While we cannot predict the outcome of pending legal matters with certainty, we do not believe any currently identified claim, proceeding or litigation, either individually or in aggregate, will have a material impact on our results of operations, financial position or cash flows. In certain cases, the Company has entered into contractual agreements which have payments indexed to foreign currencies that create embedded derivative contracts recorded at fair value through Other expense (income), net . Changes in our assessment may result in the recognition of a tax benefit or an additional charge to the tax provision in the period our assessment changes. The Company records a valuation allowance to reduce deferred tax assets to the amount management believes is more likely than not to be realized. They help to make the bag and checkout process possible as well as assisting in security issues and conforming to regulations. Retail store revenues are recorded at the time of sale and digital commerce revenues are recorded upon delivery to the customer. Demand creation expense also increased, as higher sports marketing costs were only partially offset by lower retail brand presentation costs. The information required by Items 402, 407(e)(4) and 407(e)(5) of Regulation S-K regarding executive compensation is included under "Election of Directors - Director Compensation for Fiscal 2018 ," "Compensation Discussion and Analysis," "Executive Compensation," "Election of Directors - Compensation Committee Interlocks and Insider Participation," and "Compensation Committee Report" in the definitive Proxy Statement for our 2018 Annual Meeting of Shareholders and is incorporated herein by reference. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. During the fourth quarter of fiscal 2018, management identified a misstatement related to the historical allocation of repurchases of Class B Common stock between Capital in excess of stated value and Retained earnings . The currency-neutral apparel revenue growth of 23% for fiscal 2018 was fueled by higher revenues in all key categories, most notably Sportswear and, to a lesser extent, NIKE Basketball, the Jordan Brand and Running. Nike aims to be a brand with purpose that moves the world forward. Our objective in managing this interest rate exposure is to limit the impact of interest rate changes on earnings and cash flows and to reduce overall borrowing costs. Any amounts of cash collateral posted related to these instruments associated with the Company ' s credit-related contingent features are recorded in Prepaid expenses and other current assets , which would further offset against the Company ' s derivative liability balance (refer to Note 16 - Risk Management and Derivatives ). If retailers of our products experience declining revenues or experience difficulty obtaining financing in the capital and credit markets to purchase our products, this could result in reduced orders for our products, order cancellations, late retailer payments, extended payment terms, higher accounts receivable, reduced cash flows, greater expense associated with collection efforts and increased bad debt expense. Advertising production costs are expensed the first time an advertisement is run. The information required by Item 406 of Regulation S-K is included under "Corporate Governance - Code of Business Conduct and Ethics" in the definitive Proxy Statement for our 2018 Annual Meeting of Shareholders and is incorporated herein by reference. Continued volatility in the markets and exchange rates for foreign currencies and contracts in foreign currencies, including in response to certain policies advocated or implemented by the U.S. presidential administration, could have a significant impact on our reported operating results and financial condition. NIKE INC. Form 10-K (Filer) Published: 2019-07-23 16:13:55 Submitted: 2019-07-23 Filing Agent: NIKE, Inc. Period Ending In: 2019-05-31 Interactive XBRL Filing. Refer to Note 9 - Income Taxes for additional information. Currency-neutral apparel revenues grew 16% for fiscal 2018, driven by higher revenues in all key categories, most notably Sportswear and Football (Soccer). whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. The proliferation of NIKE Air, Lunar, Zoom, Free, Flywire, Dri-Fit, Flyknit, Flyweave, ZoomX, React and NIKE+ technologies throughout our Running, NIKE Basketball, Jordan Brand, Football (Soccer), Training and Sportswear categories, among others, typifies our dedication to designing innovative products. In designing and evaluating the disclosure controls and procedures, management recognizes any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. We sell a line of performance equipment and accessories under the NIKE Brand name, including bags, socks, sport balls, eyewear, timepieces, digital devices, bats, gloves, protective equipment and other equipment designed for sports activities. Rent expense for non-cancelable operating leases with scheduled rent increases or landlord incentives are recognized on a straight-line basis over the lease term, beginning with the effective lease commencement date, which is generally the date in which the Company takes possession of or controls the physical use of the property. Our market-sensitive derivative and other financial instruments are foreign currency forward contracts, foreign currency option contracts, interest rate swaps, intercompany loans denominated in non-functional currencies, fixed interest rate U.S. Dollar denominated debt and fixed interest rate Japanese Yen denominated debt. Mr. Hill was appointed President, Consumer and Marketplace in March 2018. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. In the current marketplace environment, we believe there has been a meaningful shift in the way consumers shop for product and make purchasing decisions. We also have the following outstanding short-term debt obligations as of May 31, 2018 . The Class A Common Stock is not publicly traded, but each share is convertible upon request of the holder into one share of Class B Common Stock. References to wholesale equivalent revenues are intended to provide context as to the total size of our NIKE Brand market footprint if we had no NIKE Direct operations. We utilize trademarks on nearly all of our products and believe having distinctive marks that are readily identifiable is an important factor in creating a market for our goods, in identifying our brands and the Company, and in distinguishing our goods from the goods of others. This estimated annual effective tax rate is then applied to the year-to-date Income before income taxes excluding infrequently occurring or unusual items, to determine the year-to-date Income tax expense . Many of our foreign subsidiaries operate in functional currencies other than the U.S. Dollar. NIKE's independent contract manufacturers and suppliers have thus far experienced little difficulty in satisfying raw material requirements for the production of our products. But we will not stop here. Converse is also a reportable segment and operates in one industry: the design, marketing, licensing and selling of casual sneakers, apparel and accessories. In step two of the analysis, the Company measures and records an impairment loss equal to the excess of the carrying value of the reporting unit's goodwill over its implied fair value, if any. ), Directors, Executive Officers and Corporate Governance, Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters, Certain Relationships and Related Transactions and Director Independence, Exhibits and Financial Statement Schedules. Certain contracts provide for royalty payments to endorsers based upon a predetermined percent of sales of particular products. Operating overhead expense consists primarily of wage and benefit-related expenses, research and development costs, as well as other administrative expenses, such as rent, depreciation and amortization, professional services, meetings and travel. Revenues . During fiscal 2018, Sojitz America provided financing and purchasing services for NIKE Brand products sold in certain NIKE markets including Argentina, Brazil, Canada, India, South Africa and Uruguay (collectively the "Sojitz Markets"), excluding products produced and sold in the same country. We build deep, personal connections with consumers. Included in Interest expense (income), net was interest income related to the Company's available-for-sale securities of $70 million , $27 million and $12 million for the years ended May 31, 2018 , 2017 and 2016 , respectively. The VaR model is a risk analysis tool and does not purport to represent actual losses in fair value we will incur nor does it consider the potential effect of favorable changes in market rates. Level 2: Inputs other than observable quoted prices for the asset or liability, either directly or indirectly; these include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. Accordingly, changes in the fair values of the interest rate swaps are considered to exactly offset changes in the fair value of the underlying long-term debt. NIKE designs, develops, markets and sells athletic footwear, apparel, equipment, accessories and services worldwide. Copies of these filings may also be obtained by visiting the Public Reference Room of the SEC at 100 F Street, NE, Washington, D.C. 20549, or by calling the SEC at 1-800-SEC-0330 and are available on the SEC's website ( www.sec.gov ). Non-Functional Currency Denominated External Sales - A portion of our EMEA geography revenues, as well as a portion of our Converse European operations revenues, are earned in currencies other than the Euro (e.g., the British Pound) but are recognized at a subsidiary that uses the Euro as its functional currency. If any of these or other factors make the conduct of business in a particular country undesirable or impractical, our business could be adversely affected. A reconciliation from the U.S. statutory federal income tax rate to the effective income tax rate is as follows: Remeasurement of deferred tax assets and liabilities related to the Tax Act, Excess tax benefits from share-based compensation. We are also subject to the examination of our tax returns by the United States Internal Revenue Service ("IRS") and other tax authorities. The market for prime real estate is competitive. Second Supplemental Indenture, dated as of October 29, 2015, by and between NIKE, Inc. and Deutsche Bank Trust Company Americas, as trustee, including the form of 3.875% Notes due 2045 (incorporated by reference to Exhibit 4.2 to the Company's Form 8-K filed October 29, 2015). The Company recognizes interest and penalties related to income tax matters in Income tax expense . This includes, for example, the uncertainty surrounding the effect of Brexit, including changes to the legal and regulatory framework that apply to the United Kingdom and its relationship with the European Union, as well as new and proposed changes affecting tax laws and trade policy in the U.S. and elsewhere as further described below under " We could be subject to changes in tax rates, adoption of new tax laws, additional tax liabilities or increased volatility in our effective tax rate " and " Changes to U.S. trade policy, tariff and import/export regulations may have a material adverse effect on our business, financial condition and results of operations . " NTC sales to a NIKE entity with a different functional currency result in a foreign currency exposure for the NTC. At July 20, 2018, there were 22,271 holders of record of our Class B Common Stock and 15 holders of record of our Class A Common Stock. New $15 Billion Share Repurchase Program Announced NIKE, Inc. (NYSE:NKE) today reported financial results for its fiscal 2018 fourth quarter and full year ended May 31, 2018. Over a number of years, we have implemented Information Technology Systems in all of the geographical regions in which we operate. The NIKE Brand, which represents over 90% of NIKE, Inc. The Company, similar to many other multinational corporations, does a significant amount of business that would be impacted by changes to the trade policies of the U.S. and foreign countries (including governmental action related to tariffs, international trade agreements, or economic sanctions). Cash used by financing activities was $4,835 million for fiscal 2018 compared to $2,148 million for fiscal 2017 . Demand creation expense increased 2% for fiscal 2017 compared to fiscal 2016, driven by higher sports marketing costs, as well as higher marketing and advertising costs, primarily to support key sporting events including the Rio Olympics and European Football Championship. The ineffective portion of the unrealized gains and losses on these contracts, if any, are recorded immediately in earnings. Cost of sales consists primarily of inventory costs, as well as warehousing costs (including the cost of warehouse labor), third-party royalties, certain foreign currency hedge gains and losses and product design costs. Inventories are stated at lower of cost and net realizable value, and valued on either an average or a specific identification cost basis. If the foreign exchange derivative instruments had been netted in the Consolidated Balance Sheets, the asset and liability positions each would have been reduced by $182 million as of May 31, 2018 . Commitments. Our foreign exchange risk management program is intended to lessen both the positive and negative effects of currency fluctuations on our consolidated results of operations, financial position and cash flows. Selling and administrative expense increased due to higher demand creation expense, as increased sports marketing and advertising expenses more than offset lower marketing costs. In June 2018, our Board of Directors approved a new four-year, $15 billion program to repurchase shares of NIKE's Class B Common Stock, which we anticipate will commence at the completion of our current program. The principal materials used in our footwear products - natural and synthetic rubber, plastic compounds, foam cushioning materials, natural and synthetic leather, natural and synthetic fabrics and threads, nylon, canvas and polyurethane films - are also locally available to manufacturers. The actions we take to establish and protect our intellectual property rights may not be adequate to prevent imitation of our products by others. Sportswear, Running and the Jordan Brand are currently our top-selling footwear categories and we expect them to continue to lead in footwear sales. All changes in fair value of the derivatives designated as net investment hedges, except ineffective portions, are reported in Accumulated other comprehensive income along with the foreign currency translation adjustments on those investments. On November 19, 2015, the Company announced a two -for-one split of both NIKE Class A and Class B Common Stock. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Implementation of the Tax Act required us to record incremental provisional tax expense in fiscal 2018, which increased our effective tax rate in fiscal 2018. After allocation of revenues for Global Brand Divisions, Converse and Corporate to geographical areas based on the location where the sales originated, revenues by geographical area are essentially the same as reported above for the NIKE Brand operating segments with the exception of the United States. Resource. UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ANNUAL REPORT PURSUANT TO SECTION 13 These sales generate a foreign currency exposure. There are no material pending legal proceedings, other than ordinary routine litigation incidental to our business, to which we are a party or of which any of our property is the subject. As the Company completes its analysis of the Tax Act, including collecting, preparing and analyzing necessary information, performing and refining calculations and obtaining additional guidance from the IRS, U.S. Treasury Department, FASB or other standard setting and regulatory bodies on the Tax Act, it may record adjustments to the provisional amounts, which may be material. The Company records these costs in Demand creation expense at the point in time when it is obligated to its customers for the costs. The degree to which our financial results are affected for any given time period will depend in part upon our hedging activities. Typically, the Company may enter into hedge contracts starting up to 12 to 24 months in advance of the forecasted transaction and may place incremental hedges up to 100% of the exposure by the time the forecasted transaction occurs. Although we cannot predict whether or in what form these proposals will pass, several of the proposals considered, if enacted into law, could have an adverse impact on our income tax expense and cash flows. The NIKE Brand segments are defined by geographic regions for operations participating in NIKE Brand sales activity. M ost recently, Mr. Hill served as President of Geographies and Sales and Vice President and General Manager of North America. *, Form of Covenant Not to Compete and Non-Disclosure Agreement between NIKE, Inc. and its executive officers (other than Mark G. 033-63995, 333-63581, 333-63583, 333-68864, 333-68886, 333-71660, 333-104822, 333-117059, 333-133360, 333-164248, 333-171647, 333-173727, 333-208900 and 333-215439) of NIKE, Inc. of our report dated July 24, 2018 relating to the financial statements, financial statement schedule and the effectiveness of internal control over financial reporting, which appears in this Form 10-K. Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. In general, endorsement payments are expensed on a straight-line basis over the term of the contract. Leveraging the power of digital, NIKE plans to drive growth - by accelerating innovation and product creation, moving even closer to the consumer through key cities, and deepening one-to-one connections. We work with hundreds of contractors outside of the United States to manufacture our products, and we also have license agreements that permit unaffiliated parties to manufacture or contract for the manufacture of products using our intellectual property. Corporate Governance … if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Our work to integrate, secure and enhance these systems and related processes in our global operations is ongoing and NIKE will continue to invest in these efforts. Unit sales of apparel for fiscal 2017 increased 12%, while higher ASP per unit contributed approximately 5 percentage points of apparel revenue growth. If we are unsuccessful in enforcing our intellectual property rights, continued sales of these products could adversely affect our sales and our brand and could result in a shift of consumer preference away from our products. We base our estimates on (1) historical rates of product returns, discounts and claims, (2) specific identification of outstanding claims and outstanding returns not yet received from customers and (3) estimated returns, discounts and claims expected but not yet finalized with our customers. NIKE, Inc. Form 10-K (Filer) Published: 2020-07-24 16:07:45 Submitted: 2020-07-24 Filing Agent: NIKE, Inc. Period Ending In: 2020-05-31 Interactive XBRL Filing. Additionally, the Company reclassified cash outflows of $29 million, $22 million, $8 million and $13 million for the years ended May 31, 2017, 2016, 2015 and 2014, respectively, related to tax payments for the net settlement of share-based payment awards, from Cash provided by operations to Cash used by financing activities within the Consolidated Statements of Cash Flows. The information required by Item 401 of Regulation S-K regarding directors is included under "Election of Directors" in the definitive Proxy Statement for our 2018 Annual Meeting of Shareholders and is incorporated herein by reference. Even effective internal controls can provide only reasonable assurance with respect to the preparation and fair presentation of financial statements. We are also monitoring for and advocating against other impediments that may limit or delay customs clearance for imports of footwear, apparel and equipment. Capital leases and other financing obligations include payments related to build-to-suit lease arrangements. In some markets outside the U.S., these trademarks are licensed to third parties who design, distribute, market and sell similar products. The impact of the Tax Act primarily reflects provisional expense of $1,875 million for the one-time transition tax on the deemed repatriation of undistributed foreign earnings and $158 million resulting from the remeasurement of deferred tax assets and liabilities. On a currency-neutral basis, APLA revenues for fiscal 2017 increased 13%. Estimates of interest payments are based on outstanding principal amounts, applicable fixed interest rates or currently effective interest rates as of May 31, 2018 (if variable), timing of scheduled payments and the term of the debt obligations. When the specific criteria to qualify for hedge accounting has been met, changes in the fair value of contracts hedging probable forecasted future cash flows are recorded in Accumulated other comprehensive income , rather than Net income , until the underlying hedged transaction affects Net income . 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. We manage global foreign exchange risk centrally on a portfolio basis to address those risks material to NIKE, Inc. We manage these exposures by taking advantage of natural offsets and currency correlations existing within the portfolio and, where practical and material, by hedging a portion of the remaining exposures using derivative instruments such as forward contracts and options. The third quarter of fiscal 2018 reflects the impact from the enactment of the Tax Cuts and Jobs Act. A pace easy enough that you can catch your breath while running. While the Company does not expect the adoption of this standard to have a material impact on the Company's net Revenues in the Consolidated Statements of Income, revenues for certain wholesale transactions and substantially all digital commerce sales will be recognized upon shipment rather than upon delivery to the customer. There have not been any other changes in our internal control over financial reporting during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. There were no cash flows from net investment hedge settlements for the years ended May 31, 2018 and 2017. Profit sharing contributions of $59 million , $68 million and $64 million were made to the plan and included in Cost of sales or Operating overhead expense , as applicable, for the years ended May 31, 2018 , 2017 and 2016 , respectively. That means you'll get to run Long Runs that challenge you. *, Form of Non-Statutory Stock Option Agreement for options granted to executives prior to May 31, 2010 under the 1990 Stock Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company's Annual Report on Form 10-K for the fiscal year ended May 31, 2009). NIKE's independent contractors and suppliers buy raw materials for the manufacturing of our footwear, apparel and equipment products. If such facts indicate a potential impairment, we would assess the recoverability of an asset group by determining if the carrying value of the asset group exceeds the sum of the projected undiscounted cash flows expected to result from the use and eventual disposition of the assets over the remaining economic life of the primary asset in the asset group. Dollars are included in the foreign currency translation adjustment, a component of Accumulated other comprehensive income in Total shareholders' equity . Refer to Note 16 - Risk Management and Derivatives for additional information on the Company's risk management program and derivatives. In some cases, these cookies involve the processing of your personal data. Our financial results may be adversely affected if substantial investments in businesses and operations fail to produce expected returns. Refer to Note 16 - Risk Management and Derivatives for more information on the Company's risk management program and derivatives. Our previous discussion and analysis of our financial condition and results of operations are based upon our Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. Download the plan to see what's in store for the remaining 6 weeks. Any country in which our products are produced or sold may eliminate, adjust or impose new quotas, duties, tariffs, safeguard measures, anti-dumping duties, cargo restrictions to prevent terrorism, restrictions on the transfer of currency, climate change legislation, product safety regulations or other charges or restrictions, any of which could have an adverse effect on our results of operations and financial condition. Consumer connection and affinity for brands and products, developed through marketing and promotion; social media interaction; customer support and service; identification with prominent and influential athletes, public figures, coaches, teams, colleges and sports leagues who endorse our brands and use our products and active engagement through sponsored sporting events and clinics. In addition, many of our imported products are subject to duties, tariffs or quotas that affect the cost and quantity of various types of goods imported into the United States and other countries. As of November 30, 2017, the aggregate market values of the Registrant ' s Common Stock held by non-affiliates were: As of July 20, 2018, the number of shares of the Registrant ' s Common Stock outstanding were: Parts of Registrant ' s Proxy Statement for the Annual Meeting of Shareholders to be held on September 20, 2018 are incorporated by reference into Part III of this Report . The Corporate loss before interest and taxes largely consists of unallocated general and administrative expenses, including expenses associated with centrally managed departments; depreciation and amortization related to our corporate headquarters; unallocated insurance, benefit and compensation programs, including stock-based compensation; and certain foreign currency gains and losses. The GDPR imposes additional obligations on companies regarding the handling of personal data and provides certain individual privacy rights to persons whose data is stored. Changes in foreign currency exchange rates reduced Demand creation expense by approximately 1 percentage point. *, Form of Discretionary Performance Award Agreement.*. Under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, our management conducted an evaluation of the effectiveness of our internal control over financial reporting based upon the framework in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company makes ongoing estimates relating to the collectability of its accounts receivable and maintains an allowance for estimated losses resulting from the inability of its customers to make required payments. 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