations, One Bowerman Drive, Beaverton, Oregon 97005-6453. \nInformation contained on or accessible through our website is not incorporated into, and does not form a part of, this Annual \nReport or any other report or document we file with the SEC, and any references to our website are intended to be inactive \ntextual references only.\n2023 FORM 10-K   7    \n\n\nINFORMATION ABOUT OUR EXECUTIVE OFFICERS\nThe executive officers of NIKE, Inc. as of July 20, 2023, are as follows:\nMark G. Parker, Executive Chairman — Mr. Parker, 67, is Executive Chairman of the Board of Directors \nand served as President and Chief Executive Officer from 2006 - January 2020. He has been employed \nby NIKE since 1979 with primary responsibilities in product research, design and development, \nmarketing and brand management. Mr. Parker was appointed divisional Vice President in charge of \nproduct development in 1987, corporate Vice President in 1989, General Manager in 1993, Vice \nPresident of Global Footwear in 1998 and President of the NIKE Brand in 2001.\nJohn J. Donahoe II, President and Chief Executive Officer — Mr. Donahoe, 63, was appointed \nPresident and Chief Executive Officer in January 2020 and has been a director since 2014. He brings \nexpertise in digital commerce, technology and global strategy. He previously served as President and \nChief Executive Officer at ServiceNow, Inc. Prior to joining ServiceNow, Inc., he served as President and \nChief Executive Officer of eBay, Inc. He also held leadership roles at Bain & Company for two decades.\nMatthew Friend, Executive Vice President and Chief Financial Officer — Mr. Friend, 45, joined NIKE in \n2009 and leads the Company's finance, demand & supply management, procurement and global places \n& services organizations. He joined NIKE as Senior Director of Corporate Strategy and Development, \nand was appointed Chief Financial Officer of Emerging Markets in 2011. In 2014, Mr. Friend was \nappointed Chief Financial Officer of Global Categories, Product and Functions, and was subsequently \nappointed Chief Financial Officer of the NIKE Brand in 2016. He was also appointed Vice President of \nInvestor Relations in 2019. Mr. Friend was appointed as Executive Vice President and Chief Financial \nOfficer of NIKE, Inc. in April 2020. Prior to joining NIKE, he worked in the financial industry including \nroles as VP of investment banking and mergers and acquisitions at Goldman Sachs and Morgan \nStanley.\nMonique S. Matheson, Executive Vice President, Chief Human Resources Officer — Ms. Matheson, \n56, joined NIKE in 1998, with primary responsibilities in the human resources function. She was \nappointed as Vice President and Senior Business Partner in 2011 and Vice President, Chief Talent and \nDiversity Officer in 2012. Ms. Matheson was appointed Executive Vice President, Global Human \nResources in 2017.\nAnn M. Miller, Executive Vice President, Chief Legal Officer — Ms. Miller, 49, joined NIKE in 2007 and \nserves as EVP, Chief Legal Officer for NIKE, Inc. In her capacity as Chief Legal Officer, she oversees all \nlegal, compliance, government & public affairs, social community impact, security, resilience and \ninvestigation matters of the Company. For the past six years, she served as Vice President, Corporate \nSecretary and Chief Ethics & Compliance Officer. She previously served as Converse's General \nCounsel, and brings more than 20 years of legal and business expertise to her role. Prior to joining \nNIKE, Ms. Miller worked at the law firm Sullivan & Cromwell.\nHeidi O'Neill, President, Consumer, Brand & Product — Ms. O'Neill, 58, joined NIKE in 1998 and leads \nthe integration of global Men's, Women's & Kids' consumer teams, the entire global product engine and \nglobal brand marketing and sports marketing to build deep storytelling, relationships and engagement \nwith the brand. Since joining NIKE, she has held a variety of key roles, including leading NIKE's \nmarketplace and four geographic operating regions, leading NIKE Direct and accelerating NIKE's retail \nand digital-commerce business and creating and leading NIKE's Women’s business. Prior to NIKE, Ms. \nO'Neill held roles at Levi Strauss & Company and Foote, Cone & Belding.\nCraig Williams, President, Geographies & Marketplace — Mr. Williams, 54, joined NIKE in 2019 and \nleads NIKE's four geographies and marketplace across the NIKE Direct and wholesale business. In \naddition, he leads the Supply Chain and Logistics organization. Mr. Williams joined NIKE as President of \nJordan Brand overseeing a team of designers, product developers, marketers and business leaders. \nPrior to NIKE, he was Senior Vice President, The Coca-Cola Co., and President of The McDonald's \nDivision (TMD) Worldwide. Mr. Williams has also held roles at CIBA Vision and Kraft Foods Inc., and \nserved five years in the U.S. Navy as a Naval Nuclear Power Officer.\nNIKE, INC.       \n8\n\n\nITEM 1A. RISK FACTORS\nSpecial Note Regarding Forward-Looking Statements and Analyst Reports\nCertain written and oral statements, other than purely historic information, including estimates, projections, statements relating to \nNIKE's business plans, objectives and expected operating or financial results and the assumptions upon which those statements \nare based, made or incorporated by reference from time to time by NIKE or its representatives in this Annual Report, other \nreports, filings with the SEC, press releases, conferences or otherwise, are \"forward-looking statements\" within the meaning of \nthe Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities Exchange Act of 1934, as amended. \nForward-looking statements include, without limitation, any statement that may predict, forecast, indicate or imply future results, \nperformance or achievements, and may contain the words \"believe,\" \"anticipate,\" \"expect,\" \"estimate,\" \"project,\" \"will be,\" \"will \ncontinue,\" \"will likely result\" or words or phrases of similar meaning. Forward-looking statements involve risks and uncertainties \nwhich may cause actual results to differ materially from the forward-looking statements. The risks and uncertainties are detailed \nfrom time to time in reports filed by NIKE with the SEC, including reports filed on Forms 8-K, 10-Q and 10-K, and include, among \nothers, the following: international, national and local political, civil, economic and market conditions, including high, and \nincreases in, inflation and interest rates; the size and growth of the overall athletic or leisure footwear, apparel and equipment \nmarkets; intense competition among designers, marketers, distributors and sellers of athletic or leisure footwear, apparel and \nequipment for consumers and endorsers; demographic changes; changes in consumer preferences; popularity of particular \ndesigns, categories of products and sports; seasonal and geographic demand for NIKE products; difficulties in anticipating or \nforecasting changes in consumer preferences, consumer demand for NIKE products and the various market factors described \nabove; our ability to execute on our sustainability strategy and achieve our sustainability-related goals and targets, including \nsustainable product offerings; difficulties in implementing, operating and maintaining NIKE's increasingly complex information \ntechnology systems and controls, including, without limitation, the systems related to demand and supply planning and inventory \ncontrol; interruptions in data and information technology systems; consumer data security; fluctuations and difficulty in forecasting \noperating results, including, without limitation, the fact that advance orders may not be indicative of future revenues due to \nchanges in shipment timing, the changing mix of orders with shorter lead times, and discounts, order cancellations and returns; \nthe ability of NIKE to sustain, manage or forecast its growth and inventories; the size, timing and mix of purchases of NIKE's \nproducts; increases in the cost of materials, labor and energy used to manufacture products; new product development and \nintroduction; the ability to secure and protect trademarks, patents and other intellectual property; product performance and \nquality; customer service; adverse publicity and an inability to maintain NIKE's reputation and brand image, including without \nlimitation, through social media or in connection with brand damaging events; the loss of significant customers or suppliers; \ndependence on distributors and licensees; business disruptions; increased costs of freight and transportation to meet delivery \ndeadlines; increases in borrowing costs due to any decline in NIKE's debt ratings; changes in business strategy or development \nplans; general risks associated with doing business outside of the United States, including, without limitation, exchange rate \nfluctuations, import duties, tariffs, quotas, sanctions, political and economic instability, conflicts and terrorism; the potential impact \nof new and existing laws, regulations or policy, including, without limitation, tariffs, import/export, trade, wage and hour or labor \nand immigration regulations or policies; changes in government regulations; the impact of, including business and legal \ndevelopments relating to, climate change, extreme weather conditions and natural disasters; litigation, regulatory proceedings, \nsanctions or any other claims asserted against NIKE; the ability to attract and retain qualified employees, and any negative public \nperception with respect to key personnel or our corporate culture, values or purpose; the effects of NIKE's decision to invest in or \ndivest of businesses or capabilities; health epidemics, pandemics and similar outbreaks, including the COVID-19 pandemic; and \nother factors referenced or incorporated by reference in this Annual Report and other reports.\nInvestors should also be aware that while NIKE does, from time to time, communicate with securities analysts, it is against NIKE's \npolicy to disclose to them any material non-public information or other confidential commercial information. Accordingly, \nshareholders should not assume that NIKE agrees with any statement or report issued by any analyst irrespective of the content \nof the statement or report. Furthermore, NIKE has a policy against confirming financial forecasts or projections issued by others. \nThus, to the extent that reports issued by securities analysts contain any projections, forecasts or opinions, such reports are not \nthe responsibility of NIKE.\nRisk Factors\nThe risks included here are not exhaustive. Other sections of this Annual Report may include additional factors which could \nadversely affect NIKE's business and financial performance. Moreover, NIKE operates in a very competitive and rapidly changing \nenvironment. New risks emerge from time to time and it is not possible for management to predict all such risks, nor can it assess \nthe impact of all such risks on NIKE's business or the extent to which any risk, or combination of risks, may cause actual results \nto differ materially from those contained in any forward-looking statements. Given these risks and uncertainties, investors should \nnot place undue reliance on forward-looking statements as a prediction of actual results.\n2023 FORM 10-K   9    \n\n\nEconomic and Industry Risks\nGlobal economic conditions could have a material adverse effect on our business, operating results and financial \ncondition.\nThe uncertain state of the global economy, including high and rising levels of inflation and interest rates and the risk of a \nrecession, continues to impact businesses around the world. If global economic and financial market conditions deteriorate, the \nfollowing factors, among others, could have a material adverse effect on our business, operating results and financial condition:\n• Our sales are impacted by discretionary spending by consumers. Declines in consumer spending have in the past resulted \nin and may in the future result in reduced demand for our products, increased inventories, reduced orders from retailers for \nour products, order cancellations, lower revenues, higher discounts and lower gross margins.\n• In the future, we may be unable to access financing in the credit and capital markets at reasonable rates in the event we find \nit desirable to do so.\n• We conduct transactions in various currencies, which creates exposure to fluctuations in foreign currency exchange rates \nrelative to the U.S. Dollar. Continued volatility in the markets and exchange rates for foreign currencies and contracts in \nforeign currencies has had and could continue to have a significant impact on our reported operating results and financial \ncondition.\n• Continued volatility in the availability and prices for commodities and raw materials we use in our products and in our supply \nchain (such as cotton or petroleum derivatives) has had and could in the future have a material adverse effect on our costs, \ngross margins and profitability. In addition, supply chain issues caused by factors including the COVID-19 pandemic and \ngeopolitical conflicts have impacted and may continue to impact the availability, pricing and timing for obtaining commodities \nand raw materials. \n• If retailers of our products experience declining revenues or experience difficulty obtaining financing in the capital and credit \nmarkets to purchase our products, this could result in reduced orders for our products, order cancellations, late retailer \npayments, extended payment terms, higher accounts receivable, reduced cash flows, greater expense associated with \ncollection efforts and increased bad debt expense.\n• In the past, certain retailers of our products have experienced severe financial difficulty, become insolvent and ceased \nbusiness operations, and this could occur in the future, which could negatively impact the sale of our products to consumers. \n• If contract manufacturers of our products or other participants in our supply chain experience difficulty obtaining financing in \nthe capital and credit markets to purchase raw materials or to finance capital equipment and other general working capital \nneeds, it may result in delays or non-delivery of shipments of our products.\nOur products, services and experiences face intense competition.\nNIKE is a consumer products company and the relative popularity of various sports and fitness activities and changing design \ntrends affect the demand for our products, services and experiences. The athletic footwear, apparel and equipment industry is \nhighly competitive both in the United States and worldwide. We compete internationally with a significant number of athletic and \nleisure footwear companies, athletic and leisure apparel companies, sports equipment companies, private labels and large \ncompanies that have diversified lines of athletic and leisure footwear, apparel and equipment. We also compete with other \ncompanies for the production capacity of contract manufacturers that produce our products. In addition, we and our contract \nmanufacturers compete with other companies and industries for raw materials used in our products. Our NIKE Direct operations, \nboth through our digital commerce operations and retail stores, also compete with multi-brand retailers, which sell our products \nthrough their digital platforms and physical stores, and with digital commerce platforms. In addition, we compete with respect to \nthe digital services and experiences we are able to offer our consumers, including fitness and activity apps; sport, fitness and \nwellness content and services; and digital services and features in retail stores that enhance the consumer experience.\nProduct offerings, technologies, marketing expenditures (including expenditures for advertising and endorsements), pricing, costs \nof production, customer service, digital commerce platforms, digital services and experiences and social media presence are \nareas of intense competition. These, in addition to ongoing rapid changes in technology, a reduction in barriers to the creation of \nnew footwear and apparel companies and consumer preferences in the markets for athletic and leisure footwear, apparel, and \nequipment, services and experiences, constitute significant risk factors in our operations. In addition, the competitive nature of \nretail, including shifts in the ways in which consumers shop, and the continued proliferation of digital commerce, constitutes a risk \nfactor implicating our NIKE Direct and wholesale operations. If we do not adequately and timely anticipate and respond to our \ncompetitors, our costs may increase, demand for our products may decline, possibly significantly, or we may need to reduce \nwholesale or suggested retail prices for our products.\nNIKE, INC.      \n10\n\n\nEconomic factors beyond our control, and changes in the global economic environment, including fluctuations in \ninflation and currency exchange rates, could result in lower revenues, higher costs and decreased margins and \nearnings.\nA majority of our products are manufactured and sold outside of the United States, and we conduct purchase and sale \ntransactions in various currencies, which creates exposure to the volatility of global economic conditions, including fluctuations in \ninflation and foreign currency exchange rates. Central banks may deploy various strategies to combat inflation, including \nincreasing interest rates, which may impact our borrowing costs. Additionally, there has been, and may continue to be, volatility in \ncurrency exchange rates that impact the U.S. Dollar value relative to other international currencies. Our international revenues \nand expenses generally are derived from sales and operations in foreign currencies, and these revenues and expenses are \naffected by currency fluctuations, specifically amounts recorded in foreign currencies and translated into U.S. Dollars for \nconsolidated financial reporting, as weakening of foreign currencies relative to the U.S. Dollar adversely affects the U.S. Dollar \nvalue of the Company's foreign currency-denominated sales and earnings. Currency exchange rate fluctuations could also \ndisrupt the business of the independent manufacturers that produce our products by making their purchases of raw materials \nmore expensive and more difficult to finance. Foreign currency fluctuations have adversely affected and could continue to have \nan adverse effect on our results of operations and financial condition.\nWe hedge certain foreign currency exposures to lessen and delay, but not to completely eliminate, the effects of foreign currency \nfluctuations on our financial results. Since the hedging activities are designed to lessen volatility, they not only reduce the \nnegative impact of a stronger U.S. Dollar or other trading currency, but they also reduce the positive impact of a weaker U.S. \nDollar or other trading currency. Our future financial results have in the past been and could in the future be significantly affected \nby the value of the U.S. Dollar in relation to the foreign currencies in which we conduct business. The degree to which our \nfinancial results are affected for any given time period will depend in part upon our hedging activities.\nWe may be adversely affected by the financial health of our wholesale customers.\nWe extend credit to our customers based on an assessment of a customer's financial condition, generally without requiring \ncollateral. To assist in the scheduling of production and the shipping of our products, we offer certain customers the opportunity to \nplace orders five to six months ahead of delivery under our futures ordering program. These advance orders may be canceled \nunder certain conditions, and the risk of cancellation increases when dealing with financially unstable retailers or retailers \nstruggling with economic uncertainty. In the past, some customers have experienced financial difficulties up to and including \nbankruptcies, which have had an adverse effect on our sales, our ability to collect on receivables and our financial condition. \nWhen the retail economy weakens or as consumer behavior shifts, retailers tend to be more cautious with orders. A slowing or \nchanging economy in our key markets, including a recession, could adversely affect the financial health of our customers, which \nin turn could have an adverse effect on our results of operations and financial condition. In addition, product sales are dependent \nin part on high quality merchandising and an appealing retail environment to attract consumers, which requires continuing \ninvestments by retailers. Retailers that experience financial difficulties may fail to make such investments or delay them, resulting \nin lower sales and orders for our products.\nClimate change and other sustainability-related matters, or legal, regulatory or market responses thereto, may have an \nadverse impact on our business and results of operations. \nThere are concerns that increased levels of carbon dioxide and other greenhouse gases in the atmosphere have caused, and \nmay continue to cause, potentially at a growing rate, increases in global temperatures, changes in weather patterns and \nincreasingly frequent and/or prolonged extreme weather and climate events. Climate change may also exacerbate challenges \nrelating to the availability and quality of water and raw materials, including those used in the production of our products, and may \nresult in changes in regulations or consumer preferences, which could in turn affect our business, operating results and financial \ncondition. For example, there has been increased focus by governmental and non-governmental organizations, consumers, \ncustomers, employees and other stakeholders on products that are sustainably made and other sustainability matters, including \nresponsible sourcing and deforestation, the use of plastic, energy and water, the recyclability or recoverability of packaging and \nmaterials transparency, any of which may require us to incur increased costs for additional transparency, due diligence and \nreporting. In addition, federal, state or local governmental authorities in various countries have proposed, and are likely to \ncontinue to propose, legislative and regulatory initiatives to reduce or mitigate the impacts of climate change on the environment. \nVarious countries and regions are following different approaches to the regulation of climate change, which could increase the \ncomplexity of, and potential cost related to complying with, such regulations. Any of the foregoing may require us to make \nadditional investments in facilities and equipment, may impact the availability and cost of key raw materials used in the \nproduction of our products or the demand for our products, and, in turn, may adversely impact our business, operating results \nand financial condition.\nAlthough we have announced sustainability-related goals and targets, there can be no assurance that our stakeholders will agree \nwith our strategies, and any perception, whether or not valid, that we have failed to achieve, or to act responsibly with respect to, \nsuch matters or to effectively respond to new or additional legal or regulatory requirements regarding climate change, could result \nin adverse publicity and adversely affect our business and reputation. Execution of these strategies and achievement of our goals \nis subject to risks and uncertainties, many of which are outside of our control. These risks and uncertainties include, but are not \n2023 FORM 10-K   11    \n\n\nlimited to, our ability to execute our strategies and achieve our goals within the currently projected costs and the expected \ntimeframes; the availability and cost of raw materials and renewable energy; unforeseen production, design, operational and \ntechnological difficulties; the outcome of research efforts and future technology developments, including the ability to scale \nprojects and technologies on a commercially competitive basis such as carbon sequestration and/or other related processes; \ncompliance with, and changes or additions to, global and regional regulations, taxes, charges, mandates or requirements relating \nto greenhouse gas emissions, carbon costs or climate-related goals; adapting products to customer preferences and customer \nacceptance of sustainable supply chain solutions; and the actions of competitors and competitive pressures. As a result, there is \nno assurance that we will be able to successfully execute our strategies and achieve our sustainability-related goals, which could \ndamage our reputation and customer and other stakeholder relationships and have an adverse effect on our business, results of \noperations and financial condition.\nExtreme weather conditions and natural disasters could negatively impact our operating results and financial condition.\nGiven the broad and global scope of our operations, we are particularly vulnerable to the physical risks of climate change, such \nas shifts in weather patterns. Extreme weather conditions in the areas in which our retail stores, suppliers, manufacturers, \ncustomers, distribution centers, offices, headquarters and vendors are located could adversely affect our operating results and \nfinancial condition. Moreover, natural disasters such as earthquakes, hurricanes, wildfires, tsunamis, floods or droughts, whether \noccurring in the United States or abroad, and their related consequences and effects, including energy shortages and public \nhealth issues, have in the past temporarily disrupted, and could in the future disrupt, our operations, the operations of our \nvendors, manufacturers and other suppliers or have in the past resulted in, and in the future could result in, economic instability \nthat may negatively impact our operating results and financial condition. In particular, if a natural disaster or severe weather event \nwere to occur in an area in which we or our suppliers, manufacturers, employees, customers, distribution centers or vendors are \nlocated, our continued success would depend, in part, on the safety and availability of the relevant personnel and facilities and \nproper functioning of our or third parties' computer, network, telecommunication and other systems and operations. In addition, a \nnatural disaster or severe weather event could negatively impact retail traffic to our stores or stores that carry our products and \ncould have an adverse impact on consumer spending, any of which could in turn result in negative point-of-sale trends for our \nmerchandise. Further, climate change may increase both the frequency and severity of extreme weather conditions and natural \ndisasters, which may affect our business operations, either in a particular region or globally, as well as the activities of our third-\nparty vendors and other suppliers, manufacturers and customers. We believe the diversity of locations in which we operate, our \noperational size, disaster recovery and business continuity planning and our information technology systems and networks, \nincluding the Internet and third-party services (\"Information Technology Systems\"), position us well, but may not be sufficient for \nall or for concurrent eventualities. If we were to experience a local or regional disaster or other business continuity event or \nconcurrent events, we could experience operational challenges, in particular depending upon how a local or regional event may \naffect our human capital across our operations or with regard to particular aspects of our operations, such as key executive \nofficers or personnel. For example, our world headquarters is located in an active seismic zone, which is at a higher risk for \nearthquakes and the related consequences or effects. Further, if we are unable to find alternative suppliers, replace capacity at \nkey manufacturing or distribution locations or quickly repair damage to our Information Technology Systems or supply systems, \nwe could be late in delivering, or be unable to deliver, products to our customers. These events could result in reputational \ndamage, lost sales, cancellation charges or markdowns, all of which could have an adverse effect on our business, results of \noperations and financial condition.\nOur financial condition and results of operations have been, and could in the future be, adversely affected by a \npandemic, epidemic or other public health emergency.\nPandemics, including the COVID-19 pandemic, and other public health emergencies, and preventative measures taken to \ncontain or mitigate such crises have caused, and may in the future cause, business slowdown or shutdown in affected areas and \nsignificant disruption in the financial markets, both globally and in the United States. These events have led to and could again \nlead to adverse impacts to our global supply chain, factory cancellation costs, store closures, and a decline in retail traffic and \ndiscretionary spending by consumers and, in turn, materially impact our business, sales, financial condition and results of \noperations as well as cause a volatile effective tax rate driven by changes in the mix of earnings across our jurisdictions. We \ncannot predict whether, and to what degree, our sales, operations and financial results could in the future be affected by the \npandemic and preventative measures. Risks presented by pandemics and other public health emergencies include, but are not \nlimited to:\n• Deterioration in economic conditions in the United States and globally, including the effect of prolonged periods of inflation \non our consumers and vendors;\n• Disruption to our distribution centers, contract manufacturers, finished goods factories and other vendors, through the effects \nof facility closures, increased operating costs, reductions in operating hours, labor shortages, and real time changes in \noperating procedures, such as additional cleaning and disinfection procedures, which have had, and could in the future \nagain have, a significant impact on our planned inventory production and distribution, including higher inventory levels or \ninventory shortages in various markets;\nNIKE, INC.      \n12\n\n\n• Impacts to our distribution and logistics providers' ability to operate, including labor and container shortages, and increases \nin their operating costs. These supply chain effects have had, and could in the future have, an adverse effect on our ability to \nmeet consumer demand, including digital demand, and have in the past resulted in and could in the future result in extended \ninventory transit times and an increase in our costs of production and distribution, including increased freight and logistics \ncosts and other expenses;\n• Decreased retail traffic as a result of store closures, reduced operating hours, social distancing restrictions and/or changes in \nconsumer behavior;\n• Reduced consumer demand for our products, including as a result of a rise in unemployment rates, higher costs of \nborrowing, inflation and diminished consumer confidence;\n• Cancellation or postponement of sports seasons and sporting events in multiple countries, and bans on large public \ngatherings, which have reduced and in the future could reduce consumer spending on our products and could impact the \neffectiveness of our arrangements with key endorsers;\n• The risk that any safety protocols in NIKE-owned or affiliated facilities, including our offices, will not be effective or not be \nperceived as effective, or that any virus-related illnesses will be linked or alleged to be linked to such facilities, whether \naccurate or not;\n• Incremental costs resulting from the adoption of preventative measures and compliance with regulatory requirements, \nincluding providing facial coverings and hand sanitizer, rearranging operations to follow social distancing protocols, \nconducting temperature checks, testing and undertaking regular and thorough disinfecting of surfaces;\n• Bankruptcies or other financial difficulties facing our wholesale customers, which could cause them to be unable to make or \ndelay making payments to us, or result in revised payment terms, cancellation or reduction of their orders; and\n• Significant disruption of and volatility in global financial markets, which could have a negative impact on our ability to access \ncapital in the future.\nWe cannot reasonably predict the ultimate impact of any pandemic or public health emergency, including the extent of any \nadverse impact on our business, results of operations and financial condition, which will depend on, among other things, the \nduration and spread of the pandemic or public health emergency, the impact of governmental regulations that have been, and \nmay continue to be, imposed in response, the effectiveness of actions taken to contain or mitigate the outbreak, the availability, \nsafety and efficacy of vaccines, including against emerging variants of the infectious disease, and global economic conditions. \nAdditionally, disruptions have in the past made it more challenging to compare our performance, including our revenue growth \nand overall profitability, across quarters and fiscal years, and could have this effect in the future. Any pandemic or public health \nemergency may also affect our business, results of operations or financial condition in a manner that is not presently known to us \nor that we currently do not consider to present significant risks and may also exacerbate, or occur concurrently with, other risks \ndiscussed in this Item 1A. Risk Factors, any of which could have a material effect on us.\nBusiness and Operational Risks\nFailure to maintain our reputation, brand image and culture could negatively impact our business.\nOur iconic brands have worldwide recognition, and our success depends on our ability to maintain and enhance our brand image \nand reputation. Maintaining, promoting and growing our brands will depend on our design and marketing efforts, including \nadvertising and consumer campaigns, product innovation and product quality. Our commitment to product innovation, quality and \nsustainability, and our continuing investment in design (including materials), marketing and sustainability measures may not have \nthe desired impact on our brand image and reputation. In addition, our success in maintaining, extending and expanding our \nbrand image depends on our ability to adapt to a rapidly changing media and digital environment, including our reliance on social \nmedia and other digital advertising networks, and digital dissemination of advertising campaigns on our digital platforms and \nthrough our digital experiences and products. We could be adversely impacted if we fail to achieve any of these objectives.\nOur brand value also depends on our ability to maintain a positive consumer perception of our corporate integrity, purpose and \nbrand culture. Negative claims or publicity involving us, our culture and values, our products, services and experiences, \nconsumer data, or any of our key employees, endorsers, sponsors, suppliers or partners could seriously damage our reputation \nand brand image, regardless of whether such claims are accurate. For example, while we require our suppliers of our products to \noperate their business in compliance with applicable laws and regulations, we do not control their practices. Negative publicity \nrelating to a violation or an alleged violation of policies or laws by such suppliers could damage our brand image and diminish \nconsumer trust in our brand. Further, our reputation and brand image could be damaged as a result of our support of, association \nwith or lack of support or disapproval of certain social causes, as well as any decisions we make to continue to conduct, or \nchange, certain of our activities in response to such considerations. Social media, which accelerates and potentially amplifies the \nscope of negative publicity, can increase the challenges of responding to negative claims. Adverse publicity about regulatory or \nlegal action against us, or by us, could also damage our reputation and brand image, undermine consumer confidence in us and \nreduce long-term demand for our products, even if the regulatory or legal action is unfounded or not material to our operations. If \n2023 FORM 10-K   13    \n\n\nthe reputation, culture or image of any of our brands is tarnished or if we receive negative publicity, then our sales, financial \ncondition and results of operations could be materially and adversely affected.\nOur business is affected by seasonality, which could result in fluctuations in our operating results.\nWe experience moderate fluctuations in aggregate sales volume during the year. Historically, revenues in the first and fourth \nfiscal quarters have slightly exceeded those in the second and third fiscal quarters. However, the mix of product sales may vary \nconsiderably from time to time or in the future as a result of strategic shifts in our business and seasonal or geographic demand \nfor particular types of footwear, apparel and equipment and in connection with the timing of significant sporting events, such as \nthe NBA Finals, Olympics or the World Cup, among others. In addition, our customers may cancel orders, change delivery \nschedules or change the mix of products ordered with minimal notice. As a result, we may not be able to accurately predict our \nquarterly sales. Accordingly, our results of operations are likely to fluctuate significantly from period to period. This seasonality, \nalong with other factors that are beyond our control, including economic conditions, changes in consumer preferences, weather \nconditions, outbreaks of disease, social or political unrest, availability of import quotas, transportation disruptions and currency \nexchange rate fluctuations, has in the past adversely affected and could in the future adversely affect our business and cause our \nresults of operations to fluctuate. Our operating margins are also sensitive to a number of additional factors that are beyond our \ncontrol, including manufacturing and transportation costs, shifts in product sales mix and geographic sales trends, all of which we \nexpect to continue. Results of operations in any period should not be considered indicative of the results to be expected for any \nfuture period.\nIf we are unable to anticipate consumer preferences and develop new products, we may not be able to maintain or \nincrease our revenues and profits.\nOur success depends on our ability to identify, originate and define product trends as well as to anticipate, gauge and react to \nchanging consumer demands in a timely manner. However, lead times for many of our products may make it more difficult for us \nto respond rapidly to new or changing product trends or consumer preferences. All of our products are subject to changing \nconsumer preferences that cannot be predicted with certainty. Our new products may not receive consumer acceptance as \nconsumer preferences could shift rapidly to different types of performance products or away from these types of products \naltogether, and our future success depends in part on our ability to anticipate and respond to these changes. If we fail to \nanticipate accurately and respond to trends and shifts in consumer preferences by adjusting the mix of existing product offerings, \ndeveloping new products, designs, styles and categories, and influencing sports and fitness preferences through extensive \nmarketing, we could experience lower sales, excess inventories or lower profit margins, any of which could have an adverse \neffect on our results of operations and financial condition. In addition, we market our products globally through a diverse spectrum \nof advertising and promotional programs and campaigns, including social media and other digital advertising networks. If we do \nnot successfully market our products or if advertising and promotional costs increase, these factors could have an adverse effect \non our business, financial condition and results of operations.\nWe rely on technical innovation and high-quality products to compete in the market for our products.\nTechnical innovation and quality control in the design and manufacturing processes of footwear, apparel, equipment and other \nproducts and services are essential to the commercial success of our products and development of new products. Research and \ndevelopment play a key role in technical innovation. We rely upon specialists in the fields of biomechanics, chemistry, exercise \nphysiology, engineering, digital technologies, industrial design, sustainability and related fields, as well as research committees \nand advisory boards made up of athletes, coaches, trainers, equipment managers, orthopedists, podiatrists and other experts to \ndevelop and test cutting-edge performance products. While we strive to produce products that help to enhance athletic \nperformance and reduce injury and maximize comfort, if we fail to introduce technical innovation in our products, consumer \ndemand for our products could decline, and if we experience problems with the quality of our products, we may incur substantial \nexpense to remedy the problems and loss of consumer confidence.\nFailure to continue to obtain or maintain high-quality endorsers of our products could harm our business.\nWe establish relationships with professional athletes, sports teams and leagues, as well as other public figures, including artists, \ndesigners and influencers, to develop, evaluate and promote our products, as well as establish product authenticity with \nconsumers. However, as competition in our industry has increased, the costs associated with establishing and retaining such \nsponsorships and other relationships have increased, and competition to attract and retain high-quality endorsers has increased. \nIf we are unable to maintain our current associations with professional athletes, sports teams and leagues, or other public figures, \nor to do so at a reasonable cost, we could lose the high visibility or on-field authenticity associated with our products, and we may \nbe required to modify and substantially increase our marketing investments. As a result, our brands, net revenues, expenses and \nprofitability could be harmed.\nFurthermore, if certain endorsers were to stop using our products contrary to their endorsement agreements, our business could \nbe adversely affected. In addition, actions taken or statements made by athletes, teams or leagues, or other endorsers, \nassociated with our products or brand that harm the reputations of those athletes, teams or leagues, or endorsers, or our \ndecisions to cease collaborating with certain endorsers in light of actions taken or statements made by them, have in the past \nharmed and could in the future seriously harm our brand image with consumers and, as a result, could have an adverse effect on \nNIKE, INC.      \n14\n\n\nour sales and financial condition. Poor or non-performance by our endorsers, a failure to continue to correctly identify promising \nathletes, public figures or sports organizations, to use and endorse our products and brand or a failure to enter into cost-effective \nendorsement arrangements with prominent athletes, public figures and sports organizations could adversely affect our brand, \nsales and profitability.\nFailure to accurately forecast consumer demand could lead to excess inventories or inventory shortages, which could \nresult in decreased operating margins, reduced cash flows and harm to our business.\nTo meet anticipated demand for our products, we purchase products from manufacturers outside of our futures ordering program \nand in advance of customer orders, which we hold in inventory and resell to customers. There is a risk we may be unable to sell \nexcess products ordered from manufacturers. Inventory levels in excess of customer demand may result in inventory write-\ndowns, and the sale of excess inventory at discounted prices could significantly impair our brand image and have an adverse \neffect on our operating results, financial condition and cash flows. Conversely, if we underestimate consumer demand for our \nproducts or if our manufacturers fail to supply products we require at the time we need them, we may experience inventory \nshortages. Inventory shortages could delay shipments to customers, negatively impact retailer, distributor and consumer \nrelationships and diminish brand loyalty. The difficulty in forecasting demand also makes it difficult to estimate our future results of \noperations, financial condition and cash flows from period to period. A failure to accurately predict the level of demand for our \nproducts could adversely affect our net revenues and net income, and we are unlikely to forecast such effects with any certainty \nin advance.\nOur NIKE Direct operations have required and will continue to require a substantial investment and commitment of \nresources and are subject to numerous risks and uncertainties.\nOur NIKE Direct operations, including our retail stores and digital platforms, have required and will continue to require significant \ninvestment. Our NIKE Direct stores have required and will continue to require substantial fixed investment in equipment and \nleasehold improvements and personnel. We have entered into substantial operating lease commitments for retail space. Certain \nstores have been designed and built to serve as high-profile venues to promote brand awareness and marketing activities and to \nintegrate with our digital platforms. Because of their unique design and technological elements, locations and size, these stores \nrequire substantially more investment than other stores. Due to the high fixed-cost structure associated with our NIKE Direct retail \nstores, a decline in sales, a shift in consumer behavior away from brick-and-mortar retail, or the closure, temporary or otherwise, \nor poor performance of individual or multiple stores could result in significant lease termination costs, write-offs of equipment and \nleasehold improvements and employee-related costs.\nMany factors unique to retail operations, some of which are beyond our control, pose risks and uncertainties. Risks include, but \nare not limited to: credit card fraud; mismanagement of existing retail channel partners; inability to manage costs associated with \nstore construction and operation; and theft. \nIn addition, we have made significant investments in digital technologies and information systems for the digital aspect of our \nNIKE Direct operations, and our digital offerings will require continued investment in the development and upgrading of our \ntechnology platforms. In order to deliver high-quality digital experiences, our digital platforms must be designed effectively and \nwork well with a range of other technologies, systems, networks, and standards that we do not control. We may not be successful \nin developing platforms that operate effectively with these technologies, systems, networks or standards. A growing portion of \nconsumers access our NIKE Direct digital platforms, but in the event that it is more difficult for consumers to access and use our \ndigital platforms, consumers find that our digital platforms do not effectively meet their needs or expectations or consumers \nchoose not to access or use our digital platforms or use devices that do not offer access to our platforms, the success of our \nNIKE Direct operations could be adversely impacted. Our competitors may develop, or have already developed, digital \nexperiences, features, content, services or technologies that are similar to ours or that achieve greater acceptance. \nWe may not realize a satisfactory return on our investment in our NIKE Direct operations and management's attention from our \nother business opportunities could be diverted, which could have an adverse effect on our business, financial condition or results \nof operations.\nIf the technology-based systems that give our consumers the ability to shop or interact with us online do not function \neffectively, our operating results, as well as our ability to grow our digital commerce business globally or to retain our \ncustomer base, could be materially adversely affected.\nMany of our consumers shop with us through our digital platforms. Increasingly, consumers are using mobile-based devices and \napplications to shop online with us and with our competitors, and to do comparison shopping, as well as to engage with us and \nour competitors through digital services and experiences that are offered on mobile platforms. We use social media and \nproprietary mobile applications to interact with our consumers and as a means to enhance their shopping experience. Any failure \non our part to provide attractive, effective, reliable, secure and user-friendly digital commerce platforms that offer a wide \nassortment of merchandise with rapid delivery options and that continually meet the changing expectations of online shoppers or \nany failure to provide attractive digital experiences to our customers could place us at a competitive disadvantage, result in the \nloss of digital commerce and other sales, harm our reputation with consumers, have a material adverse impact on the growth of \nour digital commerce business globally and have a material adverse impact on our business and results of operations. In \n2023 FORM 10-K   15    \n\n\naddition, as use of our digital platforms continues to grow, we will need an increasing amount of technical infrastructure to \ncontinue to satisfy our consumers' needs. If we fail to continue to effectively scale and adapt our digital platforms to \naccommodate increased consumer demand, our business may be subject to interruptions, delays or failures and consumer \ndemand for our products and digital experiences could decline.\nRisks specific to our digital commerce business also include diversion of sales from our and our retailers' brick and mortar stores, \ndifficulty in recreating the in-store experience through direct channels and liability for online content. Our failure to successfully \nrespond to these risks might adversely affect sales in our digital commerce business, as well as damage our reputation and \nbrands.\nWe rely significantly on information technology to operate our business, including our supply chain and retail \noperations, and any failure, inadequacy or interruption of that technology could harm our ability to effectively operate \nour business.\nWe are heavily dependent on Information Technology Systems, across our supply chain, including product design, production, \nforecasting, ordering, manufacturing, transportation, sales and distribution, as well as for processing financial information for \nexternal and internal reporting purposes, retail operations and other business activities. Information Technology Systems are \ncritical to many of our operating activities and our business processes and may be negatively impacted by any service \ninterruption or shutdown. For example, our ability to effectively manage and maintain our inventory and to ship products to \ncustomers on a timely basis depends significantly on the reliability of these Information Technology Systems. Over a number of \nyears, we have implemented Information Technology Systems in all of the geographical regions in which we operate. Our work to \nintegrate, secure and enhance these systems and related processes in our global operations is ongoing and NIKE will continue to \ninvest in these efforts. We cannot provide assurance, however, that the measures we take to secure and enhance these systems \nwill be sufficient to protect our Information Technology Systems and prevent cyber-attacks, system failures or data or information \nloss. The failure of these systems to operate effectively, including as a result of security breaches, viruses, hackers, malware, \nnatural disasters, vendor business interruptions or other causes, failure to properly maintain, protect, repair or upgrade systems, \nor problems with transitioning to upgraded or replacement systems could cause delays in product fulfillment and reduced \nefficiency of our operations, could require significant capital investments to remediate the problem which may not be sufficient to \ncover all eventualities, and may have an adverse effect on our reputation, results of operations and financial condition. In \naddition, the use of employee-owned devices for communications as well as hybrid work arrangements, present additional \noperational risks to our Information Technology Systems, including, but not limited to, increased risks of cyber-attacks. Further, \nlike other companies in the retail industry, we have in the past experienced, and we expect to continue to experience, cyber-\nattacks, including phishing, and other attempts to breach, or gain unauthorized access to, our systems. To date, these attacks \nhave not had a material impact on our operations, but we cannot provide assurance that they will not have an impact in the \nfuture.\nWe also use Information Technology Systems to process financial information and results of operations for internal reporting \npurposes and to comply with regulatory financial reporting, legal and tax requirements. From time to time, we have expended, \nand expect to continue to expend, significant resources to modify, update and enhance our Information Technology Systems and \nto investigate and remediate vulnerabilities or other exposures. These modifications, updates and enhancements may cost more \nthan initially expected and may not be effective in preventing issues and disruptions. Moreover, due to the complexity of our \nInformation Technology Systems, the process of implementing modifications or enhancements can itself create a risk of systems \ndisruptions and security issues. If Information Technology Systems suffer severe damage, disruption or shutdown and our \nbusiness continuity plans, or those of our vendors, do not effectively resolve the issues in a timely manner, we could experience \ndelays in reporting our financial results, which could result in lost revenues and profits, as well as reputational damage. \nFurthermore, we depend on Information Technology Systems and personal data collection for digital marketing, digital commerce, \nconsumer engagement and the marketing and use of our digital products and services. We also rely on our ability to engage in \nelectronic communications throughout the world between and among our employees as well as with other third parties, including \ncustomers, suppliers, vendors and consumers. Any interruption in Information Technology Systems may impede our ability to \nengage in the digital space and result in lost revenues, damage to our reputation, and loss of users.\nWe are subject to the risk our licensees may not generate expected sales or maintain the value of our brands. \nWe currently license, and expect to continue licensing, certain of our proprietary rights, such as trademarks or copyrighted \nmaterial, to third parties. If our licensees fail to successfully market and sell licensed products, or fail to obtain sufficient capital or \neffectively manage their business operations, customer relationships, labor relationships, supplier relationships or credit risks, it \ncould adversely affect our revenues, both directly from reduced royalties received and indirectly from reduced sales of our other \nproducts. \nWe also rely on our licensees to help preserve the value of our brands. Although we attempt to protect our brands through \napproval rights over the design, production processes, quality, packaging, merchandising, distribution, advertising and promotion \nof our licensed products, we cannot completely control the use of our licensed brands by our licensees. The misuse of a brand by \nor negative publicity involving a licensee could have a material adverse effect on that brand and on us.\nNIKE, INC.      \n16\n\n\nConsolidation of retailers or concentration of retail market share among a few retailers may increase and concentrate \nour credit risk and impair our ability to sell products.\nThe athletic footwear, apparel and equipment retail markets in some countries are dominated by a few large athletic footwear, \napparel and equipment retailers with many stores and accelerating digital commerce capabilities. The market shares of these \nretailers may increase through acquisitions and construction of additional stores and investments in digital capacity, and as a \nresult of attrition as struggling retailers exit the market. Consolidation of our retailers will concentrate our credit risk with a smaller \nset of retailers, any of whom may experience declining sales or a shortage of liquidity. In addition, increasing market share \nconcentration among a few retailers in a particular country or region increases the risk that if any one of them substantially \nreduces their purchases of our products, we may be unable to find sufficient retail outlets for our products to sustain the same \nlevel of sales and revenues.\nIf one or more of our counterparty financial institutions default on their obligations to us or fail, we may incur significant \nlosses.\nAs part of our hedging activities, we enter into transactions involving derivative financial instruments, which may include forward \ncontracts, commodity futures contracts, option contracts, collars and swaps with various financial institutions. In addition, we have \nsignificant amounts of cash, cash equivalents and other investments on deposit or in accounts with banks or other financial \ninstitutions in the United States and abroad. As a result, we are exposed to the risk of default by or failure of counterparty \nfinancial institutions. The risk of counterparty default or failure may be heightened during economic downturns and periods of \nuncertainty in the financial markets. If one of our counterparties were to become insolvent or file for bankruptcy, our ability to \nrecover losses incurred as a result of default, or our assets deposited or held in accounts with such counterparty, may be limited \nby the counterparty's liquidity or the applicable laws governing the insolvency or bankruptcy proceedings. In the event of default \nor failure of one or more of our counterparties, we could incur significant losses, which could negatively impact our results of \noperations and financial condition.\nWe rely on a concentrated source base of contract manufacturers to supply a significant portion of our footwear \nproducts.\nAs of May 31, 2023, our contract manufacturers operated 123 finished goods footwear factories located in 11 countries. We rely \nupon contract manufacturers, which we do not own or operate, to manufacture all of the footwear products we sell. For fiscal \n2023, four footwear contract manufacturers each accounted for greater than 10% of footwear production and in the aggregate \naccounted for approximately 58% of NIKE Brand footwear production. Our ability to meet our customers' needs depends on our \nability to maintain a steady supply of products from our contract manufacturers. If one or more of our significant suppliers were to \nsever their relationship with us or significantly alter the terms of our relationship, including due to changes in applicable trade \npolicies, or be unable to perform, we may not be able to obtain replacement products in a timely manner, which could have a \nmaterial adverse effect on our business operations, sales, financial condition or results of operations. Additionally, if any of our \nprimary footwear contract manufacturers fail to make timely shipments, do not meet our quality standards or otherwise fail to \ndeliver us product in accordance with our plans, there could be a material adverse effect on our results of operations.\nCertain of our footwear contract manufacturers are highly specialized and only produce a specific type of product. Such contract \nmanufacturers may go out of business if consumer preferences or market conditions change such that there is no longer \nsufficient demand for the types of products they produce. If, in the future, the relevant products are again in demand and the \nspecialized contract manufacturers no longer exist, we may not be able to locate replacement facilities to manufacture certain \nfootwear products in a timely manner or at all, which could have a material adverse effect on our sales, financial condition or \nresults of operations.\nThe market for prime real estate is competitive.\nOur ability to effectively obtain real estate to open new retail stores and otherwise conduct our operations, both domestically and \ninternationally, depends on the availability of real estate that meets our criteria for traffic, square footage, co-tenancies, lease \neconomics, demographics and other factors. We also must be able to effectively renew our existing real estate leases. In \naddition, from time to time, we seek to downsize, consolidate, reposition or close some of our real estate locations, which may \nrequire modification of an existing lease. Failure to secure adequate new locations or successfully modify leases for existing \nlocations, or failure to effectively manage the profitability of our existing fleet of retail stores, could have an adverse effect on our \noperating results and financial condition.\nAdditionally, the economic environment may make it difficult to determine the fair market rent of real estate properties \ndomestically and internationally. This could impact the quality of our decisions to exercise lease options at previously negotiated \nrents and to renew expiring leases at negotiated rents. Any adverse effect on the quality of these decisions could impact our \nability to retain real estate locations adequate to meet our targets or efficiently manage the profitability of our existing fleet of \nstores, which could have an adverse effect on our operating results and financial condition.\n2023 FORM 10-K   17    \n\n\nThe success of our business depends, in part, on high-quality employees, including key personnel as well as our ability \nto maintain our workplace culture and values.\nOur success depends in part on the continued service of high-quality employees, including key executive officers and personnel. \nThe loss of the services of key individuals, or any negative perception with respect to these individuals, or our workplace culture \nor values, could harm our business. Our success also depends on our ability to recruit, retain and engage our personnel \nsufficiently, both to maintain our current business and to execute our strategic initiatives. Competition for employees in our \nindustry is intense and we may not be successful in attracting and retaining such personnel. Changes to our current and future \nwork models may not meet the needs or expectations of our employees or may not be perceived as favorable compared to other \ncompanies' policies, which could negatively impact our ability to attract, hire and retain our employees. In addition, shifts in U.S. \nimmigration policy could negatively impact our ability to attract, hire and retain highly skilled employees who are from outside the \nUnited States. We also believe that our corporate culture has been a key driver of our success, and we have invested substantial \ntime and resources in building, maintaining and evolving our culture. Any failure to preserve and evolve our culture could \nnegatively affect our future success, including our ability to retain and recruit employees.\nOur business operations and financial performance could be adversely affected by changes in our relationship with our \nworkforce or changes to United States or foreign employment regulations.\nWe have significant exposure to changes in domestic and foreign laws governing our relationships with our workforce, including \nwage and hour laws and regulations, fair labor standards, minimum wage requirements, overtime pay, unemployment tax rates, \nworkers' compensation rates, citizenship requirements and payroll taxes, which could have a direct impact on our operating \ncosts. A significant increase in minimum wage or overtime rates in countries where we have workforce could have a significant \nimpact on our operating costs and may require that we relocate those operations or take other steps to mitigate such increases, \nall of which may cause us to incur additional costs. There is also a risk of potential claims that we have violated laws related to \ndiscrimination and harassment, health and safety, wage and hour laws, criminal activity, personal injury and other claims. In \naddition, if there were a significant increase in the number of members of our workforce who are members of labor organizations \nor become parties to collective bargaining agreements, we could be vulnerable to a strike, work stoppage or other labor action, \nwhich could have an adverse effect on our business.\nRisks Related to Operating a Global Business\nOur international operations involve inherent risks which could result in harm to our business.\nNearly all of our athletic footwear and apparel is manufactured outside of the United States, and the majority of our products are \nsold outside of the United States. Accordingly, we are subject to the risks generally associated with global trade and doing \nbusiness abroad, which include foreign laws and regulations, varying consumer preferences across geographic regions, political \ntensions, unrest, disruptions or delays in cross-border shipments and changes in economic conditions in countries in which our \nproducts are manufactured or where we sell products. Changes in U.S. or international social, political, regulatory and economic \nconditions could impact our business, reputation, financial condition and results of operations. In particular, political and economic \ninstability, geopolitical conflicts, political unrest, civil strife, terrorist activity, acts of war, public corruption, expropriation, \nnationalism and other economic or political uncertainties in the United States or internationally could interrupt and negatively \naffect the sale of our products or other business operations. Any negative sentiment toward the United States as a result of any \nsuch changes could also adversely affect our business.\nIn addition, disease outbreaks, terrorist acts and military conflict have increased the risks of doing business abroad. These \nfactors, among others, could affect our ability to manufacture products or procure materials, or our costs for manufacturing and \nprocuring materials, our ability to import products, our ability to sell products in international markets and our cost of doing \nbusiness. If any of these or other factors make the conduct of business in a particular country undesirable or impractical, our \nbusiness could be adversely affected.\nOur products are subject to risks associated with overseas sourcing, manufacturing and financing.\nThe principal materials used in our footwear products — natural and synthetic rubber, plastic compounds, foam cushioning \nmaterials, natural and synthetic leather, nylon, polyester and natural fiber textiles and polyurethane films — are locally available \nto manufacturers. The principal materials used in our apparel products — natural and synthetic fabrics, yarns and threads (both \nvirgin and recycled), specialized performance fabrics designed to efficiently wick moisture away from the body, retain heat and \nrepel rain and/or snow as well as plastic and metal hardware — are also available in countries where our manufacturing takes \nplace. Both our apparel and footwear products are dependent upon the ability of our contract manufacturers to locate, train, \nemploy and retain adequate personnel. NIKE contract manufacturers and materials suppliers buy raw materials and are subject \nto wage rates and other labor standards that are oftentimes regulated by the governments of the countries in which our products \nare manufactured.\nThere could be a significant disruption in the supply of fabrics or raw materials from current sources or, in the event of a \ndisruption or heightened competition for such materials, our contract manufacturers might not be able to locate alternative \nsuppliers of materials of comparable quality at an acceptable price or at all. Further, our contract manufacturers have \nexperienced and may continue to experience in the future, unexpected closures, unexpected increases in work wages or other \nNIKE, INC.      \n18\n\n\nchanges in labor standards, whether government mandated or otherwise, and increases in compliance costs due to \ngovernmental regulation concerning certain metals, fabrics or raw materials used in the manufacturing of our products. In \naddition, we cannot be certain that manufacturers that we do not contract and that we refer to as \"unaffiliated manufacturers\" will \nbe able to fill our orders in a timely manner. If we experience significant increases in demand, or reductions in the availability of \nmaterials, or need to replace an existing contract manufacturer or materials supplier, there can be no assurance additional \nsupplies of fabrics or raw materials or additional manufacturing capacity will be available when required on terms acceptable to \nus, or at all, or that any contract manufacturer, unaffiliated manufacturer, or any materials supplier would allocate sufficient \ncapacity to us in order to meet our requirements. In addition, even if we are able to expand existing or find new manufacturing \ncapacity or sources of materials, we may encounter delays in production and added costs as a result of the time it takes to train \nsuppliers and manufacturers in our methods, products, quality control standards and labor, health and safety standards. Any \ndelays, interruption or increased costs in labor or wages, in the supply of materials or in the manufacturing of our products could \nhave an adverse effect on our ability to meet retail customer and consumer demand for our products and result in lower revenues \nand net income both in the short- and long-term.\nBecause contract manufacturers make a majority of our products outside of our principal sales markets, our products must be \ntransported by third parties over large geographic distances. Delays in the shipment or delivery of our products due to the \navailability of transportation, container shortages, labor shortages, including work stoppages or port strikes, infrastructure and \nport congestion or other factors, and costs and delays associated with consolidating or transitioning between manufacturers, \nhave adversely impacted, and could in the future adversely impact the availability of our products and, in turn, our financial \nperformance. In addition, delays in the shipment or delivery of our products, manufacturing delays or unexpected demand for our \nproducts have required us, and may in the future require us to use faster, but more expensive, transportation methods such as air \nfreight, which could adversely affect our profit margins. The cost of oil is a significant component in manufacturing and \ntransportation costs, so increases in the price of petroleum products can adversely affect our profit margins. Changes in U.S. \ntrade policies, including modifications to import tariffs and existing trade policies and agreements, have also had, and could \ncontinue to have a significant impact on our activities in foreign jurisdictions, and could adversely affect our reputation or results \nof operations.\nOur success depends on our global distribution facilities.\nWe distribute our products to customers directly from the factory and through distribution centers located throughout the world. \nOur ability to meet customer expectations, manage inventory, complete sales and achieve objectives for operating efficiencies \nand growth, particularly in emerging markets, depends on the proper operation of our distribution facilities, the development or \nexpansion of additional distribution capabilities and the timely performance of services by third parties (including those involved in \nshipping product to and from our distribution facilities). Our distribution facilities have in the past and could in the future be \ninterrupted by information technology problems, disasters such as earthquakes or fires or outbreaks of disease or government \nactions taken to mitigate their spread. Any significant failure in our distribution facilities could result in an adverse effect on our \nbusiness. We maintain business interruption insurance, but it may not adequately protect us from adverse effects caused by \nsignificant disruptions in our distribution facilities.\nLegal, Regulatory, and Compliance Risks\nWe are subject to a complex array of laws and regulations and litigation and other legal and regulatory proceedings, \nwhich could have an adverse effect on our business, financial condition and results of operations.\nAs a multinational corporation with operations and distribution channels throughout the world, we are subject to and must comply \nwith extensive laws and regulations in the United States and other jurisdictions in which we have operations and distribution \nchannels. If we or our employees, agents, suppliers, and other partners fail to comply with any of these laws or regulations, such \nfailure could subject us to fines, sanctions or other penalties that could negatively affect our reputation, business, financial \ncondition and results of operations. Furthermore, laws, regulations and policies and the interpretation of such, can conflict among \njurisdictions and compliance in one jurisdiction may result in legal or reputational risks in another jurisdiction. We are involved in \nvarious types of claims, lawsuits, regulatory proceedings and government investigations relating to our business, our products \nand the actions of our employees and representatives, including contractual and employment relationships, product liability, \nantitrust, trademark rights and a variety of other matters. It is not possible to predict with certainty the outcome of any such legal \nor regulatory proceedings or investigations, and we could in the future incur judgments, fines or penalties, or enter into \nsettlements of lawsuits and claims that could have a material adverse effect on our business, financial condition and results of \noperations and negatively impact our reputation. The global nature of our business means legal and compliance risks, such as \nanti-bribery, anti-corruption, fraud, trade, environmental, competition, privacy and other regulatory matters, will continue to exist \nand additional legal proceedings and other contingencies have and will continue to arise from time to time, which could adversely \naffect us. In addition, the adoption of new laws or regulations, or changes in the interpretation of existing laws or regulations, may \nresult in significant unanticipated legal and reputational risks. Moreover, the regulation of certain transactions we engage in, \nincluding those involving virtual goods and cryptocurrencies, remains in an early stage and subject to significant uncertainty. As a \nresult, we are required to exercise our judgment as to whether or how certain laws or regulations apply, or may in the future \n2023 FORM 10-K   19    \n\n\napply, and it is possible that legislators, regulators and courts may disagree with our conclusions. Any current or future legal or \nregulatory proceedings could divert management's attention from our operations and result in substantial legal fees.\nChanges to U.S. or other countries' trade policies and tariff and import/export regulations or our failure to comply with \nsuch regulations may have a material adverse effect on our reputation, business, financial condition and results of \noperations.\nChanges in the U.S. government's import and export policies, including trade restrictions, sanctions and countersanctions, \nincreased tariffs or quotas, embargoes, safeguards or customs restrictions, could require us to change the way we conduct \nbusiness and adversely affect our results of operations.\nIn addition, changes in laws and policies governing foreign trade, manufacturing, development and investment in the territories or \ncountries where we currently sell our products or conduct our business could adversely affect our business. U.S. presidential \nadministrations have instituted or proposed changes in trade policies that include the negotiation or termination of trade \nagreements, the imposition of higher tariffs on imports into the U.S., economic sanctions on individuals, corporations or countries, \nand other government regulations affecting trade between the U.S. and other countries where we conduct our business. It may \nbe time-consuming and expensive for us to alter our business operations in order to adapt to or comply with any such changes.\nChanges or proposed changes in U.S. or other countries' trade policies may result in restrictions and economic disincentives on \ninternational trade. Tariffs and other changes in U.S. trade policy have in the past and could in the future trigger retaliatory actions \nby affected countries, and certain foreign governments have instituted or are considering imposing retaliatory measures on \ncertain U.S. goods. Further, any emerging protectionist or nationalist trends either in the United States or in other countries could \naffect the trade environment. The Company, similar to many other multinational corporations, does a significant amount of \nbusiness that would be impacted by changes to the trade policies of the United States and foreign countries (including \ngovernmental action related to tariffs, international trade agreements, or economic sanctions). Such changes have the potential \nto adversely impact the U.S. economy or certain sectors thereof or the economy of another country in which we conduct \noperations, our industry and the global demand for our products, and as a result, could have a material adverse effect on our \nbusiness, financial condition and results of operations.\nIn addition, many of our imported products are subject to duties, tariffs or quotas that affect the cost and quantity of various types \nof goods imported into the United States and other countries. Any country in which our products are produced or sold may \neliminate, adjust or impose new quotas, duties, tariffs, safeguard measures, anti-dumping duties, cargo restrictions to prevent \nterrorism, restrictions on the transfer of currency, climate change legislation, product safety regulations or other charges or \nrestrictions, any of which could have an adverse effect on our results of operations and financial condition.\nFurthermore, we are subject to the FCPA as well as the anti-corruption laws of other countries in which we operate. Although we \nimplement policies and procedures designed to promote compliance with these laws, our employees, independent contractors, \ncontract manufacturers, suppliers and agents, as well as those companies to which we outsource certain of our business \noperations, may take actions in violation of our policies. Any such violation could result in sanctions or other penalties and have \nan adverse effect on our business, reputation and operating results.\nFailure to adequately protect or enforce our intellectual property rights could adversely affect our business.\nWe periodically discover counterfeit reproductions of our products or products that otherwise infringe our intellectual property \nrights. If we are unsuccessful in enforcing our intellectual property rights, continued sales of these products could adversely affect \nour sales and our brand and could result in a shift of consumer preference away from our products.\nThe actions we take to establish and protect our intellectual property rights may not be adequate to prevent imitation of our \nproducts by others. We also may be unable to prevent others from seeking to block sales of our products as violations of \nproprietary rights. \nWe may be subject to liability if third parties successfully claim we infringe their intellectual property rights. Defending \ninfringement claims could be expensive and time-consuming and might result in our entering into costly license agreements. We \nalso may be subject to significant damages or injunctions against development, manufacturing, use, importation and/or sale of \ncertain products.\nWe take various actions to prevent the unauthorized use and/or disclosure of our confidential information and intellectual property \nrights. These actions include contractual measures such as entering into non-disclosure and non-compete agreements and \nagreements relating to our collaborations with third parties and providing confidential information awareness training. Our controls \nand efforts to prevent unauthorized use and/or disclosure of confidential information and intellectual property rights might not \nalways be effective. For example, confidential information related to business strategy, innovations, new technologies, mergers \nand acquisitions, unpublished financial results or personal data could be prematurely, inadvertently, or improperly used and/or \ndisclosed, resulting in a loss of reputation, loss of intellectual property rights, a decline in our stock price and/or a negative impact \non our market position, and could lead to damages, fines, penalties or injunctions. In addition, new products we offer, such as \nvirtual goods, may raise various novel intellectual property law considerations, including adequacy and scope of assignment, \nlicensing, transfer, copyright and other right-of-use issues.\nNIKE, INC.      \n20\n\n\nIn addition, the laws of certain countries may not protect or allow enforcement of intellectual property rights to the same extent as \nthe laws of the United States. We may face significant expenses and liability in connection with the protection of our intellectual \nproperty rights, including outside the United States, and if we are unable to successfully protect our rights or resolve intellectual \nproperty conflicts with others, our business or financial condition may be adversely affected.\nWe are subject to data security and privacy risks that could negatively affect our results, operations or reputation.\nIn addition to our own sensitive and proprietary business information, we handle transactional and personal information about our \nwholesale customers and consumers and users of our digital experiences, which include online distribution channels and product \nengagement, adaptive products and personal fitness applications. Hackers and data thieves are increasingly sophisticated and \noperate social engineering, such as phishing, and large-scale, complex automated attacks that can evade detection for long \nperiods of time. Any breach of our or our service providers' networks, or other vendor systems, may result in the loss of \nconfidential business and financial data, misappropriation of our consumers', users' or employees' personal information or a \ndisruption of our business. Any of these outcomes could have a material adverse effect on our business, including unwanted \nmedia attention, impairment of our consumer and customer relationships, damage to our reputation; resulting in lost sales and \nconsumers, fines, lawsuits, or significant legal and remediation expenses. We also may need to expend significant resources to \nprotect against, respond to and/or redress problems caused by any breach.\nIn addition, we must comply with increasingly complex and rigorous, and sometimes conflicting, regulatory standards enacted to \nprotect business and personal data in the United States, Europe and elsewhere. For example, the European Union adopted the \nGeneral Data Protection Regulation (the \"GDPR\"); the United Kingdom enacted the UK General Data Protection Regulation \n(which implements the GDPR into UK law); several states in the United States have passed data privacy laws; China enacted the \nData Security Law and Personal Information Protection Law; and additional jurisdictions have adopted or are considering \nproposing or adopting similar regulations. These laws impose additional obligations on companies regarding the handling of \npersonal data and provide certain individual privacy rights to persons whose data is stored. Compliance with existing, proposed \nand recently enacted laws and regulations can be costly and time consuming, and any failure to comply with these regulatory \nstandards could subject us to legal, operational and reputational risks. Misuse of or failure to secure personal information could \nalso result in violation of data privacy laws and regulations, proceedings against the Company by governmental entities or others, \nimposition of fines by governmental authorities and damage to our reputation and credibility and could have a negative impact on \nrevenues and profits.\nWe could be subject to changes in tax rates, adoption of new tax laws, additional tax liabilities or increased volatility in \nour effective tax rate.\nWe earn a substantial portion of our income in foreign countries and, as such, we are subject to the tax laws in the United States \nand numerous foreign jurisdictions. Current economic and political conditions make tax laws and regulations, or their \ninterpretation and application, in any jurisdiction subject to significant change. \nProposals to reform U.S. and foreign tax laws could significantly impact how U.S. multinational corporations are taxed on global \nearnings and could increase the U.S. corporate tax rate. For example, the Organization for Economic Co-operation and \nDevelopment (OECD) and the G20 Inclusive Framework on Base Erosion and Profit Shifting (the \"Inclusive Framework\") has put \nforth two proposals—Pillar One and Pillar Two—that revise the existing profit allocation and nexus rules and ensure a minimal \nlevel of taxation, respectively. On December 12, 2022, the European Union member states agreed to implement the Inclusive \nFramework's global corporate minimum tax rate of 15%. Other countries are also actively considering changes to their tax laws to \nadopt certain parts of the Inclusive Framework's proposals. Although we cannot predict whether or in what form these proposals \nwill be enacted into law, these changes, if enacted into law, could have an adverse impact on our effective tax rate, income tax \nexpense and cash flows.\nPortions of our operations are subject to a reduced tax rate or are under a tax holiday. We also utilize tax rulings and other \nagreements to obtain certainty in treatment of certain tax matters. Tax holidays and rulings can expire from time to time and may \nbe extended when certain conditions are met, or terminated if certain conditions are not met. The impact of any changes in \nconditions would be the loss of certainty in treatment thus potentially impacting our effective income tax rate. For example, in \nJanuary 2019, the European Commission opened a formal investigation to examine whether the Netherlands has breached State \nAid rules when granting certain tax rulings to the Company. If this matter is adversely resolved, the Netherlands may be required \nto assess additional amounts with respect to prior periods, and the Company's income taxes related to prior periods in the \nNetherlands could increase.\nWe are also subject to the examination of our tax returns by the United States Internal Revenue Service (\"IRS\") and other tax \nauthorities. We regularly assess the likelihood of an adverse outcome resulting from these examinations to determine the \nadequacy of our provision for income taxes. Although we believe our tax provisions are adequate, the final determination of tax \naudits and any related disputes could be materially different from our historical income tax provisions and accruals. The results of \naudits or related disputes could have an adverse effect on our financial statements for the period or periods for which the \napplicable final determinations are made. For example, we and our subsidiaries are also engaged in a number of intercompany \ntransactions across multiple tax jurisdictions. Although we believe we have clearly reflected the economics of these transactions \n2023 FORM 10-K   21    \n\n\nand the proper local transfer pricing documentation is in place, tax authorities may propose and sustain adjustments that could \nresult in changes that may impact our mix of earnings in countries with differing statutory tax rates.\nFailure of our contractors or our licensees' contractors to comply with our code of conduct, local laws and other \nstandards could harm our business.\nWe have license agreements that permit independent parties to manufacture or contract for the manufacture of products using \nour intellectual property. We require the contractors that directly manufacture our products and our licensees that make products \nusing our intellectual property (including, indirectly, their contract manufacturers) to comply with a code of conduct and other \nenvironmental, human rights, health and safety standards for the benefit of workers. We also require our contract manufacturers \nand the contractors of our licensees to comply with applicable standards for product safety. Notwithstanding their contractual \nobligations, from time to time contractors may not comply with such standards or applicable local law or our licensees may fail to \nenforce such standards or applicable local law on their contractors. If one or more of our direct or indirect contractors violates or \nfails to comply with, or is accused of violating or failing to comply with, such standards and laws, this could harm our reputation or \nresult in a product recall and, as a result, could have an adverse effect on our sales and financial condition. Negative publicity \nregarding production methods, alleged unethical or illegal practices or workplace or related conditions of any of our suppliers, \nmanufacturers or licensees could adversely affect our brand image and sales, force us to locate alternative suppliers, \nmanufacturers or licenses or result in the imposition of additional regulations, including new or additional quotas, tariffs, \nsanctions, product safety regulations or other regulatory measures, by governmental authorities.\nRisks Related to Our Securities, Investments and Liquidity\nOur financial results may be adversely affected if substantial investments in businesses and operations fail to produce \nexpected returns.\nFrom time to time, we may invest in technology, business infrastructure, new businesses or capabilities, product offering and \nmanufacturing innovation and expansion of existing businesses, such as our NIKE Direct operations, which require substantial \ncash investments and management attention. We believe cost-effective investments are essential to business growth and \nprofitability; however, significant investments are subject to typical risks and uncertainties inherent in developing a new business \nor expanding an existing business. The failure of any significant investment to provide expected returns or profitability could have \na material adverse effect on our financial results and divert management attention from more profitable business operations. See \nalso \"Our NIKE Direct operations have required and will continue to require a substantial investment and commitment of \nresources and are subject to numerous risks and uncertainties.\"\nThe sale of a large number of shares of common stock by our principal shareholder could depress the market price of \nour common stock.\nAs of June 30, 2023, Swoosh, LLC beneficially owned approximately 77% of our Class A Common Stock. If, on June 30, 2023, all \nof these shares were converted into Class B Common Stock, Swoosh, LLC's commensurate ownership percentage of our Class \nB Common Stock would be approximately 16%. The shares are available for resale, subject to the requirements of the U.S. \nsecurities laws and the terms of the limited liability company agreement governing Swoosh, LLC. The sale or prospect of a sale of \na substantial number of these shares could have an adverse effect on the market price of our common stock. Swoosh, LLC was \nformed by Philip H. Knight, our Chairman Emeritus, to hold the majority of his shares of Class A Common Stock. Mr. Knight does \nnot have voting rights with respect to Swoosh, LLC, although Travis Knight, his son and a NIKE director, has a significant role in \nthe management of the Class A Common Stock owned by Swoosh, LLC.\nChanges in our credit ratings or macroeconomic conditions may affect our liquidity, increasing borrowing costs and \nlimiting our financing options.\nOur long-term debt is currently rated Investment Grade by Standard & Poor's and Moody's Investors Service. If our credit ratings \nare lowered, borrowing costs for our existing facilities or for future long-term debt or short-term credit facilities may increase and \nour financing options, including our access to credit or capital markets, could be adversely affected. We may also be subject to \nrestrictive covenants that would reduce our flexibility to, among other things, incur additional indebtedness, make restricted \npayments, pledge assets as security, make investments, loans, advances, guarantees and acquisitions, undergo fundamental \nchanges and enter into transactions with affiliates. Failure to comply with such covenants could result in a default, and as a result, \nthe commitments of our lenders under our credit agreements may be terminated and the maturity of amounts owed may be \naccelerated. In addition, macroeconomic conditions, such as increased volatility or disruption in the credit or capital markets, \ncould adversely affect our ability to refinance existing debt.\nIf our internal controls are ineffective, our operating results could be adversely affected.\nOur internal control over financial reporting may not prevent or detect misstatements because of its inherent limitations, including \nthe possibility of human error, the circumvention or overriding of controls or fraud. Even effective internal controls can provide \nonly reasonable assurance with respect to the preparation and fair presentation of financial statements. If we fail to maintain the \nadequacy of our internal controls, including any failure to implement required new or improved controls, or if we experience \nNIKE, INC.      \n22\n\n\ndifficulties in their implementation, our business and operating results could be harmed and we could fail to meet our financial \nreporting obligations. \nIf our estimates or judgments relating to our critical accounting estimates prove to be incorrect, our operating results \ncould be adversely affected.\nThe preparation of financial statements in conformity with accounting principles generally accepted in the United States requires \nmanagement to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and \naccompanying notes. We base our estimates on historical experience and on various other assumptions we believe to be \nreasonable under the circumstances, as provided in \"Management's Discussion and Analysis of Financial Condition and Results \nof Operations\". The results of these estimates form the basis for making judgments about the carrying values of assets, liabilities \nand equity, and the amount of revenues and expenses that are not readily apparent from other sources. Significant assumptions \nand estimates used in preparing our consolidated financial statements include those related to revenue recognition, inventory \nreserves, hedge accounting for derivatives, income taxes and other contingencies. Our operating results may be adversely \naffected if our assumptions change or if actual circumstances differ from those in our assumptions, which could cause our \noperating results to fall below the expectations of securities analysts and investors, resulting in a decline in the price of our Class \nB Common Stock.\nAnti-takeover provisions may impair an acquisition of the Company or reduce the price of our common stock.\nThere are provisions within our articles of incorporation and Oregon law intended to protect shareholder interests by providing the \nBoard of Directors a means to attempt to deny coercive takeover attempts or to negotiate with a potential acquirer in order to \nobtain more favorable terms. Such provisions include a control share acquisition statute, a freeze-out statute, two classes of \nstock that vote separately on certain issues, and the fact that holders of Class A Common Stock elect three-quarters of the Board \nof Directors rounded down to the next whole number. However, such provisions could discourage, delay or prevent an unsolicited \nmerger, acquisition or other change in control of the Company that some shareholders might believe to be in their best interests \nor in which shareholders might receive a premium for their common stock over the prevailing market price. These provisions \ncould also discourage proxy contests for control of the Company.\nWe may fail to meet market expectations, which could cause the price of our stock to decline.\nOur Class B Common Stock is traded publicly, and at any given time various securities analysts follow our financial results and \nissue reports on us. These reports include information about our historical financial results as well as analysts' opinions of our \nfuture performance, which may, in part, be based upon any guidance we have provided. Analysts' estimates are often different \nfrom our estimates or expectations. If our operating results are below the estimates or expectations of public market analysts and \ninvestors, our stock price could decline. In the past, securities class action litigation has been brought against NIKE and other \ncompanies following a decline in the market price of their securities. If our stock price is volatile for any reason, we may become \ninvolved in this type of litigation in the future. Any litigation could result in reputational damage, substantial costs and a diversion \nof management's attention and resources needed to successfully run our business.\n2023 FORM 10-K   23    \n\n\nITEM 1B. UNRESOLVED STAFF COMMENTS\nNone.\nITEM 2. PROPERTIES\nThe following is a summary of principal properties owned or leased by NIKE:\nThe NIKE World Campus, owned by NIKE and located near Beaverton, Oregon, USA, is an approximately 400-acre site \nconsisting of over 40 buildings which, together with adjacent leased properties, functions as our world headquarters and is \noccupied by approximately 11,400 employees engaged in management, research, design, development, marketing, finance and \nother administrative functions serving nearly all of our segments. We lease a similar, but smaller, administrative facility in \nHilversum, the Netherlands, which serves as the headquarters for our Europe, Middle East & Africa geography and management \nof certain brand functions for our non-U.S. operations. We also lease an office complex in Shanghai, China, our headquarters for \nour Greater China geography, occupied by employees focused on implementing our wholesale, NIKE Direct and merchandising \nstrategies in the region, among other functions.\nIn the United States, NIKE has eight significant distribution centers. Five are located in or near Memphis, Tennessee, two of \nwhich are owned and three of which are leased. Two other distribution centers, one located in Indianapolis, Indiana and one \nlocated in Dayton, Tennessee, are leased and operated by third-party logistics providers. One distribution center for Converse is \nlocated in Ontario, California, which is leased. NIKE has a number of distribution facilities outside the United States, some of \nwhich are leased and operated by third-party logistics providers. The most significant distribution facilities outside the United \nStates are located in Laakdal, Belgium; Taicang, China; Tomisato, Japan and Icheon, Korea, all of which we own.\nAir Manufacturing Innovation manufactures cushioning components used in footwear at NIKE-owned and leased facilities located \nnear Beaverton, Oregon, and in Dong Nai Province, Vietnam, as well as at NIKE-owned facilities in St. Charles, Missouri. \nAside from the principal properties described above, we lease many offices worldwide for sales and administrative purposes. We \nlease approximately 1,027 retail stores worldwide, which primarily consist of factory stores. See \"United States Market\" and \n\"International Markets\" for additional information regarding our retail stores. Our leases expire at various dates through the fiscal \nyear 2052.\nITEM 3. LEGAL PROCEEDINGS\nWe do not believe there are any material pending legal proceedings, other than ordinary routine litigation incidental to our \nbusiness, to which we are a party or of which any of our property is the subject. Refer to Note 16 — Commitments and \nContingencies in the accompanying Notes to the Consolidated Financial Statements for further information.\nITEM 4. MINE SAFETY DISCLOSURES\nNot applicable.\nNIKE, INC.      \n24\n\n\nPART II\nITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, \nRELATED STOCKHOLDER MATTERS AND ISSUER \nPURCHASES OF EQUITY SECURITIES\nNIKE's Class B Common Stock is listed on the New York Stock Exchange and trades under the symbol NKE. At July 12, 2023, \nthere were 21,813 holders of record of NIKE's Class B Common Stock and 15 holders of record of NIKE's Class A Common \nStock. These figures do not include beneficial owners who hold shares in nominee name. The Class A Common Stock is not \npublicly traded, but each share is convertible upon request of the holder into one share of Class B Common Stock. Refer to our \nConsolidated Statements of Shareholders' Equity for dividends declared on the Class A and Class B Common Stock.\nIn August 2022, the Company terminated the previous four-year, $15 billion share repurchase program approved by the Board of \nDirectors in June 2018. Prior to the program's termination, the Company purchased 6.5 million shares at an average price of \n$109.85 per share for a total approximate cost of $710.0 million during the first quarter of fiscal 2023 and 83.8 million shares at \nan average price of $111.82 per share for a total approximate cost of $9.4 billion during the term of this program.\nUpon termination of the $15 billion program, the Company began purchasing shares under a new four-year, $18 billion share \nrepurchase program authorized by the Board of Directors in June 2022. As of May 31, 2023, the Company had repurchased 43.5 \nmillion shares at an average price of $110.38 per share for a total approximate cost of $4.8 billion under the new program.\nRepurchases under the Company's new program will be made in open market or privately negotiated transactions in compliance \nwith the Securities and Exchange Commission Rule 10b-18, subject to market conditions, applicable legal requirements and \nother relevant factors. The new share repurchase program does not obligate the Company to acquire any particular amount of \ncommon stock, and it may be suspended at any time at the Company's discretion.\nAll share repurchases were made under NIKE's publicly announced program, and there are no other programs under which the \nCompany repurchases shares. The following table presents a summary of share repurchases made during the quarter ended \nMay 31, 2023: \nPERIOD\nTOTAL NUMBER OF \nSHARES PURCHASED\nAVERAGE PRICE  \nPAID PER SHARE\nAPPROXIMATE DOLLAR \nVALUE OF SHARES THAT \nMAY YET BE PURCHASED \nUNDER THE PLANS \nOR PROGRAMS \n(IN MILLIONS)\nMarch 1 — March 31, 2023\n \n4,118,427 $ \n120.04 $ \n14,099 \nApril 1 — April 30, 2023\n \n3,282,288 $ \n125.01 $ \n13,689 \nMay 1 — May 31, 2023\n \n4,134,824 $ \n118.30 $ \n13,200 \n \n11,535,539 $ \n120.83 \n2023 FORM 10-K   25    \n\n\nPERFORMANCE GRAPH\nThe following graph demonstrates a five-year comparison of cumulative total returns for NIKE's Class B Common Stock; the \nStandard & Poor's 500 Stock Index; the Dow Jones U.S. Footwear Index; and the Standard & Poor's Apparel, Accessories & \nLuxury Goods Index. The graph assumes an investment of $100 on May 31, 2018, in each of the indices and our Class B \nCommon Stock. Each of the indices assumes that all dividends were reinvested on the day of issuance.\nCOMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN AMONG NIKE, INC.; S&P 500 INDEX; THE DOW JONES U.S. FOOTWEAR \nINDEX; AND S&P APPAREL, ACCESSORIES & LUXURY GOODS INDEX\nThe Dow Jones U.S. Footwear Index consists of NIKE, Crocs Inc., Deckers Outdoor Corporation and Skechers U.S.A., Inc. \nBecause NIKE is part of the Dow Jones U.S. Footwear Index, the price and returns of NIKE stock have a substantial effect on this \nindex. The Standard & Poor's Apparel, Accessories & Luxury Goods Index consists of Ralph Lauren Corporation, Tapestry, Inc. \nand V.F. Corporation. The Dow Jones U.S. Footwear Index and the Standard & Poor's Apparel, Accessories & Luxury Goods \nIndex include companies in two major lines of business in which the Company competes. The indices do not encompass all of the \nCompany's competitors, nor all product categories and lines of business in which the Company is engaged.\nThe stock performance shown on the performance graph above is not necessarily indicative of future performance. The Company \nwill not make or endorse any predictions as to future stock performance.\nThe performance graph above is being furnished solely to accompany this Annual Report pursuant to Item 201(e) of Regulation \nS-K, is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be \nincorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general \nincorporation language in such filing.\nNIKE, INC.      \n26\n$0\n$20\n$40\n$60\n$80\n$100\n$120\n$140\n$160\n$180\n$200\n$220\n2018\n2019\n2020\n2021\n2022\n2023\nNIKE, Inc.\nS&P 500 INDEX - TOTAL RETURN\nDOW JONES US FOOTWEAR INDEX\nS&P 500 APPAREL, ACCESSORIES & LUXURY GOODS INDEX\n\n\nITEM 6. [RESERVED] \n2023 FORM 10-K   27    \n\n\nITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF \nFINANCIAL CONDITION AND RESULTS OF OPERATIONS\nOVERVIEW\nNIKE designs, develops, markets and sells athletic footwear, apparel, equipment, accessories and services worldwide. We are \nthe largest seller of athletic footwear and apparel in the world. We sell our products through NIKE Direct operations, which is \ncomprised of both NIKE-owned retail stores and sales through our digital platforms (also referred to as \"NIKE Brand Digital\"), to \nwholesale accounts and to a mix of independent distributors, licensees and sales representatives in nearly all countries around \nthe world. Our goal is to deliver value to our shareholders by building a profitable global portfolio of branded footwear, apparel, \nequipment and accessories businesses. Our strategy is to achieve long-term revenue growth by creating innovative, \"must-have\" \nproducts, building deep personal consumer connections with our brands and delivering compelling consumer experiences \nthrough digital platforms and at retail.\nThrough the Consumer Direct Acceleration strategy, we are focused on creating the marketplace of the future with more \npremium, consistent and seamless consumer experiences, leading with digital and our owned stores, as well as select wholesale \npartners. In addition, our product creation and marketing organizations are aligned to a consumer construct focused on sports \ndimensions through Men's, Women's and Kids', which allows us to better serve consumer needs. We continue to invest in a new \nEnterprise Resource Planning Platform, data and analytics, demand sensing, insight gathering, and other areas to create an end-\nto-end technology foundation, which we believe will further accelerate our digital transformation. We believe this unified approach \nwill accelerate growth and unlock more efficiency for our business, while driving speed and responsiveness as we serve \nconsumers globally.\nFINANCIAL HIGHLIGHTS \n• In fiscal 2023, NIKE, Inc. achieved record Revenues of $51.2 billion, which increased 10% and 16% on a reported and \ncurrency-neutral basis, respectively \n• NIKE Direct revenues grew 14% from $18.7 billion in fiscal 2022 to $21.3 billion in fiscal 2023, and represented \napproximately 44% of total NIKE Brand revenues for fiscal 2023\n• Gross margin for the fiscal year decreased 250 basis points to 43.5% primarily driven by higher product costs, higher \nmarkdowns and unfavorable changes in foreign currency exchange rates, partially offset by strategic pricing actions\n• Inventories as of May 31, 2023 were $8.5 billion, flat compared to the prior year, driven by the actions we took throughout \nfiscal 2023 to manage inventory levels\n• We returned $7.5 billion to our shareholders in fiscal 2023 through share repurchases and dividends\n• Return on Invested Capital (\"ROIC\") as of May 31, 2023 was 31.5% compared to 46.5% as of May 31, 2022. ROIC is \nconsidered a non-GAAP financial measure, see \"Use of Non-GAAP Financial Measures\" for further information.\nFor discussion related to the results of operations and changes in financial condition for fiscal 2022 compared to fiscal 2021 refer \nto Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations in our fiscal 2022 \nForm 10-K, which was filed with the United States Securities and Exchange Commission on July 21, 2022.\nCURRENT ECONOMIC CONDITIONS AND MARKET DYNAMICS \n• Consumer Spending: Our fiscal 2023 growth in Revenues reflects strong demand for our products despite ongoing \nuncertainty in the global economy. We will continue to closely monitor macroeconomic conditions, including potential impacts \nof inflation and rising interest rates on consumer behavior. \n• Inflationary Pressures: Inflationary pressures, including higher product input, freight and logistics costs negatively \nimpacted gross margin for fiscal 2023. The strategic pricing actions we have taken partially offset the impacts of these higher \ncosts.\n• Supply Chain Volatility: Supply chain challenges, macroeconomic conditions and the impact of the COVID-19 pandemic \non the manufacturing of our product disrupted the flow of seasonal product in fiscal 2022 and the first quarter of fiscal 2023, \nresulting in elevated inventory levels at the end of the first quarter of fiscal 2023. Throughout fiscal 2023, we took action to \nreduce excess inventory by decreasing future inventory purchases and increasing promotional activity. These actions, along \nwith the stabilization of inventory transit times in the second and third quarters of fiscal 2023, resulted in the normalization of \nthe seasonal flow of product in the fourth quarter of fiscal 2023.\nNIKE, INC.      \n28\n\n\n• COVID-19 Impacts in Greater China: During the first and second quarters of fiscal 2023, we managed through continued \ntemporary store closures and reduced retail traffic in Greater China, primarily due to COVID-19 related local government \nrestrictions. At the beginning of the third quarter of fiscal 2023, the government mandated restrictions were lifted and we \nexperienced improvement in physical retail traffic. \n• Foreign Currency Impacts: As a global company with significant operations outside the United States, we are exposed to \nrisk arising from foreign currency exchange rates. For fiscal 2023, fluctuations in foreign currency exchange rates negatively \nimpacted our reported Revenues by approximately $2,859 million, reducing our revenue growth rate to 10% on a reported \nbasis from 16% on a currency-neutral basis. Foreign currency impacts, net of hedges, also reduced our reported Income \nbefore income taxes by approximately $1,023 million. For further information, refer to \"Foreign Currency Exposures and \nHedging Practices\".\nThe operating environment could remain volatile in fiscal 2024 as the risk exists that worsening macroeconomic conditions could \nhave a material adverse impact on our future revenue growth as well as overall profitability. For more information refer to Item 1A \nRisk Factors, within Part I, Item 1. Business.\nRECENT DEVELOPMENTS\nDuring the first and second quarters of fiscal 2023, we completed the sale of our entity in Chile and our entities in Argentina and \nUruguay to third-party distributors, respectively. Now that we have completed the shift from a wholesale and direct to consumer \noperating model to a distributor model within our Central and South America (\"CASA\") territory, we expect consolidated NIKE, \nInc. and Asia Pacific & Latin America (\"APLA\") revenue growth will be reduced due to different commercial terms. However, over \ntime we expect the future operating model to have a favorable impact on our overall profitability as we reduce selling and \nadministrative expenses, as well as reduce exposure to foreign exchange rate volatility.\nUSE OF NON-GAAP FINANCIAL MEASURES\nThroughout this Annual Report on Form 10-K, we discuss non-GAAP financial measures, which should be considered in addition \nto, and not in lieu of, the financial measures calculated and presented in accordance with U.S. GAAP. References to these \nmeasures should not be considered in isolation or as a substitute for other financial measures calculated and presented in \naccordance with U.S. GAAP and may not be comparable to similarly titled measures used by other companies. Management \nuses these non-GAAP measures when evaluating the Company's performance, including when making financial and operating \ndecisions. Additionally, management believes these non-GAAP financial measures provide investors with additional financial \ninformation that should be considered when assessing our underlying business performance and trends. \nEarnings Before Interest and Taxes (\"EBIT\"): Calculated as Net income before Interest expense (income), net and Income tax \nexpense in the Consolidated Statements of Income. Total NIKE, Inc. EBIT for fiscal 2023 and fiscal 2022 is as follows:\nYEAR ENDED MAY 31,\n(Dollars in millions)\n2023\n2022\nNet income\n$ \n5,070 \n$ \n6,046 \nAdd: Interest expense (income), net\n \n(6) \n \n205 \nAdd: Income tax expense\n \n1,131 \n \n605 \nEarnings before interest and taxes\n$ \n6,195 \n$ \n6,856 \nEBIT Margin: Calculated as total NIKE, Inc. EBIT divided by total NIKE, Inc. Revenues. Our EBIT Margin calculation for fiscal \n2023 and fiscal 2022 is as follows:\nYEAR ENDED MAY 31,\n(Dollars in millions)\n2023\n2022\nNumerator\nEarnings before interest and taxes\n$ \n6,195 \n$ \n6,856 \nDenominator\nTotal NIKE, Inc. Revenues\n$ \n51,217 \n$ \n46,710 \nEBIT Margin\n \n12.1 \n%\n \n14.7 \n%\n2023 FORM 10-K   29    \n\n\nReturn on Invested Capital (\"ROIC\"): Represents a performance measure that management believes is useful information in \nunderstanding the Company's ability to effectively manage invested capital. Our ROIC calculation as of May 31, 2023 and 2022 is \nas follows:\nFOR THE TRAILING FOUR \nQUARTERS ENDED\n(Dollars in millions)\nMAY 31, 2023\nMAY 31, 2022\nNumerator\nNet income \n$ \n5,070 \n$ \n6,046 \nAdd: Interest expense (income), net\n \n(6) \n \n205 \nAdd: Income tax expense\n \n1,131 \n \n605 \nEarnings before interest and taxes\n \n6,195 \n \n6,856 \nIncome tax adjustment(1)\n \n(1,130) \n \n(624) \nEarnings before interest and after taxes\n$ \n5,065 \n$ \n6,232 \nAVERAGE FOR THE TRAILING FIVE \nQUARTERS ENDED\nMAY 31, 2023\nMAY 31, 2022\nDenominator\nTotal debt(2)\n$ \n12,491 \n$ \n12,722 \nAdd: Shareholders' equity\n \n14,982 \n \n14,425 \nLess: Cash and equivalents and Short-term investments\n \n11,394 \n \n13,748 \nTotal invested capital\n$ \n16,079 \n$ \n13,399 \nRETURN ON INVESTED CAPITAL\n \n31.5 \n%\n \n46.5 \n%\n(1)\nEquals Earnings before interest and taxes multiplied by the effective tax rate as of the respective quarter end.\n(2)\nTotal debt includes the following: 1) Current portion of long-term debt, 2) Notes Payable, 3) Current portion of operating lease liabilities, 4) Long-term \ndebt and 5) Operating lease liabilities.\nCurrency-neutral revenues: Currency-neutral revenues enhance visibility to underlying business trends, excluding the impact of \ntranslation arising from foreign currency exchange rate fluctuations. Currency-neutral revenues are calculated using actual \nexchange rates in use during the comparative prior year period in place of the exchange rates in use during the current period.\nWholesale equivalent revenues: References to wholesale equivalent revenues are intended to provide context as to the total \nsize of our NIKE Brand market footprint if we had no NIKE Direct operations. NIKE Brand wholesale equivalent revenues consist \nof (1) sales to external wholesale customers and (2) internal sales from our wholesale operations to our NIKE Direct operations, \nwhich are charged at prices comparable to those charged to external wholesale customers. \nCOMPARABLE STORE SALES\nComparable store sales: This key metric, which excludes NIKE Brand Digital sales, comprises revenues from NIKE-owned in-\nline and factory stores for which all three of the following requirements have been met: (1) the store has been open at least one \nyear, (2) square footage has not changed by more than 15% within the past year and (3) the store has not been permanently \nrepositioned within the past year. Comparable store sales includes revenues from stores that were temporarily closed during the \nperiod as a result of COVID-19. Comparable store sales represents a performance metric that we believe is useful information for \nmanagement and investors in understanding the performance of our established NIKE-owned in-line and factory stores. \nManagement considers this metric when making financial and operating decisions. The method of calculating comparable store \nsales varies across the retail industry. As a result, our calculation of this metric may not be comparable to similarly titled metrics \nused by other companies.\nNIKE, INC.      \n30\n\n\nRESULTS OF OPERATIONS\n(Dollars in millions, except per share data)\nFISCAL 2023\nFISCAL 2022\n% CHANGE\nFISCAL 2021\n% CHANGE\nRevenues\n$ \n51,217 \n$ \n46,710 \n \n10 \n% $ \n44,538 \n \n5 \n%\nCost of sales\n \n28,925 \n \n25,231 \n \n15 \n%  \n24,576 \n \n3 \n%\nGross profit\n \n22,292 \n \n21,479 \n \n4 \n%  \n19,962 \n \n8 \n%\nGross margin\n \n43.5 %\n \n46.0 %\n \n44.8 %\nDemand creation expense\n \n4,060 \n \n3,850 \n \n5 \n%  \n3,114 \n \n24 \n%\nOperating overhead expense\n \n12,317 \n \n10,954 \n \n12 \n%  \n9,911 \n \n11 \n%\nTotal selling and administrative expense\n \n16,377 \n \n14,804 \n \n11 \n%  \n13,025 \n \n14 \n%\n% of revenues\n \n32.0 %\n \n31.7 %\n \n29.2 %\nInterest expense (income), net\n \n(6) \n \n205 \n \n— \n \n262 \n \n— \nOther (income) expense, net\n \n(280) \n \n(181) \n \n— \n \n14 \n \n— \nIncome before income taxes\n \n6,201 \n \n6,651 \n \n-7 \n%  \n6,661 \n \n0 \n%\nIncome tax expense\n \n1,131 \n \n605 \n \n87 \n%  \n934 \n \n-35 \n%\nEffective tax rate\n \n18.2 %\n \n9.1 %\n \n14.0 %\nNET INCOME\n$ \n5,070 \n$ \n6,046 \n \n-16 \n% $ \n5,727 \n \n6 \n%\nDiluted earnings per common share\n$ \n3.23 \n$ \n3.75 \n \n-14 \n% $ \n3.56 \n \n5 \n%\n \n2023 FORM 10-K   31    \n\n\nCONSOLIDATED OPERATING RESULTS\nREVENUES\n(Dollars in millions)\nFISCAL \n2023\nFISCAL \n2022\n% \nCHANGE\n% CHANGE \nEXCLUDING \nCURRENCY \nCHANGES\n(1)\nFISCAL \n2021\n% \nCHANGE\n% CHANGE \nEXCLUDING \nCURRENCY \nCHANGES\n(1)\nNIKE, Inc. Revenues:\nNIKE Brand Revenues by:\nFootwear\n$ 33,135 $ 29,143 \n \n14 \n%\n \n20 \n% $ 28,021 \n \n4 \n%\n \n4 \n%\nApparel\n 13,843  13,567 \n \n2 \n%\n \n8 \n%  12,865 \n \n5 \n%\n \n6 \n%\nEquipment\n \n1,727  \n1,624 \n \n6 \n%\n \n13 \n%  \n1,382 \n \n18 \n%\n \n18 \n%\nGlobal Brand Divisions(2)\n \n58  \n102 \n \n-43 \n%\n \n-43 \n%  \n25 \n \n308 \n%\n \n302 \n%\nTotal NIKE Brand Revenues\n$ 48,763 $ 44,436 \n \n10 \n%\n \n16 \n% $ 42,293 \n \n5 \n%\n \n6 \n%\nConverse\n \n2,427  \n2,346 \n \n3 \n%\n \n8 \n%  \n2,205 \n \n6 \n%\n \n7 \n%\nCorporate(3)\n \n27  \n(72)  \n— \n \n— \n \n40  \n— \n \n— \nTOTAL NIKE, INC. REVENUES\n$ 51,217 $ 46,710 \n \n10 \n%\n \n16 \n% $ 44,538 \n \n5 \n%\n \n6 \n%\nSupplemental NIKE Brand Revenues Details:\nNIKE Brand Revenues by:\nSales to Wholesale Customers\n$ 27,397 $ 25,608 \n \n7 \n%\n \n14 \n% $ 25,898 \n \n-1 \n%\n \n-1 \n%\nSales through NIKE Direct\n 21,308  18,726 \n \n14 \n%\n \n20 \n%  16,370 \n \n14 \n%\n \n15 \n%\nGlobal Brand Divisions(2)\n \n58  \n102 \n \n-43 \n%\n \n-43 \n%  \n25 \n \n308 \n%\n \n302 \n%\nTOTAL NIKE BRAND REVENUES\n$ 48,763 $ 44,436 \n \n10 \n%\n \n16 \n% $ 42,293 \n \n5 \n%\n \n6 \n%\nNIKE Brand Revenues on a Wholesale Equivalent \nBasis(1):\nSales to Wholesale Customers\n$ 27,397 $ 25,608 \n \n7 \n%\n \n14 \n% $ 25,898 \n \n-1 \n%\n \n-1 \n%\nSales from our Wholesale Operations to NIKE Direct \nOperations\n 12,730  10,543 \n \n21 \n%\n \n27 \n%  \n9,872 \n \n7 \n%\n \n7 \n%\nTOTAL NIKE BRAND WHOLESALE EQUIVALENT \nREVENUES\n$ 40,127 $ 36,151 \n \n11 \n%\n \n18 \n% $ 35,770 \n \n1 \n%\n \n1 \n%\nNIKE Brand Wholesale Equivalent Revenues by:(1),(4)\nMen's\n$ 20,733 $ 18,797 \n \n10 \n%\n \n17 \n% $ 18,391 \n \n2 \n%\n \n3 \n%\nWomen's\n \n8,606  \n8,273 \n \n4 \n%\n \n11 \n%  \n8,225 \n \n1 \n%\n \n1 \n%\nNIKE Kids'\n \n5,038  \n4,874 \n \n3 \n%\n \n10 \n%  \n4,882 \n \n0 \n%\n \n0 \n%\nJordan Brand\n \n6,589  \n5,122 \n \n29 \n%\n \n35 \n%  \n4,780 \n \n7 \n%\n \n7 \n%\nOthers(5)\n \n(839)  \n(915) \n \n8 \n%\n \n-3 \n%  \n(508) \n \n-80 \n%\n \n-79 \n%\nTOTAL NIKE BRAND WHOLESALE EQUIVALENT \nREVENUES\n$ 40,127 $ 36,151 \n \n11 \n%\n \n18 \n% $ 35,770 \n \n1 \n%\n \n1 \n%\n(1)\nThe percent change excluding currency changes and the presentation of wholesale equivalent revenues represent non-GAAP financial measures. For \nfurther information, see \"Use of Non-GAAP Financial Measures\".\n(2)\nGlobal Brand Divisions revenues include NIKE Brand licensing and other miscellaneous revenues that are not part of a geographic operating segment.\n(3)\nCorporate revenues primarily consist of foreign currency hedge gains and losses related to revenues generated by entities within the NIKE Brand \ngeographic operating segments and Converse, but managed through our central foreign exchange risk management program.\n(4)\nAs a result of the Consumer Direct Acceleration strategy, announced in fiscal 2021, the Company is now organized around a consumer construct of \nMen's, Women's and Kids'. Beginning in the first quarter of fiscal 2022, unisex products are classified within Men's, and Jordan Brand revenues are \nseparately reported. Certain prior year amounts were reclassified to conform to fiscal 2022 presentation. These changes had no impact on previously \nreported consolidated results of operations or shareholders' equity. \n(5)\nOthers include products not allocated to Men's, Women's, NIKE Kids' and Jordan Brand, as well as certain adjustments that are not allocated to \nproducts designated by consumer.\nNIKE, INC.      \n32\n\n\nFISCAL 2023 NIKE BRAND REVENUE HIGHLIGHTS\nThe following tables present NIKE Brand revenues disaggregated by reportable operating segment, distribution channel and \nmajor product line:\nFISCAL 2023 COMPARED TO FISCAL 2022\n• NIKE, Inc. Revenues were $51.2 billion in fiscal 2023, which increased 10% and 16% compared to fiscal 2022 on a reported \nand currency-neutral basis, respectively. The increase was due to higher revenues in North America, Europe, Middle East & \nAfrica (\"EMEA\"), APLA and Greater China, which contributed approximately 7, 6, 2 and 1 percentage points to NIKE, Inc. \nRevenues, respectively. \n• NIKE Brand revenues, which represented over 90% of NIKE, Inc. Revenues, increased 10% and 16% on a reported and \ncurrency-neutral basis, respectively. This increase was primarily due to higher revenues in Men's, the Jordan Brand, \nWomen's and Kids' which grew 17%, 35%,11% and 10%, respectively, on a wholesale equivalent basis. \n• NIKE Brand footwear revenues increased 20% on a currency-neutral basis, due to higher revenues in Men's, the \nJordan Brand, Women's and Kids'. Unit sales of footwear increased 13%, while higher average selling price (\"ASP\") \nper pair contributed approximately 7 percentage points of footwear revenue growth. Higher ASP was primarily due to \nhigher full-price ASP, net of discounts, on a wholesale equivalent basis, and growth in the size of our NIKE Direct \nbusiness, partially offset by lower NIKE Direct ASP. \n• NIKE Brand apparel revenues increased 8% on a currency-neutral basis, primarily due to higher revenues in Men's. \nUnit sales of apparel increased 4%, while higher ASP per unit contributed approximately 4 percentage points of \napparel revenue growth. Higher ASP was primarily due to higher full-price ASP and growth in the size of our NIKE \nDirect business, partially offset by lower NIKE Direct ASP, reflecting higher promotional activity.\n• NIKE Direct revenues increased 14% from $18.7 billion in fiscal 2022 to $21.3 billion in fiscal 2023. On a currency-neutral \nbasis, NIKE Direct revenues increased 20% primarily driven by NIKE Brand Digital sales growth of 24%, comparable store \nsales growth of 14% and the addition of new stores. For further information regarding comparable store sales, including the \ndefinition, see \"Comparable Store Sales\". NIKE Brand Digital sales were $12.6 billion for fiscal 2023 compared to \n$10.7 billion for fiscal 2022.\n2023 FORM 10-K   33    \n28%\nEMEA\n13%\nAPLA\n44%\nNorth\nAmerica\n15%\nGreater\nChina\n56%\nWholesale\n44%\nNIKE\nDirect\n28%\nApparel\n4%\nEquipment\n68%\nFootwear\n\n\nGROSS MARGIN\nFISCAL 2023 COMPARED TO FISCAL 2022\nFor fiscal 2023, our consolidated gross profit increased 4% to $22,292 million compared to $21,479 million for fiscal 2022. Gross \nmargin decreased 250 basis points to 43.5% for fiscal 2023 compared to 46.0% for fiscal 2022 due to the following:\n*Wholesale equivalent\nThe decrease in gross margin for fiscal 2023 was primarily due to:\n• Higher NIKE Brand product costs, on a wholesale equivalent basis, primarily due to higher input costs and elevated inbound \nfreight and logistics costs as well as product mix;\n• Lower margin in our NIKE Direct business, driven by higher promotional activity to liquidate inventory in the current period \ncompared to lower promotional activity in the prior period resulting from lower available inventory supply;\n• Unfavorable changes in net foreign currency exchange rates, including hedges; and\n• Lower off-price margin, on a wholesale equivalent basis.\nThis was partially offset by:\n• Higher NIKE Brand full-price ASP, net of discounts, on a wholesale equivalent basis, due primarily to strategic pricing actions \nand product mix; and\n• Lower other costs, primarily due to higher inventory obsolescence reserves recognized in Greater China in the fourth quarter \nof fiscal 2022.\nTOTAL SELLING AND ADMINISTRATIVE EXPENSE\n(Dollars in millions)\nFISCAL 2023\nFISCAL 2022\n% CHANGE\nFISCAL 2021\n% CHANGE\nDemand creation expense(1)\n$ \n4,060 \n$ \n3,850 \n \n5% \n$ \n3,114 \n \n24% \nOperating overhead expense\n \n12,317 \n \n10,954 \n \n12% \n \n9,911 \n \n11% \nTotal selling and administrative expense\n$ \n16,377 \n$ \n14,804 \n \n11% \n$ \n13,025 \n \n14% \n% of revenues\n \n32.0 \n%\n \n31.7 \n%  \n30  bps\n \n29.2 \n%  \n250  bps\n(1)\nDemand creation expense consists of advertising and promotion costs, including costs of endorsement contracts, complimentary product, television, \ndigital and print advertising and media costs, brand events and retail brand presentation.\nFISCAL 2023 COMPARED TO FISCAL 2022\nDemand creation expense increased 5% for fiscal 2023, primarily due to higher advertising and marketing expense and higher \nsports marketing expense. Changes in foreign currency exchange rates decreased Demand creation expense by approximately 4 \npercentage points. \nOperating overhead expense increased 12%, primarily due to higher wage-related expenses, NIKE Direct variable costs, \nstrategic technology enterprise investments and other administrative costs. Changes in foreign currency exchange rates \ndecreased Operating overhead expense by approximately 3 percentage points.\nNIKE, INC.      \n34\n%\n43.5\n(1.0)\n3.1\n(3.3)\n0.1\n(0.4)\n(1.0)\n46.0\nFY 23\nFULL PRICE NIKE \nBRAND AVERAGE \nSELLING PRICE \n(NET OF\nDISCOUNTS)*\nFOREIGN CURRENCY\nEXCHANGE RATES\n(INCL. HEDGES)\nOTHER COSTS\nOFF-PRICE*\nNIKE DIRECT\nFY 22\nNIKE BRAND\nPRODUCT COSTS*\n40.0\n42.0\n44.0\n46.0\n48.0\n\n\nOTHER (INCOME) EXPENSE, NET\n(Dollars in millions)\nFISCAL 2023\nFISCAL 2022\nFISCAL 2021\nOther (income) expense, net\n$ \n(280) $ \n(181) $ \n14 \nOther (income) expense, net comprises foreign currency conversion gains and losses from the remeasurement of monetary \nassets and liabilities denominated in non-functional currencies and the impact of certain foreign currency derivative instruments, \nas well as unusual or non-operating transactions that are outside the normal course of business.\nFISCAL 2023 COMPARED TO FISCAL 2022 \nOther (income) expense, net increased from $181 million of other income, net in fiscal 2022 to $280 million in the current fiscal \nyear, primarily due to a net favorable change in foreign currency conversion gains and losses, including hedges, and the one-time \ncharge related to the deconsolidation of our Russian operations recognized in the prior year. This increase was partially offset by \nnet unfavorable activity related to our strategic distributor partnership transition within APLA, including the loss recognized upon \nthe completion of the sale of our entities in Argentina and Uruguay to a third-party distributor in the second quarter of fiscal 2023.\nFor more information related to our distributor partnership transition within APLA, see Note 18 — Acquisitions and Divestitures \nwithin the accompanying Notes to the Consolidated Financial Statements. \nWe estimate the combination of the translation of foreign currency-denominated profits from our international businesses, and the \nyear-over-year change in foreign currency-related gains and losses included in Other (income) expense, net had an unfavorable \nimpact on our Income before income taxes of $1,023 million for fiscal 2023. \nINCOME TAXES\nFISCAL 2023\nFISCAL 2022\n% CHANGE\nFISCAL 2021\n% CHANGE\nEffective tax rate\n \n18.2 \n%\n \n9.1 \n%\n910 bps\n \n14.0 \n%\n(490) bps\nFISCAL 2023 COMPARED TO FISCAL 2022 \nOur effective tax rate was 18.2% for fiscal 2023, compared to 9.1% for fiscal 2022, primarily due to decreased benefits from \nstock-based compensation and a non-cash, one-time benefit in the prior year related to the onshoring of certain non-U.S. \nintangible property ownership rights.\nOn August 16, 2022, the U.S. government enacted the Inflation Reduction Act of 2022 that includes, among other provisions, \nchanges to the U.S. corporate income tax system, including a fifteen percent minimum tax based on \"adjusted financial statement \nincome,\" which is effective for NIKE beginning June 1, 2023. Based on our current analysis of the provisions, we do not expect \nthese tax law changes to have a material impact on our financial statements; however, we will continue to evaluate their impact \nas further information becomes available. \n2023 FORM 10-K   35    \n\n\nOPERATING SEGMENTS\nAs discussed in Note 15 — Operating Segments and Related Information in the accompanying Notes to the Consolidated \nFinancial Statements, our operating segments are evidence of the structure of the Company's internal organization. The NIKE \nBrand segments are defined by geographic regions for operations participating in NIKE Brand sales activity. \nThe breakdown of Revenues is as follows:\n(Dollars in millions)\nFISCAL 2023 FISCAL 2022\n% CHANGE\n% CHANGE \nEXCLUDING \nCURRENCY \nCHANGES\n(1) FISCAL 2021\n% CHANGE\n% CHANGE \nEXCLUDING \nCURRENCY \nCHANGES\n(1)\nNorth America\n$ 21,608 $ 18,353 \n \n18 \n%\n \n18 \n% $ 17,179 \n \n7 \n%\n \n7 \n%\nEurope, Middle East & Africa\n \n13,418  \n12,479 \n \n8 \n%\n \n21 \n%  \n11,456 \n \n9 \n%\n \n12 \n%\nGreater China\n \n7,248  \n7,547 \n \n-4 \n%\n \n4 \n%  \n8,290 \n \n-9 \n%\n \n-13 \n%\nAsia Pacific & Latin America(2)\n \n6,431  \n5,955 \n \n8 \n%\n \n17 \n%  \n5,343 \n \n11 \n%\n \n16 \n%\nGlobal Brand Divisions(3)\n \n58  \n102 \n \n-43 \n%\n \n-43 \n%  \n25 \n \n308 \n%\n \n302 \n%\nTOTAL NIKE BRAND\n$ 48,763 $ 44,436 \n \n10 \n%\n \n16 \n% $ 42,293 \n \n5 \n%\n \n6 \n%\nConverse\n \n2,427  \n2,346 \n \n3 \n%\n \n8 \n%  \n2,205 \n \n6 \n%\n \n7 \n%\nCorporate(4)\n \n27  \n(72)  \n— \n \n— \n \n40  \n— \n \n— \nTOTAL NIKE, INC. REVENUES\n$ 51,217 $ 46,710 \n \n10 \n%\n \n16 \n% $ 44,538 \n \n5 \n%\n \n6 \n%\n(1) \nThe percent change excluding currency changes represents a non-GAAP financial measure. For further information, see \"Use of Non-GAAP Financial \nMeasures\".\n(2) \nFor additional information on the transition of our NIKE Brand businesses within our CASA territory to a third-party distributor, see Note 18 — \nAcquisitions and Divestitures of the Notes to Consolidated Financial Statements contained in Item 8 of this Annual Report.\n(3) \nGlobal Brand Divisions revenues include NIKE Brand licensing and other miscellaneous revenues that are not part of a geographic operating segment.\n(4) \nCorporate revenues primarily consist of foreign currency hedge gains and losses related to revenues generated by entities within the NIKE Brand \ngeographic operating segments and Converse, but managed through our central foreign exchange risk management program.\nThe primary financial measure used by the Company to evaluate performance is Earnings Before Interest and Taxes (\"EBIT\"). As \ndiscussed in Note 15 — Operating Segments and Related Information in the accompanying Notes to the Consolidated Financial \nStatements, certain corporate costs are not included in EBIT.\nThe breakdown of EBIT is as follows: \n(Dollars in millions)\nFISCAL 2023\nFISCAL 2022\n% CHANGE\nFISCAL 2021\n% CHANGE\nNorth America\n$ \n5,454 \n$ \n5,114 \n \n7 \n%\n$ \n5,089 \n \n0 \n%\nEurope, Middle East & Africa\n \n3,531 \n \n3,293 \n \n7 \n%\n \n2,435 \n \n35 \n%\nGreater China\n \n2,283 \n \n2,365 \n \n-3 \n%\n \n3,243 \n \n-27 \n%\nAsia Pacific & Latin America\n \n1,932 \n \n1,896 \n \n2 \n%\n \n1,530 \n \n24 \n%\nGlobal Brand Divisions\n \n(4,841) \n \n(4,262) \n \n-14 \n%\n \n(3,656) \n \n-17 \n%\nTOTAL NIKE BRAND(1)\n$ \n8,359 \n$ \n8,406 \n \n-1 \n%\n$ \n8,641 \n \n-3 \n%\nConverse\n \n676 \n \n669 \n \n1 \n%\n \n543 \n \n23 \n%\nCorporate\n \n(2,840) \n \n(2,219) \n \n-28 \n%\n \n(2,261) \n \n2 \n%\nTOTAL NIKE, INC. EARNINGS BEFORE \nINTEREST AND TAXES(1)\n$ \n6,195 \n$ \n6,856 \n \n-10 \n%\n$ \n6,923 \n \n-1 \n%\nEBIT margin(1)\n \n12.1 %\n \n14.7 %\n \n15.5 %\nInterest expense (income), net\n \n(6) \n \n205 \n \n— \n \n262 \n \n— \nTOTAL NIKE, INC. INCOME BEFORE INCOME \nTAXES\n$ \n6,201 \n$ \n6,651 \n \n-7 \n%\n$ \n6,661 \n \n0 \n%\n(1) \nTotal NIKE Brand EBIT, Total NIKE, Inc. EBIT and EBIT Margin represent non-GAAP financial measures. See \"Use of Non-GAAP Financial Measures\" \nfor further information. \nNIKE, INC.      \n36\n\n\nNORTH AMERICA\n(Dollars in millions)\nFISCAL 2023 FISCAL 2022\n% CHANGE\n% CHANGE \nEXCLUDING \nCURRENCY \nCHANGES FISCAL 2021\n% CHANGE\n% CHANGE \nEXCLUDING \nCURRENCY \nCHANGES\nRevenues by:\nFootwear\n$ 14,897 $ 12,228 \n \n22 \n%\n \n22 \n% $ 11,644 \n \n5 \n%\n \n5 \n%\nApparel\n \n5,947  \n5,492 \n \n8 \n%\n \n9 \n%  \n5,028 \n \n9 \n%\n \n9 \n%\nEquipment\n \n764  \n633 \n \n21 \n%\n \n21 \n%  \n507 \n \n25 \n%\n \n25 \n%\nTOTAL REVENUES\n$ 21,608 $ 18,353 \n \n18 \n%\n \n18 \n% $ 17,179 \n \n7 \n%\n \n7 \n%\nRevenues by:\n \n \n \nSales to Wholesale Customers\n$ 11,273 $ \n9,621 \n \n17 \n%\n \n18 \n% $ 10,186 \n \n-6 \n%\n \n-6 \n%\nSales through NIKE Direct\n \n10,335  \n8,732 \n \n18 \n%\n \n18 \n%  \n6,993 \n \n25 \n%\n \n25 \n%\nTOTAL REVENUES\n$ 21,608 $ 18,353 \n \n18 \n%\n \n18 \n% $ 17,179 \n \n7 \n%\n \n7 \n%\nEARNINGS BEFORE INTEREST \nAND TAXES\n$ \n5,454 $ \n5,114 \n \n7 \n%\n$ \n5,089 \n \n0 \n%\nFISCAL 2023 COMPARED TO FISCAL 2022\n• North America revenues increased 18% on a currency-neutral basis, primarily due to higher revenues in Men's and the \nJordan Brand. NIKE Direct revenues increased 18%, driven by strong digital sales growth of 23%, comparable store sales \ngrowth of 9% and the addition of new stores.\n• Footwear revenues increased 22% on a currency-neutral basis, primarily due to higher revenues in Men's and the Jordan \nBrand. Unit sales of footwear increased 17%, while higher ASP per pair contributed approximately 5 percentage points of \nfootwear revenue growth. Higher ASP per pair was primarily due to higher full-price ASP and growth in NIKE Direct, partially \noffset by lower NIKE Direct ASP, reflecting higher promotional activity as well as lower available inventory supply in the prior \nperiod and a lower mix of full-price sales. \n• Apparel revenues increased 9% on a currency-neutral basis, primarily due to higher revenues in Men's. Unit sales of apparel \nincreased 7%, while higher ASP per unit contributed approximately 2 percentage points of apparel revenue growth. Higher \nASP per unit was primarily due to higher full-price ASP and growth in NIKE Direct, partially offset by lower NIKE Direct ASP, \nreflecting higher promotional activity.\nReported EBIT increased 7% due to higher revenues and the following:\n• Gross margin contraction of 310 basis points primarily due to higher product costs, reflecting higher input costs and inbound \nfreight and logistics costs and product mix, lower margins in NIKE Direct due to higher promotional activity and a lower mix \nof full-price sales. This was partially offset by higher full-price ASP, net of discounts, largely due to strategic pricing actions \nand product mix.\n• Selling and administrative expense increased 15% due to higher operating overhead and demand creation expense. The \nincrease in operating overhead expense was primarily due to higher wage-related costs and higher NIKE Direct variable \ncosts, in part due to new store additions. Demand creation expense increased primarily due to higher sports marketing \nexpense and an increase in digital marketing.\n2023 FORM 10-K   37    \n\n\nEUROPE, MIDDLE EAST & AFRICA\n(Dollars in millions)\nFISCAL 2023 FISCAL 2022\n% CHANGE\n% CHANGE \nEXCLUDING \nCURRENCY \nCHANGES FISCAL 2021\n% CHANGE\n% CHANGE \nEXCLUDING \nCURRENCY \nCHANGES\nRevenues by:\nFootwear\n$ \n8,260 $ \n7,388 \n \n12 \n%\n \n25 \n% $ \n6,970 \n \n6 \n%\n \n9 \n%\nApparel\n \n4,566  \n4,527 \n \n1 \n%\n \n14 \n%  \n3,996 \n \n13 \n%\n \n16 \n%\nEquipment\n \n592  \n564 \n \n5 \n%\n \n18 \n%  \n490 \n \n15 \n%\n \n17 \n%\nTOTAL REVENUES\n$ 13,418 $ 12,479 \n \n8 \n%\n \n21 \n% $ 11,456 \n \n9 \n%\n \n12 \n%\nRevenues by:\n \n \n \nSales to Wholesale Customers\n$ \n8,522 $ \n8,377 \n \n2 \n%\n \n15 \n% $ \n7,812 \n \n7 \n%\n \n10 \n%\nSales through NIKE Direct\n \n4,896  \n4,102 \n \n19 \n%\n \n33 \n%  \n3,644 \n \n13 \n%\n \n15 \n%\nTOTAL REVENUES\n$ 13,418 $ 12,479 \n \n8 \n%\n \n21 \n% $ 11,456 \n \n9 \n%\n \n12 \n%\nEARNINGS BEFORE INTEREST \nAND TAXES\n$ \n3,531 $ \n3,293 \n \n7 \n%\n$ \n2,435 \n \n35 \n%  \nFISCAL 2023 COMPARED TO FISCAL 2022 \n• EMEA revenues increased 21% on a currency-neutral basis, due to higher revenues in Men's, the Jordan Brand, Women's \nand Kids'. NIKE Direct revenues increased 33%, driven primarily by strong digital sales growth of 43% and comparable store \nsales growth of 22%.\n• Footwear revenues increased 25% on a currency-neutral basis, due to higher revenues in Men's, the Jordan Brand, \nWomen's and Kids'. Unit sales of footwear increased 9%, while higher ASP per pair contributed approximately 16 \npercentage points of footwear revenue growth. Higher ASP per pair was primarily due to higher full-price ASP and growth in \nNIKE Direct.\n• Apparel revenues increased 14% on a currency-neutral basis, primarily due to higher revenues in Men's. Unit sales of \napparel increased 2%, while higher ASP per unit contributed approximately 12 percentage points of apparel revenue growth. \nHigher ASP per unit was primarily due to higher full-price ASP and growth in NIKE Direct, partially offset by lower NIKE \nDirect ASP, reflecting higher promotional activity.\nReported EBIT increased 7% due to higher revenues and the following:\n• Gross margin contraction of 60 basis points primarily due to higher product costs reflecting higher input costs, inbound \nfreight and logistics costs and product mix, higher other costs and unfavorable changes in standard foreign currency \nexchange rates. This was partially offset by higher full-price ASP, net of discounts, primarily due to strategic pricing actions \nand product mix.\n• Selling and administrative expense increased 4% due to higher operating overhead and demand creation expense. \nOperating overhead expense increased primarily due to higher wage-related expenses and other administrative costs, \npartially offset by favorable changes in foreign currency exchange rates. Demand creation expense increased primarily due \nto higher advertising and marketing expense, partially offset by favorable changes in foreign currency exchange rates. \nNIKE, INC.      \n38\n\n\n GREATER CHINA\n(Dollars in millions)\nFISCAL 2023 FISCAL 2022\n% CHANGE\n% CHANGE \nEXCLUDING \nCURRENCY \nCHANGES FISCAL 2021\n% CHANGE\n% CHANGE \nEXCLUDING \nCURRENCY \nCHANGES\nRevenues by:\nFootwear\n$ \n5,435 $ \n5,416 \n \n0 \n%\n \n8 \n% $ \n5,748 \n \n-6 \n%\n \n-10 \n%\nApparel\n \n1,666  \n1,938 \n \n-14 \n%\n \n-7 \n%  \n2,347 \n \n-17 \n%\n \n-21 \n%\nEquipment\n \n147  \n193 \n \n-24 \n%\n \n-18 \n%  \n195 \n \n-1 \n%\n \n-6 \n%\nTOTAL REVENUES\n$ \n7,248 $ \n7,547 \n \n-4 \n%\n \n4 \n% $ \n8,290 \n \n-9 \n%\n \n-13 \n%\nRevenues by:\n \n \n \nSales to Wholesale Customers\n$ \n3,866 $ \n4,081 \n \n-5 \n%\n \n2 \n% $ \n4,513 \n \n-10 \n%\n \n-14 \n%\nSales through NIKE Direct\n \n3,382  \n3,466 \n \n-2 \n%\n \n5 \n%  \n3,777 \n \n-8 \n%\n \n-12 \n%\nTOTAL REVENUES\n$ \n7,248 $ \n7,547 \n \n-4 \n%\n \n4 \n% $ \n8,290 \n \n-9 \n%\n \n-13 \n%\nEARNINGS BEFORE INTEREST \nAND TAXES\n$ \n2,283 $ \n2,365 \n \n-3 \n%  \n$ \n3,243 \n \n-27 \n%  \nFISCAL 2023 COMPARED TO FISCAL 2022 \n• Greater China revenues increased 4% on a currency-neutral basis, primarily due to higher revenues in the Jordan Brand, \npartially offset by lower revenues in Men's and Women's. NIKE Direct revenues increased 5%, due to comparable store \nsales growth of 9% and the addition of new stores, partially offset by digital sales declines of 4%.\n• Footwear revenues increased 8% on a currency-neutral basis, primarily due to higher revenues in the Jordan Brand and \nMen's. Unit sales of footwear increased 7%, while higher ASP per pair contributed approximately 1 percentage point of \nfootwear revenue growth. Higher ASP per pair was primarily due to higher NIKE Direct ASP and a higher mix of full-price \nsales, largely offset by a lower mix of NIKE Direct sales.\n• Apparel revenues decreased 7% on a currency-neutral basis, primarily due to lower revenues in Men's and Women's. Unit \nsales of apparel decreased 8%, while higher ASP per unit contributed approximately 1 percentage point of apparel revenue \ngrowth. Higher ASP per unit was primarily due to a higher mix of full price sales, partially offset by lower off-price ASP.\nReported EBIT decreased 3% due to lower revenues and the following:\n• Gross margin expansion of approximately 140 basis points, primarily due to higher inventory obsolescence reserves \nrecognized in the fourth quarter of fiscal 2022, favorable changes in standard foreign currency exchange rates and higher \nfull-price ASP, net of discounts, in part due to product mix. This was partially offset by higher product costs reflecting higher \ninput costs and product mix.\n• Selling and administrative expense was flat due to increased operating overhead expense offset by lower demand creation \nexpense. The increase in operating overhead expense was primarily due to higher wage-related expenses and other \nadministrative costs, partially offset by favorable changes in foreign currency exchange rates. Demand creation expense \ndecreased primarily due to lower retail brand presentation costs, lower digital marketing and favorable changes in foreign \ncurrency exchange rates, partially offset by higher advertising and marketing expense.\n2023 FORM 10-K   39    \n\n\nASIA PACIFIC & LATIN AMERICA\n(Dollars in millions)\nFISCAL 2023 FISCAL 2022\n% CHANGE\n% CHANGE \nEXCLUDING \nCURRENCY \nCHANGES FISCAL 2021\n% CHANGE\n% CHANGE \nEXCLUDING \nCURRENCY \nCHANGES\nRevenues by:\nFootwear\n$ \n4,543 $ \n4,111 \n \n11 \n%\n \n19 \n% $ \n3,659 \n \n12 \n%\n \n17 \n%\nApparel\n \n1,664  \n1,610 \n \n3 \n%\n \n13 \n%  \n1,494 \n \n8 \n%\n \n12 \n%\nEquipment\n \n224  \n234 \n \n-4 \n%\n \n4 \n%  \n190 \n \n23 \n%\n \n28 \n%\nTOTAL REVENUES\n$ \n6,431 $ \n5,955 \n \n8 \n%\n \n17 \n% $ \n5,343 \n \n11 \n%\n \n16 \n%\nRevenues by:\nSales to Wholesale Customers\n$ \n3,736 $ \n3,529 \n \n6 \n%\n \n14 \n% $ \n3,387 \n \n4 \n%\n \n8 \n%\nSales through NIKE Direct\n \n2,695  \n2,426 \n \n11 \n%\n \n22 \n%  \n1,956 \n \n24 \n%\n \n30 \n%\nTOTAL REVENUES\n$ \n6,431 $ \n5,955 \n \n8 \n%\n \n17 \n% $ \n5,343 \n \n11 \n%\n \n16 \n%\nEARNINGS BEFORE INTEREST \nAND TAXES\n$ \n1,932 $ \n1,896 \n \n2 \n%\n$ \n1,530 \n \n24 \n%\nAs discussed previously, our NIKE Brand business in Brazil transitioned to a distributor operating model during fiscal 2021. We \ncompleted the sale of our entity in Chile and our entities in Argentina and Uruguay to third-party distributors in the first and \nsecond quarters of fiscal 2023, respectively. The impacts of closing these transactions are included within Corporate and are not \nreflected in the APLA operating segment results. This completed the transition of our NIKE Brand businesses within our CASA \nmarketplace, which now reflects a full distributor operating model. For more information see Note 18 — Acquisitions and \nDivestitures within the accompanying Notes to the Consolidated Financial Statements.\nFISCAL 2023 COMPARED TO FISCAL 2022\n• APLA revenues increased 17% on a currency-neutral basis due to higher revenues across nearly all territories, led by \nSoutheast Asia and India, Korea and Japan. The increase was partially offset by a decline in our CASA territory. Within our \nCASA territory, the transition of our Chile, Argentina and Uruguay entities to a third-party distributor operating model reduced \nAPLA revenue growth by approximately 5 percentage points. Revenues increased primarily due to growth in Men's, \nWomen's and the Jordan Brand. NIKE Direct revenues increased 22%, driven by digital sales growth of 23% and \ncomparable store sales growth of 28%.\n• Footwear revenues increased 19% on a currency-neutral basis, primarily due to higher revenues in Men's, Women's and the \nJordan Brand. Unit sales of footwear increased 16%, while higher ASP per pair contributed approximately 3 percentage \npoints of footwear revenue growth. Higher ASP per pair was primarily due to higher full-price ASP and growth in NIKE Direct, \npartially offset by lower NIKE Direct ASP.\n• Apparel revenues increased 13% on a currency-neutral basis, primarily due to higher revenues in Men's. Unit sales of \napparel increased 9%, while higher ASP per unit contributed approximately 4 percentage points of apparel revenue growth. \nHigher ASP per unit was primarily due to higher full-price and off-price ASPs, partially offset by lower NIKE Direct ASP.\nReported EBIT increased 2% due to higher revenues and the following:\n• Gross margin contraction of approximately 190 basis points primarily due to higher product costs, reflecting product mix and \nhigher input costs, as well as unfavorable changes in standard foreign currency exchange rates. This was partially offset by \nhigher full-price ASP, net of discounts, due to product mix and strategic pricing actions.\n• Selling and administrative expense increased 8% due to higher operating overhead and demand creation expense. \nOperating overhead expense increased primarily due to higher wage-related expenses and an increase in NIKE Direct \nvariable costs, partially offset by favorable changes in foreign currency exchange rates. Demand creation expense increased \nprimarily due to higher sports marketing expense and higher advertising and marketing expense, partially offset by favorable \nchanges in foreign currency exchange rates. \nNIKE, INC.      \n40\n\n\nGLOBAL BRAND DIVISIONS\n(Dollars in millions)\nFISCAL 2023 FISCAL 2022\n% CHANGE\n% CHANGE \nEXCLUDING \nCURRENCY \nCHANGES FISCAL 2021\n% CHANGE\n% CHANGE \nEXCLUDING \nCURRENCY \nCHANGES\nRevenues\n$ \n58 $ \n102 \n \n-43 \n%\n \n-43 \n% $ \n25 \n \n308 \n%\n \n302 \n%\nEarnings (Loss) Before Interest and Taxes\n$ \n(4,841) $ \n(4,262) \n \n-14 \n%\n$ \n(3,656) \n \n-17 \n%  \nGlobal Brand Divisions primarily represent demand creation and operating overhead expense, including product creation and \ndesign expenses that are centrally managed for the NIKE Brand, as well as costs associated with NIKE Direct global digital \noperations and enterprise technology. Global Brand Divisions revenues include NIKE Brand licensing and other miscellaneous \nrevenues that are not part of a geographic operating segment.\nFISCAL 2023 COMPARED TO FISCAL 2022 \nGlobal Brand Divisions' loss before interest and taxes increased 14% for fiscal 2023 primarily due to a 12% increase in selling \nand administrative expense from higher operating overhead expense largely driven by higher wage-related costs and strategic \ntechnology enterprise investments.\nCONVERSE\n(Dollars in millions)\nFISCAL 2023 FISCAL 2022\n% CHANGE\n% CHANGE \nEXCLUDING \nCURRENCY \nCHANGES FISCAL 2021\n% CHANGE\n% CHANGE \nEXCLUDING \nCURRENCY \nCHANGES\nRevenues by:\nFootwear\n$ \n2,155 $ \n2,094 \n \n3 \n%\n \n8 \n% $ \n1,986 \n \n5 \n%\n \n6 \n%\nApparel\n \n90  \n103 \n \n-13 \n%\n \n-7 \n%  \n104 \n \n-1 \n%\n \n-3 \n%\nEquipment\n \n28  \n26 \n \n8 \n%\n \n16 \n%  \n29 \n \n-10 \n%\n \n-16 \n%\nOther(1)\n \n154  \n123 \n \n25 \n%\n \n25 \n%  \n86 \n \n43 \n%\n \n42 \n%\nTOTAL REVENUES\n$ \n2,427 $ \n2,346 \n \n3 \n%\n \n8 \n% $ \n2,205 \n \n6 \n%\n \n7 \n%\nRevenues by:\nSales to Wholesale Customers\n$ \n1,299 $ \n1,292 \n \n1 \n%\n \n7 \n% $ \n1,353 \n \n-5 \n%\n \n-4 \n%\nSales through Direct to Consumer\n \n974  \n931 \n \n5 \n%\n \n8 \n%  \n766 \n \n22 \n%\n \n22 \n%\nOther(1)\n \n154  \n123 \n \n25 \n%\n \n25 \n%  \n86 \n \n43 \n%\n \n42 \n%\nTOTAL REVENUES\n$ \n2,427 $ \n2,346 \n \n3 \n%\n \n8 \n% $ \n2,205 \n \n6 \n%\n \n7 \n%\nEARNINGS BEFORE INTEREST \nAND TAXES\n$ \n676 $ \n669 \n \n1 \n%\n$ \n543 \n \n23 \n%\n(1) \nOther revenues consist of territories serviced by third-party licensees who pay royalties to Converse for the use of its registered trademarks and other \nintellectual property rights. We do not own the Converse trademarks in Japan and accordingly do not earn revenues in Japan.\nFISCAL 2023 COMPARED TO FISCAL 2022\n• Converse revenues increased 8% on a currency-neutral basis for fiscal 2023 due to revenue growth in North America, \nWestern Europe and licensee markets, partially offset by declines in Asia. Combined unit sales within the wholesale and \ndirect to consumer channels increased 1% while ASP increased 6%, driven by strategic pricing actions in Western Europe \nand North America.\n• Direct to consumer revenues increased 8% on a currency-neutral basis, led by strong digital sales growth in North America. \n• Wholesale revenues increased 7% on a currency-neutral basis, as growth in North America and Western Europe was \npartially offset by declines in Asia due to marketplace dynamics in China.\nReported EBIT increased 1% due to higher revenues and the following:\n• Gross margin expansion of approximately 50 basis points as higher full-price ASP, net of discounts, lower other costs, and \ngrowth in licensee revenues were partially offset by higher product costs, lower margins in direct to consumer in part \nreflecting increased promotional activity, and unfavorable changes in standard foreign currency exchange rates.\n• Selling and administrative expense increased 7% due to higher operating overhead and demand creation expense. \nOperating overhead expense increased primarily as a result of higher wage-related expenses. Demand creation expense \nincreased as a result of higher advertising and marketing costs, partially offset by lower retail brand presentation costs.\n2023 FORM 10-K   41    \n\n\nCORPORATE\n(Dollars in millions)\nFISCAL 2023\nFISCAL 2022\n% CHANGE\nFISCAL 2021\n% CHANGE\nRevenues\n$ \n27 $ \n(72)  \n— \n$ \n40  \n— \nEarnings (Loss) Before Interest and Taxes\n$ \n(2,840) $ \n(2,219) \n \n-28 \n% $ \n(2,261) \n \n2 \n%\nCorporate revenues primarily consist of foreign currency hedge gains and losses related to revenues generated by entities within \nthe NIKE Brand geographic operating segments and Converse, but managed through our central foreign exchange risk \nmanagement program. \nThe Corporate loss before interest and taxes primarily consists of unallocated general and administrative expenses, including \nexpenses associated with centrally managed departments; depreciation and amortization related to our corporate headquarters; \nunallocated insurance, benefit and compensation programs, including stock-based compensation; and certain foreign currency \ngains and losses.\nIn addition to the foreign currency gains and losses recognized in Corporate revenues, foreign currency results in Corporate \ninclude gains and losses resulting from the difference between actual foreign currency exchange rates and standard rates used \nto record non-functional currency denominated product purchases within the NIKE Brand geographic operating segments and \nConverse; related foreign currency hedge results; conversion gains and losses arising from remeasurement of monetary assets \nand liabilities in non-functional currencies; and certain other foreign currency derivative instruments. \nFISCAL 2023 COMPARED TO FISCAL 2022 \nCorporate's loss before interest and taxes increased $621 million during fiscal 2023, primarily due to the following:\n• an unfavorable change of $371 million primarily related to higher wage and other professional services expenses, reported \nas a component of consolidated Operating overhead expense;\n• an unfavorable change of $352 million related to the difference between actual foreign currency exchange rates and \nstandard foreign currency exchange rates assigned to the NIKE Brand geographic operating segments and Converse, net of \nhedge gains and losses; these results are reported as a component of consolidated gross margin;\n• an unfavorable change of $45 million largely due to net unfavorable activity related to our strategic distributor partnership \ntransition within APLA, including the loss recognized upon completion of the sale our entities in Argentina and Uruguay to a \nthird-party distributor in the second quarter of fiscal 2023. This was partially offset by the one-time charge related to the \ndeconsolidation of our Russian operations recognized in the prior year, with the net amount of these activities reported as a \ncomponent of consolidated Other (income) expense, net; and\n• a favorable change in net foreign currency gains and losses of $174 million related to the remeasurement of monetary \nassets and liabilities denominated in non-functional currencies and the impact of certain foreign currency derivative \ninstruments, reported as a component of consolidated Other (income) expense, net. \nFOREIGN CURRENCY EXPOSURES AND HEDGING PRACTICES\nOVERVIEW\nAs a global company with significant operations outside the United States, in the normal course of business we are exposed to \nrisk arising from changes in currency exchange rates. Our primary foreign currency exposures arise from the recording of \ntransactions denominated in non-functional currencies and the translation of foreign currency denominated results of operations, \nfinancial position and cash flows into U.S. Dollars.\nOur foreign exchange risk management program is intended to lessen both the positive and negative effects of currency \nfluctuations on our consolidated results of operations, financial position and cash flows. We manage global foreign exchange risk \ncentrally on a portfolio basis to address those risks material to NIKE, Inc. We manage these exposures by taking advantage of \nnatural offsets and currency correlations existing within the portfolio and, where practical and material, by hedging a portion of the \nremaining exposures using derivative instruments such as forward contracts and options. As described below, the implementation \nof the NIKE Trading Company (\"NTC\") and our foreign currency adjustment program enhanced our ability to manage our foreign \nexchange risk by increasing the natural offsets and currency correlation benefits existing within our portfolio of foreign exchange \nexposures. Our hedging policy is designed to partially or entirely offset the impact of exchange rate changes on the underlying \nnet exposures being hedged. Where exposures are hedged, our program has the effect of delaying the impact of exchange rate \nmovements on our Consolidated Financial Statements; the length of the delay is dependent upon hedge horizons. We do not \nhold or issue derivative instruments for trading or speculative purposes.\nNIKE, INC.      \n42\n\n\nRefer to Note 4 — Fair Value Measurements and Note 12 — Risk Management and Derivatives in the accompanying Notes to \nthe Consolidated Financial Statements for additional description of outstanding derivatives at each reported period end.\nTRANSACTIONAL EXPOSURES\nWe conduct business in various currencies and have transactions which subject us to foreign currency risk. Our most significant \ntransactional foreign currency exposures are:\n• Product Costs — NIKE's product costs are exposed to fluctuations in foreign currencies in the following ways:\n1.\nProduct purchases denominated in currencies other than the functional currency of the transacting entity:\na.\nCertain NIKE entities purchase product from the NTC, a wholly-owned sourcing hub that buys NIKE branded \nproducts from third-party factories, predominantly in U.S. Dollars. The NTC, whose functional currency is the \nU.S. Dollar, then sells the products to NIKE entities in their respective functional currencies. NTC sales to a NIKE \nentity with a different functional currency results in a foreign currency exposure for the NTC.\nb.\nOther NIKE entities purchase product directly from third-party factories in U.S. Dollars. These purchases generate \na foreign currency exposure for those NIKE entities with a functional currency other than the U.S. Dollar.\nIn both purchasing scenarios, a weaker U.S. Dollar reduces inventory costs incurred by NIKE whereas a stronger \nU.S. Dollar increases its cost.\n2.\nFactory input costs: NIKE operates a foreign currency adjustment program with certain factories. The program is \ndesigned to more effectively manage foreign currency risk by assuming certain of the factories' foreign currency \nexposures, some of which are natural offsets to our existing foreign currency exposures. Under this program, our \npayments to these factories are adjusted for rate fluctuations in the basket of currencies (\"factory currency exposure \nindex\") in which the labor, materials and overhead costs incurred by the factories in the production of NIKE branded \nproducts (\"factory input costs\") are denominated.\nAs an offset to the impacts of the fluctuating U.S. Dollar on our non-functional currency denominated product purchases \ndescribed above, a strengthening U.S. Dollar against the foreign currencies within the factory currency exposure indices \nreduces NIKE's U.S. Dollar inventory cost. Conversely, a weakening U.S. Dollar against the indexed foreign currencies \nincreases our inventory cost.\n• Non-Functional Currency Denominated External Sales — A portion of our NIKE Brand and Converse revenues associated \nwith European operations are earned in currencies other than the Euro (e.g., the British Pound) but are recognized at a \nsubsidiary that uses the Euro as its functional currency. These sales generate a foreign currency exposure.\n• Other Costs — Non-functional currency denominated costs, such as endorsement contracts, also generate foreign currency \nrisk, though to a lesser extent. \n• Non-Functional Currency Denominated Monetary Assets and Liabilities — Our global subsidiaries have various assets and \nliabilities, primarily receivables and payables, including intercompany receivables and payables, denominated in currencies \nother than their functional currencies. These balance sheet items are subject to remeasurement which may create \nfluctuations in Other (income) expense, net within our Consolidated Statements of Income.\nMANAGING TRANSACTIONAL EXPOSURES\nTransactional exposures are managed on a portfolio basis within our foreign currency risk management program. We manage \nthese exposures by taking advantage of natural offsets and currency correlations that exist within the portfolio and may also elect \nto use currency forward and option contracts to hedge the remaining effect of exchange rate fluctuations on probable forecasted \nfuture cash flows, including certain product cost exposures, non-functional currency denominated external sales and other costs \ndescribed above. Generally, these are accounted for as cash flow hedges.\n2023 FORM 10-K   43    \n\n\nCertain currency forward contracts used to manage the foreign exchange exposure of non-functional currency denominated \nmonetary assets and liabilities subject to remeasurement are not formally designated as hedging instruments. Accordingly, \nchanges in fair value of these instruments are recognized in Other (income) expense, net and are intended to offset the foreign \ncurrency impact of the remeasurement of the related non-functional currency denominated asset or liability being hedged. \nTRANSLATIONAL EXPOSURES\nMany of our foreign subsidiaries operate in functional currencies other than the U.S. Dollar. Fluctuations in currency exchange \nrates create volatility in our reported results as we are required to translate the balance sheets, operational results and cash flows \nof these subsidiaries into U.S. Dollars for consolidated reporting. The translation of foreign subsidiaries' non-U.S. Dollar \ndenominated balance sheets into U.S. Dollars for consolidated reporting results in a cumulative translation adjustment to \nAccumulated other comprehensive income (loss) within Shareholders' equity. In the translation of our Consolidated Statements of \nIncome, a weaker U.S. Dollar in relation to foreign functional currencies benefits our consolidated earnings whereas a stronger \nU.S. Dollar reduces our consolidated earnings. The impact of foreign exchange rate fluctuations on the translation of our \nconsolidated Revenues was a detriment of approximately $2,859 million, $295 million and a benefit of approximately $893 million \nfor the years ended May 31, 2023, 2022 and 2021, respectively. The impact of foreign exchange rate fluctuations on the \ntranslation of our Income before income taxes was a detriment of approximately $824 million, $87 million and a benefit of \napproximately $260 million for the years ended May 31, 2023, 2022 and 2021, respectively.\nMANAGING TRANSLATIONAL EXPOSURES\nTo minimize the impact of translating foreign currency denominated revenues and expenses into U.S. Dollars for consolidated \nreporting, certain foreign subsidiaries use excess cash to purchase U.S. Dollar denominated available-for-sale investments. The \nvariable future cash flows associated with the purchase and subsequent sale of these U.S. Dollar denominated investments at \nnon-U.S. Dollar functional currency subsidiaries creates a foreign currency exposure that qualifies for hedge accounting under \ngenerally accepted accounting principles in the United States of America (\"U.S. GAAP\"). We utilize forward contracts and/or \noptions to mitigate the variability of the forecasted future purchases and sales of these U.S. Dollar investments. The combination \nof the purchase and sale of the U.S. Dollar investment and the hedging instrument has the effect of partially offsetting the year-\nover-year foreign currency translation impact on net earnings in the period the investments are sold. Hedges of the purchase of \nU.S. Dollar denominated available-for-sale investments are accounted for as cash flow hedges. \nWe estimate the combination of translation of foreign currency-denominated profits from our international businesses and the \nyear-over-year change in foreign currency related gains and losses included in Other (income) expense, net had an unfavorable \nimpact of approximately $1,023 million and a favorable impact of approximately $132 million and $19 million on our Income \nbefore income taxes for the years ended May 31, 2023, 2022 and 2021, respectively.\nNET INVESTMENTS IN FOREIGN SUBSIDIARIES\nWe are also exposed to the impact of foreign exchange fluctuations on our investments in wholly-owned foreign subsidiaries \ndenominated in a currency other than the U.S. Dollar, which could adversely impact the U.S. Dollar value of these investments \nand therefore the value of future repatriated earnings. We have, in the past, hedged and may, in the future, hedge net investment \npositions in certain foreign subsidiaries to mitigate the effects of foreign exchange fluctuations on these net investments. These \nhedges are accounted for as net investment hedges in accordance with U.S. GAAP. There were no outstanding net investment \nhedges as of May 31, 2023 and 2022. There were no cash flows from net investment hedge settlements for the years ended \nMay 31, 2023, 2022 and 2021.\nLIQUIDITY AND CAPITAL RESOURCES\nCASH FLOW ACTIVITY\nCash provided (used) by operations was an inflow of $5,841 million for fiscal 2023, compared to $5,188 million for fiscal 2022. \nNet income, adjusted for non-cash items, generated $6,354 million of operating cash inflow for fiscal 2023, compared to $6,848 \nmillion for fiscal 2022. The net change in working capital and other assets and liabilities resulted in a decrease to Cash provided \n(used) by operations of $513 million for fiscal 2023 compared to a decrease of $1,660 million for fiscal 2022. For fiscal 2023, the \nnet change in working capital compared to the prior year was impacted by unfavorable changes in Accounts payable, offset by \nfavorable impacts from Inventories and Accounts receivable. These changes were, in part, due to reduced inventory purchases in \nthe current period and timing of wholesale shipments. Further impacting these changes was a lower available supply of inventory \nin the prior year due to supply chain constraints. \nCash provided (used) by investing activities was an inflow of $564 million for fiscal 2023, compared to an outflow of $1,524 \nmillion for fiscal 2022, primarily driven by the net change in short-term investments. For fiscal 2023, the net change in short-term \nNIKE, INC.      \n44\n\n\ninvestments (including sales, maturities and purchases) resulted in a cash inflow of $1,481 million compared to a cash outflow of \n$747 million for fiscal 2022. Additionally, we continue to invest in our infrastructure to support future growth, specifically focused \naround digital capabilities, our end-to-end technology foundation, our corporate facilities and improvements across our supply \nchain. \nCash provided (used) by financing activities was an outflow of $7,447 million for fiscal 2023 compared to an outflow of $4,836 \nmillion for fiscal 2022. The increased outflow in fiscal 2023 was driven by higher share repurchases of $5,480 million for fiscal \n2023 compared to $4,014 million for fiscal 2022, the repayment of $500 million of senior notes that matured in fiscal 2023, as well \nas lower proceeds from stock option exercises, which resulted in a cash inflow of $651 million in fiscal 2023 compared to $1,151 \nmillion in fiscal 2022.\nIn fiscal 2023, we purchased a total of 50.0 million shares of NIKE's Class B Common Stock for $5.5 billion (an average price of \n$110.32 per share). In August 2022, we terminated the previous four-year, $15 billion share repurchase program approved by the \nBoard of Directors in June 2018. Under this program, we repurchased 6.5 million shares for a total approximate cost of \n$710.0 million (an average price of $109.85 per share) during the first quarter of fiscal 2023 and 83.8 million shares for a total \napproximate cost of $9.4 billion (an average price of $111.82 per share) during the term of the program. Upon termination of the \nfour-year, $15 billion program, we began purchasing shares under the new four-year, $18 billion share repurchase plan \nauthorized by the Board of Directors in June 2022. As of May 31, 2023, we had repurchased 43.5 million shares at a cost of \napproximately $4.8 billion (an average price of $110.38 per share) under this new program. We continue to expect funding of \nshare repurchases will come from operating cash flows. The timing and the amount of share repurchases will be dictated by our \ncapital needs and stock market conditions.\nCAPITAL RESOURCES\nOn July 21, 2022, we filed a shelf registration statement (the \"Shelf\") with the U.S. Securities and Exchange Commission (the \n\"SEC\") which permits us to issue an unlimited amount of debt securities from time to time. The Shelf expires on July 21, 2025.\nOn March 11, 2022, we entered into a five-year committed credit facility agreement with a syndicate of banks which provides for \nup to $2 billion of borrowings, with the option to increase borrowings up to $3 billion in total with lender approval. The facility \nmatures on March 11, 2027, with options to extend the maturity date up to an additional two years. This facility replaces the prior \n$2 billion five-year credit facility agreement entered into on August 16, 2019, which would have matured on August 16, 2024. \nRefer to Note 5 — Short-Term Borrowings and Credit Lines for additional information. \nOn March 10, 2023, we entered into a 364-day committed credit facility agreement with a syndicate of banks which provides for \nup to $1 billion of borrowings, with the option to increase borrowings up to $1.5 billion in total with lender approval. The facility \nmatures on March 8, 2024, with an option to extend the maturity date by 364 days. This facility replaces the prior $1 billion 364-\nday credit facility agreement entered into on March 11, 2022, which matured on March 10, 2023. Refer to Note 5 — Short-Term \nBorrowings and Credit Lines for additional information.\nWe currently have long-term debt ratings of AA- and A1 from Standard and Poor's Corporation and Moody's Investor Services, \nrespectively. As it relates to our committed credit facilities entered into on March 11, 2022 and March 10, 2023, if our long-term \ndebt ratings were to decline, the facility fees and interest rates would increase. Conversely, if our long-term debt ratings were to \nimprove, the facility fees and interest rates would decrease. Changes in our long-term debt ratings would not trigger acceleration \nof maturity of any then-outstanding borrowings or any future borrowings under the committed credit facilities. Under these \nfacilities, we have agreed to various covenants. These covenants include limits on the disposal of assets and the amount of debt \nsecured by liens we may incur. In the event we were to have any borrowings outstanding under these facilities, failed to meet any \ncovenant and were unable to obtain a waiver from a majority of the banks in the applicable syndicate, any borrowings would \nbecome immediately due and payable. As of May 31, 2023, we were in full compliance with each of these covenants, and we \nbelieve it is unlikely we will fail to meet any of these covenants in the foreseeable future.\nLiquidity is also provided by our $3 billion commercial paper program. As of and for the fiscal years ended May 31, 2023 and \n2022, we did not have any borrowings outstanding under our $3 billion program. \nWe may continue to issue commercial paper or other debt securities depending on general corporate needs. \nTo date, we have not experienced difficulty accessing the capital or credit markets; however, future volatility may increase costs \nassociated with issuing commercial paper or other debt instruments or affect our ability to access those markets.\nAs of May 31, 2023, we had Cash and equivalents and Short-term investments totaling $10.7 billion, primarily consisting of \ncommercial paper, corporate notes, deposits held at major banks, money market funds, U.S. Treasury obligations and other \ninvestment grade fixed-income securities. Our fixed-income investments are exposed to both credit and interest rate risk. All of \nour investments are investment grade to minimize our credit risk. While individual securities have varying durations, as of \nMay 31, 2023, the weighted-average days to maturity of our cash equivalents and short-term investments portfolio was 98 days.\n2023 FORM 10-K   45    \n\n\nWe believe that existing Cash and equivalents, Short-term investments and cash generated by operations, together with access \nto external sources of funds as described above, will be sufficient to meet our domestic and foreign capital needs in the \nforeseeable future.\nOur material cash requirements as of May 31, 2023, were as follows:\n•\nDebt Obligations — Refer to Note 5 — Short-Term Borrowings and Credit Lines and Note 6 — Long-Term Debt in the \naccompanying Notes to the Consolidated Financial Statements for further information.\n•\nOperating Leases — Refer to Note 17 — Leases in the accompanying Notes to the Consolidated Financial Statements \nfor further information.\n•\nEndorsement Contracts — As of May 31, 2023, we had endorsement contract obligations of $7.6 billion, with $1.3 billion \npayable within 12 months, representing approximate amounts of base compensation and minimum guaranteed royalty \nfees we are obligated to pay athlete, public figure, sport team and league endorsers of our products. Actual payments \nunder some contracts may be higher than these amounts as these contracts provide for bonuses to be paid to the \nendorsers based upon athletic achievements and/or royalties on product sales in future periods. Actual payments under \nsome contracts may also be lower as these contracts include provisions for reduced payments if athletic performance \ndeclines in future periods. In addition to the cash payments, we are obligated to furnish our endorsers with NIKE \nproduct for their use. It is not possible to determine how much we will spend on this product on an annual basis as the \namount of product provided to the endorsers will depend on many factors and the contracts generally do not stipulate a \nminimum amount of cash to be spent on the product.\n•\nProduct Purchase Obligations — As of May 31, 2023, we had product purchase obligations of $6.4 billion, all of which \nare payable within the next 12 months. Product purchase obligations represent agreements (including open purchase \norders) to purchase products in the ordinary course of business that are enforceable and legally binding and specify all \nsignificant terms. We generally order product at least four to five months in advance of sale based primarily on \nadvanced orders received from external wholesale customers and internal orders from our direct to consumer \noperations. In some cases, prices are subject to change throughout the production process.\n•\nOther Purchase Obligations — As of May 31, 2023, we had $3.3 billion of other purchase obligations, with $1.7 billion \npayable within the next 12 months. Other purchase obligations primarily include technology investments, construction, \nservice and marketing commitments, including marketing commitments associated with endorsement contracts, made \nin the ordinary course of business. The amounts represent the minimum payments required by legally binding contracts \nand agreements that specify all significant terms, and may include open purchase orders for non-product purchases. \nIn addition to the above, we have long-term obligations for uncertain tax positions and various post-retirement benefits for which \nwe are not able to reasonably estimate when cash payments will occur. Refer to Note 7 — Income Taxes and Note 11 — Benefit \nPlans in the accompanying Notes to the Consolidated Financial Statements for further information related to uncertain tax \npositions and post-retirement benefits, respectively. \nAs a part of the transition tax related to the Tax Cuts and Jobs Act, as of May 31, 2023, we had $644 million in estimated future \ncash payments, with $161 million payable within the next 12 months. These amounts represent the transition tax on deemed \nrepatriation of undistributed earnings of foreign subsidiaries, which are reflected net of foreign tax credits we utilized.\nRefer to Note 16 — Commitments and Contingencies in the accompanying Notes to the Consolidated Financial Statements for \nfurther information related to our off-balance sheet arrangements, bank guarantees and letters of credit. \nOFF-BALANCE SHEET ARRANGEMENTS\nAs of May 31, 2023, we did not have any off-balance sheet arrangements that have, or are reasonably likely to have, a material \neffect on our current and future financial condition, results of operations, liquidity, capital expenditures or capital resources. In \nconnection with various contracts and agreements, we routinely provide indemnification relating to the enforceability of \nintellectual property rights, coverage for legal issues that arise and other items where we are acting as the guarantor. Currently, \nwe have several such agreements in place. Based on our historical experience and the estimated probability of future loss, we \nhave determined that the fair value of such indemnification is not material to our financial position or results of operations.\nNEW ACCOUNTING PRONOUNCEMENTS\nRefer to Note 1 — Summary of Significant Accounting Policies within the accompanying Notes to the Consolidated Financial \nStatements for recently adopted and issued accounting standards.\nNIKE, INC.      \n46\n\n\nCRITICAL ACCOUNTING ESTIMATES\nOur previous discussion and analysis of our financial condition and results of operations are based upon our Consolidated \nFinancial Statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements \nrequires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and \nrelated disclosure of contingent assets and liabilities. Note 1 — Summary of Significant Accounting Policies in the accompanying \nNotes to the Consolidated Financial Statements describes the significant accounting policies and methods used in the \npreparation of our Consolidated Financial Statements.\nWe believe the assumptions and judgments involved in the accounting estimates described below have the greatest potential \nimpact on our Consolidated Financial Statements, so we consider these to be our critical accounting estimates. Management has \nreviewed and discussed these critical accounting estimates with the Audit & Finance Committee of the Board of Directors.\nBecause of the uncertainty inherent in these matters, actual results could differ from the estimates we use in the preparation of \nour Consolidated Financial Statements. Within the context of these critical accounting estimates, we are not currently aware of \nany reasonably likely events or circumstances that would result in materially different amounts being reported.\nSALES-RELATED RESERVES\nProvisions for anticipated sales returns consist of both contractual return rights and discretionary authorized returns. Provisions \nfor post-invoice sales discounts consist of both contractual programs and discretionary discounts that are expected to be granted \nat a later date.\nEstimates of discretionary authorized returns, discounts and claims are based on (1) historical rates, (2) specific identification of \noutstanding returns not yet received from customers and outstanding discounts and claims and (3) estimated returns, discounts \nand claims expected but not yet finalized with customers. Actual returns, discounts and claims in any future period are inherently \nuncertain and may differ from estimates recorded. If actual or expected future returns, discounts or claims were significantly \ndifferent than reserves established, a reduction or increase to net revenues would be recorded in the period in which such \ndetermination was made.\nRefer to Note 14 — Revenues in the accompanying Notes to the Consolidated Financial Statements for additional information. \nINVENTORY RESERVES\nWe make ongoing estimates relating to the net realizable value of inventories based upon our assumptions about future demand \nand market conditions. If we estimate the net realizable value of our inventory is less than the cost of the inventory recorded on \nour books, we record a reserve equal to the difference between the cost of the inventory and the estimated net realizable value. \nThis reserve is recorded as a charge to Cost of sales. If changes in market conditions result in reductions to the estimated net \nrealizable value of our inventory below our previous estimate, we would increase our reserve in the period in which we made \nsuch a determination. \nHEDGE ACCOUNTING FOR DERIVATIVES\nWe use derivative contracts to hedge certain anticipated foreign currency and interest rate transactions as well as certain non-\nfunctional currency monetary assets and liabilities. When the specific criteria to qualify for hedge accounting has been met, \nchanges in the fair value of contracts hedging probable forecasted future cash flows are recorded in Accumulated other \ncomprehensive income (loss), rather than Net income, until the underlying hedged transaction affects Net income. In most cases, \nthis results in gains and losses on hedge derivatives being released from Accumulated other comprehensive income (loss) into \nNet income sometime after the maturity of the derivative. One of the criteria for this accounting treatment is that the notional \nvalue of these derivative contracts should not be in excess of the designated amount of anticipated transactions. By their very \nnature, our estimates of anticipated transactions may fluctuate over time and may ultimately vary from actual transactions. When \nthe designated amount of anticipated or actual transactions decline below hedged levels, or if it is no longer probable a \nforecasted transaction will occur by the end of the originally specified time period or within an additional two-month period of time \nthereafter, we reclassify the cumulative change in fair value of the over-hedged portion of the related hedge contract from \nAccumulated other comprehensive income (loss) to Other (income) expense, net during the quarter in which the decrease \noccurs. In rare circumstances, the additional period of time may exceed two months due to extenuating circumstances related to \nthe nature of the forecasted transaction that are outside our control or influence.\nRefer to Note 12 — Risk Management and Derivatives in the accompanying Notes to the Consolidated Financial Statements for \nadditional information.\n2023 FORM 10-K   47    \n\n\nINCOME TAXES\nWe are subject to taxation in the United States, as well as various state and foreign jurisdictions. The determination of our \nprovision for income taxes requires significant judgment, the use of estimates and the interpretation and application of complex \ntax laws. On an interim basis, we estimate our effective tax rate for the full fiscal year. This estimated annual effective tax rate is \nthen applied to the year-to-date Income before income taxes excluding infrequently occurring or unusual items, to determine the \nyear-to-date Income tax expense. The income tax effects of infrequent or unusual items are recognized in the interim period in \nwhich they occur. As the fiscal year progresses, we continually refine our estimate based upon actual events and earnings by \njurisdiction during the year. This continual estimation process periodically results in a change to our expected effective tax rate for \nthe fiscal year. When this occurs, we adjust the income tax provision during the quarter in which the change in estimate occurs.\nOn a quarterly basis, we evaluate the probability a tax position will be effectively sustained and the appropriateness of the \namount recognized for uncertain tax positions based on factors including changes in facts or circumstances, changes in tax law, \nsettled audit issues and new audit activity. Changes in our assessment may result in the recognition of a tax benefit or an \nadditional charge to the tax provision in the period our assessment changes. We recognize interest and penalties related to \nincome tax matters in Income tax expense. \nRefer to Note 7 — Income Taxes in the accompanying Notes to the Consolidated Financial Statements for additional information.\nOTHER CONTINGENCIES\nIn the ordinary course of business, we are subject to various legal proceedings, claims and government investigations related to \nour business, products and actions of our employees and representatives, including contractual and employment relationships, \nproduct liability, antitrust, customs, tax, intellectual property and other matters. We record contingent liabilities resulting from \nclaims against us when a loss is assessed to be probable and the amount of the loss is reasonably estimable. Assessing \nprobability of loss and estimating probable losses requires analysis of multiple factors, including in some cases judgments about \nthe potential actions of third-party claimants and courts. Recorded contingent liabilities are based on the best information \navailable and actual losses in any future period are inherently uncertain. If future adjustments to estimated probable future losses \nor actual losses exceed our recorded liability for such claims, we would record additional charges during the period in which the \nactual loss or change in estimate occurred. In addition to contingent liabilities recorded for probable losses, we disclose \ncontingent liabilities when there is a reasonable possibility the ultimate loss will materially exceed the recorded liability. \nRefer to Note 16 — Commitments and Contingencies in the accompanying Notes to the Consolidated Financial Statements for \nadditional information. \nNIKE, INC.      \n48\n\n\nITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES \nABOUT MARKET RISK\nIn the normal course of business and consistent with established policies and procedures, we employ a variety of financial \ninstruments to manage exposure to fluctuations in the value of foreign currencies and interest rates. It is our policy to utilize these \nfinancial instruments only where necessary to finance our business and manage such exposures; we do not enter into these \ntransactions for trading or speculative purposes.\nWe are exposed to foreign currency fluctuations, primarily as a result of our international sales, product sourcing and funding \nactivities. Our foreign exchange risk management program is intended to lessen both the positive and negative effects of \ncurrency fluctuations on our consolidated results of operations, financial position and cash flows. We use forward and option \ncontracts to hedge certain anticipated, but not yet firmly committed, transactions as well as certain firm commitments and the \nrelated receivables and payables, including third-party and intercompany transactions. Where exposures are hedged, our \nprogram has the effect of delaying the impact of exchange rate movements on our Consolidated Financial Statements.\nThe timing for hedging exposures, as well as the type and duration of the hedge instruments employed, are guided by our \nhedging policies and determined based upon the nature of the exposure and prevailing market conditions. Typically, the \nCompany may enter into hedge contracts starting 12 to 24 months in advance of the forecasted transaction and may place \nincremental hedges up to 100% of the exposure by the time the forecasted transaction occurs. The majority of derivatives \noutstanding as of May 31, 2023, are designated as foreign currency cash flow hedges, primarily for Euro/U.S. Dollar, British \nPound/Euro, Chinese Yuan/U.S. Dollar, and Japanese Yen/U.S. Dollar currency pairs. Refer to Note 12 — Risk Management and \nDerivatives in the accompanying Notes to the Consolidated Financial Statements for additional information.\nOur earnings are also exposed to movements in short- and long-term market interest rates. Our objective in managing this \ninterest rate exposure is to limit the impact of interest rate changes on earnings and cash flows and to reduce overall borrowing \ncosts. To achieve these objectives, we maintain a mix of commercial paper, bank loans, and fixed-rate debt of varying maturities.\nMARKET RISK MEASUREMENT\nWe monitor foreign exchange risk, interest rate risk and related derivatives using a variety of techniques including a review of \nmarket value, sensitivity analysis and Value-at-Risk (\"VaR\"). Our market-sensitive derivative and other financial instruments are \nforeign currency forward contracts, foreign currency option contracts, intercompany loans denominated in non-functional \ncurrencies and fixed interest rate U.S. Dollar denominated debt.\nWe use VaR to monitor the foreign exchange risk of our foreign currency forward and foreign currency option derivative \ninstruments only. The VaR determines the maximum potential one-day loss in the fair value of these foreign exchange rate-\nsensitive financial instruments. The VaR model estimates assume normal market conditions and a 95% confidence level. There \nare various modeling techniques that can be used in the VaR computation. Our computations are based on interrelationships \nbetween currencies and interest rates (a \"variance/co-variance\" technique). These interrelationships are a function of foreign \nexchange currency market changes and interest rate changes over the preceding one-year period. The value of foreign currency \noptions does not change on a one-to-one basis with changes in the underlying currency rate. We adjust the potential loss in \noption value for the estimated sensitivity (the \"delta\" and \"gamma\") to changes in the underlying currency rate. This calculation \nreflects the impact of foreign currency rate fluctuations on the derivative instruments only and does not include the impact of such \nrate fluctuations on non-functional currency transactions (such as anticipated transactions, firm commitments, cash balances and \naccounts and loans receivable and payable), including those which are hedged by these instruments.\nThe VaR model is a risk analysis tool and does not purport to represent actual losses in fair value we will incur nor does it \nconsider the potential effect of favorable changes in market rates. It also does not represent the full extent of the possible loss \nthat may occur. Actual future gains and losses will differ from those estimated because of changes or differences in market rates \nand interrelationships, hedging instruments and hedge percentages, timing and other factors.\nThe estimated maximum one-day loss in fair value on our foreign currency sensitive derivative financial instruments, derived \nusing the VaR model, was $111 million and $99 million as of May 31, 2023 and 2022, respectively. The VaR increased year-over-\nyear as a result of an increase in foreign currency volatilities as of May 31, 2023. Such a hypothetical loss in the fair value of our \nderivatives would be offset by increases in the value of the underlying transactions being hedged. The average monthly change \nin the fair values of foreign currency forward and foreign currency option derivative instruments was $289 million and $170 million \nduring fiscal 2023 and fiscal 2022, respectively.\nThe instruments not included in the VaR are intercompany loans denominated in non-functional currencies and fixed interest rate \nU.S. Dollar denominated debt. Intercompany loans and related interest amounts are eliminated in consolidation. Furthermore, our \nnon-functional currency intercompany loans are substantially hedged against foreign exchange risk through the use of forward \n2023 FORM 10-K   49    \n\n\ncontracts, which are included in the VaR calculation above. Therefore, we consider the interest rate and foreign currency market \nrisks associated with our non-functional currency intercompany loans to be immaterial to our consolidated financial position, \nresults of operations and cash flows.\nDetails of third-party debt are provided in the table below. The table presents principal cash flows and related weighted average \ninterest rates by expected maturity dates. \nEXPECTED MATURITY DATE YEAR ENDING MAY 31,\n(Dollars in millions)\n2024\n2025\n2026\n2027\n2028\nTHEREAFTER\nTOTAL FAIR VALUE\nInterest Rate Risk\nLong-term U.S. Dollar debt — Fixed rate\nPrincipal payments\n$ \n— \n$ \n1,000 \n$ \n— \n$ \n2,000 \n$ \n— \n$ \n6,000 \n$ 9,000 \n$ \n7,889 \nAverage interest rate\n \n0.0 %\n \n2.4 %\n \n0.0 %\n \n2.6 %\n \n0.0 %\n \n3.3 %\n \n3.1 %\nNIKE, INC.      \n50\n\n\nITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY \nDATA\nManagement of NIKE, Inc. is responsible for the information and representations contained in this Annual Report. The financial \nstatements have been prepared in conformity with accounting principles generally accepted in the United States of America \n(\"U.S. GAAP\") and include certain amounts based on our best estimates and judgments. Other financial information in this \nAnnual Report is consistent with these financial statements.\nOur accounting systems include controls designed to reasonably assure assets are safeguarded from unauthorized use or \ndisposition and provide for the preparation of financial statements in conformity with U.S. GAAP. These systems are \nsupplemented by the selection and training of qualified financial personnel and an organizational structure providing for \nappropriate segregation of duties.\nAn internal corporate audit department reviews the results of its work with the Audit & Finance Committee of the Board of \nDirectors, presently comprised of four outside, independent directors. The Audit & Finance Committee is responsible for the \nappointment of the independent registered public accounting firm and reviews, with the independent registered public accounting \nfirm, management and the internal corporate audit staff, the scope and the results of the annual audit, the effectiveness of the \naccounting control system and other matters relating to the financial affairs of NIKE as the Audit & Finance Committee deems \nappropriate. The independent registered public accounting firm and the internal corporate auditors have full access to the Audit & \nFinance Committee, with and without the presence of management, to discuss any appropriate matters.\n2023 FORM 10-K   51    \n\n\nMANAGEMENT'S ANNUAL REPORT ON INTERNAL CONTROL OVER \nFINANCIAL REPORTING\nManagement is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is \ndefined in Rule 13(a) - 15(f) and Rule 15(d) - 15(f) of the Securities Exchange Act of 1934, as amended. Internal control over \nfinancial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the \npreparation of the financial statements for external purposes in accordance with generally accepted accounting principles in the \nUnited States of America. Internal control over financial reporting includes those policies and procedures that: (i) pertain to the \nmaintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of assets of the \nCompany; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial \nstatements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are \nbeing made only in accordance with authorizations of our management and directors; and (iii) provide reasonable assurance \nregarding prevention or timely detection of unauthorized acquisition, use or disposition of assets of the Company that could have \na material effect on the financial statements.\nBecause of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, \nprojections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate \nbecause of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.\nUnder the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, our management \nconducted an evaluation of the effectiveness of our internal control over financial reporting based upon the framework in Internal \nControl — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission \n(COSO). Based on the results of our evaluation, our management concluded that our internal control over financial reporting was \neffective as of May 31, 2023.\nPricewaterhouseCoopers LLP, an independent registered public accounting firm, has audited (1) the Consolidated Financial \nStatements and (2) the effectiveness of our internal control over financial reporting as of May 31, 2023, as stated in their report \nherein.\nJohn J. Donahoe II\nMatthew Friend\nPresident and Chief Executive Officer\nExecutive Vice President and Chief Financial Officer\nNIKE, INC.      \n52\n\n\nReport of Independent Registered Public Accounting Firm\nTo the Board of Directors and Shareholders of NIKE, Inc.\nOpinions on the Financial Statements and Internal Control over Financial Reporting\nWe have audited the accompanying consolidated balance sheets of NIKE, Inc. and its subsidiaries (the “Company”) as of May \n31, 2023 and 2022, and the related consolidated statements of income, of comprehensive income, of shareholders' equity and of \ncash flows for each of the three years in the period ended May 31, 2023, including the related notes and financial statement \nschedule listed in the index appearing under Item 15(a)(2) (collectively referred to as the “consolidated financial statements”). We \nalso have audited the Company's internal control over financial reporting as of May 31, 2023, based on criteria established in \nInternal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway \nCommission (COSO).\nIn our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position \nof the Company as of May 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in \nthe period ended May 31, 2023 in conformity with accounting principles generally accepted in the United States of America. Also \nin our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of May 31, \n2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.\nBasis for Opinions\nThe Company's management is responsible for these consolidated financial statements, for maintaining effective internal control \nover financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the \naccompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express \nopinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting \nbased on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United \nStates) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities \nlaws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.\nWe conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the \naudits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, \nwhether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material \nrespects.\nOur audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement \nof the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. \nSuch procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated \nfinancial statements. Our audits also included evaluating the accounting principles used and significant estimates made by \nmanagement, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control \nover financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a \nmaterial weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the \nassessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We \nbelieve that our audits provide a reasonable basis for our opinions.\nDefinition and Limitations of Internal Control over Financial Reporting\nA company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the \nreliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally \naccepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that \n(i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions \nof the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit \npreparation of financial statements in accordance with generally accepted accounting principles, and that receipts and \nexpenditures of the company are being made only in accordance with authorizations of management and directors of the \ncompany; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or \ndisposition of the company’s assets that could have a material effect on the financial statements.\nBecause of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, \nprojections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate \nbecause of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.\n2023 FORM 10-K   53    \n\n\nCritical Audit Matters\nThe critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial \nstatements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or \ndisclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or \ncomplex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated \nfinancial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate \nopinion on the critical audit matter or on the accounts or disclosures to which it relates.\nAccounting for Income Taxes\nAs described in Notes 1 and 7 to the consolidated financial statements, the Company recorded income tax expense of $1,131 \nmillion for the year ended May 31, 2023, and has net deferred tax assets of $1,799 million, including a valuation allowance of $22 \nmillion, and total gross unrecognized tax benefits, excluding related interest and penalties, of $936 million as of May 31, 2023, \n$651 million of which would affect the Company's effective tax rate if recognized in future periods. The realization of deferred tax \nassets is dependent on future taxable earnings. Management assesses the scheduled reversal of deferred tax liabilities, \nprojected future taxable income and available tax planning strategies and considers foreign tax credit utilization in making this \nassessment of realization. A valuation allowance is established against the net deferred tax asset to the extent that recovery is \nnot likely. The Company is subject to taxation in the United States, as well as various state and foreign jurisdictions. As disclosed \nby management, the use of significant judgment and estimates, as well as the interpretation and application of complex tax laws \nis required by management to determine the Company's provision for income taxes.\nThe principal considerations for our determination that performing procedures relating to the accounting for income taxes is a \ncritical audit matter are a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating audit \nevidence relating to management's assessment of complex tax laws and regulations as it relates to determining the provision for \nincome taxes. In addition, the audit effort involved the use of professionals with specialized skill and knowledge.\nAddressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall \nopinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to \nincome taxes, evaluating changes in and compliance with tax laws, and testing the calculation of the provision of income taxes. \nProfessionals with specialized skill and knowledge were used to assist in evaluating changes in and compliance with the tax laws \nand regulations and the provision for income taxes.\n/s/ PricewaterhouseCoopers LLP\nPortland, Oregon\nJuly 20, 2023 \nWe have served as the Company's auditor since 1974. \nNIKE, INC.      \n54\n\n\nNIKE, INC.\nCONSOLIDATED STATEMENTS OF INCOME\nYEAR ENDED MAY 31,\n(In millions, except per share data)\n2023\n2022\n2021\nRevenues\n$ \n51,217 $ \n46,710 $ \n44,538 \nCost of sales\n \n28,925  \n25,231  \n24,576 \nGross profit\n \n22,292  \n21,479  \n19,962 \nDemand creation expense\n \n4,060  \n3,850  \n3,114 \nOperating overhead expense\n \n12,317  \n10,954  \n9,911 \nTotal selling and administrative expense\n \n16,377  \n14,804  \n13,025 \nInterest expense (income), net\n \n(6)  \n205  \n262 \nOther (income) expense, net\n \n(280)  \n(181)  \n14 \nIncome before income taxes\n \n6,201  \n6,651  \n6,661 \nIncome tax expense \n \n1,131  \n605  \n934 \nNET INCOME\n$ \n5,070 $ \n6,046 $ \n5,727 \nEarnings per common share:\nBasic\n$ \n3.27 $ \n3.83 $ \n3.64 \nDiluted\n$ \n3.23 $ \n3.75 $ \n3.56 \nWeighted average common shares outstanding:\nBasic\n \n1,551.6  \n1,578.8  \n1,573.0 \nDiluted\n \n1,569.8  \n1,610.8  \n1,609.4 \nThe accompanying Notes to the Consolidated Financial Statements are an integral part of this statement.\n2023 FORM 10-K   55    \n\n\nNIKE, INC.\nCONSOLIDATED STATEMENTS OF COMPREHENSIVE \nINCOME\nYEAR ENDED MAY 31,\n(Dollars in millions)\n2023\n2022\n2021\nNet income\n$ \n5,070 $ \n6,046 $ \n5,727 \nOther comprehensive income (loss), net of tax:\nChange in net foreign currency translation adjustment\n \n267  \n(522)  \n496 \nChange in net gains (losses) on cash flow hedges\n \n(348)  \n1,214  \n(825) \nChange in net gains (losses) on other\n \n(6)  \n6  \n5 \nTotal other comprehensive income (loss), net of tax\n \n(87)  \n698  \n(324) \nTOTAL COMPREHENSIVE INCOME\n$ \n4,983 $ \n6,744 $ \n5,403 \nThe accompanying Notes to the Consolidated Financial Statements are an integral part of this statement.\nNIKE, INC.      \n56\n\n\nNIKE, INC.\nCONSOLIDATED BALANCE SHEETS\nMAY 31,\n(In millions)\n2023\n2022\nASSETS\nCurrent assets:\nCash and equivalents\n$ \n7,441 $ \n8,574 \nShort-term investments\n \n3,234  \n4,423 \nAccounts receivable, net\n \n4,131  \n4,667 \nInventories\n \n8,454  \n8,420 \nPrepaid expenses and other current assets\n \n1,942  \n2,129 \nTotal current assets\n \n25,202  \n28,213 \nProperty, plant and equipment, net\n \n5,081  \n4,791 \nOperating lease right-of-use assets, net\n \n2,923  \n2,926 \nIdentifiable intangible assets, net\n \n274  \n286 \nGoodwill\n \n281  \n284 \nDeferred income taxes and other assets\n \n3,770  \n3,821 \nTOTAL ASSETS\n$ \n37,531 $ \n40,321 \nLIABILITIES AND SHAREHOLDERS' EQUITY\nCurrent liabilities:\nCurrent portion of long-term debt\n$ \n— $ \n500 \nNotes payable\n \n6  \n10 \nAccounts payable\n \n2,862  \n3,358 \nCurrent portion of operating lease liabilities\n \n425  \n420 \nAccrued liabilities\n \n5,723  \n6,220 \nIncome taxes payable\n \n240  \n222 \nTotal current liabilities\n \n9,256  \n10,730 \nLong-term debt\n \n8,927  \n8,920 \nOperating lease liabilities\n \n2,786  \n2,777 \nDeferred income taxes and other liabilities\n \n2,558  \n2,613 \nCommitments and contingencies (Note 16)\nRedeemable preferred stock\n \n—  \n— \nShareholders' equity:\nCommon stock at stated value:\nClass A convertible — 305 and 305 shares outstanding\n \n—  \n— \nClass B — 1,227 and 1,266 shares outstanding\n \n3  \n3 \nCapital in excess of stated value\n \n12,412  \n11,484 \nAccumulated other comprehensive income (loss)\n \n231  \n318 \nRetained earnings (deficit)\n \n1,358  \n3,476 \nTotal shareholders' equity\n \n14,004  \n15,281 \nTOTAL LIABILITIES AND SHAREHOLDERS' EQUITY\n$ \n37,531 $ \n40,321 \nThe accompanying Notes to the Consolidated Financial Statements are an integral part of this statement.\n2023 FORM 10-K   57    \n\n\nNIKE, INC.\nCONSOLIDATED STATEMENTS OF CASH FLOWS\nYEAR ENDED MAY 31,\n(Dollars in millions)\n2023\n2022\n2021\nCash provided (used) by operations:\nNet income\n$ \n5,070 $ \n6,046 $ \n5,727 \nAdjustments to reconcile net income to net cash provided (used) by operations:\nDepreciation\n \n703  \n717  \n744 \nDeferred income taxes\n \n(117)  \n(650)  \n(385) \nStock-based compensation\n \n755  \n638  \n611 \nAmortization, impairment and other\n \n156  \n123  \n53 \nNet foreign currency adjustments\n \n(213)  \n(26)  \n(138) \nChanges in certain working capital components and other assets and liabilities:\n(Increase) decrease in accounts receivable\n \n489  \n(504)  \n(1,606) \n(Increase) decrease in inventories\n \n(133)  \n(1,676)  \n507 \n(Increase) decrease in prepaid expenses, operating lease right-of-use assets and \nother current and non-current assets\n \n(644)  \n(845)  \n(182) \nIncrease (decrease) in accounts payable, accrued liabilities, operating lease liabilities \nand other current and non-current liabilities\n \n(225)  \n1,365  \n1,326 \nCash provided (used) by operations\n \n5,841  \n5,188  \n6,657 \nCash provided (used) by investing activities:\nPurchases of short-term investments\n \n(6,059)  \n(12,913)  \n(9,961) \nMaturities of short-term investments\n \n3,356  \n8,199  \n4,236 \nSales of short-term investments\n \n4,184  \n3,967  \n2,449 \nAdditions to property, plant and equipment\n \n(969)  \n(758)  \n(695) \nOther investing activities\n \n52  \n(19)  \n171 \nCash provided (used) by investing activities\n \n564  \n(1,524)  \n(3,800) \nCash provided (used) by financing activities:\nIncrease (decrease) in notes payable, net\n \n(4)  \n15  \n(52) \nRepayment of borrowings\n \n(500)  \n—  \n(197) \nProceeds from exercise of stock options and other stock issuances\n \n651  \n1,151  \n1,172 \nRepurchase of common stock\n \n(5,480)  \n(4,014)  \n(608) \nDividends — common and preferred\n \n(2,012)  \n(1,837)  \n(1,638) \nOther financing activities\n \n(102)  \n(151)  \n(136) \nCash provided (used) by financing activities\n \n(7,447)  \n(4,836)  \n(1,459) \nEffect of exchange rate changes on cash and equivalents\n \n(91)  \n(143)  \n143 \nNet increase (decrease) in cash and equivalents\n \n(1,133)  \n(1,315)  \n1,541 \nCash and equivalents, beginning of year\n \n8,574  \n9,889  \n8,348 \nCASH AND EQUIVALENTS, END OF YEAR\n$ \n7,441 $ \n8,574 $ \n9,889 \nSupplemental disclosure of cash flow information:\nCash paid during the year for:\nInterest, net of capitalized interest\n$ \n347 $ \n290 $ \n293 \nIncome taxes\n \n1,517  \n1,231  \n1,177 \nNon-cash additions to property, plant and equipment\n \n211  \n160  \n179 \nDividends declared and not paid\n \n524  \n480  \n438 \nThe accompanying Notes to the Consolidated Financial Statements are an integral part of this statement.\nNIKE, INC.      \n58\n\n\nNIKE, INC.\nCONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY\nBalance at May 31, 2020\n \n315 $ \n— \n 1,243 $ \n3 $ \n8,299 $ \n(56) $ \n(191) $ 8,055 \nStock options exercised\n \n21 \n \n954 \n \n954 \nConversion to Class B Common Stock\n \n(10) \n \n10 \n \n— \nRepurchase of Class B Common Stock\n \n(5) \n \n(28) \n \n(622)  \n(650) \nDividends on common stock ($1.070 \nper share) and preferred stock ($0.10 \nper share)\n \n(1,692)  (1,692) \nIssuance of shares to employees, net of \nshares withheld for employee taxes\n \n4 \n \n129 \n \n(43)  \n86 \nStock-based compensation\n \n611 \n \n611 \nNet income\n \n5,727  \n5,727 \nOther comprehensive income (loss)\n \n(324) \n \n(324) \nBalance at May 31, 2021\n \n305 $ \n— \n 1,273 $ \n3 $ \n9,965 $ \n(380) $ 3,179 $ \n12,767 \nStock options exercised\n \n17 \n \n924 \n \n924 \nRepurchase of Class B Common Stock\n \n(27) \n \n(186) \n \n(3,808)  (3,994) \nDividends on common stock ($1.190 \nper share) and preferred stock ($0.10 \nper share)\n \n(1,886)  (1,886) \nIssuance of shares to employees, net of \nshares withheld for employee taxes\n \n3 \n \n143 \n \n(55)  \n88 \nStock-based compensation\n \n638 \n \n638 \nNet income\n \n6,046  \n6,046 \nOther comprehensive income (loss)\n \n698 \n \n698 \nBalance at May 31, 2022\n \n305 $ \n— \n 1,266 $ \n3 $ 11,484 $ \n318 $ 3,476 $ \n15,281 \nStock options exercised\n \n8 \n \n421 \n \n421 \nRepurchase of Class B Common Stock\n \n(51) \n \n(378) \n \n(5,131)  (5,509) \nDividends on common stock ($1.325 \nper share) and preferred stock ($0.10 \nper share)\n \n(2,059)  (2,059) \nIssuance of shares to employees, net of \nshares withheld for employee taxes\n \n4 \n \n130 \n \n2  \n132 \nStock-based compensation\n \n755 \n \n755 \nNet income\n \n5,070  \n5,070 \nOther comprehensive income (loss)\n \n(87) \n \n(87) \nBalance at May 31, 2023\n \n305 $ \n— \n 1,227 $ \n3 $ 12,412 $ \n231 $ 1,358 $ \n14,004 \nCOMMON STOCK\nCAPITAL IN \nEXCESS \nOF STATED \nVALUE\nACCUMULATED \nOTHER \nCOMPREHENSIVE \nINCOME (LOSS)\nRETAINED \nEARNINGS \n(DEFICIT)\nTOTAL\nCLASS A\nCLASS B\n(In millions, except per share data)\nSHARES\nAMOUNT\nSHARES AMOUNT\nThe accompanying Notes to the Consolidated Financial Statements are an integral part of this statement.\n2023 FORM 10-K   59    \n\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\nNote 1\nSummary of Significant Accounting Policies\n61\nNote 2\nProperty, Plant and Equipment\n67\nNote 3\nAccrued Liabilities\n67\nNote 4\nFair Value Measurements\n68\nNote 5\nShort-Term Borrowings and Credit Lines\n70\nNote 6\nLong-Term Debt\n71\nNote 7\nIncome Taxes\n72\nNote 8\nRedeemable Preferred Stock\n74\nNote 9\nCommon Stock and Stock-Based Compensation\n74\nNote 10\nEarnings Per Share\n77\nNote 11\nBenefit Plans\n77\nNote 12\nRisk Management and Derivatives\n77\nNote 13\nAccumulated Other Comprehensive Income (Loss)\n81\nNote 14\nRevenues\n83\nNote 15\nOperating Segments and Related Information\n84\nNote 16\nCommitments and Contingencies\n88\nNote 17\nLeases\n88\nNote 18\nAcquisitions and Divestitures\n89\nNote 19\nRestructuring\n90\nNIKE, INC.     \n60\n\n\nNOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES\nDESCRIPTION OF BUSINESS\nNIKE, Inc. is a worldwide leader in the design, development and worldwide marketing and selling of athletic footwear, apparel, \nequipment, accessories and services. NIKE, Inc. portfolio brands include the NIKE Brand, Jordan Brand and Converse. The NIKE \nBrand is focused on performance athletic footwear, apparel, equipment, accessories and services across Men's, Women's and \nKids', amplified with sport-inspired lifestyle products carrying the Swoosh trademark, as well as other NIKE Brand trademarks. \nThe Jordan Brand is focused on athletic and casual footwear, apparel and accessories using the Jumpman trademark. Sales and \noperating results of Jordan Brand products are reported within the respective NIKE Brand geographic operating segments. \nConverse designs, distributes, licenses and sells casual sneakers, apparel and accessories under the Converse, Chuck Taylor, \nAll Star, One Star, Star Chevron and Jack Purcell trademarks. In some markets outside the U.S., these trademarks are licensed \nto third parties who design, distribute, market and sell similar products. Operating results of the Converse brand are reported on a \nstand-alone basis.\nBASIS OF CONSOLIDATION\nThe Consolidated Financial Statements include the accounts of NIKE, Inc. and its subsidiaries (the \"Company\" or \"NIKE\"). All \nsignificant intercompany transactions and balances have been eliminated. \nREVENUE RECOGNITION\nRevenue transactions associated with the sale of NIKE Brand footwear, apparel and equipment, as well as Converse products, \ncomprise a single performance obligation, which consists of the sale of products to customers either through wholesale or direct \nto consumer channels. The Company satisfies the performance obligation and records revenues when transfer of control to the \ncustomer has occurred, based on the terms of sale. A customer is considered to have control once they are able to direct the use \nand receive substantially all of the benefits of the product. \nControl is transferred to wholesale customers upon shipment or upon receipt depending on the country of the sale and the \nagreement with the customer. Control transfers to retail store customers at the time of sale and to substantially all digital \ncommerce customers upon shipment. The transaction price is determined based upon the invoiced sales price, less anticipated \nsales returns, discounts and miscellaneous claims from customers. Payment terms for wholesale transactions depend on the \ncountry of sale or agreement with the customer and payment is generally required within 90 days or less of shipment to or receipt \nby the wholesale customer. Payment is due at the time of sale for retail store and digital commerce transactions.\nConsideration for trademark licensing contracts is earned through sales-based or usage-based royalty arrangements, and the \nassociated revenues are recognized over the license period. \nTaxes assessed by governmental authorities that are both imposed on and concurrent with a specific revenue-producing \ntransaction, and are collected by the Company from a customer, are excluded from Revenues and Cost of sales in the \nConsolidated Statements of Income. Shipping and handling costs associated with outbound freight after control over a product \nhas transferred to a customer are accounted for as fulfillment costs and are included in Cost of sales when the related revenues \nare recognized.\nSALES-RELATED RESERVES\nConsideration promised in the Company's contracts with customers is variable due to anticipated reductions, such as sales \nreturns, discounts and miscellaneous claims from customers. The Company estimates the most likely amount it will be entitled to \nreceive and records an anticipated reduction against Revenues, with an offsetting increase to Accrued liabilities at the time \nrevenues are recognized. The estimated cost of inventory for product returns is recorded in Prepaid expenses and other current \nassets on the Consolidated Balance Sheets.\nThe provision for anticipated sales returns consists of both contractual return rights and discretionary authorized returns. \nProvisions for post-invoice sales discounts consist of both contractual programs and discretionary discounts that are expected to \nbe granted at a later date.\nEstimates of discretionary authorized returns, discounts and claims are based on (1) historical rates, (2) specific identification of \noutstanding returns not yet received from customers and outstanding discounts and claims and (3) estimated returns, discounts \nand claims expected but not yet finalized with customers. Actual returns, discounts and claims in any future period are inherently \nuncertain and thus may differ from estimates recorded. If actual or expected future returns, discounts or claims are significantly \ngreater or lower than the reserves established, a reduction or increase to net Revenues is recorded in the period in which such \ndetermination is made.\n2023 FORM 10-K   61    \n\n\nCOST OF SALES\nCost of sales consists primarily of inventory costs, as well as warehousing costs (including the cost of warehouse labor), third-\nparty royalties, certain foreign currency hedge gains and losses and product design costs. Shipping and handling costs are \nexpensed as incurred and included in Cost of sales.\nDEMAND CREATION EXPENSE\nDemand creation expense consists of advertising and promotion costs, including costs of endorsement contracts, complimentary \nproducts, television, digital and print advertising as well as media costs, brand events and retail brand presentation. Advertising \nproduction costs are expensed the first time an advertisement is run. Advertising media costs are expensed when the \nadvertisement appears. Costs related to brand events are expensed when the event occurs. Costs related to retail brand \npresentation are expensed when the presentation is complete and delivered.\nA significant amount of the Company's promotional expenses result from payments under endorsement contracts. In general, \nendorsement payments are expensed on a straight-line basis over the term of the contract. However, certain contracts contain \nelements that may be accounted for differently based upon the facts and circumstances of each individual contract. Prepayments \nmade under contracts are included in Prepaid expenses and other current assets or Deferred income taxes and other assets \ndepending on the period to which the prepayment applies.\nCertain contracts provide for contingent payments to endorsers based upon specific achievements in their sport (e.g., winning a \nchampionship). The Company records Demand creation expense for these amounts when the endorser achieves the specific \ngoal.\nCertain contracts provide for variable payments based upon endorsers maintaining a level of performance in their sport over an \nextended period of time (e.g., maintaining a specified ranking in a sport for a year). When the Company determines payments are \nprobable, the amounts are reported in Demand creation expense ratably over the contract period based on the Company's best \nestimate of the endorser's performance. In these instances, to the extent actual payments to the endorser differ from the \nCompany's estimate due to changes in the endorser's performance, adjustments to Demand creation expense may be recorded \nin a future period.\nCertain contracts provide for royalty payments to endorsers based upon a predetermined percent of sales of particular products, \nwhich the Company records in Cost of sales as the related sales occur. For contracts containing minimum guaranteed royalty \npayments, the Company records the amount of any guaranteed payment in excess of that earned through sales of product within \nDemand creation expense.\nThrough cooperative advertising programs, the Company reimburses its wholesale customers for certain costs of advertising the \nCompany's products. To the extent the Company receives a distinct good or service in exchange for consideration paid to the \ncustomer that does not exceed the fair value of that good or service, the amounts reimbursed are recorded in Demand creation \nexpense.\nTotal Demand creation expense was $4,060 million, $3,850 million and $3,114 million for the years ended May 31, 2023, 2022 \nand 2021, respectively. Prepaid advertising and promotion expenses totaled $755 million and $773 million at May 31, 2023 and \n2022, respectively, of which $372 million and $329 million, respectively, were recorded in Prepaid expenses and other current \nassets, and $383 million and $444 million, respectively, were recorded in Deferred income taxes and other assets, depending on \nthe period to which the prepayment applied.\nOPERATING OVERHEAD EXPENSE\nOperating overhead expense consists primarily of wage and benefit-related expenses, research and development costs, bad \ndebt expense as well as other administrative expenses such as rent, depreciation and amortization, professional services, certain \ntechnology investments, meetings and travel.\nCASH AND EQUIVALENTS\nCash and equivalents represent cash and short-term, highly liquid investments, that are both readily convertible to known \namounts of cash and so near their maturity they present insignificant risk of changes in value because of changes in interest \nrates, with maturities three months or less at the date of purchase.\nNIKE, INC.      \n62\n\n\nSHORT-TERM INVESTMENTS\nShort-term investments consist of highly liquid investments with maturities over three months at the date of purchase. At May 31, \n2023 and 2022, Short-term investments consisted of available-for-sale debt securities, which are recorded at fair value with \nunrealized gains and losses reported, net of tax, in Accumulated other comprehensive income (loss), unless unrealized losses \nare determined to be unrecoverable. Realized gains and losses on the sale of securities are determined by specific identification. \nThe Company considers all available-for-sale debt securities, including those with maturity dates beyond 12 months, as available \nto support current operational liquidity needs and, therefore, classifies all securities with maturity dates beyond three months at \nthe date of purchase as current assets within Short-term investments on the Consolidated Balance Sheets.\nRefer to Note 4 — Fair Value Measurements for more information on the Company's Short-term investments.\nALLOWANCE FOR UNCOLLECTIBLE ACCOUNTS RECEIVABLE\nAccounts receivable, net consist primarily of amounts due from customers. The Company makes ongoing estimates relating to \nthe collectability of its accounts receivable and maintains an allowance for expected losses resulting from the inability of its \ncustomers to make required payments. In addition to judgments about the creditworthiness of significant customers based on \nongoing credit evaluations, the Company considers historical levels of credit losses, as well as macroeconomic and industry \ntrends to determine the amount of the allowance. The allowance for uncollectible accounts receivable was $35 million and $34 \nmillion as of May 31, 2023 and 2022, respectively.\nINVENTORY VALUATION\nInventories, substantially all of which are finished goods, are stated at lower of cost and net realizable value and valued on either \nan average or a specific identification cost basis. In some instances, the Company ships products directly from its suppliers to the \ncustomer, with the related inventory and cost of sales recognized on a specific identification basis. Inventory costs primarily \nconsist of product cost from the Company's suppliers, as well as inbound freight, import duties, taxes, insurance, logistics and \nother handling fees.\nPROPERTY, PLANT AND EQUIPMENT AND DEPRECIATION\nProperty, plant and equipment are recorded at cost. Depreciation is determined on a straight-line basis for land improvements, \nbuildings and leasehold improvements over 2 to 40 years and for machinery and equipment over 2 to 15 years.\nDepreciation and amortization of assets used in manufacturing, warehousing and product distribution are recorded in Cost of \nsales. Depreciation and amortization of all other assets are recorded in Operating overhead expense.\nSOFTWARE DEVELOPMENT COSTS\nExpenditures for major software purchases and software developed for internal use are capitalized and amortized over 2 to 12 \nyears on a straight-line basis. The Company's policy provides for the capitalization of external direct costs associated with \ndeveloping or obtaining internal use computer software. The Company also capitalizes certain payroll and payroll-related costs \nfor employees who are directly associated with internal use computer software projects. The amount of capitalizable payroll costs \nwith respect to these employees is limited to the time directly spent on such projects. Costs associated with preliminary project \nstage activities, training, maintenance and all other post-implementation stage activities are expensed as incurred.\nDevelopment costs of computer software to be sold, leased or otherwise marketed as an integral part of a product are subject to \ncapitalization beginning when a product's technological feasibility has been established and ending when a product is available \nfor general release to customers. In most instances, the Company's products are released soon after technological feasibility has \nbeen established; therefore, software development costs incurred subsequent to achievement of technological feasibility are \nusually not significant, and generally, most software development costs have been expensed as incurred.\n2023 FORM 10-K   63    \n\n\nIMPAIRMENT OF LONG-LIVED ASSETS\nThe Company reviews the carrying value of long-lived assets or asset groups to be used in operations whenever events or \nchanges in circumstances indicate the carrying amount of the assets might not be recoverable. Factors that would necessitate an \nimpairment assessment include a significant adverse change in the extent or manner in which an asset is used, a significant \nadverse change in legal factors or the business climate that could affect the value of the asset or a significant decline in the \nobservable market value of an asset, among others. If such facts indicate a potential impairment, the Company would assess the \nrecoverability of an asset group by determining if the carrying value of the asset group exceeds the sum of the projected \nundiscounted cash flows expected to result from the use and eventual disposition of the assets over the remaining economic life \nof the primary asset in the asset group. If the recoverability test indicates that the carrying value of the asset group is not \nrecoverable, the Company will estimate the fair value of the asset group using appropriate valuation methodologies, which would \ntypically include an estimate of discounted cash flows. Any impairment would be measured as the difference between the asset \ngroup's carrying amount and its estimated fair value.\nGOODWILL AND INDEFINITE-LIVED INTANGIBLE ASSETS\nThe Company performs annual impairment tests on goodwill and intangible assets with indefinite lives in the fourth quarter of \neach fiscal year or when events occur or circumstances change that would, more likely than not, reduce the fair value of a \nreporting unit or an intangible asset with an indefinite life below its carrying value. \nFor purposes of testing goodwill for impairment, the Company allocates goodwill across its reporting units, which are considered \nthe Company's operating segments. For both goodwill and indefinite-lived intangible assets, which primarily consist of acquired \ntrade names and trademarks, the Company may first assess qualitative factors to determine whether it is more likely than not that \nthe fair value of a reporting unit or an intangible asset with an indefinite life is less than its carrying amount. If, after assessing the \ntotality of events and circumstances, the Company determines it is more likely than not that the fair value of a reporting unit or \nindefinite-lived intangible asset is greater than its carrying amount, an impairment test is unnecessary. \nIf an impairment test is necessary, the Company will estimate the fair value of the related reporting unit or indefinite-lived \nintangible asset. If the carrying value of a reporting unit or indefinite-lived intangible asset exceeds its fair value, the goodwill of \nthat reporting unit or indefinite-lived intangible asset is determined to be impaired and the Company will record an impairment \ncharge equal to the excess of the carrying value over the related fair value. \nThere were no accumulated impairment losses as of May 31, 2023 and 2022. Additionally, the impact to Goodwill as a result of \nacquisitions and divestitures during fiscal 2023 and 2022, was not material.\nOPERATING LEASES\nThe Company primarily leases retail store space, certain distribution and warehouse facilities, office space, equipment and other \nnon-real estate assets. The Company determines if an arrangement is a lease at inception and begins recording lease activity at \nthe commencement date, which is generally the date in which the Company takes possession of or controls the physical use of \nthe asset. Lease components are not separated from non-lease components for real estate leases within the Company's lease \nportfolio. Right-of-use (\"ROU\") assets and lease liabilities are recognized based on the present value of lease payments over the \nlease term with lease expense recognized on a straight-line basis. The Company's incremental borrowing rate is used to \ndetermine the present value of future lease payments unless the implicit rate is readily determinable. \nLease agreements may contain rent escalation clauses, renewal or termination options, rent holidays or certain landlord \nincentives, including tenant improvement allowances. ROU assets include amounts for scheduled rent increases and are reduced \nby the amount of lease incentives. The lease term includes the non-cancelable period of the lease and options to extend or \nterminate the lease when it is reasonably certain the Company will exercise those options. The Company does not record leases \nwith an initial term of 12 months or less on the Consolidated Balance Sheets and recognizes related lease payments in the \nConsolidated Statements of Income on a straight-line basis over the lease term. Certain lease agreements include variable lease \npayments, which are based on a percent of retail sales over specified levels or adjust periodically for inflation as a result of \nchanges in a published index, primarily the Consumer Price Index, and are expensed as incurred.\nFAIR VALUE MEASUREMENTS\nThe Company measures certain financial assets and liabilities at fair value on a recurring basis, including derivatives, equity \nsecurities and available-for-sale debt securities. Fair value is the price the Company would receive to sell an asset or pay to \ntransfer a liability in an orderly transaction with a market participant at the measurement date. The Company uses a three-level \nhierarchy that prioritizes fair value measurements based on the types of inputs used, as follows:\nNIKE, INC.      \n64\n\n\n• Level 1: Quoted prices in active markets for identical assets or liabilities.\n• Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly; these include \nquoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in \nmarkets that are not active.\n• Level 3: Unobservable inputs with little or no market data available, which require the reporting entity to develop its own \nassumptions.\nThe Company's assessment of the significance of a particular input to the fair value measurement in its entirety requires \njudgment and considers factors specific to the asset or liability. Financial assets and liabilities are classified in their entirety based \non the most conservative level of input that is significant to the fair value measurement.\nPricing vendors are utilized for a majority of Level 1 and Level 2 investments. These vendors either provide a quoted market price \nin an active market or use observable inputs without applying significant adjustments in their pricing. Observable inputs include \nbroker quotes, interest rates and yield curves observable at commonly quoted intervals, volatilities and credit risks. The fair value \nof derivative contracts is determined using observable market inputs such as the daily market foreign currency rates, forward \npricing curves, currency volatilities, currency correlations and interest rates and considers nonperformance risk of the Company \nand its counterparties. \nThe Company's fair value measurement process includes comparing fair values to another independent pricing vendor to ensure \nappropriate fair values are recorded.\nRefer to Note 4 — Fair Value Measurements for additional information.\nFOREIGN CURRENCY TRANSLATION AND FOREIGN CURRENCY TRANSACTIONS\nAdjustments resulting from translating foreign functional currency financial statements into U.S. Dollars are included in the foreign \ncurrency translation adjustment, a component of Accumulated other comprehensive income (loss).\nThe Company's global subsidiaries have various monetary assets and liabilities, primarily receivables and payables, which are \ndenominated in currencies other than their functional currency. These balance sheet items are subject to remeasurement, the \nimpact of which is recorded in Other (income) expense, net, within the Consolidated Statements of Income.\nACCOUNTING FOR DERIVATIVES AND HEDGING ACTIVITIES\nThe Company uses derivative financial instruments to reduce its exposure to changes in foreign currency exchange rates and \ninterest rates. All derivatives are recorded at fair value on the Consolidated Balance Sheets and changes in the fair value of \nderivative financial instruments are either recognized in Accumulated other comprehensive income (loss), Long-term debt or Net \nincome depending on the nature of the underlying exposure, whether the derivative is formally designated as a hedge and, if \ndesignated, the extent to which the hedge is effective. The Company classifies the cash flows at settlement from derivatives in \nthe same category as the cash flows from the related hedged items. For undesignated hedges and designated cash flow hedges, \nthis is primarily within the Cash provided by operations component of the Consolidated Statements of Cash Flows. For \ndesignated net investment hedges, this is within the Cash provided by investing activities component of the Consolidated \nStatements of Cash Flows. For the Company's fair value hedges, which are interest rate swaps used to mitigate the change in \nfair value of its fixed-rate debt attributable to changes in interest rates, the related cash flows from periodic interest payments are \nreflected within the Cash provided by operations component of the Consolidated Statements of Cash Flows. \nRefer to Note 12 — Risk Management and Derivatives for additional information on the Company's risk management program \nand derivatives.\nSTOCK-BASED COMPENSATION\nThe Company accounts for stock-based compensation by estimating the fair value, net of estimated forfeitures, of equity awards \nand recognizing the related expense as Cost of sales or Operating overhead expense, as applicable, in the Consolidated \nStatements of Income on a straight-line basis over the vesting period. Substantially all awards vest ratably over four years of \ncontinued employment, with stock options expiring 10 years from the date of grant. Performance-based restricted stock units vest \nbased on the Company's achievement of certain performance criteria throughout the three-year performance period and \ncontinued employment through the vesting date. The fair value of options, stock appreciation rights and employees' purchase \nrights under the employee stock purchase plans (\"ESPPs\") is determined using the Black-Scholes option pricing model. The fair \nvalue of restricted stock and time-vesting restricted stock units is established by the market price on the date of grant. The fair \nvalue of performance-based restricted stock units is estimated as of the grant date using a Monte Carlo simulation.\nRefer to Note 9 — Common Stock and Stock-Based Compensation for additional information on the Company's stock-based \ncompensation programs.\n2023 FORM 10-K   65    \n\n\nINCOME TAXES\nThe Company accounts for income taxes using the asset and liability method. This approach requires the recognition of deferred \ntax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and \nthe tax basis of assets and liabilities. The Company records a valuation allowance to reduce deferred tax assets to the amount \nmanagement believes is more likely than not to be realized. Realization of deferred tax assets is dependent on future taxable \nearnings and is therefore uncertain. At least quarterly, the Company assesses taxable income in prior carryback periods, the \nscheduled reversal of deferred tax liabilities, projected future taxable income and available tax planning strategies. The Company \nuses forecasts of taxable income and considers foreign tax credit utilization in making this assessment of realization, which are \ninherently uncertain and can result in significant variation between estimated and actual results. To the extent the Company \nbelieves that recovery is not likely, a valuation allowance is established against the net deferred tax asset, which increases the \nCompany's income tax expense in the period when such determination is made.\nThe Company recognizes a tax benefit from uncertain tax positions in the financial statements only when it is more likely than not \nthe position will be sustained upon examination by relevant tax authorities. The Company recognizes interest and penalties \nrelated to income tax matters in Income tax expense.\nRefer to Note 7 — Income Taxes for further discussion.\nEARNINGS PER SHARE\nBasic earnings per common share is calculated by dividing Net income by the weighted average number of common shares \noutstanding during the year. Diluted earnings per common share is calculated by adjusting weighted average outstanding shares, \nassuming conversion of all potentially dilutive stock options and awards.\nRefer to Note 10 — Earnings Per Share for further discussion.\nMANAGEMENT ESTIMATES\nThe preparation of financial statements in conformity with generally accepted accounting principles requires management to \nmake estimates, including estimates relating to assumptions that affect the reported amounts of assets and liabilities and \ndisclosure of contingent assets and liabilities at the date of financial statements and the reported amounts of revenues and \nexpenses during the reporting period. Actual results could differ from these estimates. Additionally, the macroeconomic \nenvironment could remain volatile as the risk exists that worsening macroeconomic conditions could have a material, adverse \nimpact on future revenue growth as well as overall profitability. \nRECENTLY ISSUED ACCOUNTING STANDARDS\nIn September 2022, the Financial Accounting Standards Board (the \"FASB\") issued Accounting Standards Update (\"ASU\") ASU \n2022-04, Liabilities — Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations, which \nenhances transparency surrounding the use of supplier finance programs. The new guidance requires qualitative and quantitative \ndisclosure sufficient to enable users of the financial statements to understand the nature, activity during the period, changes from \nperiod to period and potential magnitude of such programs. The amendments are effective for fiscal years beginning after \nDecember 15, 2022, including interim periods within those fiscal periods, except for the amendment on rollforward information, \nwhich is effective for fiscal years beginning after December 15, 2023. The Company will adopt the required guidance in the first \nquarter of fiscal 2024 and is currently evaluating the ASU to determine its impact on the Company's disclosures.\nNIKE, INC.      \n66\n\n\nNOTE 2 — PROPERTY, PLANT AND EQUIPMENT\nProperty, plant and equipment, net included the following:\nMAY 31,\n(Dollars in millions)\n2023\n2022\nLand and improvements\n$ \n326 $ \n330 \nBuildings\n \n3,293  \n3,170 \nMachinery and equipment\n \n3,083  \n2,870 \nInternal-use software\n \n1,612  \n1,616 \nLeasehold improvements\n \n1,876  \n1,712 \nConstruction in process\n \n525  \n399 \nTotal property, plant and equipment, gross\n \n10,715  \n10,097 \nLess accumulated depreciation\n \n5,634  \n5,306 \nTOTAL PROPERTY, PLANT AND EQUIPMENT, NET\n$ \n5,081 $ \n4,791 \nCapitalized interest was not material for the fiscal years ended May 31, 2023, 2022 and 2021.\nNOTE 3 — ACCRUED LIABILITIES\nAccrued liabilities included the following:\nMAY 31,\n(Dollars in millions)\n2023\n2022\nCompensation and benefits, excluding taxes\n$ \n1,737 $ \n1,297 \nSales-related reserves \n \n994  \n1,015 \nEndorsement compensation\n \n552  \n496 \nDividends payable\n \n529  \n485 \nAllowance for expected loss on sale(1)\n \n—  \n397 \nOther\n \n1,911  \n2,530 \nTotal Accrued Liabilities\n$ \n5,723 $ \n6,220 \n(1)\nRefer to Note 18 — Acquisitions and Divestitures for additional information.\n2023 FORM 10-K   67    \n\n\nNOTE 4 — FAIR VALUE MEASUREMENTS\nThe following tables present information about the Company's financial assets measured at fair value on a recurring basis as of \nMay 31, 2023 and 2022, and indicate the level in the fair value hierarchy in which the Company classifies the fair value \nmeasurement. Refer to Note 1 — Summary of Significant Accounting Policies for additional detail regarding the Company's fair \nvalue measurement methodology.\n \nMAY 31, 2023\n(Dollars in millions)\nASSETS AT FAIR VALUE\nCASH AND EQUIVALENTS\nSHORT-TERM INVESTMENTS\nCash\n$ \n1,767 $ \n1,767 $ \n— \nLevel 1:\nU.S. Treasury securities\n \n2,655  \n—  \n2,655 \nLevel 2:\nCommercial paper and bonds\n \n543  \n15  \n528 \nMoney market funds\n \n5,157  \n5,157  \n— \nTime deposits\n \n507  \n502  \n5 \nU.S. Agency securities\n \n46  \n—  \n46 \nTotal Level 2\n \n6,253  \n5,674  \n579 \nTOTAL\n$ \n10,675 $ \n7,441 $ \n3,234 \nMAY 31, 2022\n(Dollars in millions)\nASSETS AT FAIR VALUE\nCASH AND EQUIVALENTS\nSHORT-TERM INVESTMENTS\nCash\n$ \n839 $ \n839 $ \n— \nLevel 1:\nU.S. Treasury securities\n \n3,801  \n8  \n3,793 \nLevel 2:\nCommercial paper and bonds\n \n660  \n37  \n623 \nMoney market funds\n \n6,458  \n6,458  \n— \nTime deposits\n \n1,237  \n1,232  \n5 \nU.S. Agency securities\n \n2  \n—  \n2 \nTotal Level 2\n \n8,357  \n7,727  \n630 \nTOTAL\n$ \n12,997 $ \n8,574 $ \n4,423 \nAs of May 31, 2023, the Company held $2,563 million of available-for-sale debt securities with maturity dates within one year and \n$671 million with maturity dates over one year and less than five years in Short-term investments on the Consolidated Balance \nSheets. The fair value of the Company's available-for-sale debt securities approximates their amortized cost.\nIncluded in Interest expense (income), net was interest income related to the Company's investment portfolio of $297 million, $94 \nmillion and $34 million for the years ended May 31, 2023, 2022 and 2021, respectively.\nThe Company records the assets and liabilities of its derivative financial instruments on a gross basis on the Consolidated \nBalance Sheets. The Company's derivative financial instruments are subject to master netting arrangements that allow for the \noffset of assets and liabilities in the event of default or early termination of the contract. Any amounts of cash collateral received \nrelated to these instruments associated with the Company's credit-related contingent features are recorded in Cash and \nequivalents and Accrued liabilities, the latter of which would further offset against the Company's derivative asset balance. Any \namounts of cash collateral posted related to these instruments associated with the Company's credit-related contingent features \nare recorded in Prepaid expenses and other current assets, which would further offset against the Company's derivative liability \nbalance. Cash collateral received or posted related to the Company's credit-related contingent features is presented in the Cash \nprovided by operations component of the Consolidated Statements of Cash Flows. The Company does not recognize amounts of \nnon-cash collateral received, such as securities, on the Consolidated Balance Sheets. For further information related to credit \nrisk, refer to Note 12 — Risk Management and Derivatives.\nNIKE, INC.      \n68\n\n\nThe following tables present information about the Company's derivative assets and liabilities measured at fair value on a \nrecurring basis and indicate the level in the fair value hierarchy in which the Company classifies the fair value measurement:\nMAY 31, 2023\nDERIVATIVE ASSETS\nDERIVATIVE LIABILITIES\n(Dollars in millions)\nASSETS AT \nFAIR VALUE\nOTHER \nCURRENT \nASSETS\nOTHER \nLONG-TERM \nASSETS\nLIABILITIES \nAT FAIR \nVALUE\nACCRUED \nLIABILITIES\nOTHER \nLONG-TERM \nLIABILITIES\nLevel 2:\nForeign exchange forwards and options(1)\n$ \n557 $ \n493 $ \n64 \n$ \n180 $ \n128 $ \n52 \n(1)\nIf the foreign exchange derivative instruments had been netted on the Consolidated Balance Sheets, the asset and liability positions each would have \nbeen reduced by $178 million as of May 31, 2023. As of that date, the Company received $36 million of cash collateral from various counterparties \nrelated to foreign exchange derivative instruments. No amount of collateral was posted on the derivative liability balance as of May 31, 2023.\nMAY 31, 2022\nDERIVATIVE ASSETS\nDERIVATIVE LIABILITIES\n(Dollars in millions)\nASSETS AT \nFAIR VALUE\nOTHER \nCURRENT \nASSETS\nOTHER \nLONG-TERM \nASSETS\nLIABILITIES \nAT FAIR \nVALUE\nACCRUED \nLIABILITIES\nOTHER \nLONG-TERM \nLIABILITIES\nLevel 2:\nForeign exchange forwards and options and \nembedded derivatives(1)\n$ \n880 $ \n674 $ \n206 \n$ \n77 $ \n66 $ \n11 \n(1)\nIf the foreign exchange derivative instruments had been netted on the Consolidated Balance Sheets, the asset and liability positions each would have \nbeen reduced by $76 million as of May 31, 2022. As of that date, the Company had received $486 million of cash collateral from various counterparties \nrelated to foreign exchange derivative instruments. No amount of collateral was posted on the Company's derivative liability balance as of May 31, \n2022.\nFor additional information related to the Company's derivative financial instruments, refer to Note 12 — Risk Management and \nDerivatives. For fair value information regarding Notes payable and Long-term debt, refer to Note 5 — Short-Term Borrowings \nand Credit Lines and Note 6 — Long-Term Debt, respectively. \nThe carrying amounts of other current financial assets and other current financial liabilities approximate fair value.\nNON-RECURRING FAIR VALUE MEASUREMENTS\nAs further discussed in Note 18 — Acquisitions and Divestitures, the Company met the criteria to recognize the related assets \nand liabilities of its Argentina, Chile and Uruguay entities as held-for-sale as of May 31, 2022. This required the Company to \nremeasure the disposal groups at fair value, less costs to sell, which is considered a Level 3 fair value measurement and was \nbased on each transaction's estimated consideration. \nAll other assets or liabilities required to be measured at fair value on a non-recurring basis as of May 31, 2023 and 2022 were \nimmaterial.\n2023 FORM 10-K   69    \n\n\nNOTE 5 — SHORT-TERM BORROWINGS AND CREDIT LINES\nThe carrying amounts reflected in the Consolidated Balance Sheets for Notes payable approximate fair value.\nOn March 11, 2022, the Company entered into a five-year committed credit facility agreement with a syndicate of banks which \nprovides for up to $2 billion of borrowings, with the option to increase borrowings up to $3 billion in total with lender approval. The \nfacility matures on March 11, 2027, with options to extend the maturity date up to an additional two years. This facility replaces \nthe prior $2 billion five-year credit facility agreement entered into on August 16, 2019, which would have matured on August 16, \n2024. Based on the Company's current long-term senior unsecured debt ratings of AA- and A1 from Standard and Poor's \nCorporation and Moody's Investor Services, respectively, the interest rate charged on any outstanding borrowings would be the \nprevailing Term SOFR for the applicable interest period plus 0.60%. The facility fee is 0.04% of the total undrawn commitment.\nOn March 10, 2023, the Company entered into a 364-day committed credit facility agreement with a syndicate of banks, which \nprovides for up to $1 billion of borrowings, with an option to increase borrowings up to $1.5 billion in total with lender approval. \nThe facility matures on March 8, 2024, with an option to extend the maturity date an additional 364 days. This facility replaces the \nprior $1 billion 364-day credit facility agreement entered into on March 11, 2022, which matured on March 10, 2023. Based on the \nCompany's current long-term senior unsecured debt ratings of AA- and A1 from Standard and Poor's Corporation and Moody's \nInvestor Services, respectively, the interest rate charged on any outstanding borrowings would be the prevailing Term Secured \nOvernight Financing Rate (\"Term SOFR\") for the applicable interest period plus 0.60%. The facility fee is 0.02% of the total \nundrawn commitment.\nAs of and for the periods ended May 31, 2023 and 2022, no amounts were outstanding under any of the Company's committed \ncredit facilities. \nNIKE, INC.      \n70\n\n\nNOTE 6 — LONG-TERM DEBT\nLong-term debt, net of unamortized premiums, discounts and debt issuance costs, comprises the following: \nBOOK VALUE \nOUTSTANDING \nAS OF MAY 31,\nScheduled Maturity (Dollars in millions)\nORIGINAL PRINCIPAL INTEREST RATE\nINTEREST PAYMENTS\n2023\n2022\nCorporate Term Debt:(1)(2)\nMay 1, 2023\n$ \n500 \n \n2.25 %\nSemi-Annually\n$ \n— $ \n500 \nMarch 27, 2025\n \n1,000 \n \n2.40 %\nSemi-Annually\n \n998  \n996 \nNovember 1, 2026\n \n1,000 \n \n2.38 %\nSemi-Annually\n \n997  \n997 \nMarch 27, 2027\n \n1,000 \n \n2.75 %\nSemi-Annually\n \n997  \n996 \nMarch 27, 2030\n \n1,500 \n \n2.85 %\nSemi-Annually\n \n1,492  \n1,491 \nMarch 27, 2040\n \n1,000 \n \n3.25 %\nSemi-Annually\n \n987  \n986 \nMay 1, 2043\n \n500 \n \n3.63 %\nSemi-Annually\n \n496  \n496 \nNovember 1, 2045\n \n1,000 \n \n3.88 %\nSemi-Annually\n \n986  \n985 \nNovember 1, 2046\n \n500 \n \n3.38 %\nSemi-Annually\n \n492  \n492 \nMarch 27, 2050\n \n1,500 \n \n3.38 %\nSemi-Annually\n \n1,482  \n1,481 \nTotal\n \n8,927  \n9,420 \nLess Current Portion of Long-Term Debt\n \n—  \n500 \nTOTAL LONG-TERM DEBT\n$ \n8,927 $ \n8,920 \n(1)\nThese senior unsecured obligations rank equally with the Company's other unsecured and unsubordinated indebtedness.\n(2)\nThe bonds are redeemable at the Company's option at a price equal to the greater of (i) 100% of the aggregate principal amount of the notes to be \nredeemed or (ii) the sum of the present values of the remaining scheduled payments, plus in each case, accrued and unpaid interest. However, the \nbonds also feature a par call provision, which allows for the bonds to be redeemed at a price equal to 100% of the aggregate principal amount of the \nnotes being redeemed, plus accrued and unpaid interest on or after the Par Call Date, as defined in the respective notes.\nThe scheduled maturity of Long-term debt in each of the years ending May 31, 2024 through 2028, are $0 million, $1,000 million, \n$0 million, $2,000 million and $0 million, respectively, at face value.\nThe Company's Long-term debt is recorded at adjusted cost, net of unamortized premiums, discounts and debt issuance costs. \nThe fair value of long-term debt is estimated based upon quoted prices for similar instruments or quoted prices for identical \ninstruments in inactive markets (Level 2). The fair value of the Company's Long-term debt, including the current portion, was \napproximately $7,889 million and $8,933 million as of May 31, 2023 and 2022, respectively. \n2023 FORM 10-K   71    \n\n\nNOTE 7 — INCOME TAXES\nIncome before income taxes is as follows:\nYEAR ENDED MAY 31,\n(Dollars in millions)\n2023\n2022\n2021\nIncome before income taxes:\nUnited States\n$ \n4,663 $ \n6,020 $ \n5,723 \nForeign\n \n1,538  \n631  \n938 \nTOTAL INCOME BEFORE INCOME TAXES\n$ \n6,201 $ \n6,651 $ \n6,661 \nThe provision for income taxes is as follows:\nYEAR ENDED MAY 31,\n(Dollars in millions)\n2023\n2022\n2021\nCurrent:\nUnited States\nFederal\n$ \n430 $ \n231 $ \n328 \nState\n \n184  \n98  \n134 \nForeign\n \n634  \n926  \n857 \nTotal Current\n \n1,248  \n1,255  \n1,319 \nDeferred:\nUnited States\nFederal\n \n(162)  \n(522)  \n(371) \nState\n \n(25)  \n(16)  \n(34) \nForeign\n \n70  \n(112)  \n20 \nTotal Deferred\n \n(117)  \n(650)  \n(385) \nTOTAL INCOME TAX EXPENSE\n$ \n1,131 $ \n605 $ \n934 \nA reconciliation from the U.S. statutory federal income tax rate to the effective income tax rate is as follows:\n \nYEAR ENDED MAY 31,\n2023\n2022\n2021\nFederal income tax rate\n \n21.0 \n%\n \n21.0 \n%\n \n21.0 \n%\nState taxes, net of federal benefit\n \n1.5 \n%\n \n1.4 \n%\n \n1.3 \n%\nForeign earnings\n \n1.7 \n%\n \n-1.8 \n%\n \n0.2 \n%\nSubpart F deferred tax benefit\n \n0.0 \n%\n \n-4.7 \n%\n \n0.0 \n%\nForeign-derived intangible income benefit\n \n-6.1 \n%\n \n-4.1 \n%\n \n-3.7 \n%\nExcess tax benefits from stock-based compensation\n \n-1.1 \n%\n \n-4.9 \n%\n \n-4.5 \n%\nIncome tax audits and contingency reserves\n \n1.0 \n%\n \n1.5 \n%\n \n1.5 \n%\nU.S. research and development tax credit\n \n-1.2 \n%\n \n-1.0 \n%\n \n-0.9 \n%\nOther, net\n \n1.4 \n%\n \n1.7 \n%\n \n-0.9 \n%\nEFFECTIVE INCOME TAX RATE\n \n18.2 \n%\n \n9.1 \n%\n \n14.0 \n%\nOn December 22, 2017, the U.S. enacted the Tax Cuts and Jobs Act (the \"Tax Act\"), which significantly changed U.S. tax law and \nincluded a provision to tax global intangible low-taxed income (\"GILTI\") of foreign subsidiaries. The Company recognizes taxes \ndue under the GILTI provision as a current period expense. \nThe effective tax rate for the fiscal year ended May 31, 2023 was higher than the effective tax rate for the fiscal year ended \nMay 31, 2022. The increase was primarily due to decreased benefits from stock-based compensation and the prior year \nrecognition of a non-cash, one-time benefit related to the onshoring of the Company's non-U.S. intangible property. During the \nfourth quarter of fiscal 2022, the Company onshored certain non-U.S. intangible property ownership rights and implemented \nchanges in the Company's legal entity structure. The tax restructuring increases the possibility that foreign earnings in future \nperiods will be subject to tax in the U.S. due to Subpart F of the Internal Revenue Code. The Company recognized a deferred tax \nasset and corresponding non-cash deferred income tax benefit of 4.7%, to establish the deferred tax deduction that is expected \nto reduce taxable income in future periods.\nNIKE, INC.      \n72\n\n\nThe effective tax rate for the fiscal year ended May 31, 2022 was lower than the effective tax rate for the fiscal year ended \nMay 31, 2021. The decrease was primarily due to a shift in the Company's earnings mix and recognition of a non-cash, one-time \nbenefit related to the onshoring of the Company's non-U.S. intangible property.\nDeferred tax assets and liabilities comprise the following as of: \nMAY 31,\n(Dollars in millions)\n2023\n2022\nDeferred tax assets:\nInventories(1)\n$ \n79 $ \n136 \nSales return reserves(1)\n \n89  \n109 \nDeferred compensation(1)\n \n321  \n313 \nStock-based compensation\n \n261  \n195 \nReserves and accrued liabilities(1)\n \n144  \n145 \nOperating lease liabilities\n \n511  \n508 \nIntangibles\n \n255  \n275 \nCapitalized research and development expenditures \n \n548  \n353 \nNet operating loss carry-forwards\n \n15  \n8 \nSubpart F deferred tax\n \n374  \n313 \nForeign tax credit carry-forward\n \n—  \n103 \nOther(1)\n \n183  \n148 \nTotal deferred tax assets\n \n2,780  \n2,606 \nValuation allowance\n \n(22)  \n(19) \nTotal deferred tax assets after valuation allowance\n \n2,758  \n2,587 \nDeferred tax liabilities:\nForeign withholding tax on undistributed earnings of foreign subsidiaries\n \n(186)  \n(146) \nProperty, plant and equipment(1)\n \n(276)  \n(247) \nRight-of-use assets\n \n(441)  \n(437) \nOther(1)\n \n(56)  \n(92) \nTotal deferred tax liabilities\n \n(959)  \n(922) \nNET DEFERRED TAX ASSET (2)\n$ \n1,799 $ \n1,665 \n(1)\nThe above amounts exclude deferred taxes held-for-sale as of May 31, 2022. See Note 18 — Acquisitions and Divestitures for additional information.\n(2)\nOf the total $1,799 million net deferred tax asset for the period ended May 31, 2023, $2,026 million was included within Deferred income taxes and \nother assets and $(227) million was included within Deferred income taxes and other liabilities on the Consolidated Balance Sheets. Of the total $1,665 \nmillion net deferred tax asset for the period ended May 31, 2022, $1,891 million was included within Deferred income taxes and other assets and \n$(226) million was included within Deferred income taxes and other liabilities on the Consolidated Balance Sheets.\nThe following is a reconciliation of the changes in the gross balance of unrecognized tax benefits as of:\n \nMAY 31,\n(Dollars in millions)\n2023\n2022\n2021\nUnrecognized tax benefits, beginning of the period\n$ \n848 $ \n896 $ \n771 \nGross increases related to prior period tax positions\n \n95  \n71  \n77 \nGross decreases related to prior period tax positions\n \n(17)  \n(145)  \n(22) \nGross increases related to current period tax positions\n \n50  \n62  \n59 \nSettlements\n \n(18)  \n(17)  \n(5) \nLapse of statute of limitations\n \n(7)  \n(10)  \n(6) \nChanges due to currency translation\n \n(15)  \n(9)  \n22 \nUNRECOGNIZED TAX BENEFITS, END OF THE PERIOD\n$ \n936 $ \n848 $ \n896 \nAs of May 31, 2023, total gross unrecognized tax benefits, excluding related interest and penalties, were $936 million, of which \n$651 million would affect the Company's effective tax rate if recognized in future periods. The majority of the total gross \nunrecognized tax benefits are long-term in nature and included within Deferred income taxes and other liabilities on the \nConsolidated Balance Sheets.\n2023 FORM 10-K   73    \n\n\nThe Company recognizes interest and penalties related to income tax matters in Income tax expense. The liability for payment of \ninterest and penalties increased by $20 million during the fiscal year ended May 31, 2023, increased by $45 million during the \nfiscal year ended May 31, 2022, and increased by $45 million during the fiscal year ended May 31, 2021. As of May 31, 2023 and \n2022, accrued interest and penalties related to uncertain tax positions were $268 million and $248 million, respectively (excluding \nfederal benefit) and were included within Deferred income taxes and other liabilities on the Consolidated Balance Sheets.\nAs of May 31, 2023 and 2022, long-term income taxes payable were $373 million and $535 million, respectively, and were \nincluded within Deferred income taxes and other liabilities on the Consolidated Balance Sheets. \nThe Company is subject to taxation in the U.S., as well as various state and foreign jurisdictions. The Company is currently under \naudit by the U.S. IRS for fiscal years 2017 through 2019. The Company has closed all U.S. federal income tax matters through \nfiscal 2016, with the exception of certain transfer pricing adjustments. Tax years after 2011 remain open in certain major foreign \njurisdictions. Although the timing of resolution of audits is not certain, the Company evaluates all domestic and foreign audit \nissues in the aggregate, along with the expiration of applicable statutes of limitations, and estimates that it is reasonably possible \nthe total gross unrecognized tax benefits could decrease by up to $50 million within the next 12 months. In January 2019, the \nEuropean Commission opened a formal investigation to examine whether the Netherlands has breached State Aid rules when \ngranting certain tax rulings to the Company. The Company believes the investigation is without merit. If this matter is adversely \nresolved, the Netherlands may be required to assess additional amounts with respect to prior periods, and the Company's \nincome taxes related to prior periods in the Netherlands could increase. \nA portion of the Company's foreign operations benefit from a tax holiday, which is set to expire in 2031. This tax holiday may be \nextended when certain conditions are met or may be terminated early if certain conditions are not met. The tax benefit attributable \nto this tax holiday, before taking into consideration other U.S. indirect tax provisions, was $263 million, $221 million and $238 \nmillion for the fiscal years ended May 31, 2023, 2022 and 2021, respectively. The benefit of the tax holiday on diluted earnings \nper common share was $0.17, $0.14 and $0.15 for the fiscal years ended May 31, 2023, 2022 and 2021, respectively.\nDeferred tax assets as of May 31, 2023 and 2022, were reduced by a valuation allowance. For the fiscal year ended May 31, \n2023, a valuation allowance was provided for U.S. capital loss carryforwards and on tax benefits generated by certain entities \nwith operating losses. For the fiscal year ended May 31, 2022, a valuation allowance was provided for U.S. capital loss \ncarryforwards and on tax benefits generated by certain entities with operating losses. There was a $3 million net increase in the \nvaluation allowance for the fiscal year ended May 31, 2023, compared to a $7 million net increase for the fiscal year ended \nMay 31, 2022, and $14 million net decrease for the fiscal year ended May 31, 2021.\nThe Company has available domestic and foreign loss carry-forwards of $61 million as of May 31, 2023. If not utilized, $33 million \nof losses will expire in the periods between fiscal 2028 and 2043. \nNOTE 8 — REDEEMABLE PREFERRED STOCK\nSojitz America is the sole owner of the Company's authorized redeemable preferred stock, $1 par value, which is redeemable at \nthe option of Sojitz America or the Company at par value aggregating $0.3 million. A cumulative dividend of $0.10 per share is \npayable annually on May 31, and no dividends may be declared or paid on the common stock of the Company unless dividends \non the redeemable preferred stock have been declared and paid in full. There have been no changes in the redeemable preferred \nstock in the fiscal years ended May 31, 2023, 2022 and 2021. As the holder of the redeemable preferred stock, Sojitz America \ndoes not have general voting rights but does have the right to vote as a separate class on the sale of all or substantially all of the \nassets of the Company and its subsidiaries; on merger, consolidation, liquidation or dissolution of the Company; or on the sale or \nassignment of the NIKE trademark for athletic footwear sold in the United States. The redeemable preferred stock has been fully \nissued to Sojitz America and is not blank check preferred stock. The Company's articles of incorporation do not permit the \nissuance of additional preferred stock.\nNOTE 9 — COMMON STOCK AND STOCK-BASED COMPENSATION\nCOMMON STOCK\nThe authorized number of shares of Class A Common Stock, no par value, and Class B Common Stock, no par value, are 400 \nmillion and 2,400 million, respectively. Each share of Class A Common Stock is convertible into one share of Class B Common \nStock. Voting rights of Class B Common Stock are limited in certain circumstances with respect to the election of directors. There \nare no differences in the dividend and liquidation preferences or participation rights of the holders of Class A and Class B \nCommon Stock. From time to time, the Company's Board of Directors authorizes share repurchase programs for the repurchase \nof Class B Common Stock. The value of repurchased shares is deducted from Total shareholders' equity through allocation to \nCapital in excess of stated value and Retained earnings.\nNIKE, INC.      \n74\n\n\nSTOCK-BASED COMPENSATION\nThe NIKE, Inc. Stock Incentive Plan (the \"Stock Incentive Plan\") provides for the issuance of up to 798 million previously \nunissued shares of Class B Common Stock in connection with equity awards granted under the Stock Incentive Plan. The Stock \nIncentive Plan authorizes the grant of non-statutory stock options, incentive stock options, stock appreciation rights, and stock \nawards, including restricted stock and restricted stock units. Restricted stock units include both time-vesting restricted stock units \n(\"RSUs\") as well as performance-based restricted stock units (\"PSUs\"). A committee of the Board of Directors administers the \nStock Incentive Plan and has the authority to determine the employees to whom awards will be made, the amount of the awards \nand the other terms and conditions of the awards. The Company generally grants stock options, restricted stock and restricted \nstock units on an annual basis. The exercise price for stock options and stock appreciation rights may not be less than the fair \nmarket value of the underlying shares on the date of grant. Substantially all awards under the Stock Incentive Plan vest ratably \nover 4 years of continued employment, with stock options expiring 10 years from the date of grant. \nThe following table summarizes the Company's total stock-based compensation expense recognized in Cost of sales or \nOperating overhead expense, as applicable: \n \nYEAR ENDED MAY 31,\n(Dollars in millions)\n2023\n2022\n2021\nStock options(1)\n$ \n311 $ \n297 $ \n323 \nESPPs\n \n72  \n60  \n63 \nRestricted stock and restricted stock units(1)(2)\n \n372  \n281  \n225 \nTOTAL STOCK-BASED COMPENSATION EXPENSE\n$ \n755 $ \n638 $ \n611 \n(1)\nExpense for stock options includes the expense associated with stock appreciation rights. Accelerated stock option expense is primarily recorded for \nemployees meeting certain retirement eligibility requirements and was $64 million, $57 million and $67 million for the fiscal years ended May 31, 2023, \n2022 and 2021, respectively. During fiscal 2021, an immaterial amount of accelerated stock option and restricted stock unit expense was also recorded \nfor certain employees impacted by the Company's organizational realignment. For more information, see Note 19 — Restructuring.\n(2)\nFor the fiscal years ended May 31, 2023 and 2022, expense for restricted stock units includes an immaterial amount of expense for PSUs.\nThe income tax benefit related to stock-based compensation expense was $71 million, $327 million and $297 million for the fiscal \nyears ended May 31, 2023, 2022 and 2021, respectively, and reported within Income tax expense.\nSTOCK OPTIONS\nThe weighted average fair value per share of stock options granted during the years ended May 31, 2023, 2022 and 2021, \ncomputed as of the grant date using the Black-Scholes pricing model, was $31.31, $37.53 and $26.75, respectively. The \nweighted average assumptions used to estimate these fair values were as follows:\n \nYEAR ENDED MAY 31,\n2023\n2022\n2021\nDividend yield\n \n0.9 %\n \n0.8 %\n \n0.9 %\nExpected volatility\n \n27.1 %\n \n24.9 %\n \n27.3 %\nWeighted average expected life (in years)\n5.8\n5.8\n6.0\nRisk-free interest rate\n \n3.3 %\n \n0.9 %\n \n0.4 %\nExpected volatilities are based on an analysis of the historical volatility of the Company's common stock, the implied volatility in \nmarket traded options on the Company's common stock with a term greater than one year, as well as other factors. The weighted \naverage expected life of options is based on an analysis of historical and expected future exercise patterns. The interest rate is \nbased on the U.S. Treasury (constant maturity) risk-free rate in effect at the date of grant for periods corresponding with the \nexpected term of the options.\n2023 FORM 10-K   75    \n\n\nThe following summarizes the stock option transactions under the plan discussed above: \nSHARES\n(1)\nWEIGHTED AVERAGE \nOPTION PRICE\n(In millions)\nOptions outstanding as of May 31, 2022\n \n68.0 $ \n88.66 \nExercised\n \n(7.5)  \n57.11 \nForfeited\n \n(1.5)  \n122.93 \nGranted\n \n12.0  \n107.44 \nOptions outstanding as of May 31, 2023\n \n71.0 $ \n94.40 \n(1)\nIncludes stock appreciation rights transactions.\nOptions exercisable as of May 31, 2023 were 44.7 million and had a weighted average option price of $79.95 per share. The \naggregate intrinsic value for options outstanding and exercisable as of May 31, 2023 was $1,380 million and $1,307 million, \nrespectively. The total intrinsic value of the options exercised during the years ended May 31, 2023, 2022 and 2021 was $438 \nmillion, $1,742 million and $1,571 million, respectively. The intrinsic value is the amount by which the market value of the \nunderlying stock exceeds the exercise price of the options. The weighted average contractual life remaining for options \noutstanding and options exercisable as of May 31, 2023 was 5.9 years and 4.5 years, respectively. As of May 31, 2023, the \nCompany had $425 million of unrecognized compensation costs from stock options, net of estimated forfeitures, to be recognized \nin Cost of sales or Operating overhead expense, as applicable, over a weighted average remaining period of 2.5 years.\nEMPLOYEE STOCK PURCHASE PLANS\nIn addition to the Stock Incentive Plan, the Company gives employees the right to purchase shares at a discount from the market \nprice under ESPPs. Subject to the annual statutory limit, employees are eligible to participate through payroll deductions of up to \n10% of their compensation. At the end of each six-month offering period, shares are purchased by the participants at 85% of the \nlower of the fair market value at the beginning or the end of the offering period. Employees purchased 3.0 million, 2.0 million and \n2.5 million shares during each of the fiscal years ended May 31, 2023, 2022 and 2021, respectively.\nRESTRICTED STOCK AND RESTRICTED STOCK UNITS\nRecipients of restricted stock are entitled to cash dividends and to vote their respective shares throughout the period of \nrestriction. Recipients of restricted stock units, which includes RSUs and PSUs, are entitled to dividend equivalent cash \npayments upon vesting. The number of shares of restricted stock and restricted stock units vested includes shares of common \nstock withheld by the Company on behalf of employees to satisfy the minimum statutory tax withholding requirements. \nThe following summarizes the restricted stock and restricted stock units transactions under the plan discussed above: \nSHARES\n(1)\nWEIGHTED AVERAGE \nGRANT DATE  \nFAIR VALUE\n(In millions)\nNonvested as of May 31, 2022\n \n6.7 $ \n130.88 \nVested\n \n(2.2)  \n114.85 \nForfeited\n \n(0.7)  \n131.10 \nGranted\n \n4.5  \n115.56 \nNonvested as of May 31, 2023\n \n8.3 $ \n126.97 \n         (1) Includes an immaterial amount of PSU transactions\nThe weighted average fair value per share of restricted stock and restricted stock units granted for the fiscal years ended May 31, \n2023, 2022 and 2021, computed as of the grant date, was $115.56, $168.04 and $113.84, respectively. During the fiscal years \nended May 31, 2023, 2022 and 2021, the aggregate fair value of vested restricted stock and restricted stock units was $250 \nmillion, $354 million and $310 million, respectively, computed as of the date of vesting. \nAs of May 31, 2023, the Company had $649 million of unrecognized compensation costs from restricted stock and restricted \nstock units, net of estimated forfeitures, to be recognized in Cost of sales or Operating overhead expense, as applicable, over a \nweighted average remaining period of 2.3 years.\nNIKE, INC.      \n76\n\n\nNOTE 10 — EARNINGS PER SHARE\nThe following is a reconciliation from basic earnings per common share to diluted earnings per common share. The computations \nof diluted earnings per common share excluded restricted stock, restricted stock units and options, including shares under \nESPPs, to purchase an estimated additional 31.7 million, 9.4 million and 11.3 million shares of common stock outstanding for the \nfiscal years ended May 31, 2023, 2022 and 2021, respectively, because the awards were assumed to be anti-dilutive.\n \nYEAR ENDED MAY 31,\n(In millions, except per share data)\n2023\n2022\n2021\nNet income available to common stockholders\n$ \n5,070 $ \n6,046 $ \n5,727 \nDetermination of shares:\nWeighted average common shares outstanding\n \n1,551.6  \n1,578.8  \n1,573.0 \nAssumed conversion of dilutive stock options and awards\n \n18.2  \n32.0  \n36.4 \nDILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING\n \n1,569.8  \n1,610.8  \n1,609.4 \nEarnings per common share:\nBasic\n$ \n3.27 $ \n3.83 $ \n3.64 \nDiluted\n$ \n3.23 $ \n3.75 $ \n3.56 \nNOTE 11 — BENEFIT PLANS\nThe Company has a qualified 401(k) Savings and Profit Sharing Plan, in which all U.S. employees are able to participate. The \nCompany matches a portion of employee contributions to the savings plan. Company contributions to the savings plan were $136 \nmillion, $126 million and $110 million and included in Cost of sales or Operating overhead expense, as applicable, for the fiscal \nyears ended May 31, 2023, 2022 and 2021, respectively. \nThe Company also has a Long-Term Incentive Plan (\"LTIP\") adopted by the Board of Directors and approved by shareholders in \nSeptember 1997, which has been amended from time to time. The Company recognized an immaterial amount of Operating \noverhead expense related to cash awards under the LTIP during the years ended May 31, 2023, 2022 and 2021. During the fiscal \nyears ended May 31, 2023 and 2022, under the Stock Incentive Plan, the Company granted PSUs which replaced cash-based \nlong-term incentive awards historically granted under the Company's LTIP. Refer to Note 9 — Common Stock and Stock-Based \nCompensation for further information related to PSUs.\nThe Company allows certain highly compensated employees and non-employee directors of the Company to defer compensation \nunder a nonqualified deferred compensation plan. A rabbi trust was established to fund the Company's nonqualified deferred \ncompensation plan obligation. The assets in the rabbi trust of approximately $875 million and $876 million as of May 31, 2023 \nand 2022, respectively, primarily consist of company owned life insurance policies recorded at their cash surrender value and are \nclassified in Deferred income taxes and other assets on the Consolidated Balance Sheets. Deferred compensation plan liabilities \nwere $897 million and $890 million as of May 31, 2023 and 2022, respectively, and primarily classified in Deferred income taxes \nand other liabilities on the Consolidated Balance Sheets.\nThe Company has pension plans in various countries worldwide. The pension plans are only available to local employees and are \ngenerally government mandated. The liability related to the unfunded pension liabilities of the plans was $29 million and $30 \nmillion as of May 31, 2023 and 2022, respectively, and primarily classified as non-current in Deferred income taxes and other \nliabilities on the Consolidated Balance Sheets.\nNOTE 12 — RISK MANAGEMENT AND DERIVATIVES\nThe Company is exposed to global market risks, including the effect of changes in foreign currency exchange rates and interest \nrates, and uses derivatives to manage financial exposures that occur in the normal course of business. The Company does not \nhold or issue derivatives for trading or speculative purposes.\nThe Company may elect to designate certain derivatives as hedging instruments under U.S. GAAP. The Company formally \ndocuments all relationships between designated hedging instruments and hedged items, as well as its risk management \nobjectives and strategies for undertaking hedge transactions. This process includes linking all derivatives designated as hedges \nto either recognized assets or liabilities or forecasted transactions and assessing, both at inception and on an ongoing basis, the \neffectiveness of the hedging relationships.\n2023 FORM 10-K   77    \n\n\nThe majority of derivatives outstanding as of May 31, 2023, are designated as foreign currency cash flow hedges, primarily for \nEuro/U.S. Dollar, British Pound/Euro, Chinese Yuan/U.S. Dollar and Japanese Yen/U.S. Dollar currency pairs. All derivatives are \nrecognized on the Consolidated Balance Sheets at fair value and classified based on the instrument's maturity date.\nThe following tables present the fair values of derivative instruments included within the Consolidated Balance Sheets:\n \nDERIVATIVE ASSETS\nBALANCE SHEET LOCATION\nMAY 31,\n(Dollars in millions)\n2023\n2022\nDerivatives formally designated as hedging \ninstruments:\nForeign exchange forwards and options\nPrepaid expenses and other current assets $ \n480 \n$ \n639 \nForeign exchange forwards and options\nDeferred income taxes and other assets\n \n64 \n \n206 \nTotal derivatives formally designated as hedging \ninstruments\n \n544 \n \n845 \nDerivatives not designated as hedging \ninstruments:\nForeign exchange forwards and options and \nembedded derivatives\nPrepaid expenses and other current assets  \n13 \n \n35 \nTotal derivatives not designated as hedging \ninstruments\n \n13 \n \n35 \nTOTAL DERIVATIVE ASSETS\n$ \n557 \n$ \n880 \n \nDERIVATIVE LIABILITIES\nBALANCE SHEET LOCATION\nMAY 31,\n(Dollars in millions)\n2023\n2022\nDerivatives formally designated as hedging \ninstruments:\nForeign exchange forwards and options\nAccrued liabilities $ \n93 \n$ \n37 \nForeign exchange forwards and options\nDeferred income taxes and other liabilities  \n52 \n \n11 \nTotal derivatives formally designated as hedging \ninstruments\n \n145 \n \n48 \nDerivatives not designated as hedging \ninstruments:\nForeign exchange forwards and options and \nembedded derivatives\nAccrued liabilities  \n35 \n \n29 \nTotal derivatives not designated as hedging \ninstruments\n \n35 \n \n29 \nTOTAL DERIVATIVE LIABILITIES\n$ \n180 \n$ \n77 \nThe following table presents the amounts in the Consolidated Statements of Income in which the effects of cash flow hedges are \nrecorded and the effects of cash flow hedge activity on these line items for the fiscal years ended May 31, 2023, 2022 and 2021: \nYEAR ENDED MAY 31,\n2023\n2022\n2021\n(Dollars in millions)\nTOTAL\nAMOUNT OF  \nGAIN (LOSS)  \nON CASH FLOW \nHEDGE ACTIVITY\nTOTAL\nAMOUNT OF  \nGAIN (LOSS)  \nON CASH FLOW \nHEDGE ACTIVITY\nTOTAL\nAMOUNT OF  \nGAIN (LOSS)  \nON CASH FLOW \nHEDGE ACTIVITY\nRevenues\n$ 51,217 $ \n26 \n$ 46,710 $ \n(82) $ 44,538 $ \n45 \nCost of sales\n \n28,925  \n581 \n \n25,231  \n(23)  \n24,576  \n51 \nDemand creation expense\n \n4,060  \n(5)  \n3,850  \n1 \n \n3,114  \n3 \nOther (income) expense, net\n \n(280)  \n338 \n \n(181)  \n130 \n \n14  \n(47) \nInterest expense (income), net\n \n(6)  \n(8)  \n205  \n(7)  \n262  \n(7) \nNIKE, INC.      \n78\n\n\nThe following tables present the amounts affecting the Consolidated Statements of Income for the years ended May 31, 2023, \n2022 and 2021:\n(Dollars in millions)\nAMOUNT OF GAIN (LOSS) \nRECOGNIZED IN OTHER \nCOMPREHENSIVE INCOME \n(LOSS) ON DERIVATIVES\n(1)\nAMOUNT OF GAIN (LOSS)  \nRECLASSIFIED FROM ACCUMULATED  \nOTHER COMPREHENSIVE  \nINCOME (LOSS) INTO INCOME\n(1)\nYEAR ENDED MAY 31,\nLOCATION OF GAIN (LOSS) \nRECLASSIFIED FROM ACCUMULATED \nOTHER COMPREHENSIVE INCOME \n(LOSS) INTO INCOME\nYEAR ENDED MAY 31,\n2023\n2022\n2021\n2023\n2022\n2021\nDerivatives designated as \ncash flow hedges:\nForeign exchange forwards \nand options\n$ \n16 $ \n(39) $ \n(61) \nRevenues\n$ \n26 $ \n(82) $ \n45 \nForeign exchange forwards  \nand options\n \n305  \n889  \n(563) \nCost of sales\n \n581  \n(23)  \n51 \nForeign exchange forwards \nand options\n \n(1)  \n(6)  \n5 \nDemand creation expense\n \n(5)  \n1  \n3 \nForeign exchange forwards \nand options\n \n207  \n492  \n(163) \nOther (income) expense, net\n \n338  \n130  \n(47) \nInterest rate swaps(2)\n \n—  \n—  \n— \nInterest expense (income), net\n \n(8)  \n(7)  \n(7) \nTotal designated cash \nflow hedges\n$ \n527 $ 1,336 $ (782) \n$ \n932 $ \n19 $ \n45 \n(1)\nFor the fiscal years ended May 31, 2023, 2022, and 2021, the amounts recorded in Other (income) expense, net as a result of the discontinuance of \ncash flow hedges because the forecasted transactions were no longer probable of occurring were immaterial.\n(2)\nGains and losses associated with terminated interest rate swaps, which were previously designated as cash flow hedges and recorded in Accumulated \nother comprehensive income (loss), will be released through Interest expense (income), net over the term of the issued debt.\nAMOUNT OF GAIN (LOSS) RECOGNIZED \nIN INCOME ON DERIVATIVES\nLOCATION OF GAIN (LOSS)  \nRECOGNIZED IN INCOME  \nON DERIVATIVES\nYEAR ENDED MAY 31,\n(Dollars in millions)\n2023\n2022\n2021\nDerivatives designated as hedging instruments:\nForeign exchange forwards and options and \nembedded derivatives\n$ \n28 $ \n38 $ \n(167) \nOther (income) expense, net\nCASH FLOW HEDGES\nAll changes in fair value of derivatives designated as cash flow hedge instruments are recorded in Accumulated other \ncomprehensive income (loss) until Net income is affected by the variability of cash flows of the hedged transaction. Effective \nhedge results are classified in the Consolidated Statements of Income in the same manner as the underlying exposure. When it \nis no longer probable the forecasted hedged transaction will occur in the initially identified time period, hedge accounting is \ndiscontinued and the Company accounts for the associated derivative as an undesignated instrument as discussed below. \nAdditionally, the gains and losses associated with derivatives no longer designated as cash flow hedge instruments in \nAccumulated other comprehensive income (loss) are recognized immediately in Other (income) expense, net, if it is probable the \nforecasted hedged transaction will not occur by the end of the initially identified time period or within an additional two-month \nperiod thereafter. In rare circumstances, the additional period of time may exceed two months due to extenuating circumstances \nrelated to the nature of the forecasted transaction that are outside the control or influence of the Company. \nThe purpose of the Company's foreign exchange risk management program is to lessen both the positive and negative effects of \ncurrency fluctuations on the Company's consolidated results of operations, financial position and cash flows. Foreign currency \nexposures the Company may elect to hedge in this manner include product costs, non-functional currency denominated \nrevenues, intercompany revenues, demand creation expenses, investments in U.S. Dollar denominated available-for-sale debt \nsecurities and certain other intercompany transactions.\nProduct cost foreign currency exposures are primarily generated through non-functional currency denominated product \npurchases. NIKE entities primarily purchase product in two ways: (1) Certain NIKE entities purchase product from the NIKE \nTrading Company (\"NTC\"), a wholly-owned sourcing hub that buys NIKE branded products from third-party factories, \npredominantly in U.S. Dollars. The NTC, whose functional currency is the U.S. Dollar, then sells the product to NIKE entities in \ntheir respective functional currencies. NTC sales to a NIKE entity with a different functional currency result in a foreign currency \n2023 FORM 10-K   79    \n\n\nexposure for the NTC. (2) Other NIKE entities purchase product directly from third-party factories in U.S. Dollars. These \npurchases generate a foreign currency exposure for those NIKE entities with a functional currency other than the U.S. Dollar.\nThe Company's policy permits the utilization of derivatives to reduce its foreign currency exposures where internal netting or \nother strategies cannot be effectively employed. Typically, the Company may enter into hedge contracts starting up to 12 to 24 \nmonths in advance of the forecasted transaction and may place incremental hedges up to 100% of the exposure by the time the \nforecasted transaction occurs. The total notional amount of outstanding foreign currency derivatives designated as cash flow \nhedges was $18.2 billion as of May 31, 2023.\nAs of May 31, 2023, approximately $419 million of deferred net gains (net of tax) on both outstanding and matured derivatives in \nAccumulated other comprehensive income (loss) are expected to be reclassified to Net income during the next 12 months \nconcurrent with the underlying hedged transactions also being recorded in Net income. Actual amounts ultimately reclassified to \nNet income are dependent on the exchange rates in effect when derivative contracts currently outstanding mature. As of May 31, \n2023, the maximum term over which the Company hedges exposures to the variability of cash flows for its forecasted \ntransactions was 27 months.\nFAIR VALUE HEDGES\nThe Company has, in the past, been exposed to the risk of changes in the fair value of certain fixed-rate debt attributable to \nchanges in interest rates. Derivatives used by the Company to hedge this risk are receive-fixed, pay-variable interest rate swaps. \nThe Company had no interest rate swaps designated as fair value hedges as of May 31, 2023. \nNET INVESTMENT HEDGES\nThe Company has, in the past, hedged and may, in the future, hedge the risk of variability in foreign currency-denominated net \ninvestments in wholly-owned international operations. All changes in fair value of the derivatives designated as net investment \nhedges are reported in Accumulated other comprehensive income (loss) along with the foreign currency translation adjustments \non those investments. The Company had no outstanding net investment hedges as of May 31, 2023.\nUNDESIGNATED DERIVATIVE INSTRUMENTS\nThe Company may elect to enter into foreign exchange forwards to mitigate the change in fair value of specific assets and \nliabilities on the Consolidated Balance Sheets. These undesignated instruments are recorded at fair value as a derivative asset or \nliability on the Consolidated Balance Sheets with their corresponding change in fair value recognized in Other (income) expense, \nnet, together with the remeasurement gain or loss from the hedged balance sheet position. The total notional amount of \noutstanding undesignated derivative instruments was $4.7 billion as of May 31, 2023.\nCREDIT RISK\nThe Company is exposed to credit-related losses in the event of nonperformance by counterparties to hedging instruments. The \ncounterparties to all derivative transactions are major financial institutions with investment grade credit ratings; however, this \ndoes not eliminate the Company's exposure to credit risk with these institutions. This credit risk is limited to the unrealized gains \nin such contracts should any of these counterparties fail to perform as contracted. To manage this risk, the Company has \nestablished strict counterparty credit guidelines that are continually monitored.\nThe Company's derivative contracts contain credit risk-related contingent features designed to protect against significant \ndeterioration in counterparties' creditworthiness and their ultimate ability to settle outstanding derivative contracts in the normal \ncourse of business. The Company's bilateral credit-related contingent features generally require the owing entity, either the \nCompany or the derivative counterparty, to post collateral for the portion of the fair value in excess of $50 million should the fair \nvalue of outstanding derivatives per counterparty be greater than $50 million. Additionally, a certain level of decline in credit rating \nof either the Company or the counterparty could trigger collateral requirements. As of May 31, 2023, the Company was in \ncompliance with all credit risk-related contingent features, and derivative instruments with such features were in a net liability \nposition of approximately $2 million. Accordingly, the Company posted no cash collateral as a result of these contingent features. \nFurther, as of May 31, 2023, the Company had received $36 million in cash collateral from various counterparties to its derivative \ncontracts. The Company considers the impact of the risk of counterparty default to be immaterial.\nFor additional information related to the Company's derivative financial instruments and collateral, refer to Note 4 — Fair Value \nMeasurements.\nNIKE, INC.      \n80\n\n\nNOTE 13 — ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)\nThe changes in Accumulated other comprehensive income (loss), net of tax, were as follows:\n(Dollars in millions)\nFOREIGN \nCURRENCY \nTRANSLATION \nADJUSTMENT\n(1)\nCASH FLOW \nHEDGES\nNET \nINVESTMENT \nHEDGES\n(1)\nOTHER\nTOTAL\nBalance at May 31, 2022\n$ \n(520) $ \n779 $ \n115 $ \n(56) $ \n318 \nOther comprehensive income (loss):\nOther comprehensive gains (losses) before \nreclassifications(2)\n \n(91)  \n487  \n—  \n(20)  \n376 \nReclassifications to net income of previously deferred \n(gains) losses(3)\n358\n(835)  \n— \n14\n(463)\nTotal other comprehensive income (loss)\n \n267  \n(348)  \n—  \n(6)  \n(87) \nBalance at May 31, 2023\n$ \n(253) $ \n431 $ \n115 $ \n(62) $ \n231 \n(1)\nThe accumulated foreign currency translation adjustment and net investment hedge gains/losses related to an investment in a foreign subsidiary are \nreclassified to Net income upon sale or upon complete or substantially complete liquidation of the respective entity.\n(2)\nNet of tax benefit (expense) of $0 million, $(40) million, $0 million, $6 million and $(34) million, respectively.\n(3)\nNet of tax (benefit) expense of $(16) million, $97 million, $0 million, $(5) million and $76 million, respectively. \n(Dollars in millions)\nFOREIGN \nCURRENCY \nTRANSLATION \nADJUSTMENT\n(1)\nCASH FLOW \nHEDGES\nNET \nINVESTMENT \nHEDGES\n(1)\nOTHER\nTOTAL\nBalance at May 31, 2021\n$ \n2 $ \n(435) $ \n115 $ \n(62) $ \n(380) \nOther comprehensive income (loss):\nOther comprehensive gains (losses) before \nreclassifications(2)\n \n(522)  \n1,222  \n—  \n28  \n728 \nReclassifications to net income of previously deferred \n(gains) losses(3)\n \n—  \n(8)  \n—  \n(22)  \n(30) \nTotal other comprehensive income (loss)\n \n(522)  \n1,214  \n—  \n6  \n698 \nBalance at May 31, 2022\n$ \n(520) $ \n779 $ \n115 $ \n(56) $ \n318 \n(1)\nThe accumulated foreign currency translation adjustment and net investment hedge gains/losses related to an investment in a foreign subsidiary are \nreclassified to Net income upon sale or upon complete or substantially complete liquidation of the respective entity.\n(2)\nNet of tax benefit (expense) of $0 million, $(114) million, $0 million, $(9) million and $(123) million, respectively.\n(3)\nNet of tax (benefit) expense of $0 million, $11 million, $0 million, $9 million and $20 million, respectively.\n2023 FORM 10-K   81    \n\n\nThe following table summarizes the reclassifications from Accumulated other comprehensive income (loss) to the Consolidated \nStatements of Income:\nAMOUNT OF GAIN (LOSS) \nRECLASSIFIED FROM ACCUMULATED \nOTHER COMPREHENSIVE INCOME  \n(LOSS) INTO INCOME\nLOCATION OF GAIN (LOSS)  \nRECLASSIFIED FROM ACCUMULATED  \nOTHER COMPREHENSIVE INCOME  \n(LOSS) INTO INCOME\nYEAR ENDED MAY 31,\n(Dollars in millions)\n2023\n2022\nGains (losses) on foreign currency translation adjustment\n$ \n(374) $ \n— \nOther (income) expense, net\nTotal before tax\n(374)  \n— \nTax (expense) benefit\n16  \n— \nGain (loss) net of tax\n(358)  \n— \nGains (losses) on cash flow hedges:\nForeign exchange forwards and options\n \n26  \n(82) \nRevenues\nForeign exchange forwards and options\n \n581  \n(23) \nCost of sales\nForeign exchange forwards and options\n \n(5)  \n1 \nDemand creation expense\nForeign exchange forwards and options\n \n338  \n130 \nOther (income) expense, net\nInterest rate swaps\n(8)  \n(7) \nInterest expense (income), net\nTotal before tax\n932  \n19 \nTax (expense) benefit\n(97)  \n(11) \nGain (loss) net of tax\n835  \n8 \nGains (losses) on other\n(19)  \n31 \nOther (income) expense, net\nTotal before tax\n(19)  \n31 \nTax (expense) benefit\n5  \n(9) \nGain (loss) net of tax\n(14)  \n22 \nTotal net gain (loss) reclassified for the period\n$ \n463 $ \n30 \nNIKE, INC.      \n82\n\n\nNOTE 14 — REVENUES\nDISAGGREGATION OF REVENUES\nThe following tables present the Company's Revenues disaggregated by reportable operating segment, major product line and \ndistribution channel:\nYEAR ENDED MAY 31, 2023\n(Dollars in millions)\nNORTH \nAMERICA\nEUROPE, \nMIDDLE \nEAST & \nAFRICA\nGREATER \nCHINA\nASIA \nPACIFIC & \nLATIN \nAMERICA\n(1)\nGLOBAL \nBRAND \nDIVISIONS\nTOTAL \nNIKE \nBRAND\nCONVERSE\nCORPORATE\nTOTAL \nNIKE, INC.\nRevenues by:\nFootwear\n$ 14,897 $ 8,260 $ 5,435 $ 4,543 $ \n— $ 33,135 $ \n2,155 $ \n— $ 35,290 \nApparel\n \n5,947  \n4,566  \n1,666  \n1,664  \n—  13,843  \n90  \n—  13,933 \nEquipment\n \n764  \n592  \n147  \n224  \n—  \n1,727  \n28  \n—  \n1,755 \nOther\n \n—  \n—  \n—  \n—  \n58  \n58  \n154  \n27  \n239 \nTOTAL REVENUES\n$ 21,608 $ 13,418 $ 7,248 $ 6,431 $ \n58 $ 48,763 $ \n2,427 $ \n27 $ 51,217 \nRevenues by:\nSales to Wholesale \nCustomers\n$ 11,273 $ 8,522 $ 3,866 $ 3,736 $ \n— $ 27,397 $ \n1,299 $ \n— $ 28,696 \nSales through Direct to \nConsumer\n 10,335  \n4,896  \n3,382  \n2,695  \n—  21,308  \n974  \n—  22,282 \nOther\n \n—  \n—  \n—  \n—  \n58  \n58  \n154  \n27  \n239 \nTOTAL REVENUES\n$ 21,608 $ 13,418 $ 7,248 $ 6,431 $ \n58 $ 48,763 $ \n2,427 $ \n27 $ 51,217 \n(1)\nRefer to Note 18 — Acquisitions and Divestitures for additional information on the transition of the Company's NIKE Brand businesses in its CASA \nterritory to third-party distributors.\nYEAR ENDED MAY 31, 2022\n(Dollars in millions)\nNORTH \nAMERICA\nEUROPE, \nMIDDLE \nEAST & \nAFRICA\nGREATER \nCHINA\nASIA \nPACIFIC & \nLATIN \nAMERICA\nGLOBAL \nBRAND \nDIVISIONS\nTOTAL \nNIKE \nBRAND\nCONVERSE\nCORPORATE\nTOTAL \nNIKE, INC.\nRevenues by:\nFootwear\n$ 12,228 $ 7,388 $ 5,416 $ 4,111 $ \n— $ 29,143 $ \n2,094 $ \n— $ 31,237 \nApparel\n \n5,492  \n4,527  \n1,938  \n1,610  \n—  13,567  \n103  \n—  13,670 \nEquipment\n \n633  \n564  \n193  \n234  \n—  \n1,624  \n26  \n—  \n1,650 \nOther\n \n—  \n—  \n—  \n—  \n102  \n102  \n123  \n(72)  \n153 \nTOTAL REVENUES\n$ 18,353 $ 12,479 $ 7,547 $ 5,955 $ \n102 $ 44,436 $ \n2,346 $ \n(72) $ 46,710 \nRevenues by:\nSales to Wholesale \nCustomers\n$ 9,621 $ 8,377 $ 4,081 $ 3,529 $ \n— $ 25,608 $ \n1,292 $ \n— $ 26,900 \nSales through Direct to \nConsumer\n \n8,732  \n4,102  \n3,466  \n2,426  \n—  18,726  \n931  \n—  19,657 \nOther\n \n—  \n—  \n—  \n—  \n102  \n102  \n123  \n(72)  \n153 \nTOTAL REVENUES\n$ 18,353 $ 12,479 $ 7,547 $ 5,955 $ \n102 $ 44,436 $ \n2,346 $ \n(72) $ 46,710 \n2023 FORM 10-K   83    \n\n\nYEAR ENDED MAY 31, 2021\n(Dollars in millions)\nNORTH \nAMERICA\nEUROPE, \nMIDDLE \nEAST & \nAFRICA\nGREATER \nCHINA\nASIA \nPACIFIC & \nLATIN \nAMERICA\n(1)\nGLOBAL \nBRAND \nDIVISIONS\nTOTAL \nNIKE \nBRAND\nCONVERSE\nCORPORATE\nTOTAL \nNIKE, INC.\nRevenues by:\nFootwear\n$ 11,644 $ \n6,970 $ \n5,748 $ \n3,659 $ \n— $ 28,021 $ \n1,986 $ \n— $ 30,007 \nApparel\n \n5,028  \n3,996  \n2,347  \n1,494  \n—  \n12,865  \n104  \n—  \n12,969 \nEquipment\n \n507  \n490  \n195  \n190  \n—  \n1,382  \n29  \n—  \n1,411 \nOther\n \n—  \n—  \n—  \n—  \n25  \n25  \n86  \n40  \n151 \nTOTAL REVENUES\n$ 17,179 $ 11,456 $ \n8,290 $ \n5,343 $ \n25 $ 42,293 $ \n2,205 $ \n40 $ 44,538 \nRevenues by:\nSales to Wholesale \nCustomers\n$ 10,186 $ \n7,812 $ \n4,513 $ \n3,387 $ \n— $ 25,898 $ \n1,353 $ \n— $ 27,251 \nSales through Direct to \nConsumer\n \n6,993  \n3,644  \n3,777  \n1,956  \n—  \n16,370  \n766  \n—  \n17,136 \nOther\n \n—  \n—  \n—  \n—  \n25  \n25  \n86  \n40  \n151 \nTOTAL REVENUES\n$ 17,179 $ 11,456 $ \n8,290 $ \n5,343 $ \n25 $ 42,293 $ \n2,205 $ \n40 $ 44,538 \n(1)  Refer to Note 18 — Acquisitions and Divestitures for additional information on the transition of the Company's NIKE Brand business in Brazil to a third-\nparty distributor.\nFor the fiscal years ended May 31, 2023, 2022 and 2021, Global Brand Divisions revenues include NIKE Brand licensing and \nother miscellaneous revenues that are not part of a geographic operating segment. Converse Other revenues were primarily \nattributable to licensing businesses. Corporate revenues primarily consisted of foreign currency hedge gains and losses related \nto revenues generated by entities within the NIKE Brand geographic operating segments and Converse but managed through the \nCompany's central foreign exchange risk management program.\nAs of May 31, 2023 and 2022, the Company did not have any contract assets and had an immaterial amount of contract liabilities \nrecorded in Accrued liabilities on the Consolidated Balance Sheets.\nSALES-RELATED RESERVES\nAs of May 31, 2023 and 2022, the Company's sales-related reserve balance, which includes returns, post-invoice sales discounts \nand miscellaneous claims, was $994 million and $1,015 million, respectively, recorded in Accrued liabilities on the Consolidated \nBalance Sheets. The estimated cost of inventory for expected product returns was $226 million and $194 million as of May 31, \n2023 and 2022, respectively, and was recorded in Prepaid expenses and other current assets on the Consolidated Balance \nSheets.\nNOTE 15 — OPERATING SEGMENTS AND RELATED INFORMATION \nThe Company's operating segments are evidence of the structure of the Company's internal organization. The NIKE Brand \nsegments are defined by geographic regions for operations participating in NIKE Brand sales activity.\nEach NIKE Brand geographic segment operates predominantly in one industry: the design, development, marketing and selling \nof athletic footwear, apparel and equipment. The Company's reportable operating segments for the NIKE Brand are: North \nAmerica; Europe, Middle East & Africa (\"EMEA\"); Greater China; and Asia Pacific & Latin America (\"APLA\"), and include results \nfor the NIKE and Jordan brands. Refer to Note 18 — Acquisitions and Divestitures for information regarding the transition of NIKE \nBrand businesses in certain countries within APLA to third-party distributors.\nThe Company's NIKE Direct operations are managed within each NIKE Brand geographic operating segment. Converse is also a \nreportable segment for the Company and operates in one industry: the design, marketing, licensing and selling of athletic lifestyle \nsneakers, apparel and accessories.\nGlobal Brand Divisions is included within the NIKE Brand for presentation purposes to align with the way management views the \nCompany. Global Brand Divisions revenues include NIKE Brand licensing and other miscellaneous revenues that are not part of a \ngeographic operating segment. Global Brand Divisions costs represent demand creation and operating overhead expense that \ninclude product creation and design expenses centrally managed for the NIKE Brand, as well as costs associated with NIKE \nDirect global digital operations and enterprise technology. \nNIKE, INC.      \n84\n\n\nCorporate consists primarily of unallocated general and administrative expenses, including expenses associated with centrally \nmanaged departments; depreciation and amortization related to the Company's headquarters; unallocated insurance, benefit and \ncompensation programs, including stock-based compensation; and certain foreign currency gains and losses, including certain \nhedge gains and losses. \nThe primary financial measure used by the Company to evaluate performance of individual operating segments is earnings \nbefore interest and taxes (\"EBIT\"), which represents Net income before Interest expense (income), net and Income tax expense \nin the Consolidated Statements of Income. \nAs part of the Company's centrally managed foreign exchange risk management program, standard foreign currency rates are \nassigned twice per year to each NIKE Brand entity in the Company's geographic operating segments and to Converse. These \nrates are set approximately nine and twelve months in advance of the future selling seasons to which they relate (specifically, for \neach currency, one standard rate applies to the fall and holiday selling seasons, and one standard rate applies to the spring and \nsummer selling seasons) based on average market spot rates in the calendar month preceding the date they are established. \nInventories and Cost of sales for geographic operating segments and Converse reflect the use of these standard rates to record \nnon-functional currency product purchases in the entity's functional currency. Differences between assigned standard foreign \ncurrency rates and actual market rates are included in Corporate, together with foreign currency hedge gains and losses \ngenerated from the Company's centrally managed foreign exchange risk management program and other conversion gains and \nlosses.\nAccounts receivable, net, Inventories and Property, plant and equipment, net for operating segments are regularly reviewed by \nmanagement and are therefore provided below.\n2023 FORM 10-K   85    \n\n\nYEAR ENDED MAY 31,\n(Dollars in millions)\n2023\n2022\n2021\nREVENUES\nNorth America\n$ \n21,608 $ \n18,353 $ \n17,179 \nEurope, Middle East & Africa\n \n13,418  \n12,479  \n11,456 \nGreater China\n \n7,248  \n7,547  \n8,290 \nAsia Pacific & Latin America\n \n6,431  \n5,955  \n5,343 \nGlobal Brand Divisions\n \n58  \n102  \n25 \nTotal NIKE Brand\n \n48,763  \n44,436  \n42,293 \nConverse\n \n2,427  \n2,346  \n2,205 \nCorporate\n \n27  \n(72)  \n40 \nTOTAL NIKE, INC. REVENUES\n$ \n51,217 $ \n46,710 $ \n44,538 \nEARNINGS BEFORE INTEREST AND TAXES\nNorth America\n$ \n5,454 $ \n5,114 $ \n5,089 \nEurope, Middle East & Africa\n \n3,531  \n3,293  \n2,435 \nGreater China\n \n2,283  \n2,365  \n3,243 \nAsia Pacific & Latin America\n \n1,932  \n1,896  \n1,530 \nGlobal Brand Divisions\n \n(4,841)  \n(4,262)  \n(3,656) \nConverse\n \n676  \n669  \n543 \nCorporate\n \n(2,840)  \n(2,219)  \n(2,261) \nInterest expense (income), net\n \n(6)  \n205  \n262 \nTOTAL NIKE, INC. INCOME BEFORE INCOME TAXES\n$ \n6,201 $ \n6,651 $ \n6,661 \nADDITIONS TO PROPERTY, PLANT AND EQUIPMENT\nNorth America\n$ \n283 $ \n146 $ \n98 \nEurope, Middle East & Africa\n \n215  \n197  \n153 \nGreater China\n \n56  \n78  \n94 \nAsia Pacific & Latin America\n \n64  \n56  \n54 \nGlobal Brand Divisions\n \n271  \n222  \n278 \nTotal NIKE Brand\n \n889  \n699  \n677 \nConverse\n \n7  \n9  \n7 \nCorporate\n \n140  \n103  \n107 \nTOTAL ADDITIONS TO PROPERTY, PLANT AND EQUIPMENT\n$ \n1,036 $ \n811 $ \n791 \nDEPRECIATION\nNorth America\n$ \n128 $ \n124 $ \n130 \nEurope, Middle East & Africa\n \n120  \n134  \n136 \nGreater China\n \n54  \n41  \n46 \nAsia Pacific & Latin America\n \n42  \n42  \n43 \nGlobal Brand Divisions\n \n211  \n220  \n222 \nTotal NIKE Brand\n \n555  \n561  \n577 \nConverse\n \n17  \n22  \n26 \nCorporate\n \n131  \n134  \n141 \nTOTAL DEPRECIATION\n$ \n703 $ \n717 $ \n744 \nNIKE, INC.      \n86\n\n\nAS OF MAY 31,\n(Dollars in millions)\n2023\n2022\nACCOUNTS RECEIVABLE, NET\nNorth America\n$ \n1,653 $ \n1,850 \nEurope, Middle East & Africa\n \n1,197  \n1,351 \nGreater China\n \n162  \n406 \nAsia Pacific & Latin America(1)\n \n700  \n664 \nGlobal Brand Divisions\n \n96  \n113 \nTotal NIKE Brand\n \n3,808  \n4,384 \nConverse\n \n235  \n230 \nCorporate\n \n88  \n53 \nTOTAL ACCOUNTS RECEIVABLE, NET\n$ \n4,131 $ \n4,667 \nINVENTORIES\nNorth America\n$ \n3,806 $ \n4,098 \nEurope, Middle East & Africa\n \n2,167  \n1,887 \nGreater China\n \n973  \n1,044 \nAsia Pacific & Latin America(1)\n \n894  \n686 \nGlobal Brand Divisions\n \n232  \n197 \nTotal NIKE Brand\n \n8,072  \n7,912 \nConverse\n \n305  \n279 \nCorporate\n \n77  \n229 \nTOTAL INVENTORIES\n$ \n8,454 $ \n8,420 \nPROPERTY, PLANT AND EQUIPMENT, NET\nNorth America\n$ \n794 $ \n639 \nEurope, Middle East & Africa\n \n1,009  \n920 \nGreater China\n \n292  \n303 \nAsia Pacific & Latin America(1)\n \n279  \n274 \nGlobal Brand Divisions\n \n840  \n789 \nTotal NIKE Brand\n \n3,214  \n2,925 \nConverse\n \n38  \n49 \nCorporate\n \n1,829  \n1,817 \nTOTAL PROPERTY, PLANT AND EQUIPMENT, NET\n$ \n5,081 $ \n4,791 \n(1)\nExcludes assets held-for-sale as of May 31, 2022. See Note 18 — Acquisitions and Divestitures for additional information.\nREVENUES AND LONG-LIVED ASSETS BY GEOGRAPHIC AREA\nAfter allocation of revenues for Global Brand Divisions, Converse and Corporate to geographical areas based on the location \nwhere the sales originated, revenues by geographical area are essentially the same as reported above for the NIKE Brand \noperating segments with the exception of the United States. Revenues derived in the United States were $22,007 million, \n$18,749 million and $17,363 million for the fiscal years ended May 31, 2023, 2022 and 2021, respectively. \nThe Company's largest concentrations of long-lived assets primarily consist of the Company's corporate headquarters, retail \nlocations and distribution facilities in the United States and China, as well as distribution facilities in Belgium. Long-lived assets \nattributable to operations in these countries, which consist of property, plant and equipment, net and operating lease ROU assets, \nnet, were as follows: \nMAY 31,\n(Dollars in millions)\n2023\n2022\nUnited States\n$ \n5,129 $ \n4,916 \nBelgium\n \n702  \n646 \nChina\n \n559  \n538 \n2023 FORM 10-K   87    \n\n\nNOTE 16 — COMMITMENTS AND CONTINGENCIES\nAs of May 31, 2023 and 2022, the Company had bank guarantees and letters of credit outstanding totaling $588 million and $289 \nmillion, respectively, issued primarily for real estate agreements, self-insurance programs, other general business obligations and \nlegal matters.\nIn connection with various contracts and agreements, the Company provides routine indemnification relating to the enforceability \nof intellectual property rights, coverage for legal issues that arise and other items where the Company is acting as the guarantor. \nCurrently, the Company has several such agreements in place. However, based on the Company's historical experience and the \nestimated probability of future loss, the Company has determined the fair value of such indemnification is not material to the \nCompany's financial position or results of operations.\nIn the ordinary course of business, the Company is subject to various legal proceedings, claims and government investigations \nrelating to its business, products and actions of its employees and representatives, including contractual and employment \nrelationships, product liability, antitrust, customs, tax, intellectual property and other matters. The outcome of these legal matters \nis inherently uncertain, and the Company cannot predict the eventual outcome of currently pending matters, the timing of their \nultimate resolution or the eventual losses, fines, penalties or consequences relating to those matters. When a loss related to a \nlegal proceeding or claim is probable and reasonably estimable, the Company accrues its best estimate for the ultimate \nresolution of the matter. If one or more legal matters were to be resolved against the Company in a reporting period for amounts \nabove management's expectations, the Company's financial position, operating results and cash flows for that reporting period \ncould be materially adversely affected. In the opinion of management, based on its current knowledge and after consultation with \ncounsel, the Company does not believe any currently pending legal matters will have a material adverse impact on the \nCompany's results of operations, financial position or cash flows, except as described below.\nBELGIAN CUSTOMS CLAIM\nThe Company has received claims for certain years from the Belgian Customs Authorities for alleged underpaid duties related to \nproducts imported beginning in fiscal 2018. The Company disputes these claims and has engaged in the appellate process. The \nCompany has issued bank guarantees in order to appeal the claims. At this time, the Company is unable to estimate the range of \nloss and cannot predict the final outcome as it could take several years to reach a resolution on this matter. If this matter is \nultimately resolved against the Company, the amounts owed, including fines, penalties and other consequences relating to the \nmatter, could have a material adverse effect on the Company's results of operations, financial position and cash flows.\nNOTE 17 — LEASES\nLease expense is recognized in Cost of sales or Operating overhead expense within the Consolidated Statements of Income, \nbased on the underlying nature of the leased asset. For the fiscal years ended May 31, 2023, 2022 and 2021, lease expense \nprimarily consisted of operating lease costs of $585 million, $593 million and $589 million, respectively. Lease expense also \nconsisted of $403 million, $366 million and $347 million for fiscal years ended May 31, 2023, 2022 and 2021, respectively, \nprimarily related to variable lease costs, which includes an immaterial amount of short-term lease costs. As of and for the fiscal \nyears ended May 31, 2023 and 2022 and 2021, finance leases were not a material component of the Company's lease portfolio.\nThe undiscounted cash flows for future maturities of the Company's operating lease liabilities and the reconciliation to the \nOperating lease liabilities recognized in the Company's Consolidated Balance Sheets are as follows:\n(Dollars in millions)\nAS OF MAY 31, 2023\n(1)\nFiscal 2024\n$ \n506 \nFiscal 2025\n \n562 \nFiscal 2026\n \n490 \nFiscal 2027\n \n436 \nFiscal 2028\n \n369 \nThereafter\n \n1,225 \nTotal undiscounted future cash flows related to lease payments\n$ \n3,588 \nLess interest \n \n377 \nPresent value of lease liabilities\n$ \n3,211 \n(1)\nExcludes $278 million as of May 31, 2023, of future operating lease payments for lease agreements signed but not yet commenced. \nNIKE, INC.      \n88\n\n\nThe following table includes supplemental information used to calculate the present value of Operating lease liabilities:\nAS OF MAY 31,\n2023\n2022\nWeighted-average remaining lease term (in years)\n7.5\n7.8\nWeighted-average discount rate\n \n2.5 %\n \n2.3 %\nThe following table includes supplemental cash and non-cash information related to operating leases:\nYEAR ENDED MAY 31,\n(Dollars in millions)\n2023\n2022\n2021\nCash paid for amounts included in the measurement of lease \nliabilities:\nOperating cash flows from operating leases\n$ \n575 \n$ \n589 \n$ \n583 \nOperating lease right-of-use assets obtained in exchange for \nnew operating lease liabilities\n$ \n602 \n$ \n537 \n$ \n489 \nNOTE 18 — ACQUISITIONS AND DIVESTITURES\nACQUISITIONS\nDuring fiscal 2023, 2022 and 2021, the Company made multiple acquisitions focused on gaining new capabilities to fuel its \nConsumer Direct Acceleration strategy, serving consumers personally at a global scale. The impact of acquisitions, individually \nand in aggregate, was not considered material to the Company's Consolidated Financial Statements.\nDIVESTITURES\nDuring the fourth quarter of fiscal 2022, the Company entered into separate definitive agreements to sell its entities in Argentina \nand Uruguay as well as its entity in Chile to third-party distributors. \nThe sale of the Company's entity in Chile to a third-party distributor was completed during the first quarter of fiscal 2023. The \nimpacts from the transaction were not material to the Company's Consolidated Financial Statements.\nThe sale of the Company's entities in Argentina and Uruguay to a third-party distributor was completed during the second quarter \nof fiscal 2023 and the net loss on the sale of these entities totaled approximately $550 million. This loss included $389 million, \nrecognized primarily in fiscal 2020, largely due to the anticipated release of the cumulative foreign currency translation losses. \nThe remaining loss recognized in fiscal 2023 was due to the devaluation of local currency and cash equivalents included in the \ntransferred assets. Upon completion of the sale, the foreign currency translation losses recorded in Accumulated other \ncomprehensive income (loss) were reclassified to Net income within Other (income) expense, net, on the Company's \nConsolidated Statements of Comprehensive Income along with the allowance for previously recognized losses recorded in \nAccrued liabilities. The net loss was classified within Corporate.\nThe net cash proceeds received are reflected within Other investing activities on the Company's Consolidated Statements of \nCash Flows.\nThe related assets and liabilities of these entities within the Company's APLA operating segment were classified as held-for-sale \non the Consolidated Balance Sheets within Prepaid expenses and other currents and Accrued liabilities, respectively, until the \ntransactions closed. As of May 31, 2022, held-for-sale assets were $182 million and held-for-sale liabilities were $58 million. \nOTHER DIVESTITURES\nDuring fiscal 2020, the Company entered into a definitive agreement to sell substantially all of its NIKE Brand operations in Brazil \nand shift to a distributor operating model. During fiscal 2021, the transaction closed and the Company recognized a loss of \napproximately $50 million within Other (income) expense, net classified within Corporate, on the Consolidated Statements of \nIncome. Cash proceeds received were reflected within Other investing activities on the Consolidated Statements of Cash Flows. \n2023 FORM 10-K   89    \n\n\nNOTE 19 — RESTRUCTURING\nIn fiscal 2021, the Company substantially completed a series of leadership and operating model changes to streamline and \nspeed up the strategic execution of the Consumer Direct Acceleration. \nFor the fiscal year ended May 31, 2021, the Company recognized employee termination costs of $214 million and $35 million \nwithin Operating overhead expense and Cost of sales, respectively, and made cash payments of $212 million. Additionally, the \nrelated stock-based compensation expense recorded within Operating overhead expense and Cost of sales was $41 million and \n$4 million, respectively. \nThese costs were classified within Corporate.\nNIKE, INC.      \n90\n\n\nITEM 9. CHANGES IN AND DISAGREEMENTS WITH \nACCOUNTANTS ON ACCOUNTING AND FINANCIAL \nDISCLOSURE\nThere has been no change of accountants nor any disagreements with accountants on any matter of accounting principles or \npractices or financial statement disclosure required to be reported under this Item.\nITEM 9A. CONTROLS AND PROCEDURES\nWe maintain disclosure controls and procedures that are designed to provide reasonable assurance that information required to \nbe disclosed in our Securities Exchange Act of 1934, as amended (the \"Exchange Act\"), reports is recorded, processed, \nsummarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms and \nthat such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief \nFinancial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the \ndisclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and \noperated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to \napply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.\nWe carry out a variety of ongoing procedures, under the supervision and with the participation of our management, including our \nChief Executive Officer and Chief Financial Officer, to evaluate the effectiveness of the design and operation of our disclosure \ncontrols and procedures. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our \ndisclosure controls and procedures were effective at the reasonable assurance level as of May 31, 2023.\n\"Management's Annual Report on Internal Control Over Financial Reporting\" is included in Item 8 of this Annual Report.\nWe are continuing several transformation initiatives to centralize and simplify our business processes and systems. These are \nlong-term initiatives, which we believe will enhance our internal control over financial reporting due to increased automation and \nfurther integration of related processes. We will continue to monitor our internal control over financial reporting for effectiveness \nthroughout these transformation initiatives.\nThere have not been any changes in our internal control over financial reporting during our most recent fiscal quarter that have \nmaterially affected, or are reasonably likely to materially affect, our internal control over financial reporting.\nITEM 9B. OTHER INFORMATION\nNo disclosure is required under this item. \nITEM 9C. DISCLOSURE REGARDING FOREIGN \nJURISDICTIONS THAT PREVENT INSPECTIONS\nNot applicable. \n2023 FORM 10-K   91    \n\n\nPART III\nITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND \nCORPORATE GOVERNANCE\nThe information required by Item 401 of Regulation S-K regarding directors is included under \"Corporate Governance — NIKE, \nInc. Board of Directors\" in the definitive Proxy Statement for our 2023 Annual Meeting of Shareholders and is incorporated herein \nby reference. The information required by Item 401 of Regulation S-K regarding executive officers is included under \"Information \nabout our Executive Officers\" in Item 1 of this Annual Report. The information required by Item 406 of Regulation S-K is included \nunder \"Corporate Governance — Code of Conduct\" in the definitive Proxy Statement for our 2023 Annual Meeting of \nShareholders and is incorporated herein by reference. The information required by Items 407(d)(4) and (d)(5) of Regulation S-K \nregarding the Audit & Finance Committee of the Board of Directors is included under \"Corporate Governance — Board Structure \nand Responsibilities — Board Committees\" in the definitive Proxy Statement for our 2023 Annual Meeting of Shareholders and is \nincorporated herein by reference.\nITEM 11. EXECUTIVE COMPENSATION\nThe information required by Items 402, 407(e)(4) and 407(e)(5) of Regulation S-K regarding executive compensation is included \nunder \"Corporate Governance — Director Compensation for Fiscal 2023,\" \"Executive Compensation — Compensation \nDiscussion and Analysis,\" \"Executive Compensation — Executive Compensation Tables,\" and \"Additional Information — \nCompensation Committee Interlocks and Insider Participation,\" in the definitive Proxy Statement for our 2023 Annual Meeting of \nShareholders and is incorporated herein by reference.\nITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL \nOWNERS AND MANAGEMENT AND RELATED \nSTOCKHOLDER MATTERS\nThe information required by Item 201(d) of Regulation S-K is included under \"Executive Compensation — Executive \nCompensation Tables — Equity Compensation Plan Information\" in the definitive Proxy Statement for our 2023 Annual Meeting of \nShareholders and is incorporated herein by reference. The information required by Item 403 of Regulation S-K is included under \n\"Stock Ownership Information — Stock Holdings of Certain Owners and Management\" in the definitive Proxy Statement for our \n2023 Annual Meeting of Shareholders and is incorporated herein by reference.\nITEM 13. CERTAIN RELATIONSHIPS AND RELATED \nTRANSACTIONS AND DIRECTOR INDEPENDENCE\nThe information required by Items 404 and 407(a) of Regulation S-K is included under \"Additional Information — Transactions \nwith Related Persons\" and \"Corporate Governance — NIKE, Inc. Board of Directors — Director Independence\" in the definitive \nProxy Statement for our 2023 Annual Meeting of Shareholders and is incorporated herein by reference.\nITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES\nThe information required by Item 9(e) of Schedule 14A is included under \"Audit Matters — Ratification of Appointment of \nIndependent Registered Public Accounting Firm\" in the definitive Proxy Statement for our 2023 Annual Meeting of Shareholders \nand is incorporated herein by reference.\nNIKE, INC.      \n92\n\n\nPART IV\nITEM 15. EXHIBITS AND FINANCIAL STATEMENT \nSCHEDULES\n(a)\nThe following documents are filed as part of this Annual Report:\nFORM 10-K \nPAGE NO.\n1.\nFinancial Statements:\nReport of Independent Registered Public Accounting Firm (PCAOB ID 238)\n53\nConsolidated Statements of Income for each of the three years ended May 31, 2023, May 31, 2022 \nand May 31, 2021\n55\nConsolidated Statements of Comprehensive Income for each of the three years ended May 31, \n2023, May 31, 2022 and May 31, 2021\n56\nConsolidated Balance Sheets at May 31, 2023 and May 31, 2022\n57\nConsolidated Statements of Cash Flows for each of the three years ended May 31, 2023, May 31, \n2022 and May 31, 2021\n58\nConsolidated Statements of Shareholders' Equity for each of the three years ended May 31, 2023, \nMay 31, 2022 and May 31, 2021\n59\nNotes to Consolidated Financial Statements\n60\n2.\nFinancial Statement Schedule:\nII — Valuation and Qualifying Accounts for the years ended May 31, 2023, 2022 and 2021\n96\nAll other schedules are omitted because they are not applicable or the required information is shown \nin the financial statements or notes thereto.\n3.\nExhibits:\n3.1\nRestated Articles of Incorporation, as amended (incorporated by reference to Exhibit 3.1 to the Company's \nQuarterly Report on Form 10-Q for the fiscal quarter ended November 30, 2015).\n3.2\nFifth Restated Bylaws, as amended (incorporated by reference to Exhibit 3.1 to the Company's Current Report on \nForm 8-K filed June 19, 2020).\n4.1\nRestated Articles of Incorporation, as amended (see Exhibit 3.1).\n4.2\nFifth Restated Bylaws, as amended (see Exhibit 3.2).\n4.3\nIndenture dated as of April 26, 2013, by and between NIKE, Inc. and Deutsche Bank Trust Company Americas, as \ntrustee (incorporated by reference to Exhibit 4.1 to the Company's Form 8-K filed April 26, 2013).\n4.4\nSecond Supplemental Indenture, dated as of October 29, 2015, by and between NIKE, Inc. and Deutsche Bank \nTrust Company Americas, as trustee, including the form of 3.875% Notes due 2045 (incorporated by reference to \nExhibit 4.2 to the Company's Form 8-K filed October 29, 2015).\n4.5\nThird Supplemental Indenture, dated as of October 21, 2016, by and between NIKE, Inc. and Deutsche Bank Trust \nCompany Americas, as trustee, including the form of 2.375% Notes due 2026 and form of 3.375% Notes due 2046 \n(incorporated by reference to Exhibit 4.2 to the Company's Form 8-K filed October 21, 2016).\n4.6\nFourth Supplemental Indenture, dated as of March 27, 2020, by and between NIKE, Inc. and Deutsche Bank Trust \nCompany Americas, as trustee, including the form of 2.400% Notes due 2025, form of 2.750% Notes due 2027, \nform of 2.850% Notes due 2030, form of 3.250% Notes due 2040 and form of 3.375% Notes due 2050 \n(incorporated by reference to Exhibit 4.2 to the Company's Form 8-K filed March 27, 2020).\n4.7\nDescription of Registrants Securities (incorporated by reference to Exhibit 4.6 to the Company's Annual Report on \nForm 10-K for the fiscal year ended May 31, 2019).\n10.1\nForm of Non-Statutory Stock Option Agreement for options granted to non-employee directors under the 1990 \nStock Incentive Plan (incorporated by reference to Exhibit 10.2 to the Company's Annual Report on Form 10-K for \nthe fiscal year ended May 31, 2010).*\n10.2\nForm of Restricted Stock Agreement for non-employee directors under the 1990 Stock Incentive Plan \n(incorporated by reference to Exhibit 10.4 to the Company's Annual Report on Form 10-K for the fiscal year ended \nMay 31, 2014).*\n10.3\nForm of Non-Statutory Stock Option Agreement for options granted to executives under the Stock Incentive Plan \n(incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter \nended February 28, 2018).*\n2023 FORM 10-K   93    \n\n\n10.4\nForm of Indemnity Agreement entered into between the Company and each of its officers and directors \n(incorporated by reference to Exhibit 10.2 to the Company's Annual Report on Form 10-K for the fiscal year ended \nMay 31, 2008).*\n10.5\nNIKE, Inc. 1990 Stock Incentive Plan (incorporated by reference to Exhibit 10.7 to the Company's Annual Report \non Form 10-K for the fiscal year ended May 31, 2014).*\n10.6\nNIKE, Inc. Deferred Compensation Plan (Amended and Restated effective April 1, 2013) (incorporated by \nreference to Exhibit 10.9 to the Company's Annual Report on Form 10-K for the fiscal year ended May 31, 2013).*\n10.7\nNIKE, Inc. Deferred Compensation Plan (Amended and Restated effective June 1, 2004) (applicable to amounts \ndeferred before January 1, 2005) (incorporated by reference to Exhibit 10.6 to the Company's Annual Report on \nForm 10-K for the fiscal year ended May 31, 2004).*\n10.8\nAmendment No. 1 effective January 1, 2008 to the NIKE, Inc. Deferred Compensation Plan (June 1, 2004 \nRestatement) (incorporated by reference to Exhibit 10.9 to the Company's Annual Report on Form 10-K for the \nfiscal year ended May 31, 2009).*\n10.9\nNIKE, Inc. Foreign Subsidiary Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.1 to the \nCompany's Quarterly Report on Form 10-Q for the fiscal quarter ended November 30, 2008).*\n10.10\nAmended and Restated Covenant Not to Compete and Non-Disclosure Agreement between NIKE, Inc. and Mark \nG. Parker dated July 24, 2008 (incorporated by reference to Exhibit 10.1 to the Company's Current Report on \nForm 8-K filed July 24, 2008).*\n10.11\nForm of Restricted Stock Unit Agreement under the Stock Incentive Plan (incorporated by reference to Exhibit 10.2 \nto the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended February 28, 2018).*\n10.12\nForm of Covenant Not to Compete and Non-Disclosure Agreement between NIKE, Inc. and its executive officers \n(other than Mark G. Parker and John J. Donahoe II) (incorporated by reference to Exhibit 10.1 to the Company's \nCurrent Report on Form 8-K filed February 18, 2020).*\n10.13\nPolicy for Recoupment of Incentive Compensation (incorporated by reference to Exhibit 10.3 to the Company's \nCurrent Report on Form 8-K filed July 20, 2010).*\n10.14\nNIKE, Inc. Stock Incentive Plan (incorporated by reference to Exhibit 10.2 to the Company's Current Report on \nForm 8-K filed September 23, 2015).*\n10.15\nForm of Discretionary Performance Award Agreement (incorporated by reference to Exhibit 10.22 to the \nCompany's Annual Report on Form 10-K for the fiscal year ended May 31, 2018).*\n10.16\nNIKE, Inc. Amended and Restated Long-Term Incentive Plan (incorporated by reference to Exhibit A to the \nCompany's definitive Proxy Statement filed July 25, 2017).*\n10.17\nOffer Letter between NIKE, Inc. and John J. Donahoe II (incorporated by reference to Exhibit 10.1 to the \nCompany's Current Report on Form 8-K filed October 22, 2019).*\n10.18\nForm of Covenant Not to Compete and Non-Disclosure Agreement between NIKE, Inc. and John J. Donahoe II \n(incorporated by reference to Exhibit 10.3 to the Company's Current Report on Form 8-K filed October 22, 2019).*\n10.19\nForm of Performance-Based Stock Option Agreement (incorporated by reference to Exhibit 10.2 to the Company's \nCurrent Report on Form 8-K filed October 22, 2019).\n10.20\nLetter Agreement between NIKE, Inc. and Mark G. Parker (incorporated by reference to Exhibit 10.6 to the \nCompany's Current Report on Form 8-K filed October 22, 2019).*\n10.21\nNIKE, Inc. Executive Performance Sharing Plan (incorporated by reference to Exhibit 10.1 to the Company's \nCurrent Report on Form 8-K filed June 19, 2020).*\n10.22\nNIKE, Inc. Amended and Restated Long-Term Incentive Plan (incorporated by reference to Exhibit 10.2 to the \nCompany's Current Report on Form 8-K filed June 19, 2020).*\n10.23\nForm of Non-Statutory Stock Option Agreement under the NIKE, Inc. Stock Incentive Plan (incorporated by \nreference to Exhibit 10.3 to the Company's Current Report on Form 8-K filed June 19, 2020).*\n10.24\nForm of Restricted Stock Unit Agreement under the NIKE, Inc. Stock Incentive Plan (incorporated by reference to \nExhibit 10.4 to the Company's Current Report on Form 8-K filed June 19, 2020).*\n10.25\nNIKE, Inc. Stock Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company's Current Report on \nForm 8-K filed September 18, 2020).* \n10.26\nNIKE, Inc. Performance-Based Restricted Stock Unit Agreement under the NIKE, Inc. Stock Incentive Plan \n(incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on June 17, 2021).*\n10.27\nCredit Agreement, dated as of March 11, 2022, among NIKE, Inc., Bank of America, N.A., as Administrative Agent, \nand the other Banks named therein (incorporated by reference to Exhibit 10.2 to the Company's Current Report on \nForm 8-K filed March 14, 2022).\n10.28\nNIKE, Inc. Employee Stock Purchase Plan, as amended (incorporated by reference to Exhibit 10.1 to the \nCompany's Current Report on Form 8-K filed on September 14, 2022).\n10.29\nCredit Agreement, dated as of March 10, 2023, among NIKE, Inc., Bank of America, N.A., as Administrative Agent, \nand the other Banks named therein (incorporated by reference to Exhibit 10.1 to the Company's Current Report on \nForm 8-K filed March 13, 2023).\n21\nSubsidiaries of the Registrant.\n23\nConsent of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm (included within this \nAnnual Report on Form 10-K).\n31.1\nRule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.\n31.2\nRule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.\n32†\nSection 1350 Certifications.\nNIKE, INC.      \n94\n\n\n101.INS\nInline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its \nXBRL tags are embedded within the Inline XBRL document.\n101.SCH\nInline XBRL Taxonomy Extension Schema\n101.CAL\nInline XBRL Taxonomy Extension Calculation Linkbase\n101.DEF\nInline XBRL Taxonomy Extension Definition Document\n101.LAB\nInline XBRL Taxonomy Extension Label Linkbase\n101.PRE\nInline XBRL Taxonomy Extension Presentation Linkbase\n104\nCover Page Interactive Data File - formatted in Inline XBRL and included in Exhibit 101\n* Management contract or compensatory plan or arrangement.\n† Furnished herewith\nThe Exhibits filed herewith do not include certain instruments with respect to long-term debt of NIKE and its subsidiaries, \ninasmuch as the total amount of debt authorized under any such instrument does not exceed 10 percent of the total assets of \nNIKE and its subsidiaries on a consolidated basis. NIKE agrees, pursuant to Item 601(b)(4)(iii) of Regulation S-K, that it will \nfurnish a copy of any such instrument to the SEC upon request.\n2023 FORM 10-K   95    \n\n\nSCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS\n(Dollars in millions)\nBALANCE AT \nBEGINNING OF\nPERIOD\nCHARGED TO\n COSTS AND\n EXPENSES\nCHARGED \n TO OTHER  \nACCOUNTS\n(1)\nWRITE-OFFS,\nNET\nBALANCE \nAT END \nOF PERIOD\nSales returns reserve\nFor the fiscal year ended May 31, 2021\n$ \n682 $ \n2,617 $ \n41 $ \n(2,745) $ \n595 \nFor the fiscal year ended May 31, 2022\n \n595  \n2,573  \n(31)  \n(2,612)  \n525 \nFor the fiscal year ended May 31, 2023\n \n525  \n3,344  \n(11)  \n(3,309)  \n549 \n(1)\nAmounts included in this column primarily relate to foreign currency translation.\nNIKE, INC.      \n96\n\n\nITEM 16. FORM 10-K SUMMARY\nNone.\n2023 FORM 10-K   97    \n\n\nConsent of Independent Registered Public Accounting Firm\nWe hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (No. 333-266267) and Form \nS-8 (Nos. 033-63995, 333-63581, 333-63583, 333-68864, 333-68886, 333-71660, 333-104822, 333-117059, 333-133360, \n333-164248, 333-171647, 333-173727, 333-208900, 333-215439 and 333-266269) of NIKE, Inc. of our report dated July 20, \n2023 relating to the financial statements, financial statement schedule and the effectiveness of internal control over financial \nreporting, which appears in this Form 10-K.\n/s/ PricewaterhouseCoopers LLP\nPortland, Oregon\nJuly 20, 2023 \nNIKE, INC.      \n98\n\n\nSIGNATURES\nPursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this \nreport to be signed on its behalf by the undersigned, thereunto duly authorized.\nNIKE, INC.\nBy:\n/s/ JOHN J. DONAHOE II\nJohn J. Donahoe II\nPresident and Chief Executive Officer\nDate:\nJuly 20, 2023\nPursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the \nfollowing persons on behalf of the registrant and in the capacities and on the dates indicated.\nSIGNATURE\nTITLE\nDATE\nPRINCIPAL EXECUTIVE OFFICER AND DIRECTOR:\n/s/ JOHN J. DONAHOE II\nJohn J. Donahoe II\nPresident and Chief Executive Officer\nJuly 20, 2023\nPRINCIPAL FINANCIAL OFFICER:\n/s/ MATTHEW FRIEND\nMatthew Friend\nExecutive Vice President and Chief Financial Officer July 20, 2023\nPRINCIPAL ACCOUNTING OFFICER:\n/s/ JOHANNA NIELSEN \nJohanna Nielsen\nVice President and Corporate Controller\nJuly 20, 2023\nDIRECTORS:\n/s/ MARK G. PARKER\nMark G. Parker\nDirector, Chairman of the Board\nJuly 20, 2023\n/s/ CATHLEEN A. BENKO\nCathleen A. Benko\nDirector\nJuly 20, 2023\n/s/ TIMOTHY D. COOK\nTimothy D. Cook\nDirector\nJuly 20, 2023\n/s/ THASUNDA B. DUCKETT\nThasunda B. Duckett\nDirector\nJuly 20, 2023\n/s/ MÓNICA GIL\nMónica Gil\nDirector\nJuly 20, 2023\n/s/ ALAN B. GRAF, JR.\nAlan B. Graf, Jr.\nDirector\nJuly 20, 2023\n/s/ MARIA HENRY\nMaria Henry\nDirector\nJuly 20, 2023\n/s/ PETER B. HENRY\nPeter B. Henry\nDirector\nJuly 20, 2023\n/s/ TRAVIS A. KNIGHT\nTravis A. Knight\nDirector\nJuly 20, 2023\n/s/ MICHELLE A. PELUSO\nMichelle A. Peluso\nDirector\nJuly 20, 2023\n/s/ JOHN W. ROGERS, JR.\nJohn W. Rogers, Jr.\nDirector\nJuly 20, 2023\n/s/ ROBERT SWAN\nRobert Swan\nDirector\nJuly 20, 2023\n2023 FORM 10-K   99    \n\n\nCathleen Benko(3)\nFormer Vice Chairman & Managing Principal\nDeloitte LLP\nRedwood City, California\nTimothy Cook(3)(5)\nChief Executive Officer\nApple Inc.\nCupertino, California\nJohn Donahoe II(1)\nPresident & Chief Executive Officer\nNIKE, Inc.\nBeaverton, Oregon\nThasunda Duckett(4)\nPresident & Chief Executive Officer\nTeachers Insurance and Annuity Association of America  \nNew York, New York\nMónica Gil(3)\nChief Administrative and Marketing Officer\nNBCUniversal Telemundo Enterprises\nMiami, Florida\nAlan Graf, Jr.(2)\nExecutive Vice President & Chief Financial Officer (Retired)\nFedEx Corporation \nMemphis, Tennessee\nMaria Henry(2)\nChief Financial Officer (Retired)\nKimberly-Clark Corporation \nDallas, Texas\nPeter Henry(2)\nClass of 1984 Senior Fellow at Stanford University’s Hoover \nInstitution, Senior Fellow at Stanford’s Freeman Spogli Institute \nfor International Studies and Dean Emeritus of New York \nUniversity’s Leonard N. Stern School of Business\nStanford University\nStanford, California \nTravis Knight(1)\nPresident & Chief Executive Officer\nLAIKA, LLC\nHillsboro, Oregon\nMark Parker(1)\nExecutive Chairman \nNIKE, Inc.\nBeaverton, Oregon\nMichelle Peluso(4)\nExecutive Vice President & Chief Customer Officer, CVS Health \nand Co-President, Pharmacy and Consumer Wellness\nCVS Health\nWoonsocket, Rhode Island\nJohn Rogers, Jr.(4)\nCo-Chief Executive Officer & Chief Investment Officer\nAriel Investments, LLC \nChicago, Illinois\nRobert Swan(2)\nOperating Partner\nAndreessen Horowtiz\nMenlo Park, California\n(1) Member — Executive Committee\n(2) Member — Audit & Finance Committee\n(3) Member — Compensation Committee\n(4) Member — Corporate Responsibility, Sustainability & Governance Committee\n(5) Lead Independent Director\nD I R E C TO R S \nCO R P O R AT E  O F F I C E R S \nJohn Donahoe II\nPresident & Chief Executive Officer\nMark Parker\nExecutive Chairman\nMatthew Friend\nExecutive Vice President & Chief Financial Officer\nMonique Matheson\nExecutive Vice President, Chief Human Resources Officer\nAnn Miller\nExecutive Vice President, Chief Legal Officer\nHeidi O’Neill\nPresident, Consumer, Product & Brand\nCraig Williams\nPresident, Geographies & Marketplace\nMary Hunter\nVice President, Corporate Secretary, and \nCorporate Governance & Securities Counsel\nPatricia Johnson\nVice President, Treasurer & Chief Tax Officer\nKelsey Baldwin\nSenior Counsel, Corporate Governance & Securities, \nAssistant Secretary\nCarlos Wilson\nAssistant General Counsel, Corporate Governance & Securities, \nAssistant Secretary\n\n\nS\nD\nN\nA\nR\nB\nY\nR\nA\nI\nD\nI\nS\nB\nU\nS\n160 North Washington St.\nBoston, Massachusetts 02114\nOne Bowerman Drive\nBeaverton, Oregon 97005-6453\nWORLD HEADQUARTERS\nOne Bowerman Drive\nBeaverton, Oregon 97005-6453\nEUROPEAN HEADQUARTERS\nColosseum 1\n1213 NL Hilversum\nThe Netherlands\nGREATER CHINA HEADQUARTERS\nLiNa Building\nTower 1, No. 99\nJiangwancheng Road\nYangpu District\nShanghai, China 200438\nS H A R E H O L D E R I N F O R M A T I O N\nI N D E P E N D E N T A C C O U N T A N T S\nPricewaterhouseCoopers LLP\n805 SW Broadway, Suite 800\nPortland, Oregon 97205\nR E G I S T R A R A N D S T O C K T R A N S F E R A G E N T\nComputershare Trust Company, N.A.\nP.O. Box 505000\nLouisville, KY 40233\n800-756-8200\nHearing Impaired #\nTDD: 800-952-9245\nShareholder Information\nNIKE, Inc. common stock is listed on the New York Stock Exchange under trading symbol ‘NKE.’ Copies of the Company’s Form 10-K or Form\n10-Q reports filed with the Securities and Exchange Commission are available from the Company without charge. To request a copy, please call\n800-640-8007 or write to NIKE’s Investor Relations Department at NIKE World Headquarters, One Bowerman Drive, Beaverton, Oregon 97005-\n6453. Copies are available on the investor relations website, http://investors.nike.com.\nDividend Payments\nQuarterly dividends on NIKE common stock, when declared by the Board of Directors, are paid on or about July 5, October 5, January 5, and April 5. Additional\nfinancial information is available at http://investors.nike.com.\nOther Shareholder Assistance\nCommunications concerning shareholder address changes, stock transfers, changes of ownership, lost stock certificates, payment of dividends, dividend check\nreplacements, duplicate mailings, or other account services should be directed to the Company’s Registrar and Stock Transfer Agent at the address or telephone\nnumber above.\nNIKE, the Swoosh Design, and Just Do It are registered trademarks of NIKE, Inc.\nS U B S I D I A R Y   B R A N D S\nL O C A T I O N S\nwww-us.computershare.com/investor\n\n\nNIKE, INC.\nOne Bowerman Drive\nBeaverton, OR 97005-6453\nwww.nike.com\n\n\nFORM 10-K\nFORM 10-K\n4\n\n\n UNITED STATES\nSECURITIES AND EXCHANGE COMMISSION\nWashington, D.C. 20549\nFORM 10-K \n(Mark One)\n☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934\nFOR THE FISCAL YEAR ENDED MAY 31, 2024  \nOR\n☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934\nFOR THE TRANSITION PERIOD FROM                         TO                         .\nCommission File No. 1-10635 \nNIKE, Inc. \n(Exact name of Registrant as specified in its charter)\nOregon\n93-0584541\n(State or other jurisdiction of incorporation)\n(IRS Employer Identification No.)\nOne Bowerman Drive, Beaverton, Oregon 97005-6453 \n(Address of principal executive offices and zip code)\n(503) 671-6453 \n(Registrant's telephone number, including area code)\nSECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:\nClass B Common Stock\nNKE\nNew York Stock Exchange\n(Title of each class)\n(Trading symbol)\n(Name of each exchange on which registered)\nSECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:\nNONE\nIndicate by check mark:\nYes\nNo\n• if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.\nþ\n¨\n• if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.\n¨\nþ\n• whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities \nExchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required \nto file such reports), and (2) has been subject to such filing requirements for the past 90 days.\nþ\n¨\n• whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to \nRule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period \nthat the registrant was required to submit such files).\nþ\n¨\n• whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth \ncompany. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of \nthe Exchange Act.\nLarge accelerated filer\nþ\nAccelerated filer ☐\nNon-accelerated filer ☐\nSmaller reporting company ☐\nEmerging growth company ☐\n• if an emerging growth company, if the registrant has elected not to use the extended transition period for \ncomplying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the \nExchange Act.\n¨\n• whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of \nits internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by \nthe registered public accounting firm that prepared or issued its audit report.\nþ\n• if securities are registered pursuant to Section 12(b) of the Act, whether the financial statements of the registrant \nincluded in the filing reflect the correction of an error to previously issued financial statements. \n¨\n• whether any of those error corrections are restatements that required a recovery analysis of incentive-based \ncompensation received by any of the registrant's executive officers during the relevant recovery period pursuant to \n§ 240.10D-1(b). \n¨\n• whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).\n☐\nþ\nAs of November 30, 2023, the aggregate market values of the Registrant's Common Stock held by non-affiliates were:\nClass A\n$ \n7,404,327,478 \nClass B\n \n133,466,945,242 \n$ \n140,871,272,720 \nAs of July 10, 2024, the number of shares of the Registrant's Common Stock outstanding were:\nClass A\n \n297,897,252 \nClass B\n \n1,201,461,692 \n \n1,499,358,944 \nDOCUMENTS INCORPORATED BY REFERENCE:\nParts of Registrant's Proxy Statement for the Annual Meeting of Shareholders to be held on September 10, 2024, are incorporated by reference into Part III \nof this report.\n\n\nNIKE, INC.\nANNUAL REPORT ON FORM 10-K\nTABLE OF CONTENTS\nPAGE\nPART I\n1\nITEM 1.\nBusiness\n1\nGeneral\n1\nProducts\n1\nSales and Marketing\n2\nOur Markets\n2\nSignificant Customer\n3\nProduct Research, Design and Development\n3\nManufacturing\n3\nInternational Operations and Trade\n4\nCompetition\n5\nTrademarks and Patents\n5\nHuman Capital Resources\n6\nAvailable Information and Websites\n7\nInformation about our Executive Officers\n8\nITEM 1A.\nRisk Factors\n9\nITEM 1B.\nUnresolved Staff Comments\n25\nITEM 1C.\nCybersecurity\n25\nITEM 2.\nProperties\n26\nITEM 3.\nLegal Proceedings\n26\nITEM 4.\nMine Safety Disclosures\n26\nPART II\n27\nITEM 5.\nMarket for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities\n27\nITEM 6.\nReserved\n29\nITEM 7.\nManagement's Discussion and Analysis of Financial Condition and Results of Operations\n30\nITEM 7A.\nQuantitative and Qualitative Disclosures about Market Risk\n51\nITEM 8.\nFinancial Statements and Supplementary Data\n53\nITEM 9.\nChanges in and Disagreements with Accountants on Accounting and Financial Disclosure\n92\nITEM 9A.\nControls and Procedures\n92\nITEM 9B.\nOther Information\n92\nITEM 9C.\nDisclosure Regarding Foreign Jurisdictions that Prevent Inspections\n92\nPART III\n93\n(Except for the information set forth under “Information about our Executive Officers” in Item 1 above, Part III is \nincorporated by reference from the Proxy Statement for the NIKE, Inc. 2024 Annual Meeting of Shareholders.)\nITEM 10.\nDirectors, Executive Officers and Corporate Governance\n93\nITEM 11.\nExecutive Compensation\n93\nITEM 12.\nSecurity Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters\n93\nITEM 13.\nCertain Relationships and Related Transactions and Director Independence\n93\nITEM 14.\nPrincipal Accountant Fees and Services\n93\nPART IV\n94\nITEM 15.\nExhibits and Financial Statement Schedules\n94\nITEM 16.\nForm 10-K Summary\n98\nSignatures\n100\n  \n\n\nPART I\nITEM 1. BUSINESS\nGENERAL\nNIKE, Inc. was incorporated in 1967 under the laws of the State of Oregon. As used in this Annual Report on Form 10-K (this \n\"Annual Report\"), the terms \"we,\" \"us,\" \"our,\" \"NIKE\" and the \"Company\" refer to NIKE, Inc. and its predecessors, subsidiaries \nand affiliates, collectively, unless the context indicates otherwise.\nOur principal business activity is the design, development and worldwide marketing and selling of athletic footwear, apparel, \nequipment, accessories and services. NIKE is the largest seller of athletic footwear and apparel in the world. We sell our products \nthrough NIKE Direct operations, which are comprised of both NIKE-owned retail stores and sales through our digital platforms \n(also referred to as \"NIKE Brand Digital\") and to wholesale accounts, which include a mix of independent distributors, licensees \nand sales representatives in nearly all countries around the world. We also offer interactive consumer services and experiences \nthrough our digital platforms. Nearly all of our products are manufactured by independent contractors. Nearly all footwear and \napparel products are manufactured outside the United States, while equipment products are manufactured both in the United \nStates and abroad.\nAll references to fiscal 2025, 2024, 2023, 2022 and 2021 are to NIKE, Inc.'s fiscal years ended May 31, 2025, 2024, 2023, 2022 \nand 2021, respectively. Any references to other fiscal years refer to a fiscal year ending on May 31 of that year.\nPRODUCTS\nOur NIKE Brand product offerings are aligned around our consumer construct focused on Men's, Women's and Kids'. We also \ndesign products specifically for the Jordan Brand and Converse. We believe this approach allows us to create products that \nbetter meet individual consumer needs while accelerating our largest growth opportunities.\nNIKE's athletic footwear products are designed primarily for specific athletic use, although a large percentage of the products are \nworn for casual or leisure purposes. We place considerable emphasis on innovation and high-quality construction in the \ndevelopment and manufacturing of our products.\nWe also sell sports apparel, which features the same trademarks and are sold predominantly through the same marketing and \ndistribution channels as athletic footwear. Our sports apparel, similar to our athletic footwear products, is designed primarily for \nathletic use, although many of the products are worn for casual or leisure purposes, and demonstrates our commitment to \ninnovation and high-quality construction. We often market footwear, apparel and accessories in \"collections\" of similar use or by \ncategory. We also market apparel with licensed college and professional team and league logos.\nWe sell a line of performance equipment and accessories under the NIKE Brand name, including bags, socks, sport balls, \neyewear, timepieces, digital devices, bats, gloves, protective equipment and other equipment designed for sports activities. We \nalso sell small amounts of various plastic products to other manufacturers through our wholly-owned subsidiary, NIKE IHM, Inc., \ndoing business as Air Manufacturing Innovation.\nOur Jordan Brand designs, distributes and licenses athletic and casual footwear, apparel and accessories predominantly focused \non basketball performance and culture using the Jumpman trademark. Sales and operating results for Jordan Brand products are \nreported within the respective NIKE Brand geographic operating segments.\nOur wholly-owned subsidiary brand, Converse, headquartered in Boston, Massachusetts, designs, distributes and licenses \ncasual sneakers, apparel and accessories under the Converse, Chuck Taylor, All Star, One Star, Star Chevron and Jack Purcell \ntrademarks. Operating results of the Converse brand are reported on a stand-alone basis.\nIn addition to the products we sell to our wholesale customers and directly to consumers through our NIKE Direct operations, we \nhave also entered into license agreements that permit unaffiliated parties to manufacture and sell, using NIKE-owned trademarks, \ncertain apparel, digital devices and applications and other equipment designed for sports activities.\nWe also offer interactive consumer services and experiences as well as digital products through our digital platforms, including \nfitness and activity apps; sport, fitness and wellness content; and digital services and features in retail stores that enhance the \nconsumer experience.\n2024 FORM 10-K   1    \n\n\nSALES AND MARKETING\nWe experience moderate fluctuations in aggregate sales volume during the year. Historically, revenues in the first and fourth \nfiscal quarters have slightly exceeded those in the second and third fiscal quarters. However, the mix of product sales may vary \nconsiderably as a result of changes in seasonal and geographic demand for particular types of footwear, apparel and equipment, \nas well as other macroeconomic, strategic, operating and logistics-related factors.\nBecause NIKE is a consumer products company, the relative popularity and availability of various sports and fitness activities, as \nwell as changing design trends and consumer preferences, affect the demand for our products. We must, therefore, respond to \ntrends and shifts in consumer preferences by adjusting the mix of existing product offerings and channels, developing new \nproducts, styles and categories and influencing sports and fitness preferences through extensive marketing. Failure to respond in \na timely and adequate manner could have a material adverse effect on our sales and profitability. This is a continuing risk. Refer \nto Item 1A. Risk Factors.\nOUR MARKETS\nWe report our NIKE Brand operations based on our internal geographic organization. Each NIKE Brand geographic segment \noperates predominantly in one industry: the design, development, marketing and selling of athletic footwear, apparel and \nequipment. The Company's reportable operating segments for the NIKE Brand are: North America; Europe, Middle East & Africa \n(\"EMEA\"); Greater China; and Asia Pacific & Latin America (\"APLA\"), and include results for the NIKE and Jordan brands. Sales \nthrough our NIKE Direct operations are managed within each geographic operating segment.\nConverse is also a reportable operating segment and operates predominately in one industry: the design, marketing, licensing \nand selling of casual sneakers, apparel and accessories. Converse direct to consumer operations, including digital commerce, \nare reported within the Converse operating segment results.\nUNITED STATES MARKET\nFor fiscal 2024, NIKE Brand and Converse sales in the United States accounted for approximately 42% of total revenues, \ncompared to 43% and 40% for fiscal 2023 and fiscal 2022, respectively. We sell our products to thousands of wholesale accounts \nin the United States, including a mix of footwear stores, sporting goods stores, athletic specialty stores, department stores, skate, \ntennis and golf shops and other wholesale accounts. In the United States, we utilize NIKE sales offices to solicit such sales. \nDuring fiscal 2024, our three largest United States customers accounted for approximately 21% of sales in the United States.\nOur NIKE Direct and Converse direct to consumer operations sell our products to consumers through various digital platforms. In \naddition, our NIKE Direct and Converse direct to consumer operations sell products through the following number of retail stores \nin the United States:\nU.S. RETAIL STORES\nNUMBER\nNIKE Brand factory stores\n \n211 \nNIKE Brand in-line stores (including employee-only stores)\n \n85 \nConverse stores (including factory stores)\n \n81 \nTOTAL\n \n377 \nIn the United States, NIKE has eight significant distribution centers. Refer to Item 2. Properties for additional information.\n2\n       NIKE, INC.\n\n\nINTERNATIONAL MARKETS\nFor fiscal 2024, non-U.S. NIKE Brand and Converse sales accounted for approximately 58% of total revenues, compared to 57% \nand 60% for fiscal 2023 and fiscal 2022, respectively. We sell our products through NIKE Direct operations and to wholesale \naccounts, which include a mix of independent distributors, licensees and sales representatives around the world. We sell to \nthousands of retail accounts and ship products from 68 distribution centers outside of the United States. Refer to Item 2. \nProperties for additional information on distribution facilities outside of the United States. During fiscal 2024, NIKE's three largest \ncustomers outside of the United States accounted for approximately 15% of total non-U.S. sales.\nIn addition to NIKE-owned and Converse-owned digital commerce platforms in over 40 countries, our NIKE Direct and Converse \ndirect to consumer businesses operate the following number of retail stores outside the United States:\nNON-U.S. RETAIL STORES\nNUMBER\nNIKE Brand factory stores\n \n561 \nNIKE Brand in-line stores (including employee-only stores)\n \n53 \nConverse stores (including factory stores)\n \n54 \nTOTAL\n \n668 \nSIGNIFICANT CUSTOMER\nNo customer accounted for 10% or more of our consolidated net Revenues during fiscal 2024.\nPRODUCT RESEARCH, DESIGN AND DEVELOPMENT\nWe believe our research, design and development efforts are key factors in our success. Technical innovation in the design and \nmanufacturing process of footwear, apparel and athletic equipment receives continued emphasis as we strive to produce \nproducts that help to enhance athletic performance, reduce injury and maximize comfort, while decreasing our environmental \nimpact.\nIn addition to our own staff of specialists in the areas of biomechanics, chemistry, exercise physiology, engineering, digital \ntechnologies, industrial design, sustainability and related fields, we also utilize research committees and advisory boards made \nup of athletes, coaches, trainers, equipment managers, orthopedists, podiatrists, physicians and other experts who consult with \nus and review certain designs, materials and concepts for product and manufacturing, design and other process improvements \nand compliance with product safety regulations around the world. Employee athletes, athletes engaged under sports marketing \ncontracts and other athletes wear-test and evaluate products during the design and development process.\nAs we continue to develop new technologies, we are simultaneously focused on the design of innovative products and \nexperiences incorporating such technologies throughout our product categories and consumer applications. Using market \nintelligence and research, our various design teams identify opportunities to leverage new technologies in existing categories to \nrespond to consumer preferences. The proliferation of Nike Air, Zoom, Free, Dri-FIT, Flyknit, FlyEase, ZoomX, Air Max, and React \ntechnologies, among others, typifies our dedication to designing innovative products.\nMANUFACTURING\nNearly all of our footwear and apparel products are manufactured outside the United States by independent contract \nmanufacturers (\"contract manufacturers\"), many of which operate multiple factories. We are also supplied, primarily indirectly, by \na number of materials, or \"Tier 2\" suppliers, who provide the principal materials used in footwear and apparel finished goods \nproducts. As of May 31, 2024, we had 169 strategic Tier 2 suppliers.\nAs of May 31, 2024, our contract manufacturers operated 96 finished goods footwear factories located in 11 countries. For fiscal \n2024, NIKE Brand footwear finished goods were manufactured by 15 contract manufacturers, many of which operate multiple \nfactories. The largest single finished goods footwear factory accounted for approximately 9% of total fiscal 2024 NIKE Brand \nfootwear production. For fiscal 2024, factories in Vietnam, Indonesia and China manufactured approximately 50%, 27% and 18% \nof total NIKE Brand footwear, respectively. For fiscal 2024, four footwear contract manufacturers each accounted for greater than \n10% of footwear production and in the aggregate accounted for approximately 57% of NIKE Brand footwear production.\nAs of May 31, 2024, our contract manufacturers operated 285 finished goods apparel factories located in 33 countries. For fiscal \n2024, NIKE Brand apparel finished goods were manufactured by 68 contract manufacturers, many of which operate multiple \nfactories. The largest single finished goods apparel factory accounted for approximately 9% of total fiscal 2024 NIKE Brand \napparel production. For fiscal 2024, factories in Vietnam, China and Cambodia manufactured approximately 28%, 16% and 15% \n2024 FORM 10-K   3    \n\n\nof total NIKE Brand apparel, respectively. For fiscal 2024, one apparel contract manufacturer accounted for more than 10% of \napparel production, and the top five contract manufacturers in the aggregate accounted for approximately 51% of NIKE Brand \napparel production.\nNIKE's contract manufacturers buy raw materials for the manufacturing of our footwear, apparel and equipment products. Most \nraw materials are available and purchased by those contract manufacturers in the countries where manufacturing takes place. \nThe principal materials used in our footwear products are natural and synthetic rubber, plastic compounds, foam cushioning \nmaterials, natural and synthetic leather, nylon, polyester and natural fiber textiles, as well as polyurethane films used to make \nNIKE Air-Sole cushioning components. During fiscal 2024, Air Manufacturing Innovation, a wholly-owned subsidiary, with facilities \nnear Beaverton, Oregon, in Dong Nai Province, Vietnam, and St. Charles, Missouri, as well as contract manufacturers in China \nand Vietnam, were our suppliers of NIKE Air-Sole and other cushioning components used in footwear.\nThe principal materials used in our apparel products are natural and synthetic fabrics, yarns and threads (both virgin and \nrecycled); specialized performance fabrics designed to efficiently wick moisture away from the body, retain heat and repel rain \nand/or snow; and plastic and metal hardware. \nFrom time to time, certain materials used in the production of our products experience periods of high demand, shortages and \nprice volatility. In fiscal 2024, contract manufacturers were able to source sufficient quantities of raw materials for use in our \nfootwear and apparel products. Refer to Item 1A. Risk Factors, for additional discussion of the impact of sourcing risks on our \nbusiness.\nSince 1972, Sojitz Corporation of America (\"Sojitz America\"), a large Japanese trading company and the sole owner of our \nredeemable preferred stock, has performed import-export financing services for us.\nINTERNATIONAL OPERATIONS AND TRADE\nOur international operations and sources of supply are subject to the usual risks of doing business abroad, such as the \nimplementation of, or potential changes in, foreign and domestic trade policies, increases in import duties, anti-dumping \nmeasures, quotas, safeguard measures, trade restrictions, restrictions on the transfer of funds and, in certain parts of the world, \npolitical tensions, instability, conflicts, nationalism and terrorism, and resulting sanctions and other measures imposed in \nresponse to such issues. We have not, to date, been materially affected by any such risk but cannot predict the likelihood of such \nmaterial effects occurring in the future.\nIn recent years, uncertain global and regional economic and political conditions have affected international trade and increased \nprotectionist actions around the world. These trends are affecting many global manufacturing and service sectors, and the \nfootwear and apparel industries, as a whole, are not immune. Companies in our industry are facing trade protectionism in many \ndifferent regions, and, in nearly all cases, we are working together with industry groups to address trade issues and reduce the \nimpact to the industry, while observing applicable competition laws. Notwithstanding our efforts, protectionist measures have \nresulted in increases in the cost of our products, and additional measures, if implemented, could adversely affect sales and/or \nprofitability for NIKE, as well as the imported footwear and apparel industry as a whole.\nWe monitor protectionist trends and developments throughout the world that may materially impact our industry, and we engage \nin administrative and judicial processes to mitigate trade restrictions. We are actively monitoring actions that may result in \nadditional anti-dumping measures and could affect our industry. We are also monitoring for and advocating against other \nimpediments that may limit or delay customs clearance for imports of footwear, apparel and equipment. NIKE also advocates for \ntrade liberalization for footwear and apparel in a number of bilateral and multilateral free trade agreements. Changes in, and \nresponses to, U.S. trade policies, including the imposition of tariffs or penalties on imported goods or retaliatory measures by \nother countries, have negatively affected, and could in the future negatively affect, U.S. corporations, including NIKE, with \nbusiness operations and/or consumer markets in those countries, which could also make it necessary for us to change the way \nwe conduct business, either of which may have an adverse effect on our business, financial condition or our results of operations. \nIn addition, with respect to proposed trade restrictions, we work with a broad coalition of global businesses and trade \nassociations representing a wide variety of sectors to help ensure that any legislation enacted and implemented (i) addresses \nlegitimate and core concerns, (ii) is consistent with international trade rules and (iii) reflects and considers domestic economies \nand the important role they may play in the global economic community.\nWhere trade protection measures are implemented, we believe we have the ability to develop, over a period of time, adequate \nalternative sources of supply for the products obtained from our present suppliers. If events prevented us from acquiring products \nfrom our suppliers in a particular country, our operations could be temporarily disrupted and we could experience an adverse \nfinancial impact. However, we believe we could abate any such disruption, and that much of the adverse impact on supply would, \ntherefore, be of a short-term nature, although alternate sources of supply might not be as cost-effective and could have an \nongoing adverse impact on profitability.\n4\n       NIKE, INC.\n\n\nOur international operations are also subject to compliance with the U.S. Foreign Corrupt Practices Act (the \"FCPA\"), and other \nanti-bribery laws applicable to our operations. We source a significant portion of our products from, and have important consumer \nmarkets, outside of the United States. We have an ethics and compliance program to address compliance with the FCPA and \nsimilar laws by us, our employees, agents, suppliers and other partners. Refer to Item 1A. Risk Factors for additional information \non risks relating to our international operations.\nCOMPETITION\nThe athletic footwear, apparel and equipment industry is highly competitive on a worldwide basis. We compete internationally with \na significant number of athletic and leisure footwear companies, athletic and leisure apparel companies, sports equipment \ncompanies and large companies having diversified lines of athletic and leisure footwear, apparel and equipment, including \nadidas, Anta, ASICS, Deckers, Li Ning, lululemon athletica, New Balance, On, Puma, Under Armour and V.F. Corporation, among \nothers. The intense competition and the rapid changes in technology and consumer preferences in the markets for athletic and \nleisure footwear and apparel and athletic equipment constitute significant risk factors in our operations. Refer to Item 1A. Risk \nFactors for additional information.\nNIKE is the largest seller of athletic footwear and apparel in the world. Important aspects of competition in this industry are:\n• Product attributes such as quality; innovation and development; performance and reliability; new product style, and design; \nas well as consumer price/value.\n• Consumer connection, engagement and affinity for brands and products, developed through marketing, promotion and \ndigital experiences; social media interaction; customer support and service; identification with prominent and influential \nathletes, influencers, public figures, coaches, teams, colleges and sports leagues who endorse our brands and use our \nproducts and active engagement through sponsored sporting events and clinics. \n• Effective sourcing and distribution of products, with attractive merchandising and presentation at retail, both in-store and on \ndigital platforms.\nWe believe that we are competitive in all of these areas. See Item 1A. Risk Factors, including the risk factor titled \"Our products, \nservices and experiences face intense competition.\"\nTRADEMARKS AND PATENTS\nWe believe that our intellectual property rights are important to our brand, our success and our competitive position. We \nstrategically pursue available protections of these rights and vigorously protect and enforce them against third-party theft and \ninfringement.\nWe use trademarks on nearly all of our products and packaging, and in our marketing materials, and believe having distinctive \nmarks that are readily identifiable is an important factor in creating a market for our goods, in identifying our brands and the \nCompany, and in distinguishing our goods from the goods of others. We consider our NIKE and Swoosh Design trademarks to be \namong our most valuable assets and we have registered these trademarks in over 190 jurisdictions worldwide. In addition, we \nown many other trademarks that we use in marketing our products. Throughout the world, we own common law rights in the trade \ndress of several distinctive shoe designs and elements. For certain trade dress, we have sought and obtained trademark \nregistrations.\nWe have copyright protection in our designs, graphics, software applications, digital goods and other original works. When \nappropriate, we also obtain registered copyrights.\nWe file for, own and maintain many U.S. and foreign utility and design patents protecting components, technologies, materials, \nmanufacturing techniques, features, functionality, and industrial designs used in and for the manufacture of various athletic, \nperformance, and leisure footwear and apparel, including physical and digital versions thereof, athletic equipment, and digital \ndevices, and related software applications. These patents expire at various times.\nWe believe our success depends upon our capabilities in areas such as design, research and development, production and \nmarketing and is supported and protected by our intellectual property rights, such as trademarks, utility and design patents, \ncopyrights, and trade secrets, among others. \nWe have followed a policy of applying for and registering intellectual property rights in the United States and select foreign \ncountries on trademarks, inventions, innovations and designs that we deem protectable and valuable. We also continue to \nvigorously protect and enforce our intellectual property, including trademarks, patents and trade secrets against third-party \ninfringement and misappropriation.\n2024 FORM 10-K   5    \n\n\nHUMAN CAPITAL RESOURCES\nAt NIKE, we consider the strength and effective management of our workforce to be essential to the ongoing success of our \nbusiness. We believe that it is important to attract, develop and retain a diverse and engaged workforce at all levels of our \nbusiness and that such a workforce fosters creativity and accelerates innovation. We are focused on building a talent pipeline that \nreflects our consumers, athletes and the communities we serve.\nCULTURE \nEach employee shapes NIKE's culture through behaviors and practices. This starts with our Maxims, which represent our core \nvalues and, along with our Code of Conduct, feature the fundamental behaviors that help anchor, inform and guide us and apply \nto all employees. Our mission is to bring inspiration and innovation to every athlete in the world, which includes the belief that if \nyou have a body, you are an athlete. We aim to do this by creating groundbreaking sport innovations, making our products more \nsustainably, building a creative and diverse global team, supporting the well-being of our employees and making a positive impact \nin communities where we live and work. Our mission is aligned with our deep commitment to maintaining an environment where \nall NIKE employees have the opportunity to reach their full potential, to connect to our brands and to shape our workplace \nculture. We believe providing for growth and retention of our employees is essential in fostering such a culture and are dedicated \nto providing access to training programs and career development opportunities, including trainings on NIKE's values, history and \nbusiness, trainings on developing leadership skills at all levels, tools and resources for managers and qualified tuition \nreimbursement opportunities. \nIn empowering our employees to help shape our culture, we source employee feedback through a variety of survey tools: our \nannual Engagement Survey program, corporate pulse surveys and listening sessions. These tools provide employees throughout \nthe globe an opportunity to provide confidential feedback on key areas known to drive employee engagement, including their \nsatisfaction with their managers, their work and the Company generally. These tools also measure our employees' connection to \nNIKE's culture. NIKE also provides multiple points of contact for employees to speak up if they experience something that does \nnot align with our values or otherwise violates our workplace policies, even if they are uncertain what they observed or heard is a \nviolation of company policy.\nAs part of our commitment to making a positive impact on our communities, we maintain a goal of investing 2% of our prior fiscal \nyear's pre-tax income into global communities. The focus of this investment continues to be inspiring youth to be active through \nplay and sport as well as uniting and inspiring communities to create a better and more equitable future for all. Our community \ninvestments are an important part of our culture, and we support employees in giving back to community organizations through \nvolunteering and donations, which are matched by the NIKE Foundation where eligible.\nEMPLOYEE BASE\nAs of May 31, 2024, we had approximately 79,400 employees worldwide, including retail and part-time employees. We also \nutilize independent contractors and temporary personnel to supplement our workforce.\nMost of our employees are not represented by unions, except for certain employees in the EMEA and APLA geographies who are \nmembers of and/or represented by trade unions, as allowed or required by local law and/or collective bargaining agreements. \nAlso, in some countries outside of the United States, local laws require employee representation by works councils (which may \nbe entitled to information and consultation on certain subsidiary decisions) or by organizations similar to a union. In certain \nEuropean countries, we are required by local law to enter into, and/or comply with, industry-wide or national collective bargaining \nagreements. NIKE has never experienced a material interruption of operations due to labor disagreements.\nDIVERSITY, EQUITY AND INCLUSION\nDiversity, equity and inclusion (\"DE&I\") is a strategic priority for NIKE and we are committed to having an inclusive and diverse \nteam and culture. We aim to foster an inclusive and accessible workplace through recruitment, development and retention of \ntalent from diverse experiences and backgrounds with the goal of expanding representation across all dimensions of diversity \nover the long term. We remain committed to the targets announced in fiscal 2021 for the Company to work toward by fiscal 2025, \nincluding diverse representation in our corporate workforce and leadership positions. \nWe continue our efforts to recruit talent through our traditional channels and through initiatives, such as partnerships with athletes \nand sports-related organizations to create apprenticeship programs and new partnerships with organizations, colleges and \nuniversities that serve diverse populations. Additionally, we are prioritizing DE&I education so that all NIKE employees and \nleaders have the cultural knowledge and understanding to lead inclusively and build diverse and inclusive teams. We also have \nEmployee Networks, collectively known as NikeUNITED, representing various employee groups.\n6\n       NIKE, INC.\n\n\nOur DE&I focus extends beyond our workforce and includes our communities, which we support in a number of ways. We have \ncommitted to investments that aim to address racial inequality and improve diversity and representation in our communities. We \nalso are leveraging our global scale to support business diversity among the businesses with which we work.\nCOMPENSATION AND BENEFITS \nNIKE's total rewards are intended to be competitive and equitable, meet the diverse needs of our global teammates and reinforce \nour values. We are committed to providing comprehensive, competitive and equitable pay and benefits to our employees, and we \nhave invested, and aim to continue to invest, in our employees through growth and development and holistic well-being \ninitiatives. Our initiatives in this area include: \n• We are committed to competitive pay, pay equity and to reviewing our pay and promotion practices annually. \n• We have an annual company bonus plan and a retail-focused bonus plan applicable to all eligible employees. Both programs \nare focused on rewarding employees for company performance, which we believe reinforces our culture and rewards \nbehaviors that support collaboration and teamwork.\n• We provide comprehensive family care benefits in the U.S. and globally where practicable, including family planning \ncoverage, backup care and child/elder care assistance as well as an income-based childcare subsidy for eligible employees. \n• Our Military Leave benefit provides up to 12 weeks of paid time off every 12 months.\n• We offer free access to our sport centers at our World Headquarters for our full-time employees and North America store \nemployees.\n• We provide employees free access to mindfulness and meditation resources, as well as live classes through our sport \ncenters.\n• We provide all employees and their families globally with free and confidential visits with a mental health counselor through a \nthird-party provider and our global Employee Assistance Program (EAP).\n• We provide support to our employees in a variety of ways during times of crisis, including pay continuity under certain \ncircumstances, and our natural disaster assistance program.\n• We provide a hybrid work approach for the majority of employees, as well as a Four Week Flex program, which provides \nemployees an opportunity to work remotely for up to four weeks per year.\n• We offer a Well-Being Week where we close our corporate offices for a full week in the summer and Well-Being Days for our \nteammates in our retail stores and distribution centers, and encourage our teammates to focus on their well-being.\n• We provide inclusive family planning benefits and transgender healthcare coverage for eligible employees covered on the \nU.S. Health Plan, including access to both restorative services and personal care.\n• We provide all U.S. employees with unlimited free financial coaching through a third-party provider.\nAdditional information related to our human capital strategy can be found in our FY23 NIKE, Inc. Impact Report, which is \navailable on the Impact section of about.nike.com. Information contained on or accessible through our websites is not \nincorporated into, and does not form a part of, this Annual Report or any other report or document we file with the SEC, and any \nreferences to our websites are intended to be inactive textual references only.\nAVAILABLE INFORMATION AND WEBSITES\nOur NIKE digital commerce website is located at www.nike.com. On our NIKE corporate website, located at investors.nike.com, \nwe post the following filings as soon as reasonably practicable after they are electronically filed with, or furnished to, the United \nStates Securities and Exchange Commission (the \"SEC\"): our annual report on Form 10-K, our quarterly reports on Form 10-Q, \nour current reports on Form 8-K and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the \nSecurities and Exchange Act of 1934, as amended. Our proxy statements are also posted on our corporate website. All such \nfilings on our corporate website are available free of charge. Copies of these filings are also available on the SEC's website at \nwww.sec.gov. Also available on our corporate website are the charters of the committees of our Board of Directors, as well as our \ncorporate governance guidelines and code of ethics. Copies of any of these documents will be provided in print to any \nshareholder who submits a request in writing to NIKE Investor Relations, One Bowerman Drive, Beaverton, Oregon 97005-6453. \nInformation contained on or accessible through our website is not incorporated into, and does not form a part of, this Annual \nReport or any other report or document we file with the SEC, and any references to our website are intended to be inactive \ntextual references only.\n2024 FORM 10-K   7    \n\n\nINFORMATION ABOUT OUR EXECUTIVE OFFICERS\nThe executive officers of NIKE, Inc. as of July 25, 2024, are as follows:\nMark Parker, Executive Chairman — Mr. Parker, 68, joined NIKE in 1979, is Executive Chairman of the \nBoard of Directors and served as President and Chief Executive Officer of NIKE, Inc. from 2006 to 2020. \nDuring his employment with NIKE, he has had primary responsibilities in product research, design and \ndevelopment, marketing and brand management. Mr. Parker previously served in various roles at NIKE \nincluding President of the NIKE Brand, Vice President of Global Footwear, General Manager, corporate \nVice President and divisional Vice President in charge of product development.\nJohn Donahoe II, President and Chief Executive Officer — Mr. Donahoe, 64, joined NIKE in 2014 as a \nmember of the Board of Directors and has served as President and Chief Executive Officer of NIKE, Inc. \nsince January 2020. He is responsible for NIKE’s global business portfolio, which includes the NIKE, \nJordan and Converse brands. Prior to joining NIKE, Mr. Donahoe was the President and Chief Executive \nOfficer of ServiceNow, Inc. from 2017 to 2020 and, prior to that, the President and Chief Executive \nOfficer of eBay Inc. Earlier in his career, he worked for Bain & Company for nearly two decades, \nbecoming the firm’s President and Chief Executive Officer in 1999.\nMatthew Friend, Executive Vice President and Chief Financial Officer — Mr. Friend, 46, joined NIKE in \n2009 and has served as Executive Vice President and Chief Financial Officer of NIKE, Inc. since 2020, \nand leads the Company's finance, demand and supply management, procurement and global places \nand services organizations. Mr. Friend previously served in various roles at NIKE including as Vice \nPresident of Investor Relations and Chief Financial Officer of the NIKE Brand. Prior to joining NIKE, Mr. \nFriend worked in the financial industry, including as Vice President in the investment banking and \nmergers and acquisitions groups at Goldman Sachs and Morgan Stanley.\nMonique Matheson, Executive Vice President, Chief Human Resources Officer — Ms. Matheson, 57, \njoined NIKE in 1998 and has served as Executive Vice President, Chief Human Resources Officer of \nNIKE, Inc. since 2017, overseeing and driving the Company’s strategic global Human Resources \nstrategy. In this role, Ms. Matheson leads through the lens of people — managing functions including \nrecruitment, succession planning, learning and career development, diversity and inclusion, \norganizational effectiveness, employee engagement, pay and benefits and people solutions. Previously, \nMs. Matheson has held roles including Vice President, Chief Talent and Diversity Officer and Vice \nPresident, Senior Human Resources Business Partner for North America, Global Product Creation \n(Footwear, Apparel and Equipment), Global Finance and NIKE, Inc. Affiliates. Prior to joining NIKE, Ms. \nMatheson practiced employment law.\nAnn Miller, Executive Vice President, Chief Legal Officer — Ms. Miller, 50, joined NIKE in 2007 and has \nserved as Executive Vice President, Chief Legal Officer of NIKE, Inc. since 2022. In her capacity as \nChief Legal Officer, she oversees all legal, compliance, government & public affairs, social community \nimpact, security, resilience and investigation matters of the Company. Previously, Ms. Miller served as \nVice President, Corporate Secretary from 2017 to 2022. Ms. Miller has also previously held other roles in \nthe NIKE legal department, including Chief Ethics & Compliance Officer and Converse's General \nCounsel. Prior to joining NIKE, Ms. Miller worked at the law firm Sullivan & Cromwell LLP. Ms. Miller \nbrings more than 25 years of legal and business expertise to her role.\nHeidi O'Neill, President, Consumer, Product & Brand — Ms. O'Neill, 59, joined NIKE in 1998 and has \nserved as President, Consumer, Product & Brand of NIKE, Inc. since 2023. In this role, Ms. O’Neill leads \nthe integration of the global Men's, Women's & Kids' consumer teams, the entire global product engine \nand global brand marketing and sports marketing to build deep storytelling, relationships and \nengagement with the brand. Most recently, Ms. O’Neill has also served as President, Consumer and \nMarketplace from 2020 to 2023 and President, Direct to Consumer from 2016 to 2020. Since joining \nNIKE, she has held a variety of key roles, including leading NIKE's marketplace and four geographic \noperating regions, leading NIKE Direct and NIKE's retail and digital-commerce business and creating \nand leading NIKE's Women’s business. Prior to joining NIKE, Ms. O'Neill held roles at Levi Strauss & \nCompany and was a Vice President at Foote, Cone & Belding.\nCraig Williams, President, Geographies & Marketplace — Mr. Williams, 55, joined NIKE in 2019 and \nhas served as President, Geographies & Marketplace of NIKE, Inc. since 2023. In this role, Mr. Williams \nleads NIKE's four geographic operating units, the global direct to consumer business and wholesale \nmarketplace partnerships. In addition, Mr. Williams leads the NIKE Supply Chain and Logistics \norganization. Mr. Williams previously served as President of Jordan Brand from 2019 to June 2023, \noverseeing the global business and team of designers, footwear and apparel developers, marketers and \ngeography leaders. Prior to joining NIKE, Mr. Williams held executive leadership positions at The Coca-\nCola Company as well as roles at CIBA Vision, a subsidiary of Novartis AG, and Kraft Foods Inc. Mr. \nWilliams also served five years in the U.S. Navy as a Naval Nuclear Power Officer.\n8\n       NIKE, INC.\n\n\nITEM 1A. RISK FACTORS\nSpecial Note Regarding Forward-Looking Statements and Analyst Reports\nCertain written and oral statements, other than purely historic information, including estimates, projections, statements relating to \nNIKE's business plans, objectives and expected operating or financial results and the assumptions upon which those statements \nare based, made or incorporated by reference from time to time by NIKE or its representatives in this Annual Report, other \nreports, filings with the SEC, press releases, conferences or otherwise, are \"forward-looking statements\" within the meaning of \nthe Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities Exchange Act of 1934, as amended. \nForward-looking statements include, without limitation, any statement that may predict, forecast, indicate or imply future results, \nperformance or achievements, and may contain the words \"believe,\" \"anticipate,\" \"expect,\" \"estimate,\" \"project,\" \"will be,\" \"will \ncontinue,\" \"will likely result\" or words or phrases of similar meaning. Forward-looking statements involve risks and uncertainties \nwhich may cause actual results to differ materially from the forward-looking statements. The risks and uncertainties are detailed \nfrom time to time in reports filed by NIKE with the SEC, including reports filed on Forms 8-K, 10-Q and 10-K, and include, among \nothers, the following: risks relating to our multi-year enterprise initiative, including the risk that NIKE is not able to identify \nopportunities to deliver anticipated cost savings, risks related to any delays in the timing for implementing the initiative or potential \ndisruptions to NIKE's business or operations as it executes on the initiative, and other factors that may cause NIKE to be unable \nto achieve the expected benefits of the initiative; intense competition among designers, marketers, distributors and sellers of \nathletic or leisure footwear, apparel and equipment for consumers and endorsers; NIKE's ability to successfully innovate and \ncompete in various categories; new product development and innovation; demographic changes; changes in consumer \npreferences and channel mix; popularity of particular designs, categories of products and sports; seasonal and geographic \ndemand for NIKE products; difficulties in anticipating or forecasting, and responding to changes in consumer preferences, \nconsumer demand for NIKE products, changes in channel mix and the various market factors described above; the size and \ngrowth of the overall athletic or leisure footwear, apparel and equipment markets; international, national and local political, civil, \neconomic and market conditions, including high and increasing inflation and interest rates; our ability to execute on our \nsustainability strategy and achieve our sustainability-related goals and targets, including sustainable product offerings; difficulties \nin implementing, operating and maintaining NIKE's increasingly complex information technology systems and controls, including, \nwithout limitation, the systems related to demand and supply planning and inventory control; interruptions in data and information \ntechnology systems; consumer data security; fluctuations and difficulty in forecasting operating results, including, without \nlimitation, the fact that advance orders may not be indicative of future revenues due to changes in shipment timing, the changing \nmix of orders with shorter lead times, and discounts, order cancellations and returns; the ability of NIKE to sustain, manage or \nforecast its growth and inventories; the size, timing and mix of purchases of NIKE's products; increases in the cost of materials, \nlabor and energy used to manufacture products; the ability to secure and protect trademarks, patents and other intellectual \nproperty; product performance and quality; customer service; adverse publicity and an inability to maintain NIKE's reputation and \nbrand image, including without limitation, through social media or in connection with brand damaging events; the loss of \nsignificant customers or suppliers; dependence on distributors and licensees; business disruptions; increased costs of freight and \ntransportation to meet delivery deadlines; increases in borrowing costs due to any decline in NIKE's debt ratings; changes in \nbusiness strategy or development plans; general risks associated with doing business outside of the United States, including, \nwithout limitation, exchange rate fluctuations, inflation, import duties, tariffs, quotas, sanctions, political and economic instability, \nconflicts and terrorism; the potential impact of new and existing laws, regulations or policy, including, without limitation, tariffs, \nimport/export, trade, wage and hour or labor and immigration regulations or policies; changes in government regulations; the \nimpact of, including business and legal developments relating to, climate change, extreme weather conditions and natural \ndisasters; litigation, regulatory proceedings, sanctions or any other claims asserted against NIKE; the ability to attract and retain \nqualified employees, and any negative public perception with respect to key personnel or our corporate culture, values or \npurpose; the effects of NIKE's decision to invest in or divest of businesses or capabilities; health epidemics, pandemics and \nsimilar outbreaks; and other factors referenced or incorporated by reference in this Annual Report and other reports.\nInvestors should also be aware that while NIKE does, from time to time, communicate with securities analysts, it is against NIKE's \npolicy to disclose to them any material non-public information or other confidential commercial information. Accordingly, \nshareholders should not assume that NIKE agrees with any statement or report issued by any analyst irrespective of the content \nof the statement or report. Furthermore, NIKE has a policy against confirming financial forecasts or projections issued by others. \nThus, to the extent that reports issued by securities analysts contain any projections, forecasts or opinions, such reports are not \nthe responsibility of NIKE.\nRisk Factors\nThe risks included here are not exhaustive. Other sections of this Annual Report may include additional factors which could \nadversely affect NIKE's business and financial performance. Moreover, NIKE operates in a very competitive and rapidly changing \nenvironment. New risks emerge from time to time and it is not possible for management to predict all such risks, nor can it assess \nthe impact of all such risks on NIKE's business or the extent to which any risk, or combination of risks, may cause actual results \nto differ materially from those contained in any forward-looking statements. Given these risks and uncertainties, investors should \nnot place undue reliance on forward-looking statements as a prediction of actual results.\n2024 FORM 10-K   9    \n\n\nEconomic and Industry Risks\nGlobal economic conditions could have a material adverse effect on our business, operating results and financial \ncondition.\nThe uncertain state of the global economy, including sustained high levels of inflation and interest rates and the risk of a \nrecession, continues to impact businesses around the world. If global economic and financial market conditions deteriorate, the \nfollowing factors, among others, could have a material adverse effect on our business, operating results and financial condition:\n• Our sales are impacted by discretionary spending by consumers. Declines in consumer spending have in the past resulted \nin and may in the future result in reduced demand for our products, increased inventories, reduced orders from retailers for \nour products, order cancellations, lower revenues, higher discounts and lower gross margins.\n• In the future, we may be unable to access financing in the credit and capital markets at reasonable rates in the event we find \nit desirable to do so.\n• We conduct transactions in various currencies, which creates exposure to fluctuations in foreign currency exchange rates \nrelative to the U.S. Dollar. Continued volatility in the markets and exchange rates for foreign currencies and contracts in \nforeign currencies has had and could continue to have a significant impact on our reported operating results and financial \ncondition.\n• Continued volatility in the availability and prices for commodities and raw materials we use in our products and in our supply \nchain (such as cotton or petroleum derivatives) has had and could in the future have a material adverse effect on our costs, \ngross margins and profitability. In addition, supply chain issues caused by factors including geopolitical conflicts and \npandemics have impacted and may in the future impact the availability, pricing and timing for obtaining commodities and raw \nmaterials. \n• If retailers of our products experience declining revenues or experience difficulty obtaining financing to purchase our \nproducts, this could result in reduced orders for our products, order cancellations, late retailer payments, extended payment \nterms, higher accounts receivable, reduced cash flows, greater expense associated with collection efforts and increased bad \ndebt expense.\n• In the past, certain retailers of our products have experienced severe financial difficulty, become insolvent and ceased \nbusiness operations, and this could occur in the future, which could negatively impact the sale of our products to consumers. \n• If contract manufacturers of our products or other participants in our supply chain experience difficulty obtaining financing to \npurchase raw materials or to finance capital equipment and other general working capital needs, it may result in delays or \nnon-delivery of shipments of our products.\nOur products, services and experiences face intense competition.\nNIKE is a consumer products company and the relative popularity of various sports and fitness activities and changing design \ntrends affect the demand for our products, services and experiences. The athletic footwear, apparel and equipment industry is \nhighly competitive both in the United States and worldwide. We compete with a significant number of athletic and leisure footwear \ncompanies, athletic and leisure apparel companies, sports equipment companies, private label brands offered by major retailers \nand various other large companies that have diversified lines of athletic and leisure footwear, apparel and equipment. New \ncompetitors frequently enter the markets we serve. We also compete with other companies for the production capacity of contract \nmanufacturers that produce our products. In addition, we and our contract manufacturers compete with other companies and \nindustries for raw materials used in our products. Our NIKE Direct operations, both through our digital commerce operations and \nretail stores, also compete with multi-brand retailers, which sell our products through their digital platforms and physical stores, \nand with digital commerce platforms. In addition, we compete with respect to the digital services and experiences we are able to \noffer our consumers, including fitness and activity apps; sport, fitness and wellness content and services; and digital services and \nfeatures in retail stores that enhance the consumer experience.\nProduct offerings, product innovations and technologies, marketing expenditures (including expenditures for advertising and \nendorsements), pricing, costs of production, customer service, digital commerce platforms, digital services and experiences and \nsocial media presence are areas of intense competition. These, in addition to ongoing rapid changes in technology (including \nmarketing and advertising technology), a reduction in barriers to starting new footwear and apparel companies and an increase in \nthe number of such companies (some of which may be able to react more nimbly to changes in consumer preferences) and \nchanges in consumer preferences in the markets for athletic and leisure footwear, apparel, and equipment, services and \nexperiences, constitute significant risk factors in our operations. In addition, the competitive nature of retail, including shifts in the \nways in which consumers shop, constitutes a risk factor implicating our NIKE Direct and wholesale operations. If we do not \nadequately and timely anticipate and respond to our competitors, our costs may increase, demand for our products may decline, \npossibly significantly, or we may need to reduce wholesale or suggested retail prices for our products.\n10\n       NIKE, INC.\n\n\nEconomic factors beyond our control, and changes in the global economic environment, including fluctuations in \ninflation and currency exchange rates, could result in lower revenues, higher costs and decreased margins and \nearnings.\nA majority of our products are manufactured and sold outside of the United States, and we conduct purchase and sale \ntransactions in various currencies, which creates exposure to the volatility of global economic conditions, including fluctuations in \ninflation and foreign currency exchange rates. Central banks deploy various strategies to combat inflation, including increasing \ninterest rates, which impact our borrowing costs. Government shutdowns or the risk of government shutdowns, as well as the \nimpact or expected impact of elections, both in the United States and in other countries around the world, may also increase \nvolatility. Additionally, there has been, and may continue to be, volatility in currency exchange rates that impact the U.S. Dollar \nvalue relative to other international currencies. Our international revenues and expenses generally are derived from sales and \noperations in foreign currencies, and these revenues and expenses are affected by currency fluctuations, specifically amounts \nrecorded in foreign currencies and translated into U.S. Dollars for consolidated financial reporting, as weakening of foreign \ncurrencies relative to the U.S. Dollar adversely affects the U.S. Dollar value of the Company's foreign currency-denominated \nsales and earnings. Currency exchange rate fluctuations could also disrupt the business of the independent manufacturers that \nproduce our products by making their purchases of raw materials more expensive and more difficult to finance. Foreign currency \nfluctuations have adversely affected and could continue to have an adverse effect on our results of operations and financial \ncondition.\nWe hedge certain foreign currency exposures to lessen and delay, but not to completely eliminate, the effects of foreign currency \nfluctuations on our financial results. Since the hedging activities are designed to lessen volatility, they not only reduce the \nnegative impact of a stronger U.S. Dollar or other trading currency, but they also reduce the positive impact of a weaker U.S. \nDollar or other trading currency. Our future financial results have in the past been and could in the future be significantly affected \nby the value of the U.S. Dollar in relation to the foreign currencies in which we conduct business. The degree to which our \nfinancial results are affected for any given time period will depend in part upon our hedging activities.\nWe may be adversely affected by the financial health of our wholesale customers.\nWe extend credit to our customers based on an assessment of a customer's financial condition, generally without requiring \ncollateral. To assist in the scheduling of production and the shipping of our products, we offer certain customers the opportunity to \nplace orders five to six months ahead of delivery under our futures ordering program. These advance orders may be canceled \nunder certain conditions, and the risk of cancellation increases when dealing with financially unstable retailers or retailers \nstruggling with economic uncertainty. In the past, some customers have experienced financial difficulties up to and including \nbankruptcies, which have had an adverse effect on our sales, our ability to collect on receivables and our financial condition. \nWhen the retail economy weakens or as consumer behavior shifts, retailers tend to be more cautious with orders. A slowing or \nchanging economy in our key markets, including a recession, could adversely affect the financial health of our customers, which \nin turn could have an adverse effect on our results of operations and financial condition. In addition, product sales are dependent \nin part on high quality merchandising and an appealing retail environment to attract consumers, which requires continuing \ninvestments by retailers. Retailers that experience financial difficulties may fail to make such investments or delay them, resulting \nin lower sales and orders for our products.\nClimate change and other sustainability-related matters, or legal, regulatory or market responses thereto, may have an \nadverse impact on our business and results of operations. \nThere are concerns that increased levels of carbon dioxide and other greenhouse gases in the atmosphere have caused, and \nmay continue to cause, potentially at a growing rate, increases in global temperatures, changes in weather patterns and \nincreasingly frequent and/or prolonged extreme weather and climate events. Climate change may also exacerbate challenges \nrelating to the availability and quality of water and raw materials, including those used in the production of our products, and may \nresult in changes in regulations or consumer preferences, which could in turn affect our business, operating results and financial \ncondition. For example, there has been increased focus by governmental and non-governmental organizations, consumers, \ncustomers, employees and other stakeholders on products that are sustainably made and other sustainability matters, including \nresponsible sourcing and deforestation, the use of plastic, energy and water, the recyclability or recoverability of packaging and \nmaterials transparency, any of which may require us to incur increased costs for additional transparency, due diligence and \nreporting. In addition, federal, state or local governmental authorities in various countries are implementing, have proposed and \nare likely to continue to propose, legislative and regulatory initiatives to reduce or mitigate the impacts of climate change on the \nenvironment. Various countries and regions are following different approaches to the regulation of climate change, which could \nincrease the complexity of, and potential cost related to complying with, such regulations. Any of the foregoing may require us to \nmake additional investments in facilities and equipment, may impact the availability and cost of key raw materials used in the \nproduction of our products or the demand for our products, and, in turn, may adversely impact our business, operating results \nand financial condition.\nInvestors, regulators and other stakeholders are also increasingly scrutinizing companies’ environmental, social and governance \n(“ESG”) commitments, performance and disclosures, including related to climate change, and in recent years have placed \nincreasing importance on social costs and related implications of their investments. Additionally, organizations that provide \n2024 FORM 10-K   11    \n\n\ninformation to investors on corporate governance and related matters have developed ratings processes for evaluating \ncompanies on their respective approaches to ESG matters, which are increasingly being employed by investors, lenders, and \ncustomers to inform their investment, financing or purchasing decisions. Although we have announced sustainability-related goals \nand targets, there can be no assurance that our stakeholders will agree with our strategies, and any perception, whether or not \nvalid, that we have failed to achieve, or to act responsibly with respect to, such matters or to effectively respond to new or \nadditional legal or regulatory requirements regarding climate change, could result in adverse publicity and adversely affect our \nbusiness and reputation. Execution of these strategies and achievement of our goals is subject to risks and uncertainties, many \nof which are outside of our control. These risks and uncertainties include, but are not limited to, our ability to execute our \nstrategies and achieve our goals within the currently projected costs and the expected timeframes; the availability and cost of raw \nmaterials and renewable energy; unforeseen production, design, operational and technological difficulties; the outcome of \nresearch efforts and future technology developments, including the ability to scale projects and technologies on a commercially \ncompetitive basis such as carbon sequestration and/or other related processes; compliance with, and changes or additions to, \nglobal and regional regulations, taxes, charges, mandates or requirements relating to greenhouse gas emissions, carbon costs or \nclimate-related goals; adapting products to customer preferences and customer acceptance of sustainable supply chain \nsolutions; and the actions of competitors and competitive pressures. As a result, there is no assurance that we will be able to \nadequately meet stakeholder expectations, successfully execute our strategies or achieve our sustainability-related goals, which \ncould damage our reputation and customer and other stakeholder relationships and have an adverse effect on our business, \nresults of operations and financial condition.\nExtreme weather conditions and natural disasters could negatively impact our operating results and financial condition.\nGiven the broad and global scope of our operations, we are particularly vulnerable to the physical risks of climate change, such \nas shifts in weather patterns. Extreme weather conditions in the areas in which our retail stores, suppliers, manufacturers, \ncustomers, distribution centers, offices, headquarters and vendors are located could adversely affect our operating results and \nfinancial condition. Moreover, natural disasters such as earthquakes, hurricanes, wildfires, tsunamis, floods or droughts, whether \noccurring in the United States or abroad, and their related consequences and effects, including energy shortages and public \nhealth issues, have in the past temporarily disrupted, and could in the future disrupt, our operations, the operations of our \nvendors, manufacturers and other suppliers or have in the past resulted in, and in the future could result in, economic instability \nthat may negatively impact our operating results and financial condition. In particular, if a natural disaster or severe weather event \nwere to occur in an area in which we or our suppliers, manufacturers, employees, customers, distribution centers or vendors are \nlocated, our continued success would depend, in part, on the safety and availability of the relevant personnel and facilities and \nproper functioning of our or third parties' computer, network, telecommunication and other systems and operations. In addition, a \nnatural disaster or severe weather event could negatively impact retail traffic to our stores or stores that carry our products and \ncould have an adverse impact on consumer spending, any of which could in turn result in negative point-of-sale trends for our \nmerchandise. Further, climate change may increase both the frequency and severity of extreme weather conditions and natural \ndisasters, which may affect our business operations, either in a particular region or globally, as well as the activities of our third-\nparty vendors and other suppliers, manufacturers and customers. The diversity of locations in which we operate, our operational \nsize, disaster recovery and business continuity planning and our information technology systems and networks, including the \nInternet and third-party services (\"Information Technology Systems\"), may not be sufficient for all or for concurrent eventualities. If \nwe were to experience a local or regional disaster or other business continuity event or concurrent events, we could experience \noperational challenges, in particular depending upon how a local or regional event may affect our human capital across our \noperations or with regard to particular aspects of our operations, such as key executive officers or personnel. For example, our \nWorld Headquarters is located in a seismic zone, which is at a higher risk for earthquakes and the related consequences or \neffects. Further, if we are unable to find alternative suppliers, replace capacity at key manufacturing or distribution locations or \nquickly repair damage to our Information Technology Systems or supply systems, we could be late in delivering, or be unable to \ndeliver, products to our customers. These events could result in reputational damage, lost sales, cancellation charges or \nmarkdowns, all of which could have an adverse effect on our business, results of operations and financial condition.\nOur financial condition and results of operations have been, and could in the future be, adversely affected by a \npandemic, epidemic or other public health emergency.\nPandemics, including the COVID-19 pandemic, and other public health emergencies, and preventative measures taken to \ncontain or mitigate such crises have caused, and may in the future cause, business slowdown or shutdown in affected areas and \nsignificant disruption in the financial markets, both globally and in the United States. These events have led to and could again \nlead to adverse impacts to our global supply chain, factory cancellation costs, store closures, and a decline in retail traffic and \ndiscretionary spending by consumers and, in turn, materially impact our business, sales, financial condition and results of \noperations as well as cause a volatile effective tax rate driven by changes in the mix of earnings across our jurisdictions. We \ncannot predict whether, and to what degree, our sales, operations and financial results could in the future be affected by the \npandemic and preventative measures. Risks presented by pandemics and other public health emergencies include, but are not \nlimited to:\n• Deterioration in economic conditions in the United States and globally, including the effect of prolonged periods of inflation \non our consumers and vendors;\n12\n       NIKE, INC.\n\n\n• Disruption to our distribution centers, contract manufacturers, finished goods factories and other vendors, through the effects \nof facility closures, increased operating costs, reductions in operating hours, labor shortages, and real time changes in \noperating procedures, such as additional cleaning and disinfection procedures, which have had, and could in the future \nagain have, a significant impact on our planned inventory production and distribution, including higher inventory levels or \ninventory shortages in various markets;\n• Impacts to our distribution and logistics providers' ability to operate, including labor and container shortages, and increases \nin their operating costs. These supply chain effects have had, and could in the future have, an adverse effect on our ability to \nmeet consumer demand, including digital demand, and have in the past resulted in and could in the future result in extended \ninventory transit times and an increase in our costs of production and distribution, including increased freight and logistics \ncosts and other expenses;\n• Decreased retail traffic as a result of store closures, reduced operating hours, social distancing restrictions and/or changes in \nconsumer behavior;\n• Reduced consumer demand for our products, including as a result of a rise in unemployment rates, higher costs of \nborrowing, inflation and diminished consumer confidence;\n• Cancellation or postponement of sports seasons and sporting events in multiple countries, and bans on large public \ngatherings, which have reduced and in the future could reduce consumer spending on our products and could impact the \neffectiveness of our arrangements with key endorsers;\n• The risk that any safety protocols in NIKE-owned or affiliated facilities, including our offices, will not be effective or not be \nperceived as effective, or that any virus-related illnesses will be linked or alleged to be linked to such facilities, whether \naccurate or not;\n• Incremental costs resulting from the adoption of preventative measures and compliance with regulatory requirements, \nincluding providing facial coverings and hand sanitizer, rearranging operations to follow social distancing protocols, \nconducting temperature checks, testing and undertaking regular and thorough disinfecting of surfaces;\n• Bankruptcies or other financial difficulties facing our wholesale customers, which could cause them to be unable to make or \ndelay making payments to us, or result in revised payment terms, cancellation or reduction of their orders; and\n• Significant disruption of and volatility in global financial markets, which could have a negative impact on our ability to access \ncapital in the future.\nWe cannot reasonably predict the ultimate impact of any pandemic or public health emergency, including the extent of any \nadverse impact on our business, results of operations and financial condition, which will depend on, among other things, the \nduration and spread of the pandemic or public health emergency, the impact of governmental regulations that have been, and \nmay continue to be, imposed in response, the effectiveness of actions taken to contain or mitigate the outbreak, the availability, \nsafety and efficacy of vaccines, including against emerging variants of the infectious disease, and global economic conditions. \nAdditionally, disruptions have in the past made it more challenging to compare our performance, including our revenue growth \nand overall profitability, across quarters and fiscal years, and could have this effect in the future. Any pandemic or public health \nemergency may also affect our business, results of operations or financial condition in a manner that is not presently known to us \nor that we currently do not consider to present significant risks and may also exacerbate, or occur concurrently with, other risks \ndiscussed in this Item 1A. Risk Factors, any of which could have a material effect on us.\nBusiness and Operational Risks\nFailure to maintain our reputation, brand image and culture could negatively impact our business.\nOur iconic brands have worldwide recognition, and our success depends on our ability to maintain and enhance our brand image \nand reputation. Maintaining, promoting and growing our brands will depend on our design and marketing efforts, including product \ninnovation, product quality and advertising and consumer campaigns. Our commitment to product innovation, quality and \nsustainability, and our continuing investment in design (including materials), marketing and sustainability measures may not have \nthe desired impact on our brand image and reputation. In addition, our success in maintaining, extending and expanding our \nbrand image depends on our ability to adapt to a rapidly changing media and digital environment, including our reliance on social \nmedia, digital advertising networks, digital and advertising technology, and digital dissemination of advertising campaigns on our \ndigital platforms and through our digital experiences and products. We could be adversely impacted if we fail to achieve any of \nthese objectives.\nOur brand value also depends on our ability to maintain a positive consumer perception of our corporate integrity, purpose and \nbrand culture. Negative claims or publicity involving us, our culture and values, our products, services and experiences, \nconsumer data, or any of our key employees, endorsers, sponsors, suppliers or partners could seriously damage our reputation \nand brand image, regardless of whether such claims are accurate. For example, while we require our suppliers of our products to \noperate their business in compliance with applicable laws and regulations, we do not control their practices. Negative publicity \n2024 FORM 10-K   13    \n\n\nrelating to a violation or an alleged violation of policies or laws by such suppliers could damage our brand image and diminish \nconsumer trust in our brand. Further, our reputation and brand image could be damaged as a result of our support of, association \nwith or lack of support or disapproval of certain social causes and public personalities, as well as any decisions we make to \ncontinue to conduct, or change, certain of our activities in response to such considerations. Social media, which accelerates and \npotentially amplifies the scope of negative publicity, can increase the challenges of responding to negative claims. Adverse \npublicity about regulatory or legal action against us, or by us, could also damage our reputation and brand image, undermine \nconsumer confidence in us and reduce long-term demand for our products, even if the regulatory or legal action is unfounded or \nnot material to our operations. If the reputation, culture or image of any of our brands is tarnished or if we receive negative \npublicity, then our sales, financial condition and results of operations could be materially and adversely affected.\nIf we are unable to anticipate consumer preferences and develop new products, we may not be able to maintain or \nincrease our revenues and profits.\nOur success depends on our ability to identify, originate and define product trends as well as to anticipate, gauge and react to \nchanging consumer demands in a timely manner so that our product offerings evolve and are responsive to consumer demands. \nHowever, lead times for many of our products make it more difficult for us to respond rapidly to new or changing product trends or \nconsumer preferences. All of our products are subject to changing consumer preferences that cannot be predicted with certainty. \nOur new products may not receive consumer acceptance as consumer preferences could shift rapidly to different types of \nproducts or away from these types of products altogether, and our future success depends in part on our ability to anticipate and \nrespond to these changes. If we fail to anticipate accurately and respond to trends and shifts in consumer preferences by \nadjusting the mix of existing product offerings, developing new products, designs, styles and categories, and influencing sports \nand fitness preferences through extensive marketing, we could experience lower sales, excess inventories or lower profit \nmargins, any of which could have an adverse effect on our results of operations and financial condition. In addition, we market \nour products globally through a diverse spectrum of advertising and promotional programs and campaigns, including social media \nand other digital advertising networks. If we do not successfully market our products, if advertising and promotional costs \nincrease or if certain advertising networks are no longer available, these factors could have an adverse effect on our business, \nfinancial condition and results of operations.\nWe rely on technical innovation and high-quality products to compete.\nTechnical innovation and quality control in the design and manufacturing processes of footwear, apparel, equipment and other \nproducts and services are essential to the commercial success of our products and development of new products. Research and \ndevelopment play a key role in technical innovation. We rely upon specialists in the fields of biomechanics, chemistry, exercise \nphysiology, engineering, digital technologies, industrial design, sustainability and related fields, as well as research committees \nand advisory boards made up of athletes, coaches, trainers, equipment managers, orthopedists, podiatrists and other experts to \ndevelop and test cutting-edge performance products. While we strive to produce products that help to enhance athletic \nperformance and reduce injury and maximize comfort, if we fail to introduce technical innovation in our products, consumer \ndemand for our products could decline, and if we experience problems with the quality of our products (including the introduction \nof bias or inaccuracies in our products), we may incur substantial expense to remedy the problems and loss of consumer confidence.\nOur enterprise initiative may not generate the intended benefits or projected cost savings we anticipate. \nIn December 2023, we announced a multi-year enterprise initiative aimed at delivering cost savings and investing in future \ngrowth, accelerating innovation and driving profitability. Areas of potential savings include simplifying our product assortment, \nincreasing automation and use of technology, streamlining our organization and leveraging our scale to drive greater efficiency. \nOur ability to achieve the intended cost savings and goals associated with the enterprise initiative are subject to many estimates \nand assumptions, which may change during implementation and execution. For example, we may not be able to identify \nopportunities to deliver anticipated cost savings. Additionally, the timing of the cost savings associated with the enterprise \ninitiative may be delayed. Further, we may also face disruptions to our business or operations as we execute on the initiative.\nOur business is affected by seasonality, which could result in fluctuations in our operating results.\nWe experience moderate fluctuations in aggregate sales volume during the year. Historically, revenues in the first and fourth \nfiscal quarters have slightly exceeded those in the second and third fiscal quarters. However, the mix of product sales may vary \nconsiderably from time to time or in the future as a result of strategic shifts in our business and seasonal or geographic demand \nfor particular types of footwear, apparel and equipment and in connection with the timing of significant sporting events, such as \nthe NBA Finals, Olympics or the World Cup, among others. In addition, our customers may, and from time to time do, cancel \norders, change delivery schedules or change the mix of products ordered with minimal notice. As a result, we may not be able to \naccurately predict our quarterly sales. Accordingly, our results of operations are likely to fluctuate significantly from period to \nperiod. This seasonality, along with other factors that are beyond our control, including economic conditions, changes in \nconsumer preferences, weather conditions, outbreaks of disease, social or political unrest, availability of import quotas, \ntransportation disruptions and currency exchange rate fluctuations, has in the past adversely affected and could in the future \nadversely affect our business and cause our results of operations to fluctuate. Our operating margins are also sensitive to a \nnumber of additional factors that are beyond our control, including manufacturing and transportation costs, shifts in product sales \n14\nmix and geographic sales trends, all of which we expect to continue. Results of operations in any period should not be \nconsidered indicative of the results to be expected for any future period.\n       NIKE, INC.\n\n\nFailure to continue to obtain or maintain high-quality endorsers of our products could harm our business.\nWe establish relationships with professional athletes, sports teams and leagues, as well as other public figures, including artists, \ndesigners and influencers, to develop, evaluate and promote our products, as well as establish product authenticity with \nconsumers. However, as competition in our industry has increased, the costs associated with establishing and retaining such \nsponsorships and other relationships have increased, and competition to attract and retain high-quality endorsers has increased. \nIf we are unable to negotiate new, or maintain our current, associations with professional athletes, sports teams and leagues, or \nother public figures, or to do so at a reasonable cost, we could lose the high visibility or on-field authenticity associated with our \nproducts, and we may be required to modify and substantially increase our marketing investments. As a result, our brands, net \nrevenues, expenses and profitability could be harmed.\nFurthermore, if certain endorsers were to stop using our products contrary to their endorsement agreements, our business could \nbe adversely affected. In addition, actions taken or statements made by athletes, teams or leagues, or other endorsers, \nassociated with our products or brand that harm the reputations of those athletes, teams or leagues, or endorsers, or our \ndecisions to cease collaborating with certain endorsers in light of actions taken or statements made by them, have in the past \nharmed and could in the future seriously harm our brand image with consumers and, as a result, could have an adverse effect on \nour sales and financial condition. Poor or non-performance by our endorsers, a failure to continue to correctly identify promising \nathletes, public figures or sports organizations, to use and endorse our products and brand or a failure to enter into cost-effective \nendorsement arrangements with prominent athletes, public figures and sports organizations could adversely affect our brand, \nsales and profitability.\nFailure to accurately forecast consumer demand could lead to excess inventories or inventory shortages, which could \nresult in decreased operating margins, reduced cash flows and harm to our business.\nTo meet anticipated demand for our products, we purchase products from manufacturers outside of our futures ordering program \nand in advance of customer orders, which we hold in inventory and resell to customers. There is a risk we may be unable to sell \nexcess products ordered from manufacturers. Inventory levels in excess of customer demand may result in inventory write-\ndowns, and the sale of excess inventory at discounted prices could significantly impair our brand image and have an adverse \neffect on our operating results, financial condition and cash flows. Conversely, if we underestimate consumer demand for our \nproducts or if our manufacturers fail to supply products we require at the time we need them, we may experience inventory \nshortages. Inventory shortages could delay shipments to customers, negatively impact retailer, distributor and consumer \nrelationships and diminish brand loyalty. The difficulty in forecasting demand also makes it difficult to estimate our future results of \noperations, financial condition and cash flows from period to period. A failure to accurately predict the level of demand for our \nproducts could adversely affect our net revenues and net income, and we are unlikely to forecast such effects with any certainty \nin advance.\nOur NIKE Direct operations have required and will continue to require a substantial investment and commitment of \nresources and are subject to numerous risks and uncertainties.\nOur NIKE Direct operations, including our retail stores and digital platforms, have required and will continue to require significant \ninvestment. Our NIKE Direct stores have required and will continue to require substantial fixed investment in equipment and \nleasehold improvements and personnel. We have entered into substantial operating lease commitments for retail space. Certain \nstores have been designed and built to serve as high-profile venues to promote brand awareness and marketing activities and to \nintegrate with our digital platforms. Because of their unique design and technological elements, locations and size, these stores \nrequire substantially more investment than other stores. Due to the high fixed-cost structure associated with our NIKE Direct retail \nstores, a decline in sales, a shift in consumer behavior away from brick-and-mortar retail, or the closure, temporary or otherwise, \nor poor performance of individual or multiple stores could result in significant lease termination costs, write-offs of equipment and \nleasehold improvements and employee-related costs.\nMany factors unique to retail operations, some of which are beyond our control, pose risks and uncertainties. Risks include, but \nare not limited to: credit card fraud and theft in both our retail stores and on digital platforms; mismanagement of existing retail \nchannel partners; inability to manage costs associated with store construction and operation; and supply chain and inventory \nmanagement. \nIn addition, we have made significant investments in digital technologies and information systems for the digital aspect of our \nNIKE Direct operations, and our digital offerings will require continued investment in the development and upgrading of our \ntechnology platforms. In order to deliver high-quality digital experiences, our digital platforms must be designed effectively and \nwork well with a range of other technologies, systems, networks, and standards that we do not control. We may not be successful \nin developing platforms that operate effectively with these technologies, systems, networks or standards. A growing portion of \nconsumers access our NIKE Direct digital platforms, but in the event that it is more difficult for consumers to access and use our \ndigital platforms, consumers find that our digital platforms do not effectively meet their needs or expectations or consumers \nchoose not to access or use our digital platforms or use devices that do not offer access to our platforms, the success of our \n2024 FORM 10-K   15    \n\n\nNIKE Direct operations could be adversely impacted. Our competitors may develop, or have already developed, digital \nexperiences, features, content, services or technologies that are similar to ours or that achieve greater acceptance. \nWe may not realize a satisfactory return on our investment in our NIKE Direct operations and management's attention from our \nother business opportunities could be diverted, which could have an adverse effect on our business, financial condition or results \nof operations.\nIf the technology-based systems, applications and platforms that give our consumers the ability to shop or interact with \nus online do not function effectively, our operating results, as well as our ability to grow our digital commerce business \nglobally or to retain our customer base, could be materially adversely affected.\nMany of our consumers shop with us through our digital platforms. Consumers frequently use mobile-based devices and \napplications to shop online with us and with our competitors, and to do comparison shopping, as well as to engage with us and \nour competitors through digital services and experiences that are offered on mobile platforms. We use social media and \nproprietary mobile applications to interact with our consumers and as a means to enhance their shopping experience. Any failure \non our part to provide attractive, effective, reliable, secure and user-friendly digital commerce platforms that offer a wide \nassortment of merchandise with rapid delivery options and that continually meet the changing expectations of online shoppers or \nany failure to provide attractive digital experiences to our customers could place us at a competitive disadvantage, result in the \nloss of digital commerce and other sales, harm our reputation with consumers, have a material adverse impact on the growth of \nour digital commerce business globally and have a material adverse impact on our business and results of operations. In \naddition, as use of our digital platforms continues to grow, we will need an increasing amount of technical infrastructure to \ncontinue to satisfy our consumers' needs. If we fail to continue to effectively scale and adapt our digital platforms to \naccommodate increased consumer demand, our business may be subject to interruptions, delays or failures and consumer \ndemand for our products and digital experiences could decline.\nRisks specific to our digital commerce business also include diversion of sales from our and our retailers' brick and mortar stores, \npricing pressure on our products, difficulty in recreating the in-store experience through direct channels and liability for online \ncontent. Our failure to successfully respond to these risks might adversely affect sales in our digital commerce business, as well \nas damage our reputation and brands.\nWe rely significantly on information technology to operate our business, including our supply chain and retail \noperations, and any failure, inadequacy or interruption of that technology could harm our ability to effectively operate \nour business.\nWe are heavily dependent on Information Technology Systems, across our supply chain, including product design, production, \nforecasting, ordering, manufacturing, transportation, sales and distribution, as well as for processing financial information for \nexternal and internal reporting purposes, retail operations and other business activities. Information Technology Systems are \ncritical to many of our operating activities and our business processes and may be negatively impacted by any service \ninterruption or shutdown. For example, our ability to effectively manage and maintain our inventory and to ship products to \ncustomers on a timely basis depends significantly on the reliability of these Information Technology Systems. Over a number of \nyears, we have implemented Information Technology Systems in all of the geographical regions in which we operate. Our work to \nintegrate, secure and enhance these systems and related processes in our global operations is ongoing and NIKE will continue to \ninvest in these efforts. We cannot provide assurance, however, that the measures we take to secure and enhance these systems \nwill be sufficient to protect our Information Technology Systems and prevent cyber-attacks, system failures or data or information \nloss. The failure of these systems to operate effectively, including as a result of security breaches, viruses, hackers, malware, \nransomware, denial of service attacks, natural disasters, vendor business interruptions or other causes, failure to properly \nmaintain, protect, repair or upgrade systems, or problems with transitioning to upgraded or replacement systems could cause \ndelays in product fulfillment and reduced efficiency of our operations, could require significant time and capital investments to \nremediate the problem which may not be sufficient to cover all eventualities, and may have an adverse effect on our reputation, \nresults of operations and financial condition. In addition, the use of employee-owned devices for communications as well as \nhybrid work arrangements, present additional operational risks to our Information Technology Systems, including, but not limited \nto, increased risks of cyber-attacks. Further, like other companies in the retail industry, we have in the past experienced, and we \nexpect to continue to experience, cyber-attacks, including phishing, and other attempts to breach, or gain unauthorized access to, \nour systems. To date, these attacks have not had a material impact on our operations, but we cannot provide assurance that they \nwill not have an impact in the future.\nWe also use Information Technology Systems to process financial information and results of operations for internal reporting \npurposes and to comply with regulatory financial reporting, legal and tax requirements. From time to time, we have expended, \nand expect to continue to expend, significant resources to modify, update and enhance our Information Technology Systems and \nto investigate and remediate vulnerabilities or other exposures. These modifications, updates and enhancements may cost more \nthan initially expected and may not be effective in preventing issues and disruptions. Moreover, due to the complexity of our \nInformation Technology Systems, the process of implementing modifications or enhancements can itself create a risk of systems \ndisruptions and security issues. If Information Technology Systems suffer severe damage, disruption or shutdown and our \n16\n       NIKE, INC.\n\n\nbusiness continuity plans, or those of our vendors, do not effectively resolve the issues in a timely manner, we could experience \ndelays in reporting our financial results, which could result in lost revenues and profits, as well as reputational damage. \nFurthermore, we depend on Information Technology Systems and personal data collection for digital marketing, digital commerce, \nconsumer engagement and the marketing and use of our digital products and services. We also rely on our ability to engage in \nelectronic communications throughout the world between and among our employees as well as with other third parties, including \ncustomers, suppliers, vendors and consumers. Any interruption in Information Technology Systems may impede our ability to \nengage in the digital space and result in lost revenues, damage to our reputation, and loss of users.\nGiven the increasing complexity and sophistication of techniques used by bad actors to obtain unauthorized access to or disable \ninformation technology systems, and the fact that cyber-attacks are being made by groups and individuals with a wide range of \nexpertise and motives, it is increasingly difficult to anticipate and defend against cyber-attacks, and a cyberattack could occur and \npersist for an extended period of time before being detected. Moreover, the extent of a particular cyber incident and the steps that \nwe may need to take to investigate the incident may not be immediately clear, and it may take a significant amount of time before \nsuch investigation can be finalized and completed and reliable information about the incident is known. During the pendency of \nany such investigation, we may not necessarily know the extent of the harm or how best to remediate it and we may be required \nto disclose incidents before their full extent is known. \nMoreover, to the extent we integrate artificial intelligence (\"AI\") into our operations, this may increase the cybersecurity and \nprivacy risks, including the risk of unauthorized or misuse of AI tools, we are exposed to, and threat actors may leverage AI to \nengage in automated, targeted and coordinated attacks of our systems.\nWe are subject to the risk our licensees may not generate expected sales or maintain the value of our brands. \nWe currently license, and expect to continue licensing, certain of our proprietary rights, such as trademarks or copyrighted \nmaterial, to third parties. If our licensees fail to successfully market and sell licensed products, or fail to obtain sufficient capital or \neffectively manage their business operations, customer relationships, labor relationships, supplier relationships or credit risks, it \ncould adversely affect our revenues, both directly from reduced royalties received and indirectly from reduced sales of our other \nproducts. \nWe also rely on our licensees to help preserve the value of our brands. Although we attempt to protect our brands through \napproval rights over the design, production processes, quality, packaging, merchandising, distribution, advertising and promotion \nof our licensed products, we cannot completely control the use of our licensed brands by our licensees. The misuse of a brand by \nor negative publicity involving a licensee could have a material adverse effect on that brand and on us.\nConsolidation of retailers or concentration of retail market share among a few retailers may increase and concentrate \nour credit risk and impair our ability to sell products.\nThe athletic footwear, apparel and equipment retail markets in some countries are dominated by a few large athletic footwear, \napparel and equipment retailers with many stores and accelerating digital commerce capabilities. The market shares of these \nretailers may increase through acquisitions and construction of additional stores and investments in digital capacity, and as a \nresult of attrition as struggling retailers exit the market. Consolidation of our retailers will concentrate our credit risk with a smaller \nset of retailers, any of whom may experience declining sales or a shortage of liquidity. In addition, increasing market share \nconcentration among a few retailers in a particular country or region increases the risk that if any one of them substantially \nreduces their purchases of our products, we may be unable to find sufficient retail outlets for our products to sustain the same \nlevel of sales and revenues.\nIf one or more of our counterparty financial institutions default on their obligations to us or fail, we may incur significant \nlosses.\nAs part of our hedging activities, we enter into transactions involving derivative financial instruments, which may include forward \ncontracts, commodity futures contracts, option contracts, collars and swaps with various financial institutions. In addition, we have \nsignificant amounts of cash, cash equivalents and other investments on deposit or in accounts with banks or other financial \ninstitutions in the United States and abroad. As a result, we are exposed to the risk of default by or failure of counterparty \nfinancial institutions. The risk of counterparty default or failure may be heightened during periods of sustained high interest rates \nand uncertainty in the financial markets as well as economic downturns. If one of our counterparties were to become insolvent or \nfile for bankruptcy, our ability to recover losses incurred as a result of default, or our assets deposited or held in accounts with \nsuch counterparty, may be limited by the counterparty's liquidity or the applicable laws governing the insolvency or bankruptcy \nproceedings. In the event of default or failure of one or more of our counterparties, we could incur significant losses, which could \nnegatively impact our results of operations and financial condition.\nWe rely on a concentrated source base of contract manufacturers to supply a significant portion of our footwear \nproducts.\nWe rely upon a concentrated amount of contract manufacturers, which we do not own or operate, to manufacture all of the \nfootwear products we sell, see \"Manufacturing\" for additional information. Our ability to meet our customers' needs depends on \nour ability to maintain a steady supply of products from our contract manufacturers. If one or more of our significant suppliers \n2024 FORM 10-K   17    \n\n\nwere to sever their relationship with us or significantly alter the terms of our relationship, including due to changes in applicable \ntrade policies, or be unable to perform, we may not be able to obtain replacement products in a timely manner, which could have \na material adverse effect on our business operations, sales, financial condition or results of operations. Additionally, if any of our \nprimary footwear contract manufacturers fail to make timely shipments, do not meet our quality standards or otherwise fail to \ndeliver us product in accordance with our plans, there could be a material adverse effect on our results of operations.\nCertain of our footwear contract manufacturers are highly specialized and only produce a specific type of product. Such contract \nmanufacturers may go out of business if consumer preferences or market conditions change such that there is no longer \nsufficient demand for the types of products they produce. If, in the future, the relevant products are again in demand and the \nspecialized contract manufacturers no longer exist, we may not be able to locate replacement facilities to manufacture certain \nfootwear products in a timely manner or at all, which could have a material adverse effect on our sales, financial condition or \nresults of operations.\nThe market for prime real estate is competitive.\nOur ability to effectively obtain real estate to open new retail stores and otherwise conduct our operations, both domestically and \ninternationally, depends on the availability of real estate that meets our criteria for traffic, square footage, co-tenancies, lease \neconomics, demographics and other factors. We also must be able to effectively renew our existing real estate leases. In \naddition, from time to time, we seek to downsize, consolidate, reposition or close some of our real estate locations, which may \nrequire modification of an existing lease. Failure to secure adequate new locations or successfully modify leases for existing \nlocations, or failure to effectively manage the profitability of our existing fleet of retail stores, could have an adverse effect on our \noperating results and financial condition.\nAdditionally, the economic environment may make it difficult to determine the fair market rent of real estate properties \ndomestically and internationally. This could impact the quality of our decisions to exercise lease options at previously negotiated \nrents and to renew expiring leases at negotiated rents. Any adverse effect on the quality of these decisions could impact our \nability to retain real estate locations adequate to meet our targets or efficiently manage the profitability of our existing fleet of \nstores, which could have an adverse effect on our operating results and financial condition.\nThe success of our business depends, in part, on high-quality employees, including key personnel as well as our ability \nto maintain our workplace culture and values.\nOur success depends in part on the continued service of high-quality employees, including key executive officers and personnel. \nThe loss of the services of key individuals, or any negative perception with respect to these individuals, or our workplace culture \nor values, could harm our business. Our success also depends on our ability to recruit, retain and engage our personnel \nsufficiently, both to maintain our current business and to execute our strategic initiatives. Competition for employees in our \nindustry is intense and we may not be successful in attracting and retaining such personnel. Changes to our current and future \nwork models may not meet the needs or expectations of our employees or may not be perceived as favorable compared to other \ncompanies' policies, which could negatively impact our ability to attract, hire and retain our employees. In addition, shifts in U.S. \nimmigration policy could negatively impact our ability to attract, hire and retain highly skilled employees who are from outside the \nUnited States. We also believe that our corporate culture has been a key driver of our success, and we have invested substantial \ntime and resources in building, maintaining and evolving our culture. Any failure to preserve and evolve our culture could \nnegatively affect our future success, including our ability to retain and recruit employees.\nOur business operations and financial performance could be adversely affected by changes in our relationship with our \nworkforce or changes to United States or foreign employment regulations.\nWe have significant exposure to changes in domestic and foreign laws governing our relationships with our workforce, including \nwage and hour laws and regulations, fair labor standards, minimum wage requirements, overtime pay, unemployment tax rates, \nworkers' compensation rates, citizenship requirements and payroll taxes, which could have a direct impact on our operating \ncosts. A significant increase in minimum wage or overtime rates in countries where we have workforce could have a significant \nimpact on our operating costs and may require that we relocate those operations or take other steps to mitigate such increases, \nall of which may cause us to incur additional costs. There is also a risk of potential claims that we have violated laws related to \ndiscrimination and harassment, health and safety, wage and hour laws, criminal activity, personal injury and other claims. In \naddition, if there were a significant increase in the number of members of our workforce who are members of labor organizations \nor become parties to collective bargaining agreements, we could be vulnerable to a strike, work stoppage or other labor action, \nas well as additional expenses, expectations or requirements, which could have an adverse effect on our business.\nRisks Related to Operating a Global Business\nOur international operations involve inherent risks which could result in harm to our business.\nNearly all of our athletic footwear and apparel is manufactured outside of the United States, and the majority of our products are \nsold outside of the United States. Accordingly, we are subject to the risks generally associated with global trade and doing \nbusiness abroad, which include foreign laws and regulations, varying consumer preferences across geographic regions, political \ntensions, unrest, disruptions or delays in cross-border shipments and changes in economic conditions in countries in which our \n18\n       NIKE, INC.\n\n\nproducts are manufactured or where we sell products. Changes in U.S. or international social, political, regulatory and economic \nconditions could impact our business, reputation, financial condition and results of operations. In particular, political and economic \ninstability, geopolitical conflicts, political unrest, civil strife, terrorist activity, acts of war, public corruption, expropriation, \nnationalism and other economic or political uncertainties in the United States or internationally could interrupt and negatively \naffect the sale of our products or other business operations. Any negative sentiment toward the United States as a result of any \nsuch changes could also adversely affect our business.\nIn addition, terrorist acts, military conflict and disease outbreaks have increased the risks of doing business abroad. These \nfactors, among others, could affect our ability to manufacture products or procure materials, or our costs for manufacturing and \nprocuring materials, our ability to import products, our ability to sell products in international markets and our cost of doing \nbusiness. If any of these or other factors make the conduct of business in a particular country undesirable or impractical, our \nbusiness could be adversely affected.\nOur products are subject to risks associated with overseas sourcing, manufacturing and financing.\nThe principal materials used in our footwear products — natural and synthetic rubber, plastic compounds, foam cushioning \nmaterials, natural and synthetic leather, nylon, polyester and natural fiber textiles and polyurethane films — are locally available \nto manufacturers. The principal materials used in our apparel products — natural and synthetic fabrics, yarns and threads (both \nvirgin and recycled), specialized performance fabrics designed to efficiently wick moisture away from the body, retain heat and \nrepel rain and/or snow as well as plastic and metal hardware — are also available in countries where our manufacturing takes \nplace. Both our apparel and footwear products are dependent upon the ability of our contract manufacturers to locate, train, \nemploy and retain adequate personnel. NIKE contract manufacturers and materials suppliers buy raw materials and are subject \nto wage rates and other labor standards that are oftentimes regulated by the governments of the countries in which our products \nare manufactured.\nThere could be a significant disruption in the supply of fabrics or raw materials from current sources or, in the event of a \ndisruption or heightened competition for such materials, our contract manufacturers might not be able to locate alternative \nsuppliers of materials of comparable quality at an acceptable price or at all. Further, our contract manufacturers have \nexperienced and may continue to experience in the future, unexpected closures, unexpected increases in work wages or other \nchanges in labor standards, whether government mandated or otherwise, and increases in compliance costs due to \ngovernmental regulation concerning certain metals, fabrics or raw materials used in the manufacturing of our products. In \naddition, we cannot be certain that manufacturers that we do not contract and that we refer to as \"unaffiliated manufacturers\" will \nbe able to fill our orders in a timely manner. If we experience significant increases in demand, or reductions in the availability of \nmaterials, or need to replace an existing contract manufacturer or materials supplier, there can be no assurance additional \nsupplies of fabrics or raw materials or additional manufacturing capacity will be available when required on terms acceptable to \nus, or at all, or that any contract manufacturer, unaffiliated manufacturer, or any materials supplier would allocate sufficient \ncapacity to us in order to meet our requirements. Even if we are able to expand existing or find new manufacturing capacity or \nsources of materials, we may encounter delays in production and added costs as a result of the time it takes to train suppliers \nand manufacturers in our methods, products, quality control standards and labor, health and safety standards. In addition, \nchanges we make in managing the supply of our products, such as changes to decrease the supply of certain products, pose the \nrisk that we may not be able to meet demand for, or ramp up production of, certain products timely or without additional cost. Any \ndelays, interruption or increased costs in labor or wages, in the supply of materials or in the manufacturing of our products could \nhave an adverse effect on our ability to meet retail customer and consumer demand for our products and result in lower revenues \nand net income both in the short- and long-term.\nBecause contract manufacturers make a majority of our products outside of our principal sales markets, our products must be \ntransported by third parties over large geographic distances. Delays in the shipment or delivery of our products due to the \navailability of transportation, container shortages, labor shortages, including work stoppages or port strikes, infrastructure and \nport congestion or other factors, and costs and delays associated with consolidating or transitioning between manufacturers, \nhave adversely impacted, and could in the future adversely impact the availability of our products and, in turn, our financial \nperformance. In addition, delays in the shipment or delivery of our products, manufacturing delays or unexpected demand for our \nproducts have required us, and may in the future require us to use faster, but more expensive, transportation methods such as air \nfreight, which could adversely affect our profit margins. The cost of oil is a significant component in manufacturing and \ntransportation costs, so increases in the price of petroleum products can adversely affect our profit margins. Changes in U.S. \ntrade policies, including modifications to import tariffs and existing trade policies and agreements, have also had, and could \ncontinue to have a significant impact on our activities in foreign jurisdictions, and could adversely affect our reputation or results \nof operations.\nIn addition, we have become, and expect to continue to be, subject to a number of regulations that require us to develop new \npolicies and procedures for, strive to mitigate, and report, certain supply chain risks related to sourcing internationally. These \nregulations have resulted and may continue to result in increased operating costs and affect how and where we source materials \nfor our products.\n2024 FORM 10-K   19    \n\n\nOur success depends on our global distribution facilities.\nWe distribute our products to customers directly from the factory and through distribution centers located throughout the world. \nOur ability to meet customer expectations, manage inventory, complete sales and achieve objectives for operating efficiencies \nand growth, particularly in emerging markets, depends on the proper operation of our distribution facilities, the development or \nexpansion of additional distribution capabilities and the timely performance of services by third parties (including those involved in \nshipping product to and from our distribution facilities). Our distribution facilities have in the past and could in the future be \ninterrupted by information technology problems, disasters such as earthquakes or fires or outbreaks of disease or government \nactions taken to mitigate their spread. Any significant failure in our distribution facilities could result in an adverse effect on our \nbusiness. We maintain business interruption insurance, but it may not adequately protect us from adverse effects caused by \nsignificant disruptions in our distribution facilities.\nLegal, Regulatory, and Compliance Risks\nWe are subject to a complex array of laws and regulations and litigation and other legal and regulatory proceedings, \nwhich could have an adverse effect on our business, financial condition and results of operations.\nAs a multinational corporation with operations and distribution channels throughout the world, we are subject to and must comply \nwith extensive laws and regulations in the United States and other jurisdictions in which we have operations and distribution \nchannels. If we or our employees, agents, suppliers, and other partners fail to comply with any of these laws or regulations, such \nfailure could subject us to fines, sanctions or other penalties that could negatively affect our reputation, business, financial \ncondition and results of operations. Furthermore, laws, regulations and policies and the interpretation of such, can conflict among \njurisdictions and compliance in one jurisdiction may result in legal or reputational risks in another jurisdiction. We are involved in \nvarious types of claims, lawsuits, regulatory proceedings and government investigations relating to our business, our products \nand the actions of our employees and representatives, including contractual and employment relationships, product liability, \nantitrust, trademark rights and a variety of other matters. It is not possible to predict with certainty the outcome of any such legal \nor regulatory proceedings or investigations, and we could in the future incur judgments, fines or penalties, or enter into \nsettlements of lawsuits and claims that could have a material adverse effect on our business, financial condition and results of \noperations and negatively impact our reputation. The global nature of our business means legal and compliance risks, such as \nanti-bribery, anti-corruption, fraud, trade, environmental, competition, privacy and other regulatory matters, will continue to exist \nand additional legal proceedings and other contingencies have and will continue to arise from time to time, which could adversely \naffect us. In addition, the adoption of new laws or regulations, or changes in the interpretation of existing laws or regulations, may \nresult in significant unanticipated legal and reputational risks. Moreover, the regulation of certain transactions we engage in, \nincluding those involving virtual goods and cryptocurrencies, remains in an early stage and subject to significant uncertainty. As a \nresult, we are required to exercise our judgment as to whether or how certain laws or regulations apply, or may in the future \napply, and it is possible that legislators, regulators and courts may disagree with our conclusions. Any current or future legal or \nregulatory proceedings could divert management's attention from our operations and result in substantial legal fees.\nChanges to U.S. or other countries' trade policies and tariff and import/export regulations or our failure to comply with \nsuch regulations may have a material adverse effect on our reputation, business, financial condition and results of \noperations.\nChanges in the U.S. government's import and export policies, including trade restrictions, sanctions and countersanctions, \nincreased tariffs or quotas, embargoes, safeguards or customs restrictions, could require us to change the way we conduct \nbusiness and adversely affect our results of operations.\nIn addition, changes in laws and policies governing foreign trade, manufacturing, development and investment in the territories or \ncountries where we currently sell our products or conduct our business could adversely affect our business. U.S. presidential \nadministrations have instituted or proposed changes in trade policies that include the negotiation or termination of trade \nagreements, the imposition of higher tariffs on imports into the U.S., economic sanctions on individuals, corporations or countries, \nand other government regulations affecting trade between the U.S. and other countries where we conduct our business. It may \nbe time-consuming and expensive for us to alter our business operations in order to adapt to or comply with any such changes.\nChanges or proposed changes in U.S. or other countries' trade policies may result in restrictions and economic disincentives on \ninternational trade. Tariffs and other changes in U.S. trade policy have in the past and could in the future trigger retaliatory actions \nby affected countries, and certain foreign governments have instituted or are considering imposing retaliatory measures on \ncertain U.S. goods. Further, any emerging protectionist or nationalist trends either in the United States or in other countries could \naffect the trade environment. The Company, similar to many other multinational corporations, does a significant amount of \nbusiness that would be impacted by changes to the trade policies of the United States and foreign countries (including \ngovernmental action related to tariffs, international trade agreements, or economic sanctions). Such changes have the potential \nto adversely impact the U.S. economy or certain sectors thereof or the economy of another country in which we conduct \noperations, our industry and the global demand for our products, and as a result, could have a material adverse effect on our \nbusiness, financial condition and results of operations.\nIn addition, many of our imported products are subject to duties, tariffs or quotas that affect the cost and quantity of various types \nof goods imported into the United States and other countries. Any country in which our products are produced or sold may \n20\n       NIKE, INC.\n\n\neliminate, adjust or impose new quotas, duties, tariffs, safeguard measures, anti-dumping duties, cargo restrictions to prevent \nterrorism, restrictions on the transfer of currency, climate change legislation, product safety regulations or other charges or \nrestrictions, any of which could have an adverse effect on our results of operations and financial condition.\nFurthermore, we are subject to the FCPA as well as the anti-corruption laws of other countries in which we operate. Although we \nimplement policies and procedures designed to promote compliance with these laws, our employees, independent contractors, \ncontract manufacturers, suppliers and agents, as well as those companies to which we outsource certain of our business \noperations, may take actions in violation of our policies. Any such violation could result in sanctions or other penalties and have \nan adverse effect on our business, reputation and operating results.\nFailure to adequately protect or enforce our intellectual property rights could adversely affect our business.\nWe periodically discover counterfeit reproductions of our products or products that otherwise infringe our intellectual property \nrights. If we are unsuccessful in enforcing our intellectual property rights, continued sales of these products could adversely affect \nour sales and our brand and could result in a shift of consumer preference away from our products.\nThe actions we take to establish and protect our intellectual property rights may not be adequate to prevent imitation of our \nproducts by others. We also may be unable to prevent others from seeking to block sales of our products as violations of \nproprietary rights. \nWe may be subject to liability if third parties successfully claim we infringe their intellectual property rights. Defending \ninfringement claims could be expensive and time-consuming and might result in our entering into costly license agreements. We \nalso may be subject to significant damages or injunctions against development, manufacturing, use, importation and/or sale of \ncertain products.\nWe take various actions to prevent the unauthorized use and/or disclosure of our confidential information and intellectual property \nrights. These actions include contractual measures such as entering into non-disclosure and non-compete agreements and \nagreements relating to our collaborations with third parties and providing confidential information awareness training. Our controls \nand efforts to prevent unauthorized use and/or disclosure of confidential information and intellectual property rights might not \nalways be effective. For example, confidential information related to business strategy, innovations, new technologies, mergers \nand acquisitions, unpublished financial results or personal data could be prematurely, inadvertently, or improperly used and/or \ndisclosed, resulting in a loss of reputation, loss of intellectual property rights, a decline in our stock price and/or a negative impact \non our market position, and could lead to damages, fines, penalties or injunctions. In addition, new products we offer, such as \nvirtual goods, may raise various novel intellectual property law considerations, including adequacy and scope of assignment, \nlicensing, transfer, copyright and other right-of-use issues.\nIn addition, the laws of certain countries may not protect or allow enforcement of intellectual property rights to the same extent as \nthe laws of the United States. We may face significant expenses and liability in connection with the protection of our intellectual \nproperty rights, including outside the United States, and if we are unable to successfully protect our rights or resolve intellectual \nproperty conflicts with others, our business or financial condition may be adversely affected.\nRegulations and best practices with respect to new technological developments, including generative AI, are in the process of \nbeing developed globally. These developments may affect aspects of our business that leverage these tools, and give rise to \nrisks related to intellectual property infringement claims or harm to our reputation or brand image.\nWe are subject to data security and privacy risks that could negatively affect our results, operations or reputation.\nIn addition to our own sensitive and proprietary business information, we handle transactional and personal information about our \nwholesale customers and consumers and users of our digital experiences, which include online distribution channels and product \nengagement, adaptive products and personal fitness applications. Hackers and data thieves are increasingly sophisticated and \noperate social engineering, such as phishing, and large-scale, complex automated attacks that can evade detection for long \nperiods of time. Any breach of our or our service providers' networks, or other vendor systems, may result in the loss of \nconfidential business and financial data, misappropriation of our consumers', users' or employees' personal information or a \ndisruption of our business. Any of these outcomes could have a material adverse effect on our business, including unwanted \nmedia attention, impairment of our consumer and customer relationships, damage to our reputation; resulting in lost sales and \nconsumers, fines, lawsuits, or significant legal and remediation expenses. We also may need to expend significant resources to \nprotect against, respond to and/or redress problems caused by any breach.\nIn addition, we must comply with increasingly complex and rigorous, and sometimes conflicting, regulatory standards enacted to \nprotect business and personal data in the United States, Europe and elsewhere. For example, the European Union adopted the \nGeneral Data Protection Regulation (the \"GDPR\"); the United Kingdom enacted the UK General Data Protection Regulation \n(which implements the GDPR into UK law); several states in the United States have passed data privacy laws; China enacted the \nData Security Law and Personal Information Protection Law; and additional jurisdictions have adopted or are considering \nproposing or adopting similar regulations. These laws impose additional obligations on companies regarding the handling of \npersonal data and provide certain individual privacy rights to persons whose data is stored. Compliance with existing, proposed \nand recently enacted laws and regulations is costly and time consuming, and any failure to comply with these regulatory \n2024 FORM 10-K   21    \n\n\nstandards could subject us to legal, operational and reputational risks. Misuse of or failure to secure personal information could \nalso result in violation of data privacy laws and regulations, proceedings against the Company by governmental entities or others, \nimposition of fines by governmental authorities and damage to our reputation and credibility and could have a negative impact on \nrevenues and profits.\nWe could be subject to changes in tax rates, adoption of new tax laws or regulations, or changes in the interpretations \nthereof, additional tax liabilities or increased volatility in our effective tax rate.\nWe earn a substantial portion of our income in foreign countries and, as such, we are subject to the tax laws in the United States \nand numerous foreign jurisdictions. Current economic and political conditions make tax laws and regulations, or their \ninterpretation and application, in any jurisdiction subject to significant change. \nProposals to reform U.S. and foreign tax laws could significantly impact how U.S. multinational corporations are taxed on global \nearnings and could increase the U.S. corporate tax rate. For example, the Organization for Economic Co-operation and \nDevelopment (the \"OECD\") and the G20 Inclusive Framework on Base Erosion and Profit Shifting (the \"Inclusive Framework\") \nhas put forth two proposals—Pillar One and Pillar Two—that revise the existing profit allocation and nexus rules and ensure a \nminimal level of taxation, respectively. Several countries in which we operate, including several European Union member states' \nhave adopted domestic legislation to implement the Inclusive Framework's global corporate minimum tax rate of 15% which will \nbe effective beginning fiscal 2025. Other countries are also actively considering changes to their tax laws to adopt certain parts of \nthe Inclusive Framework's proposals. Although we cannot predict whether or in what form these proposals, or any other changes \nin the U.S. or foreign tax laws or regulations, will be enacted into law, these changes, if enacted into law, could have an adverse \nimpact on our effective tax rate, income tax expense and cash flows.\nPortions of our operations are subject to a reduced tax rate or are under a tax holiday. We also utilize tax rulings and other \nagreements to obtain certainty in treatment of certain tax matters. Tax holidays and rulings can expire from time to time and may \nbe extended when certain conditions are met, or terminated if certain conditions are not met. The impact of any changes in \nconditions would be the loss of certainty in treatment thus potentially impacting our effective income tax rate. For example, in \nJanuary 2019, the European Commission opened a formal investigation to examine whether the Netherlands has breached State \nAid rules when granting certain tax rulings to the Company. If this matter is adversely resolved, the Netherlands may be required \nto assess additional amounts with respect to prior periods, and the Company's income taxes related to prior periods in the \nNetherlands could increase.\nWe are also subject to the examination of our tax returns by the United States Internal Revenue Service (\"IRS\") and other tax \nauthorities. We regularly assess the likelihood of an adverse outcome resulting from these examinations to determine the \nadequacy of our provision for income taxes. Although we believe our tax provisions are adequate, the final determination of tax \naudits and any related disputes could be materially different from our historical income tax provisions and accruals. The results of \naudits or related disputes could have an adverse effect on our financial statements for the period or periods for which the \napplicable final determinations are made. For example, we and our subsidiaries are also engaged in a number of intercompany \ntransactions across multiple tax jurisdictions. Although we believe we have clearly reflected the economics of these transactions \nand the proper local transfer pricing documentation is in place, tax authorities may propose and sustain adjustments that could \nresult in changes that may impact our mix of earnings in countries with differing statutory tax rates.\nFailure of our contractors or our licensees' contractors to comply with our code of conduct, local laws and other \nstandards could harm our business.\nWe have license agreements that permit independent parties to manufacture or contract for the manufacture of products using \nour intellectual property. We require the contractors that directly manufacture our products and our licensees that make products \nusing our intellectual property (including, indirectly, their contract manufacturers) to comply with a code of conduct and other \nenvironmental, human rights, health and safety standards for the benefit of workers. We also require our contract manufacturers \nand the contractors of our licensees to comply with applicable standards for product safety. Notwithstanding their contractual \nobligations, from time to time contractors may not comply with such standards or applicable local law or our licensees may fail to \nenforce such standards or applicable local law on their contractors. If one or more of our direct or indirect contractors violates or \nfails to comply with, or is accused of violating or failing to comply with, such standards and laws, this could harm our reputation or \nresult in a product recall and, as a result, could have an adverse effect on our sales and financial condition. Negative publicity \nregarding production methods, alleged unethical or illegal practices or workplace or related conditions of any of our suppliers, \nmanufacturers or licensees could adversely affect our brand image and sales, force us to locate alternative suppliers, \nmanufacturers or licenses or result in the imposition of additional regulations, including new or additional quotas, tariffs, \nsanctions, product safety regulations or other regulatory measures, by governmental authorities.\n22\n       NIKE, INC.\n\n\nRisks Related to Our Securities, Investments and Liquidity\nOur financial results may be adversely affected if substantial investments in businesses and operations fail to produce \nexpected returns.\nFrom time to time, we may invest in product offering and manufacturing innovation and expansion of existing businesses, such as \nour NIKE Direct operations, technology, business infrastructure, new businesses or capabilities, which require substantial cash \ninvestments and management attention. We believe cost-effective investments are essential to business growth and profitability; \nhowever, significant investments are subject to typical risks and uncertainties inherent in developing a new business or \nexpanding an existing business. The failure of any significant investment to provide expected returns or profitability could have a \nmaterial adverse effect on our financial results and divert management attention from more profitable business operations. See \nalso \"Our NIKE Direct operations have required and will continue to require a substantial investment and commitment of \nresources and are subject to numerous risks and uncertainties.\"\nThe sale of a large number of shares of common stock by our principal shareholder could depress the market price of \nour common stock.\nAs of June 28, 2024, Swoosh, LLC beneficially owned approximately 77% of our Class A Common Stock. If, on June 28, 2024, all \nof these shares were converted into Class B Common Stock, Swoosh, LLC's commensurate ownership percentage of our Class \nB Common Stock would be approximately 16%. The shares are available for resale, subject to the requirements of the U.S. \nsecurities laws and the terms of the limited liability company agreement governing Swoosh, LLC. The sale or prospect of a sale of \na substantial number of these shares could have an adverse effect on the market price of our common stock. Swoosh, LLC was \nformed by Philip H. Knight, our Chairman Emeritus, to hold the majority of his shares of Class A Common Stock. Mr. Knight does \nnot have voting rights with respect to Swoosh, LLC, although Travis Knight, his son and a NIKE director, has a significant role in \nthe management of the Class A Common Stock owned by Swoosh, LLC.\nChanges in our credit ratings or macroeconomic conditions may affect our liquidity, increasing borrowing costs and \nlimiting our financing options.\nOur long-term debt is currently rated Investment Grade by Standard & Poor's and Moody's Investors Service. If our credit ratings \nare lowered, borrowing costs for our existing facilities or for future long-term debt or short-term credit facilities may increase and \nour financing options, including our access to credit or capital markets, could be adversely affected. We may also be subject to \nrestrictive covenants that would reduce our flexibility to, among other things, incur additional indebtedness, make restricted \npayments, pledge assets as security, make investments, loans, advances, guarantees and acquisitions, undergo fundamental \nchanges and enter into transactions with affiliates. Failure to comply with such covenants could result in a default, and as a result, \nthe commitments of our lenders under our credit agreements may be terminated and the maturity of amounts owed may be \naccelerated. In addition, macroeconomic conditions, such as increased volatility or disruption in the credit or capital markets, \ncould adversely affect our ability to refinance existing debt.\nIf our internal controls are ineffective, our operating results could be adversely affected.\nOur internal control over financial reporting may not prevent or detect misstatements because of its inherent limitations, including \nthe possibility of human error, the circumvention or overriding of controls or fraud. Even effective internal controls can provide \nonly reasonable assurance with respect to the preparation and fair presentation of financial statements. If we fail to maintain the \nadequacy of our internal controls, including any failure to implement required new or improved controls, or if we experience \ndifficulties in their implementation, our business and operating results could be harmed and we could fail to meet our financial \nreporting obligations. \nIf our estimates or judgments relating to our critical accounting estimates prove to be incorrect, our operating results \ncould be adversely affected.\nThe preparation of financial statements in conformity with accounting principles generally accepted in the United States requires \nmanagement to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and \naccompanying notes. We base our estimates on historical experience and on various other assumptions we believe to be \nreasonable under the circumstances, as provided in \"Management's Discussion and Analysis of Financial Condition and Results \nof Operations\". The results of these estimates form the basis for making judgments about the carrying values of assets, liabilities \nand equity, and the amount of revenues and expenses that are not readily apparent from other sources. Significant assumptions \nand estimates used in preparing our consolidated financial statements include those related to sales-related reserves, inventory \nreserves, hedge accounting for derivatives, income taxes and other contingencies. Our operating results may be adversely \naffected if our assumptions change or if actual circumstances differ from those in our assumptions, which could cause our \noperating results to fall below the expectations of securities analysts and investors, resulting in a decline in the price of our Class \nB Common Stock.\n2024 FORM 10-K   23    \n\n\nAnti-takeover provisions may impair an acquisition of the Company or reduce the price of our common stock.\nThere are provisions within our articles of incorporation and Oregon law intended to protect shareholder interests by providing the \nBoard of Directors a means to attempt to deny coercive takeover attempts or to negotiate with a potential acquirer in order to \nobtain more favorable terms. Such provisions include a control share acquisition statute, a freeze-out statute, two classes of \nstock that vote separately on certain issues, and the fact that holders of Class A Common Stock elect three-quarters of the Board \nof Directors rounded down to the next whole number. However, such provisions could discourage, delay or prevent an unsolicited \nmerger, acquisition or other change in control of the Company that some shareholders might believe to be in their best interests \nor in which shareholders might receive a premium for their common stock over the prevailing market price. These provisions \ncould also discourage proxy contests for control of the Company.\nWe have in the past failed and may in the future fail to meet market expectations, which has caused and could in the \nfuture cause the price of our stock to decline.\nOur Class B Common Stock is traded publicly, and at any given time various securities analysts follow our financial results and \nissue reports on us. These reports include information about our historical financial results as well as analysts' opinions of our \nfuture performance, which may, in part, be based upon any guidance we have provided. Analysts' estimates are often different \nfrom our estimates or expectations. If our operating results are below the estimates or expectations of public market analysts and \ninvestors, our stock price could decline (which has recently happened in the past and could happen in the future). We are \ncurrently subject to multiple securities class action and shareholder derivative lawsuits relating to a drop in our stock price and \ncould become involved in additional litigation of this type in the future if our stock price is volatile for any reason. Any litigation \ncould result in reputational damage, substantial costs and a diversion of management's attention and resources needed to \nsuccessfully run our business.\n24\n       NIKE, INC.\n\n\nITEM 1B. UNRESOLVED STAFF COMMENTS\nNone.\nITEM 1C. CYBERSECURITY\nAt NIKE, cybersecurity risk management is an important part of our overall risk management efforts. We have cybersecurity \nprocesses, technologies and controls in place to aid in our efforts to assess, identify and manage material risks associated with \ncybersecurity threats. We assess cybersecurity risk at both the board and management levels.\nManagement’s Role in Managing Risk\nAt the management level, primary responsibility for assessing and managing material risks from cybersecurity threats rests with \nour Vice President, Corporate Information Security, Risk & Compliance (\"VP, CIS\"). Our VP, CIS has over two decades of \nexperience in information technology and cybersecurity. The VP, CIS reports to our Chief Information Officer (“CIO”) who has \nsignificant experience leading technology teams at large public companies and our CIO reports to our Chief Technology Officer.\nOur approach to managing cybersecurity risk is informed by the industry-standard National Institute for Standards and \nTechnology Cybersecurity Framework. The VP, CIS has primary responsibility for implementing and overseeing our enterprise-\nwide cybersecurity strategy, policy, architecture and processes. We use various tools and methodologies to identify and manage \ncybersecurity risk, including risk assessments and a vulnerability management program that includes periodic penetration testing. \nWe have a third-party cyber risk management program that conducts assessments on third parties who integrate with our data, \nnetwork, systems and applications. These tools and methodologies inform our remediation activities, which are tracked and \nreported to senior management.\nIn addition, our internal audit function periodically conducts independent testing of the overall operations of our cybersecurity \nprogram and supporting control frameworks, and reports the results to the Audit & Finance Committee. We also engage third \nparties to assess our cybersecurity program maturity and to perform audits of portions of our cybersecurity control environment \nbased on risk or where necessary to ensure regulatory compliance.\nOur cybersecurity team meets frequently to monitor the prevention, detection, mitigation and remediation of cybersecurity threats \nand incidents. In the event of a cybersecurity incident, we have an incident response plan that governs our immediate response \nincluding detection, escalation, assessment, management and remediation. As part of incident response, the cybersecurity team \nwill also coordinate with external advisors and other key stakeholders as needed. The cybersecurity team routinely tests this plan \nacross the organization to validate the procedures for appropriately escalating potentially material cybersecurity risks and \nincidents. Also, we provide an annual, mandatory cybersecurity training program for employees that is intended to help them \nunderstand cybersecurity risks and comply with our cybersecurity policies.\nBoard Oversight\nOur Board of Directors has ultimate oversight of cybersecurity risk as part of its risk management oversight responsibilities, \nincluding with respect to cybersecurity risk priorities, resource allocation and oversight structures. The Board of Directors receives \nan update on our cybersecurity program on an annual basis, or more frequently as determined to be necessary or advisable. The \nBoard of Directors has delegated risk management oversight responsibility for information security and data protection to the \nAudit & Finance Committee, which regularly reviews our cybersecurity program and related matters with management and \nreports to the Board of Directors. Topics discussed at the board level include our approach to cybersecurity risk management, key \ninitiatives, the threat landscape and recent developments and trends. The Board of Directors is aware of the critical nature of \nmanaging risks associated with cybersecurity threats and is actively engaged in our cybersecurity risk management strategy.\nRisks from Cybersecurity Threats\nEven though, to date, cybersecurity risks have not materially affected our business or our results of operations, we face \nnumerous and evolving cybersecurity threats. There can be no assurance that we, or the third parties with which we interact, will \nnot face a cybersecurity incident in the future that will materially affect us. For more information about the cybersecurity risks we \nface, see the risk factor entitled “We rely significantly on information technology to operate our business, including our supply \nchain and retail operations, and any failure, inadequacy or interruption of that technology could harm our ability to effectively \noperate our business” in Item 1A. Risk Factors.\n2024 FORM 10-K   25    \n\n\nITEM 2. PROPERTIES\nThe following is a summary of principal properties owned or leased by NIKE:\nThe NIKE World Headquarters, owned by NIKE and located near Beaverton, Oregon, USA, is an approximately 400-acre site \nconsisting of over 40 buildings which, together with adjacent leased properties, functions as our global headquarters and is \noccupied by approximately 10,700 employees engaged in management, research, design, development, marketing, finance and \nother administrative functions serving nearly all of our segments. We lease a similar, but smaller, administrative facility in \nHilversum, the Netherlands, which serves as the headquarters for our Europe, Middle East & Africa geography and management \nof certain brand functions for our non-U.S. operations. We also lease an office complex in Shanghai, China, our headquarters for \nour Greater China geography, occupied by employees focused on implementing our wholesale, NIKE Direct and merchandising \nstrategies in the region, among other functions.\nIn the United States, NIKE has eight significant distribution centers. Five are located in or near Memphis, Tennessee, two of \nwhich are owned and three of which are leased. Two other distribution centers, one located in Indianapolis, Indiana and one \nlocated in Dayton, Tennessee, are leased and operated by third-party logistics providers. One distribution center for Converse is \nlocated in Ontario, California, which is leased. NIKE has a number of distribution facilities outside the United States, some of \nwhich are leased and operated by third-party logistics providers. The most significant distribution facilities outside the United \nStates are located in Laakdal, Belgium; Taicang, China; Tomisato, Japan and Icheon, Korea, all of which we own.\nAir Manufacturing Innovation manufactures cushioning components used in footwear at NIKE-owned and leased facilities located \nnear Beaverton, Oregon, and in Dong Nai Province, Vietnam, as well as at NIKE-owned facilities in St. Charles, Missouri. \nAside from the principal properties described above, we lease many offices worldwide for sales and administrative purposes. We \nlease approximately 1,040 retail stores worldwide, which primarily consist of factory stores. See \"United States Market\" and \n\"International Markets\" for additional information regarding our retail stores. Our leases expire at various dates through the fiscal \nyear 2058.\nITEM 3. LEGAL PROCEEDINGS\nWe do not believe there are any material pending legal proceedings, other than ordinary routine litigation incidental to our \nbusiness, to which we are a party or of which any of our property is the subject. Refer to Note 16 — Commitments and \nContingencies in the accompanying Notes to the Consolidated Financial Statements for additional information.\nITEM 4. MINE SAFETY DISCLOSURES\nNot applicable.\n26\n       NIKE, INC.\n\n\nPART II\nITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, \nRELATED STOCKHOLDER MATTERS AND ISSUER \nPURCHASES OF EQUITY SECURITIES\nNIKE's Class B Common Stock is listed on the New York Stock Exchange and trades under the symbol NKE. At July 10, 2024, \nthere were 21,354 holders of record of NIKE's Class B Common Stock and 16 holders of record of NIKE's Class A Common \nStock. These figures do not include beneficial owners who hold shares in nominee name. The Class A Common Stock is not \npublicly traded, but each share is convertible upon request of the holder into one share of Class B Common Stock. Refer to our \nConsolidated Statements of Shareholders' Equity for dividends declared on the Class A and Class B Common Stock.\nIn June 2022, the Board of Directors approved a four-year, $18 billion share repurchase program. As of May 31, 2024, the \nCompany had repurchased 84.9 million shares at an average price of $106.65 per share for a total approximate cost of $9.1 \nbillion under this program.\nAll share repurchases were made under NIKE's publicly announced program, and there are no other programs under which the \nCompany repurchases shares. The following table presents a summary of share repurchases made during the quarter ended \nMay 31, 2024: \nPERIOD\nTOTAL NUMBER OF \nSHARES PURCHASED\nAVERAGE PRICE  \nPAID PER SHARE\nAPPROXIMATE DOLLAR \nVALUE OF SHARES THAT \nMAY YET BE PURCHASED \nUNDER THE PLANS \nOR PROGRAMS \n(IN MILLIONS)\nMarch 1 — March 31, 2024\n \n2,583,730 $ \n98.42 $ \n9,739 \nApril 1 — April 30, 2024\n \n3,606,667 $ \n93.73 $ \n9,401 \nMay 1 — May 31, 2024\n \n4,895,400 $ \n93.16 $ \n8,945 \n \n11,085,797 $ \n94.57 \n2024 FORM 10-K   27    \n\n\nPERFORMANCE GRAPH\nThe following graph demonstrates a five-year comparison of cumulative total returns for NIKE's Class B Common Stock; the \nStandard & Poor's 500 Stock Index; the Dow Jones U.S. Footwear Index; and the Standard & Poor's Apparel, Accessories & \nLuxury Goods Index. The graph assumes an investment of $100 on May 31, 2019, in each of the indices and our Class B \nCommon Stock. Each of the indices assumes that all dividends were reinvested on the day of issuance.\nThe Dow Jones U.S. Footwear Index consists of NIKE, Crocs Inc., Deckers Outdoor Corporation and Skechers U.S.A., Inc. \nBecause NIKE is part of the Dow Jones U.S. Footwear Index, the price and returns of NIKE stock have a substantial effect on this \nindex. The Standard & Poor's Apparel, Accessories & Luxury Goods Index consists of Ralph Lauren Corporation, Tapestry, Inc. \nand lululemon athletica. The Dow Jones U.S. Footwear Index and the Standard & Poor's Apparel, Accessories & Luxury Goods \nIndex include companies in two major lines of business in which the Company competes. The indices do not encompass all of the \nCompany's competitors, nor all product categories and lines of business in which the Company is engaged.\nThe stock performance shown on the performance graph above is not necessarily indicative of future performance. The Company \nwill not make or endorse any predictions as to future stock performance.\nThe performance graph above is being furnished solely to accompany this Annual Report pursuant to Item 201(e) of Regulation \nS-K, is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be \nincorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general \nincorporation language in such filing.\n28\nCOMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN AMONG NIKE, INC.; S&P 500 INDEX; THE DOW JONES U.S. FOOTWEAR \nINDEX; AND S&P APPAREL, ACCESSORIES & LUXURY GOODS INDEX\n$0\n$20\n$40\n$60\n$80\n$100\n$120\n$140\n$160\n$180\n$200\n$220\n2019\n2020\n2021\n2022\n2023\n2024\nNIKE, Inc.\nS&P 500 INDEX - TOTAL RETURN\nDOW JONES US FOOTWEAR INDEX\nS&P 500 APPAREL, ACCESSORIES & LUXURY GOODS INDEX\n       NIKE, INC.\n\n\nITEM 6. [RESERVED] \n2024 FORM 10-K   29    \n\n\nITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF \nFINANCIAL CONDITION AND RESULTS OF OPERATIONS\nOVERVIEW\nNIKE designs, develops, markets and sells athletic footwear, apparel, equipment, accessories and services worldwide. We are \nthe largest seller of athletic footwear and apparel in the world. We sell our products through NIKE Direct operations, which are \ncomprised of both NIKE-owned retail stores and sales through our digital platforms (also referred to as \"NIKE Brand Digital\") and \nto wholesale accounts, which include a mix of independent distributors, licensees and sales representatives in nearly all countries \naround the world. Our goal is to deliver value to our shareholders by building a profitable global portfolio of branded footwear, \napparel, equipment and accessories businesses. \nOur strategy is to achieve sustainable profitable long-term revenue growth by creating innovative, \"must-have\" products, building \ndeep personal consumer connections with our brands and delivering compelling consumer experiences through digital platforms \nand at retail. We are focused on growing the entire marketplace by continuing to invest in our NIKE Direct operations while also \nincreasing investment to elevate and differentiate our brand experience within our wholesale partners.\nIn addition, in the third quarter of fiscal 2024, we announced an enterprise-wide initiative to prioritize investment to fuel future \ngrowth including taking steps to streamline the organization. This resulted in a net reduction of our global workforce and we \nexpect to reinvest a majority of the future annual wage savings from these actions to support this initiative. \nWe also continue to invest in a global Enterprise Resource Planning Platform, data and analytics, demand sensing, insight \ngathering and other areas to create an end-to end technology foundation to serve our consumer with speed and scale. \nFISCAL 2024 FINANCIAL HIGHLIGHTS\n• NIKE, Inc. Revenues for fiscal 2024 were $51.4 billion compared to $51.2 billion for fiscal 2023\n• NIKE Direct revenues grew 1% from $21.3 billion in fiscal 2023 to $21.5 billion in fiscal 2024, and represented approximately \n44% of total NIKE Brand revenues for fiscal 2024\n• NIKE Brand wholesale revenues increased 1% on a reported basis and 2% on a currency-neutral basis\n• Gross margin increased 110 basis points to 44.6%, primarily due to strategic pricing actions and lower ocean freight rates \nand logistics costs, partially offset by higher product input costs, lower margin in NIKE Direct and unfavorable changes in net \nforeign currency exchange rates\n• Income before income taxes included a restructuring charge of $443 million related to the streamlining of our organization, \nprimarily associated with employee severance costs and accelerated stock-based compensation expense. For more \ninformation, refer to Note 19 — Restructuring within the accompanying Notes to the Consolidated Financial Statements.\n• Inventories as of May 31, 2024 were $7.5 billion, a decrease of 11% compared to the prior year, primarily due to a decrease \nin units\n• We returned $6.4 billion to our shareholders in fiscal 2024 through share repurchases and dividends\n• Return on Invested Capital (\"ROIC\") was 34.9% as of May 31, 2024, compared to 31.5% as of May 31, 2023. ROIC is \nconsidered a non-GAAP financial measure, see \"Use of Non-GAAP Financial Measures\" for additional information.\nFor discussion related to the results of operations and changes in financial condition for fiscal 2023 compared to fiscal 2022 refer \nto Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations in our fiscal 2023 \nForm 10-K, which was filed with the United States Securities and Exchange Commission on July 20, 2023.\n30\n       NIKE, INC.\n\n\nCURRENT ECONOMIC CONDITIONS AND OTHER FACTORS IMPACTING OUR BUSINESS\nThe operating environment could remain volatile in fiscal 2025 as the risk remains that these factors, among others, could have a \nmaterial adverse impact on our future revenue growth as well as overall profitability.\n• Consumer Spending: In fiscal 2024, consumers continued to spend more cautiously as the global economy remains \nuncertain and promotional activity remained high across our industry. We will continue to closely monitor macroeconomic \nand geopolitical conditions, including potential impacts of inflation and higher interest rates on consumer spending behavior. \n• Cost Inflationary Pressures: Inflationary pressures, including higher product input costs, continued to negatively impact \nour gross margin with more pronounced impacts in the first nine months of fiscal 2024. These negative impacts were more \nthan offset by the strategic pricing actions we have taken through fiscal 2024, as well as improvements in ocean freight rates \nand logistics costs we started to realize at the beginning of the second quarter of fiscal 2024. \n• Supply Chain Conditions: During fiscal 2024 and as of May 31, 2024, our inventory levels were healthy, reflecting our \nproactive actions taken to manage our inventory supply.\n• Foreign Currency Impacts: As a global company with significant operations outside the United States, we are exposed to \nrisk arising from changes in foreign currency exchange rates. For additional information, refer to \"Foreign Currency \nExposures and Hedging Practices\".\n• Product Lifecycle Management: We are currently reducing the supply of certain footwear products as we scale new and \ninnovative products across the marketplace. This had a negative impact on our revenues, specifically NIKE Brand Digital \nrevenues in the fourth quarter of fiscal 2024.\nFor more information refer to Item 1A Risk Factors, within Part 1, Item 1, Business.\nUSE OF NON-GAAP FINANCIAL MEASURES\nThroughout this Annual Report on Form 10-K, we discuss non-GAAP financial measures, which should be considered in addition \nto, and not in lieu of, the financial measures calculated and presented in accordance with generally accepted accounting \nprinciples in the United States of America (\"U.S. GAAP\"). References to these measures should not be considered in isolation or \nas a substitute for other financial measures calculated and presented in accordance with U.S. GAAP and may not be comparable \nto similarly titled measures used by other companies. Management uses these non-GAAP measures when evaluating the \nCompany's performance, including when making financial and operating decisions. Additionally, management believes these non-\nGAAP financial measures provide investors with additional financial information that should be considered when assessing our \nunderlying business performance and trends. \nEarnings Before Interest and Taxes (\"EBIT\"): Calculated as Net income before Interest expense (income), net and Income tax \nexpense in the Consolidated Statements of Income. Total NIKE, Inc. EBIT for fiscal 2024, 2023 and 2022 are as follows:\nYEAR ENDED MAY 31,\n(Dollars in millions)\n2024\n2023\n2022\nNet income\n$ \n5,700 \n$ \n5,070 \n$ \n6,046 \nAdd: Interest expense (income), net\n \n(161) \n \n(6) \n \n205 \nAdd: Income tax expense\n \n1,000 \n \n1,131 \n \n605 \nEarnings before interest and taxes\n$ \n6,539 \n$ \n6,195 \n$ \n6,856 \nEBIT Margin: Calculated as total NIKE, Inc. EBIT divided by total NIKE, Inc. Revenues. Our EBIT Margin calculation for fiscal \n2024, 2023 and 2022 are as follows:\nYEAR ENDED MAY 31,\n(Dollars in millions)\n2024\n2023\n2022\nNumerator\nEarnings before interest and taxes\n$ \n6,539 \n$ \n6,195 \n$ \n6,856 \nDenominator\nTotal NIKE, Inc. Revenues\n$ \n51,362 \n$ \n51,217 \n$ \n46,710 \nEBIT Margin\n \n12.7 \n%\n \n12.1 \n%\n \n14.7 \n%\n2024 FORM 10-K   31    \n\n\nReturn on Invested Capital (\"ROIC\"): Represents a performance measure that management believes is useful information in \nunderstanding the Company's ability to effectively manage invested capital. Our ROIC calculation as of May 31, 2024 and 2023 is \nas follows:\nFOR THE TRAILING FOUR QUARTERS ENDED\n(Dollars in millions)\nMAY 31, 2024\nMAY 31, 2023\nNumerator\nNet income \n$ \n5,700 \n$ \n5,070 \nAdd: Interest expense (income), net\n \n(161) \n \n(6) \nAdd: Income tax expense\n \n1,000 \n \n1,131 \nEarnings before interest and taxes\n \n6,539 \n \n6,195 \nIncome tax adjustment(1)\n \n(976) \n \n(1,130) \nEarnings before interest and after taxes\n$ \n5,563 \n$ \n5,065 \nAVERAGE FOR THE TRAILING FIVE QUARTERS \nENDED\nMAY 31, 2024\nMAY 31, 2023\nDenominator\nTotal debt(2)\n$ \n12,110 \n$ \n12,491 \nAdd: Shareholders' equity\n \n14,155 \n \n14,982 \nLess: Cash and equivalents and Short-term investments\n \n10,309 \n \n11,394 \nTotal invested capital\n$ \n15,956 \n$ \n16,079 \nRETURN ON INVESTED CAPITAL\n \n34.9 \n%\n \n31.5 \n%\n(1)\nEquals Earnings before interest and taxes multiplied by the effective tax rate as of each of the respective quarter ends.\n(2)\nTotal debt includes the following: 1) Current portion of long-term debt, 2) Notes Payable, 3) Current portion of operating lease liabilities, 4) Long-term \ndebt and 5) Operating lease liabilities.\nCurrency-neutral revenues: Currency-neutral revenues enhance visibility to underlying business trends, excluding the impact of \ntranslation arising from foreign currency exchange rate fluctuations. Currency-neutral revenues are calculated using actual \nexchange rates in use during the comparative prior year period in place of the exchange rates in use during the current period.\nWholesale equivalent revenues: References to wholesale equivalent revenues are intended to provide context as to the total \nsize of our NIKE Brand market footprint if we had no NIKE Direct operations. NIKE Brand wholesale equivalent revenues consist \nof (1) sales to external wholesale customers and (2) internal sales from our wholesale operations to our NIKE Direct operations, \nwhich are charged at prices comparable to those charged to external wholesale customers. Beginning in fiscal 2025, with the \ncontinued rollout of a new Enterprise Resource Planning Platform, the Company will replace wholesale equivalent revenues and \ngross margin drivers with a comparable U.S. GAAP metric. \nCOMPARABLE STORE SALES\nComparable store sales: This key metric, which excludes NIKE Brand Digital sales, comprises revenues from NIKE-owned in-\nline and factory stores for which all three of the following requirements have been met: (1) the store has been open at least one \nyear, (2) square footage has not changed by more than 15% within the past year and (3) the store has not been permanently \nrepositioned within the past year. Comparable store sales represents a performance metric that we believe is useful information \nfor management and investors in understanding the performance of our established NIKE-owned in-line and factory stores. \nManagement considers this metric when making financial and operating decisions. The method of calculating comparable store \nsales varies across the retail industry. As a result, our calculation of this metric may not be comparable to similarly titled metrics \nused by other companies.\n32\n       NIKE, INC.\n\n\nRESULTS OF OPERATIONS\n(Dollars in millions, except per share data)\nFISCAL 2024\nFISCAL 2023\n% CHANGE\nFISCAL 2022\n% CHANGE\nRevenues\n$ \n51,362 \n$ \n51,217 \n \n0 \n% $ \n46,710 \n \n10 \n%\nCost of sales\n \n28,475 \n \n28,925 \n \n-2 \n%  \n25,231 \n \n15 \n%\nGross profit\n \n22,887 \n \n22,292 \n \n3 \n%  \n21,479 \n \n4 \n%\nGross margin\n \n44.6 %\n \n43.5 %\n \n46.0 %\nDemand creation expense\n \n4,285 \n \n4,060 \n \n6 \n%  \n3,850 \n \n5 \n%\nOperating overhead expense\n \n12,291 \n \n12,317 \n \n0 \n%  \n10,954 \n \n12 \n%\nTotal selling and administrative expense\n \n16,576 \n \n16,377 \n \n1 \n%  \n14,804 \n \n11 \n%\n% of revenues\n \n32.3 %\n \n32.0 %\n \n31.7 %\nInterest expense (income), net\n \n(161) \n \n(6) \n \n— \n \n205 \n \n— \nOther (income) expense, net\n \n(228) \n \n(280) \n \n— \n \n(181) \n \n— \nIncome before income taxes\n \n6,700 \n \n6,201 \n \n8 \n%  \n6,651 \n \n-7 \n%\nIncome tax expense\n \n1,000 \n \n1,131 \n \n-12 \n%  \n605 \n \n87 \n%\nEffective tax rate\n \n14.9 %\n \n18.2 %\n \n9.1 %\nNET INCOME\n$ \n5,700 \n$ \n5,070 \n \n12 \n% $ \n6,046 \n \n-16 \n%\nDiluted earnings per common share\n$ \n3.73 \n$ \n3.23 \n \n15 \n% $ \n3.75 \n \n-14 \n%\n \n2024 FORM 10-K   33    \n\n\nCONSOLIDATED OPERATING RESULTS\nREVENUES\n(Dollars in millions)\nFISCAL \n2024\nFISCAL \n2023\n% \nCHANGE\n% CHANGE \nEXCLUDING \nCURRENCY \nCHANGES\n(1)\nFISCAL \n2022\n% \nCHANGE\n% CHANGE \nEXCLUDING \nCURRENCY \nCHANGES\n(1)\nNIKE, Inc. Revenues:\nNIKE Brand Revenues by:\nFootwear\n$ 33,427 $ 33,135 \n \n1 \n%\n \n1 \n% $ 29,143 \n \n14 \n%\n \n20 \n%\nApparel\n 13,775  13,843 \n \n0 \n%\n \n0 \n%  13,567 \n \n2 \n%\n \n8 \n%\nEquipment\n \n2,075  \n1,727 \n \n20 \n%\n \n20 \n%  \n1,624 \n \n6 \n%\n \n13 \n%\nGlobal Brand Divisions(2)\n \n45  \n58 \n \n-22 \n%\n \n-25 \n%  \n102 \n \n-43 \n%\n \n-43 \n%\nTotal NIKE Brand Revenues\n$ 49,322 $ 48,763 \n \n1 \n%\n \n1 \n% $ 44,436 \n \n10 \n%\n \n16 \n%\nConverse\n \n2,082  \n2,427 \n \n-14 \n%\n \n-15 \n%  \n2,346 \n \n3 \n%\n \n8 \n%\nCorporate(3)\n \n(42)  \n27  \n— \n \n— \n \n(72)  \n— \n \n— \nTOTAL NIKE, INC. REVENUES\n$ 51,362 $ 51,217 \n \n0 \n%\n \n1 \n% $ 46,710 \n \n10 \n%\n \n16 \n%\nSupplemental NIKE Brand Revenues Details:\nNIKE Brand Revenues by:\nSales to Wholesale Customers\n$ 27,758 $ 27,397 \n \n1 \n%\n \n2 \n% $ 25,608 \n \n7 \n%\n \n14 \n%\nSales through NIKE Direct\n 21,519  21,308 \n \n1 \n%\n \n1 \n%  18,726 \n \n14 \n%\n \n20 \n%\nGlobal Brand Divisions(2)\n \n45  \n58 \n \n-22 \n%\n \n-25 \n%  \n102 \n \n-43 \n%\n \n-43 \n%\nTOTAL NIKE BRAND REVENUES\n$ 49,322 $ 48,763 \n \n1 \n%\n \n1 \n% $ 44,436 \n \n10 \n%\n \n16 \n%\nNIKE Brand Revenues on a Wholesale Equivalent \nBasis(1):\nSales to Wholesale Customers\n$ 27,758 $ 27,397 \n \n1 \n%\n \n2 \n% $ 25,608 \n \n7 \n%\n \n14 \n%\nSales from our Wholesale Operations to NIKE Direct \nOperations\n 13,009  12,730 \n \n2 \n%\n \n2 \n%  10,543 \n \n21 \n%\n \n27 \n%\nTOTAL NIKE BRAND WHOLESALE EQUIVALENT \nREVENUES\n$ 40,767 $ 40,127 \n \n2 \n%\n \n2 \n% $ 36,151 \n \n11 \n%\n \n18 \n%\nNIKE Brand Wholesale Equivalent Revenues by:(1)\nMen's\n$ 20,868 $ 20,733 \n \n1 \n%\n \n1 \n% $ 18,797 \n \n10 \n%\n \n17 \n%\nWomen's\n \n8,586  \n8,606 \n \n0 \n%\n \n1 \n%  \n8,273 \n \n4 \n%\n \n11 \n%\nKids'\n \n5,111  \n5,038 \n \n1 \n%\n \n1 \n%  \n4,874 \n \n3 \n%\n \n10 \n%\nJordan Brand\n \n6,988  \n6,589 \n \n6 \n%\n \n7 \n%  \n5,122 \n \n29 \n%\n \n35 \n%\nOthers(4)\n \n(786)  \n(839) \n \n6 \n%\n \n6 \n%  \n(915) \n \n8 \n%\n \n-3 \n%\nTOTAL NIKE BRAND WHOLESALE EQUIVALENT \nREVENUES\n$ 40,767 $ 40,127 \n \n2 \n%\n \n2 \n% $ 36,151 \n \n11 \n%\n \n18 \n%\n(1)\nThe percent change excluding currency changes and the presentation of wholesale equivalent revenues represent non-GAAP financial measures. For \nadditional information, see \"Use of Non-GAAP Financial Measures\".\n(2)\nGlobal Brand Divisions revenues include NIKE Brand licensing and other miscellaneous revenues that are not part of a geographic operating segment.\n(3)\nCorporate revenues primarily consist of foreign currency hedge gains and losses related to revenues generated by entities within the NIKE Brand \ngeographic operating segments and Converse, but managed through our central foreign exchange risk management program. \n(4)\nOthers include products not allocated to Men's, Women's, Kids' and Jordan Brand, as well as certain adjustments that are not allocated to products \ndesignated by consumer.\n34\n       NIKE, INC.\n\n\nFISCAL 2024 NIKE BRAND REVENUE HIGHLIGHTS\nThe following tables present NIKE Brand revenues disaggregated by reportable operating segment, distribution channel and \nmajor product line:\nFISCAL 2024 COMPARED TO FISCAL 2023\n• NIKE, Inc. Revenues for fiscal 2024 were $51.4 billion compared to $51.2 billion for fiscal 2023. On a currency-neutral basis, \nNIKE, Inc. Revenues increased 1%, as higher revenues in Greater China and Asia Pacific & Latin America (\"APLA\"), which \neach increased NIKE, Inc. Revenues by 1 percentage point, were partially offset by lower revenues in Converse, which \nreduced NIKE, Inc. Revenues by approximately 1 percentage point. \n• NIKE Brand revenues, which represented over 90% of NIKE, Inc. Revenues, increased 1% on both a reported and currency-\nneutral basis. The increase, on a currency-neutral basis, was primarily due to higher revenues in the Jordan Brand and \nMen's.\n• NIKE Brand footwear revenues increased 1% on a currency-neutral basis, primarily due to higher revenues in the \nJordan Brand, Men's and Women's. Unit sales of footwear decreased 2%, while higher average selling price (\"ASP\") \nper pair contributed approximately 3 percentage points of footwear revenue growth. Higher ASP per pair was \nprimarily due to higher full-price ASP, net of discounts, on a wholesale equivalent basis, and a higher mix of NIKE \nDirect sales, partially offset by lower NIKE Direct ASP. \n• NIKE Brand apparel revenues were flat on a currency-neutral basis, primarily due to lower revenues in Men's and \nWomen's, offset by higher revenues in Kids'. Unit sales of apparel decreased 9%, while higher ASP per unit \ncontributed approximately 9 percentage points of apparel revenue growth. Higher ASP per unit was primarily due to \nhigher full-price, off-price and NIKE Direct ASPs.\n• NIKE Brand wholesale revenues increased 1% on a reported basis and 2% on a currency-neutral basis, compared to fiscal \n2023. Higher revenues in Greater China and APLA were partially offset by lower revenues in North America.\n• NIKE Direct revenues increased 1% to $21.5 billion in fiscal 2024 compared to $21.3 billion in fiscal 2023. On a currency-\nneutral basis, NIKE Direct revenues increased 1%, primarily driven by comparable store sales growth of 3% and the addition \nof new stores, partially offset by declines in NIKE Brand Digital sales of 3%, reflecting reduced digital traffic. For additional \ninformation regarding comparable store sales, including the definition, see \"Comparable Store Sales\". NIKE Brand Digital \nsales were $12.1 billion for fiscal 2024 compared to $12.4 billion for fiscal 2023. Within NIKE Direct revenues, there were \ncertain reclassifications made between NIKE-owned retail stores and NIKE Brand Digital in the prior period to conform to \ncurrent period presentation. The reclassifications did not have a material impact on our Consolidated Financial Statements. \n2024 FORM 10-K   35    \n28%\nEMEA\n14%\nAPLA\n43%\nNorth\nAmerica\n15%\nGreater\nChina\n56%\nWholesale\n44%\nNIKE\nDirect\n28%\nApparel\n4%\nEquipment\n68%\nFootwear\n\n\nGROSS MARGIN\nFISCAL 2024 COMPARED TO FISCAL 2023\nFor fiscal 2024, our consolidated gross profit increased 3% to $22,887 million compared to $22,292 million for fiscal 2023. Gross \nmargin increased 110 basis points to 44.6% for fiscal 2024 compared to 43.5% for fiscal 2023 due to the following:\nThe increase in gross margin for fiscal 2024 was primarily due to:\n• Higher NIKE Brand full-price ASP, net of discounts, on a wholesale equivalent basis (increasing gross margin approximately \n200 basis points), primarily due to strategic pricing actions;\n• Lower NIKE Brand product costs, on a wholesale equivalent basis (increasing gross margin approximately 10 basis points), \nprimarily due to lower ocean freight rates and logistics costs largely offset by higher product input costs; and\n• Lower other costs (increasing gross margin approximately 10 basis points).\nThis was partially offset by:\n• Unfavorable changes in net foreign currency exchange rates, including hedges (decreasing gross margin approximately 40 \nbasis points);\n• Lower margin in our NIKE Direct business (decreasing gross margin approximately 40 basis points);\n• Lower off-price margin, on a wholesale equivalent basis (decreasing gross margin approximately 20 basis points); and\n• Restructuring charges (decreasing gross margin approximately 10 basis points).\nTOTAL SELLING AND ADMINISTRATIVE EXPENSE\n(Dollars in millions)\nFISCAL 2024\nFISCAL 2023\n% CHANGE\nFISCAL 2022\n% CHANGE\nDemand creation expense(1)\n$ \n4,285 \n$ \n4,060 \n \n6% \n$ \n3,850 \n \n5% \nOperating overhead expense\n \n12,291 \n \n12,317 \n \n0% \n \n10,954 \n \n12% \nTotal selling and administrative expense\n$ \n16,576 \n$ \n16,377 \n \n1% \n$ \n14,804 \n \n11% \n% of revenues\n \n32.3 \n%\n \n32.0 \n%  \n30  bps\n \n31.7 \n%  \n30  bps\n(1)\nDemand creation expense consists of advertising and promotion costs, including costs of endorsement contracts, complimentary product, television, \ndigital and print advertising and media costs, brand events and retail brand presentation.\nFISCAL 2024 COMPARED TO FISCAL 2023\nDemand creation expense increased 6% for fiscal 2024, primarily due to higher advertising and marketing expense, digital \nmarketing and sports marketing expense. Changes in foreign currency exchange rates did not have a material impact on \nDemand creation expense.\nOperating overhead expense was flat, as lower wage-related expenses and lower technology spend were offset by restructuring \ncharges. Changes in foreign currency exchange rates did not have a material impact on Operating overhead expense.\nFor more information related to our organizational realignment and related costs, refer to Note 19 — Restructuring within the \naccompanying Notes to the Consolidated Financial Statements.\n36\n44.6\n(0.4)\n0.1\n0.1\n(0.1)\n(0.2)\n(0.4)\n43.5\nFY 24\nFULL PRICE NIKE \nBRAND AVERAGE \nSELLING PRICE \n(NET OF\nDISCOUNTS)*\nFOREIGN CURRENCY\nEXCHANGE RATES\n(INCL. HEDGES)\nNIKE BRAND\nPRODUCT COSTS*\nOFF-PRICE*\nNIKE DIRECT\nFY 23\nOTHER COSTS\n40.0\n42.0\n44.0\n46.0\n48.0\nRESTRUCTURING\nCHARGES\n2.0\n%\n*Wholesale equivalent\n       NIKE, INC.\n\n\nOTHER (INCOME) EXPENSE, NET\n(Dollars in millions)\nFISCAL 2024\nFISCAL 2023\nFISCAL 2022\nOther (income) expense, net\n$ \n(228) $ \n(280) $ \n(181) \nOther (income) expense, net comprises foreign currency conversion gains and losses from the remeasurement of monetary \nassets and liabilities denominated in non-functional currencies and the impact of certain foreign currency derivative instruments, \nas well as unusual or non-operating transactions that are outside the normal course of business.\nFISCAL 2024 COMPARED TO FISCAL 2023 \nOther (income) expense, net decreased from $280 million of other income, net in fiscal 2023 to $228 million in the current fiscal \nyear, primarily due to a net unfavorable change in foreign currency conversion gains and losses, including hedges, as well as net \nfavorable settlements of legal matters in the prior year. These items were partially offset by the loss recognized in the prior year \nupon completion of the sale of our entities in Argentina and Uruguay to a third-party distributor. \nFor more information related to the sale of our entities in Argentina and Uruguay to a third-party distributor, see Note 18 — \nDivestitures within the accompanying Notes to the Consolidated Financial Statements. \nWe estimate the combination of the translation of foreign currency-denominated profits from our international businesses, and the \nyear-over-year change in foreign currency-related gains and losses included in Other (income) expense, net had an unfavorable \nimpact on our Income before income taxes of $68 million for fiscal 2024. \nINCOME TAXES\nFISCAL 2024\nFISCAL 2023\n% CHANGE\nFISCAL 2022\n% CHANGE\nEffective tax rate\n \n14.9 \n%\n \n18.2 \n%\n(330) bps\n \n9.1 \n%\n910 bps\nFISCAL 2024 COMPARED TO FISCAL 2023 \nOur effective tax rate was 14.9% for fiscal 2024, compared to 18.2% for fiscal 2023, primarily due to changes in earnings mix and \none-time items including the benefit provided by the delay of the effective date of certain U.S. foreign tax credit regulations in the \nfirst quarter of fiscal 2024.\nThe OECD and the Inclusive Framework has put forth Pillar Two proposals that ensure a minimal level of taxation. Several \ncountries in which we operate, including several European Union member states, have adopted domestic legislation to implement \nthe Inclusive Framework's global corporate minimum tax rate of fifteen percent which will be effective for NIKE beginning June 1, \n2024. Other countries are also actively considering changes to their tax laws to adopt certain parts of the Inclusive Framework's \nproposals. Based on our current analysis of Pillar Two provisions, we do not expect these tax law changes to have a material \nimpact on our Consolidated Financial Statements; however, we will continue to evaluate their impact as additional information \nbecomes available.\n2024 FORM 10-K   37    \n\n\nOPERATING SEGMENTS\nAs discussed in Note 15 — Operating Segments and Related Information in the accompanying Notes to the Consolidated \nFinancial Statements, our operating segments are evidence of the structure of the Company's internal organization. The NIKE \nBrand segments are defined by geographic regions for operations participating in NIKE Brand sales activity. \nThe breakdown of Revenues is as follows:\n(Dollars in millions)\nFISCAL 2024 FISCAL 2023\n% CHANGE\n% CHANGE \nEXCLUDING \nCURRENCY \nCHANGES\n(1) FISCAL 2022\n% CHANGE\n% CHANGE \nEXCLUDING \nCURRENCY \nCHANGES\n(1)\nNorth America\n$ 21,396 $ 21,608 \n \n-1 \n%\n \n-1 \n% $ 18,353 \n \n18 \n%\n \n18 \n%\nEurope, Middle East & Africa\n \n13,607  \n13,418 \n \n1 \n%\n \n0 \n%  \n12,479 \n \n8 \n%\n \n21 \n%\nGreater China\n \n7,545  \n7,248 \n \n4 \n%\n \n8 \n%  \n7,547 \n \n-4 \n%\n \n4 \n%\nAsia Pacific & Latin America(2)\n \n6,729  \n6,431 \n \n5 \n%\n \n5 \n%  \n5,955 \n \n8 \n%\n \n17 \n%\nGlobal Brand Divisions(3)\n \n45  \n58 \n \n-22 \n%\n \n-25 \n%  \n102 \n \n-43 \n%\n \n-43 \n%\nTOTAL NIKE BRAND\n$ 49,322 $ 48,763 \n \n1 \n%\n \n1 \n% $ 44,436 \n \n10 \n%\n \n16 \n%\nConverse\n \n2,082  \n2,427 \n \n-14 \n%\n \n-15 \n%  \n2,346 \n \n3 \n%\n \n8 \n%\nCorporate(4)\n \n(42)  \n27  \n— \n \n— \n \n(72)  \n— \n \n— \nTOTAL NIKE, INC. REVENUES\n$ 51,362 $ 51,217 \n \n0 \n%\n \n1 \n% $ 46,710 \n \n10 \n%\n \n16 \n%\n(1) \nThe percent change excluding currency changes represents a non-GAAP financial measure. For additional information, see \"Use of Non-GAAP \nFinancial Measures\".\n(2) \nFor additional information on the transition of our NIKE Brand businesses within our Central and South America (\"CASA\") territory to a third-party \ndistributor, see Note 18 — Divestitures of the Notes to Consolidated Financial Statements.\n(3) \nGlobal Brand Divisions revenues include NIKE Brand licensing and other miscellaneous revenues that are not part of a geographic operating segment.\n(4) \nCorporate revenues primarily consist of foreign currency hedge gains and losses related to revenues generated by entities within the NIKE Brand \ngeographic operating segments and Converse, but managed through our central foreign exchange risk management program.\nThe primary financial measure used by the Company to evaluate performance is Earnings Before Interest and Taxes (\"EBIT\"). As \ndiscussed in Note 15 — Operating Segments and Related Information in the accompanying Notes to the Consolidated Financial \nStatements, certain corporate costs are not included in EBIT.\nThe breakdown of EBIT is as follows: \n(Dollars in millions)\nFISCAL 2024\nFISCAL 2023\n% CHANGE\nFISCAL 2022\n% CHANGE\nNorth America\n$ \n5,822 \n$ \n5,454 \n \n7 \n%\n$ \n5,114 \n \n7 \n%\nEurope, Middle East & Africa\n \n3,388 \n \n3,531 \n \n-4 \n%\n \n3,293 \n \n7 \n%\nGreater China\n \n2,309 \n \n2,283 \n \n1 \n%\n \n2,365 \n \n-3 \n%\nAsia Pacific & Latin America\n \n1,885 \n \n1,932 \n \n-2 \n%\n \n1,896 \n \n2 \n%\nGlobal Brand Divisions\n \n(4,720) \n \n(4,841) \n \n2 \n%\n \n(4,262) \n \n-14 \n%\nTOTAL NIKE BRAND(1)\n$ \n8,684 \n$ \n8,359 \n \n4 \n%\n$ \n8,406 \n \n-1 \n%\nConverse\n \n474 \n \n676 \n \n-30 \n%\n \n669 \n \n1 \n%\nCorporate\n \n(2,619) \n \n(2,840) \n \n8 \n%\n \n(2,219) \n \n-28 \n%\nTOTAL NIKE, INC. EARNINGS BEFORE \nINTEREST AND TAXES(1)\n$ \n6,539 \n$ \n6,195 \n \n6 \n%\n$ \n6,856 \n \n-10 \n%\nEBIT margin(1)\n \n12.7 %\n \n12.1 %\n \n14.7 %\nInterest expense (income), net\n \n(161) \n \n(6) \n \n— \n \n205 \n \n— \nTOTAL NIKE, INC. INCOME BEFORE INCOME \nTAXES\n$ \n6,700 \n$ \n6,201 \n \n8 \n%\n$ \n6,651 \n \n-7 \n%\n(1) \nTotal NIKE Brand EBIT, Total NIKE, Inc. EBIT and EBIT Margin represent non-GAAP financial measures. See \"Use of Non-GAAP Financial Measures\" \nfor additional information. \n38\n       NIKE, INC.\n\n\nNORTH AMERICA\n(Dollars in millions)\nFISCAL 2024 FISCAL 2023\n% CHANGE\n% CHANGE \nEXCLUDING \nCURRENCY \nCHANGES FISCAL 2022\n% CHANGE\n% CHANGE \nEXCLUDING \nCURRENCY \nCHANGES\nRevenues by:\nFootwear\n$ 14,537 $ 14,897 \n \n-2 \n%\n \n-2 \n% $ 12,228 \n \n22 \n%\n \n22 \n%\nApparel\n \n5,953  \n5,947 \n \n0 \n%\n \n0 \n%  \n5,492 \n \n8 \n%\n \n9 \n%\nEquipment\n \n906  \n764 \n \n19 \n%\n \n19 \n%  \n633 \n \n21 \n%\n \n21 \n%\nTOTAL REVENUES\n$ 21,396 $ 21,608 \n \n-1 \n%\n \n-1 \n% $ 18,353 \n \n18 \n%\n \n18 \n%\nRevenues by:\n \n \n \nSales to Wholesale Customers\n$ 11,004 $ 11,273 \n \n-2 \n%\n \n-2 \n% $ \n9,621 \n \n17 \n%\n \n18 \n%\nSales through NIKE Direct\n \n10,392  \n10,335 \n \n1 \n%\n \n1 \n%  \n8,732 \n \n18 \n%\n \n18 \n%\nTOTAL REVENUES\n$ 21,396 $ 21,608 \n \n-1 \n%\n \n-1 \n% $ 18,353 \n \n18 \n%\n \n18 \n%\nEARNINGS BEFORE INTEREST \nAND TAXES\n$ \n5,822 $ \n5,454 \n \n7 \n%\n$ \n5,114 \n \n7 \n%\nFISCAL 2024 COMPARED TO FISCAL 2023\n• North America revenues decreased 1% on a currency-neutral basis, primarily due to lower revenues in Men's and Women's, \npartially offset by higher revenues in the Jordan Brand. Wholesale revenues decreased 2%, primarily reflecting liquidation of \nexcess inventory in the prior year. NIKE Direct revenues increased 1%, primarily driven by the addition of new stores, \npartially offset by a decline in digital sales of 1%. Comparable store sales for fiscal 2024 were flat.\n• Footwear revenues decreased 2% on a currency-neutral basis due to lower revenues in Men's, Kids' and Women's, partially \noffset by higher revenues in the Jordan Brand. Unit sales of footwear decreased 7%, while higher ASP per pair contributed \napproximately 5 percentage points of footwear revenue growth. Higher ASP per pair was primarily due to higher full-price \nASP and a higher mix of NIKE Direct sales, partially offset by lower NIKE Direct ASP.\n• Apparel revenues were flat on a currency-neutral basis due to lower revenues in Men's, Women's and the Jordan Brand, \noffset by higher revenues in Kids'. Unit sales of apparel decreased 6%, while higher ASP per unit contributed approximately \n6 percentage points of apparel revenue growth. Higher ASP per unit was primarily due to higher full-price ASP.\nReported EBIT increased 7% reflecting lower revenues and the following:\n• Gross margin expansion of 220 basis points primarily due to higher full-price ASP, net of discounts, largely due to strategic \npricing actions and lower discounts, as well as lower product costs. Lower product costs were primarily due to lower ocean \nfreight rates and logistics costs, partially offset by higher product input costs.\n• Selling and administrative expense increase of 1% due to higher demand creation expense, partially offset by lower \noperating overhead expense. The increase in demand creation expense was primarily due to higher digital marketing and \nsports marketing expense. Operating overhead expense decreased primarily due to lower wage-related expenses, partially \noffset by higher other administrative costs.\n2024 FORM 10-K   39    \n\n\nEUROPE, MIDDLE EAST & AFRICA\n(Dollars in millions)\nFISCAL 2024 FISCAL 2023\n% CHANGE\n% CHANGE \nEXCLUDING \nCURRENCY \nCHANGES FISCAL 2022\n% CHANGE\n% CHANGE \nEXCLUDING \nCURRENCY \nCHANGES\nRevenues by:\nFootwear\n$ \n8,473 $ \n8,260 \n \n3 \n%\n \n1 \n% $ \n7,388 \n \n12 \n%\n \n25 \n%\nApparel\n \n4,380  \n4,566 \n \n-4 \n%\n \n-6 \n%  \n4,527 \n \n1 \n%\n \n14 \n%\nEquipment\n \n754  \n592 \n \n27 \n%\n \n24 \n%  \n564 \n \n5 \n%\n \n18 \n%\nTOTAL REVENUES\n$ 13,607 $ 13,418 \n \n1 \n%\n \n0 \n% $ 12,479 \n \n8 \n%\n \n21 \n%\nRevenues by:\n \n \n \nSales to Wholesale Customers\n$ \n8,562 $ \n8,522 \n \n0 \n%\n \n0 \n% $ \n8,377 \n \n2 \n%\n \n15 \n%\nSales through NIKE Direct\n \n5,045  \n4,896 \n \n3 \n%\n \n0 \n%  \n4,102 \n \n19 \n%\n \n33 \n%\nTOTAL REVENUES\n$ 13,607 $ 13,418 \n \n1 \n%\n \n0 \n% $ 12,479 \n \n8 \n%\n \n21 \n%\nEARNINGS BEFORE INTEREST \nAND TAXES\n$ \n3,388 $ \n3,531 \n \n-4 \n%\n$ \n3,293 \n \n7 \n%  \nFISCAL 2024 COMPARED TO FISCAL 2023 \n• EMEA revenues were flat on a currency-neutral basis, primarily due to lower revenues in Women's and Kids', offset by \nhigher revenues in Men's. Wholesale revenues were flat. NIKE Direct revenues were flat as a decline in digital sales of 5% \nwas offset by comparable store sales growth of 7% and the addition of new stores.\n• Footwear revenues increased 1% on a currency-neutral basis, primarily due to higher revenues in Men's, partially offset by \nlower revenues in Kids'. Unit sales of footwear decreased 4%, while higher ASP per pair contributed approximately 5 \npercentage points of footwear revenue growth. Higher ASP per pair was primarily due to higher full-price ASP and a higher \nmix of NIKE Direct sales, partially offset by lower NIKE Direct ASP.\n• Apparel revenues decreased 6% on a currency-neutral basis, primarily due to lower revenues in Men's and Women's. Unit \nsales of apparel decreased 17%, while higher ASP per unit contributed approximately 11 percentage points of apparel \nrevenue growth. Higher ASP per unit was primarily due to higher full-price and NIKE Direct ASPs.\nReported EBIT decreased 4% reflecting higher revenues and the following:\nGross margin contraction of 110 basis points largely due to unfavorable changes in standard foreign currency exchange \nrates, partially offset by higher full-price ASP, net of discounts, primarily due to strategic pricing actions, as well as lower \nother costs and lower product costs, reflecting lower ocean freight rates and logistics costs.\n• Selling and administrative expense increase of 3% due to higher demand creation and operating overhead expense. \nDemand creation expense increased primarily due to higher advertising and marketing expense, unfavorable changes in \nforeign exchange rates and higher sports marketing expense. Operating overhead expense increased primarily due to \nunfavorable changes in foreign currency exchange rates.\n40\n•\n       NIKE, INC.\n\n\n GREATER CHINA\n(Dollars in millions)\nFISCAL 2024 FISCAL 2023\n% CHANGE\n% CHANGE \nEXCLUDING \nCURRENCY \nCHANGES FISCAL 2022\n% CHANGE\n% CHANGE \nEXCLUDING \nCURRENCY \nCHANGES\nRevenues by:\nFootwear\n$ \n5,552 $ \n5,435 \n \n2 \n%\n \n6 \n% $ \n5,416 \n \n0 \n%\n \n8 \n%\nApparel\n \n1,828  \n1,666 \n \n10 \n%\n \n14 \n%  \n1,938 \n \n-14 \n%\n \n-7 \n%\nEquipment\n \n165  \n147 \n \n12 \n%\n \n17 \n%  \n193 \n \n-24 \n%\n \n-18 \n%\nTOTAL REVENUES\n$ \n7,545 $ \n7,248 \n \n4 \n%\n \n8 \n% $ \n7,547 \n \n-4 \n%\n \n4 \n%\nRevenues by:\n \n \n \nSales to Wholesale Customers\n$ \n4,262 $ \n3,866 \n \n10 \n%\n \n15 \n% $ \n4,081 \n \n-5 \n%\n \n2 \n%\nSales through NIKE Direct\n \n3,283  \n3,382 \n \n-3 \n%\n \n1 \n%  \n3,466 \n \n-2 \n%\n \n5 \n%\nTOTAL REVENUES\n$ \n7,545 $ \n7,248 \n \n4 \n%\n \n8 \n% $ \n7,547 \n \n-4 \n%\n \n4 \n%\nEARNINGS BEFORE INTEREST \nAND TAXES\n$ \n2,309 $ \n2,283 \n \n1 \n%  \n$ \n2,365 \n \n-3 \n%  \nFISCAL 2024 COMPARED TO FISCAL 2023 \n• Greater China revenues increased 8% on a currency-neutral basis due to higher revenues in Men's, Women's, the Jordan \nBrand and Kids'. Wholesale revenues increased 15%. NIKE Direct revenues increased 1%, driven by comparable store \nsales growth of 1% and the addition of new stores, partially offset by a decline in digital sales of 8%.\n• Footwear revenues increased 6% on a currency-neutral basis due to higher revenues in Men's, Women's, the Jordan Brand \nand Kids'. Unit sales of footwear increased 8%, while lower ASP per pair reduced footwear revenues by approximately 2 \npercentage points. Lower ASP per pair was primarily due to lower NIKE Direct ASP, partially offset by higher full-price ASP.\n• Apparel revenues increased 14% on a currency-neutral basis, primarily due to higher revenues in Men's and Women's. Unit \nsales of apparel increased 7%, while higher ASP per unit contributed approximately 7 percentage points of apparel revenue \ngrowth. Higher ASP per unit was primarily due to higher NIKE Direct, full-price and off-price ASPs as well as a higher mix of \nfull-price sales.\nReported EBIT increased 1% reflecting higher revenues and the following:\n• Gross margin contraction of approximately 80 basis points, primarily due to unfavorable changes in standard foreign \ncurrency exchange rates, partially offset by higher full-price ASP, net of discounts, and lower other costs. The higher full-\nprice ASP, net of discounts, was largely due to strategic pricing actions, partially offset by product mix.\n• Selling and administrative expense increase of 2% due to higher demand creation and operating overhead expense. \nDemand creation expense increased primarily due to higher advertising and marketing expense and retail brand \npresentation expense, partially offset by favorable changes in foreign currency exchange rates. Operating overhead \nexpense increased primarily due to higher other administrative costs, partially offset by favorable changes in foreign \ncurrency exchange rates. \n2024 FORM 10-K   41    \n\n\nASIA PACIFIC & LATIN AMERICA\n(Dollars in millions)\nFISCAL 2024 FISCAL 2023\n% CHANGE\n% CHANGE \nEXCLUDING \nCURRENCY \nCHANGES FISCAL 2022\n% CHANGE\n% CHANGE \nEXCLUDING \nCURRENCY \nCHANGES\nRevenues by:\nFootwear\n$ \n4,865 $ \n4,543 \n \n7 \n%\n \n7 \n% $ \n4,111 \n \n11 \n%\n \n19 \n%\nApparel\n \n1,614  \n1,664 \n \n-3 \n%\n \n-2 \n%  \n1,610 \n \n3 \n%\n \n13 \n%\nEquipment\n \n250  \n224 \n \n12 \n%\n \n12 \n%  \n234 \n \n-4 \n%\n \n4 \n%\nTOTAL REVENUES\n$ \n6,729 $ \n6,431 \n \n5 \n%\n \n5 \n% $ \n5,955 \n \n8 \n%\n \n17 \n%\nRevenues by:\nSales to Wholesale Customers\n$ \n3,930 $ \n3,736 \n \n5 \n%\n \n6 \n% $ \n3,529 \n \n6 \n%\n \n14 \n%\nSales through NIKE Direct\n \n2,799  \n2,695 \n \n4 \n%\n \n4 \n%  \n2,426 \n \n11 \n%\n \n22 \n%\nTOTAL REVENUES\n$ \n6,729 $ \n6,431 \n \n5 \n%\n \n5 \n% $ \n5,955 \n \n8 \n%\n \n17 \n%\nEARNINGS BEFORE INTEREST \nAND TAXES\n$ \n1,885 $ \n1,932 \n \n-2 \n%\n$ \n1,896 \n \n2 \n%\nWe completed the sale of our entity in Chile and our entities in Argentina and Uruguay to third-party distributors in the first and \nsecond quarters of fiscal 2023, respectively. The impacts of closing these transactions are included within Corporate and are not \nreflected in the APLA operating segment results. This completed the transition of our NIKE Brand businesses within our CASA \nmarketplace, which now reflects a full distributor operating model. For more information see Note 18 — Divestitures within the \naccompanying Notes to the Consolidated Financial Statements.\nFISCAL 2024 COMPARED TO FISCAL 2023\n• APLA revenues increased 5% on a currency-neutral basis primarily due to higher revenues in Southeast Asia & India, \nMexico and Japan. Within our CASA territory, the transition of our Chile, Argentina and Uruguay entities to a third-party \ndistributor operating model did not have a material impact on APLA revenues. Revenues increased due to overall growth in \nMen's, Women's, the Jordan Brand and Kids'. Wholesale revenues increased 6%. NIKE Direct revenues increased 4%, \ndriven by comparable store sales growth of 10% and the addition of new stores, partially offset by a decline in digital sales of \n2%.\n• Footwear revenues increased 7% on a currency-neutral basis due to higher revenues in Men's, Women's, the Jordan Brand \nand Kids'. Unit sales of footwear increased 6%, while higher ASP per pair contributed approximately 1 percentage point of \nfootwear revenue growth. Higher ASP per pair was primarily due to higher full-price ASP, off-price ASP and a higher mix of \nNIKE Direct sales, partially offset by lower NIKE Direct ASP.\n• Apparel revenues decreased 2% on a currency-neutral basis, primarily due to lower revenues in Men's and Women's, \npartially offset by higher revenues in the Jordan Brand. Unit sales of apparel decreased 9%, while higher ASP per unit \ncontributed approximately 7 percentage points of apparel revenue growth. Higher ASP per unit was primarily due to higher \nfull-price ASP, off-price ASP and a higher mix of NIKE Direct sales, partially offset by lower NIKE Direct ASP.\nReported EBIT decreased 2% reflecting higher revenues and the following:\n• Gross margin contraction of approximately 220 basis points primarily due to unfavorable changes in standard foreign \ncurrency exchange rates, lower margin in NIKE Direct and higher product costs, reflecting higher product input costs and \nproduct mix. This was partially offset by higher full-price ASP, net of discounts, primarily due to product mix and strategic \npricing actions.\n• Selling and administrative expense increase of 4% due to higher demand creation and operating overhead expense. \nDemand creation expense increased primarily due to higher digital marketing and sports marketing expense. Operating \noverhead expense increased primarily due to higher other administrative costs.\n42\n       NIKE, INC.\n\n\nGLOBAL BRAND DIVISIONS\n(Dollars in millions)\nFISCAL 2024 FISCAL 2023\n% CHANGE\n% CHANGE \nEXCLUDING \nCURRENCY \nCHANGES FISCAL 2022\n% CHANGE\n% CHANGE \nEXCLUDING \nCURRENCY \nCHANGES\nRevenues\n$ \n45 $ \n58 \n \n-22 \n%\n \n-25 \n% $ \n102 \n \n-43 \n%\n \n-43 \n%\nEarnings (Loss) Before Interest and Taxes\n$ \n(4,720) $ \n(4,841) \n \n2 \n%\n$ \n(4,262) \n \n-14 \n%  \nGlobal Brand Divisions primarily represent demand creation and operating overhead expense, including product creation and \ndesign expenses that are centrally managed for the NIKE Brand, as well as costs associated with NIKE Direct global digital \noperations and enterprise technology. Global Brand Divisions revenues include NIKE Brand licensing and other miscellaneous \nrevenues that are not part of a geographic operating segment.\nFISCAL 2024 COMPARED TO FISCAL 2023 \nGlobal Brand Divisions' loss before interest and taxes decreased 2% primarily due to lower operating overhead expense, partially \noffset by higher demand creation expense. Lower operating overhead expense was primarily due to lower wage-related \nexpenses, technology spend and other administrative costs. The increase in demand creation expense was primarily due to \nhigher advertising and marketing expense as well as digital marketing.\nCONVERSE\n(Dollars in millions)\nFISCAL 2024 FISCAL 2023\n% CHANGE\n% CHANGE \nEXCLUDING \nCURRENCY \nCHANGES FISCAL 2022\n% CHANGE\n% CHANGE \nEXCLUDING \nCURRENCY \nCHANGES\nRevenues by:\nFootwear\n$ \n1,800 $ \n2,155 \n \n-16 \n%\n \n-17 \n% $ \n2,094 \n \n3 \n%\n \n8 \n%\nApparel\n \n93  \n90 \n \n3 \n%\n \n4 \n%  \n103 \n \n-13 \n%\n \n-7 \n%\nEquipment\n \n37  \n28 \n \n32 \n%\n \n34 \n%  \n26 \n \n8 \n%\n \n16 \n%\nOther(1)\n \n152  \n154 \n \n-1 \n%\n \n-2 \n%  \n123 \n \n25 \n%\n \n25 \n%\nTOTAL REVENUES\n$ \n2,082 $ \n2,427 \n \n-14 \n%\n \n-15 \n% $ \n2,346 \n \n3 \n%\n \n8 \n%\nRevenues by:\nSales to Wholesale Customers\n$ \n1,098 $ \n1,299 \n \n-15 \n%\n \n-16 \n% $ \n1,292 \n \n1 \n%\n \n7 \n%\nSales through Direct to Consumer\n \n832  \n974 \n \n-15 \n%\n \n-14 \n%  \n931 \n \n5 \n%\n \n8 \n%\nOther(1)\n \n152  \n154 \n \n-1 \n%\n \n-2 \n%  \n123 \n \n25 \n%\n \n25 \n%\nTOTAL REVENUES\n$ \n2,082 $ \n2,427 \n \n-14 \n%\n \n-15 \n% $ \n2,346 \n \n3 \n%\n \n8 \n%\nEARNINGS BEFORE INTEREST \nAND TAXES\n$ \n474 $ \n676 \n \n-30 \n%\n$ \n669 \n \n1 \n%\n(1) \nOther revenues consist of territories serviced by third-party licensees who pay royalties to Converse for the use of its registered trademarks and other \nintellectual property rights. We do not own the Converse trademarks in Japan and accordingly do not earn revenues in Japan.\nFISCAL 2024 COMPARED TO FISCAL 2023\n• Converse revenues decreased 15% on a currency-neutral basis primarily due to declines in North America and Western \nEurope. Combined unit sales within the wholesale and direct to consumer channels decreased 12%, driven primarily by a \ndecrease in wholesale, while ASP decreased 3%, primarily driven by increased promotional activity in direct to consumer. \n• Wholesale revenues decreased 16% on a currency-neutral basis, driven by declines in all geographies.\n• Direct to consumer revenues decreased 14% on a currency-neutral basis as declines in North America and Western Europe, \ndriven by reduced traffic, were partially offset by growth in Asia.\nReported EBIT decreased 30% reflecting lower revenues and the following:\n• Gross margin contraction of approximately 130 basis points due to unfavorable changes in standard foreign currency \nexchange rates, lower full-price ASP, net of discounts, higher other costs and lower margin in direct to consumer, partially \noffset by lower ocean freight rates.\n• Selling and administrative expense decrease of 2% due to lower operating overhead expense, primarily as a result of lower \nwage-related expenses.\n2024 FORM 10-K   43    \n\n\nCORPORATE\n(Dollars in millions)\nFISCAL 2024\nFISCAL 2023\n% CHANGE\nFISCAL 2022\n% CHANGE\nRevenues\n$ \n(42) $ \n27  \n— \n$ \n(72)  \n— \nEarnings (Loss) Before Interest and Taxes\n$ \n(2,619) $ \n(2,840) \n \n8 \n% $ \n(2,219) \n \n-28 \n%\nCorporate revenues primarily consist of foreign currency hedge gains and losses related to revenues generated by entities within \nthe NIKE Brand geographic operating segments and Converse, but managed through our central foreign exchange risk \nmanagement program. \nThe Corporate loss before interest and taxes primarily consists of unallocated general and administrative expenses, including \nexpenses associated with centrally managed departments; depreciation and amortization related to our corporate headquarters; \nunallocated insurance, benefit and compensation programs, including stock-based compensation; and certain foreign currency \ngains and losses.\nIn addition to the foreign currency gains and losses recognized in Corporate revenues, foreign currency results in Corporate \ninclude gains and losses resulting from the difference between actual foreign currency exchange rates and standard rates used \nto record non-functional currency denominated product purchases within the NIKE Brand geographic operating segments and \nConverse; related foreign currency hedge results; conversion gains and losses arising from remeasurement of monetary assets \nand liabilities in non-functional currencies; and certain other foreign currency derivative instruments. \nFISCAL 2024 COMPARED TO FISCAL 2023 \nCorporate's loss before interest and taxes decreased $221 million during fiscal 2024, primarily due to the following:\n• a favorable change in net foreign currency gains and losses of $588 million related to the difference between actual foreign \ncurrency exchange rates and standard foreign currency exchange rates assigned to the NIKE Brand geographic operating \nsegments and Converse, net of hedge gains and losses; these results are reported as a component of consolidated Gross \nprofit;\n• a favorable change of $80 million primarily related to lower wage-related expenses, partially offset by higher professional \nservices, reported as a component of consolidated Operating overhead expense; \n• a favorable change of $27 million primarily related to the loss recognized in the prior year upon completion of the sale of our \nentities in Argentina and Uruguay to a third-party distributor, partially offset by the remeasurement of monetary assets and \nliabilities denominated in non-functional currencies and the impact of certain foreign currency derivative instruments, as well \nas net favorable settlements of legal matters in the prior year, reported as a component of consolidated Other (income) \nexpense, net; and\n• an unfavorable change of $443 million related to restructuring charges, $379 million reported as a component of \nconsolidated Operating overhead expense and $64 million reported as a component of consolidated Cost of sales.\nFOREIGN CURRENCY EXPOSURES AND HEDGING PRACTICES\nOVERVIEW\nAs a global company with significant operations outside the United States, in the normal course of business we are exposed to \nrisk arising from changes in currency exchange rates. Our primary foreign currency exposures arise from the recording of \ntransactions denominated in non-functional currencies and the translation of foreign currency denominated results of operations, \nfinancial position and cash flows into U.S. Dollars.\nOur foreign exchange risk management program is intended to lessen both the positive and negative effects of currency \nfluctuations on our consolidated results of operations, financial position and cash flows. We manage global foreign exchange risk \ncentrally on a portfolio basis to address those risks material to NIKE, Inc. We manage these exposures by taking advantage of \nnatural offsets and currency correlations existing within the portfolio and, where practical and material, by hedging a portion of the \nremaining exposures using derivative instruments such as forward contracts and options. As described below, the implementation \nof the NIKE Trading Company (\"NTC\") and our foreign currency adjustment program enhanced our ability to manage our foreign \nexchange risk by increasing the natural offsets and currency correlation benefits existing within our portfolio of foreign exchange \nexposures. Our hedging policy is designed to partially or entirely offset the impact of exchange rate changes on the underlying \nnet exposures being hedged. Where exposures are hedged, our program has the effect of delaying the impact of exchange rate \nmovements on our Consolidated Financial Statements; the length of the delay is dependent upon hedge horizons. We do not \nhold or issue derivative instruments for trading or speculative purposes.\n44\n       NIKE, INC.\n\n\nRefer to Note 4 — Fair Value Measurements and Note 12 — Risk Management and Derivatives in the accompanying Notes to \nthe Consolidated Financial Statements for additional description of outstanding derivatives at each reported period end.\nTRANSACTIONAL EXPOSURES\nWe conduct business in various currencies and have transactions which subject us to foreign currency risk. Our most significant \ntransactional foreign currency exposures are:\n• Product Costs — NIKE's product costs are exposed to fluctuations in foreign currencies in the following ways:\n1.\nProduct purchases denominated in currencies other than the functional currency of the transacting entity:\na.\nCertain NIKE entities purchase product from the NTC, a wholly-owned sourcing hub that buys NIKE branded \nproducts from third-party factories, predominantly in U.S. Dollars. The NTC, whose functional currency is the \nU.S. Dollar, then sells the products to NIKE entities in their respective functional currencies. NTC sales to a NIKE \nentity with a different functional currency results in a foreign currency exposure for the NTC.\nb.\nOther NIKE entities purchase product directly from third-party factories predominantly in U.S. Dollars. These \npurchases generate a foreign currency exposure for those NIKE entities with a functional currency other than the \nU.S. Dollar.\nIn both purchasing scenarios, a weaker U.S. Dollar reduces inventory costs incurred by NIKE whereas a stronger \nU.S. Dollar increases its cost.\n2.\nFactory input costs: NIKE operates a foreign currency adjustment program with certain factories. The program is \ndesigned to more effectively manage foreign currency risk by assuming certain of the factories' foreign currency \nexposures, some of which are natural offsets to our existing foreign currency exposures. Under this program, our \npayments to these factories are adjusted for rate fluctuations in the basket of currencies (\"factory currency exposure \nindex\") in which the labor, materials and overhead costs incurred by the factories in the production of NIKE branded \nproducts (\"factory input costs\") are denominated.\nAs an offset to the impacts of the fluctuating U.S. Dollar on our non-functional currency denominated product purchases \ndescribed above, a strengthening U.S. Dollar against the foreign currencies within the factory currency exposure indices \nreduces NIKE's U.S. Dollar inventory cost. Conversely, a weakening U.S. Dollar against the indexed foreign currencies \nincreases our inventory cost.\n• Non-Functional Currency Denominated External Sales — A portion of our NIKE Brand and Converse revenues associated \nwith European operations are earned in currencies other than the Euro (e.g., the British Pound) but are recognized at a \nsubsidiary that uses the Euro as its functional currency. These sales generate a foreign currency exposure.\n• Other Costs — Non-functional currency denominated costs, such as endorsement contracts, also generate foreign currency \nrisk, though to a lesser extent. \n• Non-Functional Currency Denominated Monetary Assets and Liabilities — Our global subsidiaries have various assets and \nliabilities, primarily receivables and payables, including intercompany receivables and payables, denominated in currencies \nother than their functional currencies. These balance sheet items are subject to remeasurement which may create \nfluctuations in Other (income) expense, net within our Consolidated Statements of Income.\nMANAGING TRANSACTIONAL EXPOSURES\nTransactional exposures are managed on a portfolio basis within our foreign currency risk management program. We manage \nthese exposures by taking advantage of natural offsets and currency correlations that exist within the portfolio and may also elect \nto use currency forward and option contracts to hedge the remaining effect of exchange rate fluctuations on probable forecasted \nfuture cash flows, including certain product cost exposures, non-functional currency denominated external sales and other costs \ndescribed above. Generally, these are accounted for as cash flow hedges. \nCertain currency forward contracts used to manage the foreign exchange exposure of non-functional currency denominated \nmonetary assets and liabilities subject to remeasurement are not formally designated as hedging instruments. Accordingly, \nchanges in fair value of these instruments are recognized in Other (income) expense, net and are intended to offset the foreign \ncurrency impact of the remeasurement of the related non-functional currency denominated asset or liability being hedged. \n2024 FORM 10-K   45    \n\n\nTRANSLATIONAL EXPOSURES\nMany of our foreign subsidiaries operate in functional currencies other than the U.S. Dollar. Fluctuations in currency exchange \nrates create volatility in our reported results as we are required to translate the balance sheets, operational results and cash flows \nof these subsidiaries into U.S. Dollars for consolidated reporting. The translation of foreign subsidiaries' non-U.S. Dollar \ndenominated balance sheets into U.S. Dollars for consolidated reporting results in a cumulative translation adjustment to \nAccumulated other comprehensive income (loss) within Shareholders' equity. In the translation of our Consolidated Statements of \nIncome, a weaker U.S. Dollar in relation to foreign functional currencies benefits our consolidated earnings whereas a stronger \nU.S. Dollar reduces our consolidated earnings. The impact of foreign exchange rate fluctuations on the translation of our \nconsolidated Revenues was a detriment of approximately $141 million for the year ended May 31, 2024. The impact of foreign \nexchange rate fluctuations on the translation of our Income before income taxes was a benefit of approximately $48 million for \nthe year ended May 31, 2024.\nMANAGING TRANSLATIONAL EXPOSURES\nTo minimize the impact of translating foreign currency denominated revenues and expenses into U.S. Dollars for consolidated \nreporting, certain foreign subsidiaries use excess cash to purchase U.S. Dollar denominated available-for-sale investments. The \nvariable future cash flows associated with the purchase and subsequent sale of these U.S. Dollar denominated investments at \nnon-U.S. Dollar functional currency subsidiaries creates a foreign currency exposure that qualifies for hedge accounting under \nU.S. GAAP. We utilize forward contracts and/or options to mitigate the variability of the forecasted future purchases and sales of \nthese U.S. Dollar investments. The combination of the purchase and sale of the U.S. Dollar investment and the hedging \ninstrument has the effect of partially offsetting the year-over-year foreign currency translation impact on net earnings in the period \nthe investments are sold. Hedges of the purchase of U.S. Dollar denominated available-for-sale investments are accounted for as \ncash flow hedges. \nWe estimate the combination of translation of foreign currency-denominated profits from our international businesses and the \nyear-over-year change in foreign currency related gains and losses included in Other (income) expense, net had an unfavorable \nimpact of approximately $68 million on our Income before income taxes for the year ended May 31, 2024.\nNET INVESTMENTS IN FOREIGN SUBSIDIARIES\nWe are also exposed to the impact of foreign exchange fluctuations on our investments in wholly-owned foreign subsidiaries \ndenominated in a currency other than the U.S. Dollar, which could adversely impact the U.S. Dollar value of these investments \nand therefore the value of future repatriated earnings. We have, in the past, hedged and may, in the future, hedge net investment \npositions in certain foreign subsidiaries to mitigate the effects of foreign exchange fluctuations on these net investments. These \nhedges are accounted for as net investment hedges in accordance with U.S. GAAP. There were no outstanding net investment \nhedges as of May 31, 2024 and 2023. There were no cash flows from net investment hedge settlements for the years ended \nMay 31, 2024, 2023 and 2022.\nLIQUIDITY AND CAPITAL RESOURCES\nCASH FLOW ACTIVITY\nCash provided (used) by operations was an inflow of $7,429 million for fiscal 2024, compared to $5,841 million for fiscal 2023. \nNet income, adjusted for non-cash items, generated $6,713 million of operating cash inflow for fiscal 2024, compared to $6,354 \nmillion for fiscal 2023. The net change in working capital and other assets and liabilities resulted in an increase to Cash provided \n(used) by operations of $716 million for fiscal 2024 compared to a decrease of $513 million for fiscal 2023. For fiscal 2024, the \nfavorable net change in working capital compared to the prior year was primarily impacted by favorable changes to Inventories \ndue to reduced inventory purchases and improved lead times, partially offset by unfavorable changes to Accounts receivable due \nto the timing of wholesale shipments.\nCash provided (used) by investing activities was an inflow of $894 million for fiscal 2024, compared to an inflow of $564 million for \nfiscal 2023, primarily driven by the net change in short-term investments (including sales, maturities and purchases). For fiscal \n2024, the net change in short-term investments resulted in a cash inflow of $1,721 million compared to a cash inflow of $1,481 \nmillion for fiscal 2023.\nCash provided (used) by financing activities was an outflow of $5,888 million for fiscal 2024 compared to an outflow of $7,447 \nmillion for fiscal 2023. The decreased outflow in fiscal 2024 was driven by lower share repurchases of $4,250 million for fiscal \n2024 compared to $5,480 million for fiscal 2023, partially offset by higher dividend payments of $2,169 million for fiscal 2024 \ncompared to $2,012 million for fiscal 2023. \n46\n       NIKE, INC.\n\n\nIn fiscal 2024, we purchased a total of 41.4 million shares of NIKE's Class B Common Stock for $4.3 billion (an average price of \n$102.72 per share) under the four-year, $18 billion share repurchase plan authorized by the Board of Directors in June 2022. As \nof May 31, 2024, we had repurchased 84.9 million shares at a cost of approximately $9.1 billion (an average price of $106.65 per \nshare) under this program. We continue to expect funding of share repurchases will come from operating cash flows. The timing \nand the amount of share repurchases will be dictated by our capital needs and stock market conditions.\nCAPITAL RESOURCES\nOn July 21, 2022, we filed a shelf registration statement (the \"Shelf\") with the U.S. Securities and Exchange Commission (the \n\"SEC\") which permits us to issue an unlimited amount of debt securities from time to time. The Shelf expires on July 21, 2025.\nOn March 11, 2022, we entered into a five-year committed credit facility agreement with a syndicate of banks which provides for \nup to $2 billion of borrowings, with the option to increase borrowings up to $3 billion in total with lender approval. The facility \nmatures on March 11, 2027, with options to extend the maturity date up to an additional two years. Refer to Note 5 — Short-Term \nBorrowings and Credit Lines for additional information. \nOn March 8, 2024, we entered into a 364-day committed credit facility agreement with a syndicate of banks which provides for up \nto $1 billion of borrowings, with the option to increase borrowings up to $1.5 billion in total with lender approval. The facility \nmatures on March 7, 2025, with an option to extend the maturity date an additional 364 days. This facility replaces the prior $1 \nbillion 364-day credit facility agreement entered into on March 10, 2023, which matured on March 8, 2024. Refer to Note 5 — \nShort-Term Borrowings and Credit Lines for additional information.\nWe currently have long-term debt ratings of AA- and A1 from Standard and Poor's Corporation and Moody's Investor Services, \nrespectively. As it relates to our committed credit facilities entered into on March 11, 2022 and March 8, 2024, if our long-term \ndebt ratings were to decline, the facility fees and interest rates would increase. Conversely, if our long-term debt ratings were to \nimprove, the facility fees and interest rates would decrease. Changes in our long-term debt ratings would not trigger acceleration \nof maturity of any then-outstanding borrowings or any future borrowings under the committed credit facilities. Under these \nfacilities, we have agreed to various covenants. These covenants include limits on the disposal of assets and the amount of debt \nsecured by liens we may incur. In the event we were to have any borrowings outstanding under these facilities, failed to meet any \ncovenant and were unable to obtain a waiver from a majority of the banks in the applicable syndicate, any borrowings would \nbecome immediately due and payable. As of May 31, 2024, we were in full compliance with each of these covenants, and we \nbelieve it is unlikely we will fail to meet any of these covenants in the foreseeable future.\nLiquidity is also provided by our $3 billion commercial paper program. As of and for the fiscal years ended May 31, 2024 and \n2023, we did not have any borrowings outstanding under our $3 billion program. We may issue commercial paper or other debt \nsecurities depending on general corporate needs. \nTo date, we have not experienced difficulty accessing the capital or credit markets; however, future volatility may increase costs \nassociated with issuing commercial paper or other debt instruments or affect our ability to access those markets.\nAs of May 31, 2024, we had Cash and equivalents and Short-term investments totaling $11.6 billion, primarily consisting of \ncommercial paper, corporate notes, deposits held at major banks, money market funds, U.S. Treasury obligations and other \ninvestment grade fixed-income securities. Our fixed-income investments are exposed to both credit and interest rate risk. All of \nour investments are investment grade to minimize our credit risk. While individual securities have varying durations, as of \nMay 31, 2024, the weighted-average days to maturity of our cash equivalents and short-term investments portfolio was 65 days.\nWe believe that existing Cash and equivalents, Short-term investments and cash generated by operations, together with access \nto external sources of funds as described above, will be sufficient to meet our domestic and foreign capital needs in the \nforeseeable future.\nOur material cash requirements as of May 31, 2024, were as follows:\n•\nDebt Obligations — Refer to Note 5 — Short-Term Borrowings and Credit Lines and Note 6 — Long-Term Debt in the \naccompanying Notes to the Consolidated Financial Statements for additional information.\n•\nOperating Leases — Refer to Note 17 — Leases in the accompanying Notes to the Consolidated Financial Statements \nfor additional information.\n2024 FORM 10-K   47    \n\n\n•\nEndorsement Contracts — As of May 31, 2024, we had endorsement contract obligations of $10.6 billion, with $1.7 \nbillion payable within 12 months, representing approximate amounts of base compensation and minimum guaranteed \nroyalty fees we are obligated to pay athlete, public figure, sport team and league endorsers of our products. Actual \npayments under some contracts may be higher than these amounts as these contracts provide for bonuses to be paid \nto the endorsers based upon athletic achievements and/or royalties on product sales in future periods. Actual payments \nunder some contracts may also be lower as these contracts include provisions for reduced payments if athletic \nperformance declines in future periods. In addition to the cash payments, we are obligated to furnish our endorsers with \nNIKE product for their use. It is not possible to determine how much we will spend on this product on an annual basis as \nthe amount of product provided to the endorsers will depend on many factors and the contracts generally do not \nstipulate a minimum amount of cash to be spent on the product.\n•\nProduct Purchase Obligations — As of May 31, 2024, we had product purchase obligations of $5.7 billion, all of which \nare payable within the next 12 months. Product purchase obligations represent agreements (including open purchase \norders) to purchase products in the ordinary course of business that are enforceable and legally binding and specify all \nsignificant terms. We generally order product at least four to five months in advance of sale based primarily on \nadvanced orders received from external wholesale customers and internal orders from our direct to consumer \noperations. In some cases, prices are subject to change throughout the production process.\n•\nOther Purchase Obligations — As of May 31, 2024, we had $3.5 billion of other purchase obligations, with $1.9 billion \npayable within the next 12 months. Other purchase obligations primarily include technology investments, construction, \nservice and marketing commitments, including marketing commitments associated with endorsement contracts, made \nin the ordinary course of business. The amounts represent the minimum payments required by legally binding contracts \nand agreements that specify all significant terms, and may include open purchase orders for non-product purchases. \nIn addition to the above, we have long-term obligations for uncertain tax positions and various post-retirement benefits for which \nwe are not able to reasonably estimate when cash payments will occur. Refer to Note 7 — Income Taxes and Note 11 — Benefit \nPlans in the accompanying Notes to the Consolidated Financial Statements for additional information related to uncertain tax \npositions and post-retirement benefits, respectively. \nAs a part of the transition tax related to the Tax Cuts and Jobs Act, as of May 31, 2024, we had $483 million in estimated future \ncash payments, with $215 million payable within the next 12 months. These amounts represent the transition tax on deemed \nrepatriation of undistributed earnings of foreign subsidiaries, which are reflected net of foreign tax credits we utilized.\nRefer to Note 16 — Commitments and Contingencies in the accompanying Notes to the Consolidated Financial Statements for \nadditional information related to our off-balance sheet arrangements, bank guarantees and letters of credit. \nOFF-BALANCE SHEET ARRANGEMENTS\nAs of May 31, 2024, we did not have any off-balance sheet arrangements that have, or are reasonably likely to have, a material \neffect on our current and future financial condition, results of operations, liquidity, capital expenditures or capital resources. In \nconnection with various contracts and agreements, we routinely provide indemnification relating to the enforceability of \nintellectual property rights, coverage for legal issues that arise and other items where we are acting as the guarantor. Currently, \nwe have several such agreements in place. Based on our historical experience and the estimated probability of future loss, we \nhave determined that the fair value of such indemnification is not material to our financial position or results of operations.\nNEW ACCOUNTING PRONOUNCEMENTS\nRefer to Note 1 — Summary of Significant Accounting Policies within the accompanying Notes to the Consolidated Financial \nStatements for recently adopted and issued accounting standards.\nCRITICAL ACCOUNTING ESTIMATES\nOur previous discussion and analysis of our financial condition and results of operations are based upon our Consolidated \nFinancial Statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements \nrequires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and \nrelated disclosure of contingent assets and liabilities. Note 1 — Summary of Significant Accounting Policies in the accompanying \nNotes to the Consolidated Financial Statements describes the significant accounting policies and methods used in the \npreparation of our Consolidated Financial Statements.\nWe believe the assumptions and judgments involved in the accounting estimates described below have the greatest potential \nimpact on our Consolidated Financial Statements, so we consider these to be our critical accounting estimates. Management has \nreviewed and discussed these critical accounting estimates with the Audit & Finance Committee of the Board of Directors.\n48\n       NIKE, INC.\n\n\nBecause of the uncertainty inherent in these matters, actual results could differ from the estimates we use in the preparation of \nour Consolidated Financial Statements. Within the context of these critical accounting estimates, we are not currently aware of \nany reasonably likely events or circumstances that would result in materially different amounts being reported.\nSALES-RELATED RESERVES\nProvisions for anticipated sales returns consist of both contractual return rights and discretionary authorized returns. Provisions \nfor post-invoice sales discounts consist of both contractual programs and discretionary discounts that are expected to be granted \nat a later date.\nEstimates of discretionary authorized returns, discounts and claims are based on (1) historical rates, (2) specific identification of \noutstanding returns not yet received from customers and outstanding discounts and claims and (3) estimated returns, discounts \nand claims expected but not yet finalized with customers. Actual returns, discounts and claims in any future period are inherently \nuncertain and may differ from estimates recorded. If actual or expected future returns, discounts or claims were significantly \ndifferent than reserves established, a reduction or increase to net revenues would be recorded in the period in which such \ndetermination was made.\nRefer to Note 14 — Revenues in the accompanying Notes to the Consolidated Financial Statements for additional information. \nINVENTORY RESERVES\nWe make ongoing estimates relating to the net realizable value of inventories based upon our assumptions about future demand \nand market conditions. If we estimate the net realizable value of our inventory is less than the cost of the inventory, we record a \nreserve equal to the difference between the cost of the inventory and the estimated net realizable value. This reserve is recorded \nas a charge to Cost of sales. If changes in market conditions result in reductions to the estimated net realizable value of our \ninventory below our previous estimate, we would increase our reserve in the period in which we made such a determination. \nHEDGE ACCOUNTING FOR DERIVATIVES\nWe use derivative contracts to hedge certain anticipated foreign currency and interest rate transactions as well as certain non-\nfunctional currency monetary assets and liabilities. When the specific criteria to qualify for hedge accounting has been met, \nchanges in the fair value of contracts hedging probable forecasted future cash flows are recorded in Accumulated other \ncomprehensive income (loss), rather than Net income, until the underlying hedged transaction affects Net income. In most cases, \nthis results in gains and losses on hedge derivatives being released from Accumulated other comprehensive income (loss) into \nNet income sometime after the maturity of the derivative. One of the criteria for this accounting treatment is that the notional \nvalue of these derivative contracts should not be in excess of the designated amount of anticipated transactions. By their very \nnature, our estimates of anticipated transactions may fluctuate over time and may ultimately vary from actual transactions. When \nthe designated amount of anticipated or actual transactions decline below hedged levels, or if it is no longer probable a \nforecasted transaction will occur by the end of the originally specified time period or within an additional two-month period of time \nthereafter, we reclassify the cumulative change in fair value of the over-hedged portion of the related hedge contract from \nAccumulated other comprehensive income (loss) to Other (income) expense, net during the quarter in which the decrease \noccurs. In rare circumstances, the additional period of time may exceed two months due to extenuating circumstances related to \nthe nature of the forecasted transaction that are outside our control or influence.\nRefer to Note 12 — Risk Management and Derivatives in the accompanying Notes to the Consolidated Financial Statements for \nadditional information.\nINCOME TAXES\nWe are subject to taxation in the United States, as well as various state and foreign jurisdictions. The determination of our \nprovision for income taxes requires significant judgment, the use of estimates and the interpretation and application of complex \ntax laws. On an interim basis, we estimate our effective tax rate for the full fiscal year. This estimated annual effective tax rate is \nthen applied to the year-to-date Income before income taxes excluding infrequently occurring or unusual items, to determine the \nyear-to-date Income tax expense. The income tax effects of infrequent or unusual items are recognized in the interim period in \nwhich they occur. As the fiscal year progresses, we continually refine our estimate based upon actual events and earnings by \njurisdiction during the year. This continual estimation process periodically results in a change to our expected effective tax rate for \nthe fiscal year. When this occurs, we adjust the income tax provision during the quarter in which the change in estimate occurs.\n2024 FORM 10-K   49    \n\n\nadditional charge to the tax provision in the period our assessment changes. We recognize interest and penalties related to \nincome tax matters in Income tax expense. \nRefer to Note 7 — Income Taxes in the accompanying Notes to the Consolidated Financial Statements for additional information.\nOTHER CONTINGENCIES\nIn the ordinary course of business, we are subject to various legal proceedings, claims and government investigations related to \nour business, products and actions of our employees and representatives, including contractual and employment relationships, \nproduct liability, antitrust, customs, tax, intellectual property and other matters. We record contingent liabilities resulting from \nclaims against us when a loss is assessed to be probable and the amount of the loss is reasonably estimable. Assessing \nprobability of loss and estimating probable losses requires analysis of multiple factors, including in some cases judgments about \nthe potential actions of third-party claimants and courts. Recorded contingent liabilities are based on the best information \navailable and actual losses in any future period are inherently uncertain. If future adjustments to estimated probable future losses \nor actual losses exceed our recorded liability for such claims, we would record additional charges during the period in which the \nactual loss or change in estimate occurred. In addition to contingent liabilities recorded for probable losses, we disclose \ncontingent liabilities when there is a reasonable possibility the ultimate loss will materially exceed the recorded liability. \nRefer to Note 16 — Commitments and Contingencies in the accompanying Notes to the Consolidated Financial Statements for \nadditional information. \n50\nOn a quarterly basis, we evaluate the probability a tax position will be effectively sustained and the appropriateness of the \namount recognized for uncertain tax positions based on factors including changes in facts or circumstances, changes in tax law, \nsettled audit issues and new audit activity. Changes in our assessment may result in the recognition of a tax benefit or an \n       NIKE, INC.\n\n\nITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES \nABOUT MARKET RISK\nIn the normal course of business and consistent with established policies and procedures, we employ a variety of financial \ninstruments to manage exposure to fluctuations in the value of foreign currencies and interest rates. It is our policy to utilize these \nfinancial instruments only where necessary to finance our business and manage such exposures; we do not enter into these \ntransactions for trading or speculative purposes.\nWe are exposed to foreign currency fluctuations, primarily as a result of our international sales, product sourcing and funding \nactivities. Our foreign exchange risk management program is intended to lessen both the positive and negative effects of \ncurrency fluctuations on our consolidated results of operations, financial position and cash flows. We use forward and option \ncontracts to hedge certain anticipated, but not yet firmly committed, transactions as well as certain firm commitments and the \nrelated receivables and payables, including third-party and intercompany transactions. Where exposures are hedged, our \nprogram has the effect of delaying the impact of exchange rate movements on our Consolidated Financial Statements.\nThe timing for hedging exposures, as well as the type and duration of the hedge instruments employed, are guided by our \nhedging policies and determined based upon the nature of the exposure and prevailing market conditions. Typically, the \nCompany may enter into hedge contracts starting 12 to 24 months in advance of the forecasted transaction and may place \nincremental hedges up to 100% of the exposure by the time the forecasted transaction occurs. The majority of derivatives \noutstanding as of May 31, 2024, are designated as foreign currency cash flow hedges, primarily for Euro/U.S. Dollar, British \nPound/Euro, Chinese Yuan/U.S. Dollar, and Japanese Yen/U.S. Dollar currency pairs. Refer to Note 12 — Risk Management and \nDerivatives in the accompanying Notes to the Consolidated Financial Statements for additional information.\nOur earnings are also exposed to movements in short- and long-term market interest rates. Our objective in managing this \ninterest rate exposure is to limit the impact of interest rate changes on earnings and cash flows and to reduce overall borrowing \ncosts. To achieve these objectives, we maintain a mix of commercial paper, bank loans, and fixed-rate debt of varying maturities \nand have entered into receive-fixed, pay-variable interest rate swaps for a portion of our fixed-rate debt.\nMARKET RISK MEASUREMENT\nWe monitor foreign exchange risk, interest rate risk and related derivatives using a variety of techniques including a review of \nmarket value, sensitivity analysis and Value-at-Risk (\"VaR\"). Our market-sensitive derivative and other financial instruments are \nforeign currency forward contracts, foreign currency option contracts, interest rate swaps, intercompany loans denominated in \nnon-functional currencies and fixed interest rate U.S. Dollar denominated debt.\nWe use VaR to monitor the foreign exchange risk of our foreign currency forward and foreign currency option derivative \ninstruments only. The VaR determines the maximum potential one-day loss in the fair value of these foreign exchange rate-\nsensitive financial instruments. The VaR model estimates assume normal market conditions and a 95% confidence level. There \nare various modeling techniques that can be used in the VaR computation. Our computations are based on interrelationships \nbetween currencies and interest rates (a \"variance/co-variance\" technique). These interrelationships are a function of foreign \nexchange currency market changes and interest rate changes over the preceding one-year period. The value of foreign currency \noptions does not change on a one-to-one basis with changes in the underlying currency rate. We adjust the potential loss in \noption value for the estimated sensitivity (the \"delta\" and \"gamma\") to changes in the underlying currency rate. This calculation \nreflects the impact of foreign currency rate fluctuations on the derivative instruments only and does not include the impact of such \nrate fluctuations on non-functional currency transactions (such as anticipated transactions, firm commitments, cash balances and \naccounts and loans receivable and payable), including those which are hedged by these instruments.\nThe VaR model is a risk analysis tool and does not purport to represent actual losses in fair value we will incur nor does it \nconsider the potential effect of favorable changes in market rates. It also does not represent the full extent of the possible loss \nthat may occur. Actual future gains and losses will differ from those estimated because of changes or differences in market rates \nand interrelationships, hedging instruments and hedge percentages, timing and other factors.\nThe estimated maximum one-day loss in fair value on our foreign currency sensitive derivative financial instruments, derived \nusing the VaR model, was $57 million and $111 million as of May 31, 2024 and 2023, respectively. The VaR decreased year-over-\nyear as a result of a decrease in foreign currency volatilities as of May 31, 2024. Such a hypothetical loss in the fair value of our \nderivatives would be offset by increases in the value of the underlying transactions being hedged. The average monthly change \nin the fair values of foreign currency forward and foreign currency option derivative instruments was $180 million and $289 million \nduring fiscal 2024 and fiscal 2023, respectively.\n2024 FORM 10-K   51    \n\n\nconsolidation. Furthermore, our non-functional currency intercompany loans are substantially hedged against foreign exchange \nrisk through the use of forward contracts, which are included in the VaR calculation above. Therefore, we consider the interest \nrate and foreign currency market risks associated with our non-functional currency intercompany loans to be immaterial to our \nconsolidated financial position, results of operations and cash flows.\nDetails of third-party debt and interest rate swaps are provided in the table below. The table presents principal cash flows and \nrelated weighted average interest rates by expected maturity dates. The weighted average variable interest rates for the fixed \nrate swapped to variable rate swaps reflect the effective interest rates at May 31, 2024.\nEXPECTED MATURITY DATE YEAR ENDING MAY 31,\n(Dollars in millions)\n2025\n2026\n2027\n2028\n2029\nTHEREAFTER\nTOTAL \nFAIR VALUE\nInterest Rate Risk\nLong-term U.S. Dollar debt — Fixed rate\nPrincipal payments\n$ \n1,000 \n$ \n— \n$ \n2,000 \n$ \n— \n$ \n— \n$ \n6,000 \n$ 9,000 \n$ \n7,631 \nAverage interest rate\n \n2.4 %\n \n0.0 %\n \n2.6 %\n \n0.0 %\n \n0.0 %\n \n3.3 %\n \n3.1 %\nInterest Rate Swaps — Fixed rate swapped \nto variable rate\nNotional amount\n$ \n— \n$ \n— \n$ \n— \n$ \n— \n$ \n— \n$ \n1,800 \n$ 1,800 \n$ \n(31) \nAverage fixed interest rate\n \n0.0 %\n \n0.0 %\n \n0.0 %\n \n0.0 %\n \n0.0 %\n \n3.5 %\n \n3.5 %\nAverage variable interest rate\n \n0.0 %\n \n0.0 %\n \n0.0 %\n \n0.0 %\n \n0.0 %\n \n3.7 %\n \n3.7 %\n52\nThe instruments not included in the VaR are intercompany loans denominated in non-functional currencies, fixed interest rate \nU.S. Dollar denominated debt, and interest rate swaps. Intercompany loans and related interest amounts are eliminated in \n       NIKE, INC.\n\n\nITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY \nDATA\nManagement of NIKE, Inc. is responsible for the information and representations contained in this Annual Report. The financial \nstatements have been prepared in conformity with accounting principles generally accepted in the United States of America \n(\"U.S. GAAP\") and include certain amounts based on our best estimates and judgments. Other financial information in this \nAnnual Report is consistent with these financial statements.\nOur accounting systems include controls designed to reasonably assure assets are safeguarded from unauthorized use or \ndisposition and provide for the preparation of financial statements in conformity with U.S. GAAP. These systems are \nsupplemented by the selection and training of qualified financial personnel and an organizational structure providing for \nappropriate segregation of duties.\nAn internal corporate audit department reviews the results of its work with the Audit & Finance Committee of the Board of \nDirectors, presently comprised of four outside, independent directors. The Audit & Finance Committee is responsible for the \nappointment of the independent registered public accounting firm and reviews, with the independent registered public accounting \nfirm, management and the internal corporate audit staff, the scope and the results of the annual audit, the effectiveness of the \naccounting control system and other matters relating to the financial affairs of NIKE as the Audit & Finance Committee deems \nappropriate. The independent registered public accounting firm and the internal corporate auditors have full access to the Audit & \nFinance Committee, with and without the presence of management, to discuss any appropriate matters.\n2024 FORM 10-K   53    \n\n\nMANAGEMENT'S ANNUAL REPORT ON INTERNAL CONTROL OVER \nFINANCIAL REPORTING\nManagement is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is \ndefined in Rule 13(a) - 15(f) and Rule 15(d) - 15(f) of the Securities Exchange Act of 1934, as amended. Internal control over \nfinancial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the \npreparation of the financial statements for external purposes in accordance with generally accepted accounting principles in the \nUnited States of America. Internal control over financial reporting includes those policies and procedures that: (i) pertain to the \nmaintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of assets of the \nCompany; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial \nstatements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are \nbeing made only in accordance with authorizations of our management and directors; and (iii) provide reasonable assurance \nregarding prevention or timely detection of unauthorized acquisition, use or disposition of assets of the Company that could have \na material effect on the financial statements.\nBecause of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, \nprojections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate \nbecause of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.\nUnder the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, our management \nconducted an evaluation of the effectiveness of our internal control over financial reporting based upon the framework in Internal \nControl — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission \n(COSO). Based on the results of our evaluation, our management concluded that our internal control over financial reporting was \neffective as of May 31, 2024.\nPricewaterhouseCoopers LLP, an independent registered public accounting firm, has audited (1) the Consolidated Financial \nStatements and (2) the effectiveness of our internal control over financial reporting as of May 31, 2024, as stated in their report \nherein.\nJohn J. Donahoe II\nMatthew Friend\nPresident and Chief Executive Officer\nExecutive Vice President and Chief Financial Officer\n54\n       NIKE, INC.\n\n\nReport of Independent Registered Public Accounting Firm\nTo the Board of Directors and Shareholders of NIKE, Inc.\nOpinions on the Financial Statements and Internal Control over Financial Reporting\nWe have audited the accompanying consolidated balance sheets of NIKE, Inc. and its subsidiaries (the \"Company\") as of May \n31, 2024 and 2023, and the related consolidated statements of income, of comprehensive income, of shareholders' equity and of \ncash flows for each of the three years in the period ended May 31, 2024, including the related notes and financial statement \nschedule listed in the index appearing under Item 15(a)(2) (collectively referred to as the \"consolidated financial statements\"). We \nalso have audited the Company's internal control over financial reporting as of May 31, 2024, based on criteria established in \nInternal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway \nCommission (COSO).\nIn our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position \nof the Company as of May 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in \nthe period ended May 31, 2024 in conformity with accounting principles generally accepted in the United States of America. Also \nin our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of May 31, \n2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.\nBasis for Opinions\nThe Company's management is responsible for these consolidated financial statements, for maintaining effective internal control \nover financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the \naccompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express \nopinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting \nbased on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United \nStates) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities \nlaws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.\nWe conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the \naudits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, \nwhether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material \nrespects.\nOur audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement \nof the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. \nSuch procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated \nfinancial statements. Our audits also included evaluating the accounting principles used and significant estimates made by \nmanagement, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control \nover financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a \nmaterial weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the \nassessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We \nbelieve that our audits provide a reasonable basis for our opinions.\nDefinition and Limitations of Internal Control over Financial Reporting\nA company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the \nreliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally \naccepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that \n(i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions \nof the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit \npreparation of financial statements in accordance with generally accepted accounting principles, and that receipts and \nexpenditures of the company are being made only in accordance with authorizations of management and directors of the \ncompany; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or \ndisposition of the company’s assets that could have a material effect on the financial statements.\nBecause of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, \nprojections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate \nbecause of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.\n2024 FORM 10-K   55    \n\n\nCritical Audit Matters\nThe critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial \nstatements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or \ndisclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or \ncomplex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated \nfinancial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate \nopinion on the critical audit matter or on the accounts or disclosures to which it relates.\nAccounting for Income Taxes\nAs described in Notes 1 and 7 to the consolidated financial statements, the Company is subject to taxation in the United States, \nas well as various state and foreign jurisdictions. The Company accounts for income taxes using the asset and liability method. \nThis approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of \ntemporary differences between the carrying amounts and the tax basis of assets and liabilities. As disclosed by management, the \ndetermination of the provision for income taxes by management requires significant judgment, the use of estimates, and the \ninterpretation and application of complex tax laws. Furthermore, as part of determining its provision for income taxes, \nmanagement evaluates the probability a tax position will be effectively sustained and the appropriateness of the amount \nrecognized for uncertain tax positions based on factors including changes in facts or circumstances, changes in tax law, settled \naudit issues and new audit activity. The Company recognizes a tax benefit from uncertain tax positions in the financial statements \nonly when it is more likely than not the position will be sustained upon examination by relevant tax authorities. The majority of the \ntotal gross unrecognized tax benefits are long-term in nature and included within deferred income taxes and other liabilities on \nthe consolidated balance sheets. The Company recorded income tax expense of $1,000 million for the year ended May 31, 2024. \nAs of May 31, 2024, total gross unrecognized tax benefits, excluding related interest and penalties, were $990 million, of which \n$699 million would affect the Company's effective tax rate if recognized in future periods.   \nThe principal considerations for our determination that performing procedures relating to the accounting for income taxes is a \ncritical audit matter are (i) the significant judgment by management when determining the provision for income taxes and \ninterpreting and applying complex tax laws as it relates to determining the provision for income taxes and uncertain tax positions; \n(ii) a high degree of auditor judgment and effort in performing procedures and evaluating audit evidence related to management’s \ninterpretation and application of complex tax laws as it relates to the determination of the provision for income taxes and the \nassessment of whether tax positions are more likely than not to be sustained; and (iii) the audit effort involved the use of \nprofessionals with specialized skill and knowledge.  \nAddressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall \nopinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to \nincome taxes. These procedures also included, among others (i) testing the provision for income taxes, which included the \neffective tax rate reconciliation and assessing management’s interpretation and application of complex tax laws; (ii) evaluating the \ncompleteness of management’s identification of uncertain tax positions by considering changes in facts or circumstances, \nchanges in and compliance with tax laws, settled audit issues, new authoritative cases, or new audit activity, where applicable; \nand (iii) for certain tax positions, evaluating management’s assessment of the technical merits of the tax positions by obtaining \nand inspecting third party income tax documentation. Professionals with specialized skill and knowledge were used to assist in \nevaluating (i) changes in and compliance with the tax laws; (ii) management’s interpretation and application of certain complex \ntax laws as it relates to the determination of the provision for income taxes; and (iii) the reasonableness of management's \nassessment of whether certain tax positions are more likely than not of being sustained.   \n/s/ PricewaterhouseCoopers LLP\nPortland, Oregon\nJuly 25, 2024 \nWe have served as the Company's auditor since 1974. \n56\n       NIKE, INC.\n\n\nNIKE, INC.\nCONSOLIDATED STATEMENTS OF INCOME\nYEAR ENDED MAY 31,\n(In millions, except per share data)\n2024\n2023\n2022\nRevenues\n$ \n51,362 $ \n51,217 $ \n46,710 \nCost of sales\n \n28,475  \n28,925  \n25,231 \nGross profit\n \n22,887  \n22,292  \n21,479 \nDemand creation expense\n \n4,285  \n4,060  \n3,850 \nOperating overhead expense\n \n12,291  \n12,317  \n10,954 \nTotal selling and administrative expense\n \n16,576  \n16,377  \n14,804 \nInterest expense (income), net\n \n(161)  \n(6)  \n205 \nOther (income) expense, net\n \n(228)  \n(280)  \n(181) \nIncome before income taxes\n \n6,700  \n6,201  \n6,651 \nIncome tax expense \n \n1,000  \n1,131  \n605 \nNET INCOME\n$ \n5,700 $ \n5,070 $ \n6,046 \nEarnings per common share:\nBasic\n$ \n3.76 $ \n3.27 $ \n3.83 \nDiluted\n$ \n3.73 $ \n3.23 $ \n3.75 \nWeighted average common shares outstanding:\nBasic\n \n1,517.6  \n1,551.6  \n1,578.8 \nDiluted\n \n1,529.7  \n1,569.8  \n1,610.8 \nThe accompanying Notes to the Consolidated Financial Statements are an integral part of this statement.\n2024 FORM 10-K   57    \n\n\nNIKE, INC.\nCONSOLIDATED STATEMENTS OF COMPREHENSIVE \nINCOME\nYEAR ENDED MAY 31,\n(Dollars in millions)\n2024\n2023\n2022\nNet income\n$ \n5,700 $ \n5,070 $ \n6,046 \nOther comprehensive income (loss), net of tax:\nChange in net foreign currency translation adjustment\n \n(3)  \n267  \n(522) \nChange in net gains (losses) on cash flow hedges\n \n(184)  \n(348)  \n1,214 \nChange in net gains (losses) on other\n \n9  \n(6)  \n6 \nTotal other comprehensive income (loss), net of tax\n \n(178)  \n(87)  \n698 \nTOTAL COMPREHENSIVE INCOME\n$ \n5,522 $ \n4,983 $ \n6,744 \nThe accompanying Notes to the Consolidated Financial Statements are an integral part of this statement.\n58\n       NIKE, INC.\n\n\nNIKE, INC.\nCONSOLIDATED BALANCE SHEETS\nMAY 31,\n(In millions)\n2024\n2023\nASSETS\nCurrent assets:\nCash and equivalents\n$ \n9,860 $ \n7,441 \nShort-term investments\n \n1,722  \n3,234 \nAccounts receivable, net\n \n4,427  \n4,131 \nInventories\n \n7,519  \n8,454 \nPrepaid expenses and other current assets\n \n1,854  \n1,942 \nTotal current assets\n \n25,382  \n25,202 \nProperty, plant and equipment, net\n \n5,000  \n5,081 \nOperating lease right-of-use assets, net\n \n2,718  \n2,923 \nIdentifiable intangible assets, net\n \n259  \n274 \nGoodwill\n \n240  \n281 \nDeferred income taxes and other assets\n \n4,511  \n3,770 \nTOTAL ASSETS\n$ \n38,110 $ \n37,531 \nLIABILITIES AND SHAREHOLDERS' EQUITY\nCurrent liabilities:\nCurrent portion of long-term debt\n$ \n1,000 $ \n— \nNotes payable\n \n6  \n6 \nAccounts payable\n \n2,851  \n2,862 \nCurrent portion of operating lease liabilities\n \n477  \n425 \nAccrued liabilities\n \n5,725  \n5,723 \nIncome taxes payable\n \n534  \n240 \nTotal current liabilities\n \n10,593  \n9,256 \nLong-term debt\n \n7,903  \n8,927 \nOperating lease liabilities\n \n2,566  \n2,786 \nDeferred income taxes and other liabilities\n \n2,618  \n2,558 \nCommitments and contingencies (Note 16)\nRedeemable preferred stock\n \n—  \n— \nShareholders' equity:\nCommon stock at stated value:\nClass A convertible — 298 and 305 shares outstanding\n \n—  \n— \nClass B — 1,205 and 1,227 shares outstanding\n \n3  \n3 \nCapital in excess of stated value\n \n13,409  \n12,412 \nAccumulated other comprehensive income (loss)\n \n53  \n231 \nRetained earnings (deficit)\n \n965  \n1,358 \nTotal shareholders' equity\n \n14,430  \n14,004 \nTOTAL LIABILITIES AND SHAREHOLDERS' EQUITY\n$ \n38,110 $ \n37,531 \nThe accompanying Notes to the Consolidated Financial Statements are an integral part of this statement.\n2024 FORM 10-K   59    \n\n\nNIKE, INC.\nCONSOLIDATED STATEMENTS OF CASH FLOWS\nYEAR ENDED MAY 31,\n(Dollars in millions)\n2024\n2023\n2022\nCash provided (used) by operations:\nNet income\n$ \n5,700 $ \n5,070 $ \n6,046 \nAdjustments to reconcile net income to net cash provided (used) by operations:\nDepreciation\n \n796  \n703  \n717 \nDeferred income taxes\n \n(497)  \n(117)  \n(650) \nStock-based compensation\n \n804  \n755  \n638 \nAmortization, impairment and other\n \n48  \n156  \n123 \nNet foreign currency adjustments\n \n(138)  \n(213)  \n(26) \nChanges in certain working capital components and other assets and liabilities:\n(Increase) decrease in accounts receivable\n \n(329)  \n489  \n(504) \n(Increase) decrease in inventories\n \n908  \n(133)  \n(1,676) \n(Increase) decrease in prepaid expenses, operating lease right-of-use assets and \nother current and non-current assets\n \n(260)  \n(644)  \n(845) \nIncrease (decrease) in accounts payable, accrued liabilities, operating lease \nliabilities and other current and non-current liabilities\n \n397  \n(225)  \n1,365 \nCash provided (used) by operations\n \n7,429  \n5,841  \n5,188 \nCash provided (used) by investing activities:\nPurchases of short-term investments\n \n(4,767)  \n(6,059)  \n(12,913) \nMaturities of short-term investments\n \n2,269  \n3,356  \n8,199 \nSales of short-term investments\n \n4,219  \n4,184  \n3,967 \nAdditions to property, plant and equipment\n \n(812)  \n(969)  \n(758) \nOther investing activities\n \n(15)  \n52  \n(19) \nCash provided (used) by investing activities\n \n894  \n564  \n(1,524) \nCash provided (used) by financing activities:\nIncrease (decrease) in notes payable, net\n \n—  \n(4)  \n15 \nRepayment of borrowings\n \n—  \n(500)  \n— \nProceeds from exercise of stock options and other stock issuances\n \n667  \n651  \n1,151 \nRepurchase of common stock\n \n(4,250)  \n(5,480)  \n(4,014) \nDividends — common and preferred\n \n(2,169)  \n(2,012)  \n(1,837) \nOther financing activities\n \n(136)  \n(102)  \n(151) \nCash provided (used) by financing activities\n \n(5,888)  \n(7,447)  \n(4,836) \nEffect of exchange rate changes on cash and equivalents\n \n(16)  \n(91)  \n(143) \nNet increase (decrease) in cash and equivalents\n \n2,419  \n(1,133)  \n(1,315) \nCash and equivalents, beginning of year\n \n7,441  \n8,574  \n9,889 \nCASH AND EQUIVALENTS, END OF YEAR\n$ \n9,860 $ \n7,441 $ \n8,574 \nSupplemental disclosure of cash flow information:\nCash paid during the year for:\nInterest, net of capitalized interest\n$ \n381 $ \n347 $ \n290 \nIncome taxes\n \n1,299  \n1,517  \n1,231 \nNon-cash additions to property, plant and equipment\n \n160  \n211  \n160 \nDividends declared and not paid\n \n558  \n524  \n480 \nThe accompanying Notes to the Consolidated Financial Statements are an integral part of this statement.\n60\n       NIKE, INC.\n\n\nNIKE, INC.\nCONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY\nBalance at May 31, 2021\n \n305 $ \n— \n 1,273 $ \n3 $ \n9,965 $ \n(380) $ 3,179 $ \n12,767 \nStock options exercised\n \n17 \n \n924 \n \n924 \nConversion to Class B Common Stock\n \n— \nRepurchase of Class B Common Stock\n \n(27) \n \n(186) \n \n(3,808)  (3,994) \nDividends on common stock ($1.190 \nper share) and preferred stock ($0.10 \nper share)\n \n(1,886)  (1,886) \nIssuance of shares to employees, net of \nshares withheld for employee taxes\n \n3 \n \n143 \n \n(55)  \n88 \nStock-based compensation\n \n638 \n \n638 \nNet income\n \n6,046  \n6,046 \nOther comprehensive income (loss)\n \n698 \n \n698 \nBalance at May 31, 2022\n \n305 $ \n— \n 1,266 $ \n3 $ 11,484 $ \n318 $ 3,476 $ \n15,281 \nStock options exercised\n \n8 \n \n421 \n \n421 \nRepurchase of Class B Common Stock\n \n(51) \n \n(378) \n \n(5,131)  (5,509) \nDividends on common stock ($1.325 \nper share) and preferred stock ($0.10 \nper share)\n \n(2,059)  (2,059) \nIssuance of shares to employees, net of \nshares withheld for employee taxes\n \n4 \n \n130 \n \n2  \n132 \nStock-based compensation\n \n755 \n \n755 \nNet income\n \n5,070  \n5,070 \nOther comprehensive income (loss)\n \n(87) \n \n(87) \nBalance at May 31, 2023\n \n305 $ \n— \n 1,227 $ \n3 $ 12,412 $ \n231 $ 1,358 $ \n14,004 \nStock options exercised\n \n7 \n \n432 \n \n432 \nConversion to Class B Common Stock\n \n(7) \n \n7 \n \n— \nRepurchase of Class B Common Stock\n \n(41) \n \n(347) \n \n(3,907)  (4,254) \nDividends on common stock ($1.450 \nper share) and preferred stock ($0.10 \nper share)\n \n(2,203)  (2,203) \nIssuance of shares to employees, net of \nshares withheld for employee taxes\n \n5 \n \n108 \n \n17  \n125 \nStock-based compensation\n \n804 \n \n804 \nNet income\n \n5,700  \n5,700 \nOther comprehensive income (loss)\n \n(178) \n \n(178) \nBalance at May 31, 2024\n \n298 $ \n— \n 1,205 $ \n3 $ 13,409 $ \n53 $ \n965 $ \n14,430 \nCOMMON STOCK\nCAPITAL IN \nEXCESS \nOF STATED \nVALUE\nACCUMULATED \nOTHER \nCOMPREHENSIVE \nINCOME (LOSS)\nRETAINED \nEARNINGS \n(DEFICIT)\nTOTAL\nCLASS A\nCLASS B\n(In millions, except per share data)\nSHARES\nAMOUNT\nSHARES AMOUNT\nThe accompanying Notes to the Consolidated Financial Statements are an integral part of this statement.\n2024 FORM 10-K   61    \n\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\nNote 1\nSummary of Significant Accounting Policies\n63\nNote 2\nProperty, Plant and Equipment\n69\nNote 3\nAccrued Liabilities\n69\nNote 4\nFair Value Measurements\n70\nNote 5\nShort-Term Borrowings and Credit Lines\n72\nNote 6\nLong-Term Debt\n73\nNote 7\nIncome Taxes\n74\nNote 8\nRedeemable Preferred Stock\n76\nNote 9\nCommon Stock and Stock-Based Compensation\n77\nNote 10\nEarnings Per Share\n79\nNote 11\nBenefit Plans\n79\nNote 12\nRisk Management and Derivatives\n79\nNote 13\nAccumulated Other Comprehensive Income (Loss)\n83\nNote 14\nRevenues\n84\nNote 15\nOperating Segments and Related Information\n86\nNote 16\nCommitments and Contingencies\n89\nNote 17\nLeases\n89\nNote 18\nDivestitures\n90\nNote 19\nRestructuring\n91\n62\n       NIKE, INC.\n\n\nNOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES\nDESCRIPTION OF BUSINESS\nNIKE, Inc. is a worldwide leader in the design, development and worldwide marketing and selling of athletic footwear, apparel, \nequipment, accessories and services. NIKE, Inc. portfolio brands include the NIKE Brand, Jordan Brand and Converse. The NIKE \nBrand is focused on performance athletic footwear, apparel, equipment, accessories and services across Men's, Women's and \nKids', amplified with sport-inspired lifestyle products carrying the Swoosh trademark, as well as other NIKE Brand trademarks. \nThe Jordan Brand is focused on athletic and casual footwear, apparel and accessories using the Jumpman trademark. Sales and \noperating results of Jordan Brand products are reported within the respective NIKE Brand geographic operating segments. \nConverse designs, distributes, licenses and sells casual sneakers, apparel and accessories under the Converse, Chuck Taylor, \nAll Star, One Star, Star Chevron and Jack Purcell trademarks. In some markets outside the U.S., these trademarks are licensed \nto third parties who design, distribute, market and sell similar products. Operating results of the Converse brand are reported on a \nstand-alone basis.\nBASIS OF CONSOLIDATION\nThe Consolidated Financial Statements include the accounts of NIKE, Inc. and its subsidiaries (the \"Company\" or \"NIKE\"). All \nsignificant intercompany transactions and balances have been eliminated. \nMANAGEMENT ESTIMATES\nThe preparation of financial statements in conformity with generally accepted accounting principles requires management to \nmake estimates, including estimates relating to assumptions that affect the reported amounts of assets and liabilities and \ndisclosure of contingent assets and liabilities at the date of financial statements and the reported amounts of revenues and \nexpenses during the reporting period. Actual results could differ from these estimates.\nREVENUE RECOGNITION\nRevenue transactions associated with the sale of NIKE Brand footwear, apparel and equipment, as well as Converse products, \ncomprise a single performance obligation, which consists of the sale of products to customers either through wholesale or direct \nto consumer channels. The Company satisfies the performance obligation and records revenues when transfer of control to the \ncustomer has occurred, based on the terms of sale. A customer is considered to have control once they are able to direct the use \nand receive substantially all of the benefits of the product. \nControl is transferred to wholesale customers upon shipment or upon receipt depending on the country of the sale and the \nagreement with the customer. Control transfers to retail store customers at the time of sale and to substantially all digital \ncommerce customers upon shipment. The transaction price is determined based upon the invoiced sales price, less anticipated \nsales returns, discounts and miscellaneous claims from customers. Payment terms for wholesale transactions depend on the \ncountry of sale or agreement with the customer and payment is generally required within 90 days or less of shipment to or receipt \nby the wholesale customer. Payment is due at the time of sale for retail store and digital commerce transactions.\nConsideration for trademark licensing contracts is earned through sales-based or usage-based royalty arrangements, and the \nassociated revenues are recognized over the license period. \nTaxes assessed by governmental authorities that are both imposed on and concurrent with a specific revenue-producing \ntransaction, and are collected by the Company from a customer, are excluded from Revenues and Cost of sales in the \nConsolidated Statements of Income. Shipping and handling costs associated with outbound freight after control over a product \nhas transferred to a customer are accounted for as fulfillment costs and are included in Cost of sales when the related revenues \nare recognized.\nSALES-RELATED RESERVES\nConsideration promised in the Company's contracts with customers is variable due to anticipated reductions, such as sales \nreturns, discounts and miscellaneous claims from customers. The Company estimates the most likely amount it will be entitled to \nreceive and records an anticipated reduction against Revenues, with an offsetting increase to Accrued liabilities at the time \nrevenues are recognized. The estimated cost of inventory for product returns is recorded in Prepaid expenses and other current \nassets on the Consolidated Balance Sheets.\nThe provision for anticipated sales returns consists of both contractual return rights and discretionary authorized returns. \nProvisions for post-invoice sales discounts consist of both contractual programs and discretionary discounts that are expected to \nbe granted at a later date.\n2024 FORM 10-K   63    \n\n\nEstimates of discretionary authorized returns, discounts and claims are based on (1) historical rates, (2) specific identification of \noutstanding returns not yet received from customers and outstanding discounts and claims and (3) estimated returns, discounts \nand claims expected but not yet finalized with customers. Actual returns, discounts and claims in any future period are inherently \nuncertain and thus may differ from estimates recorded. If actual or expected future returns, discounts or claims are significantly \ngreater or lower than the reserves established, a reduction or increase to net Revenues is recorded in the period in which such \ndetermination is made.\nCOST OF SALES\nCost of sales consists primarily of inventory costs, as well as warehousing costs (including the cost of warehouse labor), third-\nparty royalties, certain foreign currency hedge gains and losses and product design costs. Shipping and handling costs are \nexpensed as incurred and included in Cost of sales.\nDEMAND CREATION EXPENSE\nDemand creation expense consists of advertising and promotion costs, including costs of endorsement contracts, complimentary \nproducts, television, digital and print advertising as well as media costs, brand events and retail brand presentation. Advertising \nproduction costs are expensed the first time an advertisement is run. Advertising media costs are expensed when the \nadvertisement appears. Costs related to brand events are expensed when the event occurs. Costs related to retail brand \npresentation are expensed when the presentation is complete and delivered.\nA significant amount of the Company's promotional expenses result from payments under endorsement contracts. In general, \nendorsement payments are expensed on a straight-line basis over the term of the contract. However, certain contracts contain \nelements that may be accounted for differently based upon the facts and circumstances of each individual contract. Prepayments \nmade under contracts are included in Prepaid expenses and other current assets or Deferred income taxes and other assets \ndepending on the period to which the prepayment applies.\nCertain contracts provide for contingent payments to endorsers based upon specific achievements in their sport (e.g., winning a \nchampionship). The Company records Demand creation expense for these amounts when the endorser achieves the specific \ngoal.\nCertain contracts provide for variable payments based upon endorsers maintaining a level of performance in their sport over an \nextended period of time (e.g., maintaining a specified ranking in a sport for a year). When the Company determines payments are \nprobable, the amounts are reported in Demand creation expense ratably over the contract period based on the Company's best \nestimate of the endorser's performance. In these instances, to the extent actual payments to the endorser differ from the \nCompany's estimate due to changes in the endorser's performance, adjustments to Demand creation expense may be recorded \nin a future period.\nCertain contracts provide for royalty payments to endorsers based upon a predetermined percent of sales of particular products, \nwhich the Company records in Cost of sales as the related sales occur. For contracts containing minimum guaranteed royalty \npayments, the Company records the amount of any guaranteed payment in excess of that earned through sales of product within \nDemand creation expense.\nThrough cooperative advertising programs, the Company reimburses its wholesale customers for certain costs of advertising the \nCompany's products. To the extent the Company receives a distinct good or service in exchange for consideration paid to the \ncustomer that does not exceed the fair value of that good or service, the amounts reimbursed are recorded in Demand creation \nexpense.\nTotal Demand creation expense was $4,285 million, $4,060 million and $3,850 million for the years ended May 31, 2024, 2023 \nand 2022, respectively. Prepaid advertising and promotion expenses totaled $814 million and $755 million at May 31, 2024 and \n2023, respectively, of which $420 million and $372 million, respectively, were recorded in Prepaid expenses and other current \nassets, and $394 million and $383 million, respectively, were recorded in Deferred income taxes and other assets, depending on \nthe period to which the prepayment applied.\nOPERATING OVERHEAD EXPENSE\nOperating overhead expense consists primarily of wage and benefit-related expenses, research and development costs, bad \ndebt expense as well as other administrative expenses such as rent, depreciation and amortization, professional services, certain \ntechnology investments, meetings and travel.\n64\n       NIKE, INC.\n\n\nCASH AND EQUIVALENTS\nCash and equivalents represent cash and short-term, highly liquid investments, that are both readily convertible to known \namounts of cash and so near their maturity they present insignificant risk of changes in value because of changes in interest \nrates, with maturities three months or less at the date of purchase.\nSHORT-TERM INVESTMENTS\nShort-term investments consist of highly liquid investments with maturities over three months at the date of purchase. At May 31, \n2024 and 2023, Short-term investments consisted of available-for-sale debt securities, which are recorded at fair value with \nunrealized gains and losses reported, net of tax, in Accumulated other comprehensive income (loss), unless unrealized losses \nare determined to be unrecoverable. Realized gains and losses on the sale of securities are determined by specific identification. \nThe Company considers all available-for-sale debt securities, including those with maturity dates beyond 12 months, as available \nto support current operational liquidity needs and, therefore, classifies all securities with maturity dates beyond three months at \nthe date of purchase as current assets within Short-term investments on the Consolidated Balance Sheets.\nRefer to Note 4 — Fair Value Measurements for more information on the Company's Short-term investments.\nALLOWANCE FOR UNCOLLECTIBLE ACCOUNTS RECEIVABLE\nAccounts receivable, net consist primarily of amounts due from customers. The Company makes ongoing estimates relating to \nthe collectability of its accounts receivable and maintains an allowance for expected losses resulting from the inability of its \ncustomers to make required payments. In addition to judgments about the creditworthiness of significant customers based on \nongoing credit evaluations, the Company considers historical levels of credit losses, as well as macroeconomic and industry \ntrends to determine the amount of the allowance. The allowance for uncollectible accounts receivable was $35 million as of \nMay 31, 2024 and 2023.\nINVENTORY VALUATION\nInventories, substantially all of which are finished goods, are stated at lower of cost and net realizable value and valued on either \nan average or a specific identification cost basis. In some instances, the Company ships products directly from its suppliers to the \ncustomer, with the related inventory and cost of sales recognized on a specific identification basis. Inventory costs primarily \nconsist of product cost from the Company's suppliers, as well as inbound freight, import duties, taxes, insurance, logistics and \nother handling fees.\nPROPERTY, PLANT AND EQUIPMENT AND DEPRECIATION\nProperty, plant and equipment are recorded at cost. Depreciation is determined on a straight-line basis for land improvements, \nbuildings and leasehold improvements over 2 to 40 years and for machinery and equipment over 2 to 15 years.\nDepreciation and amortization of assets used in manufacturing, warehousing and product distribution are recorded in Cost of \nsales. Depreciation and amortization of all other assets are recorded in Operating overhead expense.\nSOFTWARE DEVELOPMENT COSTS\nExpenditures for major software purchases and software developed for internal use are capitalized and amortized over 2 to 12 \nyears on a straight-line basis. The Company's policy provides for the capitalization of external direct costs associated with \ndeveloping or obtaining internal use computer software. The Company also capitalizes certain payroll and payroll-related costs \nfor employees who are directly associated with internal use computer software projects. The amount of capitalizable payroll costs \nwith respect to these employees is limited to the time directly spent on such projects. Costs associated with preliminary project \nstage activities, training, maintenance and all other post-implementation stage activities are expensed as incurred.\nDevelopment costs of computer software to be sold, leased or otherwise marketed as an integral part of a product are subject to \ncapitalization beginning when a product's technological feasibility has been established and ending when a product is available \nfor general release to customers. In most instances, the Company's products are released soon after technological feasibility has \nbeen established; therefore, software development costs incurred subsequent to achievement of technological feasibility are \nusually not significant, and generally, most software development costs have been expensed as incurred.\n2024 FORM 10-K   65    \n\n\nIMPAIRMENT OF LONG-LIVED ASSETS\nThe Company reviews the carrying value of long-lived assets or asset groups to be used in operations whenever events or \nchanges in circumstances indicate the carrying amount of the assets might not be recoverable. Factors that would necessitate an \nimpairment assessment include a significant adverse change in the extent or manner in which an asset is used, a significant \nadverse change in legal factors or the business climate that could affect the value of the asset or a significant decline in the \nobservable market value of an asset, among others. If such facts indicate a potential impairment, the Company would assess the \nrecoverability of an asset group by determining if the carrying value of the asset group exceeds the sum of the projected \nundiscounted cash flows expected to result from the use and eventual disposition of the assets over the remaining economic life \nof the primary asset in the asset group. If the recoverability test indicates that the carrying value of the asset group is not \nrecoverable, the Company will estimate the fair value of the asset group using appropriate valuation methodologies, which would \ntypically include an estimate of discounted cash flows. Any impairment would be measured as the difference between the asset \ngroup's carrying amount and its estimated fair value.\nGOODWILL AND INDEFINITE-LIVED INTANGIBLE ASSETS\nThe Company performs annual impairment tests on goodwill and intangible assets with indefinite lives in the fourth quarter of \neach fiscal year or when events occur or circumstances change that would, more likely than not, reduce the fair value of a \nreporting unit or an intangible asset with an indefinite life below its carrying value. \nFor purposes of testing goodwill for impairment, the Company allocates goodwill across its reporting units, which are considered \nthe Company's operating segments. For both goodwill and indefinite-lived intangible assets, which primarily consist of acquired \ntrade names and trademarks, the Company may first assess qualitative factors to determine whether it is more likely than not that \nthe fair value of a reporting unit or an intangible asset with an indefinite life is less than its carrying amount. If, after assessing the \ntotality of events and circumstances, the Company determines it is more likely than not that the fair value of a reporting unit or \nindefinite-lived intangible asset is greater than its carrying amount, an impairment test is unnecessary. \nIf an impairment test is necessary, the Company will estimate the fair value of the related reporting unit or indefinite-lived \nintangible asset. If the carrying value of a reporting unit or indefinite-lived intangible asset exceeds its fair value, the goodwill of \nthat reporting unit or indefinite-lived intangible asset is determined to be impaired and the Company will record an impairment \ncharge equal to the excess of the carrying value over the related fair value. \nThere were immaterial impairment losses as of May 31, 2024, and no accumulated impairment losses as of May 31, 2023. \nAdditionally, the impact to Goodwill as a result of acquisitions and divestitures during fiscal 2024 and 2023, was immaterial.\nOPERATING LEASES\nThe Company primarily leases retail store space, certain distribution and warehouse facilities, office space, equipment and other \nnon-real estate assets. The Company determines if an arrangement is a lease at inception and begins recording lease activity at \nthe commencement date, which is generally the date in which the Company takes possession of or controls the physical use of \nthe asset. Lease components are not separated from non-lease components for real estate leases within the Company's lease \nportfolio. Right-of-use (\"ROU\") assets and lease liabilities are recognized based on the present value of lease payments over the \nlease term with lease expense recognized on a straight-line basis. The Company's incremental borrowing rate is used to \ndetermine the present value of future lease payments unless the implicit rate is readily determinable. \nLease agreements may contain rent escalation clauses, renewal or termination options, rent holidays or certain landlord \nincentives, including tenant improvement allowances. ROU assets include amounts for scheduled rent increases and are reduced \nby the amount of lease incentives. The lease term includes the non-cancelable period of the lease and options to extend or \nterminate the lease when it is reasonably certain the Company will exercise those options. The Company does not record leases \nwith an initial term of 12 months or less on the Consolidated Balance Sheets and recognizes related lease payments in the \nConsolidated Statements of Income on a straight-line basis over the lease term. Certain lease agreements include variable lease \npayments, which are based on a percent of retail sales over specified levels or adjust periodically for inflation as a result of \nchanges in a published index, primarily the Consumer Price Index, and are expensed as incurred.\nFAIR VALUE MEASUREMENTS\nThe Company measures certain financial assets and liabilities at fair value on a recurring basis, including derivatives, equity \nsecurities and available-for-sale debt securities. Fair value is the price the Company would receive to sell an asset or pay to \ntransfer a liability in an orderly transaction with a market participant at the measurement date. The Company uses a three-level \nhierarchy that prioritizes fair value measurements based on the types of inputs used, as follows:\n66\n       NIKE, INC.\n\n\n• Level 1: Quoted prices in active markets for identical assets or liabilities.\n• Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly; these include \nquoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in \nmarkets that are not active.\n• Level 3: Unobservable inputs with little or no market data available, which require the reporting entity to develop its own \nassumptions.\nThe Company's assessment of the significance of a particular input to the fair value measurement in its entirety requires \njudgment and considers factors specific to the asset or liability. Financial assets and liabilities are classified in their entirety based \non the most conservative level of input that is significant to the fair value measurement.\nPricing vendors are utilized for a majority of Level 1 and Level 2 investments. These vendors either provide a quoted market price \nin an active market or use observable inputs without applying significant adjustments in their pricing. Observable inputs include \nbroker quotes, interest rates and yield curves observable at commonly quoted intervals, volatilities and credit risks. The fair value \nof derivative contracts is determined using observable market inputs such as the daily market foreign currency rates, forward \npricing curves, currency volatilities, currency correlations and interest rates and considers nonperformance risk of the Company \nand its counterparties. \nThe Company's fair value measurement process includes comparing fair values to another independent pricing vendor to ensure \nappropriate fair values are recorded.\nRefer to Note 4 — Fair Value Measurements for additional information.\nFOREIGN CURRENCY TRANSLATION AND FOREIGN CURRENCY TRANSACTIONS\nAdjustments resulting from translating foreign functional currency financial statements into U.S. Dollars are included in the foreign \ncurrency translation adjustment, a component of Accumulated other comprehensive income (loss).\nThe Company's global subsidiaries have various monetary assets and liabilities, primarily receivables and payables, which are \ndenominated in currencies other than their functional currency. These balance sheet items are subject to remeasurement, the \nimpact of which is recorded in Other (income) expense, net, within the Consolidated Statements of Income.\nACCOUNTING FOR DERIVATIVES AND HEDGING ACTIVITIES\nThe Company uses derivative financial instruments to reduce its exposure to changes in foreign currency exchange rates and \ninterest rates. All derivatives are recorded at fair value on the Consolidated Balance Sheets and changes in the fair value of \nderivative financial instruments are either recognized in Accumulated other comprehensive income (loss), Long-term debt or Net \nincome depending on the nature of the underlying exposure, whether the derivative is formally designated as a hedge and, if \ndesignated, the extent to which the hedge is effective. The Company classifies the cash flows at settlement from derivatives in \nthe same category as the cash flows from the related hedged items. For undesignated hedges and designated cash flow hedges, \nthis is primarily within the Cash provided by operations component of the Consolidated Statements of Cash Flows. For \ndesignated net investment hedges, this is within the Cash provided by investing activities component of the Consolidated \nStatements of Cash Flows. For the Company's fair value hedges, which are interest rate swaps used to mitigate the change in \nfair value of its fixed-rate debt attributable to changes in interest rates, the related cash flows from periodic interest payments are \nreflected within the Cash provided by operations component of the Consolidated Statements of Cash Flows. \nRefer to Note 12 — Risk Management and Derivatives for additional information on the Company's risk management program \nand derivatives.\nSTOCK-BASED COMPENSATION\nThe Company accounts for stock-based compensation by estimating the fair value, net of estimated forfeitures, of equity awards \nand recognizing the related expense as Cost of sales or Operating overhead expense, as applicable, in the Consolidated \nStatements of Income on a straight-line basis over the vesting period. Substantially all awards vest ratably over four years of \ncontinued employment, with stock options expiring 10 years from the date of grant. Performance-based restricted stock units vest \nbased on the Company's achievement of certain performance criteria throughout the three-year performance period and \ncontinued employment through the vesting date. The fair value of options, stock appreciation rights and employees' purchase \nrights under the employee stock purchase plans (\"ESPPs\") is determined using the Black-Scholes option pricing model. The fair \nvalue of restricted stock and time-vesting restricted stock units is established by the market price on the date of grant. The fair \nvalue of performance-based restricted stock units is estimated as of the grant date using a Monte Carlo simulation.\nRefer to Note 9 — Common Stock and Stock-Based Compensation for additional information on the Company's stock-based \ncompensation programs.\n2024 FORM 10-K   67    \n\n\nINCOME TAXES\nThe Company accounts for income taxes using the asset and liability method. This approach requires the recognition of deferred \ntax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and \nthe tax basis of assets and liabilities. The Company records a valuation allowance to reduce deferred tax assets to the amount \nmanagement believes is more likely than not to be realized. Realization of deferred tax assets is dependent on future taxable \nearnings and is therefore uncertain. At least quarterly, the Company assesses taxable income in prior carryback periods, the \nscheduled reversal of deferred tax liabilities, projected future taxable income and available tax planning strategies. The Company \nuses forecasts of taxable income and considers foreign tax credit utilization in making this assessment of realization, which are \ninherently uncertain and can result in variation between estimated and actual results. To the extent the Company believes that \nrecovery is not likely, a valuation allowance is established against the net deferred tax asset, which increases the Company's \nincome tax expense in the period when such determination is made.\nThe Company recognizes a tax benefit from uncertain tax positions in the consolidated financial statements only when it is more \nlikely than not the position will be sustained upon examination by relevant tax authorities. The Company recognizes interest and \npenalties related to income tax matters in Income tax expense.\nRefer to Note 7 — Income Taxes for further discussion.\nEARNINGS PER SHARE\nBasic earnings per common share is calculated by dividing Net income by the weighted average number of common shares \noutstanding during the year. Diluted earnings per common share is calculated by adjusting weighted average outstanding shares, \nassuming conversion of all potentially dilutive stock options and awards.\nRefer to Note 10 — Earnings Per Share for further discussion.\nRECENTLY ISSUED ACCOUNTING STANDARDS AND DISCLOSURE RULES\nIn November 2023, the Financial Accounting Standards Board (the \"FASB\") issued Accounting Standards Update (\"ASU\") \n2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which is intended to improve \nreportable segment disclosure requirements, primarily through enhanced disclosures about significant expenses. The \namendments will require public entities to disclose significant segment expenses that are regularly provided to the chief operating \ndecision maker and included within segment profit and loss. The amendments are effective for the Company's annual periods \nbeginning June 1, 2024, and interim periods beginning June 1, 2025, with early adoption permitted, and will be applied \nretrospectively to all prior periods presented in the financial statements. The Company is currently evaluating the ASU to \ndetermine its impact on the Company's disclosures.\nIn December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which \nincludes amendments that further enhance income tax disclosures, primarily through standardization and disaggregation of rate \nreconciliation categories and income taxes paid by jurisdiction. The amendments are effective for the Company's annual periods \nbeginning June 1, 2025, with early adoption permitted, and should be applied either prospectively or retrospectively. The \nCompany is currently evaluating the ASU to determine its impact on the Company's disclosures.\nIn March 2024, the U.S. Securities and Exchange Commission (\"SEC\") adopted the final rule under SEC Release No. 33-11275, \nThe Enhancement and Standardization of Climate-Related Disclosures for Investors. This rule will require registrants to disclose \ncertain climate-related information in registration statements and annual reports. In April 2024, the SEC voluntarily stayed the \nfinal rule as a result of pending legal challenges. The disclosure requirements will apply to the Company's fiscal year beginning \nJune 1, 2025, pending resolution of the stay. The Company is currently evaluating the final rule to determine its impact on the \nCompany's disclosures.\nRECENTLY ADOPTED ACCOUNTING STANDARDS\nIn September 2022, the FASB issued ASU 2022-04, Liabilities — Supplier Finance Programs (Subtopic 405-50): Disclosure of \nSupplier Finance Program Obligations. The new guidance requires qualitative and quantitative disclosure sufficient to enable \nusers of the financial statements to understand the nature, activity during the period, changes from period to period and potential \nmagnitude of such programs. The Company adopted the required guidance in the first quarter of fiscal 2024. \nCertain financial institutions offer voluntary supplier finance programs facilitated through a third-party platform that provide \nparticipating suppliers the option to finance valid payment obligations from the Company. The Company is not a party to \nagreements negotiated between participating suppliers and third-party financial institutions. The Company's obligations to its \nsuppliers, including amounts due and payment terms, are not affected by a supplier's decision to participate in these programs \nand the Company does not provide guarantees to third parties in connection with these programs. As of May 31, 2024 and \nMay 31, 2023, the Company had $840 million and $834 million, respectively, of outstanding supplier obligations confirmed as \n68\nvalid under these programs. These amounts are included within Accounts payable on the Consolidated Balance Sheets. \n       NIKE, INC.\n\n\nNOTE 2 — PROPERTY, PLANT AND EQUIPMENT\nProperty, plant and equipment, net included the following:\nMAY 31,\n(Dollars in millions)\n2024\n2023\nLand and improvements\n$ \n329 $ \n326 \nBuildings\n \n3,439  \n3,293 \nMachinery and equipment\n \n3,123  \n3,083 \nInternal-use software\n \n1,807  \n1,612 \nLeasehold improvements\n \n2,023  \n1,876 \nConstruction in process\n \n193  \n525 \nTotal property, plant and equipment, gross\n \n10,914  \n10,715 \nLess accumulated depreciation\n \n5,914  \n5,634 \nTOTAL PROPERTY, PLANT AND EQUIPMENT, NET\n$ \n5,000 $ \n5,081 \nCapitalized interest was not material for the fiscal years ended May 31, 2024, 2023 and 2022.\nNOTE 3 — ACCRUED LIABILITIES\nAccrued liabilities included the following:\nMAY 31,\n(Dollars in millions)\n2024\n2023\nCompensation and benefits, excluding taxes\n$ \n1,291 $ \n1,737 \nSales-related reserves \n \n1,282  \n994 \nEndorsement compensation\n \n578  \n552 \nDividends payable\n \n563  \n529 \nOther\n \n2,011  \n1,911 \nTotal Accrued Liabilities\n$ \n5,725 $ \n5,723 \n2024 FORM 10-K   69    \n\n\nNOTE 4 — FAIR VALUE MEASUREMENTS\nThe following tables present information about the Company's financial assets measured at fair value on a recurring basis as of \nMay 31, 2024 and 2023, and indicate the level in the fair value hierarchy in which the Company classifies the fair value \nmeasurement.\n \nMAY 31, 2024\n(Dollars in millions)\nASSETS AT FAIR VALUE\nCASH AND EQUIVALENTS\nSHORT-TERM INVESTMENTS\nCash\n$ \n1,222 $ \n1,222 $ \n— \nLevel 1:\nU.S. Treasury securities\n \n1,175  \n155  \n1,020 \nLevel 2:\nCommercial paper and bonds\n \n591  \n17  \n574 \nMoney market funds\n \n8,119  \n8,119  \n— \nTime deposits\n \n440  \n347  \n93 \nU.S. Agency securities\n \n35  \n—  \n35 \nTotal Level 2\n \n9,185  \n8,483  \n702 \nTOTAL\n$ \n11,582 $ \n9,860 $ \n1,722 \nMAY 31, 2023\n(Dollars in millions)\nASSETS AT FAIR VALUE\nCASH AND EQUIVALENTS\nSHORT-TERM INVESTMENTS\nCash\n$ \n1,767 $ \n1,767 $ \n— \nLevel 1:\nU.S. Treasury securities\n \n2,655  \n—  \n2,655 \nLevel 2:\nCommercial paper and bonds\n \n543  \n15  \n528 \nMoney market funds\n \n5,157  \n5,157  \n— \nTime deposits\n \n507  \n502  \n5 \nU.S. Agency securities\n \n46  \n—  \n46 \nTotal Level 2\n \n6,253  \n5,674  \n579 \nTOTAL\n$ \n10,675 $ \n7,441 $ \n3,234 \nAs of May 31, 2024, the Company held $1,002 million of available-for-sale debt securities with maturity dates within one year and \n$720 million with maturity dates over one year and less than five years in Short-term investments on the Consolidated Balance \nSheets. The fair value of the Company's available-for-sale debt securities approximates their amortized cost.\nIncluded in Interest expense (income), net was interest income related to the Company's investment portfolio of $430 million, \n$297 million and $94 million for the years ended May 31, 2024, 2023 and 2022, respectively.\nThe Company records the assets and liabilities of its derivative financial instruments on a gross basis on the Consolidated \nBalance Sheets. The Company's derivative financial instruments are subject to master netting arrangements that allow for the \noffset of assets and liabilities in the event of default or early termination of the contract. Any amounts of cash collateral received \nrelated to these instruments associated with the Company's credit-related contingent features are recorded in Cash and \nequivalents and Accrued liabilities, the latter of which would further offset against the Company's derivative asset balance. Any \namounts of cash collateral posted related to these instruments associated with the Company's credit-related contingent features \nare recorded in Prepaid expenses and other current assets, which would further offset against the Company's derivative liability \nbalance. Cash collateral received or posted related to the Company's credit-related contingent features is presented in the Cash \nprovided by operations component of the Consolidated Statements of Cash Flows. The Company does not recognize amounts of \nnon-cash collateral received, such as securities, on the Consolidated Balance Sheets. For additional information related to credit \nrisk, refer to Note 12 — Risk Management and Derivatives.\n70\n       NIKE, INC.\n\n\nThe following tables present information about the Company's derivative assets and liabilities measured at fair value on a \nrecurring basis and indicate the level in the fair value hierarchy in which the Company classifies the fair value measurement:\nMAY 31, 2024\nDERIVATIVE ASSETS\nDERIVATIVE LIABILITIES\n(Dollars in millions)\nASSETS AT \nFAIR VALUE\nOTHER \nCURRENT \nASSETS\nOTHER \nLONG-TERM \nASSETS\nLIABILITIES \nAT FAIR \nVALUE\nACCRUED \nLIABILITIES\nOTHER \nLONG-TERM \nLIABILITIES\nLevel 2:\nForeign exchange forwards and options(1)\n$ \n343 $ \n299 $ \n44 \n$ \n120 $ \n115 $ \n5 \nInterest rate swaps(1)\n \n—  \n—  \n— \n \n31  \n—  \n31 \nTOTAL\n$ \n343 $ \n299 $ \n44 \n$ \n151 $ \n115 $ \n36 \n(1)\nIf the foreign exchange and interest rate swap derivative instruments had been netted on the Consolidated Balance Sheets, the asset and liability \npositions each would have been reduced by $142 million as of May 31, 2024. As of that date, the Company received $112 million of cash collateral \nfrom various counterparties on the derivative asset balance and posted $10 million cash collateral on the derivative liability balance.\nMAY 31, 2023\nDERIVATIVE ASSETS\nDERIVATIVE LIABILITIES\n(Dollars in millions)\nASSETS AT \nFAIR VALUE\nOTHER \nCURRENT \nASSETS\nOTHER \nLONG-TERM \nASSETS\nLIABILITIES \nAT FAIR \nVALUE\nACCRUED \nLIABILITIES\nOTHER \nLONG-TERM \nLIABILITIES\nLevel 2:\nForeign exchange forwards and options(1)\n$ \n557 $ \n493 $ \n64 \n$ \n180 $ \n128 $ \n52 \n(1)\nIf the foreign exchange derivative instruments had been netted on the Consolidated Balance Sheets, the asset and liability positions each would have \nbeen reduced by $178 million as of May 31, 2023. As of that date, the Company had received $36 million of cash collateral from various counterparties \nrelated to foreign exchange derivative instruments. No amount of collateral was posted on the Company's derivative liability balance as of May 31, \n2023.\nFor additional information related to the Company's derivative financial instruments, refer to Note 12 — Risk Management and \nDerivatives. For fair value information regarding Notes payable and Long-term debt, refer to Note 5 — Short-Term Borrowings \nand Credit Lines and Note 6 — Long-Term Debt, respectively. \nThe carrying amounts of other current financial assets and other current financial liabilities approximate fair value.\n2024 FORM 10-K   71    \n\n\nNOTE 5 — SHORT-TERM BORROWINGS AND CREDIT LINES\nThe carrying amounts reflected on the Consolidated Balance Sheets for Notes payable approximate fair value.\nOn March 11, 2022, the Company entered into a five-year committed credit facility agreement with a syndicate of banks which \nprovides for up to $2 billion of borrowings, with the option to increase borrowings up to $3 billion in total with lender approval. The \nfacility matures on March 11, 2027, with options to extend the maturity date up to an additional two years. Based on the \nCompany's current long-term senior unsecured debt ratings of AA- and A1 from Standard and Poor's Corporation and Moody's \nInvestor Services, respectively, the interest rate charged on any outstanding borrowings would be the prevailing Term Secured \nOvernight Financing Rate (\"Term SOFR\") for the applicable interest period plus 0.60%. The facility fee is 0.04% of the total \nundrawn commitment.\nOn March 8, 2024, the Company entered into a 364-day committed credit facility agreement with a syndicate of banks, which \nprovides for up to $1 billion of borrowings, with an option to increase borrowings up to $1.5 billion in total with lender approval. \nThe facility matures on March 7, 2025, with an option to extend the maturity date an additional 364 days. This facility replaces the \nprior $1 billion 364-day credit facility agreement entered into on March 10, 2023, which matured on March 8, 2024. Based on the \nCompany's current long-term senior unsecured debt ratings of AA- and A1 from Standard and Poor's Corporation and Moody's \nInvestor Services, respectively, the interest rate charged on any outstanding borrowings would be the prevailing Term SOFR for \nthe applicable interest period plus 0.60%. The facility fee is 0.02% of the total undrawn commitment.\nAs of and for the periods ended May 31, 2024 and 2023, no amounts were outstanding under any of the Company's committed \ncredit facilities.\n72\n       NIKE, INC.\n\n\nNOTE 6 — LONG-TERM DEBT\nLong-term debt, net of unamortized premiums, discounts, and debt issuance costs, and swap fair value adjustments comprises \nthe following: \nBOOK VALUE \nOUTSTANDING \nAS OF MAY 31,\nScheduled Maturity (Dollars in millions)\nORIGINAL PRINCIPAL INTEREST RATE\nINTEREST PAYMENTS\n2024\n2023\nCorporate Term Debt:(1)(2)\nMarch 27, 2025\n \n1,000 \n \n2.40 %\nSemi-Annually\n$ \n999 $ \n998 \nNovember 1, 2026\n \n1,000 \n \n2.38 %\nSemi-Annually\n \n998  \n997 \nMarch 27, 2027\n \n1,000 \n \n2.75 %\nSemi-Annually\n \n998  \n997 \nMarch 27, 2030\n \n1,500 \n \n2.85 %\nSemi-Annually\n \n1,494  \n1,492 \nMarch 27, 2040(3)\n \n1,000 \n \n3.25 %\nSemi-Annually\n \n966  \n987 \nMay 1, 2043(3)\n \n500 \n \n3.63 %\nSemi-Annually\n \n488  \n496 \nNovember 1, 2045(3)\n \n1,000 \n \n3.88 %\nSemi-Annually\n \n986  \n986 \nNovember 1, 2046\n \n500 \n \n3.38 %\nSemi-Annually\n \n492  \n492 \nMarch 27, 2050\n \n1,500 \n \n3.38 %\nSemi-Annually\n \n1,482  \n1,482 \nTotal\n \n8,903  \n8,927 \nLess Current Portion of Long-Term Debt\n \n1,000  \n— \nTOTAL LONG-TERM DEBT\n$ \n7,903 $ \n8,927 \n(1)\nThese senior unsecured obligations rank equally with the Company's other unsecured and unsubordinated indebtedness.\n(2)\nThe bonds are redeemable at the Company's option at a price equal to the greater of (i) 100% of the aggregate principal amount of the notes to be \nredeemed or (ii) the sum of the present values of the remaining scheduled payments, plus in each case, accrued and unpaid interest. However, the \nbonds also feature a par call provision, which allows for the bonds to be redeemed at a price equal to 100% of the aggregate principal amount of the \nnotes being redeemed, plus accrued and unpaid interest on or after the Par Call Date, which can range from one to six months prior to the scheduled \nmaturity, as defined in the respective notes.\n(3)\nThe Company entered into interest rate swap agreements pursuant to which the Company receives fixed interest payments at the same rate as the \nterm debt and pays variable interest payments based on SOFR plus a fixed spread. At May 31, 2024, the notional amount outstanding of these swaps \nwas $1.8 billion and had interest rates payable that ranged from 4.6% to 5.1%. These swaps mature during fiscal 2034.\nThe scheduled maturity of Long-term debt in each of the years ending May 31, 2025 through 2029, are $1,000 million, $0 million, \n$2,000 million, $0 million and $0 million, respectively, at face value.\nThe Company's Long-term debt is recorded at adjusted cost, net of unamortized premiums, discounts, and debt issuance costs, \nand swap fair value adjustments. The fair value of long-term debt is estimated based upon quoted prices for similar instruments \nor quoted prices for identical instruments in inactive markets (Level 2). The fair value of the Company's Long-term debt, including \nthe current portion, was approximately $7,631 million and $7,889 million as of May 31, 2024 and 2023, respectively. \n2024 FORM 10-K   73    \n\n\nNOTE 7 — INCOME TAXES\nIncome before income taxes is as follows:\nYEAR ENDED MAY 31,\n(Dollars in millions)\n2024\n2023\n2022\nIncome before income taxes:\nUnited States\n$ \n5,588 $ \n4,663 $ \n6,020 \nForeign\n \n1,112  \n1,538  \n631 \nTOTAL INCOME BEFORE INCOME TAXES\n$ \n6,700 $ \n6,201 $ \n6,651 \nThe provision for income taxes is as follows:\nYEAR ENDED MAY 31,\n(Dollars in millions)\n2024\n2023\n2022\nCurrent:\nUnited States\nFederal\n$ \n782 $ \n430 $ \n231 \nState\n \n201  \n184  \n98 \nForeign\n \n514  \n634  \n926 \nTotal Current\n \n1,497  \n1,248  \n1,255 \nDeferred:\nUnited States\nFederal\n \n(422)  \n(162)  \n(522) \nState\n \n(61)  \n(25)  \n(16) \nForeign\n \n(14)  \n70  \n(112) \nTotal Deferred\n \n(497)  \n(117)  \n(650) \nTOTAL INCOME TAX EXPENSE\n$ \n1,000 $ \n1,131 $ \n605 \nA reconciliation from the U.S. statutory federal income tax rate to the effective income tax rate is as follows:\n \nYEAR ENDED MAY 31,\n2024\n2023\n2022\nFederal income tax rate\n \n21.0 \n%\n \n21.0 \n%\n \n21.0 \n%\nState taxes, net of federal benefit\n \n1.4 \n%\n \n1.5 \n%\n \n1.4 \n%\nForeign earnings\n \n-2.5 \n%\n \n1.7 \n%\n \n-1.8 \n%\nSubpart F deferred tax benefit\n \n0.0 \n%\n \n0.0 \n%\n \n-4.7 \n%\nForeign-derived intangible income benefit\n \n-4.8 \n%\n \n-6.1 \n%\n \n-4.1 \n%\nExcess tax benefits from stock-based compensation\n \n-0.5 \n%\n \n-1.1 \n%\n \n-4.9 \n%\nIncome tax audits and contingency reserves\n \n1.8 \n%\n \n1.0 \n%\n \n1.5 \n%\nU.S. research and development tax credit\n \n-2.1 \n%\n \n-1.2 \n%\n \n-1.0 \n%\nOther, net\n \n0.6 \n%\n \n1.4 \n%\n \n1.7 \n%\nEFFECTIVE INCOME TAX RATE\n \n14.9 \n%\n \n18.2 \n%\n \n9.1 \n%\nThe effective tax rate for the fiscal year ended May 31, 2024 was lower than the effective tax rate for the fiscal year ended \nMay 31, 2023. The decrease in the Company's effective tax rate was primarily due to changes in the Company's earning mix and \none-time benefits including the impact of temporary relief provided by the Internal Revenue Service (\"IRS\") relating to U.S. \nforeign tax credit regulations. On July 21, 2023, the IRS issued Notice 2023-55 which specifically delayed the application of \ncertain U.S. foreign tax credit regulations that had previously limited the Company's ability to claim credits on certain foreign \ntaxes for the fiscal year ended May 31, 2023. As a result of this new guidance, the Company recognized a one-time tax benefit \nrelated to prior year tax positions in the first three months of fiscal 2024.\nThe effective tax rate for the fiscal year ended May 31, 2023 was higher than the effective tax rate for the fiscal year ended \nMay 31, 2022. The increase was primarily due to decreased benefits from stock-based compensation and the recognition of a \nnon-cash, one-time benefit related to the onshoring of the Company's non-U.S. intangible property in fiscal 2022. During the \nfourth quarter of fiscal 2022, the Company onshored certain non-U.S. intangible property ownership rights and implemented \n74\n       NIKE, INC.\n\n\nchanges in the Company's legal entity structure. The tax restructuring increases the possibility that foreign earnings in future \nperiods will be subject to tax in the U.S. due to Subpart F of the Internal Revenue Code. The Company recognized a deferred tax \nasset and corresponding non-cash deferred income tax benefit of 4.7%, to establish the deferred tax deduction that is expected \nto reduce taxable income in future periods.\nOn August 16, 2022, the U.S. government enacted the Inflation Reduction Act of 2022 that included, among other provisions, \nchanges to the U.S. corporate income tax system, including a fifteen percent minimum tax based on \"adjusted financial statement \nincome,\" which was effective for the Company beginning June 1, 2023. Based on the Company's current analysis of the \nprovisions, these tax law changes did not have a material impact on the Company's Consolidated Financial Statements for fiscal \n2024.\nDeferred income tax assets and liabilities comprise the following as of: \nMAY 31,\n(Dollars in millions)\n2024\n2023\nDeferred tax assets:\nInventories\n$ \n69 $ \n79 \nSales return reserves\n \n125  \n89 \nDeferred compensation\n \n347  \n321 \nStock-based compensation\n \n290  \n261 \nReserves and accrued liabilities\n \n113  \n144 \nOperating lease liabilities\n \n474  \n511 \nIntangibles\n \n236  \n255 \nCapitalized research and development expenditures \n \n878  \n548 \nNet operating loss carry-forwards\n \n21  \n15 \nSubpart F deferred tax\n \n409  \n374 \nOther\n \n214  \n183 \nTotal deferred tax assets\n \n3,176  \n2,780 \nValuation allowance\n \n(29)  \n(22) \nTotal deferred tax assets after valuation allowance\n \n3,147  \n2,758 \nDeferred tax liabilities:\nForeign withholding tax on undistributed earnings of foreign subsidiaries\n \n(131)  \n(186) \nProperty, plant and equipment\n \n(290)  \n(276) \nRight-of-use assets\n \n(397)  \n(441) \nOther\n \n(9)  \n(56) \nTotal deferred tax liabilities\n \n(827)  \n(959) \nNET DEFERRED TAX ASSET (1)\n$ \n2,320 $ \n1,799 \n(1)\nOf the total $2,320 million net deferred tax asset for the period ended May 31, 2024, $2,465 million was included within Deferred income taxes and \nother assets and $(145) million was included within Deferred income taxes and other liabilities on the Consolidated Balance Sheets. Of the total $1,799 \nmillion net deferred tax asset for the period ended May 31, 2023, $2,026 million was included within Deferred income taxes and other assets and \n$(227) million was included within Deferred income taxes and other liabilities on the Consolidated Balance Sheets.\nDeferred tax assets as of May 31, 2024 and 2023, were reduced by a valuation allowance. For the fiscal years ended May 31, \n2024 and 2023, a valuation allowance was provided for U.S. capital loss carryforwards and on tax benefits generated by certain \nentities with operating losses.\n2024 FORM 10-K   75    \n\n\nThe following is a reconciliation of the changes in the gross balance of unrecognized tax benefits as of:\n \nMAY 31,\n(Dollars in millions)\n2024\n2023\n2022\nUnrecognized tax benefits, beginning of the period\n$ \n936 $ \n848 $ \n896 \nGross increases related to prior period tax positions\n \n35  \n95  \n71 \nGross decreases related to prior period tax positions\n \n(13)  \n(17)  \n(145) \nGross increases related to current period tax positions\n \n77  \n50  \n62 \nSettlements\n \n(22)  \n(18)  \n(17) \nLapse of statute of limitations\n \n(24)  \n(7)  \n(10) \nChanges due to currency translation\n \n1  \n(15)  \n(9) \nUNRECOGNIZED TAX BENEFITS, END OF THE PERIOD\n$ \n990 $ \n936 $ \n848 \nAs of May 31, 2024, total gross unrecognized tax benefits, excluding related interest and penalties, were $990 million, of which \n$699 million would affect the Company's effective tax rate if recognized in future periods. The majority of the total gross \nunrecognized tax benefits are long-term in nature and included within Deferred income taxes and other liabilities on the \nConsolidated Balance Sheets.\nThe Company recognizes interest and penalties related to income tax matters in Income tax expense. As of May 31, 2024 and \n2023, accrued interest and penalties related to uncertain tax positions were $332 million and $268 million, respectively (excluding \nfederal benefit) and were included within Deferred income taxes and other liabilities on the Consolidated Balance Sheets.\nAs of May 31, 2024 and 2023, long-term income taxes payable unrelated to unrecognized tax benefits were $266 million and \n$373 million, respectively, and were included within Deferred income taxes and other liabilities on the Consolidated Balance \nSheets. \nThe Company is subject to taxation in the U.S., as well as various state and foreign jurisdictions. The Company is currently under \naudit by the U.S. IRS for fiscal years 2017 through 2019. The Company has closed all U.S. federal income tax matters through \nfiscal 2016, with the exception of certain transfer pricing adjustments. Tax years after 2011 remain open in certain major foreign \njurisdictions. Although the timing of resolution of audits is not certain, the Company evaluates all domestic and foreign audit \nissues in the aggregate, along with the expiration of applicable statutes of limitations, and estimates that it is reasonably possible \nthe total gross unrecognized tax benefits could decrease by up to $35 million within the next 12 months. \nIn January 2019, the European Commission opened a formal investigation to examine whether the Netherlands has breached \nState Aid rules when granting certain tax rulings to the Company. The Company believes the investigation is without merit. If this \nmatter is adversely resolved, the Netherlands may be required to assess additional amounts with respect to prior periods, and the \nCompany's income taxes related to prior periods in the Netherlands could increase. \nA portion of the Company's foreign operations benefit from a tax holiday, which is set to expire in 2031. This tax holiday may be \nextended when certain conditions are met or may be terminated early if certain conditions are not met. The tax benefit attributable \nto this tax holiday, before taking into consideration other U.S. indirect tax provisions, was $338 million, $263 million and $221 \nmillion for the fiscal years ended May 31, 2024, 2023 and 2022, respectively. The benefit of the tax holiday on diluted earnings \nper common share, before taking into consideration other U.S. indirect tax provisions, was $0.22, $0.17 and $0.14 for the fiscal \nyears ended May 31, 2024, 2023 and 2022, respectively.\nNOTE 8 — REDEEMABLE PREFERRED STOCK\nSojitz America is the sole owner of the Company's authorized redeemable preferred stock, $1 par value, which is redeemable at \nthe option of Sojitz America or the Company at par value aggregating $0.3 million. A cumulative dividend of $0.10 per share is \npayable annually on May 31, and no dividends may be declared or paid on the common stock of the Company unless dividends \non the redeemable preferred stock have been declared and paid in full. There have been no changes in the redeemable preferred \nstock in the fiscal years ended May 31, 2024, 2023 and 2022. As the holder of the redeemable preferred stock, Sojitz America \ndoes not have general voting rights but does have the right to vote as a separate class on the sale of all or substantially all of the \nassets of the Company and its subsidiaries; on merger, consolidation, liquidation or dissolution of the Company; or on the sale or \nassignment of the NIKE trademark for athletic footwear sold in the United States. The redeemable preferred stock has been fully \nissued to Sojitz America and is not blank check preferred stock. The Company's articles of incorporation do not permit the \nissuance of additional preferred stock.\n76\n       NIKE, INC.\n\n\nNOTE 9 — COMMON STOCK AND STOCK-BASED COMPENSATION\nCOMMON STOCK\nThe authorized number of shares of Class A Common Stock, no par value, and Class B Common Stock, no par value, are 400 \nmillion and 2,400 million, respectively. Each share of Class A Common Stock is convertible into one share of Class B Common \nStock. Voting rights of Class B Common Stock are limited in certain circumstances with respect to the election of directors. There \nare no differences in the dividend and liquidation preferences or participation rights of the holders of Class A and Class B \nCommon Stock. From time to time, the Company's Board of Directors authorizes share repurchase programs for the repurchase \nof Class B Common Stock. The value of repurchased shares is deducted from Total shareholders' equity through allocation to \nCapital in excess of stated value and Retained earnings.\nSTOCK-BASED COMPENSATION\nThe NIKE, Inc. Stock Incentive Plan (the \"Stock Incentive Plan\") provides for the issuance of up to 798 million previously \nunissued shares of Class B Common Stock in connection with equity awards granted under the Stock Incentive Plan. The Stock \nIncentive Plan authorizes the grant of non-statutory stock options, incentive stock options, stock appreciation rights, and stock \nawards, including restricted stock and restricted stock units. Restricted stock units include both time-vesting restricted stock units \n(\"RSUs\") as well as performance-based restricted stock units (\"PSUs\"). A committee of the Board of Directors administers the \nStock Incentive Plan and has the authority to determine the employees to whom awards will be made, the amount of the awards \nand the other terms and conditions of the awards. The Company generally grants stock options, restricted stock and restricted \nstock units on an annual basis. The exercise price for stock options and stock appreciation rights may not be less than the fair \nmarket value of the underlying shares on the date of grant. Substantially all awards under the Stock Incentive Plan vest ratably \nover 4 years of continued employment, with stock options expiring 10 years from the date of grant. \nThe following table summarizes the Company's total stock-based compensation expense recognized in Cost of sales or \nOperating overhead expense, as applicable: \n \nYEAR ENDED MAY 31,\n(Dollars in millions)\n2024\n2023\n2022\nStock options(1)\n$ \n336 $ \n311 $ \n297 \nESPPs\n \n69  \n72  \n60 \nRestricted stock and restricted stock units(1)(2)\n \n399  \n372  \n281 \nTOTAL STOCK-BASED COMPENSATION EXPENSE\n$ \n804 $ \n755 $ \n638 \n(1)\nExpense for stock options includes the expense associated with stock appreciation rights. \n(2)\nFor the fiscal years ended May 31, 2024, 2023 and 2022, expense for restricted stock units includes an immaterial amount of expense for PSUs.\nThe income tax benefit related to stock-based compensation expense was $35 million, $71 million and $327 million for the fiscal \nyears ended May 31, 2024, 2023 and 2022, respectively, and reported within Income tax expense.\nSTOCK OPTIONS\nThe weighted average fair value per share of stock options granted during the fiscal years ended May 31, 2024, 2023 and 2022, \ncomputed as of the grant date using the Black-Scholes pricing model, was $32.78, $31.31 and $37.53, respectively. The \nweighted average assumptions used to estimate these fair values were as follows:\n \nYEAR ENDED MAY 31,\n2024\n2023\n2022\nDividend yield\n \n1.2 %\n \n0.9 %\n \n0.8 %\nExpected volatility\n \n29.3 %\n \n27.1 %\n \n24.9 %\nWeighted average expected life (in years)\n5.8\n5.8\n5.8\nRisk-free interest rate\n \n4.3 %\n \n3.3 %\n \n0.9 %\nExpected volatilities are based on an analysis of the historical volatility of the Company's common stock, the implied volatility in \nmarket traded options on the Company's common stock with a term greater than one year, as well as other factors. The weighted \naverage expected life of options is based on an analysis of historical and expected future exercise patterns. The interest rate is \nbased on the U.S. Treasury (constant maturity) risk-free rate in effect at the date of grant for periods corresponding with the \nexpected term of the options.\n2024 FORM 10-K   77    \n\n\nThe following summarizes the stock option transactions under the plan discussed above: \nSHARES\n(1)\nWEIGHTED \nAVERAGE \nOPTION PRICE\n(In millions)\nOptions outstanding as of May 31, 2023\n \n71.0 $ \n94.40 \nExercised\n \n(7.0)  \n62.46 \nForfeited\n \n(2.5)  \n117.20 \nGranted\n \n12.2  \n103.08 \nOptions outstanding as of May 31, 2024\n \n73.7 $ \n98.10 \n(1)\nIncludes stock appreciation rights transactions.\nOptions exercisable as of May 31, 2024 were 48.9 million and had a weighted average option price of $89.88 per share. The \naggregate intrinsic value for options outstanding and exercisable as of May 31, 2024 was $732 million and $732 million, \nrespectively. The total intrinsic value of the options exercised during the years ended May 31, 2024, 2023 and 2022 was $305 \nmillion, $438 million and $1,742 million, respectively. The intrinsic value is the amount by which the market value of the \nunderlying stock exceeds the exercise price of the options. The weighted average contractual life remaining for options \noutstanding and options exercisable as of May 31, 2024 was 5.5 years and 4.1 years, respectively. As of May 31, 2024, the \nCompany had $389 million of unrecognized compensation costs from stock options, net of estimated forfeitures, to be recognized \nin Cost of sales or Operating overhead expense, as applicable, over a weighted average remaining period of 2.5 years.\nEMPLOYEE STOCK PURCHASE PLANS\nIn addition to the Stock Incentive Plan, the Company gives employees the right to purchase shares at a discount from the market \nprice under ESPPs. Subject to the annual statutory limit, employees are eligible to participate through payroll deductions of up to \n10% of their compensation. At the end of each six-month offering period, shares are purchased by the participants at 85% of the \nlower of the fair market value at the beginning or the end of the offering period. Employees purchased 3.1 million, 3.0 million and \n2.0 million shares during each of the fiscal years ended May 31, 2024, 2023 and 2022, respectively.\nRESTRICTED STOCK AND RESTRICTED STOCK UNITS\nRecipients of restricted stock are entitled to cash dividends and to vote their respective shares throughout the period of \nrestriction. Recipients of restricted stock units, which includes RSUs and PSUs, are entitled to dividend equivalent cash \npayments upon vesting. The number of shares of restricted stock and restricted stock units vested includes shares of common \nstock withheld by the Company on behalf of employees to satisfy the minimum statutory tax withholding requirements. \nThe following summarizes the restricted stock and restricted stock units transactions under the plan discussed above: \nSHARES\n(1)\nWEIGHTED \nAVERAGE GRANT \nDATE  \nFAIR VALUE\n(In millions)\nNonvested as of May 31, 2023\n \n8.3 $ \n126.97 \nVested\n \n(3.3)  \n116.78 \nForfeited\n \n(1.2)  \n121.79 \nGranted\n \n5.3  \n103.13 \nNonvested as of May 31, 2024\n \n9.1 $ \n117.52 \n         (1) Includes an immaterial amount of PSU transactions\nThe weighted average fair value per share of restricted stock and restricted stock units granted for the fiscal years ended May 31, \n2024, 2023 and 2022, computed as of the grant date, was $103.13, $115.56 and $168.04, respectively. During the fiscal years \nended May 31, 2024, 2023 and 2022, the aggregate fair value of vested restricted stock and restricted stock units was $340 \nmillion, $250 million and $354 million, respectively, computed as of the date of vesting. \nAs of May 31, 2024, the Company had $594 million of unrecognized compensation costs from restricted stock and restricted \nstock units, net of estimated forfeitures, to be recognized in Cost of sales or Operating overhead expense, as applicable, over a \nweighted average remaining period of 2.4 years.\n78\n       NIKE, INC.\n\n\nNOTE 10 — EARNINGS PER SHARE\nThe following is a reconciliation from basic earnings per common share to diluted earnings per common share. The computations \nof diluted earnings per common share exclude restricted stock, restricted stock units and options, including shares under ESPPs, \nto purchase an estimated additional 41.0 million, 31.7 million and 9.4 million shares of common stock outstanding for the fiscal \nyears ended May 31, 2024, 2023 and 2022, respectively, because the awards were assumed to be anti-dilutive.\n \nYEAR ENDED MAY 31,\n(In millions, except per share data)\n2024\n2023\n2022\nNet income available to common stockholders\n$ \n5,700 $ \n5,070 $ \n6,046 \nDetermination of shares:\nWeighted average common shares outstanding\n \n1,517.6  \n1,551.6  \n1,578.8 \nAssumed conversion of dilutive stock options and awards\n \n12.1  \n18.2  \n32.0 \nDILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING\n \n1,529.7  \n1,569.8  \n1,610.8 \nEarnings per common share:\nBasic\n$ \n3.76 $ \n3.27 $ \n3.83 \nDiluted\n$ \n3.73 $ \n3.23 $ \n3.75 \nNOTE 11 — BENEFIT PLANS\nThe Company has a qualified 401(k) Savings and Profit Sharing Plan, in which all U.S. employees are able to participate. The \nCompany matches a portion of employee contributions to the savings plan. Company contributions to the savings plan were $153 \nmillion, $136 million and $126 million and included in Cost of sales or Operating overhead expense, as applicable, for the fiscal \nyears ended May 31, 2024, 2023 and 2022, respectively. \nThe Company allows certain highly compensated employees and non-employee directors of the Company to defer compensation \nunder a nonqualified deferred compensation plan. A rabbi trust was established to fund the Company's nonqualified deferred \ncompensation plan obligation. The assets in the rabbi trust of approximately $1,037 million and $875 million as of May 31, 2024 \nand 2023, respectively, primarily consist of company owned life insurance policies recorded at their cash surrender value and are \nclassified in Deferred income taxes and other assets on the Consolidated Balance Sheets. Deferred compensation plan liabilities \nwere $1,063 million and $897 million as of May 31, 2024 and 2023, respectively, and primarily classified in Deferred income taxes \nand other liabilities on the Consolidated Balance Sheets.\nNOTE 12 — RISK MANAGEMENT AND DERIVATIVES\nThe Company is exposed to global market risks, including the effect of changes in foreign currency exchange rates and interest \nrates, and uses derivatives to manage financial exposures that occur in the normal course of business. The Company does not \nhold or issue derivatives for trading or speculative purposes.\nThe Company may elect to designate certain derivatives as hedging instruments under U.S. GAAP. The Company formally \ndocuments all relationships between designated hedging instruments and hedged items, as well as its risk management \nobjectives and strategies for undertaking hedge transactions. This process includes linking all derivatives designated as hedges \nto either recognized assets or liabilities or forecasted transactions and assessing, both at inception and on an ongoing basis, the \neffectiveness of the hedging relationships.\nThe majority of derivatives outstanding as of May 31, 2024, are designated as foreign currency cash flow hedges, primarily for \nEuro/U.S. Dollar, British Pound/Euro, Chinese Yuan/U.S. Dollar and Japanese Yen/U.S. Dollar currency pairs. All derivatives are \nrecognized on the Consolidated Balance Sheets at fair value and classified based on the instrument's maturity date.\nThe following tables present the fair values of derivative instruments included within the Consolidated Balance Sheets:\n2024 FORM 10-K   79    \n\n\n \nDERIVATIVE ASSETS\nBALANCE SHEET LOCATION\nMAY 31,\n(Dollars in millions)\n2024\n2023\nDerivatives formally designated as hedging \ninstruments:\nForeign exchange forwards and options\nPrepaid expenses and other current assets $ \n269 $ \n480 \nForeign exchange forwards and options\nDeferred income taxes and other assets $ \n44 $ \n64 \nTotal derivatives formally designated as hedging \ninstruments\n \n313  \n544 \nDerivatives not designated as hedging \ninstruments:\nForeign exchange forwards and options\nPrepaid expenses and other current assets  \n30  \n13 \nTotal derivatives not designated as hedging \ninstruments\n \n30  \n13 \nTOTAL DERIVATIVE ASSETS\n$ \n343 $ \n557 \n \nDERIVATIVE LIABILITIES\nBALANCE SHEET LOCATION\nMAY 31,\n(Dollars in millions)\n2024\n2023\nDerivatives formally designated as hedging \ninstruments:\nForeign exchange forwards and options\nAccrued liabilities $ \n110 $ \n93 \nForeign exchange forwards and options\nDeferred income taxes and other liabilities  \n5  \n52 \nInterest rate swaps\nDeferred income taxes and other liabilities  \n31  \n— \nTotal derivatives formally designated as hedging \ninstruments\n \n146  \n145 \nDerivatives not designated as hedging \ninstruments:\nForeign exchange forwards and options\nAccrued liabilities  \n5  \n35 \nTotal derivatives not designated as hedging \ninstruments\n \n5  \n35 \nTOTAL DERIVATIVE LIABILITIES\n$ \n151 $ \n180 \n80\n       NIKE, INC.\n\n\nThe following tables present the amounts affecting the Consolidated Statements of Income for the years ended May 31, 2024, \n2023 and 2022:\n(Dollars in millions)\nAMOUNT OF GAIN (LOSS) \nRECOGNIZED IN OTHER \nCOMPREHENSIVE INCOME \n(LOSS) ON DERIVATIVES\n(1)\nAMOUNT OF GAIN (LOSS)  \nRECLASSIFIED FROM ACCUMULATED  \nOTHER COMPREHENSIVE  \nINCOME (LOSS) INTO INCOME\n(1)\nYEAR ENDED MAY 31,\nLOCATION OF GAIN (LOSS) \nRECLASSIFIED FROM ACCUMULATED \nOTHER COMPREHENSIVE INCOME \n(LOSS) INTO INCOME\nYEAR ENDED MAY 31,\n2024\n2023\n2022\n2024\n2023\n2022\nDerivatives designated as \ncash flow hedges:\nForeign exchange forwards \nand options\n$ \n(66) $ \n16 $ \n(39) \nRevenues\n$ \n(24) $ \n26 $ \n(82) \nForeign exchange forwards  \nand options\n \n231  \n305  \n889 \nCost of sales\n \n294  \n581  \n(23) \nForeign exchange forwards \nand options\n \n3  \n(1)  \n(6) \nDemand creation expense\n \n2  \n(5)  \n1 \nForeign exchange forwards \nand options\n \n102  \n207  \n492 \nOther (income) expense, net\n \n204  \n338  \n130 \nInterest rate swaps(2)\n \n—  \n—  \n— \nInterest expense (income), net\n \n(8)  \n(8)  \n(7) \nTotal designated cash \nflow hedges\n$ \n270 $ \n527 $ 1,336 \n$ \n468 $ \n932 $ \n19 \n(1)\nFor the fiscal years ended May 31, 2024, 2023, and 2022, the amounts recorded in Other (income) expense, net as a result of the discontinuance of \ncash flow hedges because the forecasted transactions were no longer probable of occurring were immaterial.\n(2)\nGains and losses associated with terminated interest rate swaps, which were previously designated as cash flow hedges and recorded in Accumulated \nother comprehensive income (loss), will be released through Interest expense (income), net over the term of the issued debt.\nAMOUNT OF GAIN (LOSS) RECOGNIZED \nIN INCOME ON DERIVATIVES\nLOCATION OF GAIN (LOSS)  \nRECOGNIZED IN INCOME  \nON DERIVATIVES\nYEAR ENDED MAY 31,\n(Dollars in millions)\n2024\n2023\n2022\nDerivatives not designated as hedging instruments:\nForeign exchange forwards and options and \nembedded derivatives\n$ \n24 $ \n28 $ \n38 \nOther (income) expense, net\nCASH FLOW HEDGES\nAll changes in fair value of derivatives designated as cash flow hedge instruments are recorded in Accumulated other \ncomprehensive income (loss) until Net income is affected by the variability of cash flows of the hedged transaction. Effective \nhedge results are classified in the Consolidated Statements of Income in the same manner as the underlying exposure. When it \nis no longer probable the forecasted hedged transaction will occur in the initially identified time period, hedge accounting is \ndiscontinued and the Company accounts for the associated derivative as an undesignated instrument as discussed below. \nAdditionally, the gains and losses associated with derivatives no longer designated as cash flow hedge instruments in \nAccumulated other comprehensive income (loss) are recognized immediately in Other (income) expense, net, if it is probable the \nforecasted hedged transaction will not occur by the end of the initially identified time period or within an additional two-month \nperiod thereafter. In rare circumstances, the additional period of time may exceed two months due to extenuating circumstances \nrelated to the nature of the forecasted transaction that are outside the control or influence of the Company. \nThe purpose of the Company's foreign exchange risk management program is to lessen both the positive and negative effects of \ncurrency fluctuations on the Company's consolidated results of operations, financial position and cash flows. Foreign currency \nexposures the Company may elect to hedge in this manner include product costs, non-functional currency denominated \nrevenues, intercompany revenues, demand creation expenses, investments in U.S. Dollar denominated available-for-sale debt \nsecurities and certain other intercompany transactions.\nProduct cost foreign currency exposures are primarily generated through non-functional currency denominated product \npurchases. NIKE entities primarily purchase product in two ways: (1) Certain NIKE entities purchase product from the NIKE \nTrading Company (\"NTC\"), a wholly-owned sourcing hub that buys NIKE branded products from third-party factories, \npredominantly in U.S. Dollars. The NTC, whose functional currency is the U.S. Dollar, then sells the product to NIKE entities in \ntheir respective functional currencies. NTC sales to a NIKE entity with a different functional currency result in a foreign currency \n2024 FORM 10-K   81    \nexposure for the NTC. (2) Other NIKE entities purchase product directly from third-party factories in U.S. Dollars. These \npurchases generate a foreign currency exposure for those NIKE entities with a functional currency other than the U.S. Dollar.\n\n\nThe Company's policy permits the utilization of derivatives to reduce its foreign currency exposures where internal netting or \nother strategies cannot be effectively employed. Typically, the Company may enter into hedge contracts starting up to 12 to 24 \nmonths in advance of the forecasted transaction and may place incremental hedges up to 100% of the exposure by the time the \nforecasted transaction occurs. The total notional amount of outstanding foreign currency derivatives designated as cash flow \nhedges was $16.2 billion and $18.2 billion as of May 31, 2024 and 2023, respectively.\nAs of May 31, 2024, approximately $231 million of deferred net gains (net of tax) on both outstanding and matured derivatives in \nAccumulated other comprehensive income (loss) are expected to be reclassified to Net income during the next 12 months \nconcurrent with the underlying hedged transactions also being recorded in Net income. Actual amounts ultimately reclassified to \nNet income are dependent on the exchange rates in effect when derivative contracts currently outstanding mature. As of May 31, \n2024, the maximum term over which the Company hedges exposures to the variability of cash flows for its forecasted \ntransactions was 24 months.\nFAIR VALUE HEDGES\nThe Company is exposed to the risk of changes in the fair value of certain fixed-rate debt attributable to changes in interest rates. \nDerivatives used by the Company to hedge this risk are receive-fixed, pay-variable interest rate swaps which are designated as \nfair value hedges of the related long-term debt. Changes in the fair values of the interest rate swaps are recorded in Long-term \ndebt or Current portion of long-term debt. The total notional amount of outstanding interest rate swaps designated as fair value \nhedges was $1.8 billion as of May 31, 2024. The Company had no outstanding fair value hedges as of May 31, 2023.\nNET INVESTMENT HEDGES\nThe Company has, in the past, hedged and may, in the future, hedge the risk of variability in foreign currency-denominated net \ninvestments in wholly-owned international operations. All changes in fair value of the derivatives designated as net investment \nhedges are reported in Accumulated other comprehensive income (loss) along with the foreign currency translation adjustments \non those investments. The Company had no outstanding net investment hedges as of May 31, 2024 and 2023.\nUNDESIGNATED DERIVATIVE INSTRUMENTS\nThe Company may elect to enter into foreign exchange forwards to mitigate the change in fair value of specific assets and \nliabilities on the Consolidated Balance Sheets. These undesignated instruments are recorded at fair value as a derivative asset or \nliability on the Consolidated Balance Sheets with their corresponding change in fair value recognized in Other (income) expense, \nnet, together with the remeasurement gain or loss from the hedged balance sheet position. The total notional amount of \noutstanding undesignated derivative instruments was $4.4 billion and $4.7 billion as of May 31, 2024 and 2023, respectively.\nCREDIT RISK\nThe Company is exposed to credit-related losses in the event of nonperformance by counterparties to hedging instruments. The \ncounterparties to all derivative transactions are major financial institutions with investment grade credit ratings; however, this \ndoes not eliminate the Company's exposure to credit risk with these institutions. This credit risk is limited to the unrealized gains \nin such contracts should any of these counterparties fail to perform as contracted. To manage this risk, the Company has \nestablished strict counterparty credit guidelines that are continually monitored.\nThe Company's derivative contracts contain credit risk-related contingent features designed to protect against significant \ndeterioration in counterparties' creditworthiness and their ultimate ability to settle outstanding derivative contracts in the normal \ncourse of business. The Company's bilateral credit-related contingent features generally require the owing entity, either the \nCompany or the derivative counterparty, to post collateral for the fair value of outstanding derivatives per counterparty. For certain \ncounterparties, collateral would only be posted for the fair value of outstanding derivatives per counterparty greater than $50 \nmillion. Additionally, for those counterparties, a certain level of decline in credit rating of either the Company or the counterparty \ncould trigger collateral requirements. As of May 31, 2024, the Company was in compliance with all credit risk-related contingent \nfeatures. The Company considers the impact of the risk of counterparty default to be immaterial.\nFor additional information related to the Company's derivative financial instruments and collateral, refer to Note 4 — Fair Value \nMeasurements.\n82\n       NIKE, INC.\n\n\nNOTE 13 — ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)\nThe changes in Accumulated other comprehensive income (loss), net of tax, were as follows:\n(Dollars in millions)\nFOREIGN \nCURRENCY \nTRANSLATION \nADJUSTMENT\n(1)\nCASH FLOW \nHEDGES\nNET \nINVESTMENT \nHEDGES\n(1)\nOTHER\nTOTAL\nBalance at May 31, 2023\n$ \n(253) $ \n431 $ \n115 $ \n(62) $ \n231 \nOther comprehensive income (loss):\nOther comprehensive gains (losses) before \nreclassifications(2)\n \n(4)  \n239  \n—  \n15  \n250 \nReclassifications to net income of previously deferred \n(gains) losses(2)(3)\n1\n(423)  \n— \n(6)\n(428)\nTotal other comprehensive income (loss)\n \n(3)  \n(184)  \n—  \n9  \n(178) \nBalance at May 31, 2024\n$ \n(256) $ \n247 $ \n115 $ \n(53) $ \n53 \n(1)\nThe accumulated foreign currency translation adjustment and net investment hedge gains/losses related to an investment in a foreign subsidiary are \nreclassified to Net income upon sale or upon complete or substantially complete liquidation of the respective entity.\n(2)\nNet of immaterial tax impact.\n(3)\nReclassifications to net income of previously deferred (gains) losses are recorded within Other (income) expense, net for foreign currency translation \nadjustment, net investment hedges, and other.\n(Dollars in millions)\nFOREIGN \nCURRENCY \nTRANSLATION \nADJUSTMENT\n(1)\nCASH FLOW \nHEDGES\nNET \nINVESTMENT \nHEDGES\n(1)\nOTHER\nTOTAL\nBalance at May 31, 2022\n$ \n(520) $ \n779 $ \n115 $ \n(56) $ \n318 \nOther comprehensive income (loss):\nOther comprehensive gains (losses) before \nreclassifications(2)\n \n(91)  \n487  \n—  \n(20)  \n376 \nReclassifications to net income of previously deferred \n(gains) losses(2)(3)\n \n358  \n(835)  \n—  \n14  \n(463) \nTotal other comprehensive income (loss)\n \n267  \n(348)  \n—  \n(6)  \n(87) \nBalance at May 31, 2023\n$ \n(253) $ \n431 $ \n115 $ \n(62) $ \n231 \n(1)\nThe accumulated foreign currency translation adjustment and net investment hedge gains/losses related to an investment in a foreign subsidiary are \nreclassified to Net income upon sale or upon complete or substantially complete liquidation of the respective entity.\n(2)\nNet of immaterial tax impact.\n(3)\nReclassifications to net income of previously deferred (gains) losses are recorded within Other (income) expense, net for foreign currency translation \nadjustment, net investment hedges, and other.\nFor additional information related to the Company's cash flow hedges refer to Note 12 — Risk Management and Derivatives.\n2024 FORM 10-K   83    \n\n\nNOTE 14 — REVENUES\nDISAGGREGATION OF REVENUES\nThe following tables present the Company's Revenues disaggregated by reportable operating segment, major product line and \ndistribution channel:\nYEAR ENDED MAY 31, 2024\n(Dollars in millions)\nNORTH \nAMERICA\nEUROPE, \nMIDDLE \nEAST & \nAFRICA\nGREATER \nCHINA\nASIA \nPACIFIC & \nLATIN \nAMERICA\nGLOBAL \nBRAND \nDIVISIONS\nTOTAL \nNIKE \nBRAND\nCONVERSE CORPORATE\nTOTAL \nNIKE, INC.\nRevenues by:\nFootwear\n$ 14,537 $ 8,473 $ 5,552 $ 4,865 $ \n— $ 33,427 $ 1,800 $ \n— $ 35,227 \nApparel\n \n5,953  \n4,380  \n1,828  \n1,614  \n—  13,775  \n93  \n—  \n13,868 \nEquipment\n \n906  \n754  \n165  \n250  \n—  \n2,075  \n37  \n—  \n2,112 \nOther\n \n—  \n—  \n—  \n—  \n45  \n45  \n152  \n(42)  \n155 \nTOTAL REVENUES\n$ 21,396 $ 13,607 $ 7,545 $ 6,729 $ \n45 $ 49,322 $ 2,082 $ \n(42) $ 51,362 \nRevenues by:\nSales to Wholesale \nCustomers\n$ 11,004 $ 8,562 $ 4,262 $ 3,930 $ \n— $ 27,758 $ 1,098 $ \n— $ 28,856 \nSales through Direct to \nConsumer\n 10,392  \n5,045  \n3,283  \n2,799  \n—  21,519  \n832  \n—  \n22,351 \nOther\n \n—  \n—  \n—  \n—  \n45  \n45  \n152  \n(42)  \n155 \nTOTAL REVENUES\n$ 21,396 $ 13,607 $ 7,545 $ 6,729 $ \n45 $ 49,322 $ 2,082 $ \n(42) $ 51,362 \nYEAR ENDED MAY 31, 2023\n(Dollars in millions)\nNORTH \nAMERICA\nEUROPE, \nMIDDLE \nEAST & \nAFRICA\nGREATER \nCHINA\nASIA \nPACIFIC & \nLATIN \nAMERICA\n \n(1)\nGLOBAL \nBRAND \nDIVISIONS\nTOTAL \nNIKE \nBRAND\nCONVERSE CORPORATE\nTOTAL \nNIKE, INC.\nRevenues by:\nFootwear\n$ 14,897 $ 8,260 $ 5,435 $ 4,543 $ \n— $ 33,135 $ 2,155 $ \n— $ 35,290 \nApparel\n \n5,947  \n4,566  \n1,666  \n1,664  \n—  13,843  \n90  \n—  \n13,933 \nEquipment\n \n764  \n592  \n147  \n224  \n—  \n1,727  \n28  \n—  \n1,755 \nOther\n \n—  \n—  \n—  \n—  \n58  \n58  \n154  \n27  \n239 \nTOTAL REVENUES\n$ 21,608 $ 13,418 $ 7,248 $ 6,431 $ \n58 $ 48,763 $ 2,427 $ \n27 $ 51,217 \nRevenues by:\nSales to Wholesale \nCustomers\n$ 11,273 $ 8,522 $ 3,866 $ 3,736 $ \n— $ 27,397 $ 1,299 $ \n— $ 28,696 \nSales through Direct to \nConsumer\n 10,335  \n4,896  \n3,382  \n2,695  \n—  21,308  \n974  \n—  \n22,282 \nOther\n \n—  \n—  \n—  \n—  \n58  \n58  \n154  \n27  \n239 \nTOTAL REVENUES\n$ 21,608 $ 13,418 $ 7,248 $ 6,431 $ \n58 $ 48,763 $ 2,427 $ \n27 $ 51,217 \n(1)\nRefer to Note 18 — Divestitures for additional information on the transition of the Company's NIKE Brand businesses in its CASA territory to third-party \ndistributors.\n84\n       NIKE, INC.\n\n\nYEAR ENDED MAY 31, 2022\n(Dollars in millions)\nNORTH \nAMERICA\nEUROPE, \nMIDDLE \nEAST & \nAFRICA\nGREATER \nCHINA\nASIA \nPACIFIC & \nLATIN \nAMERICA\nGLOBAL \nBRAND \nDIVISIONS\nTOTAL \nNIKE \nBRAND\nCONVERSE CORPORATE\nTOTAL \nNIKE, INC.\nRevenues by:\nFootwear\n$ 12,228 $ 7,388 $ 5,416 $ 4,111 $ \n— $ 29,143 $ 2,094 $ \n— $ 31,237 \nApparel\n \n5,492  \n4,527  \n1,938  \n1,610  \n—  13,567  \n103  \n—  \n13,670 \nEquipment\n \n633  \n564  \n193  \n234  \n—  \n1,624  \n26  \n—  \n1,650 \nOther\n \n—  \n—  \n—  \n—  \n102  \n102  \n123  \n(72)  \n153 \nTOTAL REVENUES\n$ 18,353 $ 12,479 $ 7,547 $ 5,955 $ \n102 $ 44,436 $ 2,346 $ \n(72) $ 46,710 \nRevenues by:\nSales to Wholesale \nCustomers\n$ 9,621 $ 8,377 $ 4,081 $ 3,529 $ \n— $ 25,608 $ 1,292 $ \n— $ 26,900 \nSales through Direct to \nConsumer\n \n8,732  \n4,102  \n3,466  \n2,426  \n—  18,726  \n931  \n—  \n19,657 \nOther\n \n—  \n—  \n—  \n—  \n102  \n102  \n123  \n(72)  \n153 \nTOTAL REVENUES\n$ 18,353 $ 12,479 $ 7,547 $ 5,955 $ \n102 $ 44,436 $ 2,346 $ \n(72) $ 46,710 \nGlobal Brand Divisions revenues included NIKE Brand licensing and other miscellaneous revenues that are not part of a \ngeographic operating segment. Converse Other revenues were primarily attributable to licensing businesses. Corporate revenues \nprimarily consisted of foreign currency hedge gains and losses related to revenues generated by entities within the NIKE Brand \ngeographic operating segments and Converse but managed through the Company's central foreign exchange risk management \nprogram.\nAs of May 31, 2024 and 2023, the Company did not have any contract assets and had an immaterial amount of contract liabilities \nrecorded in Accrued liabilities on the Consolidated Balance Sheets.\nSALES-RELATED RESERVES\nAs of May 31, 2024 and 2023, the Company's sales-related reserve balance, which includes returns, post-invoice sales discounts \nand miscellaneous claims, was $1,282 million and $994 million, respectively, recorded in Accrued liabilities on the Consolidated \nBalance Sheets. The estimated cost of inventory for expected product returns was $331 million and $226 million as of May 31, \n2024 and 2023, respectively, and was recorded in Prepaid expenses and other current assets on the Consolidated Balance \nSheets.\n2024 FORM 10-K   85    \n\n\nNOTE 15 — OPERATING SEGMENTS AND RELATED INFORMATION \nThe Company's operating segments reflect the structure of the Company's internal organization. The NIKE Brand segments are \ndefined by geographic regions for operations participating in NIKE Brand sales activity.\nEach NIKE Brand geographic segment operates predominantly in one industry: the design, development, marketing and selling \nof athletic footwear, apparel and equipment. The Company's reportable operating segments for the NIKE Brand are: North \nAmerica; Europe, Middle East & Africa (\"EMEA\"); Greater China; and Asia Pacific & Latin America (\"APLA\"), and include results \nfor the NIKE and Jordan brands. Refer to Note 18 — Divestitures for information regarding the transition of NIKE Brand \nbusinesses in certain countries within APLA to third-party distributors.\nThe Company's NIKE Direct operations are managed within each NIKE Brand geographic operating segment. Converse is also a \nreportable segment for the Company and operates in one industry: the design, marketing, licensing and selling of athletic lifestyle \nsneakers, apparel and accessories.\nGlobal Brand Divisions is included within the NIKE Brand for presentation purposes to align with the way management views the \nCompany. Global Brand Divisions revenues include NIKE Brand licensing and other miscellaneous revenues that are not part of a \ngeographic operating segment. Global Brand Divisions costs represent demand creation and operating overhead expense that \ninclude product creation and design expenses centrally managed for the NIKE Brand, as well as costs associated with NIKE \nDirect global digital operations and enterprise technology. \nCorporate consists primarily of unallocated general and administrative expenses, including expenses associated with centrally \nmanaged departments; depreciation and amortization related to the Company's headquarters; unallocated insurance, benefit and \ncompensation programs, including stock-based compensation; and certain foreign currency gains and losses, including certain \nhedge gains and losses. \nThe primary financial measure used by the Company to evaluate performance of individual operating segments is earnings \nbefore interest and taxes (\"EBIT\"), which represents Net income before Interest expense (income), net and Income tax expense \nin the Consolidated Statements of Income. \nAs part of the Company's centrally managed foreign exchange risk management program, standard foreign currency rates are \nassigned twice per year to each NIKE Brand entity in the Company's geographic operating segments and to Converse. These \nrates are set approximately nine and twelve months in advance of the future selling seasons to which they relate (specifically, for \neach currency, one standard rate applies to the fall and holiday selling seasons, and one standard rate applies to the spring and \nsummer selling seasons) based on average market spot rates in the calendar month preceding the date they are established. \nInventories and Cost of sales for geographic operating segments and Converse reflect the use of these standard rates to record \nnon-functional currency product purchases in the entity's functional currency. Differences between assigned standard foreign \ncurrency rates and actual market rates are included in Corporate, together with foreign currency hedge gains and losses \ngenerated from the Company's centrally managed foreign exchange risk management program and other conversion gains and \nlosses.\nAccounts receivable, net, Inventories and Property, plant and equipment, net for operating segments are regularly reviewed by \nmanagement and are therefore provided below.\n86\n       NIKE, INC.\n\n\nYEAR ENDED MAY 31,\n(Dollars in millions)\n2024\n2023\n2022\nREVENUES\nNorth America\n$ \n21,396 $ \n21,608 $ \n18,353 \nEurope, Middle East & Africa\n \n13,607  \n13,418  \n12,479 \nGreater China\n \n7,545  \n7,248  \n7,547 \nAsia Pacific & Latin America\n \n6,729  \n6,431  \n5,955 \nGlobal Brand Divisions\n \n45  \n58  \n102 \nTotal NIKE Brand\n \n49,322  \n48,763  \n44,436 \nConverse\n \n2,082  \n2,427  \n2,346 \nCorporate\n \n(42)  \n27  \n(72) \nTOTAL NIKE, INC. REVENUES\n$ \n51,362 $ \n51,217 $ \n46,710 \nEARNINGS BEFORE INTEREST AND TAXES\nNorth America\n$ \n5,822 $ \n5,454 $ \n5,114 \nEurope, Middle East & Africa\n \n3,388  \n3,531  \n3,293 \nGreater China\n \n2,309  \n2,283  \n2,365 \nAsia Pacific & Latin America\n \n1,885  \n1,932  \n1,896 \nGlobal Brand Divisions\n \n(4,720)  \n(4,841)  \n(4,262) \nConverse\n \n474  \n676  \n669 \nCorporate\n \n(2,619)  \n(2,840)  \n(2,219) \nInterest expense (income), net\n \n(161)  \n(6)  \n205 \nTOTAL NIKE, INC. INCOME BEFORE INCOME TAXES\n$ \n6,700 $ \n6,201 $ \n6,651 \nADDITIONS TO PROPERTY, PLANT AND EQUIPMENT\nNorth America\n$ \n102 $ \n283 $ \n146 \nEurope, Middle East & Africa\n \n206  \n215  \n197 \nGreater China\n \n27  \n56  \n78 \nAsia Pacific & Latin America\n \n75  \n64  \n56 \nGlobal Brand Divisions\n \n233  \n271  \n222 \nTotal NIKE Brand\n \n643  \n889  \n699 \nConverse\n \n7  \n7  \n9 \nCorporate\n \n72  \n140  \n103 \nTOTAL ADDITIONS TO PROPERTY, PLANT AND EQUIPMENT\n$ \n722 $ \n1,036 $ \n811 \nDEPRECIATION\nNorth America\n$ \n152 $ \n128 $ \n124 \nEurope, Middle East & Africa\n \n146  \n120  \n134 \nGreater China\n \n56  \n54  \n41 \nAsia Pacific & Latin America\n \n51  \n42  \n42 \nGlobal Brand Divisions\n \n236  \n211  \n220 \nTotal NIKE Brand\n \n641  \n555  \n561 \nConverse\n \n17  \n17  \n22 \nCorporate\n \n138  \n131  \n134 \nTOTAL DEPRECIATION\n$ \n796 $ \n703 $ \n717 \n2024 FORM 10-K   87    \n\n\nAS OF MAY 31,\n(Dollars in millions)\n2024\n2023\nACCOUNTS RECEIVABLE, NET\nNorth America\n$ \n1,723 $ \n1,653 \nEurope, Middle East & Africa\n \n1,239  \n1,197 \nGreater China\n \n327  \n162 \nAsia Pacific & Latin America\n \n792  \n700 \nGlobal Brand Divisions\n \n103  \n96 \nTotal NIKE Brand\n \n4,184  \n3,808 \nConverse\n \n201  \n235 \nCorporate\n \n42  \n88 \nTOTAL ACCOUNTS RECEIVABLE, NET\n$ \n4,427 $ \n4,131 \nINVENTORIES\nNorth America\n$ \n3,134 $ \n3,806 \nEurope, Middle East & Africa\n \n2,028  \n2,167 \nGreater China\n \n1,070  \n973 \nAsia Pacific & Latin America\n \n810  \n894 \nGlobal Brand Divisions\n \n166  \n232 \nTotal NIKE Brand\n \n7,208  \n8,072 \nConverse\n \n296  \n305 \nCorporate\n \n15  \n77 \nTOTAL INVENTORIES\n$ \n7,519 $ \n8,454 \nPROPERTY, PLANT AND EQUIPMENT, NET\nNorth America\n$ \n744 $ \n794 \nEurope, Middle East & Africa\n \n1,089  \n1,009 \nGreater China\n \n258  \n292 \nAsia Pacific & Latin America\n \n282  \n279 \nGlobal Brand Divisions\n \n842  \n840 \nTotal NIKE Brand\n \n3,215  \n3,214 \nConverse\n \n27  \n38 \nCorporate\n \n1,758  \n1,829 \nTOTAL PROPERTY, PLANT AND EQUIPMENT, NET\n$ \n5,000 $ \n5,081 \nREVENUES AND LONG-LIVED ASSETS BY GEOGRAPHIC AREA\nAfter allocation of revenues for Global Brand Divisions, Converse and Corporate to geographical areas based on the location \nwhere the sales originated, revenues by geographical area are similar to that as reported above for the NIKE Brand operating \nsegments with the exception of the United States. Revenues derived in the United States were $21,551 million, $22,007 million \nand $18,749 million for the fiscal years ended May 31, 2024, 2023 and 2022, respectively. \nThe Company's largest concentrations of long-lived assets primarily consist of the Company's corporate headquarters, retail \nlocations and distribution facilities in the United States and China, as well as distribution facilities in Belgium. Long-lived assets \nattributable to operations in these countries, which consist of property, plant and equipment, net and operating lease ROU assets, \nnet, were as follows:\nMAY 31,\n(Dollars in millions)\n2024\n2023\nUnited States\n$ \n4,837 $ \n5,129 \nBelgium\n \n757  \n702 \nChina\n \n501  \n559 \nOther\n \n1,623  \n1,614 \nTOTAL LONG-LIVED ASSETS\n$ \n7,718 $ \n8,004 \n88\n       NIKE, INC.\n\n\nNOTE 16 — COMMITMENTS AND CONTINGENCIES\nAs of May 31, 2024 and 2023, the Company had bank guarantees and letters of credit outstanding totaling $768 million and $588 \nmillion, respectively, issued primarily for real estate agreements, self-insurance programs, other general business obligations and \nlegal matters.\nIn connection with various contracts and agreements, the Company provides routine indemnification relating to the enforceability \nof intellectual property rights, coverage for legal issues that arise and other items where the Company is acting as the guarantor. \nCurrently, the Company has several such agreements in place. However, based on the Company's historical experience and the \nestimated probability of future loss, the Company has determined the fair value of such indemnification is not material to the \nCompany's financial position or results of operations.\nIn the ordinary course of business, the Company is subject to various legal proceedings, claims and government investigations \nrelating to its business, products and actions of its employees and representatives, including contractual and employment \nrelationships, product liability, antitrust, customs, tax, intellectual property and other matters. The outcome of these legal matters \nis inherently uncertain, and the Company cannot predict the eventual outcome of currently pending matters, the timing of their \nultimate resolution or the eventual losses, fines, penalties or consequences relating to those matters. When a loss related to a \nlegal proceeding or claim is probable and reasonably estimable, the Company accrues its best estimate for the ultimate \nresolution of the matter. If one or more legal matters were to be resolved against the Company in a reporting period for amounts \nabove management's expectations, the Company's financial position, operating results and cash flows for that reporting period \ncould be materially adversely affected. In the opinion of management, based on its current knowledge and after consultation with \ncounsel, the Company does not believe any currently pending legal matters will have a material adverse impact on the \nCompany's results of operations, financial position or cash flows, except as described below.\nBELGIAN CUSTOMS CLAIM\nThe Company has received claims for certain years from Belgian Customs and other government authorities for alleged \nunderpaid duties related to products imported beginning in fiscal 2018. The Company disputes these claims and has engaged in \nthe appellate process. The Company has issued bank guarantees in order to appeal the claims. At this time, the Company is \nunable to estimate the range of loss and cannot predict the final outcome as it could take several years to reach a resolution on \nthis matter. If this matter is ultimately resolved against the Company, the amounts owed, including fines, penalties and other \nconsequences relating to the matter, could have a material adverse effect on the Company's results of operations, financial \nposition and cash flows.\nNOTE 17 — LEASES\nLease expense is recognized in Cost of sales or Operating overhead expense within the Consolidated Statements of Income, \nbased on the underlying nature of the leased asset. For the fiscal years ended May 31, 2024, 2023 and 2022, lease expense \nprimarily consisted of operating lease costs of $618 million, $585 million and $593 million, respectively, as well as $433 million, \n$403 million and $366 million, respectively, primarily related to variable lease costs. As of and for the fiscal years ended May 31, \n2024 and 2023 and 2022, finance leases were not a material component of the Company's lease portfolio.\nThe undiscounted cash flows for future maturities of the Company's operating lease liabilities and the reconciliation to the \nOperating lease liabilities recognized in the Company's Consolidated Balance Sheets are as follows:\n(Dollars in millions)\nAS OF MAY 31, 2024\n(1)\nFiscal 2025\n$ \n572 \nFiscal 2026\n \n554 \nFiscal 2027\n \n485 \nFiscal 2028\n \n403 \nFiscal 2029\n \n362 \nThereafter\n \n991 \nTotal undiscounted future cash flows related to lease payments\n$ \n3,367 \nLess interest \n \n324 \nPresent value of lease liabilities\n$ \n3,043 \n(1)\nExcludes $614 million as of May 31, 2024, of future operating lease payments for lease agreements signed but not yet commenced. \n2024 FORM 10-K   89    \n\n\nThe following table includes supplemental information used to calculate the present value of Operating lease liabilities:\nAS OF MAY 31,\n2024\n2023\nWeighted-average remaining lease term (in years)\n6.9\n7.5\nWeighted-average discount rate\n \n2.9 %\n \n2.5 %\nThe following table includes supplemental cash and non-cash information related to operating leases:\nYEAR ENDED MAY 31,\n(Dollars in millions)\n2024\n2023\n2022\nCash paid for amounts included in the measurement of lease liabilities:\nOperating cash flows from operating leases\n$ \n613 $ \n575 $ \n589 \nOperating lease right-of-use assets obtained in exchange for new operating \nlease liabilities\n$ \n458 $ \n602 $ \n537 \nNOTE 18 — DIVESTITURES\nDuring the second quarter of fiscal 2023, the sale of the Company's entities in Argentina and Uruguay to a third-party distributor \nwas completed and the net loss on the sale of these entities totaled approximately $550 million. This loss included $389 million, \nrecognized primarily in fiscal 2020, largely due to the anticipated release of the cumulative foreign currency translation losses. \nThe remaining loss recognized in fiscal 2023 was due to the devaluation of local currency and cash equivalents included in the \ntransferred assets. Upon completion of the sale, the foreign currency translation losses recorded in Accumulated other \ncomprehensive income (loss) were reclassified to Net income within Other (income) expense, net, on the Company's \nConsolidated Statements of Comprehensive Income along with the allowance for previously recognized losses recorded in \nAccrued liabilities. The net loss was classified within Corporate.\nThe net cash proceeds received are reflected within Other investing activities on the Company's Consolidated Statements of \nCash Flows.\n90\n       NIKE, INC.\n\n\nNOTE 19 — RESTRUCTURING\nDuring the third quarter of fiscal 2024, the Company announced a multi-year enterprise initiative designed to accelerate its future \ngrowth. As part of this initiative, management has taken steps to streamline the organization which resulted in a net reduction in \nthe Company's global workforce. As of May 31, 2024, the Company expects to recognize pre-tax restructuring charges of \napproximately $450 million, primarily associated with employee severance costs and accelerated stock-based compensation \nexpense, the majority of which were recognized in fiscal 2024. The related cash payments are expected to be substantially \ncomplete by the end of the first half of fiscal 2025. The expected pre-tax charges are estimates and are subject to a number of \nassumptions and actual results may vary from the estimates provided. \nPre-tax restructuring charges were classified within Corporate as follows:\nTWELVE MONTHS ENDED MAY 31, 2024\n(Dollars in millions)\nOPERATING \nOVERHEAD EXPENSE\nCOST OF SALES\nTOTAL\nEmployee severance and related costs(1)\n$ \n336 \n$ \n56 \n$ \n392 \nStock-based compensation expense(2)\n43\n8\n51\nTotal pre-tax restructuring charges\n$ \n379 \n$ \n64 \n$ \n443 \n(1)\nEmployee severance costs are recognized when a future related expense is considered probable and reasonably estimable.\n(2)\nNon-cash restructuring related stock-based compensation expense is accelerated over the requisite service period, which for certain impacted \nemployees will extend through the first half of fiscal 2025.\nAs of May 31, 2024, the majority of the remaining employee severance and related costs are reflected within Accrued liabilities on \nthe Consolidated Balance Sheets, classified within Other in Note 3 — Accrued Liabilities. The related activity is as follows:\n(Dollars in millions)\nBalance at May 31, 2023\n$ \n— \nEmployee severance and related costs\n \n392 \nCash payments\n \n(123) \nForeign currency translation and other\n \n(2) \nBalance at May 31, 2024\n$ \n267 \n2024 FORM 10-K   91    \n\n\nITEM 9. CHANGES IN AND DISAGREEMENTS WITH \nACCOUNTANTS ON ACCOUNTING AND FINANCIAL \nDISCLOSURE\nThere has been no change of accountants nor any disagreements with accountants on any matter of accounting principles or \npractices or financial statement disclosure required to be reported under this Item.\nITEM 9A. CONTROLS AND PROCEDURES\nWe maintain disclosure controls and procedures that are designed to provide reasonable assurance that information required to \nbe disclosed in our Securities Exchange Act of 1934, as amended (the \"Exchange Act\"), reports is recorded, processed, \nsummarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms and \nthat such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief \nFinancial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the \ndisclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and \noperated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to \napply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.\nWe carry out a variety of ongoing procedures, under the supervision and with the participation of our management, including our \nChief Executive Officer and Chief Financial Officer, to evaluate the effectiveness of the design and operation of our disclosure \ncontrols and procedures. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our \ndisclosure controls and procedures were effective at the reasonable assurance level as of May 31, 2024.\n\"Management's Annual Report on Internal Control Over Financial Reporting\" is included in Item 8 of this Annual Report.\nWe are continuing several transformation initiatives to centralize and simplify our business processes and systems. These are \nlong-term initiatives, which we believe will enhance our internal control over financial reporting due to increased automation and \nfurther integration of related processes. We will continue to monitor our internal control over financial reporting for effectiveness \nthroughout these transformation initiatives.\nThere have not been any changes in our internal control over financial reporting during our most recent fiscal quarter that have \nmaterially affected, or are reasonably likely to materially affect, our internal control over financial reporting.\nITEM 9B. OTHER INFORMATION\nRule 10b5-1 Trading Plans\nDuring the fiscal quarter ended May 31, 2024, none of our directors or officers (as defined in Rule 16a-1 under the Exchange Act) \nadopted or terminated a \"Rule 10b5-1 trading arrangement\" or \"non-Rule 10b5-1 trading arrangement\" (as those terms are \ndefined in Item 408 of Regulation S-K). \nITEM 9C. DISCLOSURE REGARDING FOREIGN \nJURISDICTIONS THAT PREVENT INSPECTIONS\nNot applicable. \n92\n       NIKE, INC.\n\n\nPART III\nITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND \nCORPORATE GOVERNANCE\nThe information required by Item 401 of Regulation S-K regarding directors is included under \"Corporate Governance — NIKE, \nInc. Board of Directors\" in the definitive Proxy Statement for our 2024 Annual Meeting of Shareholders and is incorporated herein \nby reference. The information required by Item 401 of Regulation S-K regarding executive officers is included under \"Information \nabout our Executive Officers\" in Item 1 of this Annual Report. The information required by Item 406 of Regulation S-K is included \nunder \"Corporate Governance — Code of Conduct\" in the definitive Proxy Statement for our 2024 Annual Meeting of \nShareholders and is incorporated herein by reference. The information required by Items 407(d)(4) and (d)(5) of Regulation S-K \nregarding the Audit & Finance Committee of the Board of Directors is included under \"Corporate Governance — Board Structure \nand Responsibilities — Board Committees\" in the definitive Proxy Statement for our 2024 Annual Meeting of Shareholders and is \nincorporated herein by reference. The information required by Item 408(b)(1) of Regulation S-K regarding our insider trading \npolicies is included under \"Additional Information — Insider Trading Arrangements and Policies\" in the definitive Proxy Statement \nfor our 2024 Annual Meeting of Shareholders and is incorporated herein by reference.\nITEM 11. EXECUTIVE COMPENSATION\nThe information required by Items 402, 407(e)(4) and 407(e)(5) of Regulation S-K regarding executive compensation is included \nunder \"Corporate Governance — Director Compensation for Fiscal 2024,\" \"Executive Compensation — Compensation \nDiscussion and Analysis,\" \"Executive Compensation — Executive Compensation Tables,\" and \"Additional Information — \nCompensation Committee Interlocks and Insider Participation,\" in the definitive Proxy Statement for our 2024 Annual Meeting of \nShareholders and is incorporated herein by reference.\nITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL \nOWNERS AND MANAGEMENT AND RELATED \nSTOCKHOLDER MATTERS\nThe information required by Item 201(d) of Regulation S-K is included under \"Executive Compensation — Executive \nCompensation Tables — Equity Compensation Plan Information\" in the definitive Proxy Statement for our 2024 Annual Meeting of \nShareholders and is incorporated herein by reference. The information required by Item 403 of Regulation S-K is included under \n\"Stock Ownership Information — Stock Holdings of Certain Owners and Management\" in the definitive Proxy Statement for our \n2024 Annual Meeting of Shareholders and is incorporated herein by reference.\nITEM 13. CERTAIN RELATIONSHIPS AND RELATED \nTRANSACTIONS AND DIRECTOR INDEPENDENCE\nThe information required by Items 404 and 407(a) of Regulation S-K is included under \"Additional Information — Transactions \nwith Related Persons\" and \"Corporate Governance — NIKE, Inc. Board of Directors — Director Independence\" in the definitive \nProxy Statement for our 2024 Annual Meeting of Shareholders and is incorporated herein by reference.\nITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES\nThe information required by Item 9(e) of Schedule 14A is included under \"Audit Matters — Ratification of Appointment of \nIndependent Registered Public Accounting Firm\" in the definitive Proxy Statement for our 2024 Annual Meeting of Shareholders \nand is incorporated herein by reference.\n2024 FORM 10-K   93    \n\n\nPART IV\nITEM 15. EXHIBITS AND FINANCIAL STATEMENT \nSCHEDULES\n(a)\nThe following documents are filed as part of this Annual Report:\nFORM 10-K \nPAGE NO.\n1.\nFinancial Statements:\nReport of Independent Registered Public Accounting Firm (PCAOB ID 238)\n55\nConsolidated Statements of Income for each of the three years ended May 31, 2024, May 31, 2023, \nand May 31, 2022\n57\nConsolidated Statements of Comprehensive Income for each of the three years ended May 31, \n2024, May 31, 2023, and May 31, 2022 \n58\nConsolidated Balance Sheets at May 31, 2024 and May 31, 2023 \n59\nConsolidated Statements of Cash Flows for each of the three years ended May 31, 2024, May 31, \n2023, and May 31, 2022 \n60\nConsolidated Statements of Shareholders' Equity for each of the three years ended May 31, 2024, \nMay 31, 2023, and May 31, 2022 \n61\nNotes to Consolidated Financial Statements\n62\n2.\nFinancial Statement Schedule:\nII — Valuation and Qualifying Accounts for the years ended May 31, 2024, 2023 and 2022 \n97\nAll other schedules are omitted because they are not applicable or the required information is shown \nin the financial statements or notes thereto.\n3.\nExhibits:\n3.1\nRestated Articles of Incorporation, as amended (incorporated by reference to Exhibit 3.1 to the Company's \nQuarterly Report on Form 10-Q for the fiscal quarter ended November 30, 2015).\n3.2\nFifth Restated Bylaws, as amended (incorporated by reference to Exhibit 3.1 to the Company's Current Report on \nForm 8-K filed June 19, 2020).\n4.1\nRestated Articles of Incorporation, as amended (see Exhibit 3.1).\n4.2\nFifth Restated Bylaws, as amended (see Exhibit 3.2).\n4.3\nIndenture dated as of April 26, 2013, by and between NIKE, Inc. and Deutsche Bank Trust Company Americas, as \ntrustee (incorporated by reference to Exhibit 4.1 to the Company's Form 8-K filed April 26, 2013).\n4.4\nSecond Supplemental Indenture, dated as of October 29, 2015, by and between NIKE, Inc. and Deutsche Bank \nTrust Company Americas, as trustee, including the form of 3.875% Notes due 2045 (incorporated by reference to \nExhibit 4.2 to the Company's Form 8-K filed October 29, 2015).\n4.5\nThird Supplemental Indenture, dated as of October 21, 2016, by and between NIKE, Inc. and Deutsche Bank Trust \nCompany Americas, as trustee, including the form of 2.375% Notes due 2026 and form of 3.375% Notes due 2046 \n(incorporated by reference to Exhibit 4.2 to the Company's Form 8-K filed October 21, 2016).\n4.6\nFourth Supplemental Indenture, dated as of March 27, 2020, by and between NIKE, Inc. and Deutsche Bank Trust \nCompany Americas, as trustee, including the form of 2.400% Notes due 2025, form of 2.750% Notes due 2027, \nform of 2.850% Notes due 2030, form of 3.250% Notes due 2040 and form of 3.375% Notes due 2050 \n(incorporated by reference to Exhibit 4.2 to the Company's Form 8-K filed March 27, 2020).\n4.7\nDescription of Registrants Securities (incorporated by reference to Exhibit 4.6 to the Company's Annual Report on \nForm 10-K for the fiscal year ended May 31, 2019).\n10.1\nForm of Restricted Stock Agreement for non-employee directors under the Stock Incentive Plan (incorporated by \nreference to Exhibit 10.4 to the Company's Annual Report on Form 10-K for the fiscal year ended May 31, 2014).*\n10.2\nForm of Non-Statutory Stock Option Agreement for options granted to executives under the Stock Incentive Plan \n(incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter \nended February 28, 2018).*\n10.3\nForm of Indemnity Agreement entered into between the Company and each of its officers and directors \n(incorporated by reference to Exhibit 10.2 to the Company's Annual Report on Form 10-K for the fiscal year ended \nMay 31, 2008).*\n10.4\nNIKE, Inc. Deferred Compensation Plan (Amended and Restated effective April 1, 2013) (incorporated by \nreference to Exhibit 10.9 to the Company's Annual Report on Form 10-K for the fiscal year ended May 31, 2013).*\n94\n       NIKE, INC.\n\n\n10.5\nNIKE, Inc. Foreign Subsidiary Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.2 to the \nCompany's Quarterly Report on Form 10-Q for the fiscal quarter ended November 30, 2023).*\n10.6\nAmended and Restated Covenant Not to Compete and Non-Disclosure Agreement between NIKE, Inc. and Mark \nG. Parker dated July 24, 2008 (incorporated by reference to Exhibit 10.1 to the Company's Current Report on \nForm 8-K filed July 24, 2008).*\n10.7\nForm of Restricted Stock Unit Agreement under the Stock Incentive Plan (incorporated by reference to Exhibit 10.2 \nto the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended February 28, 2018).*\n10.8\nForm of Covenant Not to Compete and Non-Disclosure Agreement between NIKE, Inc. and its executive officers \n(other than Mark G. Parker and John J. Donahoe II) (incorporated by reference to Exhibit 10.1 to the Company's \nCurrent Report on Form 8-K filed February 18, 2020).*\n10.9\nNIKE, Inc. Stock Incentive Plan (incorporated by reference to Exhibit 10.2 to the Company's Current Report on \nForm 8-K filed September 23, 2015).*\n10.10\nForm of Discretionary Performance Award Agreement (incorporated by reference to Exhibit 10.22 to the \nCompany's Annual Report on Form 10-K for the fiscal year ended May 31, 2018).*\n10.11\nNIKE, Inc. Amended and Restated Long-Term Incentive Plan (incorporated by reference to Exhibit A to the \nCompany's definitive Proxy Statement filed July 25, 2017).*\n10.12\nOffer Letter between NIKE, Inc. and John J. Donahoe II (incorporated by reference to Exhibit 10.1 to the \nCompany's Current Report on Form 8-K filed October 22, 2019).*\n10.13\nForm of Covenant Not to Compete and Non-Disclosure Agreement between NIKE, Inc. and John J. Donahoe II \n(incorporated by reference to Exhibit 10.3 to the Company's Current Report on Form 8-K filed October 22, 2019).*\n10.14\nForm of Performance-Based Stock Option Agreement (incorporated by reference to Exhibit 10.2 to the Company's \nCurrent Report on Form 8-K filed October 22, 2019).\n10.15\nLetter Agreement between NIKE, Inc. and Mark G. Parker (incorporated by reference to Exhibit 10.6 to the \nCompany's Current Report on Form 8-K filed October 22, 2019).*\n10.16\nNIKE, Inc. Executive Performance Sharing Plan (incorporated by reference to Exhibit 10.1 to the Company's \nCurrent Report on Form 8-K filed June 19, 2020).*\n10.17\nNIKE, Inc. Amended and Restated Long-Term Incentive Plan (incorporated by reference to Exhibit 10.2 to the \nCompany's Current Report on Form 8-K filed June 19, 2020).*\n10.18\nForm of Non-Statutory Stock Option Agreement under the NIKE, Inc. Stock Incentive Plan (incorporated by \nreference to Exhibit 10.3 to the Company's Current Report on Form 8-K filed June 19, 2020).*\n10.19\nForm of Restricted Stock Unit Agreement under the NIKE, Inc. Stock Incentive Plan (incorporated by reference to \nExhibit 10.4 to the Company's Current Report on Form 8-K filed June 19, 2020).*\n10.20\nNIKE, Inc. Stock Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company's Current Report on \nForm 8-K filed September 18, 2020).* \n10.21\nNIKE, Inc. Performance-Based Restricted Stock Unit Agreement under the NIKE, Inc. Stock Incentive Plan \n(incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on June 17, 2021).*\n10.22\nCredit Agreement, dated as of March 11, 2022, among NIKE, Inc., Bank of America, N.A., as Administrative Agent, \nand the other Banks named therein (incorporated by reference to Exhibit 10.2 to the Company's Current Report on \nForm 8-K filed March 14, 2022).\n10.23\nNIKE, Inc. Employee Stock Purchase Plan, as amended (incorporated by reference to Exhibit 10.1 to the \nCompany's Quarterly Report on Form 10-Q for the fiscal quarter ended November 30, 2023).*\n10.24\nCredit Agreement, dated as of March 8, 2024, among NIKE, Inc., Bank of America, N.A., as Administrative Agent, \nand the other Banks named therein (incorporated by reference to Exhibit 10.1 to the Company's Current Report on \nForm 8-K filed March 11, 2024).\n10.25\nSeparation and Release Agreement between NIKE, Inc. and Andrew Campion dated January 3, 2024 \n(incorporated by reference to Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter \nended November 30, 2023).*\n10.26\nForm of Stock Option Agreement under the NIKE, Inc. Stock Incentive Plan.*\n10.27\nForm of Restricted Stock Unit Agreement under the NIKE, Inc. Stock Incentive Plan.*\n10.28\nForm of Performance-Based Restricted Stock Unit Agreement under the NIKE, Inc. Stock Incentive Plan.*\n19.1\nNIKE, Inc. Insider Trading Policy.\n19.2\nNIKE, Inc. Blackout and Pre-clearance Policy.\n21\nSubsidiaries of the Registrant.\n23\nConsent of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm (included within this \nAnnual Report on Form 10-K).\n31.1\nRule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.\n31.2\nRule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.\n32†\nSection 1350 Certifications.\n97\nNIKE, Inc. Policy for Recoupment of Incentive Compensation.*\n101.INS\nInline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its \nXBRL tags are embedded within the Inline XBRL document.\n101.SCH\nInline XBRL Taxonomy Extension Schema\n2024 FORM 10-K   95    \n\n\n101.CAL\nInline XBRL Taxonomy Extension Calculation Linkbase\n101.DEF\nInline XBRL Taxonomy Extension Definition Document\n101.LAB\nInline XBRL Taxonomy Extension Label Linkbase\n101.PRE\nInline XBRL Taxonomy Extension Presentation Linkbase\n104\nCover Page Interactive Data File - formatted in Inline XBRL and included in Exhibit 101\n* Management contract or compensatory plan or arrangement.\n† Furnished herewith\nThe Exhibits filed herewith do not include certain instruments with respect to long-term debt of NIKE and its subsidiaries, \ninasmuch as the total amount of debt authorized under any such instrument does not exceed 10 percent of the total assets of \nNIKE and its subsidiaries on a consolidated basis. NIKE agrees, pursuant to Item 601(b)(4)(iii) of Regulation S-K, that it will \nfurnish a copy of any such instrument to the SEC upon request.\n96\n       NIKE, INC.\n\n\nSCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS\n(Dollars in millions)\nBALANCE AT \nBEGINNING OF\nPERIOD\nCHARGED TO\n COSTS AND\n EXPENSES\nCHARGED \n TO OTHER  \nACCOUNTS\n(1)\nWRITE-OFFS,\nNET\nBALANCE \nAT END \nOF PERIOD\nSales returns reserve\nFor the fiscal year ended May 31, 2022\n$ \n595 $ \n2,573 $ \n(31) $ \n(2,612) $ \n525 \nFor the fiscal year ended May 31, 2023\n \n525  \n3,344  \n(11)  \n(3,309)  \n549 \nFor the fiscal year ended May 31, 2024\n \n549  \n3,583  \n(8)  \n(3,325)  \n799 \n(1)\nAmounts included in this column primarily relate to foreign currency translation.\n2024 FORM 10-K   97    \n\n\nITEM 16. FORM 10-K SUMMARY\nNone.\n98\n       NIKE, INC.\n\n\nConsent of Independent Registered Public Accounting Firm\nWe hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (No. 333-266267) and Form \nS-8 (Nos. 033-63995, 333-63581, 333-63583, 333-68864, 333-68886, 333-71660, 333-104822, 333-117059, 333-133360, \n333-164248, 333-171647, 333-173727, 333-208900, 333-215439, 333-266269 and 333-273358) of NIKE, Inc. of our report dated \nJuly 25, 2024 relating to the financial statements, financial statement schedule and the effectiveness of internal control over \nfinancial reporting, which appears in this Form 10-K.\n/s/ PricewaterhouseCoopers LLP\nPortland, Oregon\nJuly 25, 2024 \n2024 FORM 10-K   99    \n\n\nSIGNATURES\nPursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this \nreport to be signed on its behalf by the undersigned, thereunto duly authorized.\nNIKE, INC.\nBy:\n/s/ JOHN J. DONAHOE II\nJohn J. Donahoe II\nPresident and Chief Executive Officer\nDate:\nJuly 25, 2024\nPursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the \nfollowing persons on behalf of the registrant and in the capacities and on the dates indicated.\nSIGNATURE\nTITLE\nDATE\nPRINCIPAL EXECUTIVE OFFICER AND DIRECTOR:\n/s/ JOHN J. DONAHOE II\nJohn J. Donahoe II\nPresident and Chief Executive Officer\nJuly 25, 2024\nPRINCIPAL FINANCIAL OFFICER:\n/s/ MATTHEW FRIEND\nMatthew Friend\nExecutive Vice President and Chief Financial Officer July 25, 2024\nPRINCIPAL ACCOUNTING OFFICER:\n/s/ JOHANNA NIELSEN\nJohanna Nielsen\nVice President and Corporate Controller\nJuly 25, 2024\nDIRECTORS:\n/s/ MARK G. PARKER\nMark G. Parker\nDirector, Chairman of the Board\nJuly 25, 2024\n/s/ CATHLEEN A. BENKO\nCathleen A. Benko\nDirector\nJuly 25, 2024\n/s/ TIMOTHY D. COOK\nTimothy D. Cook\nDirector\nJuly 25, 2024\n/s/ THASUNDA B. DUCKETT\nThasunda B. Duckett\nDirector\nJuly 25, 2024\n/s/ MÓNICA GIL\nMónica Gil\nDirector\nJuly 25, 2024\n/s/ ALAN B. GRAF, JR.\nAlan B. Graf, Jr.\nDirector\nJuly 25, 2024\n/s/ MARIA HENRY\nMaria Henry\nDirector\nJuly 25, 2024\n/s/ PETER B. HENRY\nPeter B. Henry\nDirector\nJuly 25, 2024\n/s/ TRAVIS A. KNIGHT\nTravis A. Knight\nDirector\nJuly 25, 2024\n/s/ MICHELLE A. PELUSO\nMichelle A. Peluso\nDirector\nJuly 25, 2024\n/s/ JOHN W. ROGERS, JR.\nJohn W. Rogers, Jr.\nDirector\nJuly 25, 2024\n/s/ ROBERT SWAN\nRobert Swan\nDirector\nJuly 25, 2024\n100\n       NIKE, INC.\n\n\nCathleen Benko(3)\nFormer Vice Chairman & Managing Principal\nDeloitte LLP\nRedwood City, California\nTimothy Cook(3)(5)\nChief Executive Officer\nApple Inc.\nCupertino, California\nJohn Donahoe II(1)\nPresident & Chief Executive Officer\nNIKE, Inc.\nBeaverton, Oregon\nThasunda Duckett(4)\nPresident & Chief Executive Officer\nTeachers Insurance and Annuity Association of America  \nNew York, New York\nMónica Gil(3)\nChief Administrative and Marketing Officer\nNBCUniversal Telemundo Enterprises\nMiami, Florida\nAlan Graf, Jr.(2)\nExecutive Vice President & Chief Financial Officer (Retired)\nFedEx Corporation \nMemphis, Tennessee\nMaria Henry(2)\nChief Financial Officer (Retired)\nKimberly-Clark Corporation \nDallas, Texas\nPeter Henry(2)\nClass of 1984 Senior Fellow at Stanford University’s Hoover \nInstitution, Senior Fellow at Stanford’s Freeman Spogli Institute \nfor International Studies and Dean Emeritus of New York \nUniversity’s Leonard N. Stern School of Business\nStanford University\nStanford, California \nTravis Knight(1)\nPresident & Chief Executive Officer\nLAIKA, LLC\nHillsboro, Oregon\nMark Parker(1)\nExecutive Chairman \nNIKE, Inc.\nBeaverton, Oregon\nMichelle Peluso(4)\nExecutive Vice President & Chief Customer \nand Experience Officer\nCVS Health\nWoonsocket, Rhode Island\nJohn Rogers, Jr.(4)\nCo-Chief Executive Officer & Chief Investment Officer\nAriel Investments, LLC \nChicago, Illinois\nRobert Swan(2)\nOperating Partner\nAndreessen Horowtiz\nMenlo Park, California\n(1)\tMember — Executive Committee\n(2)\tMember — Audit & Finance Committee\n(3)\tMember — Compensation Committee\n(4)\tMember — Corporate Responsibility, Sustainability & Governance Committee\n(5)\tLead Independent Director\nD I R E C TO R S \nCathleen A. Benko(2)(3) \nFormer Vice Chairman & Managing Principal \nDeloitte LLP \nRedwood City, California\nElizabeth J. Comstock(3) \nCo-Founder & Chief Commercial Officer \nClimate Real Impact Solutions  \nPrinceton, New Jersey\nTimothy D. Cook(3)(5) \nChief Executive Officer  \nApple Inc. \nCupertino, California\nJohn J. Donahoe II(1) \nPresident & Chief Executive Officer \nNIKE, Inc. \nBeaverton, Oregon\nThasunda B. Duckett(4) \nPresident & Chief Executive Officer \nTeachers Insurance and Annuity Association of America \nNew York, New York\nAlan B. Graf, Jr.(2) \nExecutive Vice President & Chief Financial Officer (Retired) \nFedEx Corporation  \nMemphis, Tennessee\nPeter B. Henry(2) \nDean Emeritus of New York University’s Leonard N. Stern School of \nBusiness & William R. Berkley Professor of Economics and Finance \nNew York University  \nNew York, New York\nTravis A. Knight(1) \nPresident & Chief Executive Officer \nLAIKA, LLC \nHillsboro, Oregon\nMark G. Parker(1)  \nExecutive Chairman  \nNIKE, Inc. \nBeaverton, Oregon\nMichelle A. Peluso(4) \nExecutive Vice President & Chief Customer Officer, CVS Health and \nCo-President, CVS Pharmacy \nCVS Health \nWoonsocket, Rhode Island\nJohn W. Rogers, Jr.(4) \nCo-Chief Executive Officer & Chief Investment Officer \nAriel Investments, LLC  \nChicago, Illinois\n(1) Member — Executive Committee\n(2) Member — Audit & Finance Committee\n(3) Member — Compensation Committee\n(4) Member — Corporate Responsibility, Sustainability & Governance Committee\n(5) Lead Independent Director\nCO R P O R AT E  O F F I C E R S \nJohn J. Donahoe II \nPresident & Chief Executive Officer\nMark G. Parker \nExecutive Chairman\nAndrew Campion \nChief Operating Officer\nMatthew Friend \nExecutive Vice President & Chief Financial Officer\nMonique S. Matheson \nExecutive Vice President, Chief Human Resources Officer\nAnn M. Miller \nExecutive Vice President, Chief Legal Officer\nHeidi O'Neill \nPresident, Consumer & Marketplace\nMary I. Hunter \nVice President, Corporate Secretary, and Corporate \nGovernance & Securities Counsel\nPatricia Johnson \nVice President, Treasurer & Chief Tax Officer\nKelsey A. Baldwin \nSenior Counsel, Corporate Governance & Securities, \nAssistant Secretary\nRonald Edwards \nAssistant General Counsel, Corporate Governance & \nSecurities, Assistant Secretary\nJohn Donahoe II\nPresident & Chief Executive Officer\nMark Parker\nExecutive Chairman\nMatthew Friend\nExecutive Vice President & Chief Financial Officer\nMonique Matheson\nExecutive Vice President, Chief Human Resources Officer\nAnn Miller\nExecutive Vice President, Chief Legal Officer\nHeidi O’Neill\nPresident, Consumer, Product & Brand\nCraig Williams\nPresident, Geographies & Marketplace\nMary Hunter\nVice President, Corporate Secretary\nPaul Trussell\nVice President, Treasurer\nKelsey Baldwin\nAssistant Secretary\nCarlos Wilson\nAssistant Secretary","difficulty":"easy","domain":"Multi-Document QA","length":"medium","question":"Compared to 2023, how has the percentage of finished goods apparel factories from countries other than Vietnam, China, and Cambodia changed in 2024?","sub_domain":"Financial"}

Source: https://huggingface.co/datasets/zai-org/LongBench-v2

initial import

Posting: /agents

GET /api/v1/write?intent=publish&task_id=63fbcfdf-0fc8-5d1d-b3b8-84dff36ed4c7&body={url_encoded_text}&agent_name={optional_name}&nonce={optional_random_id}